Attached files
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8-K/A - 8-K AMENDMENT #1 - Ameris Bancorp | d8ka.htm |
EX-99.3 - UNAUDITED FINANCIALS - Ameris Bancorp | dex993.htm |
EX-23.1 - CONSENT OF HANCOCK ASKEW & CO, LLP - Ameris Bancorp | dex231.htm |
Exhibit 99.2
Independent Auditors Report
To the Board of Directors DBT Holding Company Vidalia, Georgia
We have audited the accompanying consolidated balance sheets of DBT Holding Company and Subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders equity, and cash flows for each of the years in the three year period ended December 31, 2009. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of DBT Holding Company and Subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
Respectfully submitted,
March 10, 2010 Savannah, Georgia
100 Riverview Drive Savannah, GA 31404 T: 912.234.8243 F: 912.236.4414 |
DBT HOLDING COMPANY | 7 |
Balance Sheets
(In thousands except share information) December 31, |
2009 | 2008 | ||||||
ASSETS |
||||||||
Cash and due from banks |
$ | 151,638 | $ | 9,381 | ||||
Federal funds sold |
| 1,328 | ||||||
Investment securities |
||||||||
Available-for-sale, at fair value |
108,804 | 11,124 | ||||||
Held-to-maturity |
| 107,892 | ||||||
Other investments - certificates of deposits |
25,188 | 6,460 | ||||||
Loans and leases, net of allowance for loan and lease loss of $17,499 and $9,822 |
484,325 | 599,340 | ||||||
Premises and equipment, net |
11,687 | 13,240 | ||||||
Investment in Federal Home Loan Bank stock |
4,203 | 4,145 | ||||||
Other real estate owned |
20,559 | 16,356 | ||||||
Income tax receivable |
9,227 | | ||||||
Interest receivable and other assets |
13,884 | 16,296 | ||||||
$ | 829,515 | $ | 785,562 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Liabilities |
||||||||
Deposits |
||||||||
Demand |
$ | 12,810 | $ | 14,184 | ||||
Interest-bearing demand |
76,098 | 180,579 | ||||||
Savings |
77,084 | 68,163 | ||||||
Time, $100,000 and over |
436,184 | 296,892 | ||||||
Other time |
116,230 | 88,767 | ||||||
718,406 | 648,585 | |||||||
Accrued interest and other liabilities |
7,044 | 4,612 | ||||||
Advances from Federal Home Loan Bank |
62,000 | 62,000 | ||||||
Other borrowings |
20,979 | 20,979 | ||||||
808,429 | 736,176 | |||||||
Stockholders equity |
||||||||
Common stock authorized 10,000,000 shares, $1.00 par value; issued and outstanding 1,399,476 shares in 2009, 1,279,806 shares in 2008. |
1,400 | 1,280 | ||||||
Series B Convertible Preferred stock, no par value ($42.81 liquidation preference); 116,800 shares authorized and outstanding, 5% non-cumulative. |
| 4,984 | ||||||
Series C Convertible Preferred stock, no par value ($30 liquidation preference); 83,350 shares authorized and 67,171 outstanding, 8% non-cumulative. |
2,001 | 1,355 | ||||||
Capital in excess of par value |
19,403 | 14,362 | ||||||
(Accumulated deficit) retained earnings |
(1,529 | ) | 27,581 | |||||
Accumulated other comprehensive income, net |
(189 | ) | (178 | ) | ||||
21,086 | 49,384 | |||||||
$ | 829,515 | $ | 785,562 | |||||
See accompanying notes to consolidated financial statements.
8 | DBT HOLDING COMPANY |
Statements of Operations
(In thousands except share information) Years ended December 31, |
2009 | 2008 | 2007 | |||||||||
Interest income |
||||||||||||
Loans, including fees |
$ | 31,666 | $ | 38,598 | $ | 47,770 | ||||||
Investment securities |
4,895 | 6,424 | 5,604 | |||||||||
Other |
658 | 655 | 431 | |||||||||
Total interest income |
37,219 | 45,677 | 53,805 | |||||||||
Interest expense |
||||||||||||
Deposits |
19,640 | 19,558 | 24,146 | |||||||||
Federal Home Loan Bank advances and other borrowings |
3,634 | 3,576 | 3,089 | |||||||||
Total interest expense |
23,274 | 23,134 | 27,235 | |||||||||
Net interest income |
13,945 | 22,543 | 26,570 | |||||||||
Provision for loan losses |
31,290 | 7,215 | 3,056 | |||||||||
Net interest (loss) income after provision for loan losses |
(17,345 | ) | 15,328 | 23,514 | ||||||||
Non-interest income |
||||||||||||
Service fees |
2,208 | 2,103 | 1,872 | |||||||||
Financing lease income |
509 | 1,061 | 724 | |||||||||
Gain (loss) on sale of investment securities |
2,156 | 768 | (2 | ) | ||||||||
Other income |
1,740 | 2,032 | 1,863 | |||||||||
Total non-interest income |
6,613 | 5,964 | 4,457 | |||||||||
Non-interest expenses |
||||||||||||
Salaries and employee benefits |
8,745 | 9,572 | 10,440 | |||||||||
Equipment and occupancy |
3,325 | 3,668 | 3,280 | |||||||||
Other real estate owned related expenses |
4,580 | 1,192 | 100 | |||||||||
Other operating expenses |
8,701 | 5,414 | 5,321 | |||||||||
Total non-interest expenses |
25,351 | 19,846 | 19,141 | |||||||||
(Loss) income before income taxes |
(36,083 | ) | 1,446 | 8,830 | ||||||||
Income tax (benefit) expense |
(7,170 | ) | 154 | 2,970 | ||||||||
Net (loss) income |
$ | (28,913 | ) | $ | 1,292 | $ | 5,860 | |||||
(Loss) earnings available to common stockholders |
||||||||||||
Basic |
$ | (29,110 | ) | $ | 1,042 | $ | 5,457 | |||||
Diluted |
$ | (28,913 | ) | $ | 1,292 | $ | 5,860 | |||||
(Loss) earnings per share of common stock |
||||||||||||
Basic |
$ | (21.71 | ) | $ | .83 | $ | 4.65 | |||||
Diluted |
$ | (21.71 | ) | $ | .93 | $ | 4.35 | |||||
Weighted average shares outstanding |
||||||||||||
Basic |
1,340,843 | 1,257,697 | 1,173,206 | |||||||||
Diluted |
1,340,843 | 1,393,310 | 1,347,071 | |||||||||
See accompanying notes to consolidated financial statements.
DBT HOLDING COMPANY | 9 |
Statements of Changes in Stockholders Equity
Common Stock | ||||||||
Years ended December 31, |
Number of Shares |
Amount | ||||||
Balance, January 1, 2007 |
1,152,269 | $ | 1,152 | |||||
Comprehensive income |
||||||||
Net earnings |
| | ||||||
Other comprehensive income |
||||||||
Unrealized loss on securities, net of tax of $145 |
| | ||||||
Reclassification adjustment for realized losses (gains) included in net income |
| | ||||||
Total comprehensive income |
||||||||
Conversion of series A preferred stock |
95,280 | 96 | ||||||
Common stock issued |
9,390 | 9 | ||||||
Stock-based compensation |
| | ||||||
Cash dividends paid |
||||||||
Common - $.80 per share |
| | ||||||
Preferred |
| | ||||||
Balance, December 31, 2007 |
1,256,939 | 1,257 | ||||||
Comprehensive income |
||||||||
Net earnings |
| | ||||||
Other comprehensive income |
||||||||
Unrealized loss on securities, net of tax of $154 |
| | ||||||
Unrealized loss on derivative financial instrument, net of tax of $105 |
| | ||||||
Total comprehensive income |
||||||||
Common stock issued |
22,867 | 23 | ||||||
Stock-based compensation |
| | ||||||
Series C preferred stock issued |
| | ||||||
Cash dividends paid |
||||||||
Common - $.80 per share |
| | ||||||
Preferred |
| | ||||||
Balance, December 31, 2008 |
1,279,806 | 1,280 | ||||||
Comprehensive income |
||||||||
Net loss |
| | ||||||
Other comprehensive income |
||||||||
Unrealized loss on securities, net of tax of $25 |
| | ||||||
Unrealized gain on derivative financial instrument, net of tax of $20 |
| | ||||||
Total comprehensive income |
||||||||
Conversion of series B preferred stock |
116,800 | 117 | ||||||
Common stock issued |
2,870 | 3 | ||||||
Stock-based compensation |
| | ||||||
Series C preferred stock issued |
| | ||||||
Cash dividends paid |
||||||||
Preferred |
| | ||||||
Balance, December 31, 2009 |
1,399,476 | $ | 1,400 | |||||
10 | DBT HOLDING COMPANY |
Preferred Stock | ||||||||||||||||||||||
Number of Shares |
Amount | Capital in Excess of Par Value |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Income (Loss) |
Total | |||||||||||||||||
212,080 | $ | 7,955 | $ | 10,928 | $ | 23,008 | $ | 55 | $ | 43,098 | ||||||||||||
| | | 5,860 | | 5,860 | |||||||||||||||||
| | | | 281 | 281 | |||||||||||||||||
| | | | 8 | 8 | |||||||||||||||||
6,149 | ||||||||||||||||||||||
(95,280) | (2,971 | ) | 2,875 | | | | ||||||||||||||||
| | 195 | | | 204 | |||||||||||||||||
| | 55 | | | 55 | |||||||||||||||||
| | | (920 | ) | | (920 | ) | |||||||||||||||
| | | (403 | ) | | (403 | ) | |||||||||||||||
116,800 | 4,984 | 14,053 | 27,545 | 344 | 48,183 | |||||||||||||||||
| | | 1,292 | | 1,292 | |||||||||||||||||
| | | | (299 | ) | (299 | ) | |||||||||||||||
| | | | (223 | ) | (223 | ) | |||||||||||||||
770 | ||||||||||||||||||||||
| | 189 | | | 212 | |||||||||||||||||
| | 120 | | | 120 | |||||||||||||||||
45,168 | 1,355 | | | | 1,355 | |||||||||||||||||
| | | (1,006 | ) | | (1,006 | ) | |||||||||||||||
| | | (250 | ) | | (250 | ) | |||||||||||||||
161,968 | 6,339 | 14,362 | 27,581 | (178 | ) | 49,384 | ||||||||||||||||
| | | (28,913 | ) | | (28,913 | ) | |||||||||||||||
| | | | (51 | ) | (51 | ) | |||||||||||||||
| | | | 40 | 40 | |||||||||||||||||
(28,924 | ) | |||||||||||||||||||||
(116,800) | (4,984 | ) | 4,867 | | | | ||||||||||||||||
| | 83 | | | 86 | |||||||||||||||||
| | 91 | | | 91 | |||||||||||||||||
22,003 | 646 | | | | 646 | |||||||||||||||||
| | | (197 | ) | | (197 | ) | |||||||||||||||
67,171 | $ | 2,001 | $ | 19,403 | $ | (1,529 | ) | $ | (189 | ) | $ | 21,086 | ||||||||||
See accompanying notes to consolidated financial statements.
DBT HOLDING COMPANY | 11 |
Statements of Cash Flows
(In thousands) Years ended December 31, |
2009 | 2008 | 2007 | |||||||||
Cash flows from operating activities |
||||||||||||
Net (loss) income |
$ | (28,913 | ) | $ | 1,292 | $ | 5,860 | |||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities |
||||||||||||
Gain on sale of property |
(26 | ) | (213 | ) | | |||||||
Provision for loan losses |
31,290 | 7,215 | 3,056 | |||||||||
Depreciation |
1,358 | 1,695 | 1,516 | |||||||||
Amortization and accretion |
170 | (52 | ) | 7 | ||||||||
Net realized gains on sales of investments |
(2,156 | ) | (768 | ) | | |||||||
Deferred tax provision |
2,217 | (1,017 | ) | (351 | ) | |||||||
Stock-based compensation expense |
177 | 214 | 138 | |||||||||
Increase in cash surrender value of life insurance |
(240 | ) | (259 | ) | (241 | ) | ||||||
Changes in |
||||||||||||
Interest receivable and other assets |
(7,823 | ) | 381 | (1,089 | ) | |||||||
Accrued interest and other liabilities |
1,526 | (2,876 | ) | 841 | ||||||||
Cash (used in) provided by operating activities |
(2,420 | ) | 5,612 | 9,737 | ||||||||
Cash flows from investing activities |
||||||||||||
Decrease (increase) in federal funds sold |
1,326 | (1,326 | ) | 7,434 | ||||||||
Proceeds from maturities and sales of investment securities |
98,445 | 91,038 | 18,214 | |||||||||
Purchases of investment securities |
(105,049 | ) | (86,295 | ) | (52,014 | ) | ||||||
(Increase) decrease in FHLB stock |
(58 | ) | (755 | ) | (1,360 | ) | ||||||
Net decrease (increase) in loans and leases |
79,751 | (58,480 | ) | (76,453 | ) | |||||||
Purchase of property |
(84 | ) | (652 | ) | (6,067 | ) | ||||||
Proceeds from sale of property |
77 | 1,532 | 286 | |||||||||
Preferred stock subscribed |
645 | 1,356 | | |||||||||
Other |
| | 35 | |||||||||
Cash provided by (used for) investing activities |
75,053 | (53,582 | ) | (109,925 | ) | |||||||
Cash flows from financing activities |
||||||||||||
Net increase in deposits |
69,821 | 28,622 | 65,010 | |||||||||
Net borrowings (repayments) to Federal Home Loan Bank |
| 12,000 | 30,000 | |||||||||
Net increase in repurchase agreements |
| | 10,100 | |||||||||
(Decrease) increase in federal funds purchased |
| (6,727 | ) | 8,327 | ||||||||
Proceeds from common stock issuance |
| 118 | 121 | |||||||||
Dividends paid |
(197 | ) | (1,255 | ) | (1,323 | ) | ||||||
Cash provided by financing activities |
69,624 | 32,758 | 112,235 | |||||||||
Net increase (decrease) in cash and due from banks |
142,257 | (15,212 | ) | 12,047 | ||||||||
Cash and due from banks, beginning of year |
9,381 | 24,593 | 12,546 | |||||||||
Cash and due from banks, end of year |
$ | 151,638 | $ | 9,381 | $ | 24,593 | ||||||
Supplemental cash flow information, Note 20 |
See accompanying notes to consolidated financial statements.
12 | DBT HOLDING COMPANY |
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies |
Basis of Presentation and Principles of Consolidation |
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and conform to banking industry practices. These consolidated financial statements include the accounts of DBT Holding Company (the Company) and its wholly- owned subsidiaries, Darby Bank and Trust Company of Vidalia, Georgia (the Bank) and DBT Real Estate, LLC. All significant intercompany accounts have been eliminated in consolidation. The Companys wholly-owned subsidiaries, DBT Capital Trust II and DBT Statutory Trust III, are not consolidated as the Company is not deemed to be the primary beneficiary of these variable interest entities.
Cash Equivalents
For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption Cash and Due from Banks, which includes cash on hand, cash items in the process of collection, and amounts due from correspondent banks.
Investments
The Company has marketable investment securities. Debt securities that management has the ability and intent to hold to maturity are classified as held-to-maturity and carried at cost, adjusted for amortization of premiums and accretion of discounts, which are recognized as adjustments to interest income using a methodology that approximates a level-yield over the remaining period until maturity. Other securities are classified as available-for-sale and carried at fair value with net unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders equity, on an after-tax basis. Realized gains and losses on disposition are determined using the specific identification method. The Company does not purchase securities for trading purposes.
The Company has investments in joint ventures and other entities. Investments where the Companys voting interests are more than 20% and less than 50% are generally recorded on the equity method. The Companys share of each entitys equity is reported in the balance sheet line item; other assets and income or loss for the year is included in other income on the accompanying statements of income.
DBT HOLDING COMPANY | 13 |
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (cont.) |
Loans and Leases |
Loans are reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans, and premiums or discounts on purchased loans. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to income over the lives of the related loans using a methodology that approximates a level-yield over the remaining period until maturity. Unearned income, discounts and premiums are amortized to income using a methodology that approximates a level-yield over the remaining period until maturity.
Interest on loans is accrued and credited to income based on the principal amount and contracted interest rate on the loan. Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection of principal or interest, including loans that are individually identified as being impaired, are generally classified as non-accrual loans unless well-secured and in the process of collection. Interest accrued but not collected is reversed when a loan is classified as non-performing. Interest collections on non-performing loans for which the ultimate collectability of principal is uncertain are applied as principal reductions; otherwise, such collections are credited to income when received. Loans are returned to performing status only when the loan is brought current and ultimate collectability of principal is no longer in doubt.
The Company provides equipment financing to its customers through leasing arrangements, which are carried at the aggregate of lease payments receivable plus estimated residual value of the leased property, less unearned income. Unearned income on direct financing leases is amortized over the lease terms by methods that approximate the interest method.
Allowance for Loan and Lease Losses
The Company uses the allowance method to provide for loan losses. Accordingly, loan losses are charged to the allowance and recoveries are credited to the allowance. The allowance for loan and lease losses represents managements estimate for probable losses on existing loans and leases. The Company performs periodic detailed reviews of its lending portfolio to identify credit risks and to assess the overall collectability of the portfolio. The allowance on certain homogeneous loans is based on aggregated portfolio segment evaluations generally by product type and the bank loan grade. Loss estimates for these loans consider a variety of factors including, but not limited to, historical loss experience, delinquencies, economic conditions and credit scores.
14 | DBT HOLDING COMPANY |
1. Summary of Significant Accounting Policies (cont.) |
Allowance for Loan and Lease Losses (cont.) |
The remaining loans are reviewed on an individual loan basis. Loans subject to individual reviews are analyzed and segregated by risk according to the Companys internal risk rating scale. If necessary, a specific allowance for loan and lease losses is established for individual loans. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect amounts due according to the contractual terms of the agreement Specific allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. The risk classifications, in conjunction with an analysis of historical loss experience, current economic conditions and performance trends, and any other pertinent information, together with specific allowances for loan loss and impaired loans, result in the estimation of the allowance for loan and lease losses. Loans are charged-off against the allowance for loan and lease losses when available information confirms that the collection of the principal is considered remote.
Derivatives
The Company enters into derivative instruments in order to manage its exposure to interest rates on certain financial instruments. The accounting for the changes in the fair value of a derivative depends on the intended use of the derivative instrument at inception. For derivative contracts where the Company has elected hedge accounting, the effective portion of the hedge is accounted for in other comprehensive income rather than net income. For the derivative instruments that are not designated as hedging instruments the Company recognizes the gain or loss, calculated as the change in the fair value of the derivative instrument, in current earnings during the period of change. The Company bases the fair value of derivative instruments on market quotes or estimates of fair value for similar instruments. The Company reports derivative instruments that are an asset as other assets and derivative instruments that are liabilities as other liabilities.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation. Depreciation is charged to operations and is computed principally on the straight-line method over the estimated useful lives of the assets. Estimated lives range up to 40 years for buildings, up to 7 years for furniture and equipment, and the shorter of lease term or estimated useful life for leasehold improvements.
DBT HOLDING COMPANY | 15 |
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (cont.) |
Other Real Estate Owned |
Other real estate owned is included in other assets. These properties are acquired through foreclosure or in full or partial satisfaction of the related loan. Other real estate owned is carried at the lower of cost or the fair value, net of estimated selling costs. After foreclosure, valuations are periodically performed by management and the carrying amounts are adjusted as necessary.
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes or less deferred tax benefits. Deferred taxes or benefits are related primarily to temporary differences in reporting of allowance for loan losses and accumulated depreciation for financial and income tax reporting. The net deferred tax asset or liability represents the future tax consequences of those differences, which have been recognized in different periods for financial reporting than for income tax purposes.
In the event the future tax consequences of differences between the financial reporting bases and tax bases of the Companys assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is made. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the Companys ability to realize the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies.
Comprehensive Income
Accumulated other comprehensive income is comprised of unrealized gains and losses on available-for-sale securities and the change in value of derivatives and is reported net of applicable taxes. The Company records the changes in unrealized gains and losses on available-for-sale securities as a component of accumulated other comprehensive income and reports those changes in the statement of stockholders equity. Gains and losses on available-for-sale securities are reclassified to net income as the gains or losses are realized upon sale of the securities.
16 | DBT HOLDING COMPANY |
1. Summary of Significant Accounting Policies (cont.) |
Earnings Per Share |
Basic earnings per share are calculated by dividing net income by the weighted average number of shares outstanding during the period. For diluted earnings per common share, net income can be affected by the conversion of the convertible preferred stock. Where the effect of this conversion would have been dilutive, net income is adjusted by the associated preferred dividends. This adjusted net income is divided by the weighted average number of common shares issued and outstanding for each period plus amounts representing the dilutive effect of stock options outstanding and the dilution resulting from the conversion of the convertible preferred stock.
Stock Compensation Plans
Stock options issued prior to January 1, 2006, are accounted for based on the intrinsic value method. Under this method, compensation expense for employee stock options was not recognized if the exercise price of the option equals or exceeds the estimated fair value of the stock on the date of grant. Pro-forma information regarding net income and earnings per share is disclosed in Note 22.
For equity awards granted after January 1, 2006, the cost of employee services received in exchange for equity instruments including options and restricted stock awards generally will be measured at fair value at the grant date. The grant date fair value will be estimated using option-pricing models adjusted for the unique characteristics of those options and instruments. The cost will be recognized over the requisite service period, often the vesting period.
The Company awarded restricted stock units in 2009 and 2008. The fair value of such units is expensed over the vesting period.
Off Balance Sheet Financial Instruments
In the ordinary course of business, the Bank has entered into off balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit and standby letters of credit Such financial instruments are recorded in the financial statements when they become payable and are subject to the same credit policies and processes afforded loans by the Company.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
DBT HOLDING COMPANY | 17 |
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (cont.) |
Use of Estimates (cont.) |
A material estimate that is particularly susceptible to significant changes relates to the determination of the allowance for loan losses. While management uses all available information to estimate loan losses, future additions to the allowance may be necessary based on changes in local economic conditions or changes in the underlying credit of borrowers. In addition, regulatory agencies, as an integral part of the examination process, periodically review the Banks allowance for loan losses and may require the Bank to recognize additions to the allowance based on judgments about information available at the time of the examinations. Because of these factors, it is reasonably possible that the allowance for loan losses may change materially in the near term.
Subsequent Events
In May 2009, the FASB issued an accounting standard which establishes the general standards of accounting for, and disclosures of, events that occur after the balance sheet date but before financial statements are issued or available to be issued. It requires entities to disclose the date through which subsequent events have been evaluated and the basis for the date. This standard is effective for reporting periods ending after June 15, 2009 and was effective for the Company as of December 31, 2009. The adoption of this standard did not have a significant impact on the Companys financial statements. The Company has evaluated subsequent events through March 10, 2010.
2. Restrictions on Cash and Due |
When required, cash and due from banks includes required reserve amounts which under Federal Reserve Board Regulations are to be maintained on an average daily basis in the form of cash. There was no average reserve requirement at December 31, 2009 and 2008. |
3. Investment Securities |
During 2009, the Companys management philosophy as to investments was reconsidered. As a result, management no longer believes any securities meet the requirements to be classified as held-to-maturity. In March 2009, management reclassified approx $99,800,000 of previously classified held-to-maturity securities to the available-for sale classification. The securities were transferred at the market value at the time of transfer with the unrealized gain or loss being recorded to other comprehensive income. Subsequent to this transfer the Company sold approximately $66,000,000 of these transferred securities for a realized gain of approximately $1,600,000. |
18 | DBT HOLDING COMPANY |
3. Investment Securities (cont.) |
Investment securities held-to-maturity consist of the following (in thousands): |
December 31, 2008 |
Carrying Amount |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||
Obligations of United States government agencies |
$ | 23,103 | $ | 795 | $ | | $ | 23,898 | ||||||||
Obligations of states and political subdivisions |
7,016 | 105 | (247 | ) | 6,874 | |||||||||||
Mortgage backed securities |
74,720 | 1,608 | (133 | ) | 76,195 | |||||||||||
Corporate securities |
3,053 | | (230 | ) | 2,823 | |||||||||||
$ | 107,892 | $ | 2,508 | $ | (610 | ) | $ | 109,790 | ||||||||
Investment securities available-for-sale consist of the following (in thousands):
December 31, 2009 |
Carrying Amount |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||
Obligations of United States government agencies |
$ | 16,001 | $ | 214 | $ | | $ | 16,215 | ||||||||
Obligations of states and political subdivisions |
4,936 | 58 | (74 | ) | 4,920 | |||||||||||
Mortgage backed securities |
85,865 | 634 | (787 | ) | 85,712 | |||||||||||
Corporate securities |
2,009 | | (52 | ) | 1,957 | |||||||||||
$ | 108,811 | $ | 906 | $ | (913 | ) | $ | 108,804 | ||||||||
December 31, 2008 |
Carrying Amount |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||
Obligations of United States government agencies |
$ | 2,980 | $ | 115 | $ | | $ | 3,095 | ||||||||
Mortgage backed securities |
6,118 | 139 | (53 | ) | 6,204 | |||||||||||
Corporate securities |
1,993 | | (168 | ) | 1,825 | |||||||||||
$ | 11,091 | $ | 254 | $ | (221 | ) | $ | 11,124 | ||||||||
DBT HOLDING COMPANY | 19 |
Notes to Consolidated Financial Statements
3. Investment Securities (cont.) |
Investment securities held-to-maturity consist of the following (in thousands): |
December 31, 2008 |
Carrying Amount |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||
Obligations of United States government agencies |
$ | 23,103 | $ | 795 | $ | | $ | 23,898 | ||||||||
Obligations of states and political subdivisions |
7,016 | 105 | (247 | ) | 6,874 | |||||||||||
Mortgage backed securities |
74,720 | 1,608 | (133 | ) | 76,195 | |||||||||||
Corporate securities |
3,053 | | (230 | ) | 2,823 | |||||||||||
$ | 107,892 | $ | 2,508 | $ | (610 | ) | $ | 109,790 | ||||||||
Investment securities available-for-sale consist of the following (in thousands):
December 31, 2009 |
Carrying Amount |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||
Obligations of United States government agencies |
$ | 16,001 | $ | 214 | $ | | $ | 16,215 | ||||||||
Obligations of states and political subdivisions |
4,936 | 58 | (74 | ) | 4,920 | |||||||||||
Mortgage backed securities |
85,865 | 634 | (787 | ) | 85,712 | |||||||||||
Corporate securities |
2,009 | | (52 | ) | 1,957 | |||||||||||
$ | 108,811 | $ | 906 | $ | (913 | ) | $ | 108,804 | ||||||||
December 31, 2008 |
Carrying Amount |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||
Obligations of United States government agencies |
$ | 2,980 | $ | 115 | $ | | $ | 3,095 | ||||||||
Mortgage backed securities |
6,118 | 139 | (53 | ) | 6,204 | |||||||||||
Corporate securities |
1,993 | | (168 | ) | 1,825 | |||||||||||
$ | 11,091 | $ | 254 | $ | (221 | ) | $ | 11,124 | ||||||||
20 | DBT HOLDING COMPANY |
3. Investment Securities (cont.) |
Information pertaining to securities with gross unrealized losses at December 31, 2009, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows (in thousands): |
Less than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
December 31, 2009 |
Fair Value | Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||
Obligations of United States government agencies |
$ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||
Obligations of states and political subdivisions |
| | 2,132 | 74 | 2,132 | 74 | ||||||||||||||||||
Mortgage backed securities |
33,405 | 652 | 450 | 135 | 33,855 | 787 | ||||||||||||||||||
Corporate securities |
| | 1,957 | 52 | 1,957 | 52 | ||||||||||||||||||
$ | 33,405 | $ | 652 | $ | 4,539 | $ | 261 | $ | 37,944 | $ | 913 | |||||||||||||
Management evaluated securities for other-than-temporary impairment annually, or more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. As of December 31, 2009, management identified a mortgage backed security that met the other-than-temporary impairment criteria and noted a credit based impairment of $77,000 which they recorded through earnings.
The amortized cost and estimated market value of securities at December 31, 2009, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.
Securities available-for-sale are as follows (in thousands):
December 31, 2009 |
Carrying Value |
Fair Value |
||||||
Due one year or less |
$ | 5,685 | $ | 5,760 | ||||
Due after one year through five years |
48,780 | 49,349 | ||||||
Due after five years through ten years |
47,910 | 47,469 | ||||||
Due after ten years |
6,436 | 6,226 | ||||||
$ | 108,811 | $ | 108,804 | |||||
DBT HOLDING COMPANY | 21 |
Notes to Consolidated Financial Statements
4. Investment Securities (cont.) |
In 2009, held-to-maturity securities were called resulting in proceeds of $6,175,000 and no gross gains or losses. In 2009, available-for-sale securities were called, resulting in proceeds of $638,000 and no gross gains or losses. In 2009, available-for-sale securities were sold, resulting in proceeds of $80,439,000 and gross gains of $2,451,000. In 2008, held-to-maturity securities were called resulting in proceeds of $26,613,000 and no gross gains or losses. |
Investment securities with an approximate market value of $47,799,000 at December 31, 2009 and $74,644,000 at December 31, 2008, were pledged to secure public deposits and for other purposes.
5. Other Investments, Certificates of Deposit |
The bank invests in certificates of deposit with various financial institutions. These deposits mature at various dates through July 2011 and accrue interest at rates ranging from 1.85% to 2.95%. At December 31, 2009 and 2008 the balance was $25,188,000 and $6,460,000, respectively. |
6. Loans and Leases |
Major classifications of loans and leases are as follows (in thousands): |
December 31, |
2009 | 2008 | ||||||
Commercial loans |
$ | 465,119 | $ | 563,202 | ||||
Home equity and personal lines of credit |
10,427 | 11,129 | ||||||
Installment loans |
22,062 | 28,295 | ||||||
Leases |
4,236 | 6,583 | ||||||
Unearned fees |
(169 | ) | (154 | ) | ||||
Allowance for loan losses |
(17,499 | ) | (9,822 | ) | ||||
Loans, net |
484,176 | 599,233 | ||||||
Overdrafts |
149 | 107 | ||||||
$ | 484,325 | $ | 599,340 | |||||
The Bank grants loans and extensions of credit to individuals and a variety of businesses located primarily in Southeastern Georgia. A substantial portion of the loan portfolio is collateralized by improved and unimproved real estate, equipment, inventory and other security.
Changes in the allowance for loan losses are as follows (in thousands):
December 31, |
2009 | 2008 | 2007 | |||||||||
Balance, beginning of year |
$ | 9,822 | $ | 7,418 | $ | 7,165 | ||||||
Provision for loan losses |
31,290 | 7,215 | 3,056 | |||||||||
Charge-offs |
(24,623 | ) | (5,218 | ) | (3,001 | ) | ||||||
Recoveries |
1,010 | 407 | 198 | |||||||||
Balance, end of year |
$ | 17,499 | $ | 9,822 | $ | 7,418 | ||||||
22 | DBT HOLDING COMPANY |
6. Loans and Leases (cont.) |
Impairment of loans having recorded investments of $46,816,000 and $34,976,000 at December 31, 2009 and 2008, respectively, have been recognized. The average recorded investment in such impaired loans during 2009 and 2008 was $50,905,000 and $33,789,000, respectively. The total allowance for loan losses related to these loans was $9,422,000 and $6,237,000 at December 31, 2009 and 2008, respectively. In 2009 and 2008, the Bank received payments on these loans totaling $7,430,000 and $2,755,000, respectively. In 2009 and 2008, interest income recognized on these loans was $2,903,000 and $2,124,000, respectively. |
In addition, at December 31, 2009 the Bank had other non-accrual loans of $40,211,000 that were not identified as impaired.
Maturities of loans and leases by category and interest rate type are as follows (in thousands):
December 31, 2009 |
Variable | Fixed | Total | |||||||||
One year or less |
$ | 242,376 | $ | 87,760 | $ | 330,136 | ||||||
One to two years |
43,439 | 51,818 | 95,257 | |||||||||
Two to three years |
15,611 | 25,494 | 41,105 | |||||||||
Three to five years |
2,288 | 11,346 | 13,634 | |||||||||
Five to ten years |
9,131 | 2,685 | 11,816 | |||||||||
More than ten years |
3,909 | 5,967 | 9,876 | |||||||||
$ | 316,754 | $ | 185,070 | $ | 501,824 | |||||||
December 31, 2009 |
Commercial | Consumer | Total | |||||||||
One year or less |
$ | 317,436 | $ | 12,700 | $ | 330,136 | ||||||
One to two years |
89,945 | 5,312 | 95,257 | |||||||||
Two to three years |
36,892 | 4,213 | 41,105 | |||||||||
Three to five years |
12,015 | 1,619 | 13,634 | |||||||||
Five to ten years |
4,307 | 7,509 | 11,816 | |||||||||
More than ten years |
9,024 | 852 | 9,876 | |||||||||
$ | 469,619 | $ | 32,205 | $ | 501,824 | |||||||
7. Derivatives |
Derivatives utilized by the Company include swaps and option contracts. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. An option contract is an agreement that conveys to the purchaser the right, but not the obligation, to buy or sell a quantity of a financial instrument, index, currency or commodity at a predetermined rate or price during a period or at a time in the future. Option agreements can be transacted on organized exchanges or directly between parties. |
DBT HOLDING COMPANY | 23 |
Notes to Consolidated Financial Statements
7. Derivatives (cont.) |
The Company is exposed to counterparty credit risk for non-performance and, in the event of non-performance, to market risk for changes in interest rates. The Companys derivative activities are primarily with commercial banks and broker/dealers. To minimize credit risk, the Company enters into legally enforceable netting agreements, which reduce risk by permitting the closeout and netting of transactions with the same counterparty upon occurrence of certain events. |
At December 31, 2009, the Company was party to swaps and option contracts with an aggregate notional amount of approximately $6,028,000. At December 31, 2009, the fair value of the swaps liability and option contracts asset were ($278,000) and $ 100, respectively. At December 31, 2008, the fair value of the swaps liability and option contracts asset were ($394,000) and $49,000, respectively.
8. Premises and Equipment |
Major classifications of premises and equipment are summarized as follows (in thousands): |
December 31, |
2009 | 2008 | ||||||
Land |
$ | 3,138 | $ | 3,138 | ||||
Buildings |
6,746 | 6,746 | ||||||
Equipment |
7,256 | 7,246 | ||||||
Automobiles |
410 | 489 | ||||||
Leased assets |
1,522 | 1,972 | ||||||
Leasehold improvements |
1,007 | 1,007 | ||||||
20,079 | 20,598 | |||||||
Accumulated depreciation |
(8,451 | ) | (7,417 | ) | ||||
Construction in progress |
59 | 59 | ||||||
$ | 11,687 | $ | 13,240 | |||||
9. Other Assets |
Other assets consisted of the following (in thousands): |
December 31, |
2009 | 2008 | ||||||
Accrued interest receivable |
$ | 3,112 | $ | 4,369 | ||||
Prepaid expenses |
1,802 | 1,562 | ||||||
Deferred tax assets, net |
1,346 | 3,559 | ||||||
Bank owned life insurance |
6,524 | 6,284 | ||||||
Other investments |
369 | 369 | ||||||
Other |
731 | 153 | ||||||
$ | 13,884 | $ | 16,296 | |||||
24 | DBT HOLDING COMPANY |
9. Other Assets (cont.) |
The Bank funded the purchase of bank owned life insurance policies on the lives of certain officers and employees of the bank. The Company has recognized any increase in the cash surrender value of life insurance, net of insurance costs, in the consolidated statements of income as other income. In 2009, 2008 and 2007, the cash surrender value increased by approximately $240,000, $259,000 and $241,000, respectively. |
10. Deposits |
Scheduled maturities of time deposits are as follows (in thousands): |
December 31, |
||||
2010 |
$ | 170,446 | ||
2011 |
148,930 | |||
2012 |
212,664 | |||
2013 |
15,803 | |||
2014 |
4,571 | |||
$ | 552,414 | |||
At December 31, 2009, time deposits included $325,808,000 of out-of-market deposits. These deposits are scheduled to mature at various dates through 2012.
11. Income Taxes |
The consolidated provision for income taxes consisted of the following (in thousands): |
Years ended December 31, |
2009 | 2008 | 2007 | |||||||||
Current (benefit) payable |
$ | (9,387 | ) | $ | 1,171 | $ | 3,321 | |||||
Deferred tax benefit |
(4,945 | ) | (1,017 | ) | (351 | ) | ||||||
Valuation allowance |
7,162 | | | |||||||||
$ | (7,170 | ) | $ | 154 | $ | 2,970 | ||||||
Deferred tax benefit does not reflect the deferred tax effects of unrealized gains and losses on available-for-sale securities and derivative financial instruments of $ 136,000 in 2009 and $ 153,000 in 2008.
DBT HOLDING COMPANY | 25 |
Notes to Consolidated Financial Statements
11. Income Taxes (cont.) |
The following is a reconciliation of income tax expense at the statutory rate to income tax expense at the effective rate (in thousands): |
Years ended December 31, |
2009 | 2008 | 2007 | |||||||||
Income tax (benefit)/expense at statutory rate |
$ | (13,697 | ) | $ | 549 | $ | 3,352 | |||||
Effect of tax exempt income |
(204 | ) | (239 | ) | (305 | ) | ||||||
Effect of nondeductible expenses |
104 | 136 | 137 | |||||||||
Tax credits utilized |
(305 | ) | (193 | ) | (195 | ) | ||||||
Other |
(230 | ) | (99 | ) | (19 | ) | ||||||
Valuation allowance |
7,162 | | | |||||||||
$ | (7,170 | ) | $ | 154 | $ | 2,970 | ||||||
Deferred tax assets and liabilities have been provided for temporary deductible and taxable differences relating to the allowance for loan losses, accumulated depreciation and tax credits carried forward (in thousands):
December 31, |
2009 | 2008 | ||||||
Deferred tax assets |
$ | 9,659 | $ | 4,844 | ||||
Valuation allowance |
(7,162 | ) | | |||||
Net deferred tax assets |
2,497 | 4,844 | ||||||
Deferred tax liabilities |
(1,151 | ) | (1,285 | ) | ||||
Net deferred tax assets |
$ | 1,346 | $ | 3,559 | ||||
The future tax consequences of the differences between the financial reporting and tax basis of the Companys assets and liabilities resulted in a net deferred tax asset at December 31, 2009 and 2008. A valuation allowance was established for the net deferred tax asset as of December 31, 2009 for the portion where management has determined is more likely than not to not be realized as of December 31, 2009.
12. Employee Benefit Plan |
The Company has a noncontributory profit sharing plan for eligible employees. The Companys contributions to the plan, as determined by management, are discretionary, and subject to certain limitations. The amounts contributed to the plan for the years ended December 31, 2009, 2008 and 2007 were approximately $0, $0, and $621,000, respectively. |
26 | DBT HOLDING COMPANY |
13. Changes in Capital Stock |
In 2004, the Board of Directors authorized 116,800 shares of a class of preferred shares designated as Series B Convertible Preferred Stock. Noncumulative dividends, as declared by the Board of Directors, will be payable at a rate of 5% per annum, payable quarterly. Holders of this class of stock are entitled to a liquidation preference of $42.808 per share, plus any declared but unpaid dividends. This preference is junior to the Companys subordinated debentures and trust preferred securities. In the event of a change in control of the Company, each preferred stockholder shall have the right to convert each share of preferred stock into a share of common stock of the Company. On June 30, 2009, each share of outstanding preferred stock automatically converted to a share of common stock. |
In 2008, the Board of Directors authorized 83,350 shares of a class of preferred shares designated as Series C Convertible Preferred Stock. Noncumulative dividends, as declared by the Board of Directors, will be payable at a rate of 8% per annum, payable semi-annually. Holders of this class of stock are entitled to a liquidation preference of $30 per share, plus any declared but unpaid dividends. This preference is junior to the Companys subordinated debentures and trust preferred securities. In the event of a change in control, each preferred stockholder or the Company shall have the right to convert each share of preferred stock into a share of common stock of the Company. On December 31, 2011, each share of outstanding preferred stock will automatically convert to a share of common stock. At December 31, 2009, 67,171 shares had been issued totaling $2,001,000, less expenses of the offering. At December 31, 2008, 45,168 shares had been issued totaling $1,355,000, less expenses of the offering.
14. Related Party Transactions |
The Company makes loans and accepts deposits with certain of its employees, directors, significant stockholders and their affiliates (Related Parties). Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers, and did not, in the opinion of management, involve more than normal credit risk or present other unfavorable features. The aggregate amounts of loans to such Related Parties were $5,856,000 and $18,710,000 at December 31, 2009 and 2008, respectively. The aggregate amounts of deposits accepted from Related Parties were $8,439,000 and $7,806,000 at December 31, 2009 and 2008, respectively. |
Changes in Related Party loans during the year are as follows (in thousands):
For the year ended December 31, |
2009 | |||
Balance, beginning of year |
$ | 18,710 | ||
Advances |
320 | |||
Repayments |
(1,287 | ) | ||
Change in status |
(11,887 | ) | ||
Balance, end of year |
$ | 5,856 | ||
DBT HOLDING COMPANY | 27 |
Notes to Consolidated Financial Statements
15. Group Concentration of Credit Risk |
Most of the Banks lending activity is with customers located within the local lending area. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors ability to honor their contracts is dependent upon economic conditions in the local lending area, which primarily includes Toombs and Chatham counties. |
16. Commitments and Contingent Liabilities |
The Bank is party to financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These instruments involve, to varying degrees, elements of credit risk, interest rate risk and liquidity risk. |
The Banks exposure to credit loss, in the event of non-performance by the customer for commitments to extend credit and standby letters of credit, is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making credit commitments as those for the extension of credit on loans included in the financial statements. Collateral or other securities are generally required for commitments to extend credit The amount of collateral obtained, if deemed necessary, varies, but may include securities, accounts receivable, inventory, equipment and real estate.
A summary of the Banks off balance sheet financial instruments were as follows (in thousands):
December 31, 2009 |
||||
Loan commitments |
$ | 5,073 | ||
Standby letters of credit |
$ | 2,853 | ||
The Company has entered into various lease agreements which are classified as operating leases. Rent expense was $831,000, $868,000 and $756,000 for the years ended December 31, 2009, 2008 and 2007, respectively.
Future minimum lease payments are as follows (in thousands):
Years ending December 31, |
||||
2010 |
$ | 761 | ||
2011 |
765 | |||
2012 |
789 | |||
2013 |
814 | |||
2014 |
833 | |||
Thereafter |
11,078 | |||
$ | 15,040 | |||
The bank leases certain office space from a related party. The lease commenced in 2007 and has an initial term of ten years with three five year renewal options. Monthly lease payments are approximately $ 11,000.
28 | DBT HOLDING COMPANY |
16. Commitments and Contingent Liabilities (cont). |
The Company is subject to various claims and lawsuits arising in the ordinary course of business. In the opinion of management, the ultimate resolution of the matters will not have a material effect on the combined financial statements of the Company. |
17. Advances from Federal Home Loan Bank |
The Bank had outstanding advances from the Federal Home Loan Bank of $62,000,000 and $62,000,000 as of December 31, 2009 and 2008, respectively. Specific mortgage and commercial real estate loans totaling approximately $93,220,000 and $121,389,000, respectively, were pledged to secure these and future advances. The Bank may obtain advances up to 60% of the pledged amount for mortgage loans, up to 40% of the pledged amount for commercial real estate loans, and up to 50% of the pledged amount for home equity lines of credit and second mortgage loans. The Bank is required to keep all advances fully collateralized with qualifying mortgages, commercial real estate loans and home equity lines or eligible securities. The Bank is also required to purchase a certain amount of stock from the Federal Home Loan Bank, which is calculated in accordance with Federal Home Loan Bank standards. |
18. Other Borrowings |
Other borrowings consist of the following (in thousands): |
December 31, |
2009 | 2008 | ||||||
DBT Capital Trust II |
$ | 3,093 | $ | 3,093 | ||||
DBT Capital Trust III |
6,186 | 6,186 | ||||||
Securities sold under repurchase agreement |
10,100 | 10,100 | ||||||
Line of credit |
1,600 | 1,600 | ||||||
$ | 20,979 | $ | 20,979 | |||||
These borrowings are more fully described below.
In December 2002, the Company formed a wholly-owned subsidiary, DBT Capital Trust II (Trust II), and was issued $93,000 of floating rate common securities by Trust II. Trust II also issued $3,000,000 in floating rate capital securities (Trust Preferred Securities) to qualified institutional buyers. Trust II invested these proceeds in $3,093,000 of the Companys Series 2002-1 Unsecured Floating Junior Subordinated Debentures (the 2002 Debentures). The 2002 Debentures represent the sole assets of Trust II, mature on December 31, 2032, bear interest at the adjustable rate of prime plus 1.25% payable quarterly and are redeemable in whole, or in part, by the Company beginning on December 31, 2007 at 100% of the principal amount plus any accrued and unpaid interest to the redemption date.
DBT HOLDING COMPANY | 29 |
Notes to Consolidated Financial Statements
18. Other Borrowings (cont) |
In 2006, the Company formed a wholly-owned subsidiary, DBT Statutory Trust III (Trust III), and was issued $186,000 of floating rate common securities by Trust III. Trust III also issued $6,000,000 in floating rate capital securities (Trust Preferred Securities) to qualified institutional buyers. Trust III invested these proceeds in $6,186,000 of the Companys 2006-1 Unsecured Floating Rate Junior Subordinated Debentures (the 2006 Debentures). The 2006 Debentures represent the sole assets of Trust III, mature on December 15, 2036, bear interest at the adjustable rate of LIBOR plus 1.70%, payable quarterly and are redeemable in whole, or in part, by the Company beginning on December 15, 2011, at 100% of the principal amount plus any accrued and unpaid interest to the redemption date. |
The 2002 and 2006 Debentures are unsecured obligations of the Company and are junior in right of payment to all present and future senior indebtedness of the Company. The Company may defer interest payments on the 2002 and 2006 Debentures from time-to-time for a period not exceeding twenty consecutive quarters. However, any unpaid quarterly interest payments will continue to accrue interest at prime plus 1.25% for the 2002 Debentures and LIBOR plus 1.70% for the 2006 Debentures.
Holders of the Trust Preferred Securities are entitled to cumulative cash distributions. The Trust Preferred Securities will be redeemed upon repayment of the 2002 and 2006 Debentures. If the Company defers interest payments on the 2002 and 2006 Debentures, Trust II and Trust III will defer distributions on the Trust Preferred Securities during any deferral period. However, any unpaid quarterly distributions on the Trust Preferred Securities will continue to accrue with interest at prime plus 1.25% for Trust II and LIBOR plus 1.70% for Trust III. The Company has guaranteed, on a subordinated basis, distributions and other payments due on the Trust Preferred Securities.
The Bank has entered into a repurchase agreement for certain securities. The agreement requires interest at a variable rate based upon LIBOR and matures June 25, 2012. As of December 31, 2009, the Bank sold $ 10,100,000 under this agreement
19. Other Credit Arrangements |
The Company maintains a line of credit with a financial institution in the amount of $ 1,600,000. As of December 31, 2009, there was $1,600,000 outstanding. |
20. Fair Values of Financial Instruments |
The assumptions used in the estimation of the fair value of financial instruments are detailed below. Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered as representative of the liquidation value of the Company, but rather a good-faith estimate of the increase or decrease in value of financial instruments held since purchase, origination or issuance. |
Cash and Short-Term Investments
For cash, due from banks, federal funds sold and interest-bearing deposits with other banks, the carrying amount is a reasonable estimate of fair value.
30 | DBT HOLDING COMPANY |
20. Fair Values of Financial Instruments (cont.) |
Investment Securities |
Fair values for investment securities are based on quoted market prices.
Loans and Commitments to Extend Credit and Standby Letters of Credit
For variable rate loans that reprice frequently with no significant change in credit risk, fair values are based on carrying amounts. The fair values of other loans (for example, fixed rate real estate loans, commercial and state and municipal loans) are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include adjustments regarding future expected loss experience and risk characteristics.
Federal Home Loan Bank (FHLB) Stock
It is not practical to estimate the fair value of FHLB Stock, as it is not marketable. The investment in FHLB Stock is carried at cost in the accompanying balance sheet and is assumed to approximate fair value.
Interest Receivable and Other Assets
The carrying amounts of these assets are assumed to approximate their fair values.
Deposit Liabilities
The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.
Advances from Federal Home Loan Bank and Other Borrowings
The carrying amounts of short-term borrowings approximate their fair values.
Accrued Interest and Other Liabilities
The carrying amounts of these liabilities are assumed to approximate their fair values.
DBT HOLDING COMPANY | 31 |
Notes to Consolidated Financial Statements
20. Fair Values of Financial Instruments (cont.) |
Accrued Interest and Other Liabilities (cont.) |
Fair value estimates are made at a specific point in time based on relevant market information, and information about the respective financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Banks entire holdings of a particular financial instrument Because no market exists for a significant portion of the Banks financial instruments, fair value estimates are based on judgments, which are subjective in nature and involve uncertainties and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing and off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
The carrying amounts and estimated fair values of the Banks financial instruments are as follows (in thousands):
2009 | 2008 | |||||||||||||||
As of December 31, |
Carrying Amount |
Estimated Fair Value |
Carrying Amount |
Estimated Fair Value |
||||||||||||
Assets |
||||||||||||||||
Investment securities |
$ | 108,811 | $ | 108,804 | $ | 118,983 | $ | 120,914 | ||||||||
Federal Home Loan Bank stock |
$ | 4,203 | $ | 4,203 | $ | 4,145 | $ | 4,145 | ||||||||
Loans |
$ | 484,325 | $ | 482,891 | $ | 599,340 | $ | 609,287 | ||||||||
Liabilities |
||||||||||||||||
Deposits |
$ | 718,406 | $ | 727,568 | $ | 648,585 | $ | 652,687 | ||||||||
Borrowings |
$ | 82,979 | $ | 82,979 | $ | 82,979 | $ | 82,979 | ||||||||
Off balance sheet financial instruments |
||||||||||||||||
Commitments to extend credit |
$ | | $ | 5,058 | $ | | $ | 84,611 | ||||||||
32 | DBT HOLDING COMPANY |
20. Fair Values of Financial Instruments (cont.) |
Assets measured at fair value on a recurring basis as follows (in thousands): |
As of December 31, 2009 |
||||||||||||||||
Total carrying value in the consolidated balance sheet at December 31, 2009 |
Quoted market prices in an active market (Level 1) |
Significant other observable market parameters (Level 2) |
Internal models with significant unobservable market parameters (Level 3) |
|||||||||||||
Investment securities |
$ | 108,804 | $ | 108,804 | $ | | $ | | ||||||||
Assets measured at fair value on a recurring basis as follows (in thousands):
As of December 31, 2008 |
||||||||||||||||
Total carrying value in the consolidated balance sheet at December 31, 2008 |
Quoted market prices in an active market (Level 1) |
Significant other observable market parameters (Level 2) |
Internal models with significant unobservable market parameters (Level 3) |
|||||||||||||
Investment securities |
$ | 11,124 | $ | 11,124 | $ | | $ | | ||||||||
DBT HOLDING COMPANY | 33 |
Notes to Consolidated Financial Statements
20. Fair Values of Financial Instruments (cont.) |
Assets and liabilities measured at fair value on a non-recurring basis as follows (in thousands): |
As of December 31, 2009 |
||||||||||||||||
Total carrying value in the consolidated balance sheet at December 31, 2009 |
Quoted
market prices in an active market (Level 1) |
Significant other observable market parameters (Level 2) |
Internal models
with significant unobservable market parameters (Level 3) |
|||||||||||||
Assets |
||||||||||||||||
Impaired loans |
$ | 37,394 | $ | | $ | | $ | 37,394 | ||||||||
Other real estate owned |
20,559 | | | 20,559 | ||||||||||||
Total assets at fair value |
$ | 57,953 | $ | | $ | | $ | 57,953 | ||||||||
Liabilities |
||||||||||||||||
Derivative financial instruments |
$ | 278 | $ | | $ | 278 | $ | | ||||||||
Total liabilities at fair value |
$ | 278 | $ | | $ | 278 | $ | | ||||||||
34 | DBT HOLDING COMPANY |
20. Fair Values of Financial Instruments (cont.) |
Assets measured at fair value on a nonrecurring basis as follows (in thousands): |
As of December 31, 2008 |
||||||||||||||||
Total carrying value in the consolidated balance sheet at December 31, 2008 |
Quoted
market prices in an active market (Level 1) |
Significant other observable market parameters (Level 2) |
Internal models
with significant unobservable market parameters (Level 3) |
|||||||||||||
Assets |
||||||||||||||||
Impaired loans |
$ | 28,739 | $ | | $ | | $ | 28,739 | ||||||||
Other real estate owned |
16,356 | | | 16,356 | ||||||||||||
Derivative financial instruments |
49 | | 49 | | ||||||||||||
Total assets at fair value |
$ | 45,144 | $ | | $ | 49 | $ | 45,095 | ||||||||
Liabilities |
||||||||||||||||
Derivative financial instruments |
$ | 394 | $ | | $ | 394 | $ | | ||||||||
Total liabilities at fair value |
$ | 394 | $ | | $ | 394 | $ | | ||||||||
Rollforward of assets determined to be a Level 3 (in thousands):
Impaired Loans | Other Real Estate Owned |
|||||||
Balance at December 31, 2008 |
$ | 28,739 | $ | 16,356 | ||||
Total losses for the year |
| (2,449 | ) | |||||
Net transfers in/out Level 3 |
8,655 | 6,652 | ||||||
Balance at December 31, 2009 |
$ | 37,394 | $ | 20,559 | ||||
DBT HOLDING COMPANY | 35 |
Notes to Consolidated Financial Statements
21. Regulatory Matters |
The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Banks financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets, liabilities and certain off balance sheet items as calculated under regulatory accounting practices. The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. |
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and Tier I capital (as defined) to average assets (as defined). Due to the Banks condition, the FDIC has required that the Banks Board of Directors sign a Consent Order which conveys specific actions needed to address certain findings from the examination and to address the Banks current financial condition. The Bank entered into the Consent Order with the FDIC on December 18, 2009 and it contains a list of strict requirements including the following:
| The Board of Directors must create a committee to ensure compliance with the Order; the Committee must ensure appropriate management is in place and regularly monitor activities towards compliance with the Consent Order. |
| The Bank must implement a plan to raise additional capital and meet or exceed certain minimum capital ratios within a specified time period. |
| The Bank may not pay dividends without prior approval from the FDIC. |
| The Bank must charge off certain non-performing and classified assets and formulate a written plan to deal with significant non-performing assets. |
| The Bank must continually reevaluate its Allowance for Loan and Lease Losses and accounting for Other Real Estate and ensure adequate provisions. |
| The Bank shall review its underwriting policy and is limited in making additional extensions of credit to certain borrowers. |
| The Bank must establish a written liquidity management plan, interest rate risk policy, budget and strategic business plan for submission to the FDIC. |
| The Banks ability to accept, renew or roll over brokered deposits will be limited without being granted a waiver of this provision by the FDIC. |
The Banks Board of Directors has put plans in place to respond to and comply with the Consent Order. There is no assurance that the FDIC will accept such response or that the Bank will achieve compliance with the Consent Order.
36 | DBT HOLDING COMPANY |
21. Regulatory Matters (cont.) |
The Banks actual capital amounts and ratios are also presented in the table (in thousands). |
Actual | For Capital Adequacy Purposes |
To Be
Well Capitalized Under Prompt Corrective Action Provisions |
||||||||||||||||||||||
As of December 31, 2009 |
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||
Total capital (to risk-weighted assets) |
||||||||||||||||||||||||
DBT Holding Company |
$ | 36,901 | 7.1 | % | $ | 41,451 | 8.0 | % | $ | 51,814 | 10.0 | % | ||||||||||||
Darby Bank & Trust |
$ | 37,519 | 7.2 | % | $ | 41,434 | 8.0 | % | $ | 51,792 | 10.0 | % | ||||||||||||
Tier I capital (to risk-weighted assets) |
||||||||||||||||||||||||
DBT Holding Company |
$ | 25,699 | 4.9 | % | $ | 20,726 | 4.0 | % | $ | 31,089 | 6.0 | % | ||||||||||||
Darby Bank & Trust |
$ | 30,909 | 5.9 | % | $ | 20,717 | 4.0 | % | $ | 31,075 | 6.0 | % | ||||||||||||
Tier I capital (to average assets) |
||||||||||||||||||||||||
DBT Holding Company |
$ | 25,699 | 2.9 | % | $ | 34,339 | 4.0 | % | $ | 42,923 | 5.0 | % | ||||||||||||
Darby Bank & Trust |
$ | 30,909 | 3.6 | % | $ | 34,452 | 4.0 | % | $ | 43,066 | 5.0 | % | ||||||||||||
As of December 31, 2008 |
||||||||||||||||||||||||
Total capital (to risk-weighted assets) |
||||||||||||||||||||||||
DBT Holding Company |
$ | 58,563 | 9.4 | % | $ | 50,196 | 8.0 | % | $ | 62,745 | 10.0 | % | ||||||||||||
Darby Bank & Trust |
$ | 65,395 | 10.4 | % | $ | 50,171 | 8.0 | % | $ | 62,714 | 10.0 | % | ||||||||||||
Tier I capital (to risk-weighted assets) |
||||||||||||||||||||||||
DBT Holding Company |
$ | 66,431 | 10.2 | % | $ | 25,098 | 4.0 | % | $ | 37,647 | 6.0 | % | ||||||||||||
Darby Bank & Trust |
$ | 57,560 | 9.2 | % | $ | 25,086 | 4.0 | % | $ | 37,628 | 6.0 | % | ||||||||||||
Tier I capital (to average assets) |
||||||||||||||||||||||||
DBT Holding Company |
$ | 58,563 | 7.2 | % | $ | 25,318 | 4.0 | % | $ | 31,648 | 5.0 | % | ||||||||||||
Darby Bank & Trust |
$ | 57,560 | 7.1 | % | $ | 32,639 | 4.0 | % | $ | 40,798 | 5.0 | % |
DBT HOLDING COMPANY | 37 |
Notes to Consolidated Financial Statements
22. Supplemental Cash Flow Information |
Noncash transactions: |
During 2009, 2008 and 2007, loans having a carrying value of $ 15,253,000, $21,445,000, and $2,539,000, respectively, were transferred to other real estate owned.
Cash paid during the year for (in thousands):
December 31, |
2009 | 2008 | 2007 | |||||||||
Interest |
$ | 20,564 | $ | 22,856 | $ | 25,422 | ||||||
Income taxes |
$ | | $ | 1,505 | $ | 3,641 | ||||||
23. Stock Incentive Plan |
The Company sponsors various stock option plans. An aggregate of 120,000 shares have been reserved for issuance under the plans. The grant price, exercise period and vesting schedule for each option are determined at the date of grant by the Board of Directors. |
December 31, |
2009 | 2008 | 2007 | |||||||||||||||||||||
Shares | Weighted Average Exercise Price |
Shares | Weighted Average Exercise Price |
Shares | Weighted Average Exercise Price |
|||||||||||||||||||
Outstanding at beginning of year |
46,690 | $ | 21.71 | 78,443 | $ | 16.58 | 86,046 | $ | 16.53 | |||||||||||||||
Granted |
| $ | | | $ | | | $ | | |||||||||||||||
Exercised |
| $ | | (22,153 | ) | $ | 7.63 | (7,603 | ) | $ | 15.97 | |||||||||||||
Forfeited |
(9,197 | ) | $ | 28.99 | (9,600 | ) | $ | 7.45 | | $ | | |||||||||||||
Outstanding at end of year |
37,493 | $ | 21.17 | 46,690 | $ | 22.71 | 78,443 | $ | 16.58 | |||||||||||||||
Options exercisable at end of year |
35,803 | $ | 20.34 | 41,391 | $ | 20.67 | 58,014 | $ | 14.83 | |||||||||||||||
Weighted average fair value of all options granted during the year |
$ | | $ | | $ | | ||||||||||||||||||
38 | DBT HOLDING COMPANY |
23. Stock Incentive Plan (cont.)
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Range of Option Prices |
Weighted Average Remaining Contractual Life (Years) |
Options Outstanding December 31, 2009 |
Weighted Average Exercise Price |
Options Exercisable December 31, 2009 |
Weighted Average Exercise Price |
|||||||||||||||||
$ 12-13 | 1 | 17,328 | $ | 12.79 | 18,528 | $ | 12.79 | |||||||||||||||
$ 19-21 | 4 | 11,717 | $ | 20.94 | 18,000 | $ | 20.94 | |||||||||||||||
$ 38-39 | 6 | 8,448 | $ | 38.68 | 12,518 | $ | 38.68 | |||||||||||||||
The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition of the stock-based compensation accounting standard (in thousands, except per share data):
December 31, |
2009 | 2008 | 2007 | |||||||||
Net income available to common Stockholders |
||||||||||||
As reported |
$ | (28,913 | ) | $ | 1,292 | $ | 5,860 | |||||
Deduct: stock-based compensation expense determined under fair value method, net of tax benefit |
$ | 14 | $ | 19 | $ | 34 | ||||||
Pro forma |
$ | (28,927 | ) | $ | 1,273 | $ | 5,826 | |||||
Basic (loss) earnings per share |
||||||||||||
As reported |
$ | (21.71 | ) | $ | .83 | $ | 4.65 | |||||
Pro forma |
$ | (21.72 | ) | $ | .81 | $ | 4.62 | |||||
Diluted (loss) earnings per share |
||||||||||||
As reported |
$ | (21.71 | ) | $ | .93 | $ | 4.35 | |||||
Pro forma |
$ | (21.72 | ) | $ | .91 | $ | 4.33 | |||||
DBT HOLDING COMPANY | 39 |
Notes to Consolidated Financial Statements
23. Stock Incentive Plan (cont.) |
The fair value of options granted was estimated on the date of grant using the Black Scholes Valuation method with the following weighted average assumptions: dividend yield of 1.6% to 2.6%; a risk-free interest rate of 4%; and an expected life of 10 years. |
In 2001, the Company instituted a director stock incentive plan. An aggregate of 24,000 shares have been reserved for issuance under the plan. Certain eligible directors have elected to receive payment for 2009, 2008 and 2007 director fees in shares of common stock, resulting in the issuance of 4,903 shares, 2,869 shares, and 1,814 shares, respectively.
In 2007, the Company instituted a restricted stock unit plan. A restricted stock unit represents the contingent right to receive one share of the Companys common stock at a future date. The restricted stock units vest on a pro-rata basis in periods ranging from one to five years and are expensed accordingly on a straight-line basis. There were 14,267 and 5,850 restricted stock units granted in 2009 and 2008, respectively.
24. (Loss) / Earnings Per Share |
In thousands except share information. |
December 31, |
2009 | |||||||||||
Income (Numerator) |
Shares (Denominator) |
Per Share Amount |
||||||||||
Net loss |
$ | (28,913 | ) | |||||||||
Less: preferred stock dividends |
197 | |||||||||||
Basic EPS |
||||||||||||
Loss available to common stockholders |
$ | (29,110 | ) | 1,340,843 | $ | (21.71 | ) | |||||
Effect of dilutive securities |
||||||||||||
Stock options and restricted stock units |
| | ||||||||||
Series B convertible preferred stock |
| | ||||||||||
Series C convertible preferred stock |
| | ||||||||||
Diluted EPS |
||||||||||||
Loss available to common stockholders plus assumed conversions |
$ | (29,110 | ) | 1,340,843 | $ | (21.71 | ) | |||||
Due to the net loss as of December 31, 2009, the calculation of diluted per share amounts would cause an anti-dilutive result and, therefore, is not calculated
40 | DBT HOLDING COMPANY |
24. (Loss) / Earnings Per Share |
In thousands except share information. |
December 31, |
2008 | |||||||||||
Income (Numerator) |
Shares (Denominator) |
Per Share Amount |
||||||||||
Net income |
$ | 1,292 | ||||||||||
Less: preferred stock dividends |
250 | |||||||||||
Basic EPS |
||||||||||||
Income available to common stockholders |
$ | 1,042 | 1,257,697 | $ | .83 | |||||||
Effect of dilutive securities |
||||||||||||
Stock options |
| 18,813 | ||||||||||
Series B convertible preferred stock |
250 | 116,800 | ||||||||||
Diluted EPS |
||||||||||||
Income available to common stockholders plus assumed conversions |
$ | 1,292 | 1,393,310 | $ | .93 | |||||||
December 31, |
2007 | |||||||||||
Income (Numerator) |
Shares (Denominator) |
Per Share Amount |
||||||||||
Net income |
$ | 5,860 | ||||||||||
Less: preferred stock dividends |
403 | |||||||||||
Basic EPS |
||||||||||||
Income available to common stockholders |
$ | 5,457 | 1,173,206 | $ | 4.65 | |||||||
Effect of dilutive securities |
||||||||||||
Stock options |
| 57,065 | ||||||||||
Series A convertible preferred stock |
152 | | ||||||||||
Series B convertible preferred stock |
251 | 116,800 | ||||||||||
Diluted EPS |
||||||||||||
Income available to common stockholders plus assumed conversions |
$ | 5,860 | 1,347,071 | $ | 4.35 | |||||||
25. Reclassification |
Certain amounts reported in the prior years financial statements have been reclassified to conform to the current reporting format. |
DBT HOLDING COMPANY | 41 |
Notes to Consolidated Financial Statements
26. Condensed Financial Statements of DBT Holding Company (Parent Company Only)
Condensed Balance Sheets (In thousands) December 31, |
2009 | 2008 | ||||||
Assets |
||||||||
Cash |
$ | 289 | $ | 530 | ||||
Investment in subsidiaries |
30,905 | 57,605 | ||||||
Other assets |
1,454 | 2,496 | ||||||
$ | 32,648 | $ | 60,631 | |||||
Liabilities |
||||||||
Other payables |
$ | 683 | $ | 368 | ||||
Borrowings |
10,879 | 10,879 | ||||||
11,562 | 11,247 | |||||||
Stockholders equity |
||||||||
Common stock |
1,400 | 1,280 | ||||||
Preferred stock |
2,001 | 6,339 | ||||||
Surplus |
19,403 | 14,362 | ||||||
Retained earnings |
(1,529 | ) | 27,581 | |||||
Accumulated other comprehensive income |
(189 | ) | (178 | ) | ||||
21,086 | 49,384 | |||||||
$ | 32,648 | $ | 60,631 | |||||
Condensed Statements of Earnings (In thousands) Years ended December 31, |
2009 | 2008 | 2007 | |||||||||
Revenues |
||||||||||||
Dividend income |
$ | | $ | 14 | $ | 1,222 | ||||||
Equity in undistributed (loss) earnings of subsidiary |
(28,650 | ) | 1,367 | 5,483 | ||||||||
Other |
45 | 620 | 449 | |||||||||
Total (loss) income |
(28,605 | ) | 2,001 | 7,154 | ||||||||
Expenses |
||||||||||||
Salaries and benefits |
74 | 245 | 370 | |||||||||
Other operating expenses |
234 | 464 | 924 | |||||||||
308 | 709 | 1,294 | ||||||||||
Net (loss) earnings |
$ | (28,913 | ) | $ | 1,292 | $ | 5,860 | |||||
42 | DBT HOLDING COMPANY |
26. Condensed Financial Statements of DBT Holding Company (Parent Company Only) (cont.)
Condensed Statements of Cash Flows (In thousands) Years ended December 31, |
2009 | 2008 | 2007 | |||||||||
Cash flows from operating activities |
||||||||||||
Net (loss) earnings |
$ | (28,913 | ) | $ | 1,292 | $ | 5,860 | |||||
Adjustments to reconcile net (loss) earnings to cash provided by operating activities |
||||||||||||
Undistributed loss (earnings) of subsidiary |
28,650 | (1,367 | ) | (5,483 | ) | |||||||
Stock-based compensation expense |
177 | 214 | 138 | |||||||||
Changes in |
||||||||||||
Other assets |
1,042 | (244 | ) | (423 | ) | |||||||
Other payables |
354 | (631 | ) | 126 | ||||||||
Cash provided by (used for) operating activities |
1,310 | (736 | ) | 218 | ||||||||
Cash flows from investing activity |
||||||||||||
Investment in subsidiaries |
(2,000 | ) | (1,850 | ) | | |||||||
Cash used for investing activity |
(2,000 | ) | (1,850 | ) | | |||||||
Cash flows from financing activities |
||||||||||||
Increase to line of credit |
| 1,600 | | |||||||||
Common stock issued |
| 118 | 121 | |||||||||
Preferred stock subscribed |
646 | 1,355 | | |||||||||
Payment of cash dividends |
(197 | ) | (1,255 | ) | (1,324 | ) | ||||||
Cash provided by (used for) financing activities |
449 | 1,818 | (1,203 | ) | ||||||||
Net decrease in cash and cash equivalents |
(241 | ) | (768 | ) | (985 | ) | ||||||
Cash and cash equivalents, beginning of year |
530 | 1,298 | 2,283 | |||||||||
Cash and cash equivalents, end of year |
$ | 289 | $ | 530 | $ | 1,298 | ||||||
DBT HOLDING COMPANY | 43 |