S
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Pennsylvania
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51-066129
|
||
State
or other jurisdiction of incorporation or organization
|
(IRS
Employer Identification No.)
|
||
31 E. Main St. Ephrata, PA
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17522
|
||
(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
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(717) 733-4181
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Securities
registered pursuant to Section 12(b) of the Act:
|
None
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Large
Accelerated filer £
|
Accelerated
filer £
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Non-accelerated
filer £ (Do not
check if a smaller reporting company)
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Smaller
reporting company S
|
Part
I
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||||
Item
1.
|
3
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|||
Item
1A.
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16
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|||
Item
1B.
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23
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|||
Item
2.
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23
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|||
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||||
Item
3.
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24
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|||
Item
4.
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25
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|||
Part
II
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||||
Item
5.
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25
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|||
Item
6.
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28
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|||
Item
7.
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29
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|||
Item
7A.
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56
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|||
Item
8.
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60
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|||
Item
9.
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89
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|||
Item
9A.
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89
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|||
Item
9B.
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90
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|||
Part
III
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|||
Item
10.
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91
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|||
Item
11.
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91
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|||
Item
12.
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91
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|||
Item
13.
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91
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|||
Item
14.
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91
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|||
Part
IV
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||||
Item
15.
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92
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|||
Signatures |
93
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|||
Exhibit Index |
94
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·
|
Monetary
and interest rate policies of the Federal Reserve Board
(“FRB”)
|
·
|
Economic
conditions
|
·
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Political
changes and their impact on new laws and
regulations
|
·
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Competitive
forces
|
·
|
Management’s
ability to manage credit risk, liquidity risk, interest rate risk, and
fair value risk
|
·
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Operation,
legal, and reputation risk
|
·
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The
risk that our analyses of these risks and forces could be incorrect and/or
that the strategies developed to address them could be
unsuccessful
|
|
·
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General Supervision by the
Federal Reserve Board. As a bank holding company, our
activities are limited to the business of banking and activities closely
related or incidental to banking. Bank holding companies are
required to file periodic reports with and are subject to examination by
the Federal Reserve Board. The Federal Reserve Board has
adopted a risk-focused supervision program for small shell bank holding
companies that is tied to the examination results of the subsidiary
bank. The Federal Reserve Board has issued regulations under
the Bank Holding Company Act that require a bank holding company to serve
as a source of financial and managerial strength to its subsidiary
banks. As a result, the Federal Reserve Board may require that
the Corporation stand ready to provide adequate capital funds to Ephrata
National Bank during periods of financial stress or
adversity.
|
|
·
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Restrictions on Acquiring
Control of Other Banks and Companies. A bank holding
company may not:
|
|
o
|
acquire
direct or indirect control of more than 5% of the outstanding shares of
any class of voting stock, or substantially all of the assets of, any
bank, or
|
|
o
|
merge
or consolidate with another bank holding company, without prior approval
of the Federal Reserve Board.
|
|
o
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engage
in a non-banking business, or
|
|
o
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acquire
ownership or control of more than 5% of the outstanding shares of any
class of voting stock of any company engaged in a non-banking
business,
|
|
·
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Anti-Tie-In
Provisions. A bank holding company and its subsidiaries
may not engage in tie-in arrangements in connection with any extension of
credit or provision of any property or services. These
anti-tie-in provisions state generally that a bank may
not:
|
|
o
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extend
credit,
|
|
o
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lease
or sell property, or
|
|
o
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furnish
any service to a customer
|
|
·
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Restrictions on Extensions of
Credit by Banks to their Holding Companies. Subsidiary
banks of a holding company are also subject to restrictions imposed by the
Federal Reserve Act on:
|
|
o
|
any
extensions of credit to the bank holding company or any of its
subsidiaries,
|
|
o
|
investments
in the stock or other securities of the Corporation,
and
|
|
o
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taking
these stock or securities as collateral for loans to any
borrower.
|
|
·
|
Risk-Based Capital
Guidelines. Bank holding companies must comply with the
Federal Reserve Board’s risk-based capital guidelines. The
required minimum ratio of total capital to risk-weighted assets, including
some off-balance sheet activities, such as standby letters of credit, is
8%. At least half of the total capital is required to be Tier I Capital,
consisting principally of common shareholders’ equity, less certain
intangible assets. The remainder, Tier II Capital, may
consist of:
|
|
o
|
some
types of preferred stock,
|
|
o
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a
limited amount of subordinated
debt,
|
|
o
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some
hybrid capital instruments,
|
|
o
|
other
debt securities, and
|
|
o
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a
limited amount of the general loan loss
allowance.
|
|
·
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Capital Leverage Ratio
Requirements. The Federal Reserve Board requires a bank
holding company to maintain a leverage ratio of a minimum level of Tier I capital, as
determined under the risk-based capital guidelines, equal to 3% of average
total consolidated assets for those bank holding companies that have the
highest regulatory examination rating and are not contemplating or
experiencing significant growth or expansion. All other bank
holding companies are required to maintain a ratio of at least 1% to 2%
above the stated minimum. The Ephrata National Bank is subject
to similar capital requirements pursuant to the Federal Deposit Insurance
Act.
|
|
·
|
Restrictions on Control
Changes. The Change in Bank Control Act of 1978 requires
persons seeking control of a bank or bank holding company to obtain
approval from the appropriate federal banking agency before completing the
transaction. The law contains a presumption that the power to
vote 10% or more of voting stock confers control of a bank or bank holding
company. The Federal Reserve Board is responsible for reviewing
changes in control of bank holding companies. In doing so, the
Federal Reserve Board reviews the financial position, experience and
integrity of the acquiring person and the effect the change of control
will have on the financial condition of the Corporation, relevant markets
and federal deposit insurance
funds.
|
|
·
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Making,
acquiring or servicing loans and other extensions of credit for its own
account or for the account of
others.
|
|
·
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Any
activity used in connection with making, acquiring, brokering, or
servicing loans or other extensions of credit, as determined by the
Federal Reserve Board. The Federal Reserve Board has determined
that the following activities are
permissible:
|
|
o
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real
estate and personal property
appraising;
|
|
o
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arranging
commercial real estate equity
financing;
|
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o
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check-guaranty
services;
|
|
o
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collection
agency services;
|
|
o
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credit
bureau services;
|
|
o
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asset
management, servicing, and collection
activities;
|
|
o
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acquiring
debt in default, if a holding company divests shares or assets securing
debt in default that are not permissible investments for bank holding
companies within prescribed time periods, and meets various other
conditions; and
|
|
o
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real
estate settlement services.
|
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·
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Leasing
personal and real property or acting as agent, broker, or advisor in
leasing property, provided that:
|
|
o
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the
lease is a non-operating lease;
|
|
o
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the
initial term of the lease is at least 90
days;
|
|
o
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if
real property is being leased, the transaction will compensate the lessor
for at least the lessor’s full investment in the property and costs, with
various other conditions.
|
|
·
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Operating
non-bank depository institutions, including an industrial bank or savings
association.
|
|
·
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Performing
functions or activities that may be performed by a trust company,
including activities of a fiduciary, agency or custodial nature, in the
manner authorized by federal or state law, so long as the holding company
is not a bank.
|
|
·
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Acting
as investment or financial advisor to any person,
including:
|
|
o
|
serving
as investment advisor to an investment company registered under the
Investment Company Act of 1940;
|
|
o
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furnishing
general economic information and advice, general economic statistical
forecasting services, and industry
studies;
|
|
o
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providing
advice in connection with mergers, acquisitions, divestitures,
investments, joint ventures, capital structuring, financing transactions,
and conducting financial feasibility
studies;
|
|
o
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providing
general information, statistical forecasting, and advice concerning any
transaction in foreign exchange, swaps and similar transactions,
commodities, and options, futures and similar
instruments;
|
|
o
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providing
educational courses and instructional materials to consumers on individual
financial management matters; and
|
|
o
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providing
tax planning and tax preparation services to any
person.
|
|
·
|
Agency transactional
services for customer investments,
including:
|
|
o
|
Securities brokerage --
Providing securities brokerage services, whether alone or in combination
with investment advisory services, and incidental activities, including
related securities credit activities compliant with Federal Reserve Board
Regulation T and custodial services, if the securities brokerage services
are restricted to buying and selling securities solely as agent for the
account of customers and do not include securities underwriting or
dealing.
|
|
o
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Riskless-principal
transactions -- Buying and selling all types of securities in the
secondary market on the order of customers as “riskless
principal.”
|
|
o
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Private-placement
services -- Acting as agent for the private placement of securities
in accordance with the requirements of the Securities Act of 1933 and the
rules of the SEC.
|
|
o
|
Futures commission
merchant -- Acting as a futures commission merchant for
unaffiliated persons in the execution and clearance of any futures
contract and option on a futures contract traded on an exchange in the
United States or abroad, if the activity is conducted through a separately
incorporated subsidiary of the holding company and the company satisfies
various other conditions.
|
|
·
|
Investment
transactions as principal:
|
|
o
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Underwriting
and dealing in government obligations and money market instruments,
including bankers’ acceptances and certificates of deposit, under the same
limitations applicable if the activity were performed by a holding
company’s subsidiary member banks.
|
|
·
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Engaging
as principal in:
|
|
o
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foreign
exchanges; and
|
|
o
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forward
contracts, options, futures, options on futures, swaps, and similar
contracts, with various conditions.
|
|
·
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Buying
and selling bullion, and related
activities.
|
|
·
|
Management
consulting and counseling
activities:
|
|
o
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Subject
to various limitations, management consulting on any matter to
unaffiliated depository institutions, or on any financial, economic,
accounting, or audit matter to any other company;
and
|
|
o
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Providing
consulting services to employee benefit, compensation, and insurance
plans, including designing plans, assisting in the implementation of
plans, providing administrative services to plans, and developing employee
communication programs for plans.
|
|
·
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Providing
career counseling services to:
|
|
o
|
a
financial organization and individuals currently employed by, or recently
displaced from, a financial
organization;
|
|
o
|
individuals
who are seeking employment at a financial organization;
and
|
|
o
|
individuals
who are currently employed in or who seek positions in the finance,
accounting, and audit departments of any
company.
|
|
·
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Support
services:
|
|
o
|
providing
limited courier services; and
|
|
o
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printing
and selling checks and related items requiring magnetic ink character
recognition.
|
|
·
|
Insurance
agency and underwriting:
|
|
o
|
Subject
to various limitations, acting as principal, agent, or broker for credit
life, accident, health and unemployment insurance that is directly related
to an extension of credit a holding company or any of its
subsidiaries.
|
|
o
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Engaging
in any insurance agency activity in a place where the Corporation or a
subsidiary of the Corporation has a lending office and that has a
population not exceeding 5,000 or has inadequate insurance agency
facilities, as determined by the Federal Reserve
Board.
|
|
o
|
Supervising,
on behalf of insurance underwriters, the activities of retail insurance
agents who sell fidelity insurance and property and casualty insurance on
the real and personal property used in the Corporation’s operations or its
subsidiaries, and group insurance that protects the employees of the
Corporation or its subsidiaries.
|
|
o
|
Engaging
in any insurance agency activities if the Corporation has total
consolidated assets of $50 million or less, with the sale of life
insurance and annuities being limited to sales in small towns or as credit
insurance.
|
|
·
|
Making
equity and debt investments in corporations or projects designed primarily
to promote community welfare, and providing advisory services to these
programs.
|
|
·
|
Subject
to various limitations, providing others financially oriented data
processing or bookkeeping services.
|
|
·
|
Issuing
and selling money orders, travelers' checks and United States savings
bonds.
|
|
·
|
Providing
consumer financial counseling that involves counseling, educational
courses and distribution of instructional materials to individuals on
consumer-oriented financial management matters, including debt
consolidation, mortgage applications, bankruptcy, budget management, real
estate tax shelters, tax planning, retirement and estate planning,
insurance and general investment management, so long as this activity does
not include the sale of specific products or
investments.
|
|
·
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Providing
tax planning and preparation
advice.
|
|
·
|
lending
and deposit activities,
|
|
·
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insurance
activities, including underwriting, agency and
brokerage,
|
|
·
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providing
financial investment advisory
services,
|
|
·
|
underwriting
in, and acting as a broker or dealer in,
securities,
|
|
·
|
merchant
banking, and
|
|
·
|
insurance
company portfolio investment.
|
·
|
Scope
of a bank’s business
|
·
|
Investments
a bank may make
|
·
|
Reserves
that must be maintained against certain
deposits
|
·
|
Loans
a bank makes and collateral it
takes
|
·
|
Merger
and consolidation activities
|
·
|
Establishment
of branches
|
·
|
Loan
and deposit growth
|
·
|
Rate
of interest earned and paid
|
·
|
Levels
of liquidity
|
·
|
Levels
of required capital
|
·
|
Approval
of a new branch or other deposit
facility
|
·
|
Closing
of a branch or other deposit
facility
|
·
|
An
office relocation or a merger
|
·
|
Any
acquisition of bank shares
|
Capital
Category
|
Total
Risk-Based Ratio
|
Tier
1 Risk-Based Ratio
|
Tier
1 Leverage Ratio
|
|
|||
Well
Capitalized
|
> 10.0
|
> 6.0
|
> 5.0
|
Adequately
Capitalized
|
> 8.0
|
> 4.0
|
> 4.0*
|
Undercapitalized
|
<
8.0
|
<
4.0
|
<
4.0*
|
Significantly
Undercapitalized
|
<
6.0
|
<
3.0
|
<
3.0
|
Critically
Undercapitalized
|
< 2.0
|
||
*3.0
for those banks having the highest available regulatory
rating.
|
·
|
Implementation
of a capital restoration plan and a guarantee of the plan by a parent
institution
|
·
|
Placement
of a hold on increases in assets, number of branches, or lines of
business
|
·
|
Is
widely available to employees
|
·
|
Does
not give preference to any insider over other
employees
|
·
|
Assist
in remedying identity theft
|
·
|
Improve
consumer credit report dispute
resolution
|
·
|
Improve
the accuracy of consumer credit
records
|
·
|
Improve
the access to, and use of credit
reports
|
|
·
|
Identify
relevant patterns, practices, and specific forms of activity that are “red
flags” signaling possible identity theft and incorporate those red flags
into their program;
|
|
·
|
Detect
red flags that have been incorporated into their
program;
|
|
·
|
Respond
appropriately to any red flags that are detected to prevent and mitigate
identity theft; and
|
|
·
|
Ensure
their program is updated periodically to reflect changes in risks from
identity theft.
|
·
|
Verify
the identity of persons applying to open an
account
|
·
|
Ensure
adequate maintenance of the records used to verify a person’s identity,
and
|
·
|
Determine
whether a person is on any U.S. governmental agency list of known or
suspected terrorists, or a terrorist
organization
|
|
·
|
The
FDIC will guarantee certain newly issued senior unsecured debt issued on
or after October 14, 2008, and before June 30, 2009, by participating
financial institutions. Financial institutions not desiring to
participate in this program had to elect to opt out of this
component. The Corporation does not issue senior unsecured debt
and therefore opted out of this feature of the
TLGP.
|
|
·
|
The
FDIC will provide full deposit insurance coverage for all of a bank’s
non-interest bearing deposit transaction accounts regardless of the dollar
amount. Negotiable Order of Withdraw (NOW) accounts with
interest rates less than or equal to 0.5% and Interest on Lawyer Trust
Accounts (IOLTA) are also covered by this extended
coverage. This guarantee is temporary, expiring on December 31,
2009. This component of the TLGP requires a bank to disclose to
its customers if it is or is not participating in the
program. A participating bank is required to give a second
disclosure to customers who have an agreement that sweeps money form a
non-interest bearing transaction account to an interest bearing account or
non-transaction account. This disclosure must inform the
customer that a transfer to an interest bearing account could decrease the
customer’s FDIC deposit insurance
coverage.
|
·
|
The
Corporation’s ability to originate loans and obtain
deposits
|
·
|
The
fair value of the Corporation’s financial assets and
liabilities
|
·
|
The
average duration of the Corporation’s assets and
liabilities
|
·
|
The
future liquidity of the Corporation
|
·
|
The
ability to develop, maintain and build upon long-term customer
relationships based on quality service, high ethical standards, and safe,
sound management practices.
|
·
|
The
ability to expand the Corporation’s market
position.
|
·
|
The
scope, relevance and pricing of products and services offered to meet
customer needs and demands.
|
·
|
The
rate at which the Corporation introduces new products and services
relative to its competitors.
|
·
|
Customer
satisfaction with the Corporation’s level of
service.
|
·
|
Industry
and general economic trends.
|
•
|
Actual
or anticipated variations in quarterly results of
operations.
|
•
|
Recommendations
by securities analysts.
|
•
|
Operating
and stock price performance of other companies that investors deem
comparable to the
Corporation.
|
•
|
News
reports relating to trends, concerns and other issues in the financial
services industry.
|
•
|
Perceptions
in the marketplace regarding the Corporation and/or its
competitors.
|
•
|
New
technology used, or services offered, by
competitors.
|
•
|
Significant
acquisitions or business combinations, strategic partnerships, joint
ventures or capital commitments by or involving the Corporation or its
competitors.
|
•
|
Changes
in government regulations.
|
•
|
Geopolitical
conditions such as acts or threats of terrorism or military
conflicts.
|
Property
Location
|
Owned
|
|
Corporate
Headquarters/Main Office
|
Owned
|
|
31
East Main Street
|
||
Ephrata,
Pennsylvania
|
||
Money
Management Group
|
Owned
|
|
47
East Main Street
|
||
Ephrata,
Pennsylvania
|
||
Technology Center
|
Owned
|
|
31
East Franklin Street
|
||
Ephrata,
Pennsylvania
|
||
Main
Street Drive-In
|
Owned
|
|
42
East Main Street
|
||
Ephrata,
Pennsylvania
|
||
Cloister
Office
|
Owned
|
|
809
Martin Avenue
|
||
Ephrata,
Pennsylvania
|
||
Hinkletown
Office
|
Owned
|
|
935
North Railroad Avenue
|
||
New
Holland, Pennsylvania
|
||
Denver
Office
|
Owned
|
|
One
Main Street
|
||
Denver,
Pennsylvania
|
||
Akron
Office
|
Owned
|
|
351
South Seventh Street
|
||
Akron,
Pennsylvania
|
||
Lititz
Office
|
Owned
|
|
3190
Lititz Pike
|
||
Lititz,
Pennsylvania
|
||
Blue
Ball Office
|
Owned
|
|
110
Marble Avenue
|
||
Blue
Ball, Pennsylvania
|
||
Manheim
Office
|
Owned
|
|
1
North Penryn Road
|
||
Manheim,
Pennsylvania
|
Item 3.
|
Legal
Proceedings
|
Item 4.
|
Submission
of Matters to a Vote of Security
Holders
|
Item 5.
|
Market
for Registrant’s Common Equity, Related Shareholder Matters, and Issuer
Purchases of Equity Securities
|
2008
|
2007
|
|||||||||||||||||||||||
High
|
Low
|
Dividend
|
High
|
Low
|
Dividend
|
|||||||||||||||||||
First
quarter
|
$ | 26.85 | $ | 25.00 | $ | 0.31 | $ | 32.95 | $ | 29.00 | $ | 0.30 | ||||||||||||
Second
quarter
|
26.70 | 23.50 | 0.31 | 34.95 | 31.60 | 0.30 | ||||||||||||||||||
Third
quarter
|
26.00 | 22.76 | 0.31 | 34.60 | 28.50 | 0.30 | ||||||||||||||||||
Fourth
quarter
|
26.50 | 24.85 | 0.31 | 30.25 | 26.30 | 0.31 |
Issuer
Purchase of Equity Securites
|
||||||||||||||||
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid Per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans
*
|
U
Maximum Number of Shares that May Yet be Purchased nder the
Plan *
|
||||||||||||
July
1, 2008 to July 31, 2008
|
None
|
N/A
|
None
|
N/A
|
||||||||||||
August
1, 2008 to August 31, 2008
|
None
|
N/A
|
None
|
N/A
|
||||||||||||
September
1, 2008 to September 30, 2008
|
16,500 | $ | 25.84 | 16,500 | 123,500 | |||||||||||
October
1, 2008 to October 31, 2008
|
6,000 | $ | 25.45 | 22,500 | 117,500 | |||||||||||
November
1, 2008 to November 30, 2008
|
7,800 | $ | 25.65 | 30,300 | 109,700 | |||||||||||
December
1, 2008 to December 31, 2008
|
2,100 | $ | 25.75 | 32,400 | 107,600 | |||||||||||
Total
|
32,400 |
ENB
Financial Corp.
|
Period
Ending
|
||||||||||||||||||||||||
Index
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
12/31/07
|
12/31/08
|
||||||||||||||||||
ENB
Financial Corp.
|
100.00 | 115.63 | 117.83 | 102.62 | 91.22 | 91.04 | ||||||||||||||||||
Russell
2000
|
100.00 | 118.33 | 123.72 | 146.44 | 144.15 | 95.44 | ||||||||||||||||||
Mid-Atlantic
Custom Peer Group*
|
100.00 | 113.29 | 113.25 | 115.44 | 107.89 | 83.30 |
Year
Ended December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
INCOME
STATEMENT DATA
|
||||||||||||||||||||
Interest
income
|
34,725 | 33,784 | 31,567 | 28,087 | 25,969 | |||||||||||||||
Interest
expense
|
14,598 | 14,692 | 12,904 | 9,401 | 7,703 | |||||||||||||||
Net
interest income
|
20,127 | 19,092 | 18,663 | 18,686 | 18,266 | |||||||||||||||
Provision
for loan losses
|
669 | 1,446 | 1,276 | 390 | 540 | |||||||||||||||
Other
income
|
4,907 | 4,801 | 3,402 | 4,127 | 3,780 | |||||||||||||||
Other
expenses
|
20,468 | 16,831 | 15,300 | 13,828 | 13,051 | |||||||||||||||
Income
before income taxes
|
3,897 | 5,616 | 5,489 | 8,595 | 8,455 | |||||||||||||||
Provision
for Federal income taxes
|
(117 | ) | 553 | 718 | 1,610 | 1,654 | ||||||||||||||
Net
income
|
4,014 | 5,063 | 4,771 | 6,985 | 6,801 | |||||||||||||||
PER
SHARE DATA
|
||||||||||||||||||||
Net
income (basic and diluted)
|
1.40 | 1.77 | 1.67 | 2.39 | 2.31 | |||||||||||||||
Cash
dividends paid
|
1.24 | 1.21 | 1.17 | 1.12 | 1.04 | |||||||||||||||
Book
value at year-end
|
23.92 | 24.05 | 23.14 | 22.28 | 22.28 | |||||||||||||||
BALANCE
SHEET DATA
|
||||||||||||||||||||
Total
assets
|
688,423 | 633,762 | 606,670 | 577,578 | 544,063 | |||||||||||||||
Total
Loans
|
411,954 | 384,999 | 365,977 | 328,766 | 301,892 | |||||||||||||||
Securities
|
214,421 | 192,960 | 191,577 | 206,305 | 208,094 | |||||||||||||||
Deposits
|
511,112 | 478,726 | 469,259 | 448,786 | 415,138 | |||||||||||||||
Total
borrowings
|
103,800 | 82,100 | 67,200 | 60,900 | 59,400 | |||||||||||||||
Stockholders'
equity
|
68,045 | 68,822 | 65,957 | 64,062 | 65,561 | |||||||||||||||
SELECTED
RATIOS
|
||||||||||||||||||||
Return
on average assets
|
0.60 | % | 0.82 | % | 0.81 | % | 1.27 | % | 1.29 | % | ||||||||||
Return
on average stockholders' equity
|
5.89 | % | 7.63 | % | 7.45 | % | 10.71 | % | 10.59 | % | ||||||||||
Average
equity to average assets ratio
|
10.20 | % | 10.72 | % | 10.85 | % | 11.84 | % | 12.14 | % | ||||||||||
Dividend
payout ratio
|
88.57 | % | 68.36 | % | 70.06 | % | 46.86 | % | 44.96 | % | ||||||||||
Efficiency
ratio
|
75.09 | % | 65.42 | % | 61.92 | % | 56.42 | % | 56.20 | % | ||||||||||
Net
interest margin
|
3.51 | % | 3.62 | % | 3.68 | % | 3.92 | % | 4.01 | % |
Item 7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
·
|
The
Corporation recorded a total of $1,278,000 of losses related to FNMA
preferred stock during 2008. The impairment and realized loss on Federal
National Mortgage Association (“FNMA”) preferred stock resulting from the
deterioration of the financial condition of FNMA, leading to a government
takeover on September 7, 2008. Losses on sale of the stock
occurred in both the third and fourth quarter of 2008 with impairment
recorded as of September 30, 2008. The Corporation sold all the
preferred stock held the investment portfolio prior to December 31, 2008,
therefore no future losses will occur related to this
investment.
|
|
·
|
The
Corporation recorded $1,222,000 of additional salary and benefit expense
related to a separation package offered to qualifying
employees. Management chose to offer the package as part of an
organizational restructuring. The organizational restructuring was one of
many recommendations that resulted from a business process improvement
engagement, based on industry standards. Management anticipates
that the Corporation will recoup the majority of this charge during 2009
in the form of a lower level of salary and benefit costs than previously
would have been experienced. The organizational restructuring
engagement was dilutive to income in 2008, because of the separation
package and costs of the engagement, but is expected to be accretive to
income in 2009 as operational efficiencies and income generation is gained
from new processes.
|
Key
Ratios
|
Twelve
Months Ended
|
|||||||
December
31,
|
||||||||
2008
|
2007
|
|||||||
Return
on Average Assets
|
0.60 | % | 0.82 | % | ||||
Return
on Average Equity
|
5.89 | % | 7.63 | % |
|
·
|
Net
interest income
|
|
·
|
Provision
for loan losses
|
|
·
|
Non-interest
income
|
|
·
|
Non-interest
expenses
|
|
·
|
Provision
for income taxes
|
Year
ending
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
$
|
$
|
$
|
||||||||||
Total
interest income
|
34,725 | 33,784 | 31,567 | |||||||||
Total
interest expense
|
14,598 | 14,692 | 12,904 | |||||||||
Net
interest income
|
20,127 | 19,092 | 18,663 | |||||||||
Tax
equivalent adjustment
|
1,649 | 1,776 | 1,776 | |||||||||
Net
interest income (fully taxable equivalent)
|
21,776 | 20,868 | 20,439 |
|
·
|
The
rates charged on interest-earning assets and paid on interest-bearing
liabilities
|
|
·
|
The
average balance of interest-earning assets and interest-bearing
liabilities
|
2008
vs. 2007
|
2007
vs. 2006
|
|||||||||||||||||||||||
Increase
(Decrease)
|
Increase
(Decrease)
|
|||||||||||||||||||||||
Due
To Change In
|
Due
To Change In
|
|||||||||||||||||||||||
Net
|
Net
|
|||||||||||||||||||||||
Average
|
Interest
|
Increase
|
Average
|
Interest
|
Increase
|
|||||||||||||||||||
Balances
|
Rates
|
(Decrease)
|
Balances
|
Rates
|
(Decrease)
|
|||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||
INTEREST
INCOME
|
||||||||||||||||||||||||
Federal
funds sold
|
(116 | ) | (86 | ) | (202 | ) | 176 | 3 | 179 | |||||||||||||||
Securities
available for sale:
|
||||||||||||||||||||||||
Taxable
|
1,988 | 510 | 2,498 | (344 | ) | 350 | 6 | |||||||||||||||||
Tax-exempt
|
(523 | ) | 39 | (484 | ) | (209 | ) | (132 | ) | (341 | ) | |||||||||||||
Total
securities
|
1,465 | 549 | 2,014 | (553 | ) | 218 | (335 | ) | ||||||||||||||||
Loans
|
948 | (1,865 | ) | (917 | ) | 1,855 | 464 | 2,319 | ||||||||||||||||
Regulatory
Stock
|
30 | (111 | ) | (81 | ) | 5 | 49 | 54 | ||||||||||||||||
Total
interest income
|
2,327 | (1,513 | ) | 814 | 1,483 | 734 | 2,217 | |||||||||||||||||
INTEREST
EXPENSE
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Demand
deposits
|
63 | (565 | ) | (502 | ) | 40 | (216 | ) | (176 | ) | ||||||||||||||
Savings
deposits
|
16 | (92 | ) | (76 | ) | (5 | ) | (77 | ) | (82 | ) | |||||||||||||
Time
deposits
|
626 | (658 | ) | (32 | ) | 331 | 974 | 1,305 | ||||||||||||||||
Total
deposits
|
705 | (1,315 | ) | (610 | ) | 366 | 681 | 1,047 | ||||||||||||||||
Borrowings:
|
||||||||||||||||||||||||
Federal
funds purchased
|
70 | (58 | ) | 12 | (67 | ) | 1 | (66 | ) | |||||||||||||||
Other
borrowings
|
647 | (143 | ) | 504 | 646 | 161 | 807 | |||||||||||||||||
Total
borrowings
|
717 | (201 | ) | 516 | 579 | 162 | 741 | |||||||||||||||||
Total
interest expense
|
1,422 | (1,516 | ) | (94 | ) | 945 | 843 | 1,788 | ||||||||||||||||
NET
INTEREST INCOME
|
905 | 3 | 908 | 538 | (109 | ) | 429 |
December
31,
|
||||||||||||||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||||||||||||||
Average
|
Yield/
|
Average
|
Yield/
|
Average
|
Yield/
|
|||||||||||||||||||||||||||||||
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
||||||||||||||||||||||||||||
$
|
$
|
%
|
$
|
$
|
%
|
$
|
$
|
%
|
||||||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||||||||||
Interest
earning assets:
|
||||||||||||||||||||||||||||||||||||
Federal
funds sold and interest on deposits at other banks
|
1,310 | 32 | 2.49 | 4,502 | 234 | 5.20 | 1,116 | 55 | 4.93 | |||||||||||||||||||||||||||
Securities
available for sale:
|
||||||||||||||||||||||||||||||||||||
Taxable
|
167,845 | 8,511 | 5.07 | 128,031 | 6,013 | 4.69 | 135,558 | 6,007 | 4.43 | |||||||||||||||||||||||||||
Tax-exempt
|
54,403 | 3,455 | 6.35 | 62,643 | 3,939 | 6.29 | 65,947 | 4,280 | 6.49 | |||||||||||||||||||||||||||
Total
securities (d)
|
222,248 | 11,966 | 5.38 | 190,674 | 9,952 | 5.22 | 201,505 | 10,287 | 5.11 | |||||||||||||||||||||||||||
Loans
(a)
|
391,112 | 24,209 | 6.19 | 376,539 | 25,126 | 6.67 | 348,621 | 22,807 | 6.54 | |||||||||||||||||||||||||||
Regulatory
stock
|
4,737 | 167 | 3.52 | 4,177 | 248 | 5.94 | 4,074 | 194 | 4.76 | |||||||||||||||||||||||||||
Total
interest earning assets
|
619,407 | 36,374 | 5.87 | 575,892 | 35,560 | 6.17 | 555,316 | 33,343 | 6.00 | |||||||||||||||||||||||||||
Non-interest
earning assets (d)
|
48,773 | 43,494 | 34,732 | |||||||||||||||||||||||||||||||||
Total
assets
|
668,180 | 619,386 | 590,048 | |||||||||||||||||||||||||||||||||
LIABILITIES
&STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||||||||||||||
Interest
bearing liabilities:
|
||||||||||||||||||||||||||||||||||||
Demand
deposits
|
99,614 | 1,231 | 1.24 | 95,961 | 1,733 | 1.81 | 93,974 | 1,909 | 2.03 | |||||||||||||||||||||||||||
Savings
deposits
|
72,049 | 300 | 0.42 | 68,956 | 376 | 0.55 | 69,679 | 458 | 0.66 | |||||||||||||||||||||||||||
Time
deposits
|
219,769 | 8,939 | 4.07 | 204,947 | 8,971 | 4.38 | 196,718 | 7,666 | 3.90 | |||||||||||||||||||||||||||
Borrowed
funds
|
97,497 | 4,128 | 4.23 | 79,902 | 3,612 | 4.52 | 66,715 | 2,871 | 4.30 | |||||||||||||||||||||||||||
Total
interest bearing liabilities
|
488,929 | 14,598 | 2.99 | 449,766 | 14,692 | 3.27 | 427,086 | 12,904 | 3.02 | |||||||||||||||||||||||||||
Non-interest
bearing liabilities:
|
||||||||||||||||||||||||||||||||||||
Demand
deposits
|
106,029 | 98,228 | 94,005 | |||||||||||||||||||||||||||||||||
Other
|
5,092 | 5,007 | 4,934 | |||||||||||||||||||||||||||||||||
Total
liabilities
|
600,050 | 553,001 | 526,025 | |||||||||||||||||||||||||||||||||
Stockholders'
equity
|
68,130 | 66,385 | 64,023 | |||||||||||||||||||||||||||||||||
Total
liabilities & stockholders' equity
|
668,180 | 619,386 | 590,048 | |||||||||||||||||||||||||||||||||
Net
interest income (FTE)
|
21,776 | 20,868 | 20,439 | |||||||||||||||||||||||||||||||||
Net
interest spread (b)
|
2.89 | 2.91 | 3.32 | |||||||||||||||||||||||||||||||||
Effect
of non-interest bearing funds
|
0.62 | 0.71 | 0.36 | |||||||||||||||||||||||||||||||||
Net
yield on interest earning assets (c)
|
3.51 | 3.62 | 3.68 |
|
·
|
Historical
loan loss experience by loan type
|
|
·
|
Concentrations
of credit risk
|
|
·
|
Credit
migration analysis
|
|
·
|
Volume
of delinquent and non-performing
loans
|
|
·
|
Loan
portfolio characteristics
|
|
·
|
Current
economic conditions
|
2008
vs. 2007
|
2007
vs. 2006
|
|||||||||||||||||||||||||||||||
2008
|
2007
|
Increase
(Decrease)
|
2007
|
2006
|
Increase
(Decrease)
|
|||||||||||||||||||||||||||
$
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
|||||||||||||||||||||||||
Trust
and investment services
|
971 | 952 | 19 | 2.0 | 952 | 777 | 175 | 22.5 | ||||||||||||||||||||||||
Service
charges on deposit accounts
|
1,454 | 1,231 | 223 | 18.1 | 1,231 | 1,305 | (74 | ) | (5.7 | ) | ||||||||||||||||||||||
Other
fees
|
607 | 461 | 146 | 31.7 | 461 | 492 | (31 | ) | (6.3 | ) | ||||||||||||||||||||||
Commissions
|
1,328 | 1,124 | 204 | 18.1 | 1,124 | 991 | 133 | 13.4 | ||||||||||||||||||||||||
Net
realized gains (losses) on sales of securities available for
sale
|
(506 | ) | 157 | (663 | ) | (422.3 | ) | 157 | (870 | ) | 1,027 | (118.0 | ) | |||||||||||||||||||
Gain
(loss) on sale of mortgages
|
123 | 118 | 5 | 4.2 | 118 | 197 | (79 | ) | (40.1 | ) | ||||||||||||||||||||||
Earnings
on bank owned life insurance
|
632 | 469 | 163 | 35 | 469 | 253 | 216 | 85.4 | ||||||||||||||||||||||||
Other
miscellaneous income
|
298 | 289 | 9 | 3.1 | 289 | 257 | 32 | 12.5 | ||||||||||||||||||||||||
Total
other income
|
4,907 | 4,801 | 106 | 2.2 | 4,801 | 3,402 | 1,399 | 41.1 |
2008
vs. 2007
|
2007
vs. 2006
|
|||||||||||||||||||||||||||||||
2008
|
2007
|
Increase
(Decrease)
|
2007
|
2006
|
Increase
(Decrease)
|
|||||||||||||||||||||||||||
$
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
|||||||||||||||||||||||||
Salaries
and employee benefits
|
11,892 | 9,693 | 2,199 | 22.7 | 9,693 | 8,600 | 1,093 | 12.7 | ||||||||||||||||||||||||
Occupancy
expenses
|
1,242 | 1,146 | 96 | 8.4 | 1,146 | 1,025 | 121 | 11.8 | ||||||||||||||||||||||||
Equipment
expenses
|
957 | 899 | 58 | 6.5 | 899 | 891 | 8 | 0.9 | ||||||||||||||||||||||||
Advertising
& marketing expenses
|
411 | 415 | (4 | ) | (1.0 | ) | 415 | 423 | (8 | ) | (1.9 | ) | ||||||||||||||||||||
Computer
software & data processing expenses
|
1,508 | 1,383 | 125 | 9.0 | 1,383 | 1,330 | 53 | 4.0 | ||||||||||||||||||||||||
Shares
tax
|
721 | 449 | 272 | 60.6 | 449 | 432 | 17 | 3.9 | ||||||||||||||||||||||||
Outside
services
|
1,643 | 968 | 675 | 69.7 | 968 | 928 | 40 | 4.3 | ||||||||||||||||||||||||
Other
operating expenses
|
2,094 | 1,878 | 216 | 11.5 | 1,878 | 1,671 | 207 | 12.4 | ||||||||||||||||||||||||
Total
Operating Expenses
|
20,468 | 16,831 | 3,637 | 21.6 | 16,831 | 15,300 | 1,531 | 10.0 |
·
|
Depreciation
of bank buildings
|
·
|
Real
estate taxes and property insurance
|
·
|
Utilities
|
·
|
Building
repair and maintenance
|
|
·
|
Postage
|
|
·
|
Regulator
and tax assessments
|
|
·
|
Director
fees and expense
|
|
·
|
Travel
expense
|
|
·
|
General
supplies
|
|
·
|
Charitable
contributions
|
|
·
|
Delinquent
loan expenses
|
·
|
Balance
sheet growth was stronger in 2008 compared to
2007.
|
·
|
Short
term investments were maintained at lower levels to take advantage of
higher yielding assets
|
·
|
Growth
in securities was used to supplement slower growth in the loan
portfolio.
|
·
|
Deposit
growth was moderate in 2008 compared to slow growth in
2007.
|
·
|
Borrowings
continued to increase in 2008
|
·
|
Non-interest
bearing deposits grew considerably in both 2008, compared to moderate
growth in 2007.
|
SOURCES
AND USES OF FUNDS
|
(DOLLARS
IN THOUSANDS)
|
2008
vs. 2007
|
2007
vs. 2006
|
|||||||||||||||||||||||||||||||
2008
|
2007
|
Increase
(Decrease)
|
2007
|
2006
|
Increase
(Decrease)
|
|||||||||||||||||||||||||||
Average
Balances
|
$
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
||||||||||||||||||||||||
Short-term
investments
|
1,310 | 4,502 | (3,192 | ) | (70.9 | ) | 4,502 | 1,116 | 3,386 | 303.4 | ||||||||||||||||||||||
Securities
available for sale
|
222,248 | 190,674 | 31,574 | 16.6 | 190,674 | 201,505 | (10,831 | ) | (5.4 | ) | ||||||||||||||||||||||
Regulatory
stock
|
4,737 | 4,177 | 560 | 13.4 | 4,177 | 4,074 | 103 | 2.5 | ||||||||||||||||||||||||
Loans
|
391,112 | 376,539 | 14,573 | 3.9 | 376,539 | 348,621 | 27,918 | 8.0 | ||||||||||||||||||||||||
Total
Uses
|
619,407 | 575,892 | 43,515 | 7.6 | 575,892 | 555,316 | 20,576 | 3.7 | ||||||||||||||||||||||||
Interest
bearing demand deposits
|
99,614 | 95,961 | 3,653 | 3.8 | 95,961 | 93,974 | 1,987 | 2.1 | ||||||||||||||||||||||||
Savings
deposits
|
72,049 | 68,956 | 3,093 | 4.5 | 68,956 | 69,679 | (723 | ) | (1.0 | ) | ||||||||||||||||||||||
Time
deposits
|
219,769 | 204,947 | 14,822 | 7.2 | 204,947 | 196,718 | 8,229 | 4.2 | ||||||||||||||||||||||||
Borrowings
|
97,497 | 79,902 | 17,595 | 22.0 | 79,902 | 66,715 | 13,187 | 19.8 | ||||||||||||||||||||||||
Non-interest
bearing funds
|
106,029 | 98,228 | 7,801 | 7.9 | 98,228 | 94,005 | 4,223 | 4.5 | ||||||||||||||||||||||||
Total
Sources
|
594,958 | 547,994 | 46,964 | 8.6 | 547,994 | 521,091 | 26,903 | 5.2 |
|
·
|
Performance
of the various instruments
|
|
·
|
Direction
of interest rates
|
|
·
|
Slope
of the yield curve
|
|
·
|
ALCO
positions as to liquidity, interest rate risk, and net portfolio
value
|
|
·
|
State
of the economy and credit risk
|
December
31,
|
||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||
$
|
%
|
$
|
%
|
$
|
%
|
|||||||||||||||||||
U.S.
treasuries & governmental agencies
|
47,064 | 22.0 | 47,599 | 24.7 | 41,285 | 21.6 | ||||||||||||||||||
Mortgage-backed
securities
|
46,093 | 21.5 | 33,097 | 17.1 | 30,531 | 15.9 | ||||||||||||||||||
Collateralized
mortgage obligations
|
36,049 | 16.8 | 36,833 | 19.1 | 36,473 | 19.0 | ||||||||||||||||||
Private
collateralized mortgage obligations
|
18,294 | 8.5 | - | - | - | - | ||||||||||||||||||
Corporate
debt securities
|
11,637 | 5.4 | 11,507 | 6.0 | 10,468 | 5.5 | ||||||||||||||||||
Obligations
of states and political subdivisions
|
52,521 | 24.5 | 60,422 | 31.3 | 64,737 | 33.8 | ||||||||||||||||||
Equity
securities
|
2,763 | 1.3 | 3,502 | 1.8 | 8,083 | 4.2 | ||||||||||||||||||
Total
securities
|
214,421 | 100.0 | 192,960 | 100.0 | 191,577 | 100.0 |
|
·
|
a
stable and reliable cash flow for
liquidity
|
|
·
|
generally
carry AAA credit ratings
|
|
·
|
strong
income compared to other debt
securities
|
Within
|
1 –
5
|
5 -
10
|
Over
|
|||||||||||||||||||||||||||||||||||||
1
Year
|
Years
|
Years
|
Years
|
Total
|
||||||||||||||||||||||||||||||||||||
%
|
%
|
%
|
%
|
%
|
||||||||||||||||||||||||||||||||||||
$
|
Yield
|
$
|
Yield
|
$
|
Yield
|
$
|
Yield
|
$
|
Yield
|
|||||||||||||||||||||||||||||||
U.S.
treasuries & agencies
|
4,507 | 4.23 | 10,215 | 4.49 | 32,216 | 4.92 | - | - | 46,938 | 4.76 | ||||||||||||||||||||||||||||||
Mortgage-backed
securities
|
7,303 | 5.12 | 20,597 | 5.05 | 11,631 | 5.23 | 5,874 | 5.30 | 45,405 | 5.14 | ||||||||||||||||||||||||||||||
Collateralized
mortgage obligations
|
17,174 | 4.19 | 18,310 | 4.74 | - | - | 35,484 | 4.48 | ||||||||||||||||||||||||||||||||
Private
collaterized mortgage obligations
|
- | 5,822 | 6.28 | 2,652 | 5.92 | 12,037 | 5.83 | 20,511 | 5.97 | |||||||||||||||||||||||||||||||
Corporate
bonds
|
5,524 | 4.89 | 6,084 | 5.36 | 500 | 5.30 | - | - | 12,108 | 5.14 | ||||||||||||||||||||||||||||||
Obligations
of states and
|
||||||||||||||||||||||||||||||||||||||||
political
subdivisions
|
1,228 | 7.65 | 6,161 | 5.76 | 29,024 | 6.45 | 16,020 | 6.56 | 52,433 | 6.43 | ||||||||||||||||||||||||||||||
Other
equity securities
|
- | - | - | 3,000 | 4.70 | 3,000 | 4.70 | |||||||||||||||||||||||||||||||||
Total
securities
|
35,736 | 4.62 | 67,189 | 5.10 | 76,023 | 5.69 | 36,931 | 6.09 | 215,879 | 5.33 |
December
31,
|
||||||||||||||||||||||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||||||||||||||||||||||
$
|
%
|
$
|
%
|
$
|
%
|
$
|
%
|
$
|
%
|
|||||||||||||||||||||||||||||||
Real
estate
|
||||||||||||||||||||||||||||||||||||||||
Residential
(a)
|
163,076 | 39.6 | 150,996 | 39.2 | 148,828 | 40.6 | 135,381 | 41.1 | 124,175 | 41.0 | ||||||||||||||||||||||||||||||
Commercial
|
152,942 | 37.1 | 131,297 | 34.1 | 124,414 | 34.0 | 110,770 | 33.6 | 101,524 | 33.5 | ||||||||||||||||||||||||||||||
Construction
|
13,540 | 3.3 | 16,960 | 4.4 | 10,751 | 2.9 | 5,662 | 1.7 | 8,608 | 2.8 | ||||||||||||||||||||||||||||||
Commercial
|
71,765 | 17.4 | 75,172 | 19.5 | 70,300 | 19.2 | 64,333 | 19.5 | 54,568 | 18.0 | ||||||||||||||||||||||||||||||
Consumer
|
10,887 | 2.6 | 10,896 | 2.8 | 12,091 | 3.3 | 13,253 | 4.0 | 13,934 | 4.6 | ||||||||||||||||||||||||||||||
412,210 | 100.0 | 385,321 | 100.0 | 366,384 | 100.0 | 329,399 | 100.0 | 302,809 | 100.0 | |||||||||||||||||||||||||||||||
Less:
|
||||||||||||||||||||||||||||||||||||||||
Deferred
loan fees, net
|
256 | 322 | 407 | 633 | 827 | |||||||||||||||||||||||||||||||||||
Allowance
for loan losses
|
4,203 | 3,682 | 3,244 | 2,795 | 2,764 | |||||||||||||||||||||||||||||||||||
Total
net loans
|
407,751 | 381,317 | 362,733 | 325,971 | 299,218 |
(a)
|
Residential
real estate loans do not include mortgage loans sold to Fannie Mae and
service by ENB. These loans totaled $11,058,000 as of December
31, 2008, $9,975,000 as of December 31, 2007, $9,358,000 as of December
31, 2006, and $5,412,000 as of December 31, 2005. There were no loans sold
and serviced as of December 31,
2004.
|
Due
in One Year or Less
|
Due
After One Year Through Five Years
|
Due
After Five Years
|
Total
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Real
estate (a)
|
||||||||||||||||
Residential
|
11,120 | 13,241 | 138,715 | 163,076 | ||||||||||||
Commercial
|
16,320 | 5,271 | 131,351 | 152,942 | ||||||||||||
Construction
|
5,953 | 3,943 | 3,644 | 13,540 | ||||||||||||
Commercial
|
21,962 | 21,610 | 28,193 | 71,765 | ||||||||||||
Consumer
|
2,752 | 7,991 | 144 | 10,887 | ||||||||||||
Total
amount due
|
58,107 | 52,056 | 302,047 | 412,210 |
Floating
or
|
||||||||
Fixed
Rates
|
Adjustable
Rates
|
|||||||
$
|
$
|
|||||||
Real
estate
|
||||||||
Residential
|
137,588 | 14,368 | ||||||
Commercial
|
9,386 | 127,236 | ||||||
Construction
|
287 | 7,301 | ||||||
Commercial
|
48,567 | 1,235 | ||||||
Consumer
|
8,135 | - | ||||||
Total
amount due
|
203,963 | 150,140 |
·
|
Non-accrual
loans
|
·
|
Loans
past due 90 days or more and still
accruing
|
·
|
Troubled
debt restructurings
|
·
|
Other
real estate owned
|
December
31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Non-accrual
loans
|
1,248 | 425 | 548 | 544 | 757 | |||||||||||||||
Loans
past due 90 days or more and still accruing
|
531 | 498 | 342 | 53 | 42 | |||||||||||||||
Troubled
debt restructurings
|
1,641 | - | - | - | - | |||||||||||||||
Total
non-performing loans
|
3,420 | 923 | 890 | 597 | 799 | |||||||||||||||
Other
real estate owned
|
520 | 675 | 698 | - | - | |||||||||||||||
Total
non-performing assets
|
3,940 | 1,598 | 1,588 | 597 | 799 | |||||||||||||||
Non-performing
assets to net loans
|
0.97 | % | 0.42 | % | 0.44 | % | 0.18 | % | 0.27 | % |
·
|
Charge
off of loans considered not
recoverable
|
·
|
Recovery
of loans previously charged off
|
·
|
Provision
for loan loss
|
ALLOWANCE
FOR LOAN LOSSES
|
(DOLLARS
IN THOUSANDS)
|
December
31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Balance
at January 1,
|
3,682 | 3,244 | 2,795 | 2,764 | 2,397 | |||||||||||||||
Loans
charged off:
|
||||||||||||||||||||
Real
estate
|
- | - | 419 | - | - | |||||||||||||||
Commercial
and industrial
|
150 | 925 | 372 | 79 | 43 | |||||||||||||||
Consumer
|
91 | 153 | 111 | 171 | 154 | |||||||||||||||
241 | 1,078 | 902 | 250 | 197 | ||||||||||||||||
Recoveries
of loans previously charged off:
|
||||||||||||||||||||
Real
estate
|
- | - | - | - | - | |||||||||||||||
Commercial
and industrial
|
69 | 19 | 11 | 13 | 1 | |||||||||||||||
Consumer
|
24 | 51 | 64 | 47 | 23 | |||||||||||||||
93 | 70 | 75 | 60 | 24 | ||||||||||||||||
Net
loans charged off
|
148 | 1,008 | 827 | 190 | 173 | |||||||||||||||
Provision
charged to operating expense
|
669 | 1,446 | 1,276 | 390 | 540 | |||||||||||||||
Allowance
reclassified to other liabilities for off-balance sheet
commitments
|
- | - | - | (169 | ) | - | ||||||||||||||
Balance
at December 31,
|
4,203 | 3,682 | 3,244 | 2,795 | 2,764 | |||||||||||||||
Net
charge-offs as a %of average total loans outstanding
|
0.04 | 0.27 | 0.24 | 0.06 | 0.06 | |||||||||||||||
Allowance
at year end as a % of total loans
|
1.02 | 0.96 | 0.89 | 0.85 | 0.92 |
December
31,
|
||||||||||||||||||||||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||||||||||||||||||||||
%
of
|
%
of
|
%
of
|
%
of
|
%
of
|
||||||||||||||||||||||||||||||||||||
$
|
Loans
|
$
|
Loans
|
$
|
Loans
|
$
|
Loans
|
$
|
Loans
|
|||||||||||||||||||||||||||||||
Real
estate
|
2,293 | 80.0 | 1,558 | 77.7 | 1,654 | 77.5 | 1,327 | 76.5 | 1,162 | 77.4 | ||||||||||||||||||||||||||||||
Commercial
and industial
|
1,727 | 17.4 | 1,768 | 19.5 | 1,291 | 19.2 | 968 | 19.5 | 1,157 | 18.0 | ||||||||||||||||||||||||||||||
Consumer
|
155 | 2.6 | 166 | 2.8 | 299 | 3.3 | 236 | 4.0 | 246 | 4.6 | ||||||||||||||||||||||||||||||
Unallocated
|
28 | - | 190 | - | 0 | - | 264 | - | 199 | - | ||||||||||||||||||||||||||||||
Total
allowance for loan losses
|
4,203 | 100.0 | 3,682 | 100.0 | 3,244 | 100.0 | 2,795 | 100.0 | 2,764 | 100.0 |
December
31,
|
||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||
$
|
%
|
$
|
%
|
$
|
%
|
|||||||||||||||||||
Non-interest
bearing demand deposits
|
106,029 | - | 98,228 | - | 94,005 | - | ||||||||||||||||||
NOW
accounts
|
60,098 | 1.23 | 54,960 | 1.62 | 50,966 | 1.75 | ||||||||||||||||||
Money
market deposit accounts
|
39,516 | 1.25 | 41,001 | 2.06 | 43,008 | 2.36 | ||||||||||||||||||
Savings
deposits
|
72,049 | 0.42 | 68,956 | 0.55 | 69,679 | 0.66 | ||||||||||||||||||
Time
deposits
|
219,769 | 4.07 | 204,947 | 4.38 | 196,718 | 3.90 | ||||||||||||||||||
Total
deposits
|
497,461 | 468,092 | 454,376 |
|
·
|
Convenience
and service provided
|
|
·
|
Fees
|
|
·
|
Permanence
of the institution
|
|
·
|
Possible
risks associated with other investment
opportunities
|
|
·
|
Current
rates paid on deposits compared to competitor
rates
|
December
31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
$
|
$
|
$
|
||||||||||
Three
months or less
|
14,545 | 5,281 | 3,613 | |||||||||
Over
three months through six months
|
2,998 | 3,756 | 10,575 | |||||||||
Over
six months through twelve months
|
17,905 | 13,337 | 8,469 | |||||||||
Over
twelve months
|
20,583 | 16,759 | 13,691 | |||||||||
Total
|
56,031 | 39,133 | 36,348 |
Regulatory
Capital Ratios
|
Capital
Ratios
|
Regulatory
Requirements
|
||||||||||||||||||
As
of Dec. 31, 2008
|
As
of Dec. 31, 2007
|
As
of Dec. 31, 2006
|
Adequately
Capitalized
|
Well
Capitalized
|
||||||||||||||||
Total
Capital to Risk-Weighted Assets
|
16.2 | % | 16.6 | % | 17.4 | % | 8.0 | % | 10.0 | % | ||||||||||
Tier
I Capital to Risk-Weighted Assets
|
15.2 | % | 15.8 | % | 16.6 | % | 4.0 | % | 6.0 | % | ||||||||||
Tier
I Capital to Average Assets
|
10.1 | % | 10.9 | % | 11.1 | % | 4.0 | % | 5.0 | % |
Total
|
Less
than 1 year
|
1-3
years
|
4-5
years
|
More
than 5 years
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Time
deposits (Note E)
|
230,949 | 135,813 | 75,178 | 19,958 | 0 | |||||||||||||||
Borrowings
(Notes F and G)
|
97,000 | 20,000 | 37,000 | 17,500 | 22,500 | |||||||||||||||
Total
contractual obligations
|
327,949 | 155,813 | 112,178 | 37,458 | 22,500 |
OFF-BALANCE SHEET ARRANGEMENTS | ||||
(DOLLARS IN THOUSANDS) | ||||
December
31,
|
||||
2008
|
||||
$
|
||||
Commitments
to extend credit:
|
||||
Revolving
home equity
|
14,651 | |||
Construction
loans
|
11,095 | |||
Real
estate loans
|
5,019 | |||
Business
loans
|
45,950 | |||
Consumer
loans
|
3,008 | |||
Other
|
3,530 | |||
Standby
letters of credit
|
14,448 | |||
Total
|
97,701 |
·
|
Credit
risk
|
·
|
Liquidity
risk
|
·
|
Interest
rate risk
|
·
|
Fair
value risk
|
·
|
Deposits
|
·
|
Loan
repayments
|
·
|
Maturities
and sales of securities
|
·
|
Borrowings
from correspondent and member banks
|
·
|
Repurchase
agreements
|
·
|
Brokered
Deposits
|
·
|
Current
earnings
|
Maturity
Gap
|
Less
than 6 months
|
More
than 6 months to 1 year
|
More
than 1 year to 3 years
|
More
than 3 years to 5 years
|
More
than 5 years
|
|||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Assets
maturing
|
57,802 | 50,502 | 162,125 | 92,286 | 214,538 | |||||||||||||||
Liabilities
maturing
|
105,939 | 82,733 | 146,181 | 92,143 | 158,807 | |||||||||||||||
Maturity
gap
|
(48,137 | ) | (32,231 | ) | 15,944 | 143 | 55,731 | |||||||||||||
Cumulative
maturity gap
|
(48,137 | ) | (80,368 | ) | (64,424 | ) | (64,281 | ) | (8,550 | ) | ||||||||||
Maturity
gap %
|
54.6 | % | 61.0 | % | 110.9 | % | 100.2 | % | 135.1 | % | ||||||||||
Cumulative
maturity gap %
|
54.6 | % | 57.4 | % | 80.8 | % | 84.9 | % | 98.5 | % | ||||||||||
Cumulative
maturity gap % guideline
|
45%
to 155
|
% |
60%
to 140
|
% |
75%
to 125
|
% |
85%
to 115
|
% |
·
|
Changes
in net portfolio value
|
·
|
Changes
in net interest income
|
·
|
Projected
interest rates
|
·
|
Timing
of interest rate changes
|
·
|
Prepayment
speeds loans held and mortgage backed
securities
|
·
|
Anticipated
calls on securities with call
options
|
·
|
Deposit
and loan balance fluctuations
|
·
|
Economic
conditions
|
·
|
Consumer
reaction to interest rate changes
|
2008
Percentage
|
2007
Percentage
|
Policy
Guidelines
|
||||||||||
Change
|
Change
|
%
|
||||||||||
300
basis point rise
|
13.7 | 4.0 | (37.5 | ) | ||||||||
200
basis point rise
|
12.8 | 3.9 | (25.0 | ) | ||||||||
100
basis point rise
|
7.8 | 2.7 | (12.5 | ) | ||||||||
Base
rate scenario
|
- | - | - | |||||||||
100
basis point decline
|
0.4 | (4.3 | ) | (12.5 | ) | |||||||
200
basis point decline
|
(0.9 | ) | (9.0 | ) | (25.0 | ) | ||||||
300
basis point decline
|
(0.5 | ) | (14.6 | ) | (37.5 | ) |
2008
|
2007
|
Policy
|
||||||||||
Percentage
|
Percentage
|
Guidelines
|
||||||||||
Change
|
Change
|
%
|
||||||||||
300
basis point rise
|
1.6 | (0.5 | ) | (15.0 | ) | |||||||
200
basis point rise
|
(0.1 | ) | (0.8 | ) | (10.0 | ) | ||||||
100
basis point rise
|
(1.0 | ) | (0.5 | ) | (5.0 | ) | ||||||
Base
rate scenario
|
- | - | - | |||||||||
100
basis point decline
|
(1.1 | ) | 0.3 | (5.0 | ) | |||||||
200
basis point decline
|
(8.4 | ) | 0.1 | (10.0 | ) | |||||||
300
basis point decline
|
(16.1 | ) | (0.3 | ) | (15.0 | ) | ||||||
This
table shows the effect of an immediate interest rate shock, over a
one-year period on the Corporaton's net interest income. Base
rate is the Prime rate.
|
Item 8.
|
Financial
Statements and Supplementary Data
|
Index to Financial Statements and Supplementary
Data
|
Page
|
Report
of Independent Registered Public Accounting Firm
|
61
|
Balance
Sheets
|
62
|
Statements
of Income
|
63
|
Statements
of Stockholders’ Equity
|
64
|
Statements
of Cash Flows
|
65
|
Notes
to Financial Statements
|
66
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
$
|
$
|
|||||||
ASSETS
|
||||||||
Cash
and due from banks
|
19,286 | 17,201 | ||||||
Interest-bearing
deposits in other banks
|
106 | 96 | ||||||
Total
cash and cash equivalents
|
19,392 | 17,297 | ||||||
Securities
available for sale (at fair value)
|
214,421 | 192,960 | ||||||
Loans
held for sale
|
245 | 365 | ||||||
Loans
|
411,954 | 384,999 | ||||||
Less: Allowance
for loan losses
|
4,203 | 3,682 | ||||||
Net
loans
|
407,751 | 381,317 | ||||||
Premises
and equipment
|
19,913 | 17,810 | ||||||
Regulatory
stock
|
4,915 | 4,111 | ||||||
Bank-owned
life insurance
|
14,512 | 13,871 | ||||||
Other
assets
|
7,274 | 6,031 | ||||||
Total
assets
|
688,423 | 633,762 | ||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Liabilities:
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing
|
114,262 | 107,839 | ||||||
Interest-bearing
|
396,850 | 370,887 | ||||||
Total
deposits
|
511,112 | 478,726 | ||||||
Short-term
borrowings
|
11,800 | 100 | ||||||
Long-term
debt
|
92,000 | 82,000 | ||||||
Other
liabilities
|
5,466 | 4,114 | ||||||
Total
liabilities
|
620,378 | 564,940 | ||||||
Stockholders'
equity:
|
||||||||
Common
stock, par value $0.20
|
||||||||
Shares: Authorized
12,000,000, Issued 2,869,557, Outstanding 2,844,195 (Issued
3,000,000, Outstanding 2,861,854 as of
12-31-07)
|
574 | 600 | ||||||
Capital
surplus
|
4,457 | 4,502 | ||||||
Undivided
profits
|
64,629 | 68,158 | ||||||
Accumulated
other comprehensive loss, net of tax
|
(963 | ) | (181 | ) | ||||
Less: Treasury
stock shares at cost 25,362 (138,146 as of
12-31-07)
|
(652 | ) | (4,257 | ) | ||||
Total
stockholders' equity
|
68,045 | 68,822 | ||||||
Total
liabilities and stockholders' equity
|
688,423 | 633,762 |
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
$
|
$
|
$
|
||||||||||
Interest
and dividend income:
|
||||||||||||
Interest
and fees on loans
|
23,675 | 24,648 | 22,470 | |||||||||
Interest
on securities available for sale:
|
||||||||||||
Taxable
|
8,346 | 5,825 | 5,794 | |||||||||
Tax-Exempt
|
2,361 | 2,700 | 2,924 | |||||||||
Interest
on federal funds sold
|
28 | 221 | 41 | |||||||||
Interest
on deposits at other banks
|
5 | 13 | 14 | |||||||||
Dividend
income
|
310 | 377 | 324 | |||||||||
Total
interest and dividend income
|
34,725 | 33,784 | 31,567 | |||||||||
Interest
expense:
|
||||||||||||
Interest
on deposits
|
10,470 | 11,080 | 10,033 | |||||||||
Interest
on short-term borrowings
|
73 | 60 | 227 | |||||||||
Interest
on long-term debt
|
4,055 | 3,552 | 2,644 | |||||||||
Total
interest expense
|
14,598 | 14,692 | 12,904 | |||||||||
Net
interest income
|
20,127 | 19,092 | 18,663 | |||||||||
Provision
for loan losses
|
669 | 1,446 | 1,276 | |||||||||
Net
interest income after provision for loan losses
|
19,458 | 17,646 | 17,387 | |||||||||
Other
income:
|
||||||||||||
Trust
and investment services income
|
971 | 952 | 777 | |||||||||
Service
fees
|
2,061 | 1,692 | 1,797 | |||||||||
Commissions
|
1,328 | 1,124 | 991 | |||||||||
Gains/(losses)
on securities transactions, net
|
(506 | ) | 157 | (870 | ) | |||||||
Gains
on sale of mortgages
|
123 | 118 | 197 | |||||||||
Earnings
on bank owned life insurance
|
632 | 469 | 253 | |||||||||
Other
|
298 | 289 | 257 | |||||||||
Total
other income
|
4,907 | 4,801 | 3,402 | |||||||||
Operating
expenses:
|
||||||||||||
Salaries
and employee benefits
|
11,892 | 9,693 | 8,600 | |||||||||
Occupancy
|
1,242 | 1,146 | 1,025 | |||||||||
Equipment
|
957 | 899 | 891 | |||||||||
Advertising
& marketing
|
411 | 415 | 423 | |||||||||
Computer
software & data processing
|
1,508 | 1,383 | 1,330 | |||||||||
Shares
tax
|
721 | 449 | 432 | |||||||||
Outside
services
|
1,643 | 968 | 928 | |||||||||
Other
|
2,094 | 1,878 | 1,671 | |||||||||
Total
operating expenses
|
20,468 | 16,831 | 15,300 | |||||||||
Income
before income taxes
|
3,897 | 5,616 | 5,489 | |||||||||
Provision(Benefit)
for federal income taxes
|
(117 | ) | 553 | 718 | ||||||||
Net
income
|
4,014 | 5,063 | 4,771 | |||||||||
Earnings
per share of common stock
|
1.40 | 1.77 | 1.67 | |||||||||
Cash
dividends paid per share
|
1.24 | 1.21 | 1.17 | |||||||||
Weighted
average number of shares outstanding
|
2,860,856 | 2,854,400 | 2,850,657 |
STATEMENTS
OF STOCKHOLDERS' EQUITY
|
(DOLLARS
IN THOUSANDS, EXCEPT SHARE AND PER SHARE
DATA)
|
Common
Stock
|
Capital
Surplus
|
Undivided
Profits
|
Accumulated
Other Comprehensive Income (Loss)
|
Treasury
Stock
|
Total
Stockholders' Equity
|
|||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||
Balances,
December 31, 2005
|
600 | 4,451 | 65,113 | (2,468 | ) | (3,634 | ) | 64,062 | ||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Net
income
|
- | - | 4,771 | - | - | 4,771 | ||||||||||||||||||
Unrealized
holding gains on securities available for sale arising during the year,
net of tax $419
|
- | - | - | 813 | - | 813 | ||||||||||||||||||
Reclassification
adjustment for losses included in net income, net of tax
$296
|
- | - | - | 574 | - | 574 | ||||||||||||||||||
Total
comprehensive income
|
6,158 | |||||||||||||||||||||||
Treasury
stock purchased - 37,605 shares
|
- | - | - | - | (1,366 | ) | (1,366 | ) | ||||||||||||||||
Treasury
stock issued - 12,382 shares
|
- | 59 | - | - | 380 | 439 | ||||||||||||||||||
Cash
dividends paid, $1.17 per share
|
- | - | (3,336 | ) | - | - | (3,336 | ) | ||||||||||||||||
Balances,
December 31, 2006
|
600 | 4,510 | 66,548 | (1,081 | ) | (4,620 | ) | 65,957 | ||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Net
income
|
- | - | 5,063 | - | - | 5,063 | ||||||||||||||||||
Unrealized
holding gains on securities available for sale arising during the year,
net of tax $517
|
- | - | - | 1,004 | - | 1,004 | ||||||||||||||||||
Reclassification
adjustment for gains included in net income, net of tax
($53)
|
- | - | - | (104 | ) | - | (104 | ) | ||||||||||||||||
Total
comprehensive income
|
5,963 | |||||||||||||||||||||||
Treasury
stock issued - 11,789 shares
|
- | (8 | ) | - | - | 363 | 355 | |||||||||||||||||
Cash
dividends paid, $1.21 per share
|
- | - | (3,453 | ) | - | - | (3,453 | ) | ||||||||||||||||
Balances,
December 31, 2007
|
600 | 4,502 | 68,158 | (181 | ) | (4,257 | ) | 68,822 | ||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Net
income
|
- | - | 4,014 | - | - | 4,014 | ||||||||||||||||||
Unrealized
holding losses on securities available for sale arising during the year,
net of tax ($575)
|
- | - | - | (1,116 | ) | - | (1,116 | ) | ||||||||||||||||
Reclassification
adjustment for losses included in net income, net of tax
$172
|
- | - | - | 334 | - | 334 | ||||||||||||||||||
Total
comprehensive income
|
3,232 | |||||||||||||||||||||||
Treasury
stock retired - 130,443 shares
|
(26 | ) | - | (3,994 | ) | - | 4,020 | - | ||||||||||||||||
Treasury
stock purchased - 32,400 shares
|
- | - | - | - | (833 | ) | (833 | ) | ||||||||||||||||
Treasury
stock issued - 7,038 shares
|
- | (45 | ) | - | - | 418 | 373 | |||||||||||||||||
Cash
dividends paid, $1.24 per share
|
- | - | (3,549 | ) | - | - | (3,549 | ) | ||||||||||||||||
Balances,
December 31, 2008
|
574 | 4,457 | 64,629 | (963 | ) | (652 | ) | 68,045 |
STATEMENTS
OF CASH FLOWS
|
(DOLLARS
IN THOUSANDS)
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
$
|
$
|
$
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
4,014 | 5,063 | 4,771 | |||||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Net
amortization of securities and loan fees
|
332 | 491 | 493 | |||||||||
(Increase)
decrease in interest receivable
|
28 | 167 | (414 | ) | ||||||||
Increase
in interest payable
|
36 | 102 | 457 | |||||||||
Provision
for loan losses
|
669 | 1,446 | 1,276 | |||||||||
(Gains)
losses on securities transactions, net
|
506 | (157 | ) | 870 | ||||||||
Gains
on sale of mortgages
|
(123 | ) | (118 | ) | (197 | ) | ||||||
Loans
originated for sale
|
(2,100 | ) | (1,387 | ) | (4,261 | ) | ||||||
Proceeds
from sales of loans
|
2,343 | 1,664 | 4,612 | |||||||||
Earnings
on bank owned life insurance
|
(632 | ) | (469 | ) | (253 | ) | ||||||
Depreciation
of premises and equipment and amortization of software
|
1,261 | 1,137 | 1,116 | |||||||||
Deferred
income tax
|
(857 | ) | (396 | ) | (594 | ) | ||||||
Other
assets and other liabilities, net
|
1,453 | (340 | ) | 393 | ||||||||
Net
cash provided by operating activities
|
6,930 | 7,203 | 8,269 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Securities
available for sale:
|
||||||||||||
Proceeds
from maturities, calls, and repayments
|
50,623 | 27,778 | 26,159 | |||||||||
Proceeds
from sales
|
52,970 | 10,279 | 19,120 | |||||||||
Purchases
|
(127,127 | ) | (38,490 | ) | (29,930 | ) | ||||||
Proceeds
from sale of other real estate owned
|
150 | - | - | |||||||||
Purchase
of regulatory bank stock
|
(815 | ) | (664 | ) | (1,281 | ) | ||||||
Redemptions
of regulatory bank stock
|
11 | 670 | 811 | |||||||||
Purchase
of BOLI
|
(9 | ) | (5,111 | ) | (5,128 | ) | ||||||
Net
increase in loans
|
(27,053 | ) | (20,044 | ) | (38,618 | ) | ||||||
Purchases
of premises and equipment
|
(3,206 | ) | (1,971 | ) | (3,036 | ) | ||||||
Purchase
of computer software
|
(456 | ) | (89 | ) | (39 | ) | ||||||
Net
cash used in investing activities
|
(54,912 | ) | (27,642 | ) | (31,942 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Net
increase (decrease) in demand, NOW, and savings accounts
|
4,161 | 15,886 | (10,738 | ) | ||||||||
Net
increase (decrease) in time deposits
|
28,225 | (6,419 | ) | 31,211 | ||||||||
Net
increase (decrease) in short term borrowings
|
11,700 | (1,100 | ) | (200 | ) | |||||||
Proceeds
from long-term debt
|
20,000 | 34,000 | 14,000 | |||||||||
Repayments
of long-term debt
|
(10,000 | ) | (18,000 | ) | (7,500 | ) | ||||||
Dividends
paid
|
(3,549 | ) | (3,453 | ) | (3,336 | ) | ||||||
Treasury
stock sold
|
373 | 355 | 439 | |||||||||
Treasury
stock purchased
|
(833 | ) | - | (1,366 | ) | |||||||
Net
cash provided by financing activities
|
50,077 | 21,269 | 22,510 | |||||||||
Net
increase (decrease) in cash and cash equivalents
|
2,095 | 830 | (1,163 | ) | ||||||||
Cash
and cash equivalents at beginning of period
|
17,297 | 16,467 | 17,630 | |||||||||
Cash
and cash equivalents at end of period
|
19,392 | 17,297 | 16,467 | |||||||||
Supplemental
disclosures of cash flow information:
|
||||||||||||
Interest
paid
|
14,562 | 14,590 | 12,447 | |||||||||
Income
taxes paid
|
1,050 | 950 | 1,175 | |||||||||
Supplemental
disclosure of non-cash investing and financing activities:
|
||||||||||||
Net
transfer of other real estate owned held for sale from
loans
|
- | 93 | 698 |
|
·
|
period
of time the security has had unrealized
losses,
|
|
·
|
percentage
of unrealized loss,
|
|
·
|
the
ability and intent of management to hold the security until
maturity,
|
|
·
|
type
of security, and
|
|
·
|
market
dynamics impacting the market and liquidity of the
security.
|
Amortized
Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Fair
Value
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
December
31, 2008
|
||||||||||||||||
U.S.
treasuries & government agencies
|
46,938 | 447 | (321 | ) | 47,064 | |||||||||||
Mortgage-backed
securities
|
45,405 | 761 | (73 | ) | 46,093 | |||||||||||
Collateralized
mortgage obligations
|
35,484 | 566 | (1 | ) | 36,049 | |||||||||||
Private
label collateralized mortgage obligations
|
20,511 | - | (2,217 | ) | 18,294 | |||||||||||
Corporate
bonds
|
12,108 | 83 | (554 | ) | 11,637 | |||||||||||
Obligations
of states and political subdivisions
|
52,433 | 874 | (786 | ) | 52,521 | |||||||||||
Total
debt securities
|
212,879 | 2,731 | (3,952 | ) | 211,658 | |||||||||||
Marketable
equity securities
|
3,000 | - | (237 | ) | 2,763 | |||||||||||
Total
securities available for sale
|
215,879 | 2,731 | (4,189 | ) | 214,421 | |||||||||||
December
31, 2007
|
||||||||||||||||
U.S.
treasuries & government agencies
|
47,739 | 34 | (174 | ) | 47,599 | |||||||||||
Mortgage-backed
securities
|
33,367 | 86 | (356 | ) | 33,097 | |||||||||||
Collateralized
mortgage obligations
|
36,654 | 261 | (82 | ) | 36,833 | |||||||||||
Corporate
bonds
|
11,637 | 26 | (156 | ) | 11,507 | |||||||||||
Obligations
of states and political subdivisions
|
59,790 | 1,046 | (414 | ) | 60,422 | |||||||||||
Total
debt securities
|
189,187 | 1,453 | (1,182 | ) | 189,458 | |||||||||||
Marketable
equity securities
|
4,047 | - | (545 | ) | 3,502 | |||||||||||
Total
securities available for sale
|
193,234 | 1,453 | (1,727 | ) | 192,960 |
Amortized
|
||||||||
Cost
|
Fair
Value
|
|||||||
$
|
$
|
|||||||
Due
in one year or less
|
35,736 | 35,812 | ||||||
Due
after one year through five years
|
67,188 | 66,934 | ||||||
Due
after five years through ten years
|
76,023 | 76,216 | ||||||
Due
after ten years
|
33,932 | 32,696 | ||||||
Total
debt securities
|
212,879 | 211,658 |
Securities
Available for Sale
|
|||||||||
2008
|
2007
|
2006
|
|||||||
$
|
$
|
$
|
|||||||
Proceeds
from sales
|
52,970 | 10,279 | 19,120 | ||||||
Gross
realized gains
|
792 | 179 | 89 | ||||||
Gross
realized losses
|
1,298 | 22 | 959 |
Less
than 12 months
|
More
than 12 months
|
Total
|
||||||||||||||||||||||
Fair
Value
|
Gross
Unrealized Losses
|
Fair
Value
|
Gross
Unrealized Losses
|
Fair
Value
|
Gross
Unrealized Losses
|
|||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||
As
of December 31, 2008
|
||||||||||||||||||||||||
U.S.
treasuries & government agencies
|
21,531 | 295 | 1,813 | 26 | 23,344 | 321 | ||||||||||||||||||
Mortgage-backed
securities
|
2,527 | 10 | 3,971 | 63 | 6,498 | 73 | ||||||||||||||||||
Collateralized
mortgage obligations
|
215 | - | 495 | 1 | 710 | 1 | ||||||||||||||||||
Private
label collateralized mortgage obligations
|
18,294 | 2,217 | - | - | 18,294 | 2,217 | ||||||||||||||||||
Corporate
bonds
|
7,491 | 554 | - | - | 7,491 | 554 | ||||||||||||||||||
Obligations
of state and political subdivisions
|
9,628 | 380 | 6,901 | 406 | 16,529 | 786 | ||||||||||||||||||
Total
debt securities
|
59,686 | 3,456 | 13,180 | 496 | 72,866 | 3,952 | ||||||||||||||||||
Marketable
equity securities
|
- | - | 2,763 | 237 | 2,763 | 237 | ||||||||||||||||||
Total
temporary impaired securities
|
59,686 | 3,456 | 15,943 | 733 | 75,629 | 4,189 | ||||||||||||||||||
As
of December 31, 2007
|
||||||||||||||||||||||||
U.S.
treasuries & government agencies
|
8,321 | 15 | 21,221 | 159 | 29,542 | 174 | ||||||||||||||||||
Mortgage-backed
securities
|
- | - | 22,059 | 356 | 22,059 | 356 | ||||||||||||||||||
Collateralized
mortgage obligations
|
705 | 1 | 9,836 | 81 | 10,541 | 82 | ||||||||||||||||||
Corporate
bonds
|
1,038 | 4 | 8,444 | 152 | 9,482 | 156 | ||||||||||||||||||
Obligations
of state and political subdivisions
|
5,295 | 120 | 14,736 | 294 | 20,031 | 414 | ||||||||||||||||||
Total
debt securities
|
15,359 | 140 | 76,296 | 1,042 | 91,655 | 1,182 | ||||||||||||||||||
Marketable
equity securities
|
680 | 367 | 2,822 | 178 | 3,502 | 545 | ||||||||||||||||||
Total
temporary impaired securities
|
16,039 | 507 | 79,118 | 1,220 | 95,157 | 1,727 |
LOAN
SUMMARY
|
(DOLLARS
IN THOUSANDS)
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Real
estate (a)
|
||||||||
Residential
|
163,076 | 150,996 | ||||||
Commercial
|
152,942 | 131,297 | ||||||
Construction
|
13,540 | 16,960 | ||||||
Commercial
|
71,765 | 75,172 | ||||||
Consumer
|
10,887 | 10,896 | ||||||
412,210 | 385,321 | |||||||
Less:
|
||||||||
Deferred
loan fees, net
|
256 | 322 | ||||||
Allowance
for loan losses
|
4,203 | 3,682 | ||||||
Total
net loans (b)
|
407,751 | 381,317 |
(a)
|
Real
estate loans serviced for Fannie Mae, which are not included in the
Balance Sheets, totaled $11,058,000 and $9,975,000 as of December 31,
2008, and 2007 respectively.
|
(b)
|
Included
in total loans are $101,000 and $541,000 of loans in process as of
December 31, 2008, and 2007,
respectively.
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
$
|
$
|
$
|
||||||||||
Balance
at January 1
|
3,682 | 3,244 | 2,795 | |||||||||
Amounts
charged off
|
(241 | ) | (1,078 | ) | (902 | ) | ||||||
Recoveries
of amounts previously charged off
|
93 | 70 | 75 | |||||||||
Balance
before current year provision
|
3,534 | 2,236 | 1,968 | |||||||||
Provision
charged to operating expense
|
669 | 1,446 | 1,276 | |||||||||
Balance
at December 31
|
4,203 | 3,682 | 3,244 |
IMPAIRED
LOANS
|
2008
|
2007
|
2006
|
|||||||||
(DOLLARS
IN THOUSANDS)
|
$
|
$
|
$
|
|||||||||
Impaired
loans
|
||||||||||||
Loan
Balances without a related allowance for loan losses
|
- | - | - | |||||||||
Loan
Balances with a related allowance for loan losses
|
2,889 | 425 | 548 | |||||||||
Related
allowance for loan losses
|
455 | 220 | 38 | |||||||||
Average
recorded balance of impaired loans
|
154 | 425 | 548 | |||||||||
Interest
income recognized on impaired loans
|
8 | 32 | 44 |
December
31,
|
||||||||
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Land
|
3,017 | 3,017 | ||||||
Buildings
and improvements
|
19,533 | 17,284 | ||||||
Furniture
and equipment
|
8,654 | 7,486 | ||||||
Construction
in process
|
97 | 319 | ||||||
Total
|
31,301 | 28,106 | ||||||
Less
accumulated depreciation
|
11,388 | 10,296 | ||||||
Premises
and equipment
|
19,913 | 17,810 |
December
31,
|
||||||||
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Noninterest-bearing
demand
|
114,262 | 107,839 | ||||||
NOW
accounts
|
51,617 | 61,345 | ||||||
Money
market deposit accounts
|
42,074 | 39,474 | ||||||
Savings
accounts
|
72,210 | 67,344 | ||||||
Time
deposits under $100,000
|
174,918 | 163,591 | ||||||
Time
deposits of $100,000 or more
|
56,031 | 39,133 | ||||||
Total
deposits
|
511,112 | 478,726 |
2009
|
135,813 | |||
2010
|
42,500 | |||
2011
|
32,678 | |||
2012
|
10,061 | |||
2013
|
9,897 | |||
230,949 |
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Total
short-term borrowings outstanding at year end
|
11,800 | 100 | ||||||
Average
interest rate at year end
|
0.56 | % | 4.00 | % | ||||
Maximum
outstanding at any month-end
|
12,743 | 15,500 | ||||||
Average
amount outstanding for the year
|
3,926 | 1,157 | ||||||
Weighted
average interest rate for the year
|
1.86 | % | 5.19 | % |
At
December 31, 2008
|
At
December 31, 2007
|
|||||||||||||||
Amount
|
Weighted
Average Rate
|
Amount
|
Weighted
Average Rate
|
|||||||||||||
$
|
%
|
$
|
%
|
|||||||||||||
FHLB
fixed rate loans
|
||||||||||||||||
2008
|
- | - | 5,000 | 5.23 | ||||||||||||
2009
|
15,000 | 4.51 | 15,000 | 4.51 | ||||||||||||
2010
|
12,500 | 4.14 | 10,000 | 4.42 | ||||||||||||
2011
|
9,500 | 3.83 | 4,500 | 4.61 | ||||||||||||
2012
|
5,000 | 4.13 | 2,500 | 4.80 | ||||||||||||
FHLB
convertible loans
|
||||||||||||||||
2008
|
- | - | 5,000 | 3.16 | ||||||||||||
2011
|
5,000 | 4.79 | 5,000 | 4.79 | ||||||||||||
2012
|
7,500 | 4.62 | 7,500 | 4.30 | ||||||||||||
2013
and after
|
7,500 | 4.35 | 7,500 | 4.33 | ||||||||||||
Repurchase
agreements
|
||||||||||||||||
2010
|
5,000 | 3.15 | - | - | ||||||||||||
2011
|
5,000 | 4.64 | 5,000 | 4.64 | ||||||||||||
2012
|
5,000 | 4.82 | 5,000 | 4.82 | ||||||||||||
2013
and after
|
15,000 | 3.90 | 10,000 | 4.52 | ||||||||||||
Total
other borrowings
|
92,000 | 4.23 | 82,000 | 4.48 |
Year
Ended December 31,
|
||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||
$
|
%
|
$
|
%
|
$
|
%
|
|||||||||||||||||||
Income
tax at statutory rate
|
1,325 | 34.0 | 1,909 | 34.0 | 1,866 | 34.0 | ||||||||||||||||||
Tax-exempt
interest income
|
(1,213 | ) | (31.1 | ) | (1,317 | ) | (23.5 | ) | (1,301 | ) | (23.7 | ) | ||||||||||||
Non-deductible
interest expense
|
124 | 3.2 | 144 | 2.6 | 129 | 2.4 | ||||||||||||||||||
Bank-owned
life insurance
|
(215 | ) | (5.5 | ) | (160 | ) | (2.9 | ) | (86 | ) | (1.6 | ) | ||||||||||||
Other
|
(138 | ) | (3.6 | ) | (23 | ) | (0.4 | ) | 110 | 2.0 | ||||||||||||||
Income
tax expense
|
(117 | ) | (3.0 | ) | 553 | 9.8 | 718 | 13.1 |
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
$
|
$
|
$
|
||||||||||
Current
tax expense
|
816 | 983 | 1,050 | |||||||||
Deferred
tax benefit
|
(857 | ) | (369 | ) | (594 | ) | ||||||
Valuation
allowance adjustment
|
(76 | ) | (61 | ) | 262 | |||||||
Income
tax expense
|
(117 | ) | 553 | 718 |
December
31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
$
|
$
|
$
|
||||||||||
Deferred
tax assets
|
||||||||||||
Allowance
for loan losses
|
1,429 | 1,252 | 1,009 | |||||||||
Net
unrealized holding losses on securities available for sale
|
496 | 93 | 557 | |||||||||
Deferred
compensation reserve
|
640 | 689 | 739 | |||||||||
Separation
compensation obligation reserve
|
404 | - | - | |||||||||
Unrealized
capital loss
|
- | 76 | 262 | |||||||||
Capital
loss carryforward
|
125 | 125 | - | |||||||||
Tax
credit carryforwards
|
900 | 433 | 124 | |||||||||
Charitable
contribution carryforward
|
89 | 23 | - | |||||||||
Allowance
for off-balance sheet extensions of credit
|
72 | 65 | 85 | |||||||||
Interest
on non-accrual loans
|
19 | 3 | 1 | |||||||||
Other
|
6 | - | - | |||||||||
Total
deferred tax assets
|
4,180 | 2,759 | 2,777 | |||||||||
Valuation
allowance
|
(125 | ) | (201 | ) | (262 | ) | ||||||
Net
deferred taxes
|
4,055 | 2,558 | 2,515 | |||||||||
Deferred
tax liabilities
|
||||||||||||
Premises
and equipment
|
(1,559 | ) | (1,391 | ) | (1,395 | ) | ||||||
Discount
on investment securities
|
(78 | ) | (55 | ) | (25 | ) | ||||||
Other
|
- | (5 | ) | (5 | ) | |||||||
Total
deferred tax liabilities
|
(1,637 | ) | (1,451 | ) | (1,425 | ) | ||||||
Net
deferred tax assets
|
2,418 | 1,107 | 1,090 |
CAPITAL
LEVELS
(DOLLARS
IN THOUSANDS)
|
Actual
|
For
Capital Adequacy Purposes
|
To
Be Well Capitalized Under Prompt Corrective Action
Provision
|
|||||||||||||||||||||
$
|
%
|
$
|
%
|
$
|
%
|
|||||||||||||||||||
As
of December 31, 2008
|
||||||||||||||||||||||||
Total
Capital to Risk-Weighted Assets
|
||||||||||||||||||||||||
Consolidated
|
73,264 | 16.2 | 36,246 | 8.0 | 45,308 | 10.0 | ||||||||||||||||||
Bank
|
72,917 | 16.1 | 36,246 | 8.0 | 45,308 | 10.0 | ||||||||||||||||||
Tier
I Capital to Risk-Weighted Assets
|
||||||||||||||||||||||||
Consolidated
|
68,848 | 15.2 | 18,123 | 4.0 | 27,185 | 6.0 | ||||||||||||||||||
Bank
|
68,501 | 15.1 | 18,123 | 4.0 | 27,185 | 6.0 | ||||||||||||||||||
Tier
I Capital to Average Assets
|
||||||||||||||||||||||||
Consolidated
|
68,848 | 10.1 | 27,227 | 4.0 | 34,034 | 5.0 | ||||||||||||||||||
Bank
|
68,501 | 10.1 | 27,236 | 4.0 | 34,045 | 5.0 | ||||||||||||||||||
As
of December 31, 2007 (Bank Only)
|
||||||||||||||||||||||||
Total
Capital to Risk-Weighted Assets
|
72,508 | 16.6 | 34,858 | 8.0 | 43,573 | 10.0 | ||||||||||||||||||
Tier
I Capital to Risk-Weighted Assets
|
68,636 | 15.8 | 17,429 | 4.0 | 26,144 | 6.0 | ||||||||||||||||||
Tier
I Capital to Average Assets
|
68,636 | 10.9 | 25,192 | 4.0 | 31,490 | 5.0 |
Actual
|
||||
$
|
||||
Balance,
December 31, 2007
|
16,273 | |||
Advances
|
11,131 | |||
Repayments
|
(11,086 | ) | ||
Balance,
December 31, 2008
|
16,318 |
Level
I:
|
Quoted
prices are available in active markets for identical assets or liabilities
as of the reported date.
|
Level
II:
|
Pricing
inputs are other than the quoted prices in active markets, which are
either directly or indirectly observable as of the reported
date. The nature of these assets and liabilities includes items
for which quoted prices are available but traded less frequently and items
that are fair-valued using other financial instruments, the parameters of
which can be directly observed.
|
Level
III:
|
Assets
and liabilities that have little to no observable pricing as of the
reported date. These items do not have two-way markets and are
measured using management’s best estimate of fair value, where the inputs
into the determination of fair value require significant management
judgment or estimation.
|
Dollars
in Thousands
|
December
31, 2008
|
|||||||||||||||
Level
I
|
Level
II
|
Level
III
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Investment
securities
|
||||||||||||||||
available
for sale
|
$ | 2,763 | $ | 208,549 | $ | 3,109 | $ | 214,421 |
Dollars
in Thousands
|
Available-
|
|||
For-Sale
|
||||
Securities
|
||||
Balance,
January 1, 2008,
|
$ | - | ||
Total
gains or losses (realized/unrealized):
|
- | |||
Included
in earnings
|
- | |||
Included
in other comprehensive income
|
- | |||
Purchases,
issuances, and settlements
|
- | |||
Transfers
in and/or out of Level III
|
3,109 | |||
Balance,
December 31, 2008
|
$ | 3,109 |
December
31, 2008
|
||||||||||||||||
Level
I
|
Level
II
|
Level
III
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Impaired
Loans
|
$ | - | $ | 2,444 | $ | - | $ | 2,444 | ||||||||
OREO
|
520 | - | - | 520 | ||||||||||||
Total
|
$ | 520 | $ | 2,444 | $ | - | $ | 2,964 |
December
31,
|
December
31,
|
|||||||||||||||
2008
|
2007
|
|||||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Financial
Assets:
|
||||||||||||||||
Cash
and cash equivalents
|
19,392 | 19,392 | 17,297 | 17,297 | ||||||||||||
Securities
available for sale
|
214,421 | 214,421 | 192,960 | 192,960 | ||||||||||||
Loans
held for sale
|
245 | 245 | 365 | 365 | ||||||||||||
Loans,
net of allowance
|
407,751 | 398,291 | 381,317 | 378,641 | ||||||||||||
Accrued
interest receivable
|
2,794 | 2,794 | 2,822 | 2,822 | ||||||||||||
Bank
owned life insurance
|
14,512 | 14,512 | 13,871 | 13,871 | ||||||||||||
Mortgage
servicing asset
|
33 | 33 | 70 | 70 | ||||||||||||
Financial
Liabilities:
|
||||||||||||||||
Demand
deposits
|
114,262 | 114,262 | 107,839 | 107,839 | ||||||||||||
Interest
demand deposits
|
51,617 | 51,617 | 61,345 | 61,345 | ||||||||||||
Savings
deposits
|
72,210 | 72,210 | 67,344 | 67,344 | ||||||||||||
Money
market deposit accounts
|
42,074 | 42,074 | 39,474 | 39,474 | ||||||||||||
Time
deposits
|
230,949 | 234,725 | 202,724 | 205,392 | ||||||||||||
Total
deposits
|
511,112 | 514,888 | 478,726 | 481,394 | ||||||||||||
Short-term
borrowings
|
11,800 | 11,800 | 100 | 100 | ||||||||||||
Long-term
borrowings
|
92,000 | 98,251 | 82,000 | 84,664 | ||||||||||||
Total
borrowings
|
103,800 | 110,051 | 82,100 | 84,764 | ||||||||||||
Accrued
interest payable
|
1,703 | 1,703 | 1,667 | 1,667 |
December
31,
|
||||
2008
|
||||
$
|
||||
Assets
|
||||
Cash
|
347 | |||
Equity
in subsidiary (ENB)
|
67,698 | |||
Total
assets
|
68,045 | |||
Capital
stock
|
574 | |||
Capital
surplus
|
4,457 | |||
Retained
earnings
|
64,629 | |||
Unrealized
gain/loss AFS securities
|
(963 | ) | ||
Treasury
stock
|
(652 | ) | ||
Total
stockholder's equity
|
68,045 | |||
Year
Ending
|
||||
December
31,
|
||||
2008
|
||||
$
|
||||
Income
|
||||
Dividend
income
|
2,773 | |||
Undistributed
earnings of bank subsidiary
|
(1,581 | ) | ||
Net
Income
|
1,192 | |||
$
|
||||
Cash
Flows from Opeating Activities:
|
||||
Net
income
|
1,192 | |||
Equity
in undistributed earnings of subsidiaries
|
1,581 | |||
Net
cash provided by operating activities
|
2,773 | |||
Cash
Flows from Financing Activities:
|
||||
Proceeds
from issuance of treasury stock
|
180 | |||
Payment
to repurchase common stock
|
(833 | ) | ||
Dividends
paid
|
(1,773 | ) | ||
Net
cash used by financing activities
|
(2,426 | ) | ||
Cash
and Cash Equivalents:
|
||||
Net
change in cash and cash equivalents
|
347 | |||
Cash
and cash equivalents at beginning of year
|
- | |||
Cash
and cash equivalents, current year-to-date
|
347 |
2008
|
||||||||||||||||
1st
Qtr
|
2nd
Qtr
|
3rd
Qtr
|
4th
Qtr
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Interest
income
|
8,585 | 8,668 | 8,818 | 8,654 | ||||||||||||
Interest
expense
|
3,752 | 3,641 | 3,625 | 3,580 | ||||||||||||
Net
interest income
|
4,833 | 5,027 | 5,193 | 5,074 | ||||||||||||
Less
provision for loan losses
|
199 | 150 | 170 | 150 | ||||||||||||
Net
interest income after provision for loan losses
|
4,634 | 4,877 | 5,023 | 4,924 | ||||||||||||
Other
income
|
1,356 | 1,363 | 441 | 1,747 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and employee benefits
|
2,638 | 2,607 | 2,654 | 3,993 | ||||||||||||
Occupancy
& equipment expenses
|
534 | 543 | 534 | 588 | ||||||||||||
Other
operating expenses
|
1,232 | 1,442 | 1,799 | 1,904 | ||||||||||||
Total
operating expenses
|
4,404 | 4,592 | 4,987 | 6,485 | ||||||||||||
Income
before income taxes
|
1,586 | 1,648 | 477 | 186 | ||||||||||||
Provision
(benefit) for Federal income taxes
|
191 | 220 | 212 | (740 | ) | |||||||||||
Net
income
|
1,395 | 1,428 | 265 | 926 | ||||||||||||
FINANCIAL
RATIOS
|
||||||||||||||||
Per
share data:.
|
||||||||||||||||
Net
income
|
0.49 | 0.50 | 0.09 | 0.32 | ||||||||||||
Cash
dividends paid
|
0.31 | 0.31 | 0.31 | 0.31 | ||||||||||||
2007
|
||||||||||||||||
1st
Qtr
|
2nd
Qtr
|
3rd
Qtr
|
4th
Qtr
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Interest
income
|
8,209 | 8,419 | 8,538 | 8,618 | ||||||||||||
Interest
expense
|
3,578 | 3,646 | 3,726 | 3,742 | ||||||||||||
Net
interest income
|
4,631 | 4,773 | 4,812 | 4,876 | ||||||||||||
Less
provision for loan losses
|
1,074 | 162 | 90 | 120 | ||||||||||||
Net
interest income after provision for loan losses
|
3,557 | 4,611 | 4,722 | 4,756 | ||||||||||||
Other
income
|
1,115 | 1,175 | 1,304 | 1,207 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and employee benefits
|
2,384 | 2,379 | 2,405 | 2,525 | ||||||||||||
Occupancy
& equipment expenses
|
527 | 503 | 507 | 508 | ||||||||||||
Other
operating expenses
|
1,223 | 1,426 | 1,142 | 1,302 | ||||||||||||
Total
operating expenses
|
4,134 | 4,308 | 4,054 | 4,335 | ||||||||||||
Income
before income taxes
|
538 | 1,478 | 1,972 | 1,628 | ||||||||||||
Provision
(benefit) for Federal income taxes
|
(144 | ) | 167 | 328 | 202 | |||||||||||
Net
income
|
682 | 1,311 | 1,644 | 1,426 | ||||||||||||
FINANCIAL
RATIOS
|
||||||||||||||||
Per
share data:
|
||||||||||||||||
Net
income
|
0.24 | 0.46 | 0.58 | 0.50 | ||||||||||||
Cash
dividends paid
|
0.30 | 0.30 | 0.30 | 0.31 |
Item 9.
|
Changes
in and Disagreements with Accountant on Accounting and Financial
Disclosure
|
Item 9A (T).
|
Controls
and Procedures
|
/s/ Aaron L. Groff,
Jr.
|
/s/ Scott E.
Lied
|
Aaron
L. Groff, Jr.
|
Scott
E. Lied
|
President,
Chief Executive Officer
|
Treasurer
|
&
Chairman of the Board
|
(Principal
Financial Officer)
|
Ephrata,
PA
|
|
March
11, 2009
|
Item 15.
|
Exhibits,
Financial Statement Schedules, and Reports on Form
8-K
|
(a)
|
1.
|
Financial
Statements.
|
|
2.
|
The
financial statement schedules required by this Item are omitted because
the information is either inapplicable, not required, or is shown in the
respective financial statements or the notes
thereto.
|
|
3.
|
The
Exhibits filed herewith or incorporated by reference as a part of this
Annual Report, are set forth in (c),
below.
|
|
(b)
|
EXHIBITS
|
|
3
(i)
|
Articles
of Association of the Registrant, as amended. (Incorporated herein by
reference to Exhibit 3.1 of the Corporation’s Form 8-K12g3 filed with the
SEC on July 1, 2008.)
|
3
(ii)
|
Bylaws
of the Registrant, as amended. (Incorporated herein by reference to
Exhibit 3.2 of the Corporation’s Form 8-K filed with the SEC on July 9,
2008.)
|
|
10.1
|
Form
of Deferred Income Agreement. (Incorporated herein by reference from
Exhibit 10.1 to the Corporation’s Form 10-Q, filed with the SEC on August
12, 2008.)
|
|
10.2
|
2001
Employee Stock Purchase Plan (Incorporated herein by reference to Exhibit
99.1 of the Corporation’s Registration Statement on Form S-8 filed with
the SEC on July 9, 2008.)
|
|
11
|
Statement
re: Computation of Earnings per Share as found on pages 28 and
63 of this 2008 Form 10-K filing, which is included
herein.
|
|
12
|
Statement
re: Computation of Ratios as found on page 28 of this 2008 Form
10-K filing, which is included
herein.
|
|
14
|
Code
of Ethics Policy of Registrant as amended March 11,
2009.
|
|
23
|
Consent
of Independent Registered Public Accounting
Firm
|
|
23.1
|
Consent
of Independent Auditors
|
|
31.1
|
Section
302 Chief Executive Officer Certification (Required by Rule
13a-14(a)/15a-14(a)).
|
|
31.2
|
Section
302 Principal Financial Officer Certification (Required by Rule
13a-14(a)/15a-14(a)).
|
|
32.1
|
Section
1350 Chief Executive Officer Certification (Required by Rule
13a-14(b)).
|
|
32.2
|
Section
1350 Principal Financial Officer Certification (Required by Rule
13a-14(b)).
|
|
(c)
|
NOT
APPLICABLE.
|
ENB
FINANCIAL CORP
|
|||
By:
|
/s/ Aaron
L. Groff, Jr.
|
||
Aaron
L. Groff, Jr., Chairman of the Board,
|
|||
President
and Chief Executive Officer
|
/s/ Aaron L. Groff,
Jr.
|
Chairman
of the Board, President,
|
March
11, 2009
|
(Aaron
L. Groff, Jr.)
|
Chief
Executive Officer and Director
|
|
/s/ Scott E.
Lied
|
Treasurer
|
March
11, 2009
|
(Scott
E. Lied)
|
Principal
Financial Officer)
|
|
/s/ Paul W.
Wenger
|
Secretary
|
March
11, 2009
|
(Paul
W. Wenger)
|
||
/s/ Donald Z.
Musser
|
Director
|
March
11, 2009
|
(Donald
Z. Musser)
|
||
/s/ Willis R.
Lefever
|
Director
|
March
11, 2009
|
(Willis
R. Lefever)
|
||
/s/ Susan Young
Nicholas
|
Director
|
March
11, 2009
|
(Susan
Young Nicholas)
|
||
/s/ Bonnie R.
Sharp
|
Director
|
March
11, 2009
|
(Bonnie
R. Sharp)
|
||
/s/ J. Harold
Summers
|
Director
|
March
11, 2009
|
(J.
Harold Summers)
|
||
/s/ Mark C.
Wagner
|
Director
|
March
11, 2009
|
(Mark
C. Wagner)
|
||
/s/ Paul M. Zimmerman,
Jr.
|
Director
|
March
11, 2009
|
(Paul
M. Zimmerman, Jr.)
|
||
/s/ Thomas H.
Zinn
|
Director
|
March
11, 2009
|
(Thomas
H. Zinn)
|
Exhibit
No.
|
Description
|
Page
number
on
Manually Signed
Original
|
3(i)
|
Articles
of Association of the Registrant, as amended. (Incorporated herein by
reference to Exhibit 3.1 of the Corporation’s Form 8-K12g3 filed with the
SEC on July 1, 2008)
|
|
3
(ii)
|
Bylaws
of the Registrant, as amended. (Incorporated herein by reference to
Exhibit 3.2 of the Corporation’s Form 8-K filed with the SEC on July 9,
2008.)
|
|
10.1
|
Form
of Deferred Income Agreement. (Incorporated herein by reference to the
Corporation’s Quarterly Report on Form 10-Q filed with the SEC on August
12, 2008.)
|
|
10.2
|
2001
Employee Stock Purchase Plan (Incorporated herein by reference to Exhibit
99.1 of the Corporation’s Registration Statement on Form S-8 filed with
the SEC on July 9, 2008.)
|
|
11
|
Statement
re: Computation of Earnings Per Share as found on page 63 of Form 10-K,
which is included herein.
|
|
12
|
Statement
re: Computation of Ratios as found on page 28 of Form 10-K, which is
included herein.
|
|
14
|
Code
of Ethics Policy of Registrant as amended March 11, 2009
|
Page
95
|
23
|
Consent
of Independent Registered Public Accounting Firm
|
Page
102
|
31.1
|
Section
302 Chief Executive Officer Certification (Required by Rule
13a-14(a)).
|
Page
103
|
31.2
|
Section
302 Principal Financial Officer Certification (Required by Rule
13a-14(a)).
|
Page
104
|
32.1
|
Section
1350 Chief Executive Officer Certification (Required by Rule
13a-14(b)).
|
Page
105
|
32.2
|
Section
1350 Principal Financial Officer Certification (Required by Rule
13a-14(b)).
|
Page
106
|