As filed with the Securities and Exchange Commission on ___________, 2018
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Registration No. 333-______________
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Kentucky
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6022
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61-1206757
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(State or Other Jurisdiction
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(Primary Standard Industrial
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(I. R. S. Employer
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of Incorporation or Organization)
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Classification Code Number)
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Identification Number)
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Thomas J. Murray, Esq.
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R. Terrance Rodgers, Esq.
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Daniel J. Konrad, Esq.
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Charles W. Pace, Jr., Esq.
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Dinsmore & Shohl LLP
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Kay, Casto and Chaney, PLLC
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611 Third Avenue
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P.O. Box 2031
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P.O. Box 2185
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Charleston, West Virginia 25327
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Huntington, West Virginia 25722-2185
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(304) 345-8900
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(304) 691-8398
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging Growth Company
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount to Be
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Offering Price Per
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Aggregate Offering
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Registration
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Securities to Be Registered
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Registered (1)
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Unit (2)
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Price(2)
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Fee
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Common Stock, no par value per share
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1,608,661 shares
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$13.61
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$21,896,000
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$ 2,726.06
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(1)
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The number of shares of common stock, no par value per share of Premier Financial Bancorp, Inc. (“Premier”) to be registered pursuant to this Registration Statement represents the maximum number of shares issuable by Premier Financial Bancorp, Inc. upon consummation of the Merger of a wholly owned subsidiary of Premier and First Bank of Charleston, Inc. (“First Bank”) This number is based on (a) the number of shares of First Bank Common Stock outstanding and shares reserved for issuance pursuant to outstanding stock options as of June 30, 2018 and (b) a share exchange ratio of 1.544 per share of First Bank common stock. If the average closing price of Premier common stock over a designated measurement period declines such that the total consideration per share of First Bank common stock is less than $32.00, then First Bank may terminate the Merger Agreement unless Premier agrees to increase the number of shares to be issued to holders of First Bank common stock or increase cash consideration. In the event Premier increases the number of shares to be issued, Premier will amend this Registration Statement to increase the number of shares of Premier to be issuable upon completion of the Merger.
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(2)
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Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and computed pursuant to Rule 457(f)(1) of the Securities Act based on a rate of $124.50 per $1,000,000 of the proposed maximum offering price. The proposed aggregate offering price of the registrant’s common stock was calculated based on the book value per share of the First Bank common stock outstanding in accordance with Rule 457(f)(2) under the Securities Act outstanding as of June 30, 2018.
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Premier Financial Bancorp, Inc.
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First Bank of Charleston, Inc.
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Premier Financial Bancorp, Inc.
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First Bank of Charleston, Inc.
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1. |
A proposal to approve and adopt the Agreement of Merger dated April 18, 2018, as amended by First Amendment to Agreement of Merger dated June 29, 2018, among Premier Financial Bancorp, Inc., Premier Bank, Inc. and First Bank (the “Merger Agreement”) and the transactions contemplated thereby. The Merger Agreement provides that First Bank will merge with and into Premier Bank, Inc., a subsidiary of Premier Financial Bancorp, Inc., upon the terms and subject to the conditions set forth in the Merger Agreement, a copy of which is attached as Annex I to and as more fully described in the accompanying joint proxy statement/prospectus (the “Merger”).
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2. |
A proposal to adjourn the meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event there are not sufficient votes at the time of the meeting to approve the matters to be considered by the shareholders at the meeting, as more fully described in the accompanying joint proxy statement/prospectus.
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3. |
Such other matters as may properly come before the special meeting.
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1. |
A proposal to approve the issuance of Premier common stock, no par value per share, in connection with the Merger contemplated by the Agreement of Merger, dated as of April 18, 2018, as amended by First Amendment to Agreement of Merger dated June 29, 2018, by and among Premier, First Bank of Charleston, Inc. (“First Bank”) and Premier Bank, Inc., a wholly owned subsidiary of Premier (hereinafter the “Merger Agreement”), a copy of which is attached as Annex I to the joint proxy statement/prospectus accompanying this notice;
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2. | A proposal to amend the articles of incorporation of Premier to increase the authorized number of shares of Premier common stock from 20,000,000 to 30,000,000; and |
3. |
A proposal to adjourn the meeting to a later date or dates, if necessary, to permit further solicitation of additional proxies in the event there are not sufficient votes at the time of the meeting to approve the matters to be considered at the meeting, as more fully described in the accompanying joint proxy statement/prospectus.
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F-1
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F-2
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F-43
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A: |
Premier and First Bank have agreed to combine under the terms of a Merger Agreement that is described in this document. A copy of the Merger Agreement and amendment thereto is attached to this document as Annex I.
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The Premier special meeting will be held at the Pullman Plaza Hotel, 1001 Third Avenue, Huntington, West Virginia 25701 on ___________________, 2018, at ______ a.m., local time. The First Bank special meeting will be held at First Bank of Charleston, Inc., 201 Pennsylvania Avenue, Charleston, West Virginia 25302, on _________________, 2018, at _____ a.m., local time.
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If you are a shareholder of record of Premier as of the record date for the Premier special meeting or a shareholder of record of First Bank as of the record date for the First Bank special meeting, you may vote in person by attending your special meeting or, to ensure your shares are represented at the meeting, you may vote by signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.
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Premier. The proposal at the Premier special meeting to approve the issuance of shares of Premier common stock in the Merger requires the affirmative vote of holders of a majority of outstanding shares of Premier (excluding the shares held by Marshall T. Reynolds, Chairman of the Board of Directors of Premier, Robert W. Walker, President and Chief Executive Officer of Premier, Toney K. Adkins, Philip E. Cline and Thomas W. Wright, directors of Premier, each of whom beneficially owns shares of First Bank common stock).
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Q: |
Why are Premier shareholders voting to approve the issuance of shares of Premier common stock in the Merger?
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Premier shares are traded on the Nasdaq Global Market. Nasdaq rules require Premier shareholders to approve the issuance of Premier shares in connection with the acquisition of First Bank if (1) any director, officer or substantial shareholder of Premier has a 5% or greater interest, or Premier directors collectively have a 10% or greater interest in First Bank or the consideration to be paid in the Merger, and (2) the issuance of common stock could result in an increase in outstanding shares of Premier common stock of 5% or more.
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(a) |
The material facts of the transaction and the director’s interest were disclosed to the board of directors and the board of directors approved the transaction; or
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(b) |
The material facts of the transaction and the director’s interest were disclosed to the shareholders and the shareholders approved the transaction; or
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(c) |
The transaction was fair to the corporation.
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Premier. You are entitled to one vote for each share of Premier common stock that you owned as of the record date.
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Premier. If you are a Premier shareholder and fail to vote, fail to instruct your bank, broker or other nominee to vote or abstain from voting, it will have the same effect as a vote against the proposal to approve the issuance of shares of Premier common stock in the Merger, since the issuance requires the affirmative vote of a majority of outstanding shares, but will have no effect on the proposal to amend Premier’s articles of incorporation, assuming a quorum is present at the meeting.
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Premier. Shareholders who hold at least a majority of the outstanding shares of Premier common stock as of the close of business on the record date and who are entitled to vote must be present or represented by proxy in order to constitute a quorum to conduct the Premier special meeting.
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Q: |
If my shares are held in street name by my broker, will my broker vote my shares for me?
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If you hold your shares in a stock brokerage account or if your shares are held by a bank or nominee (that is, in street name), you should provide that record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your bank or broker. Please note that you may not vote shares held in street name by returning a proxy card directly to Premier or First Bank or by voting in person at your special meeting unless you provide a “legal proxy,” which you must obtain from your bank or broker. Further, brokers who hold shares of Premier common stock or First Bank common stock on behalf of their customers may not give a proxy to Premier or First Bank to vote those shares without specific instructions from their customers.
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If you sign and return your proxy card without indicating how to vote on any particular proposal, the Premier common stock or First Bank common stock represented by your proxy will be voted in favor of that proposal.
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Yes. You can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:
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you can send a signed notice of revocation;
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you can grant a new, valid proxy bearing a later date; or
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if you are a holder of record, you can attend your special meeting and vote in person, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.
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Premier. No, Premier shareholders do not have appraisal rights with respect to the proposal to issue Premier common stock in the Merger or the proposal to amend Premier’s articles of incorporation.
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Q: |
What are the material United States federal income tax consequences of the Merger to U.S. holders of First Bank common shares?
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A: |
For U.S. federal income tax purposes, the Special Dividend and the Merger will be treated as a single integrated transaction that will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, the Premier common stock, cash and the Special Dividend should be treated as received in exchange for shares of First Bank common stock pursuant to a transaction qualifying as a reorganization for U.S. federal income tax purposes. A First Bank shareholder who exchanges his or her shares of First Bank common stock for shares of Premier common stock pursuant to the Merger and receives Merger Consideration and the Special Dividend will recognize gain, but will not recognize any loss, for U.S. federal income tax purposes. Subject to the discussion of Certain Federal Income Tax Consequences of the Merger, the amount of gain recognized will equal the smaller of (i) the amount of the Cash Merger Consideration and the Special Dividend and (ii) gain realized from the Merger. The gain realized from the Merger is equal to the excess, if any, of (x) the sum of (1) the amount of Cash Merger Consideration, (2) the amount of the Special Dividend, and (3) the fair market value of the Premier common stock received in the Merger (determined at the effective time of the Merger) over (y) the First Bank shareholder’s tax basis in the shares of First Bank common stock surrendered in the Merger. Subject to the conditions and restrictions set forth in the section entitled “Certain Federal Income Tax Consequences of the Merger” beginning on page 89 of this joint proxy statement/prospectus, any recognized gain will generally be long-term capital gain if the shareholder’s holding period for the shares of First Bank common stock surrendered is more than one year at the effective time of the Merger.
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Premier and First Bank are working to complete the Merger in the fourth quarter of 2018. However, the Merger is subject to various federal and state regulatory approvals and other conditions, and it is possible that factors outside the control of both companies could result in the Merger being completed at a later time, or not at all. There may be a substantial amount of time between the respective Premier and First Bank special meetings and the completion of the Merger. Premier and First Bank hope to complete the Merger as soon as reasonably practicable.
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Carefully read and consider the information contained in and incorporated by reference into this document, including its annexes.
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you can indicate on the enclosed proxy card how you would like to vote and return the proxy card in the accompanying pre-addressed postage paid envelope.
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you can follow the voting instructions provided by your bank, broker or other nominee directing it how to vote your shares
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you can attend your special meeting and vote in person.
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Q: |
Do I need to do anything with my shares of First Bank or Premier common stock now?
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No. Please do not send in your First Bank share certificates with your proxy card. Should the Merger be approved, at a later date, Premier’s exchange agent will mail to you a Transmittal Form that you should use to surrender your First Bank share certificates. You should not surrender your First Bank share certificates for exchange until you receive the Transmittal Form from the exchange agent.
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Premier shareholders or First Bank shareholders who have questions about the Merger or the other matters to be voted on at the shareholder meetings or desire additional copies of this document or additional proxy cards should contact:
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if you are a Premier shareholder: | if you are a First Bank shareholder: |
Brien M. Chase, Senior Vice
President and Chief Financial Officer
Premier Financial Bancorp, Inc.
2883 Fifth Avenue
Huntington, WV 25702
Phone: (304) 525-1600
Fax: (304) 525-9701
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Larry A. Stark
President and Chief Executive Officer
First Bank of Charleston, Inc.
201 Pennsylvania Avenue
Charleston, WV 25302
Phone: (304) 340-3000
Fax: (304) 340-3003
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A: |
(a) Each share of First Bank common stock issued and outstanding immediately prior to the Effective Time, other than any Dissenting Shares, shall automatically be converted into the right to receive approximately $32.00 per First Bank common share, determined as the sum of (i) the Special Dividend; (ii) $5.00 cash, without interest, per share, paid by or on behalf of Premier (the “Cash Merger Consideration”); and (iii) approximately $22.00 per share of fully paid and non-assessable shares of Premier Common Stock (the “Stock Merger Consideration”) (determined by dividing (n) $22.00 by (d) The weighted average of the daily closing trade prices of Premier common stock on the NASDAQ Global Market System during the twenty (20) consecutive NASDAQ Global Market System trading days ending on the trading day before the Effective Time, rounded to the nearest whole cent (“Premier's Trading Price”) rounded to the nearest thousandth, which shall be hereinafter referred to as the “Exchange Ratio”); (the Stock Merger Consideration and Cash Merger Consideration are collectively referred to as the “Merger Consideration”) provided, however, that the Exchange Ratio shall not be greater than 1.544, unless increased pursuant to (b) below.
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Marshall T. Reynolds, Chairman of the Board of Directors of Premier and beneficial owner of 1,057,978 shares of Premier common stock, constituting 7.9% of outstanding shares of Premier common stock, is the beneficial owner of 89,817 shares of First Bank common stock, constituting approximately 8.7% of the outstanding First Bank shares as of __________, 2018. He also serves as a consultant to First Bank.
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Certain Premier directors beneficially own shares of First Bank common stock, each individually less than 1% of outstanding First Bank common stock, and in the aggregate, approximately 1.58% of First Bank outstanding common stock as follows:
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Toney K. Adkins |
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5,277 shares |
Philip E. Cline |
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7,555 shares |
Robert W. Walker |
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2,875 shares |
Thomas W. Wright |
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550 shares
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First Bank employees hold options to purchase up to 9,500 shares of First Bank common stock, which will be converted into options to acquire Premier common stock if the Merger is consummated.
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Certain First Bank directors beneficially own shares of Premier common stock, as indicated below, constituting 2.7% of the outstanding Premier Shares as of June 30, 2018:
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Douglas V. Reynolds | 298,810 | 2.2 | % | |||||
Nester S. Logan | 20,078 |
0.2
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%
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Sam Kapourales | 37,476 | 0.3 | % | |||||
Percy Osborne |
1,241
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Wyatt Scaggs | 183 | ** | ||||||
** Less than 0.1%
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First Bank directors and executive officers beneficially own 409,658 shares of First Bank common stock, constituting 39.68% of all outstanding First Bank common stock.
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Employee Benefit Plans. Premier intends to provide the employees of First Bank with employee benefit plans substantially similar to those provided to the employees of Premier. Employees of First Bank will receive credit for their service to First Bank in determining their eligibility and vesting in the benefit plans provided by Premier. The Merger Agreement also provides that Premier will pay to any First Bank employee who is involuntarily terminated other than for cause within 12 months after the closing date, upon execution of an appropriate full release, a severance payment equal to two weeks of base pay (at the rate in effect on the termination date) for each year of service at First Bank (with credit for partial years of service), with a maximum payment equal to ten (10) weeks of base pay.
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First Bank has created a retention bonus program for the purpose of retaining the services of First Bank employees pending completion of the Merger.
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First Bank shareholders’ approval of the Merger Agreement;
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Premier shareholders’ approval of issuance of Premier common stock in the Merger (however it is not a condition that Premier shareholders approve the amendment to articles of incorporation increasing authorized shares from 20,000,000 to 30,000,000);
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approval of the Merger by the necessary federal and state regulatory authorities;
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absence of any law or court order prohibiting the Merger;
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receipt of opinions from counsel to First Bank and Premier that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code;
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the continued accuracy of certain representations and warranties.
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Unless waived by Premier, the holders of no more than 10% of the outstanding shares of First Bank common stock shall have elected to exercise their statutory rights to appraisal, if any in connection with the Merger.
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there has been a material adverse change in the financial condition of Premier, any of the Premier Subsidiary Banks or First Bank;
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either party breaches any of its representations or obligations under the Merger Agreement, and does not cure the breach within 30 days if such breach individually or in the aggregate with other breaches results in a material adverse effect;
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the approval of any governmental entity required for consummation of the Merger is denied;
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the shareholders of First Bank do not approve the Merger Agreement;
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the shareholders of Premier do not approve the issuance of Premier common stock in the Merger; or
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if the Closing does not occur on or before January 31, 2019 unless extended by mutual agreement in writing.
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In the event that the sum of the Special Dividend and the Merger Consideration would be less than $32.00 per share of First Bank common stock, then the Merger Agreement may be terminated by First Bank on written notice to Premier; provided that Premier may, at its sole option and discretion, increase the Merger Consideration so that the sum of the Special Dividend and the Merger Consideration is equal to $32.00 per share, whereupon no termination shall have occurred.
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If First Bank shall enter into a definitive agreement with a third party providing for an Acquisition Proposal on terms determined in good faith by the First Bank board of directors, after consulting with and considering the advice of First Bank’s outside counsel and financial advisors, to constitute a Superior Proposal (as defined below); provided, that the right to terminate the Merger Agreement shall not be available to First Bank unless it delivers to Premier (1) written notice of First Bank’s intention to terminate at least five (5) days prior to termination and (2) simultaneously with such termination, the Termination Fee referred to below. A “Superior Proposal” means an Acquisition Proposal made by a third party after April 18, 2018 which, in the good faith judgment of the Board of Directors of First Bank, taking into account the financial aspects of the proposal and the person making such proposal, (1) if accepted, is more likely than not to be consummated, (2) if consummated, is reasonably likely to result in a more favorable transaction than the Merger for First Bank and its shareholders, and (3) whose refusal would constitute a breach of the fiduciary duty of the Board of Directors of First Bank.
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to vote on a proposal to approve the issuance of Premier common stock in connection with the Merger;
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to vote on a proposal to amend the Premier articles of incorporation to increase the authorized number of shares of Premier common stock from 20,000,000 to 30,000,000;
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to vote upon an adjournment of the Premier special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to issue Premier common stock in connection with the Merger; and
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to transact any other business that may properly be brought before the Premier special meeting or any adjournments or postponements thereof.
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The issuance of Premier common stock to First Bank shareholders requires approval by the affirmative vote of a majority of outstanding shares held by the shareholders of Premier (excluding the shares held by Marshall T. Reynolds, Chairman of the Board of Directors of Premier, Robert W. Walker, President and Chief Executive Officer of Premier, Toney K. Adkins, Philip E. Cline and Thomas W. Wright, directors of Premier).
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The proposal to amend the Premier articles of incorporation requires approval by the affirmative vote of holders of a majority of shares voting at the special meeting, assuming a quorum is present.
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Approval of any proposal to adjourn the Premier special meeting, if necessary, for the purpose of soliciting additional proxies requires the affirmative vote of holders of a majority of the total voting power present or represented by proxy at the Premier special meeting.
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to approve and adopt the Merger Agreement;
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to vote upon an adjournment of the First Bank special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to adopt the Merger Agreement; and
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to transact any other business that may properly be brought before the First Bank special meeting or any adjournments or postponements thereof.
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having to pay certain costs relating to the proposed Merger, such as legal, accounting, financial advisor, filing, printing and mailing fees; and
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diverting the focus of management of each of the companies from pursuing other opportunities that could be beneficial to the companies,
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timely and successfully integrate Premier Bank’s and First Bank’s operations;
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maintain existing relationships with depositors in First Bank, thereby minimizing withdrawals of deposits after the Merger;
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maintain and enhance existing relationships with borrowers to limit potential losses from loans made by First Bank;
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control the incremental increase in non-interest expense of Premier Bank and First Bank to maintain overall operating efficiencies;
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retain and attract qualified personnel at Premier Bank and First Bank; and
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compete effectively in the communities served by Premier Bank and First Bank and in nearby communities.
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the ability of First Bank to obtain the required shareholder approval;
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the ability of Premier to obtain the required shareholder approval of the issuance of Premier common stock in the Merger;
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the ability of the companies to obtain the required regulatory approvals for the Merger;
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the ability of the companies to consummate the Merger;
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the ability to successfully integrate First Bank into Premier Bank following the Merger;
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a material adverse change in the financial condition, results of operations or prospects of either First Bank or Premier;
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the ability to fully realize any cost savings and/or revenue enhancements or the ability to realize them on a timely basis;
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the risk of borrower, depositor and other customer attrition after the transaction is completed;
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a change in general business and economic conditions;
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changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition;
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changes in accounting principles, policies or guidelines;
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changes in legislation and regulation;
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other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies’ operations, pricing, and services; and
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PREMIER
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FIRST BANK
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|||||||||||||||||||||||
Cash Dividends
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Sales Price
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Cash Dividends
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Sales Price
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|||||||||||||||||||||
Paid
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High
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Low
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Paid
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High
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Low
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|||||||||||||||||||
2016
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||||||||||||||||||||||||
First Quarter
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$
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0.1088
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$
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12.1600
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$
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10.5120
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$
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0.15
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$
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22.00
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$
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22.00
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||||||||||||
Second Quarter
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0.1088
|
12.5680
|
10.8880
|
0.15
|
22.00
|
22.00
|
||||||||||||||||||
Third Quarter
|
0.1088
|
13.1280
|
11.9440
|
0.15
|
25.00
|
22.00
|
||||||||||||||||||
Fourth Quarter
|
0.1200
|
16.9920
|
11.8480
|
0.15
|
--
|
--
|
||||||||||||||||||
0.4464
|
0.60
|
|||||||||||||||||||||||
2017
|
||||||||||||||||||||||||
First Quarter
|
0.1200
|
$
|
17.3520
|
$
|
14.2480
|
0.20
|
$
|
22.00
|
$
|
22.00
|
||||||||||||||
Second Quarter
|
0.1200
|
17.7600
|
15.2640
|
0.20
|
22.00
|
22.00
|
||||||||||||||||||
Third Quarter
|
0.1200
|
18.3360
|
13.8000
|
0.20
|
20.25
|
20.25
|
||||||||||||||||||
Fourth Quarter
|
0.1200
|
17.6000
|
14.5360
|
0.20
|
22.00
|
22.00
|
||||||||||||||||||
0.4800
|
0.80
|
|||||||||||||||||||||||
2018
|
||||||||||||||||||||||||
First Quarter
|
$
|
0.1200
|
$
|
16.8000
|
$
|
13.4240
|
$
|
0.20
|
$
|
--
|
$
|
--
|
||||||||||||
Second Quarter
|
0.1500
|
21.4000
|
14.8200
|
0.20
|
--
|
--
|
||||||||||||||||||
Third Quarter (through ________, 2018)
|
-
|
20.9100
|
18.6100
|
-
|
--
|
--
|
||||||||||||||||||
The per share amounts for Premier have been adjusted to reflect a 5 for 4 stock split issued on June 8, 2018 to shareholders of record on June 4, 2018.
|
Premier
Financial
|
First
Bank
|
First Bank
Equivalent
Pro Forma
Market Value
|
||||||||||
April 18, 2018
|
$
|
15.06
|
*
|
$
|
22.00
|
$
|
32.00
|
**
|
||||
__________, 2018
|
$
|
|
* |
$
|
$
|
***
|
||||||
* Based on 20-day weighted average closing price
|
||||||||||||
** Includes total cash consideration of $10.00 per share
|
||||||||||||
*** Includes total cash consideration (which includes the Special Dividend) of $10.00 per share
|
Dollars in thousands,
except per share amounts
|
At or for the
Three Months
Ended March 31
|
At or for the Year Ended December 31
|
||||||||||||||||||||||||||
2018
|
2017
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||||||||
Earnings
|
||||||||||||||||||||||||||||
Net interest income
|
$
|
14,635
|
$
|
13,630
|
$
|
57,488
|
$
|
53,698
|
$
|
48,380
|
$
|
48,414
|
$
|
43,695
|
||||||||||||||
Provision for loan losses
|
1,115
|
366
|
2,499
|
1,748
|
326
|
534
|
(375
|
)
|
||||||||||||||||||||
Non-interest income
|
2,066
|
2,017
|
8,655
|
8,187
|
7,099
|
6,930
|
7,732
|
|||||||||||||||||||||
Non-interest expense
|
8,989
|
9,998
|
40,218
|
41,193
|
35,804
|
34,490
|
31,169
|
|||||||||||||||||||||
Income taxes
|
1,464
|
1,985
|
8,607
|
6,770
|
6,903
|
7,170
|
7,404
|
|||||||||||||||||||||
Net Income
|
5,133
|
3,664
|
14,819
|
12,174
|
12,446
|
13,150
|
13,229
|
|||||||||||||||||||||
Preferred stock dividends, net of redemption discount
|
-
|
-
|
-
|
-
|
-
|
598
|
659
|
|||||||||||||||||||||
Net income available to common shareholders
|
$
|
5,133
|
$
|
3,664
|
$
|
14,819
|
$
|
12,174
|
$
|
12,446
|
$
|
12,552
|
$
|
12,570
|
||||||||||||||
Financial Position
|
||||||||||||||||||||||||||||
Total assets
|
$
|
1,525,783
|
$
|
1,496,193
|
$
|
1,493,424
|
$
|
1,496,193
|
$
|
1,244,693
|
$
|
1,252,824
|
$
|
1,100,179
|
||||||||||||||
Loans
|
1,028,758
|
1,024,823
|
1,049,052
|
1,024,823
|
849,746
|
879,711
|
740,770
|
|||||||||||||||||||||
Allowance for loan losses
|
12,840
|
10,836
|
12,104
|
10,836
|
9,647
|
10,347
|
11,027
|
|||||||||||||||||||||
Goodwill and other intangibles
|
38,551
|
39,720
|
38,746
|
39,720
|
35,976
|
36,829
|
31,996
|
|||||||||||||||||||||
Securities
|
281,088
|
288,607
|
278,466
|
288,607
|
255,466
|
229,750
|
218,066
|
|||||||||||||||||||||
Deposits
|
1,303,195
|
1,279,386
|
1,272,675
|
1,279,386
|
1,060,196
|
1,075,243
|
924,023
|
|||||||||||||||||||||
Other borrowings
|
25,043
|
31,115
|
28,310
|
32,679
|
32,986
|
27,302
|
25,119
|
|||||||||||||||||||||
Preferred equity
|
-
|
-
|
-
|
-
|
-
|
-
|
11,955
|
|||||||||||||||||||||
Common equity
|
183,876
|
174,184
|
183,355
|
174,184
|
147,232
|
145,782
|
134,985
|
|||||||||||||||||||||
Per Common Share Data **
|
||||||||||||||||||||||||||||
Net income – basic
|
0.38
|
0.28
|
1.11
|
0.92
|
1.11
|
1.13
|
1.14
|
|||||||||||||||||||||
Net income - diluted
|
0.38
|
0.27
|
1.10
|
0.92
|
1.08
|
1.06
|
1.08
|
|||||||||||||||||||||
Book value
|
13.78
|
13.36
|
13.74
|
13.10
|
13.09
|
13.02
|
12.21
|
|||||||||||||||||||||
Tangible book value
|
10.89
|
10.40
|
10.84
|
10.11
|
9.89
|
9.73
|
9.32
|
|||||||||||||||||||||
Cash dividends
|
0.12
|
0.12
|
0.48
|
0.45
|
0.41
|
0.44
|
0.32
|
|||||||||||||||||||||
Financial Ratios
|
||||||||||||||||||||||||||||
Return on average assets
|
1.37
|
%
|
0.98
|
%
|
0.99
|
%
|
0.82
|
%
|
0.98
|
%
|
1.01
|
%
|
1.13
|
%
|
||||||||||||||
Return on average common equity
|
11.08
|
%
|
8.25
|
%
|
8.13
|
%
|
6.94
|
%
|
8.41
|
%
|
8.80
|
%
|
9.29
|
%
|
||||||||||||||
Dividend payout
|
31.58
|
%
|
42.86
|
%
|
43.17
|
%
|
48.20
|
%
|
36.63
|
%
|
38.68
|
%
|
27.97
|
%
|
||||||||||||||
Stockholders’ equity to total assets at period end
|
12.05
|
%
|
11.64
|
%
|
12.28
|
%
|
11.64
|
%
|
11.83
|
%
|
11.64
|
%
|
13.36
|
%
|
||||||||||||||
Average stockholders’ equity to average total assets
|
12.41
|
%
|
11.91
|
%
|
12.18
|
%
|
11.78
|
%
|
11.67
|
%
|
12.29
|
%
|
13.21
|
%
|
||||||||||||||
** Historical Per Common Share Data has been adjusted to reflect a 5 for 4 stock split issued on June 8, 2018 to shareholders of record on June 4, 2018
|
Dollars in thousands,
except per share amounts
|
At or for the
Three Months
Ended March 31
|
At or for the Year Ended December 31
|
||||||||||||||||||||||||||
2018
|
2017
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||||||||
Earnings
|
||||||||||||||||||||||||||||
Net interest income
|
$
|
1,575
|
$
|
1,600
|
$
|
6,265
|
$
|
6,734
|
$
|
7,189
|
$
|
7,111
|
$
|
7,498
|
||||||||||||||
Provision for loan losses
|
90
|
140
|
1,185
|
550
|
3,315
|
1,000
|
330
|
|||||||||||||||||||||
Non-interest income
|
104
|
117
|
394
|
343
|
1,342
|
600
|
493
|
|||||||||||||||||||||
Non-interest expense
|
1,056
|
986
|
3,867
|
4,011
|
3,977
|
3,803
|
3,444
|
|||||||||||||||||||||
Income taxes
|
144
|
234
|
502
|
980
|
565
|
1,147
|
1,545
|
|||||||||||||||||||||
Net Income
|
389
|
357
|
1,105
|
1,536
|
674
|
1,761
|
2,672
|
|||||||||||||||||||||
Preferred stock dividends
|
-
|
-
|
-
|
10
|
33
|
33
|
33
|
|||||||||||||||||||||
Net income available to common shareholders
|
$
|
389
|
$
|
357
|
$
|
1,105
|
$
|
1,526
|
$
|
641
|
$
|
1,728
|
$
|
2,639
|
||||||||||||||
Financial Position
|
||||||||||||||||||||||||||||
Total assets
|
$
|
181,226
|
$
|
196,927
|
$
|
188,800
|
$
|
195,882
|
$
|
198,125
|
$
|
208,738
|
$
|
206,366
|
||||||||||||||
Loans
|
126,396
|
145,213
|
132,629
|
143,614
|
147,795
|
147,942
|
140,142
|
|||||||||||||||||||||
Allowance for loan losses
|
1,813
|
1,594
|
1,662
|
1,761
|
2,456
|
3,527
|
2,657
|
|||||||||||||||||||||
Securities
|
43,530
|
40,783
|
41,740
|
40,770
|
34,328
|
48,701
|
51,023
|
|||||||||||||||||||||
Deposits
|
140,781
|
150,560
|
146,789
|
149,907
|
137,888
|
136,955
|
144,242
|
|||||||||||||||||||||
FHLB
|
17,650
|
18,530
|
19,100
|
23,730
|
34,620
|
43,649
|
34,462
|
|||||||||||||||||||||
Preferred equity
|
-
|
-
|
-
|
-
|
3,345
|
3,345
|
3,345
|
|||||||||||||||||||||
Common equity
|
21,918
|
21,993
|
22,209
|
21,719
|
21,170
|
21,183
|
20,237
|
|||||||||||||||||||||
Per Common Share Data
|
||||||||||||||||||||||||||||
Net income – basic
|
0.38
|
0.35
|
1.07
|
1.49
|
0.63
|
1.69
|
2.57
|
|||||||||||||||||||||
Net income - diluted
|
0.38
|
0.35
|
1.07
|
1.49
|
0.63
|
1.69
|
2.57
|
|||||||||||||||||||||
Book value
|
21.23
|
21.49
|
21.55
|
21.22
|
20.69
|
20.70
|
19.77
|
|||||||||||||||||||||
Cash dividends
|
0.20
|
0.20
|
0.80
|
0.60
|
0.60
|
0.83
|
0.50
|
|||||||||||||||||||||
Financial Ratios
|
||||||||||||||||||||||||||||
Return on average assets
|
0.21
|
%
|
0.18
|
%
|
0.57
|
%
|
0.77
|
%
|
0.33
|
%
|
0.84
|
%
|
1.32
|
%
|
||||||||||||||
Return on average common equity
|
1.75
|
%
|
1.62
|
%
|
4.93
|
%
|
6.99
|
%
|
2.67
|
%
|
7.25
|
%
|
12.48
|
%
|
||||||||||||||
Dividend payout
|
53.08
|
%
|
57.33
|
%
|
74.47
|
%
|
39.98
|
%
|
91.10
|
%
|
48.23
|
%
|
19.06
|
%
|
||||||||||||||
Stockholders’ equity to total assets at period end
|
12.09
|
%
|
11.17
|
%
|
11.76
|
%
|
11.09
|
%
|
12.37
|
%
|
11.75
|
%
|
11.43
|
%
|
||||||||||||||
Average stockholders’ equity to average total assets
|
12.03
|
%
|
11.16
|
%
|
11.58
|
%
|
11.09
|
%
|
12.20
|
%
|
11.66
|
%
|
10.57
|
%
|
||||||||||||||
|
Premier
|
First Bank
|
Pro Forma Fair Value Adjustments
|
Pro Forma Stock and Cash Merger Consideration Adjustments
|
Pro Forma Combined Company
|
||||||||||||||||||
ASSETS
|
||||||||||||||||||||||
Cash and due from banks
|
$
|
19,845
|
$
|
2,773
|
$
|
$
|
$
|
22,618
|
||||||||||||||
Interest bearing bank balances
|
104,968
|
18
|
(5,162
|
)
|
p
|
99,824
|
||||||||||||||||
Federal funds sold
|
15,348
|
3,536
|
(3,536
|
)
|
k
|
(1,626
|
)
|
s
|
13,722
|
|||||||||||||
Time deposits with other banks
|
2,582
|
-
|
2,582
|
|||||||||||||||||||
Securities available-for-sale
|
281,088
|
43,530
|
(475
|
)
|
c
|
324,143
|
||||||||||||||||
Loans
|
1,028,758
|
126,396
|
(4,757
|
)
|
b
|
1,150,397
|
||||||||||||||||
Allowance for loan losses
|
(12,840
|
)
|
(1,813
|
)
|
1,813
|
a
|
(12,840
|
)
|
||||||||||||||
Net loans
|
1,015,918
|
124,583
|
(2,944
|
)
|
|
1,137,557
|
||||||||||||||||
FHLB stock and other
|
3,185
|
810
|
3,995
|
|||||||||||||||||||
Premises and equipment, net
|
23,728
|
4,568
|
431
|
d
|
28,727
|
|||||||||||||||||
Other real estate owned
|
14,185
|
70
|
14,255
|
|||||||||||||||||||
Goodwill
|
35,371
|
-
|
1,299
|
e
|
10,231
|
q
|
46,901
|
|||||||||||||||
Other intangible assets
|
3,180
|
-
|
2,154
|
f
|
5,334
|
|||||||||||||||||
Other assets
|
6,385
|
1,338
|
109
|
g
|
7,832
|
|||||||||||||||||
Total assets
|
$
|
1,525,783
|
$
|
181,226
|
$
|
(2,962
|
)
|
$
|
3,443
|
$
|
1,707,490
|
|||||||||||
LIABILITIES
|
||||||||||||||||||||||
Deposits
|
||||||||||||||||||||||
Non-interest bearing deposits
|
$
|
353,008
|
$
|
16,891
|
$
|
$
|
$
|
369,899
|
||||||||||||||
Time deposits, $250,000 and over
|
62,773
|
3,155
|
(18
|
)
|
h
|
65,910
|
||||||||||||||||
Other interest bearing deposits
|
887,414
|
120,735
|
(192
|
)
|
h
|
1,007,957
|
||||||||||||||||
Total deposits
|
1,303,195
|
140,781
|
(210
|
)
|
1,443,766
|
|||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase
|
20,793
|
419
|
1,626
|
k
|
(1,626
|
)
|
s
|
21,212
|
||||||||||||||
Short-term FHLB advances
|
-
|
10,250
|
10,250
|
|||||||||||||||||||
Other FHLB advances
|
-
|
7,400
|
(103
|
)
|
j
|
7,297
|
||||||||||||||||
Other borrowed funds
|
4,250
|
-
|
4,250
|
|||||||||||||||||||
Subordinated debt
|
5,383
|
-
|
5,383
|
|||||||||||||||||||
Other liabilities
|
8,286
|
458
|
8,744
|
|||||||||||||||||||
Total liabilities
|
1,341,907
|
159,308
|
1,313
|
(1,626
|
)
|
1,500,902
|
||||||||||||||||
STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||
Common stock
|
110,485
|
16,351
|
1,292
|
n
|
5,069
|
r
|
133,197
|
|||||||||||||||
Retained earnings
|
78,515
|
6,454
|
(6,454
|
)
|
k,n
|
78,515
|
||||||||||||||||
Accumulated other comprehensive (loss)
|
(5,124
|
)
|
(887
|
)
|
887
|
m
|
(5,124
|
)
|
||||||||||||||
Total stockholders’ equity
|
183,876
|
21,918
|
(4,275
|
)
|
5,069
|
206,588
|
||||||||||||||||
Total liabilities and stockholders’ equity
|
$
|
1,525,783
|
$
|
181,226
|
$
|
(2,962
|
)
|
$
|
3,443
|
$
|
1,707,490
|
|||||||||||
|
Premier
|
First Bank
|
Pro Forma Adjustments
|
Pro Forma Combined Company
|
||||||||||||||
Interest Income
|
|||||||||||||||||
Loans, including fees
|
$
|
14,034
|
$
|
1,647
|
$
|
119
|
aa
|
$
|
15,800
|
||||||||
Investment securities
|
1,467
|
271
|
1,738
|
||||||||||||||
Federal funds sold and other
|
298
|
8
|
(45
|
)
|
bb,cc
|
261
|
|||||||||||
Total interest income
|
15,799
|
1,926
|
74
|
17,799
|
|||||||||||||
Interest Expense
|
|||||||||||||||||
Deposits
|
1,031
|
273
|
44
|
dd
|
1,348
|
||||||||||||
Repurchase agreements and other
|
8
|
1
|
9
|
||||||||||||||
FHLB advances and other borrowings
|
47
|
77
|
25
|
ee
|
149
|
||||||||||||
Subordinated debt
|
78
|
-
|
78
|
||||||||||||||
Total interest expense
|
1,164
|
351
|
69
|
1,584
|
|||||||||||||
Net interest income
|
14,635
|
1,575
|
5
|
16,215
|
|||||||||||||
Provision for loan losses
|
1,115
|
90
|
1,205
|
||||||||||||||
Net interest income after provision for loan losses
|
13,520
|
1,485
|
5
|
15,010
|
|||||||||||||
Non-interest Income
|
|||||||||||||||||
Service charges on deposit accounts
|
1,094
|
16
|
1,110
|
||||||||||||||
Electronic banking income
|
817
|
19
|
836
|
||||||||||||||
Secondary market mortgage income
|
32
|
-
|
32
|
||||||||||||||
Other
|
123
|
10
|
133
|
||||||||||||||
2,066
|
45
|
-
|
2,111
|
||||||||||||||
Non-interest Expenses
|
|||||||||||||||||
Salaries and employee benefits
|
4,778
|
531
|
5,309
|
||||||||||||||
Occupancy and equipment, net
|
1,610
|
70
|
1,680
|
||||||||||||||
Outside data processing
|
1,249
|
97
|
1,346
|
||||||||||||||
Professional fees
|
336
|
36
|
372
|
||||||||||||||
Taxes, other than payroll, property and income
|
240
|
18
|
258
|
||||||||||||||
Writedowns, expenses, sales of OREO, net
|
(886
|
)
|
17
|
(869
|
)
|
||||||||||||
Amortization of intangibles
|
195
|
-
|
54
|
hh
|
249
|
||||||||||||
Other expenses
|
1,467
|
228
|
1,695
|
||||||||||||||
8,989
|
997
|
54
|
10,040
|
||||||||||||||
Income before income taxes
|
6,597
|
533
|
(49
|
)
|
7,081
|
||||||||||||
Income tax expense (benefit)
|
1,464
|
144
|
(10
|
)
|
jj
|
1,598
|
|||||||||||
Net income
|
$
|
5,133
|
$
|
389
|
$
|
(39
|
)
|
5,483
|
|||||||||
Net Income Per Common Share
|
|||||||||||||||||
Basic
|
$
|
0.38
|
$
|
0.38
|
$
|
0.38
|
|||||||||||
Diluted
|
0.38
|
0.38
|
0.38
|
||||||||||||||
Weighted Average Shares Outstanding
|
|||||||||||||||||
Basic
|
13,346
|
1,031
|
138
|
kk
|
14,515
|
||||||||||||
Diluted
|
13,424
|
1,034
|
139
|
kk
|
14,597
|
||||||||||||
** Premier’s Weighted Average Shares Outstanding has been adjusted to reflect a 5 for 4 stock split issued to shareholders on June 8, 2018 to shareholders of record on June 4, 2018
|
|
Premier
|
First Bank
|
Pro Forma Adjustments
|
Pro Forma Combined Company
|
||||||||||||||
Interest Income
|
|||||||||||||||||
Loans, including fees
|
$
|
55,425
|
$
|
6,820
|
$
|
476
|
aa
|
$
|
62,721
|
||||||||
Investment securities
|
5,889
|
785
|
6,674
|
||||||||||||||
Federal funds sold and other
|
676
|
23
|
(140
|
)
|
bb,cc
|
559
|
|||||||||||
Total interest income
|
61,990
|
7,628
|
304
|
69,954
|
|||||||||||||
Interest Expense
|
|||||||||||||||||
Deposits
|
3,885
|
1,130
|
134
|
dd
|
5,119
|
||||||||||||
Repurchase agreements and other
|
33
|
-
|
33
|
||||||||||||||
FHLB advances and other borrowings
|
319
|
233
|
72
|
ee
|
624
|
||||||||||||
Subordinated debt
|
295
|
-
|
295
|
||||||||||||||
Total interest expense
|
4,502
|
1,363
|
206
|
6,071
|
|||||||||||||
Net interest income
|
57,488
|
6,265
|
130
|
63,883
|
|||||||||||||
Provision for loan losses
|
2,499
|
1,185
|
3,684
|
||||||||||||||
Net interest income after
provision for loan losses
|
54,989
|
5,080
|
130
|
60,199
|
|||||||||||||
Non-interest Income
|
|||||||||||||||||
Service charges on deposit accounts
|
4,357
|
123
|
4,480
|
||||||||||||||
Electronic banking income
|
3,260
|
80
|
3,340
|
||||||||||||||
Secondary market mortgage income
|
201
|
-
|
201
|
||||||||||||||
Securities losses
|
-
|
(28
|
)
|
(28
|
)
|
||||||||||||
Other
|
837
|
219
|
(219
|
)
|
ff,gg
|
837
|
|||||||||||
8,655
|
394
|
(219
|
)
|
8,830
|
|||||||||||||
Non-interest Expenses
|
|||||||||||||||||
Salaries and employee benefits
|
19,355
|
2,001
|
21,356
|
||||||||||||||
Occupancy and equipment, net
|
5,999
|
504
|
(257
|
)
|
ff
|
6,246
|
|||||||||||
Outside data processing
|
5,173
|
319
|
5,492
|
||||||||||||||
Professional fees
|
975
|
165
|
1,140
|
||||||||||||||
Taxes, other than payroll, property and income
|
780
|
73
|
853
|
||||||||||||||
Writedowns, expenses, sales of OREO, net
|
1,601
|
34
|
38
|
gg
|
1,673
|
||||||||||||
Amortization of intangibles
|
974
|
-
|
215
|
hh
|
1,189
|
||||||||||||
Other expenses
|
5,361
|
844
|
6,205
|
||||||||||||||
40,218
|
3,940
|
(4
|
)
|
44,154
|
|||||||||||||
Income before income taxes
|
23,426
|
1,534
|
(86
|
)
|
24,874
|
||||||||||||
Income tax expense (benefit)
|
8,607
|
429
|
(30
|
)
|
jj
|
9,006
|
|||||||||||
Net income (loss)
|
$
|
14,819
|
$
|
1,105
|
$
|
(56
|
)
|
15,868
|
|||||||||
Net Income Per Common Share
|
|||||||||||||||||
Basic
|
$
|
1.11
|
$
|
1.07
|
$
|
1.10
|
|||||||||||
Diluted
|
1.10
|
1.07
|
1.09
|
||||||||||||||
Weighted Average Shares Outstanding
|
|||||||||||||||||
Basic
|
13,323
|
1,030
|
138
|
kk
|
14,491
|
||||||||||||
Diluted
|
13,420
|
1,031
|
138
|
kk
|
14,589
|
||||||||||||
** Premier’s Weighted Average Shares Outstanding has been adjusted to reflect a 5 for 4 stock split issued to shareholders on June 8, 2018 to shareholders of record on June 4, 2018
|
a.
|
Eliminate First Bank’s $1,813 allowance for loan losses to the loan portfolio to record loans acquired at fair value.
|
b.
|
Apply $4,757 discount on loan portfolio to record loans at their estimated fair value. The fair value of the loan portfolio will be reassessed as of the closing date of the acquisition and is subject to change.
|
c.
|
Record certain equity securities that do not have readily determined market value to estimated fair value.
|
d.
|
Adjust premises to fair value.
|
e.
|
Record estimated goodwill resulting from acquisition.
|
f.
|
Record estimated core deposit intangible asset. The core deposit intangible is being amortized on an accelerated basis over a period of 10 years.
|
g.
|
Record net deferred income tax asset, established at a rate of 21% of the other purchase accounting adjustments.
|
h.
|
Record fixed rate certificates of deposit at fair value using market interest rates. The fair value of fixed rate certificates of deposits will be reassessed as of the closing date of the acquisition and is subject to change.
|
j. |
Adjust long-term FHLB advances to fair value using market interest rates. The fair value of long-term FHLB advances will be reassessed as of the closing date of the acquisition and is subject to change.
|
k.
|
Liquidity and overnight borrowings used to fund $5.00 per share Special Dividend.
|
m. |
Adjust cost basis of securities available-for-sale to fair value.
|
n. |
Reclass remaining First Bank retained earnings to additional paid in capital.
|
p. |
Premier funds used to pay Cash Merger Consideration of $5.00 per First Bank share.
|
q. |
Goodwill resulting from excess of purchase price over estimated fair value of net assets acquired.
|
r. |
Adjust consolidated equity to reflect the purchase of First Bank. Premier will issue approximately 1.134 shares of its common stock for each of the 1,032,379 shares of First Bank common stock, or a total of approximately 1,170,739 shares, assuming a weighted average closing price of $19.40 for Premier common stock. At the date of acquisition, the value assigned to the shares used to acquire First Bank would total approximately $22,712.
|
s. |
Premier liquidity used to satisfy First Bank overnight borrowing from Note k above.
|
aa.
|
Estimated accretion of fair value adjustment on loans assuming level yield method over an estimated 10 year average life.
|
bb.
|
Interest income reduced by $20 for the three months ended March 31, 2018 and $54 for the year ended December 31, 2017 resulting from $5,162 reduction in funds from payment of Special Dividend using First Bank’s average yield on liquid investments of 1.56% per annum during the first quarter of 2018 and 1.05% for the year ended December 31, 2017.
|
cc.
|
Interest income reduced by $25 for the three months ended March 31, 2018 and $86 for the year ended December 31, 2017 resulting from $5,162 reduction in funds from Premier’s payment of Cash Merger Consideration of $5.00 per share using Premier’s average yield on liquid investments of 1.93% per annum during the first quarter of 2018 and 1.66% for the year ended December 31, 2017.
|
dd.
|
Interest expense on deposits increased from amortization of fair value adjustment on fixed rate certificates of deposit (see note h above). Amortization is based upon the maturity pattern of the acquired certificates of deposit which is irregular. The following table estimates the projected amortization by period.
|
Certificates of Deposit
|
||||||||||||
Over $250,000
|
$250,000 and under
|
Total
|
||||||||||
0 to 3 months
|
$
|
3
|
$
|
41
|
$
|
44
|
||||||
4 to 12 months
|
7
|
83
|
90
|
|||||||||
13 to 24 months
|
3
|
42
|
45
|
|||||||||
25 to 36 months
|
3
|
15
|
18
|
|||||||||
37 to 48 months
|
2
|
7
|
9
|
|||||||||
Over 48 months
|
-
|
4
|
4
|
|||||||||
Total
|
$
|
18
|
$
|
192
|
$
|
210
|
||||||
ee.
|
Amortization of fair value adjustment on fixed rate long-term FHLB borrowings (see note j above). Amortization is estimated using the straight-line method over the remaining period to maturity of each borrowing. Maturity periods range from 1 to 29 months.
|
ff.
|
Reclassification of First Bank rental income ($264) and loss on sale of equipment ($7) to conform to Premier’s annual financial statement presentation.
|
gg.
|
Reclassification of First Bank loss on sale of other real estate owned ($44) and income from other real estate owned ($6) to conform to Premier’s annual financial statement presentation.
|
hh.
|
Amortization of core deposit intangible asset (see note f above). The core deposit intangible is being amortized on an accelerated basis over a period of 10 years.
|
jj.
|
Income tax expense at the assumed rate of 21% for the three months ended March 31, 2018 and 35% for the year ended December 31, 2017.
|
kk.
|
To adjust weighted average shares outstanding to reflect the 1,170,739 estimated shares of Premier common stock to be issued to the stockholders of First Bank assuming a weighted average stock price of $19.40.
|
At and for the three months ended March 31, 2018
|
||||||||||||||||
Premier
Historical
|
First Bank
Historical
|
Unaudited Combined Pro Forma Amounts for Premier and First Bank
|
Unaudited Pro Forma Equivalent First Bank **
|
|||||||||||||
Shares (thousands) outstanding at March 31, 2018
|
13,347
|
*
|
1,032
|
14,510
|
1,163
|
|||||||||||
Book value per share at March 31, 2018
|
$
|
13.78
|
*
|
$
|
21.23
|
$
|
14.24
|
$
|
16.05
|
|||||||
Cash dividends paid per common share for the three months ended March 31, 2018
|
$
|
0.12
|
*
|
$
|
0.20
|
$
|
0.12
|
$
|
0.14
|
|||||||
Basic earnings per share for the three months ended March 31, 2018
|
$
|
0.38
|
*
|
$
|
0.38
|
$
|
0.38
|
$
|
0.43
|
|||||||
Diluted earnings per share for the three months ended March 31, 2018
|
$
|
0.38
|
*
|
$
|
0.38
|
$
|
0.38
|
$
|
0.42
|
|||||||
*Adjusted for 5 for 4 stock split issued on June 8, 2018 to Premier shareholders of record on June 4, 2018.
|
||||||||||||||||
**Based upon Premier $19.52 closing stock price of Premier common stock on July 16, 2018.
|
||||||||||||||||
At and for year ended December 31, 2017
|
||||||||||||||||
Premier
Historical
|
First Bank
Historical
|
Unaudited Combined Pro Forma Amounts for Premier and First Bank **
|
Unaudited Pro Forma Equivalent First Bank **
|
|||||||||||||
Shares (thousands) outstanding at December 31, 2017
|
13,346
|
*
|
1,030
|
14,507
|
1,161
|
|||||||||||
Book value per share at December 31, 2017
|
$
|
13.74
|
*
|
$
|
21.56
|
$
|
14.20
|
$
|
16.01
|
|||||||
Cash dividends paid per common share for the year ended December 31, 2017
|
$
|
0.48
|
*
|
$
|
0.80
|
$
|
0.48
|
$
|
0.54
|
|||||||
Basic earnings per share for the year ended December 31, 2017
|
$
|
1.11
|
*
|
$
|
1.07
|
$
|
1.10
|
$
|
1.24
|
|||||||
Diluted earnings per share for the year ended December 31, 2017
|
$
|
1.10
|
*
|
$
|
1.07
|
$
|
1.09
|
$
|
1.23
|
|||||||
*Adjusted for 5 for 4 stock split issued on June 8, 2018 to Premier shareholders of record on June 4, 2018.
|
||||||||||||||||
**Based upon Premier $19.52 closing stock price of Premier common stock on July 16, 2018.
|
· |
to vote on a proposal to approve the issuance of Premier common stock in connection with the Merger;
|
· |
to vote on a proposal to amend the Premier articles of incorporation to increase the authorized number of shares of Premier common stock from 20,000,000 to 30,000,000;
|
· |
to vote upon an adjournment of the Premier special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to issue Premier common stock in connection with the Merger; and
|
· |
to transact any other business that may properly be brought before the Premier special meeting or any adjournments or postponements thereof.
|
· |
Marshall T. Reynolds, Chairman of the Board of Directors of Premier and beneficial owner of 1,057,978 shares of Premier common stock, constituting 7.9% of outstanding shares of Premier common stock, is the beneficial owner of 89,817 shares of First Bank common stock, constituting approximately 8.7% of the outstanding First Bank shares as of ________________, 2018. He also serves as a consultant to First Bank.
|
·
|
Certain Premier directors beneficially own shares of First Bank common stock, each individually less than 1% of outstanding First Bank common stock, and in the aggregate, approximately 1.58% of First Bank outstanding common stock as follows:
|
Toney K. Adkins |
|
5,277 shares |
Philip E. Cline |
|
7,555 shares |
Robert W. Walker |
|
2,875 shares |
Thomas W. Wright |
|
550 shares
|
(a) |
The material facts of the transaction and the director’s interest were disclosed to the board of directors and the board of directors approved the transaction; or
|
(b) |
The material facts of the transaction and the director’s interest were disclosed to the shareholders and the shareholders approved the transaction; or
|
(c) |
The transaction was fair to the corporation.
|
· |
The issuance of Premier common stock to First Bank shareholders requires approval by the affirmative vote of a majority of the outstanding shares of Premier (excluding the shares held by Marshall T. Reynolds, Robert W. Walker, Toney K. Adkins, Philip E. Cline and Thomas W. Wright).
|
· |
The Premier articles of incorporation amendment proposal requires approval by the affirmative vote of a majority of shares voting at the special meeting.
|
· |
Approval of any proposal to adjourn the Premier special meeting, if necessary, for the purpose of soliciting additional proxies requires that the affirmative vote of holders of a majority of the shares voting at the Premier special meeting.
|
· |
you can send a signed notice of revocation;
|
· |
you can grant a new, valid proxy bearing a later date; or
|
· |
if you are a holder of record, you can attend the Premier special meeting and vote in person, which will automatically cancel any proxy previously given, or you can revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.
|
· |
to approve the Merger Agreement and the transactions contemplated thereby;
|
· |
to consider and vote upon a proposal to adjourn the meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event there are not sufficient votes at the time of the meeting to approve the Merger Agreement.
|
Name and Address
|
Number of
Shares Owned
|
Percent of Common
Stock Outstanding
|
Marshall T. Reynolds
PO Box 4040
Huntington, WV 25729
|
89,817(1)
|
8.70%
|
Nester S. Logan
117 Woodland Dr.
Huntington, WV 25705
|
63,560
|
6.16%
|
Samuel Kapourales
215 Logan St. Suite 10
Williamson, WV 25661
|
81,378
|
7.88%
|
Douglas V. Reynolds
219 Briarcliff Dr.
Huntington, WV 25704
|
106,703(2)
|
10.33%
|
(1) Marshall T. Reynolds holdings are comprised of 62,718 shares directly owned; 6,482 owned by spouse; 20,617 owned by controlled corporations.
(2) Douglas V. Reynolds holdings are comprised of 62 shares directly owned; 15,824 are held in the name of minor children; 41,885 are held in an Irrevocable Trust controlled by Douglas V. Reynolds; 48,932 are owned by controlled LLC or LP.
|
Name of Beneficial Owner
|
Number of Shares of Common Stock Beneficially Owned
|
Percent of All Common
Stock Outstanding
|
Nester S. Logan
117 Woodland Dr.
Huntington, WV 25705
|
63,560
|
6.16%
|
Samuel Kaporuales
215 Logan St. Suite 10
Williamson, WV 25661
|
81,378
|
7.88%
|
Douglas V. Reynolds
219 Briarcliff Dr.
Huntington, WV 25704
|
106,703(1)
|
10.33%
|
Tommy D. Clay
P.O. Box 396
Belle, WV 25015
|
23,162(2)
|
2.24%
|
Oshel Craigo
87 Cash Lane
Winfield, WV 25213
|
23,697(3)
|
2.30%
|
Timothy J. Dagostine
116 Centre Court Rd.
Charleston, WV 25314
|
19,165
|
1.86%
|
Percy Osborne
6109 Leesburg Ln.
Raleigh, NC 27617
|
12,625
|
1.22%
|
Wyatt Scaggs
P.O. Box 300
Logan, WV 25301
|
42,607
|
4.13%
|
Daniel Wood
35 Quarry Ridge
Charleston, WV 25304
|
27,500
|
2.66%
|
John W. Williams
84 Hunting Hills Dr.
Charleston, WV 25311
|
982(4)
|
*
|
Larry Stark
1507 Virginia St. E. Apt A
Charleston, WV 25311
|
25
|
*
|
Name of Beneficial Owner
|
Number of Shares of Common Stock Beneficially Owned
|
Percent of All Common
Stock Outstanding
|
Anthony Marks
2005 Northwood Rd.
Charleston, WV 25314
|
7,454(5)
|
*
|
Joslyn Truett
5219 Brackenrich Dr.
Cross Lanes, WV 25313
|
800
|
*
|
All directors and executive officers as a group (13 persons)
|
409,658
|
39.68%
|
* Less than 1%
|
||
(1) Douglas V. Reynolds holdings are comprised of 62 shares directly owned; 15,824 are held in the name of minor children; 41,885 are held in an Irrevocable Trust controlled by Douglas V. Reynolds; 48,932 are owned by controlled LLC or LP.
(2) Tommy Clay holdings are comprised of 20,840 shares directly owned; 2,322 are owned by controlled corporation.
(3) Oshel Craigo’s holdings are comprised of 12,000 shares directly owned; 11,697 shares are owned by spouse.
(4) John W. Williams holdings are comprised of 327 shares directly owned; 655 are owned by controlled corporation.
(5) Anthony Marks holdings are comprised of 6,800 shares directly owned; 654 shares held in a Trust controlled by Anthony Marks for benefit of children.
|
· |
You must deliver a written demand for appraisal to First Bank before the vote is taken on the Merger Agreement at First Bank’s special meeting. This written demand for appraisal must be in addition to and separate from any proxy or vote against the Merger Agreement. Merely voting against, abstaining from voting or failing to vote in favor of adoption of the Merger Agreement will not constitute a demand for appraisal within the meaning of §31D-13-1321. See “Requirements for Written Demand for Appraisal” below for more details on making a demand for appraisal.
|
· |
You must not vote in favor of approval and adoption of the Merger Agreement. A failure to vote will satisfy this requirement, but a vote in favor of the Merger Agreement will constitute a waiver of your right of appraisal. Accordingly, if you want to maintain your appraisal rights you must either check the “Against” box or the “Abstain” box on the proxy card or refrain from executing and returning the enclosed proxy card.
|
· |
You must continuously hold your shares of First Bank stock from the date you make the demand for appraisal through the effective date of the Merger. A shareholder who is the record holder of shares of First Bank common stock on the date the written demand for appraisal is made, but who thereafter transfers these shares prior to completion of the Merger, will lose any right to appraisal in respect of those shares.
|
· |
The value of the Premier common stock consideration being offered to First Bank shareholders in relation to the market value, book value per share, tangible book value per share, earnings per share and projected earnings per share of First Bank and Premier;
|
· |
Comparative pro forma analyses of First Bank, Premier and the combined entity, and the earnings per share, dividends and capital levels of each entity;
|
· |
The fact that the Merger Consideration represented 1.51 times the $21.23 book value per share of First Bank common stock at March 31, 2018 and a 45% premium over the most recent trading price of First Bank common stock;
|
· |
The expected future receipt by First Bank shareholders of dividends after completion of the Merger as Premier shareholders, based on Premier’s current and forecasted dividend yield;
|
· |
Premier’s asset size, capital position and financial performance in recent periods, which make Premier an attractive merger partner and would give the combined company almost $1.7 billion in assets;
|
· |
The feasibility of, and the results that could be expected to be obtained if, First Bank continued to operate independently, including First Bank’s ability to compete with much larger regionally-based banks and the potential need to eventually raise additional capital that could be dilutive to existing First Bank shareholders;
|
· |
The anticipated future earnings growth of First Bank compared to the potential future earnings growth of Premier and the combined entity;
|
· |
The anticipated future trading value of First Bank common stock compared to the value of the common stock consideration offered by Premier and the potential future trading value of Premier common stock;
|
· |
The common stock consideration offered by Premier, including the opportunity for First Bank shareholders to receive shares of Premier common stock on a tax-free basis for their shares of First Bank common stock;
|
· |
The greater market capitalization and trading liquidity of Premier common stock in the event First Bank shareholders desired to sell the shares of Premier common stock to be received by them upon completion of the Merger;
|
· |
Operational, regulatory and compliance benefits than could be realized by First Bank if First Bank continued to operate independently;
|
· |
The presentation of analyses by FIG Partners, LLC, First Bank’s financial advisor, as to the fairness, from a financial point of view, of the Merger Consideration to be paid to First Bank common shareholders. In this regard, the First Bank board of directors received from FIG Partners, LLC a written opinion dated April 18, 2018, that, as of such date, the Merger Consideration to be received pursuant to the Merger Agreement was fair to First Bank shareholders from a financial point of view. The opinion is attached as Annex IV to this document. For a summary of FIG Partners’ presentation, see “Opinion of Financial Advisor” below;
|
· |
The current and prospective environment in which First Bank operates, including regional and local economic conditions, the competitive environment for financial institutions, the increased regulatory burdens on financial institutions, and the uncertainties in the regulatory climate going forward;
|
· |
The analyses presented by Kay, Casto & Chaney, PLLC, First Bank’s outside legal counsel, as to the structure of the Merger, the Merger Agreement, duties of the First Bank board of directors under applicable law, and the process that First Bank (including its board of directors) employed in considering all potential strategic transactions including the Merger;
|
· |
The ability to terminate the Merger Agreement if the total of the Merger Consideration and the Special Dividend is less than $32.00, as calculated pursuant to the Merger Agreement;
|
· |
The scale, scope, strength and diversity of operations, product lines and delivery systems that could be achieved by combining First Bank with Premier;
|
· |
The additional products offered by Premier to its customers, the ability of the combined company to provide comprehensive financial services to its customers, and the potential for operating synergies and cross-marketing of products and services across the combined company;
|
· |
The earnings prospects of the combined company after completion of the Merger;
|
· |
The shared community banking philosophies of First Bank and Premier, and each entity’s commitment to community service and support of community-based, non-profit organizations and causes;
|
· |
The fact that certain members of First Bank management have interests in the Merger that are different from, or in addition to, those of other First Bank shareholders, as more fully discussed under “Interests of Certain Persons in the Merger” on page 78;
|
· |
The reports of First Bank’s management and the financial presentation by FIG Partners to the First Bank board of directors concerning the operations, financial condition and prospects of Premier and the expected financial impact of the Merger on the combined company, including pro forma assets and earnings;
|
· |
The likelihood of successful integration and operation of the combined company;
|
· |
The likelihood of obtaining the regulatory approvals needed to complete the transaction;
|
· |
The potential cost-saving opportunities resulting from the Merger;
|
· |
The effects of the Merger on First Bank employees, including the prospects for continued employment and the severance and other benefits agreed to be provided to First Bank employees; and
|
· |
The review by the First Bank board of directors with its legal and financial advisors of the structure of the Merger and the financial and other terms of the Merger, including the exchange ratio and the Special Dividend, as well as the condition that the Merger must qualify as a transaction that will permit First Bank shareholders to receive Premier shares in exchange for their First Bank shares on a tax-free basis for federal income tax purposes.
|
· |
The challenges of integrating First Bank’s businesses, operations and employees with those of Premier;
|
· |
The need to obtain approval by shareholders of First Bank, as well as regulatory approvals in order to complete the transaction;
|
· |
The risks associated with the operations of the combined company including the ability to achieve the anticipated cost savings; and
|
· |
The risks associated with entry into the Merger Agreement and conduct of First Bank’s business before the Merger is completed, and the impact of provisions of the Merger Agreement relating to minimum capital requirements and the potential payment of a termination fee if First Bank receives a superior acquisition offer.
|
· |
Premier or any of its subsidiary banks suffers a material adverse change in its financial condition after December 31, 2017;
|
· |
Premier materially breaches any of its covenants or agreements under the Merger Agreement, which material breach cannot be or has not been cured within 30 days after written notice of the breach to Premier; or
|
· |
Any required approval of any government authority is denied by final non-appealable action of such government authority, or the shareholders of First Bank do not approve the Merger.
|
(i)
|
reviewed the Merger Agreement;
|
(ii)
|
reviewed certain historical, publicly available business and financial information concerning First Bank and Premier including, among other things, quarterly and annual reports filed by the parties with the Federal Deposit Insurance Corporation;
|
(iii)
|
held discussions with members or representatives of the senior management of First Bank for the purpose of reviewing future prospects of the potential pro forma institution related to the respective businesses, earnings, assets, liabilities and the amount of and timing of cost savings (the “Synergies”) expected to be achieved as a result of the Merger;
|
(iv)
|
reviewed the terms of recent merger and acquisition transactions, to the extent publicly available, involving banks, thrifts and bank and thrift holding companies that we considered relevant;
|
(v)
|
analyzed the value of Premier stock to be received as an acquisition currency in relation to its peers and broader market indices; and
|
(vi)
|
performed such other analyses and considered such other factors as we have deemed appropriate.
|
Transaction Price / LTM Net Income1:
|
25.2
|
x
|
||
Transaction Price / Dividend-Adjusted Tangible Book Value2:
|
163.1
|
%
|
||
Tangible Book Premium/Core Deposits3,4:
|
11.2
|
%
|
||
Transaction Price / Total Assets5:
|
15.1
|
%
|
1)
|
Based on last twelve months earnings of $1.106 million
|
2)
|
TBV adjusted for $5/share special dividend to a value of $17.057 million
|
3)
|
Based on special dividend-adjusted TBV per share and core deposits of $97.701 million
|
4)
|
Tangible book premium to core deposits calculated as (deal value – tangible equity) / (core deposits); Core deposits defined as total deposits less jumbo time deposits
|
5)
|
Based on total assets, adjusted for special dividend, of $184.009 million
|
PCSB Financial Corp.
|
ACNB Corp.
|
National Bankshares Inc.
|
Orrstown Financial Services
|
Citizens & Northern Corp.
|
Community Bankers Trust Corp.
|
Codorus Valley Bancorp Inc.
|
Penns Woods Bancorp Inc.
|
MVB Financial Corp.
|
C&F Financial Corp.
|
Community Finl. Corp.
|
First United Corp.
|
Premier
|
Buyer Standalone
Peer Group Median |
Buyer Standalone
Peer Group Mean |
Buyer Standalone
Peer Group High |
Buyer Standalone
Peer Group Low |
||||||||||||||||
Market Capitalization ($M)
|
$
|
198.7
|
$
|
206.5
|
$
|
228.4
|
$
|
352.6
|
$
|
135.7
|
||||||||||
Price/Tangible Book Value
|
137.4
|
%
|
156.6
|
%
|
155.0
|
%
|
175.1
|
%
|
138.2
|
%
|
||||||||||
Price/EPS
|
13.5
|
x
|
23.9
|
x
|
24.6
|
x
|
33.1
|
x
|
19.5
|
x
|
||||||||||
Dividend Yield
|
3.2
|
%
|
2.2
|
%
|
2.1
|
%
|
4.7
|
%
|
0.0
|
%
|
||||||||||
Weekly Volume
|
0.7
|
%
|
0.8
|
%
|
0.8
|
%
|
1.3
|
%
|
0.4
|
%
|
||||||||||
Short Interest
|
0.6
|
%
|
0.6
|
%
|
1.1
|
%
|
3.9
|
%
|
0.0
|
%
|
||||||||||
Insider Ownership
|
21.0
|
%
|
5.9
|
%
|
8.3
|
%
|
19.5
|
%
|
1.8
|
%
|
||||||||||
Institutional Ownership
|
32.1
|
%
|
34.0
|
%
|
35.3
|
%
|
56.0
|
%
|
17.1
|
%
|
||||||||||
Last Twelve Months Return
|
-1.5
|
%
|
13.8
|
%
|
16.8
|
%
|
54.4
|
%
|
0.2
|
%
|
||||||||||
Total Assets ($M)
|
$
|
1,493.4
|
$
|
1,458.9
|
$
|
1,453.4
|
$
|
1,709.2
|
$
|
1,256.8
|
||||||||||
Total Loans ($M)
|
$
|
1,049.1
|
$
|
1,049.6
|
$
|
1,043.7
|
$
|
1,401.5
|
$
|
668.3
|
||||||||||
Tangible Common Equity / Tangible Assets
|
9.9
|
%
|
8.8
|
%
|
10.3
|
%
|
19.2
|
%
|
7.3
|
%
|
||||||||||
Non-performing Assets / Total Assets
|
3.20
|
%
|
0.90
|
%
|
1.01
|
%
|
1.71
|
%
|
0.50
|
%
|
||||||||||
LTM Return on Average Assets
|
0.99
|
%
|
0.55
|
%
|
0.62
|
%
|
1.14
|
%
|
0.13
|
%
|
||||||||||
LTM Return on Average Equity
|
8.13
|
%
|
6.23
|
%
|
5.79
|
%
|
7.64
|
%
|
0.85
|
%
|
Metropolitan Bank Holding Corp.
|
MVB Financial Corp.
|
American National Bankshares
|
ACNB Corp.
|
Codorus Valley Bancorp Inc.
|
C&F Financial Corp.
|
Chemung Financial Corp.
|
Premier
|
Pro Forma
Peer Group Median |
Pro Forma
Peer Group Mean |
Pro Forma
Peer Group High |
Pro Forma
Peer Group Low |
||||||||||||||||
Market Capitalization ($M)
|
$
|
198.7
|
$
|
221.3
|
$
|
248.7
|
$
|
345.1
|
$
|
184.2
|
||||||||||
Price/Tangible Book Value
|
137.4
|
%
|
155.9
|
%
|
164.9
|
%
|
198.7
|
%
|
146.3
|
%
|
||||||||||
Price/EPS
|
13.5
|
x
|
21.4
|
x
|
23.8
|
x
|
30.0
|
x
|
18.0
|
x
|
||||||||||
Dividend Yield
|
3.22
|
%
|
2.4
|
%
|
2.2
|
%
|
2.7
|
%
|
0.5
|
%
|
||||||||||
Weekly Volume
|
0.71
|
%
|
0.6
|
%
|
0.6
|
%
|
1.0
|
%
|
0.4
|
%
|
||||||||||
Short Interest
|
0.58
|
%
|
0.5
|
%
|
0.5
|
%
|
1.1
|
%
|
0.0
|
%
|
||||||||||
Insider Ownership
|
21.0
|
%
|
13.8
|
%
|
15.7
|
%
|
32.7
|
%
|
4.4
|
%
|
||||||||||
Institutional Ownership
|
32.1
|
%
|
35.0
|
%
|
33.9
|
%
|
44.9
|
%
|
17.1
|
%
|
||||||||||
Last Twelve Months Return
|
-1.5
|
%
|
16.3
|
%
|
20.0
|
%
|
54.4
|
%
|
2.9
|
%
|
||||||||||
Total Assets ($M)
|
$
|
1,493.4
|
$
|
1,707.6
|
$
|
1,661.6
|
$
|
1,816.1
|
$
|
1,509.1
|
||||||||||
Total Loans ($M)
|
$
|
1,049.1
|
$
|
1,312.4
|
$
|
1,281.9
|
$
|
1,419.9
|
$
|
1,083.2
|
||||||||||
Tangible Common Equity / Tangible Assets
|
9.9
|
%
|
8.4
|
%
|
9.1
|
%
|
12.7
|
%
|
7.5
|
%
|
||||||||||
Non-performing Assets / Total Assets
|
3.2
|
%
|
0.68
|
%
|
0.70
|
%
|
1.23
|
%
|
0.24
|
%
|
||||||||||
LTM Return on Average Assets
|
0.99
|
%
|
0.69
|
%
|
0.64
|
%
|
0.87
|
%
|
0.43
|
%
|
||||||||||
LTM Return on Average Equity
|
8.13
|
%
|
7.12
|
%
|
6.55
|
%
|
9.27
|
%
|
4.58
|
%
|
Buyer
|
Target
|
|
National Commerce Corp.
|
Premier Community Bank of FL
|
|
Parkway Acquisition Corp.
|
Great State Bank
|
|
Bank of Southern California NA
|
Americas United Bk
|
|
Guaranty Bancshares Inc.
|
Westbound Bank
|
|
First Commonwealth Financial
|
Garfield Acquisition Corp.
|
|
Heritage Commerce Corp.
|
Tri-Valley Bank
|
|
Equity Bancshares Inc.
|
Adams Dairy Bancshares Inc.
|
|
SmartFinancial Inc.
|
Tennessee Bancshares Inc.
|
|
Investar Holding Corp.
|
BOJ Bancshares Inc.
|
|
Atlantic Community Bcshs Inc.
|
BBN Financial Corporation
|
|
Bank of Marin Bancorp
|
Bank of Napa
|
|
Guaranty Bancorp
|
Castle Rock Bank Holding Co.
|
|
D2 Alliances LLC
|
Grandview Bancshares Inc.
|
First Bank/
Premier |
National
Transactions Median |
National
Transactions Mean |
National
Transactions High |
National
Transactions Low |
||||||||||||||||
Deal Value ($M)
|
$
|
27.8
|
$
|
31.1
|
$
|
32.2
|
$
|
57.6
|
$
|
14.1
|
||||||||||
Transaction price/Tangible book value per share:
|
163.1
|
%
|
153.2
|
%
|
154.6
|
%
|
199.9
|
%
|
109.2
|
%
|
||||||||||
Transaction price/Earnings per share
|
25.2
|
x
|
17.0
|
x
|
17.4
|
x
|
25.3
|
x
|
4.2
|
x
|
||||||||||
Transaction price/Total assets
|
15.1
|
%
|
15.5
|
%
|
16.9
|
%
|
26.7
|
%
|
10.1
|
%
|
||||||||||
Core deposit premium
|
11.2
|
%
|
9.4
|
%
|
10.0
|
%
|
21.6
|
%
|
1.1
|
%
|
||||||||||
Target Total Assets ($M)
|
$
|
189.2
|
$
|
181.4
|
$
|
186.6
|
$
|
246.1
|
$
|
126.7
|
||||||||||
Target NPAs/Assets
|
1.78
|
%
|
0.65
|
%
|
0.76
|
%
|
1.95
|
%
|
0.00
|
%
|
||||||||||
Target TCE/TA
|
11.74
|
%
|
10.47
|
%
|
11.41
|
%
|
18.04
|
%
|
8.72
|
%
|
||||||||||
Target LTM ROAA
|
0.59
|
%
|
0.87
|
%
|
1.22
|
%
|
5.27
|
%
|
0.20
|
%
|
Buyer
|
|
Target
|
Mid Penn Bancorp Inc.
|
|
First Priority Financial Corp.
|
Old Point Financial Corp.
|
|
Citizens National Bank
|
Old Line Bancshares Inc.
|
|
Bay Bancorp Inc.
|
Howard Bancorp Inc.
|
|
1st Mariner Bank
|
Community Finl. Corp.
|
|
County First Bank
|
Delmar Bancorp
|
Liberty Bell Bank
|
First Bank/
Premier |
Mid-Atlantic
Transactions Median |
Mid-Atlantic
Transactions Mean |
Mid-Atlantic
Transactions High |
Mid-Atlantic
Transactions Low |
||||||||||||||||
Deal Value ($M)
|
$
|
27.8
|
$
|
63.5
|
$
|
73.8
|
$
|
163.3
|
$
|
8.0
|
||||||||||
Transaction price/Tangible book value per share:
|
163.1
|
%
|
155.1
|
%
|
151.8
|
%
|
194.4
|
%
|
100.7
|
%
|
||||||||||
Transaction price/Earnings per share
|
25.2
|
x
|
19.0
|
x
|
19.0
|
x
|
28.3
|
x
|
9.8
|
x
|
||||||||||
Transaction price/Total assets
|
15.1
|
%
|
15.7
|
%
|
15.7
|
%
|
19.8
|
%
|
11.4
|
%
|
||||||||||
Core deposit premium
|
11.2
|
%
|
11.1
|
%
|
9.0
|
%
|
14.3
|
%
|
0.2
|
%
|
||||||||||
Target Total Assets ($M)
|
$
|
189.2
|
$
|
424.1
|
$
|
444.5
|
$
|
975.2
|
$
|
50.0
|
||||||||||
Target NPAs/Assets
|
1.78
|
%
|
2.12
|
%
|
1.79
|
%
|
2.97
|
%
|
0.37
|
%
|
||||||||||
Target TCE/TA
|
11.74
|
%
|
8.81
|
%
|
9.35
|
%
|
15.80
|
%
|
5.08
|
%
|
||||||||||
Target LTM ROAA
|
0.59
|
%
|
0.55
|
%
|
0.53
|
%
|
1.64
|
%
|
-0.25
|
%
|
1)
|
The analyses assume First Bank pays $5.00 special dividend per share prior to the deal’s completion for its calculation of tangible common equity and other balance sheet measures.
|
Discount Rate
|
18.0x
|
|
19.0x
|
|
20.0x
|
|
21.0x
|
|
22.0x
|
|
11.0%
|
$22.98
|
|
$24.26
|
|
$25.54
|
|
$26.81
|
|
$28.09
|
|
11.5%
|
$22.47
|
|
$23.72
|
|
$24.97
|
|
$26.22
|
|
$27.47
|
|
12.0%
|
$21.98
|
|
$23.20
|
|
$24.42
|
|
$25.64
|
|
$26.86
|
|
12.5%
|
$21.49
|
|
$22.69
|
|
$23.88
|
|
$25.07
|
|
$26.27
|
|
13.0%
|
$21.02
|
|
$22.19
|
|
$23.36
|
|
$24.52
|
|
$25.69
|
Discount Rate
|
1.35x
|
|
1.45x
|
|
1.55x
|
|
1.65x
|
|
1.75x
|
|
11.0%
|
$20.45
|
|
$21.96
|
|
$23.48
|
|
$24.99
|
|
$26.51
|
|
11.5%
|
$20.00
|
|
$21.48
|
|
$22.96
|
|
$24.44
|
|
$25.92
|
|
12.0%
|
$19.55
|
|
$21.00
|
|
$22.45
|
|
$23.90
|
|
$25.35
|
|
12.5%
|
$19.12
|
|
$20.54
|
|
$21.96
|
|
$23.37
|
|
$24.79
|
|
13.0%
|
$18.70
|
|
$20.09
|
|
$21.47
|
|
$22.86
|
|
$24.24
|
· |
Opportunity to gain entry to the Charleston, West Virginia banking market with an established bank franchise in an attractive single bank facility.
|
· |
Providing Premier an opportunity to increase its core deposit base.
|
· |
Its knowledge of First Bank’s business, operations, financial condition, earnings and prospects, taking into account the results of Premier’s due diligence review of First Bank.
|
· |
The opinion of Baxter Fentriss & Company, dated April 18, 2018, to the Premier board of directors to the effect that, as of that date and based upon the factors and subject to the assumptions set forth in such opinion, the Merger Consideration was fair, from a financial point of view, to Premier, as more fully described under the caption “Opinion of Premier Financial Advisor” beginning on page 72.
|
· |
The terms and conditions of the Merger Agreement.
|
· |
The challenges inherent in the combination of two businesses of the size and scope of Premier and First Bank;
|
· |
The risk of not capturing all anticipated cost savings and operational synergies between Premier and First Bank and the risks that other anticipated benefits might not be realized;
|
· |
The risks of the type described under “Risk Factors” starting on Page 23.
|
· |
the historical and current financial condition and results of operations of Premier and First Bank including interest income, interest expense, noninterest income, noninterest expense, earnings, book value, returns on assets and equity, and possible tax consequences resulting from the transaction;
|
· |
the business prospects of Premier and First Bank;
|
· |
the economies of Premier and First Bank’s respective market areas; and
|
· |
the nature and terms of certain other acquisition transactions that it believed to be relevant.
|
· |
the Merger Agreement;
|
· |
drafts of this joint proxy statement/prospectus;
|
· |
the Annual Reports to shareholders of Premier and First Bank for the years ended December 31, 2015 and 2016, Premier and First Bank’s December 31, 2017 call report and December 31, 2017 unaudited internal financial statements, as well as certain current interim reports to shareholders and regulatory agencies; and
|
· |
certain additional financial and operating information with respect to the business, operations and prospects of Premier and First Bank as it deemed appropriate.
|
· |
held discussions with members of Premier and First Bank’s senior management regarding the historical and current business operation, financial condition and future prospects of their respective companies;
|
· |
reviewed the historical market prices and trading activity for Premier’s common stock, as applicable, and compared them with those of certain publicly traded companies that it deemed to be relevant;
|
· |
compared the results of operations of Premier and First Bank with those of certain banking companies that it deemed to be relevant;
|
· |
analyzed the pro-forma financial impact of the Merger on Premier; and
|
· |
conducted such other studies, analyses, inquiries, and examinations as Baxter Fentriss deemed appropriate.
|
Premier Offer and Select Comparable Transaction Averages
|
|||||
Price / Book
|
Price / Tangible Book
|
Price / Earnings
|
|||
Premier Offer
|
1.48 X
|
1.48 X
|
29.90 X
|
||
National Group
|
1.50 X
|
1.56 X
|
22.20 X
|
||
Metro Group
|
1.57 X
|
1.59 X
|
23.80 X
|
Discount Rate of 12.00%
|
and merger economies of
|
15%
|
20%
|
25%
|
Terminal Value of Earnings Calculations
|
||||
18X
|
$35.40
|
$37.37
|
$39.33
|
|
19X
|
$36.98
|
$39.02
|
$41.07
|
|
20X
|
$38.55
|
$40.68
|
$42.81
|
Discount Rate of 13.00%
|
and merger economies of
|
15%
|
20%
|
25%
|
Terminal Value of Earnings Calculations
|
||||
18X
|
$34.02
|
$35.91
|
$37.79
|
|
19X
|
$35.53
|
$37.49
|
$39.46
|
|
20X
|
$37.03
|
$39.08
|
$41.12
|
Discount Rate of 14.00%
|
and merger economies of
|
15%
|
20%
|
25%
|
Terminal Value of Earnings Calculations
|
||||
18X
|
$32.71
|
$34.52
|
$36.33
|
|
19X
|
$34.15
|
$36.04
|
$37.93
|
|
20X
|
$35.59
|
$37.55
|
$39.52
|
· |
Marshall T. Reynolds, Chairman of the Board of Directors of Premier and beneficial owner of 1,057,978 shares of Premier common stock, constituting 7.9% of outstanding shares of Premier common stock, is the beneficial owner of 89,817 shares of First Bank common stock, constituting approximately 8.7% of the outstanding First Bank shares as of __________, 2018. He also serves as a consultant to First Bank.
|
·
|
Certain Premier directors beneficially own shares of First Bank common stock, each individually less than 1% of outstanding First Bank common stock, and in the aggregate, approximately 1.58% of First Bank outstanding common stock as follows:
|
Toney K. Adkins |
|
5,277 shares |
Philip E. Cline |
|
7,555 shares |
Robert W. Walker |
|
2,875 shares |
Thomas W. Wright |
|
550 shares
|
·
|
First Bank employees hold options to purchase up to 9,500 shares of First Bank common stock, which will be converted into options to acquire Premier common stock if the Merger is consummated.
|
·
|
Certain First Bank directors beneficially own shares of Premier common stock, as indicated below, constituting 2.7% of the outstanding Premier Shares as of June 30, 2018:
|
Douglas V. Reynolds | 298,810 | 2.2 | % | |||||
Nester S. Logan | 20,078 |
0.2
|
%
|
|||||
Sam Kapourales | 37,476 | 0.3 | % | |||||
Percy Osborne |
1,241
|
** | ||||||
Wyatt Scaggs | 183 | ** | ||||||
** Less than 0.1%
|
· |
First Bank directors and executive officers beneficially own 409,658 shares of First Bank common stock, constituting 39.68% of all outstanding First Bank common stock.
|
·
|
Employee Benefit Plans. Premier intends to provide the employees of First Bank with employee benefit plans substantially similar to those provided to the employees of Premier. Employees of First Bank will receive credit for their service to First Bank in determining their eligibility and vesting in the benefit plans provided by Premier. The Merger Agreement also provides that Premier will pay to any First Bank employee who is involuntarily terminated other than for cause within 12 months after the closing date, upon execution of an appropriate full release, a severance payment equal to two weeks of base pay (at the rate in effect on the termination date) for each year of service at First Bank (with credit for partial years of service), with a maximum payment equal to ten (10) weeks of base pay.
|
·
|
First Bank has created a retention bonus program for the purpose of retaining the services of First Bank employees pending completion of the Merger.
|
· |
The shareholders of First Bank approve the Merger Agreement and the transactions contemplated thereby, described in this joint proxy statement/prospectus at the special meeting of shareholders of First Bank;
|
· |
The shareholders of Premier approve the issuance of Premier common stock in the Merger at the special meeting of Premier shareholders;
|
· |
All regulatory approvals required by law to consummate the transactions contemplated by the Merger Agreement are obtained from the Federal Reserve Board, the Federal Deposit Insurance Corporation, the West Virginia Division of Financial Institutions and any other appropriate federal and/or state regulatory agencies without unreasonable conditions, and all waiting periods after such approvals required by law or regulation expire;
|
· |
The registration statement (of which this joint proxy statement/prospectus is a part) registering shares of Premier common stock to be issued in the Merger is declared effective and not subject to a stop order or any threatened stop order;
|
· |
There is no actual or threatened litigation, investigations or proceedings challenging the validity of, or damages in connection with, the Merger that would have a material adverse effect with respect to the interests of Premier or First Bank or impose a term or condition that is deemed to materially adversely impact the economic or business benefits of the Merger;
|
· |
The absence of any statute, rule, regulation, judgment, decree, injunction or other order being enacted, issued, promulgated, enforced or entered by a governmental authority effectively prohibiting consummation of the Merger;
|
· |
All permits or other authorizations under state securities laws necessary to consummate the Merger and to issue the shares of Premier common stock to be issued in the Merger being obtained and remaining in full force and effect; and
|
· |
Unless waived by Premier, the holders of no more than 10% of the outstanding shares of First Bank Common Stock have elected to exercise their statutory rights to appraisal, if any, in connection with the transactions contemplated hereby.
|
· |
The representations and warranties of First Bank made in the Merger Agreement are true and correct as of the date of the Merger Agreement and as of the effective time of the Merger and Premier receives a certificate of the chief executive officer and the chief financial officer of First Bank to that effect;
|
· |
First Bank performs in all material respects all obligations required to be performed under the Merger Agreement prior to the effective time of the Merger and delivers to Premier a certificate of its chief executive officer and chief financial officer to that effect; and
|
· |
Premier has received an opinion of Dinsmore & Shohl LLP, counsel to Premier, dated as of the effective time of the Merger, that the Merger constitutes a “reorganization” under Section 368 of the Internal Revenue Code and that the federal income tax consequences will be as described in “Certain U.S. Federal Income Tax Consequences of the Merger.”
|
· |
The representations and warranties of Premier made in the Merger Agreement are true and correct as of the date of the Merger Agreement and as of the effective time of the Merger and First Bank receives a certificate of the chief executive officer and chief financial officer of Premier to that effect;
|
· |
Premier performs in all material respects all obligations required to be performed under the Merger Agreement prior to the effective time of the Merger and delivers to First Bank a certificate of its chief executive officer and chief financial officer to that effect; and
|
· |
First Bank has received an opinion of Kay, Casto & Chaney, PLLC, counsel to First Bank, stating that, among other things, as of the effective time of the Merger, the Merger constitutes a “reorganization” under Section 368 of the Internal Revenue Code and that the federal income tax consequences will be as described in “Certain U.S. Federal Income Tax Consequences of the Merger.”
|
· |
organization and good standing of each entity and its subsidiaries;
|
· |
each entity’s capital structure;
|
· |
each entity’s authority relative to the execution and delivery of, and performance of its obligations under, the reorganization agreement;
|
· |
absence of material adverse changes after December 31, 2017;
|
· |
consents and approvals required;
|
· |
regulatory matters;
|
· |
accuracy of documents, including financial statements and other reports;
|
· |
absence of defaults under contracts and agreements;
|
· |
absence of environmental problems;
|
· |
absence of conflicts between each entity’s obligations under the Merger Agreement and its charter documents and contracts to which it is a party or by which it is bound;
|
· |
litigation and related matters;
|
· |
taxes and tax regulatory matters;
|
· |
employee benefit matters; and
|
· |
books and records fully and accurately maintained and fairly present events and transactions.
|
· |
By mutual consent in writing of First Bank and Premier; or
|
· |
By First Bank by giving written notice thereof to Premier if (i) a material adverse change shall have occurred in the financial condition, results of operations or business of Premier or any Premier Subsidiary Bank since December 31, 2017; or (ii) Premier has in any material respect breached any covenant, undertaking, representation or warranty contained in the Merger Agreement and such breach has not been cured within thirty (30) days after the giving of such notice; or
|
· |
By Premier by giving written notice thereof to First Bank if (i) a material adverse change has occurred in the financial condition, results of operations or business of First Bank since December 31, 2017 or (ii) First Bank has breached any covenant, undertaking, representation or warranty contained in the Merger Agreement and such breach has not been cured within thirty (30) days after the giving of such notice; or
|
· |
By either First Bank or Premier upon written notice to the other if any regulatory agency whose approval of the transactions contemplated by the Merger Agreement is required denies such application for approval by final order or ruling (which order or ruling shall not be considered final until expiration or waiver of all periods for review or appeal); or
|
· |
By either First Bank or Premier upon written notice to the other if any condition precedent to either party’s performance under the Merger Agreement is not satisfied or fulfilled; or
|
· |
By either First Bank or Premier if the Merger would violate any non-appealable final order, decree or judgment of any court or governmental body having competent jurisdiction; or
|
· |
By either First Bank or Premier upon the bankruptcy, insolvency or assignment for the benefit of creditors of First Bank, Premier or of any of the Premier Subsidiary Banks; or
|
· |
By either First Bank or Premier, if the shareholders of First Bank fail to approve the Merger by the vote required under the West Virginia Business Corporation Act and the Articles of Incorporation and Bylaws of First Bank; or
|
· |
By either First Bank or Premier, if the shareholders of Premier fail to approve the issuance of Premier common stock in the Merger by the vote required under the Kentucky Business Corporation Act and Nasdaq rules; or
|
· |
By either First Bank or Premier, if the Closing does not occur on or before January 31, 2019 unless extended by mutual agreement in writing; or
|
· |
By First Bank in the event that the sum of the Special Dividend and the Merger Consideration would be less than $32.00 per share of First Bank common stock, provided that Premier may, at its sole option and discretion, increase the Merger Consideration so that the sum of the Special Dividend and the Merger Consideration is equal to $32.00 per share, whereupon no termination shall have occurred; or
|
· |
If First Bank enters into a definitive agreement with a third party providing for an Acquisition Proposal on terms determined in good faith by the First Bank Board, after consulting with and considering the advice of First Bank’s outside counsel and financial advisors, to constitute a Superior Proposal (as defined below); provided, that the right to terminate the Agreement shall not be available to First Bank unless it delivers to Premier (1) written notice of First Bank’s intention to terminate at least five (5) days prior to termination; and (2) simultaneously with such termination, the Termination Fee referred to below. A “Superior Proposal” means an Acquisition Proposal made by a third party after the date hereof which, in the good faith judgment of the Board of Directors of First Bank, taking into account the financial aspects of the proposal and the person making such proposal, (1) if accepted, is more likely than not to be consummated; (2) if consummated, is reasonably likely to result in a more favorable transaction than the Merger for First Bank and its shareholders; and (3) whose refusal would constitute a breach of the fiduciary duty of the Board of Directors of First Bank.
|
(1) |
Any new loan, or renewal of an existing loan, that totals $250,000 or greater; or
|
(2) |
Any new loan, or renewal of an existing loan, which, when included with all other loans from First Bank to any such borrower and their related interests, would cause such borrower’s total loans from First Bank, including loans from First Bank to their related interests, to exceed $500,000;
|
(1) |
Any defined benefit plan to which First Bank is a party; provided, however, that if all appropriate steps are taken for termination and the defined benefit plan is frozen, the actual termination of any defined benefit plan need not be accomplished prior to, or at, Closing.
|
(2) |
Any and all deferred compensation plans to which First Bank is a party.
|
(1) |
The Merger will constitute and qualify as a reorganization within the meaning of Section 368 of the Internal Revenue Code and First Bank, Premier Bank, Inc. and Premier will each qualify as “a party to a reorganization” as that term is defined in the Internal Revenue Code;
|
(2) |
No gain or loss will be recognized by the shareholders of First Bank who exchange their First Bank Common Stock for Premier Common Stock pursuant to the Merger, except that gain may be recognized as to cash received in lieu of fractional share interests, the Special Dividend and Cash Consideration;
|
(3) |
No gain or loss will be recognized by Premier, First Bank, or Premier Bank, Inc. by reason of the Merger; and
|
(4) |
The holding period of Premier Common Stock received by First Bank shareholders in exchange for First Bank Common Stock will include the holding period of the shares of First Bank Common Stock so exchanged, provided that the First Bank Common Stock is held as a capital asset at the Effective Time.
|
(1) |
The Merger will constitute and qualify as a reorganization within the meaning of Section 368 of the Internal Revenue Code and First Bank, Premier Bank, Inc. and Premier will each qualify as “a party to a reorganization” as that term is defined in the Internal Revenue Code;
|
(2) |
No gain or loss will be recognized by the shareholders of First Bank who exchange their First Bank Common Stock for Premier Common Stock pursuant to the Merger, except that gain may be recognized as to cash received in lieu of fractional share interests, the Special Dividend and Cash Merger Consideration;
|
(3) |
No gain or loss will be recognized by Premier, First Bank, or Premier Bank, Inc. by reason of the Merger; and
|
(4) |
The holding period of Premier Common Stock received by First Bank shareholders in exchange for First Bank Common Stock will include the holding period of the shares of First Bank Common Stock so exchanged, provided that the First Bank Common Stock is held as a capital asset at the Effective Time.
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
Total
|
|||||||||||||
Available for Sale:
|
||||||||||||||||
Taxable Securities
|
$
|
--
|
$
|
35,976
|
$
|
--
|
$
|
35,976
|
||||||||
Tax Exempt Securities
|
--
|
5,764
|
--
|
5,764
|
||||||||||||
Total
|
$
|
--
|
$
|
41,740
|
$
|
--
|
$
|
41,740
|
Distribution of Assets, Liabilities and Stockholders' Equity Yields and Rates
|
||||||||||||||||||||||||||||||||||||
For the Years Ended December 31, 2017, 2016 and 2015
|
||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||||||
2017
|
2016
|
2015
|
||||||||||||||||||||||||||||||||||
Average
|
Average
|
Average
|
||||||||||||||||||||||||||||||||||
Outstanding
|
Yield/
|
Outstanding
|
Yield/
|
Outstanding
|
Yield/
|
|||||||||||||||||||||||||||||||
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
||||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||||||
Loans
|
$
|
141,746
|
$
|
6,820
|
4.81
|
%
|
$
|
147,615
|
$
|
7,068
|
4.79
|
%
|
$
|
151,225
|
$
|
7,235
|
4.78
|
%
|
||||||||||||||||||
Investment securities
|
42,455
|
785
|
1.85
|
%
|
40,541
|
801
|
1.97
|
%
|
46,227
|
962
|
2.08
|
%
|
||||||||||||||||||||||||
Interest-earning bank balances
|
125
|
1
|
0.77
|
%
|
77
|
0
|
0.49
|
%
|
200
|
0
|
0.04
|
%
|
||||||||||||||||||||||||
Federal funds sold
|
2,030
|
22
|
1.08
|
%
|
2,465
|
12
|
0.49
|
%
|
1,548
|
4
|
0.23
|
%
|
||||||||||||||||||||||||
Total earning assets
|
186,356
|
7,628
|
4.09
|
%
|
190,698
|
7,881
|
4.13
|
%
|
199,200
|
8,201
|
4.12
|
%
|
||||||||||||||||||||||||
Allowance for loan losses
|
(1,641
|
)
|
(1,878
|
)
|
(2,270
|
)
|
||||||||||||||||||||||||||||||
Cash and due from banks
|
2,740
|
2,934
|
2,952
|
|||||||||||||||||||||||||||||||||
Other assets
|
5,702
|
6,736
|
6,538
|
|||||||||||||||||||||||||||||||||
Total assets
|
$
|
193,157
|
$
|
198,490
|
$
|
206,420
|
||||||||||||||||||||||||||||||
Liabilities and Stockholders' Equity
|
||||||||||||||||||||||||||||||||||||
NOW, Savings and money market accounts
|
$
|
55,211
|
$
|
222
|
0.40
|
%
|
$
|
63,866
|
$
|
246
|
0.39
|
%
|
$
|
67,971
|
$
|
267
|
0.39
|
%
|
||||||||||||||||||
Certificates of deposit
|
78,694
|
908
|
1.15
|
%
|
69,630
|
678
|
0.97
|
%
|
55,513
|
530
|
0.96
|
%
|
||||||||||||||||||||||||
Total interest-bearing deposits
|
133,905
|
1,130
|
0.84
|
%
|
133,496
|
924
|
0.69
|
%
|
123,484
|
797
|
0.65
|
%
|
||||||||||||||||||||||||
Short-term borrowings
|
17,688
|
193
|
1.09
|
%
|
24,531
|
197
|
0.80
|
%
|
40,370
|
191
|
0.47
|
%
|
||||||||||||||||||||||||
Long-term borrowings (1)
|
2,467
|
40
|
1.61
|
%
|
2,417
|
26
|
1.09
|
%
|
2,307
|
23
|
0.99
|
%
|
||||||||||||||||||||||||
Total interest-bearing liabilities
|
154,060
|
1,363
|
0.88
|
%
|
160,444
|
1,147
|
0.72
|
%
|
166,161
|
1,011
|
0.61
|
%
|
||||||||||||||||||||||||
Non-interest bearing deposits
|
16,271
|
15,693
|
14,818
|
|||||||||||||||||||||||||||||||||
Other liabilities (2)
|
420
|
374
|
237
|
|||||||||||||||||||||||||||||||||
Total liabilities
|
170,751
|
176,511
|
181,216
|
|||||||||||||||||||||||||||||||||
Shareholders' equity
|
22,406
|
21,979
|
25,204
|
|||||||||||||||||||||||||||||||||
Total liabilities and shareholders' equity
|
$
|
193,157
|
$
|
198,490
|
$
|
206,420
|
||||||||||||||||||||||||||||||
Net interest income
|
$
|
6,265
|
$
|
6,734
|
$
|
7,190
|
||||||||||||||||||||||||||||||
Net interest rate spread (2)
|
3.21
|
%
|
3.42
|
%
|
3.51
|
%
|
||||||||||||||||||||||||||||||
Net interest margin (3)
|
3.36
|
%
|
3.53
|
%
|
3.61
|
%
|
||||||||||||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities
|
120.96
|
%
|
118.86
|
%
|
119.88
|
%
|
||||||||||||||||||||||||||||||
(1) The Long Term Borrowings were determined based upon a period end for 4 quarters averaged. The total for borrowings represents a year-to-date average.
|
||||||||||||||||||||||||||||||||||||
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
|
||||||||||||||||||||||||||||||||||||
(3) Net interest margin represents net interest income divided by average total interest-earning assets.
|
||||||||||||||||||||||||||||||||||||
Interest Rates and Interest Differential
|
||||||||||||||||||||||||
Analysis of Changes in Net Interest Income
|
||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Year Ended December 31,
|
Year Ended December 31,
|
|||||||||||||||||||||||
2017 vs. 2016
|
2016 vs. 2015
|
|||||||||||||||||||||||
Increase (Decrease)
|
Total
|
Increase (Decrease)
|
Total
|
|||||||||||||||||||||
Due to
|
Increase
|
Due to
|
Increase
|
|||||||||||||||||||||
Volume
|
Rate
|
(Decrease)
|
Volume
|
Rate
|
(Decrease)
|
|||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans
|
$
|
(281
|
)
|
$
|
33
|
$
|
(248
|
)
|
(173
|
)
|
$
|
6
|
$
|
(167
|
)
|
|||||||||
Investment securities
|
38
|
(54
|
)
|
(16
|
)
|
(118
|
)
|
(43
|
)
|
$
|
(161
|
)
|
||||||||||||
Cash and due from banks
|
1
|
0
|
1
|
0
|
|
0
|
$
|
0
|
||||||||||||||||
Federal funds sold
|
(2
|
)
|
12
|
10
|
2
|
6
|
$
|
8
|
||||||||||||||||
Total interest-earning assets
|
$
|
(244
|
)
|
$
|
(9
|
)
|
$
|
(253
|
)
|
$
|
(289
|
)
|
$
|
(31
|
)
|
$
|
(320
|
)
|
||||||
Interest bearing liabilities:
|
||||||||||||||||||||||||
NOW, savings and money market accounts
|
$
|
(33
|
)
|
$
|
9
|
$
|
(24
|
)
|
$
|
(16
|
)
|
$
|
(5
|
)
|
$
|
(21
|
)
|
|||||||
Certificates of deposit
|
88
|
142
|
$
|
230
|
135
|
13
|
$
|
148
|
||||||||||||||||
Total deposits
|
55
|
151
|
206
|
119
|
8
|
127
|
||||||||||||||||||
Short-term borrowings
|
(55
|
)
|
51
|
$
|
(4
|
)
|
(75
|
)
|
81
|
$
|
6
|
|||||||||||||
Long-term borrowings
|
1
|
13
|
$
|
14
|
1
|
2
|
$
|
3
|
||||||||||||||||
Total interest-bearing liabilities
|
$
|
1
|
$
|
215
|
$
|
216
|
$
|
45
|
$
|
91
|
$
|
136
|
||||||||||||
Change in net interest income
|
$
|
(245
|
)
|
$
|
(224
|
)
|
$
|
(469
|
)
|
$
|
(334
|
)
|
$
|
(122
|
)
|
$
|
(456
|
)
|
December 31, | ||||||||||||||||||||
Composition of loan portfolio:
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
Commercial
|
22.1
|
%
|
21.9
|
%
|
23.7
|
%
|
26.2
|
%
|
42.2
|
%
|
||||||||||
Real Estate-commercial
|
55.4
|
%
|
55.6
|
%
|
52.6
|
%
|
51.1
|
%
|
35.6
|
%
|
||||||||||
Real Estate - residential
|
21.7
|
%
|
21.6
|
%
|
22.4
|
%
|
21.2
|
%
|
20.6
|
%
|
||||||||||
Installment
|
0.9
|
%
|
1.0
|
%
|
1.3
|
%
|
1.5
|
%
|
1.6
|
%
|
||||||||||
Total
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||||
Analysis of Loan Maturity and Interest Sensitivity
|
||||||||||||||||
As of December 31, 2017
|
||||||||||||||||
(in thousands)
|
Within 1 Year
|
1 to 5 Years
|
After 5 Years
|
Total
|
||||||||||||
Maturity of Loan
|
||||||||||||||||
Commercial
|
$
|
11,553
|
$
|
13,397
|
$
|
4,723
|
$
|
29,673
|
||||||||
Real estate - commerical
|
7,508
|
9,754
|
57,212
|
74,474
|
||||||||||||
Real estate - residential
|
209
|
463
|
28,523
|
29,195
|
||||||||||||
Installment
|
237
|
850
|
60
|
1,147
|
||||||||||||
Total loans
|
$
|
19,508
|
$
|
24,464
|
$
|
90,518
|
$
|
134,489
|
||||||||
Interest-Rate Sensitivity of Loans
|
||||||||||||||||
Predetermined rates
|
$
|
6,007
|
$
|
8,303
|
$
|
10,408
|
$
|
24,718
|
||||||||
Variable rates
|
54,310
|
55,229
|
232
|
109,771
|
||||||||||||
Total loans
|
$
|
60,317
|
$
|
63,532
|
$
|
10,640
|
$
|
134,489
|
Analysis of Investment Securities Portfolio
|
||||||||||||||||||||||||
As of December 31, 2017
|
||||||||||||||||||||||||
Available for Sale
|
Held to Maturity
|
|||||||||||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||||||||||
Amortized
|
Market
|
Average
|
Amortized
|
Market
|
Average
|
|||||||||||||||||||
(Dollars in thousands)
|
Cost
|
Value
|
Yield
|
Cost
|
Value
|
Yield
|
||||||||||||||||||
Securities available for sale:
|
||||||||||||||||||||||||
U.S. government agencies and corporations:
|
||||||||||||||||||||||||
One year or less
|
$
|
3,000
|
$
|
2,996
|
0.97
|
%
|
$
|
-
|
$
|
-
|
-
|
|||||||||||||
After one, but within five years
|
6,004
|
5,870
|
1.53
|
%
|
-
|
-
|
-
|
|||||||||||||||||
After five, but within ten years
|
6,500
|
6,327
|
2.12
|
%
|
-
|
-
|
-
|
|||||||||||||||||
After ten years
|
1,000
|
964
|
1.75
|
%
|
-
|
-
|
-
|
|||||||||||||||||
Total federal agency securities
|
16,504
|
16,157
|
1.71
|
%
|
-
|
-
|
-
|
|||||||||||||||||
Mortgage-backed securities
|
15,412
|
15,290
|
2.29
|
%
|
-
|
-
|
-
|
|||||||||||||||||
Corporate debt securities:
|
||||||||||||||||||||||||
One year or less
|
250
|
247
|
2.45
|
%
|
-
|
-
|
-
|
|||||||||||||||||
After one, but within five years
|
2,520
|
2,549
|
3.26
|
%
|
-
|
-
|
-
|
|||||||||||||||||
After five, but within ten years
|
785
|
758
|
2.58
|
%
|
-
|
-
|
-
|
|||||||||||||||||
After ten years
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Total corporate securities
|
3,555
|
3,554
|
3.07
|
%
|
-
|
-
|
-
|
|||||||||||||||||
Municipal securities:
|
||||||||||||||||||||||||
One year or less
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
After one, but within five years
|
500
|
525
|
5.41
|
%
|
-
|
-
|
-
|
|||||||||||||||||
After five, but within ten years
|
775
|
748
|
2.67
|
%
|
-
|
-
|
-
|
|||||||||||||||||
After ten years
|
4,546
|
4,492
|
3.40
|
%
|
-
|
-
|
-
|
|||||||||||||||||
Total municipal securities
|
5,821
|
5,764
|
3.48
|
%
|
-
|
-
|
-
|
|||||||||||||||||
Marketable equity securities
|
500
|
500
|
6.00
|
%
|
-
|
-
|
-
|
|||||||||||||||||
Investment in subordinated debt
|
475
|
475
|
5.00
|
%
|
-
|
-
|
-
|
|||||||||||||||||
Total securities
|
$
|
42,266
|
$
|
41,740
|
2.29
|
%
|
$
|
-
|
$
|
-
|
0
|
%
|
For the Year Ended
|
For the Year Ended
|
For the Year Ended
|
||||||||||||||||||||||
December 31, 2017
|
December 31, 2016
|
December 31, 2015
|
||||||||||||||||||||||
(Dollars in thousands)
|
Balance
|
Percent
|
Balance
|
Percent
|
Balance
|
Percent
|
||||||||||||||||||
Deposit type:
|
||||||||||||||||||||||||
Demand deposits
|
$
|
17,134
|
11.7
|
%
|
$
|
16,478
|
11.0
|
%
|
$
|
15,579
|
11.3
|
%
|
||||||||||||
NOW accounts
|
45,650
|
31.1
|
%
|
44,140
|
29.4
|
%
|
51,018
|
37.0
|
%
|
|||||||||||||||
Money market accounts
|
7,253
|
4.9
|
%
|
8,507
|
5.7
|
%
|
13,323
|
9.7
|
%
|
|||||||||||||||
Savings accounts
|
4,528
|
3.1
|
%
|
4,453
|
3.0
|
%
|
4,437
|
3.2
|
%
|
|||||||||||||||
Total non-certificates
|
74,565
|
50.8
|
%
|
73,578
|
49.1
|
%
|
84,357
|
61.2
|
%
|
|||||||||||||||
Certificates of deposit
|
69,683
|
47.5
|
%
|
73,595
|
49.1
|
%
|
50,087
|
36.3
|
%
|
|||||||||||||||
Individual retirement accounts
|
2,541
|
1.7
|
%
|
2,735
|
1.8
|
%
|
3,444
|
2.5
|
%
|
|||||||||||||||
Total certificates
|
72,224
|
49.2
|
%
|
76,330
|
50.9
|
%
|
53,531
|
38.8
|
%
|
|||||||||||||||
Total deposits
|
$
|
146,789
|
100.0
|
%
|
$
|
149,907
|
100.0
|
%
|
$
|
137,888
|
100.0
|
%
|
Maturity
|
||||||||||||||||||||
3 Months
|
Over 3 to 12
|
Over 6 to
|
Over 12
|
|||||||||||||||||
(In thousands)
|
or Less
|
Months
|
12 Months
|
Months
|
Total
|
|||||||||||||||
Certificates of deposit less than $100,000
|
$
|
3,718
|
$
|
8,202
|
$
|
11,341
|
$
|
14,120
|
$
|
37,381
|
||||||||||
Certificates of deposits of $100,000 or more
|
12,113
|
10,000
|
9,968
|
2,762
|
34,843
|
|||||||||||||||
Total certificates of deposit
|
$
|
15,832
|
$
|
18,202
|
$
|
21,309
|
$
|
16,882
|
$
|
72,224
|
Borrowed Funds Average Balances and Rates
|
||||||||||||||||||||
Years Ended December 31,
|
||||||||||||||||||||
(Dollars in thousands)
|
Maximum
Outstanding at
Any Month-end
|
Average
Balance
|
Average
Interest Rate
|
Ending
Balance
|
Average
Interest
Rate at
Year-end
|
|||||||||||||||
2017:
|
||||||||||||||||||||
Short-term borrowings
|
$
|
25,976
|
$
|
17,689
|
1.09
|
%
|
$
|
17,424
|
1.40
|
%
|
||||||||||
Long-term debt
|
3,000
|
2,467
|
1.61
|
%
|
2,000
|
1.78
|
%
|
|||||||||||||
2016:
|
||||||||||||||||||||
Short-term borrowings
|
$
|
31,954
|
$
|
24,531
|
0.80
|
%
|
$
|
20,165
|
0.82
|
%
|
||||||||||
Long-term debt
|
3,750
|
2,417
|
1.09
|
%
|
3,750
|
1.13
|
%
|
|||||||||||||
2015:
|
||||||||||||||||||||
Short-term borrowings
|
$
|
47,636
|
$
|
40,768
|
0.47
|
%
|
$
|
32,191
|
0.67
|
%
|
||||||||||
Long-term debt
|
3,250
|
2,307
|
0.99
|
%
|
3,250
|
1.01
|
%
|
Contractual Commitments
|
||||||||||||||||||||
Payments due by period
|
||||||||||||||||||||
Less than
|
1 to 3
|
3 - 5
|
More than
|
|||||||||||||||||
Total
|
1 year
|
years
|
years
|
5 years
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Time deposits maturities
|
$
|
72,245
|
$
|
55,470
|
$
|
15,516
|
$
|
1,031
|
$
|
228
|
||||||||||
Short-term borrowings
|
17,424
|
17,424
|
||||||||||||||||||
Long-term debt
|
2,000
|
2,000
|
||||||||||||||||||
Operating lease obligations
|
2
|
2
|
||||||||||||||||||
Purchase obligations (1)
|
985
|
299
|
686
|
|||||||||||||||||
Total
|
$
|
92,656
|
$
|
73,195
|
$
|
18,202
|
$
|
1,031
|
$
|
228
|
For the Year Ended December 31
|
||||||||||||||||||||
(In thousands)
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
Allowance for loan loss allocated to:
|
||||||||||||||||||||
Commerical and industrial
|
$
|
275
|
$
|
202
|
$
|
304
|
$
|
2,366
|
$
|
1,162
|
||||||||||
Real estate - commercial
|
1,041
|
1,165
|
1,748
|
554
|
661
|
|||||||||||||||
Residential mortgages
|
333
|
368
|
420
|
555
|
294
|
|||||||||||||||
Consumer loans
|
12
|
16
|
26
|
40
|
23
|
|||||||||||||||
Unallocated
|
9
|
(42
|
)
|
12
|
516
|
|||||||||||||||
Total Allowance for loan loss
|
$
|
1,662
|
$
|
1,761
|
$
|
2,456
|
$
|
3,527
|
$
|
2,656
|
||||||||||
As of December 31,
|
||||||||||||||||||||
(Dollars in thousands)
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
Non-accrual loans
|
||||||||||||||||||||
Commercial
|
$
|
55
|
$
|
299
|
$
|
685
|
$
|
1,402
|
$
|
1,548
|
||||||||||
Commercial real estate
|
1,846
|
1,275
|
2,625
|
6,534
|
313
|
|||||||||||||||
Residential mortgages
|
654
|
597
|
353
|
1,042
|
208
|
|||||||||||||||
Consumer
|
4
|
11
|
16
|
62
|
-
|
|||||||||||||||
Total Non-accrual loans
|
2,559
|
2,182
|
3,679
|
9,040
|
2,069
|
|||||||||||||||
Loans past due over 90 days
|
-
|
-
|
-
|
169
|
4,827
|
|||||||||||||||
Restructured loans
|
715
|
280
|
2,391
|
2,880
|
946
|
|||||||||||||||
Total non-performing loans
|
3,274
|
2,462
|
6,070
|
12,089
|
7,842
|
|||||||||||||||
Other real estate owned
|
90
|
97
|
704
|
116
|
176
|
|||||||||||||||
Total non-performing assets
|
$
|
3,364
|
$
|
2,559
|
$
|
6,774
|
$
|
12,205
|
$
|
8,018
|
||||||||||
Non-performing loans as a % of total loans
|
2.44
|
%
|
1.69
|
%
|
4.04
|
%
|
7.98
|
%
|
5.49
|
%
|
||||||||||
Non-performing assets as a % of total assets
|
1.78
|
%
|
1.31
|
%
|
3.42
|
%
|
5.85
|
%
|
3.89
|
%
|
||||||||||
Allowance for loan loss as % of non-performing assets
|
49.40
|
%
|
68.81
|
%
|
36.25
|
%
|
28.90
|
%
|
33.13
|
%
|
Progression of allowance for loan losses
|
||||||||||||||||||||
(in thousands)
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
Balance at beginning of period
|
$
|
1,761
|
$
|
2,456
|
$
|
3,527
|
$
|
2,657
|
$
|
2,415
|
||||||||||
Loans charged-off:
|
||||||||||||||||||||
Commercial and Industrial
|
(69
|
)
|
(850
|
)
|
(2,355
|
)
|
(74
|
)
|
(2
|
)
|
||||||||||
Commercial real estate
|
(1,325
|
)
|
(519
|
)
|
(1,326
|
)
|
(102
|
)
|
(125
|
)
|
||||||||||
Residential real estate
|
(59
|
)
|
(152
|
)
|
(720
|
)
|
(3
|
)
|
(92
|
)
|
||||||||||
Installment
|
(3
|
)
|
(10
|
)
|
(34
|
)
|
(3
|
)
|
(28
|
)
|
||||||||||
Total charge-offs
|
(1,456
|
)
|
(1,531
|
)
|
(4,434
|
)
|
(182
|
)
|
(247
|
)
|
||||||||||
Loan Recoveries:
|
||||||||||||||||||||
Commercial and Industrial
|
101
|
160
|
-
|
30
|
94
|
|||||||||||||||
Commercial real estate
|
71
|
104
|
3
|
6
|
-
|
|||||||||||||||
Residential real estate
|
-
|
2
|
-
|
13
|
56
|
|||||||||||||||
Installment
|
-
|
20
|
45
|
3
|
9
|
|||||||||||||||
Total recoveries
|
172
|
286
|
48
|
52
|
159
|
|||||||||||||||
Net (charge-offs) recoveries
|
(1,284
|
)
|
(1,245
|
)
|
(4,386
|
)
|
(130
|
)
|
(88
|
)
|
||||||||||
Provision (recovery to allowance) for loan losses
|
1,185
|
550
|
3,315
|
1,000
|
330
|
|||||||||||||||
Balance end of year
|
$
|
1,662
|
$
|
1,761
|
$
|
2,456
|
$
|
3,527
|
$
|
2,657
|
||||||||||
Ratios:
|
||||||||||||||||||||
Net charge-offs to average loans outstanding (annualized)
|
0.91
|
%
|
0.84
|
%
|
2.90
|
%
|
0.09
|
%
|
0.06
|
%
|
||||||||||
Allowance for loan losses to nonperforming loans at end of period
|
49.42
|
%
|
68.79
|
%
|
36.27
|
%
|
28.90
|
%
|
33.13
|
%
|
||||||||||
Allowance for loan losses to total loans at end of period
|
1.24
|
%
|
1.21
|
%
|
1.63
|
%
|
2.33
|
%
|
1.86
|
%
|
Market Risk
|
||||||||||||||||||
As of December 31,
|
2017
|
2016
|
||||||||||||||||
Change in interest rates
(basis points)
|
Net interest
income
|
Economic value
of equity
|
Net interest
income
|
Economic value
of equity
|
||||||||||||||
+100
|
2.49
|
%
|
0.96
|
%
|
0.48
|
%
|
-3.76
|
%
|
||||||||||
-100
|
-2.00
|
%
|
-3.26
|
%
|
0.89
|
%
|
6.84
|
%
|
Distribution of Assets, Liabilities and Stockholders' Equity Yields and Rates
|
||||||||||||||||||||||||
For the Three Months Ended March 31, 2018 and 2017
|
||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
2018
|
2017
|
|||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||
Outstanding
|
Yield/
|
Outstanding
|
Yield/
|
|||||||||||||||||||||
Balance
|
Interest
|
Rate (1)
|
Balance
|
Interest
|
Rate (1)
|
|||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Loans
|
$
|
130,453
|
$
|
1,647
|
5.05
|
%
|
$
|
145,207
|
$
|
1,696
|
4.67
|
%
|
||||||||||||
Investment securities
|
44,816
|
271
|
2.42
|
%
|
41,859
|
204
|
1.95
|
%
|
||||||||||||||||
Interest-earning bank balances
|
35
|
0
|
2.60
|
%
|
109
|
0
|
0.56
|
%
|
||||||||||||||||
Federal funds sold
|
1,999
|
8
|
1.56
|
%
|
2,630
|
6
|
0.88
|
%
|
||||||||||||||||
Total earning assets
|
177,303
|
1,926
|
4.34
|
%
|
189,805
|
1,906
|
4.02
|
%
|
||||||||||||||||
Allowance for loan losses
|
(1,793
|
)
|
(1,594
|
)
|
||||||||||||||||||||
Cash and due from banks
|
3,012
|
2,710
|
||||||||||||||||||||||
Other assets
|
5,833
|
6,127
|
||||||||||||||||||||||
Total assets
|
$
|
184,355
|
$
|
197,048
|
||||||||||||||||||||
Liabilities and Stockholders' Equity
|
||||||||||||||||||||||||
NOW, Savings and money market accounts
|
$
|
55,666
|
$
|
55
|
0.40
|
%
|
$
|
56,532
|
$
|
55
|
0.39
|
%
|
||||||||||||
Certificates of deposit
|
70,915
|
218
|
1.23
|
%
|
78,448
|
195
|
0.99
|
%
|
||||||||||||||||
Total deposits
|
126,581
|
273
|
0.86
|
%
|
134,980
|
250
|
0.74
|
%
|
||||||||||||||||
Short-term borrowings
|
11,611
|
41
|
1.41
|
%
|
22,389
|
51
|
0.92
|
%
|
||||||||||||||||
Long-term borrowings
|
7,400
|
37
|
1.99
|
%
|
1,750
|
5
|
1.09
|
%
|
||||||||||||||||
Total interest-bearing liabilities
|
145,592
|
351
|
0.96
|
%
|
159,119
|
306
|
0.77
|
%
|
||||||||||||||||
Non-interest bearing deposits
|
16,182
|
15,580
|
||||||||||||||||||||||
Other liabilities (1)
|
382
|
356
|
||||||||||||||||||||||
Total liabilities
|
162,156
|
175,055
|
||||||||||||||||||||||
Shareholders' equity
|
22,199
|
21,993
|
||||||||||||||||||||||
Total liabilities and shareholders' equity
|
$
|
184,355
|
$
|
197,048
|
||||||||||||||||||||
Net interest income
|
$
|
1,575
|
$
|
1,600
|
||||||||||||||||||||
Net interest rate spread (2)
|
3.38
|
%
|
3.25
|
%
|
||||||||||||||||||||
Net interest margin (3)
|
3.55
|
%
|
3.37
|
%
|
||||||||||||||||||||
(1) Deferred Income Tax Payable Fed & State is a negative, which reduces the Other Liabilities.
|
||||||||||||||||||||||||
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
|
||||||||||||||||||||||||
(3) Net interest margin represents net interest income divided by average total interest-earning assets.
|
||||||||||||||||||||||||
The above table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are year-to-day average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.
|
||||||||||||||||||||||||
Progression of allowance for loan losses
|
||||||||
For the Three Months Ended
March 31,
|
||||||||
(in thousands)
|
2018
|
2017
|
||||||
Balance at beginning of period
|
$
|
1,662
|
$
|
1,762
|
||||
Loans charged-off:
|
||||||||
Commercial and Industrial
|
(53
|
)
|
(69
|
)
|
||||
Commercial real estate
|
-
|
(402
|
)
|
|||||
Residential real estate
|
(5
|
)
|
(9
|
)
|
||||
Installment
|
(1
|
)
|
-
|
|||||
Total charge-offs
|
(59
|
)
|
(480
|
)
|
||||
Loan Recoveries:
|
||||||||
Commercial and Industrial
|
35
|
63
|
||||||
Commercial real estate
|
74
|
5
|
||||||
Residential real estate
|
8
|
-
|
||||||
Installment
|
3
|
0
|
||||||
Total recoveries
|
120
|
68
|
||||||
Net (charge-offs) recoveries
|
61
|
(412
|
)
|
|||||
Provision (recovery to allowance) for loan losses
|
90
|
140
|
||||||
Balance end of period
|
$
|
1,812
|
$
|
1,489
|
||||
Ratios:
|
||||||||
Net charge-offs to average loans outstanding (annualized)
|
-0.05
|
%
|
0.28
|
%
|
||||
Allowance for loan losses to nonperforming loans at end of period
|
48.68
|
%
|
93.24
|
%
|
||||
Allowance for loan losses to total loans at end of period
|
1.43
|
%
|
1.05
|
%
|
(Dollars in thousands)
|
3/31/2018
|
12/31/2017
|
||||||
Non-accrual loans
|
||||||||
Commercial
|
$
|
46
|
$
|
55
|
||||
Commercial real estate
|
1,706
|
1,846
|
||||||
Residential mortgages
|
685
|
654
|
||||||
Consumer
|
2
|
4
|
||||||
Total Non-accrual loans
|
2,439
|
2,559
|
||||||
Loans past due over 90 days
|
-
|
-
|
||||||
Restructured loans
|
1,214
|
715
|
||||||
Total non-performing loans
|
3,653
|
3,274
|
||||||
Other real estate owned
|
70
|
90
|
||||||
Total non-performing assets
|
$
|
3,723
|
$
|
3,364
|
||||
Non-performing loans as a % of total loans
|
2.89
|
%
|
2.44
|
%
|
||||
Non-performing assets as a % of total assets
|
2.05
|
%
|
1.78
|
%
|
||||
Allowance for loan loss as % of non-performing assets
|
48.70
|
%
|
49.41
|
%
|
Premier
|
|
First Bank
|
20,000,000 shares of common stock, no par value per share and 1,000,000 shares of preferred stock, without par value.
Authority is given in Premier’s articles of incorporation for its board of directors to issue, without shareholder approval, up to 1,000,000 shares of preferred stock, to divide the shares of preferred stock into series and, within the limitations of laws of the Commonwealth of Kentucky, to vary, as between series, dividend rates, voting rights, redemption provisions, voluntary and involuntary liquidation prices, sinking fund provisions and conversion privileges. Any preferred stock issued could be granted priority and preference over Premier common stock in payment of dividends and upon liquidation or dissolution of Premier. Premier has no current plans for issuance of authorized shares of preferred stock.
However, Premier’s 2016 assumption of First National Bankshares Trust Preferred Stock may affect the ability of Premier to declare and pay dividends on its outstanding common stock if Premier fails to pay the scheduled installments on First Bank’s Trust Preferred Stock or if an event of default exists under the First Bank Trust Preferred Stock governing instruments.
|
1,436,371 shares of common stock, $1.00 par value per share.
First Bank is authorized to issue, without shareholder approval, up to 10,000 shares of preferred stock.
|
Premier
|
|
First Bank
|
Premier’s bylaws provide that the number of directors of Premier shall be fixed by the board of directors from time to time. Presently the board of directors of Premier consists of nine (9) individuals.
|
|
First Bank’s bylaws provide that the total number of directors of First Bank shall be not less than five (5) nor more than twenty-five (25) as from time to time fixed by the board of directors or shareholder resolution. Presently the board of directors of First Bank consists of ten (10) individuals.
|
Premier
|
|
First Bank
|
Premier has only one class of directors.
|
|
First Bank has only one class of directors.
|
Premier
|
|
First Bank
|
Newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the board of directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled by action of a majority of the remaining directors then in office, and directors so chosen shall hold office for a term expiring at the next annual meeting of shareholders.
|
When any vacancy occurs among the board of directors for any reason, including due to an increase in the number thereof, the remaining members of the board may appoint a director to fill such vacancy at any regular meeting of the board, or at a special meeting called for that purpose. Any vacancy resulting from the removal of a director shall be filled by the shareholders.
|
Premier
|
|
First Bank
|
At a meeting of shareholders called expressly for the purpose of removing one or more directors, any director or the entire board of directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote at any election of directors. If less than the entire board is to be removed, no one of the directors may be removed if the votes cast against his removal are sufficient to elect him if such votes had been cumulatively voted at an election of the entire board of directors or, if there are classes of directors, at an election of the class of directors of which he is a part.
|
|
The shareholders may remove one or more directors with or without cause. If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove him or her. A director may be removed only if the number of votes cast to remove him or her exceeds the number of votes cast not to remove him or her provided that a director may not be removed if the number of votes sufficient to elect him or her under cumulative voting is voted against his or her removal. A director may be removed by the shareholders only at a meeting called for the purpose of removing him or her and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director.
|
Premier
|
|
First Bank
|
Nominations for election to the board of directors may be made by the board of directors or by any shareholder entitled to vote for election of directors. Nominations other than those made by or on behalf of the existing management shall be made in writing and be delivered or mailed to the President of Premier not less than fourteen (14) days nor more than fifty (50) days prior to any meeting of shareholders called for the election of directors; provided, however, that if less than twenty-one (21) days notice of the meeting is given to shareholders, such nomination shall be mailed or delivered to the President of Premier not later than the close of business on the 7th day following the day on which the notice of the meeting was mailed. Such notification shall contain specified information to the extent known to the notifying shareholder.
|
|
Nominations for election of a director may be made by the board of directors or any shareholder entitled to vote for the election of directors.
|
Premier
|
|
First Bank
|
None
|
|
None
|
Premier
|
|
First Bank
|
The annual meeting of the shareholders of Premier shall be held at such time, place and on such date as the chief executive officer may designate, said date to be no later than six months following the end of Premier’s fiscal year. The purpose of such meetings shall be the election of directors and the transaction of such other business as may properly come before it. If the election of directors shall not be held on the day designated for an annual meeting, or at any adjournment thereof, the board of directors shall cause the election to be held at a special meeting of the shareholders to be held as soon thereafter as may be practicable.
|
|
The bylaws provide that the annual meeting of the shareholders of First Bank shall be held at 2:00 o’clock p.m. on the second Tuesday of March of each year. However, in recent years, the practice of First Bank has been to hold the annual meeting of its shareholders at 5:00 o’clock p.m. on the second Wednesday of April of each year.
|
Premier
|
|
First Bank
|
The Articles of Incorporation of Premier may be amended by a majority vote of shareholders voting at any meeting at which a quorum is present called for the purpose of amending the Articles of Incorporation.
|
|
After shares have been issued, any amendment to the Articles of Incorporation must first be adopted by the board of directors. Except for certain specified situations, the board of directors must then submit the amendment to shareholders for their approval at a meeting at which a quorum consisting of at least a majority of the votes entitled to be case on the amendment is present.
|
Premier
|
|
First Bank
|
The board of directors shall have the power and authority to alter, amend or repeal the bylaws by the vote of a majority of the entire board of directors, subject always to the power of the shareholders to change or repeal such bylaws.
|
|
The bylaws may be amended by the board of directors at any regular or special meeting of the board of directors, but any bylaws or amendments to bylaws made by the directors may be amended, altered or repealed by the board of directors or by a majority of the shareholders.
|
Premier
|
|
First Bank
|
Shareholders of Premier have appraisal rights in accordance with Kentucky law.
|
|
Shareholders of First Bank have appraisal rights in accordance with West Virginia law.
|
Premier
|
|
First Bank
|
A Kentucky corporation generally may pay dividends in cash, property or its own shares except when the corporation is unable to pay its debts as they become due in the usual course of business or the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of the dividend, to satisfy any stockholders who have rights superior to those receiving the dividend.
|
|
A West Virginia corporation generally may pay dividends in cash, property or its own shares except when the corporation is unable to pay its debts as they become due in the usual course of business or the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of the dividend, to satisfy any stockholders who have rights superior to those receiving the dividend.
|
Premier
|
|
First Bank
|
Premier bylaws provide that Premier shall, to the fullest extent permitted by, and in accordance with the provisions of, the Kentucky Business Corporation Act, indemnify each director and officer of Premier against expenses (including attorneys’ fees), judgments, taxes, fines, and amounts paid in settlement, incurred in connection with, and shall advance expenses (including attorneys’ fees) incurred in defending, any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) to which he is, or is threatened to be made, a party by reason of the fact that he is or was a director or officer of Premier, or is or was serving at the request of Premier as a director, officer, partner, employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust or other enterprise.
|
First Bank’s articles of incorporation provide that First Bank shall indemnify any person who serves or has served as director, officer, employee or officer, partner, employee or agent of First Bank or any other entity at the request of First Bank against reasonable expenses, including reasonable attorneys’ fees, payments and settlements, etc. to the full extent contemplated and permitted by the Code of West Virginia as amended, and that First Bank is specifically empowered and authorized to purchase and maintain insurance on behalf of such person.
|
·
|
Premier’s Current Reports on Form 8-K filed on April 20, 2018, May 4, 2018, May 23, 2018, June 20, 2018 and July 3, 2018 (in each case, except to the extent furnished but not filed).
|
|
|
|
Premier Financial Bancorp, Inc.
|
|
|
2883 Fifth Avenue
|
|
|
Huntington, West Virginia 25301
|
|
|
Attention: Brien M. Chase
|
|
|
Telephone: (304) 525-1600
|
|
Premier Financial Bancorp, Inc.
By Order of the Board of Directors
Marshall T. Reynolds,
Chairman of the Board
|
First Bank of Charleston, Inc.
By Order of the Board of Directors
Nester S. Logan
Chairman of the Board
|
Independent Auditor’s Report |
|
F - 3 |
Balance Sheets |
|
F - 4
|
Statements of Income |
|
F - 5
|
Statements of Comprehensive Income | F - 6 | |
Statements of Shareholders’ Equity | F - 7 | |
Statements of Cash Flows | F - 8 | |
Notes to Financial Statements | F - 10 |
Balance Sheets |
|
F - 44
|
Statements of Income |
|
F - 45
|
Statements of Comprehensive Income | F - 46 | |
Statements of Shareholders’ Equity | F - 47 | |
Statements of Cash Flows | F - 48 | |
Notes to Financial Statements | F - 50 |
December 31, 2017 and 2016
|
||||||||
ASSETS
|
2017
|
2016
|
||||||
Cash and due from banks
|
$
|
2,890,327
|
$
|
3,591,682
|
||||
Interest bearing deposits with other banks
|
88,662
|
15,149
|
||||||
Federal funds sold
|
4,798,000
|
150,000
|
||||||
Securities available for sale
|
41,739,865
|
40,770,013
|
||||||
Loans, less allowance for loan losses of
|
||||||||
$1,661,614 and $1,761,146 respectively
|
132,628,528
|
143,614,209
|
||||||
Bank premises and equipment, net
|
4,421,765
|
4,570,189
|
||||||
Accrued interest receivable
|
545,632
|
551,206
|
||||||
Other assets
|
1,687,598
|
2,619,480
|
||||||
Total assets
|
$
|
188,800,377
|
$
|
195,881,928
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Non interest bearing
|
$
|
17,112,605
|
$
|
16,441,209
|
||||
Interest bearing
|
129,676,383
|
133,466,271
|
||||||
Total deposits
|
146,788,988
|
149,907,480
|
||||||
Short-term borrowings
|
17,424,178
|
20,164,660
|
||||||
Long-term borrowings
|
2,000,000
|
3,750,000
|
||||||
Other liabilities
|
377,884
|
340,463
|
||||||
Total liabilities
|
166,591,050
|
174,162,603
|
||||||
Shareholders' Equity
|
||||||||
Preferred stock, authorized 10,000 shares; $1 par value 5.0% Series C, non voting, Cumulative Preferred Stock, liquidation value per share of $1,000; 0 and 0 issued and outstanding, respectively
|
-
|
-
|
||||||
Common stock, $1 par value, 1,436,371 shares authorized; 1,030,379 and 1,023,379 issued and outstanding 2017 and 2016
|
1,030,379
|
1,023,379
|
||||||
Capital surplus
|
15,223,489
|
15,090,489
|
||||||
Retained earnings
|
6,339,699
|
5,988,881
|
||||||
Accumulated other comprehensive income (loss)
|
(384,240
|
)
|
(383,424
|
)
|
||||
Total shareholders' equity
|
22,209,327
|
21,719,325
|
||||||
Total liabilities and shareholders' equity
|
$
|
188,800,377
|
$
|
195,881,928
|
||||
For Each of the Years in the Period Ended December 31, 2017, 2016 and 2015
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Interest income:
|
||||||||||||
Interest and fees on loans
|
$
|
6,820,458
|
$
|
7,068,099
|
$
|
7,234,620
|
||||||
Interest and dividends on securities:
|
||||||||||||
Taxable
|
710,063
|
754,529
|
934,319
|
|||||||||
Tax-exempt
|
74,788
|
46,098
|
27,615
|
|||||||||
Interest on Federal funds sold
|
21,447
|
12,056
|
3,559
|
|||||||||
Interest on interest bearing deposits with other banks
|
960
|
376
|
71
|
|||||||||
Total interest income
|
7,627,716
|
7,881,158
|
8,200,184
|
|||||||||
Interest expense:
|
||||||||||||
Interest expense on deposits
|
1,130,096
|
923,953
|
797,113
|
|||||||||
Interest on other borrowings
|
232,437
|
223,497
|
213,448
|
|||||||||
Total interest expense
|
1,362,533
|
1,147,450
|
1,010,561
|
|||||||||
Net interest income
|
6,265,183
|
6,733,708
|
7,189,623
|
|||||||||
Provision for loan losses
|
1,185,000
|
550,000
|
3,315,000
|
|||||||||
Net interest income after provision for loan losses
|
5,080,183
|
6,183,708
|
3,874,623
|
|||||||||
Other income:
|
||||||||||||
Service charges and fees
|
203,135
|
214,442
|
213,437
|
|||||||||
Rental income
|
270,285
|
271,996
|
266,985
|
|||||||||
(Losses) gains from sale of securities and OTTI writedown
|
(27,544
|
)
|
(4,371
|
)
|
850,000
|
|||||||
Gains from sale of bank premises and equipment
|
-
|
-
|
-
|
|||||||||
(Losses) gains from sale and writedown of OREO and ORA
|
(51,482
|
)
|
(138,703
|
)
|
11,492
|
|||||||
394,394
|
343,364
|
1,341,914
|
||||||||||
Other expenses:
|
||||||||||||
Salaries and employee benefits
|
2,001,537
|
2,209,035
|
2,221,378
|
|||||||||
Net occupancy expense
|
286,318
|
281,626
|
296,294
|
|||||||||
Equipment rentals, depreciation, and maintenance
|
257,114
|
224,645
|
205,722
|
|||||||||
Legal and professional
|
164,597
|
168,910
|
142,643
|
|||||||||
Data processing
|
279,556
|
260,102
|
216,659
|
|||||||||
Regulatory assessments
|
123,571
|
163,663
|
199,979
|
|||||||||
Other operating expenses
|
754,876
|
703,013
|
694,360
|
|||||||||
3,867,569
|
4,010,994
|
3,977,035
|
||||||||||
Income before income tax expense
|
1,607,008
|
2,516,078
|
1,239,502
|
|||||||||
Income tax expense
|
501,712
|
980,401
|
565,198
|
|||||||||
Net income
|
1,105,296
|
1,535,677
|
674,304
|
|||||||||
Dividends on preferred shares
|
-
|
10,221
|
33,450
|
|||||||||
Net income applicable to common shares
|
$
|
1,105,296
|
$
|
1,525,456
|
$
|
640,854
|
||||||
|
||||||||||||
Basic earnings per common share
|
||||||||||||
Net income - basic
|
$
|
1.07
|
$
|
1.49
|
$
|
0.63
|
||||||
Net income - diluted
|
$
|
1.07
|
$
|
1.49
|
$
|
0.63
|
||||||
Average common shares - basic
|
1,030,379
|
1,023,379
|
1,023,379
|
|||||||||
Average common shares - diluted
|
1,031,255
|
1,024,473
|
1,024,414
|
|||||||||
For Each of the Years in the Period Ended December 31, 2017, 2016 and 2015
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Net income
|
$
|
1,105,296
|
$
|
1,535,677
|
$
|
674,304
|
||||||
Other comprehensive income:
|
||||||||||||
Gross unrealized (losses) gains arisingduring the period
|
140,226
|
(607,858
|
)
|
781,860
|
||||||||
Adjustments for income tax benefit (expense)
|
(159,221
|
)
|
243,268
|
(312,743
|
)
|
|||||||
(18,995
|
)
|
(364,590
|
)
|
469,117
|
||||||||
|
||||||||||||
Less: Reclassification adjustment for losses (gains) included in net income
|
27,544
|
4,371
|
(850,000
|
)
|
||||||||
Adjustment for income tax benefit (expense)
|
(9,365
|
)
|
(1,749
|
)
|
340,000
|
|||||||
18,179
|
2,622
|
(510,000
|
)
|
|||||||||
Other comprehensive (loss) income, net of tax
|
(816
|
)
|
(361,968
|
)
|
(40,883
|
)
|
||||||
Comprehensive income
|
$
|
1,104,480
|
$
|
1,173,709
|
$
|
633,421
|
||||||
For Each of the Years in the Period Ended December 31, 2017, 2016 and 2015
|
||||||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
Capital
Surplus
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Total
|
|||||||||||||||||||
Balance, December 31, 2014
|
$
|
3,345,000
|
$
|
1,023,379
|
$
|
15,089,269
|
$
|
5,050,625
|
$
|
19,427
|
$
|
24,527,700
|
||||||||||||
Net income
|
-
|
-
|
-
|
674,304
|
-
|
674,304
|
||||||||||||||||||
Cash dividend declared on common stock ($0.60 per share)
|
-
|
-
|
-
|
(614,027
|
)
|
-
|
(614,027
|
)
|
||||||||||||||||
Cash dividend declared on preferred stock ($10.00 per share)
|
-
|
-
|
-
|
(33,450
|
)
|
-
|
(33,450
|
)
|
||||||||||||||||
Stock compensation expense
|
-
|
-
|
1,220
|
-
|
-
|
1,220
|
||||||||||||||||||
Unrealized (loss) on securities, net
|
-
|
-
|
-
|
-
|
(40,883
|
)
|
(40,883
|
)
|
||||||||||||||||
Balance, December 31, 2015
|
3,345,000
|
1,023,379
|
15,090,489
|
5,077,452
|
(21,456
|
)
|
24,514,864
|
|||||||||||||||||
Net income
|
-
|
-
|
-
|
1,535,677
|
-
|
1,535,677
|
||||||||||||||||||
Cash dividend declared on common stock ($0.60 per share)
|
-
|
-
|
-
|
(614,027
|
)
|
-
|
(614,027
|
)
|
||||||||||||||||
Cash dividend declared on preferred stock ($3.06 per share)
|
-
|
-
|
-
|
(10,221
|
)
|
-
|
(10,221
|
)
|
||||||||||||||||
Redemtion of preferred stock
|
(3,345,000
|
)
|
-
|
-
|
-
|
(3,345,000
|
)
|
|||||||||||||||||
Unrealized (loss) on securities, net
|
-
|
-
|
-
|
-
|
(361,968
|
)
|
(361,968
|
)
|
||||||||||||||||
Balance, December 31, 2016
|
-
|
1,023,379
|
15,090,489
|
5,988,881
|
(383,424
|
)
|
21,719,325
|
|||||||||||||||||
Net income
|
-
|
-
|
-
|
1,105,296
|
-
|
1,105,296
|
||||||||||||||||||
Cash dividend declared on common stock ($0.80 per share)
|
-
|
-
|
-
|
(822,904
|
)
|
-
|
(822,904
|
)
|
||||||||||||||||
Adoption of ASU 2018-02
|
-
|
-
|
-
|
68,426
|
-
|
68,426
|
||||||||||||||||||
Exercise of stock options
|
7,000
|
133,000
|
-
|
-
|
140,000
|
|||||||||||||||||||
Unrealized (loss) on securities, net
|
-
|
-
|
-
|
-
|
(816
|
)
|
(816
|
)
|
||||||||||||||||
Balance, December 31, 2017
|
$
|
-
|
$
|
1,030,379
|
$
|
15,223,489
|
$
|
6,339,699
|
$
|
(384,240
|
)
|
$
|
22,209,327
|
For Each of the Years in the Period Ended December 31, 2017, 2016 and 2015
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net Income
|
$
|
1,105,296
|
$
|
1,535,677
|
$
|
674,304
|
||||||
Adjustments to reconcile net income to cash provided by (used in) operating activities:
|
||||||||||||
Depreciation
|
223,924
|
182,096
|
184,248
|
|||||||||
Provision for loan losses
|
1,185,000
|
550,000
|
3,315,000
|
|||||||||
Stock compensation expense
|
-
|
-
|
1,220
|
|||||||||
Provision for deferred income tax (benefit)
|
131,232
|
301,901
|
611,936
|
|||||||||
Amortization of securities premiums and (accretion) of discounts, net
|
297,914
|
166,006
|
100,953
|
|||||||||
Loss (gain) on sale and unrealized writedown of OREO and ORA
|
51,482
|
138,703
|
(11,492
|
)
|
||||||||
Securities (gains) losses and writedown
|
27,544
|
4,371
|
(850,000
|
)
|
||||||||
(Increase) decrease in accrued interest receivable
|
5,574
|
(25,099
|
)
|
82,055
|
||||||||
Decrease (increase) in other assets
|
(29,905
|
)
|
1,042,011
|
(219,560
|
)
|
|||||||
Increase (decrease) in other liabilities
|
37,421
|
59,908
|
78,010
|
|||||||||
Net cash provided by operating activities
|
3,035,482
|
3,955,574
|
3,966,674
|
|||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Proceeds from (purchase of) interest bearing deposits with other banks, net
|
(73,513
|
)
|
231,091
|
(104,959
|
)
|
|||||||
Purchases of securities available for sale
|
(13,688,272
|
)
|
(24,741,889
|
)
|
(5,743,420
|
)
|
||||||
Proceeds from sales of securities available for sale
|
997,500
|
268,683
|
1,626,751
|
|||||||||
Proceeds from maturities, calls and principal payments of securities available for sale
|
11,508,144
|
17,257,449
|
19,170,936
|
|||||||||
Net decrease (increase) in Federal funds sold
|
(4,648,000
|
)
|
3,483,000
|
(3,633,000
|
)
|
|||||||
Principal collected from (loans made to) customers, net
|
9,579,862
|
3,206,943
|
(4,015,885
|
)
|
||||||||
Proceeds on disposal of bank premises and equipment
|
-
|
-
|
-
|
|||||||||
Purchases of bank premises and equipment
|
(75,500
|
)
|
(275,602
|
)
|
(73,516
|
)
|
||||||
Proceeds from sale of other real estate and other assets
|
954,820
|
954,820
|
204,262
|
|||||||||
Net cash provided by (used in) investing activities
|
4,555,041
|
384,495
|
7,431,169
|
STATEMENTS OF CASH FLOWS (Continued)
|
||||||||||||
For Each of the Years in the Period Ended December 31, 2017, 2016 and 2015
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Net (decrease) increase in demand deposits, NOW and savings accounts
|
1,003,372
|
(10,746,494
|
)
|
5,242,703
|
||||||||
Proceeds from sales of (payments for maturing) time deposits, net
|
(4,121,864
|
)
|
22,765,837
|
(4,309,465
|
)
|
|||||||
Net (decrease) in Federal funds purchased
|
-
|
-
|
(2,369,000
|
)
|
||||||||
Proceeds from FHLB borrowings
|
15,350,000
|
20,480,000
|
34,550,000
|
|||||||||
Payments on FHLB borrowings
|
(19,980,000
|
)
|
(31,369,792
|
)
|
(43,579,036
|
)
|
||||||
Net (decrease) increase in securities sold with agreement to repurchase
|
139,518
|
(636,817
|
)
|
(186,609
|
)
|
|||||||
Exercise of stock options
|
140,000
|
-
|
-
|
|||||||||
Cash Paid for redemption of preferred stock
|
-
|
(3,345,000
|
)
|
-
|
||||||||
Dividends paid – common stock
|
(822,904
|
)
|
(614,027
|
)
|
(614,027
|
)
|
||||||
Dividends paid – preferred stock
|
-
|
(10,221
|
)
|
(33,450
|
)
|
|||||||
Net cash (used in) provided by financing activities
|
(8,291,878
|
)
|
(3,476,514
|
)
|
(11,298,884
|
)
|
||||||
Increase (decrease) in cash and due from banks
|
(701,355
|
)
|
863,555
|
98,959
|
||||||||
Cash and due from banks:
|
||||||||||||
Beginning
|
3,591,682
|
2,728,127
|
2,629,168
|
|||||||||
Ending
|
$
|
2,890,327
|
$
|
3,591,682
|
$
|
2,728,127
|
||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||||||
Cash payments for:
|
||||||||||||
Interest on deposits and borrowings
|
$
|
1,362,533
|
$
|
1,126,134
|
$
|
1,021,518
|
||||||
Income taxes
|
$
|
130,000
|
$
|
285,000
|
$
|
1,126,050
|
||||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
|
||||||||||||
Other real estate and assets acquired in settlement of loans
|
$
|
220,819
|
$
|
423,376
|
$
|
848,316
|
2017
|
||||||||||||||||
Amortized
Cost
|
Unrealized
|
Carrying
Value
(Estimated
Fair Value)
|
||||||||||||||
Gains
|
Losses
|
|||||||||||||||
Available for sale:
|
||||||||||||||||
Taxable:
|
||||||||||||||||
U.S. Government agencies and corporations
|
$
|
16,503,890
|
$
|
-
|
$
|
347,968
|
$
|
16,155,923
|
||||||||
Corporate bonds
|
3,554,796
|
31,711
|
32,096
|
3,554,411
|
||||||||||||
Collateralized mortgage obligations
|
15,411,571
|
16,627
|
137,887
|
15,290,310
|
||||||||||||
Investment in subordinated debt
|
474,956
|
-
|
-
|
474,956
|
||||||||||||
Equity securities - preferred securities
|
500,000
|
-
|
-
|
500,000
|
||||||||||||
Total
|
$
|
36,445,213
|
$
|
48,338
|
$
|
517,951
|
$
|
35,975,600
|
||||||||
Tax-exempt:
|
||||||||||||||||
State and county municipals
|
$
|
5,821,008
|
$
|
24,645
|
$
|
81,388
|
$
|
5,764,265
|
||||||||
Total
|
$
|
42,266,221
|
$
|
72,983
|
$
|
599,339
|
$
|
41,739,865
|
||||||||
2016
|
||||||||||||||||
Amortized
Cost
|
Unrealized
|
Carrying
Value
(Estimated
Fair Value)
|
||||||||||||||
Gains
|
Losses
|
|||||||||||||||
Available for sale:
|
||||||||||||||||
Taxable:
|
||||||||||||||||
U.S. Government agencies and corporations
|
$
|
23,504,966
|
$
|
5,805
|
$
|
445,625
|
$
|
23,065,146
|
||||||||
Corporate bonds
|
6,110,657
|
57,922
|
62,101
|
6,106,478
|
||||||||||||
Collateralized mortgage obligations
|
8,046,169
|
3,686
|
146,498
|
7,903,357
|
||||||||||||
Investment in subordinated debt
|
500,000
|
-
|
-
|
500,000
|
||||||||||||
Equity securities - preferred securities
|
500,000
|
-
|
-
|
500,000
|
||||||||||||
Total
|
$
|
38,661,792
|
$
|
67,413
|
$
|
654,224
|
$
|
38,074,981
|
||||||||
Tax-exempt:
|
||||||||||||||||
State and county municipals
|
$
|
2,747,259
|
$
|
16,430
|
$
|
68,657
|
$
|
2,695,032
|
||||||||
Total
|
$
|
41,409,051
|
$
|
83,843
|
$
|
722,881
|
$
|
40,770,013
|
Available for Sale
|
||||||||
Carrying
|
||||||||
Value
|
||||||||
Amortized
|
(Estimated
|
|||||||
Cost
|
Fair Value)
|
|||||||
Due within 1 year
|
$
|
3,250,000
|
$
|
3,242,839
|
||||
Due after 1 but within 5 years
|
9,276,214
|
9,193,680
|
||||||
Due after 5 but within 10 years
|
8,521,149
|
8,293,643
|
||||||
Due after 10 years
|
20,243,902
|
20,034,747
|
||||||
Investment in subordinated debt
|
474,956
|
474,956
|
||||||
Equity securities
|
500,000
|
500,000
|
||||||
$
|
42,266,221
|
$
|
41,739,865
|
Proceeds From
|
Gross Realized
|
|||||||||||||||||||
For the Years Ended December 31,
|
Sales
|
Calls and
Maturities
|
Principal
Payments
|
Gains
|
Losses
|
|||||||||||||||
2017
|
||||||||||||||||||||
Securities available for sale
|
$
|
997,500
|
$
|
9,528,353
|
$
|
1,979,791
|
$
|
-
|
$
|
2,500
|
||||||||||
2016
|
||||||||||||||||||||
Securities available for sale
|
$
|
268,683
|
$
|
16,027,538
|
$
|
1,229,911
|
$
|
-
|
$
|
4,371
|
||||||||||
2015
|
||||||||||||||||||||
Securities available for sale
|
$
|
1,626,751
|
$
|
19,126,436
|
$
|
44,500
|
$
|
850,000
|
$
|
-
|
2017
|
||||||||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
U.S. Government agencies and corporations
|
$
|
2,481,476
|
$
|
(18,525
|
)
|
$
|
13,674,449
|
$
|
(329,443
|
)
|
$
|
16,155,925
|
$
|
(347,968
|
)
|
|||||||||
State and county municipals
|
4,491,628
|
(53,895
|
)
|
747,992
|
(27,493
|
)
|
5,239,620
|
(81,388
|
)
|
|||||||||||||||
Corporate bonds
|
1,260,519
|
(5,041
|
)
|
754,285
|
(27,055
|
)
|
2,014,804
|
(32,096
|
)
|
|||||||||||||||
Mortgage backed securities
|
9,889,153
|
(90,072
|
)
|
2,828,305
|
(47,815
|
)
|
12,717,458
|
(137,887
|
)
|
|||||||||||||||
$
|
18,122,776
|
$
|
(167,533
|
)
|
$
|
18,005,031
|
$
|
(431,806
|
)
|
$
|
36,127,807
|
$
|
(599,339
|
)
|
2016
|
||||||||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
U.S. Government agencies and corporations
|
$
|
22,059,341
|
$
|
(445,625
|
)
|
$
|
-
|
$
|
-
|
$
|
22,059,341
|
$
|
(445,625
|
)
|
||||||||||
Corporate bonds
|
1,998,121
|
(45,204
|
)
|
732,057
|
(16,897
|
)
|
2,730,178
|
(62,101
|
)
|
|||||||||||||||
State and county municipals
|
2,178,602
|
(68,657
|
)
|
-
|
-
|
2,178,602
|
(68,657
|
)
|
||||||||||||||||
Mortgage backed securities
|
6,792,580
|
(146,498
|
)
|
-
|
-
|
6,792,580
|
(146,498
|
)
|
||||||||||||||||
$
|
33,028,644
|
$
|
(705,984
|
)
|
$
|
732,057
|
$
|
(16,897
|
)
|
$
|
33,760,701
|
$
|
(722,881
|
)
|
December 31
|
||||||||
2017
|
2016
|
|||||||
Commercial
|
$
|
18,701,738
|
$
|
19,016,020
|
||||
Commercial line of credit
|
10,970,700
|
12,810,661
|
||||||
Commercial real estate
|
73,126,219
|
73,491,977
|
||||||
Commercial real estate line of credit
|
1,347,915
|
7,387,468
|
||||||
Residential mortgage
|
20,755,450
|
22,379,557
|
||||||
Home equity
|
8,439,838
|
9,089,124
|
||||||
Consumer
|
1,146,701
|
1,422,718
|
||||||
Total loans
|
134,488,561
|
145,597,525
|
||||||
Less:
|
||||||||
Allowance for loan losses
|
(1,661,614
|
)
|
(1,761,146
|
)
|
||||
Unamortized loan origination (fees) costs, net
|
(198,419
|
)
|
(222,170
|
)
|
||||
Loans, net
|
$
|
132,628,528
|
$
|
143,614,209
|
|
After 1
|
|||||||||||
Within
|
But Within
|
After
|
||||||||||
1 Year
|
5 Years
|
5 Years
|
||||||||||
Commercial
|
$
|
736,730
|
$
|
13,242,101
|
$
|
4,722,907
|
||||||
Commercial line of credit
|
10,815,950
|
154,750
|
-
|
|||||||||
Commercial real estate line of credit
|
1,201,454
|
-
|
146,461
|
|||||||||
Commercial real estate
|
6,306,992
|
9,754,189
|
57,065,037
|
|||||||||
Residential mortgage
|
173,889
|
354,871
|
20,226,690
|
|||||||||
Home equity
|
35,291
|
107,930
|
8,296,617
|
|||||||||
Consumer
|
236,995
|
849,332
|
60,375
|
|||||||||
Total loans
|
$
|
19,507,301
|
$
|
24,463,173
|
$
|
90,518,087
|
Loans due after one year with:
|
||||
Variable rates
|
$
|
91,946,014
|
||
Fixed rates
|
23,035,246
|
|||
$
|
114,981,260
|
December 31, 2017
|
||||||||||||||||||||||||||||
Recorded
|
||||||||||||||||||||||||||||
Past Due
|
Investment
|
|||||||||||||||||||||||||||
≥ 90 days
and Accruing
|
||||||||||||||||||||||||||||
30-59 days
|
60-89 days
|
≥ 90 days
|
Total
|
Current
|
Total Loans
|
|||||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
93,595
|
$
|
52,523
|
$
|
146,118
|
$
|
18,555,620
|
$
|
18,701,738
|
$
|
-
|
||||||||||||||
Commercial line of credit
|
-
|
-
|
-
|
-
|
10,970,700
|
10,970,700
|
-
|
|||||||||||||||||||||
Commercial real estate
|
345,170
|
-
|
1,069,790
|
1,414,960
|
71,711,259
|
73,126,219
|
-
|
|||||||||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
-
|
1,347,915
|
1,347,915
|
-
|
|||||||||||||||||||||
Residential Mortgages
|
522,977
|
189,275
|
545,717
|
1,257,969
|
19,497,481
|
20,755,450
|
-
|
|||||||||||||||||||||
Home Equity
|
4,760
|
98,846
|
281,846
|
385,452
|
8,054,386
|
8,439,838
|
-
|
|||||||||||||||||||||
Consumer
|
197,268
|
-
|
-
|
197,268
|
949,433
|
1,146,701
|
-
|
|||||||||||||||||||||
Total
|
$
|
1,070,175
|
$
|
381,716
|
$
|
1,949,876
|
$
|
3,401,767
|
$
|
131,086,794
|
$
|
134,488,561
|
$
|
-
|
December 31, 2016
|
||||||||||||||||||||||||||||
Recorded
|
||||||||||||||||||||||||||||
Past Due
|
Investment
|
|||||||||||||||||||||||||||
≥ 90 days
|
||||||||||||||||||||||||||||
30-59 days
|
60-89 days
|
≥ 90 days
|
Total
|
Current
|
Total Loans
|
and Accruing
|
||||||||||||||||||||||
Commercial
|
$
|
7,069
|
$
|
-
|
$
|
298,933
|
$
|
306,002
|
$
|
18,710,018
|
$
|
19,016,020
|
$
|
-
|
||||||||||||||
Commercial line of credit
|
-
|
-
|
-
|
-
|
12,810,661
|
12,810,661
|
-
|
|||||||||||||||||||||
Commercial real estate
|
366,422
|
166,580
|
1,150,858
|
1,683,860
|
71,808,117
|
73,491,977
|
-
|
|||||||||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
-
|
7,387,468
|
7,387,468
|
-
|
|||||||||||||||||||||
Residential Mortgages
|
365,035
|
286,123
|
154,327
|
805,485
|
21,574,072
|
22,379,557
|
-
|
|||||||||||||||||||||
Home Equity
|
73,550
|
-
|
-
|
73,550
|
9,015,574
|
9,089,124
|
-
|
|||||||||||||||||||||
Consumer
|
47,297
|
7,964
|
11,400
|
66,661
|
1,356,057
|
1,422,718
|
-
|
|||||||||||||||||||||
Total
|
$
|
859,373
|
$
|
460,667
|
$
|
1,615,518
|
$
|
2,935,558
|
$
|
142,661,967
|
$
|
145,597,525
|
$
|
-
|
December 31
|
||||||||
2017
|
2016
|
|||||||
Commercial
|
$
|
55,068
|
$
|
298,933
|
||||
Commercial real estate
|
1,846,300
|
1,274,653
|
||||||
Commercial real estate line of credit
|
-
|
-
|
||||||
Residential mortgage
|
268,331
|
293,281
|
||||||
Home equity
|
385,452
|
304,087
|
||||||
Consumer
|
3,600
|
11,400
|
||||||
Total
|
$
|
2,558,751
|
$
|
2,182,354
|
December 31, 2017
|
||||||||||||||||||||
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Impaired
Balance
|
Interest income
Recognized
While Impaired
|
||||||||||||||||
With no related allowance
|
||||||||||||||||||||
Commercial
|
$
|
126,462
|
$
|
126,462
|
$
|
-
|
$
|
154,000
|
$
|
4,957
|
||||||||||
Commercial real estate
|
2,517,882
|
2,517,882
|
-
|
2,571,946
|
43,193
|
|||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
|||||||||||||||||
Residential mortgages
|
746,762
|
746,762
|
-
|
767,599
|
11,863
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total with no related allowance
|
$
|
3,391,106
|
$
|
3,391,106
|
$
|
-
|
$
|
3,493,545
|
$
|
60,013
|
||||||||||
With a related allowance
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Commercial real estate
|
454,083
|
454,083
|
11,373
|
496,826
|
-
|
|||||||||||||||
Residential mortgages
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total with a related allowance
|
$
|
454,083
|
$
|
454,083
|
$
|
11,373
|
$
|
496,826
|
$
|
-
|
||||||||||
Totals
|
||||||||||||||||||||
Commercial
|
$
|
126,462
|
$
|
126,462
|
$
|
-
|
$
|
154,000
|
$
|
4,957
|
||||||||||
Commercial real estate
|
2,971,965
|
2,971,965
|
11,373
|
3,068,772
|
43,193
|
|||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Residential mortgages
|
746,762
|
746,762
|
-
|
767,599
|
11,863
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
3,845,189
|
$
|
3,845,189
|
$
|
11,373
|
$
|
3,990,371
|
$
|
60,013
|
December 31, 2016
|
||||||||||||||||||||
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Impaired
Balance
|
Interest income
Recognized
While Impaired
|
||||||||||||||||
With no related allowance
|
||||||||||||||||||||
Commercial
|
$
|
159,837
|
$
|
159,837
|
$
|
-
|
$
|
185,922
|
$
|
6,933
|
||||||||||
Commercial real estate
|
4,220,818
|
4,220,818
|
-
|
4,309,989
|
123,719
|
|||||||||||||||
Commercial real estate line of credit
|
98,283
|
98,283
|
-
|
98,283
|
5,365
|
|||||||||||||||
Residential mortgages
|
999,468
|
999,468
|
-
|
1,009,766
|
32,027
|
|||||||||||||||
Consumer
|
11,400
|
11,400
|
-
|
13,500
|
-
|
|||||||||||||||
Total with no related allowance
|
$
|
5,633,712
|
$
|
5,633,712
|
$
|
-
|
$
|
5,789,059
|
$
|
169,049
|
||||||||||
With a related allowance
|
||||||||||||||||||||
Commercial
|
$
|
215,000
|
$
|
240,009
|
$
|
25,009
|
$
|
225,231
|
$
|
-
|
||||||||||
Commercial real estate
|
995,964
|
1,333,168
|
337,204
|
1,078,220
|
24,980
|
|||||||||||||||
Home Equity
|
292,450
|
296,627
|
4,177
|
296,225
|
-
|
|||||||||||||||
Total with a related allowance
|
$
|
1,503,414
|
$
|
1,869,804
|
$
|
366,390
|
$
|
1,599,676
|
$
|
24,890
|
||||||||||
Totals
|
||||||||||||||||||||
Commercial
|
$
|
374,837
|
$
|
399,846
|
$
|
25,009
|
$
|
411,153
|
$
|
6,933
|
||||||||||
Commercial real estate
|
5,216,782
|
5,553,986
|
337,204
|
5,388,209
|
148,699
|
|||||||||||||||
Commercial real estate line of credit
|
98,283
|
98,283
|
-
|
98,283
|
5,365
|
|||||||||||||||
Residential mortgages
|
999,468
|
999,468
|
-
|
1,009,766
|
32,027
|
|||||||||||||||
Home equity
|
436,356
|
440,533
|
4,177
|
467,824
|
1,005
|
|||||||||||||||
Consumer
|
11,400
|
11,400
|
-
|
13,500
|
-
|
|||||||||||||||
Total
|
$
|
7,137,126
|
$
|
7,503,516
|
$
|
366,390
|
$
|
7,388,735
|
$
|
194,029
|
December 31, 2017
|
|||||||||||||||||||||||||||||||
Commercial
|
Commercial
Lines
|
CRE
|
CRE Lines
|
Residential
Mortgages
|
Home
Equity
|
Consumer
|
Total
|
||||||||||||||||||||||||
Pass
|
$
|
16,626,324
|
$
|
10,970,700
|
$
|
64,777,832
|
$
|
1,347,915
|
$
|
18,916,876
|
$
|
8,053,431
|
$
|
1,143,101
|
$
|
121,836,179
|
|||||||||||||||
Other Loans especially mentioned
|
1,977,860
|
-
|
6,370,242
|
-
|
406,354
|
-
|
-
|
8,754,456
|
|||||||||||||||||||||||
Substandard
|
91,409
|
-
|
1,978,145
|
-
|
1,189,639
|
386,407
|
3,600
|
3,649,200
|
|||||||||||||||||||||||
Doubtful
|
6,145
|
-
|
-
|
-
|
242,581
|
-
|
-
|
248,726
|
|||||||||||||||||||||||
Total
|
$
|
18,701,738
|
$
|
10,970,700
|
$
|
73,126,219
|
$
|
1,347,915
|
$
|
20,755,450
|
$
|
8,439,838
|
$
|
1,146,701
|
$
|
134,488,561
|
December 31, 2016
|
|||||||||||||||||||||||||||||||
Commercial
|
Commercial
Lines
|
CRE
|
CRE Lines
|
Residential
Mortgages
|
Home
Equity
|
Consumer
|
Total
|
||||||||||||||||||||||||
Pass
|
$
|
18,523,735
|
$
|
12,810,661
|
$
|
64,959,617
|
$
|
7,140,186
|
$
|
21,487,043
|
$
|
8,682,403
|
$
|
1,411,318
|
$
|
135,014,963
|
|||||||||||||||
Other Loans especially mentioned
|
171,428
|
-
|
2,941,108
|
149,000
|
-
|
-
|
-
|
3,261,536
|
|||||||||||||||||||||||
Substandard
|
320,857
|
-
|
5,591,252
|
98,282
|
892,514
|
406,721
|
11,400
|
7,321,026
|
|||||||||||||||||||||||
Doubtful
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Total
|
$
|
19,016,020
|
$
|
12,810,661
|
$
|
73,491,977
|
$
|
7,387,468
|
$
|
22,379,557
|
$
|
9,089,124
|
$
|
1,422,718
|
$
|
145,597,525
|
2017
|
2016
|
|||||||
Balance, beginning
|
$
|
5,754,685
|
$
|
4,914,948
|
||||
Additions
|
256,734
|
2,817,708
|
||||||
Amounts collected
|
(873,748
|
)
|
(1,977,971
|
)
|
||||
Balance, ending
|
$
|
5,137,671
|
$
|
5,754,685
|
2017
|
2016
|
2015
|
||||||||||
Balance, beginning
|
$
|
1,761,146
|
$
|
2,455,847
|
$
|
3,527,108
|
||||||
Losses:
|
||||||||||||
Commercial
|
(68,992
|
)
|
(700,351
|
)
|
(2,355,459
|
)
|
||||||
Commercial Line of Credit
|
-
|
(150,000
|
)
|
-
|
||||||||
Commercial Real Estate
|
(1,324,551
|
)
|
(519,419
|
)
|
(1,325,916
|
)
|
||||||
Residential Mortgages
|
(58,953
|
)
|
(152,012
|
)
|
(719,718
|
)
|
||||||
Consumer
|
(3,914
|
)
|
(9,579
|
)
|
(33,555
|
)
|
||||||
Total
|
(1,456,410
|
)
|
(1,531,361
|
)
|
(4,434,648
|
)
|
||||||
Recoveries:
|
||||||||||||
Commercial
|
101,282
|
160,105
|
-
|
|||||||||
Commercial Real Estate
|
70,322
|
104,541
|
3,091
|
|||||||||
Residential Mortgages
|
-
|
2,050
|
-
|
|||||||||
Home Equity
|
-
|
-
|
-
|
|||||||||
Consumer
|
274
|
19,964
|
45,296
|
|||||||||
Total
|
171,878
|
286,660
|
48,387
|
|||||||||
Net (losses) recoveries
|
(1,284,532
|
)
|
(1,244,701
|
)
|
(4,386,261
|
)
|
||||||
Provision for loan losses
|
1,185,000
|
550,000
|
3,315,000
|
|||||||||
Balance, ending
|
$
|
1,661,614
|
$
|
1,761,146
|
$
|
2,455,847
|
December 31, 2017
|
||||||||||||||||||||||||
Commercial
|
||||||||||||||||||||||||
Commercial
|
Real Estate
|
Residential
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||
Beginning balance
|
$
|
202,345
|
$
|
1,165,486
|
$
|
368,158
|
$
|
16,361
|
$
|
8,796
|
$
|
1,761,146
|
||||||||||||
Charge-offs
|
(68,992
|
)
|
(1,324,551
|
)
|
(58,953
|
)
|
(3,914
|
)
|
-
|
(1,456,410
|
)
|
|||||||||||||
Recoveries
|
101,282
|
70,322
|
-
|
274
|
-
|
171,878
|
||||||||||||||||||
Provision
|
40,761
|
1,129,897
|
24,293
|
(1,155
|
)
|
(8,796
|
)
|
1,185,000
|
||||||||||||||||
Ending balance
|
$
|
275,396
|
$
|
1,041,154
|
$
|
333,498
|
$
|
11,566
|
$
|
-
|
$
|
1,661,614
|
||||||||||||
Allowance related to:
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
-
|
$
|
11,373
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
11,373
|
||||||||||||
Collectively evaluated for impairment
|
275,396
|
1,029,781
|
333,498
|
11,566
|
-
|
1,650,241
|
||||||||||||||||||
Total
|
$
|
275,396
|
$
|
1,041,154
|
$
|
333,498
|
$
|
11,566
|
$
|
-
|
$
|
1,661,614
|
||||||||||||
Loans:
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
126,462
|
$
|
2,983,338
|
$
|
746,761
|
$
|
-
|
$
|
-
|
$
|
3,856,561
|
||||||||||||
Collectively evaluated for impairment
|
29,545,976
|
71,490,796
|
28,448,527
|
1,146,701
|
-
|
130,632,000
|
||||||||||||||||||
Total
|
$
|
29,672,438
|
$
|
74,474,134
|
$
|
29,195,288
|
$
|
1,146,701
|
$
|
-
|
$
|
134,488,561
|
December 31, 2016
|
||||||||||||||||||||||||
Commercial
|
||||||||||||||||||||||||
Commercial
|
Real Estate
|
Residential
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||
Beginning balance
|
$
|
304,207
|
$
|
1,747,588
|
$
|
419,961
|
$
|
26,359
|
$
|
(42,268
|
)
|
$
|
2,455,847
|
|||||||||||
Charge-offs
|
850,351
|
519,419
|
152,012
|
9,579
|
-
|
1,531,361
|
||||||||||||||||||
Recoveries
|
160,105
|
104,541
|
2,050
|
19,964
|
-
|
286,660
|
||||||||||||||||||
Provision
|
588,384
|
(167,224
|
)
|
98,159
|
(20,383
|
)
|
51,064
|
550,000
|
||||||||||||||||
Ending balance
|
$
|
202,345
|
$
|
1,165,486
|
$
|
368,158
|
$
|
16,361
|
$
|
8,796
|
$
|
1,761,146
|
||||||||||||
Allowance related to:
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
25,009
|
$
|
337,204
|
$
|
4,177
|
$
|
-
|
$
|
-
|
$
|
366,390
|
||||||||||||
Collectively evaluated for impairment
|
177,336
|
828,282
|
363,981
|
16,361
|
8,796
|
1,394,756
|
||||||||||||||||||
Total
|
$
|
202,345
|
$
|
1,165,486
|
$
|
368,158
|
$
|
16,361
|
$
|
8,796
|
$
|
1,761,146
|
||||||||||||
Loans:
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
399,846
|
$
|
5,652,269
|
$
|
1,440,001
|
$
|
11,400
|
$
|
-
|
$
|
7,503,516
|
||||||||||||
Collectively evaluated for impairment
|
31,426,835
|
75,227,176
|
30,028,680
|
1,411,318
|
-
|
138,094,009
|
||||||||||||||||||
Total
|
$
|
31,826,681
|
$
|
80,879,445
|
$
|
31,468,681
|
$
|
1,422,718
|
$
|
-
|
$
|
145,597,525
|
||||||||||||
2017
|
||||||||||||
Number of
Contracts
|
Pre-Modification
Outstanding
Recorded
Investment
|
Post-Modification
Outstanding
Recorded
Investment
|
||||||||||
Troubled Debt Restructurings
|
||||||||||||
Commercial
|
2
|
$
|
632,159
|
$
|
584,132
|
|||||||
Commercial Real Estate
|
-
|
-
|
$
|
-
|
||||||||
Consumer
|
1
|
34,215
|
$
|
3,600
|
||||||||
Residential Mortgage
|
1
|
145,000
|
127,400
|
|||||||||
Total
|
4
|
$
|
811,374
|
$
|
715,132
|
2016
|
||||||||||||
Number of
Contracts
|
Pre-Modification
Outstanding
Recorded
Investment
|
Post-Modification
Outstanding
Recorded
Investment
|
||||||||||
Troubled Debt Restructurings
|
||||||||||||
Commercial
|
1
|
$
|
119,420
|
$
|
119,420
|
|||||||
Commercial Real Estate
|
-
|
-
|
$
|
-
|
||||||||
Consumer
|
1
|
34,215
|
$
|
15,600
|
||||||||
Residential Mortgage
|
1
|
145,000
|
145,000
|
|||||||||
Total
|
3
|
$
|
298,635
|
$
|
280,020
|
2017
|
||||||||
Number of
|
Recorded
|
|||||||
Contracts
|
Investment
|
|||||||
Troubled Debt Restructurings
|
||||||||
That Subsequently Defaulted
|
||||||||
Consumer
|
-
|
$
|
-
|
|||||
Total
|
-
|
$
|
-
|
2016
|
||||||||
Number of
|
Recorded
|
|||||||
Contracts
|
Investment
|
|||||||
Troubled Debt Restructurings
|
||||||||
That Subsequently Defaulted
|
||||||||
Commercial
|
-
|
$
|
-
|
|||||
Consumer
|
1
|
11,400
|
||||||
Total
|
1
|
$
|
11,400
|
2017
|
2016
|
|||||||
Land
|
$
|
1,306,358
|
$
|
1,306,358
|
||||
Buildings and improvements
|
4,132,246
|
4,076,861
|
||||||
Furniture and equipment
|
1,720,207
|
1,698,933
|
||||||
Vehicles
|
72,674
|
72,674
|
||||||
7,231,485
|
7,154,826
|
|||||||
Less accumulated depreciation
|
(2,809,720
|
)
|
(2,584,637
|
)
|
||||
Bank premises and equipment, net
|
$
|
4,421,765
|
$
|
4,570,189
|
Year
|
Amount
|
||||
2018
|
$
|
155,763
|
|||
2019
|
50,767
|
||||
2020
|
50,767
|
||||
2021
|
50,767
|
||||
2022
|
50,767
|
||||
$
|
358,831
|
2017
|
2016
|
|||||||
Money Market
|
$
|
7,253,237
|
$
|
8,507,225
|
||||
NOW accounts
|
45,650,479
|
44,139,541
|
||||||
Savings accounts
|
4,527,541
|
4,452,515
|
||||||
Certificates of deposit
|
72,245,126
|
76,366,990
|
||||||
Total
|
$
|
129,676,383
|
$
|
133,466,271
|
Amount
|
Percent
|
|||||||
Three months or less
|
$
|
14,631,481
|
25
|
%
|
||||
Three through six months
|
14,999,582
|
25
|
%
|
|||||
Six through twelve months
|
18,219,601
|
31
|
%
|
|||||
Over twelve months
|
11,355,038
|
19
|
%
|
|||||
Total
|
$
|
59,205,702
|
100
|
%
|
Year
|
Amount
|
|||
2018
|
$
|
55,470,394
|
||
2019
|
12,107,074
|
|||
2020
|
3,409,386
|
|||
2021
|
748,684
|
|||
2022
|
281,909
|
|||
Thereafter
|
227,679
|
|||
$
|
72,245,126
|
Short Term Borrowings
|
||||||||
2017
|
2016
|
|||||||
Outstanding at year end
|
$
|
17,424,178
|
$
|
20,164,660
|
||||
Average amount outstanding
|
$
|
19,488,714
|
$
|
24,530,585
|
||||
Maximum amount outstanding
|
||||||||
at any month end
|
$
|
25,975,946
|
$
|
31,953,701
|
||||
Weighted average interest rate
|
1.11
|
%
|
0.89
|
%
|
2017 |
2016
|
|||||||
FHLB borrowings | $ | 19,100,000 |
$
|
23,730,000
|
||||
Less short-term FHLB borrowings | (17,100,000 | ) |
(19,980,000
|
)
|
||||
$ | 2,000,000 |
$
|
3,750,000
|
Year
|
Amount
|
|||
2018
|
$
|
17,100,000
|
||
2019
|
2,000,000
|
|||
$
|
19,100,000
|
2017
|
2016
|
2015
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
392,262
|
$
|
612,099
|
$
|
(28,991
|
)
|
|||||
State
|
(21,782
|
)
|
66,401
|
(17,747
|
)
|
|||||||
370,480
|
678,500
|
(46,738
|
)
|
|||||||||
Deferred:
|
131,232
|
301,901
|
611,936
|
|||||||||
Total
|
$
|
501,712
|
$
|
980,401
|
$
|
565,198
|
2017
|
2016
|
2015
|
||||||||||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||||||||
Computed tax at applicable statutory rate
|
$
|
546,384
|
34.0
|
$
|
855,467
|
34.0
|
$
|
421,431
|
34.0
|
|||||||||||||||
Increase (decrease) in taxes resulting from:
|
||||||||||||||||||||||||
State income tax effect
|
(7,406
|
)
|
(0.5
|
)
|
22,576
|
0.9
|
(6,034
|
)
|
(0.5
|
)
|
||||||||||||||
Tax exempt income
|
(41,211
|
)
|
(2.6
|
)
|
(15,673
|
)
|
(0.6
|
)
|
(9,389
|
)
|
(0.8
|
)
|
||||||||||||
Other, net
|
3,945
|
0.2
|
118,031
|
4.7
|
159,190
|
12.8
|
||||||||||||||||||
Applicable income taxes
|
$
|
501,712
|
31.1
|
$
|
980,401
|
39.0
|
$
|
565,198
|
45.5
|
2017
|
2016
|
|||||||
Deferred tax assets:
|
||||||||
Unamortized fees and costs, net
|
$
|
53,453
|
$
|
96,460
|
||||
Allowance for loan losses
|
157,312
|
244,453
|
||||||
Net unrealized loss on securities
|
212,756
|
255,615
|
||||||
423,521
|
596,528
|
|||||||
2017
|
2016
|
|||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
(115,191
|
)
|
(182,535
|
)
|
||||
(115,191
|
)
|
(182,535
|
)
|
|||||
Net deferred tax asset
|
$
|
308,330
|
$
|
413,993
|
For the Year Ended December 31, 2017
|
||||||||||||
Income
|
Shares
|
Per Share
|
||||||||||
Basic EPS
|
(Numerator)
|
(Denominator)
|
Amount
|
|||||||||
Income available to common stockholders
|
$
|
1,105,296
|
1,030,379
|
$
|
1.07
|
|||||||
Effect of Dilutive Securities
|
||||||||||||
Options
|
-
|
876
|
||||||||||
Diluted EPS
|
||||||||||||
Income available to common stockholders plus assumed conversions
|
$
|
1,105,296
|
1,031,255
|
$
|
1.07
|
|||||||
For the Year Ended December 31, 2016
|
||||||||||||
Income
|
Shares
|
Per Share
|
||||||||||
Basic EPS
|
(Numerator)
|
(Denominator)
|
Amount
|
|||||||||
Income available to common stockholders
|
$
|
1,525,456
|
1,023,379
|
$
|
1.49
|
|||||||
Effect of Dilutive Securities
|
||||||||||||
Options
|
-
|
1,094
|
||||||||||
Diluted EPS
|
||||||||||||
Income available to common stockholders plus assumed conversions
|
$
|
1,525,456
|
1,024,473
|
$
|
1.49
|
|||||||
For the Year Ended December 31, 2015
|
||||||||||||
Income
|
Shares
|
Per Share
|
||||||||||
Basic EPS
|
(Numerator)
|
(Denominator)
|
Amount
|
|||||||||
Income available to common stockholders
|
$
|
640,854
|
1,023,379
|
$
|
0.63
|
|||||||
Effect of Dilutive Securities
|
||||||||||||
Options
|
-
|
1,094
|
||||||||||
Diluted EPS
|
||||||||||||
Income available to common stockholders plus assumed conversions
|
$
|
640,854
|
1,024,473
|
$
|
0.63
|
2017
|
2016
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Exercise
|
Exercise
|
|||||||||||||||
Shares
|
Price
|
Shares
|
Price
|
|||||||||||||
Fixed Options
|
||||||||||||||||
Outstanding at beginning of year
|
18,500
|
$
|
19.09
|
18,500
|
$
|
19.09
|
||||||||||
Outstanding at end of year
|
11,500
|
$
|
18.54
|
18,500
|
$
|
19.09
|
||||||||||
Vested and exerisable at end of year
|
11,500
|
$
|
18.54
|
18,500
|
$
|
19.09
|
||||||||||
Weighted-average Fair-value per option of options outstanding at end of year
|
$
|
2.70
|
$
|
2.70
|
Options Outstanding
|
Options Exercisable
|
|||||||||
Weighted
|
||||||||||
Average
|
Weighted
|
Weighted
|
||||||||
Range of
|
Remaining
|
Average
|
Average
|
|||||||
Exercise
|
Number
|
Contractual
|
Exercise
|
Number
|
Exercise
|
|||||
Prices
|
Outstanding
|
Life in Years
|
Price
|
Exercisable
|
Price
|
|||||
$14.40 - 20.00
|
11,500
|
1
|
$ 18.54
|
11,500
|
$ 18.54
|
Contract Amount
|
||||||||
December, 31
|
||||||||
2017
|
2016
|
|||||||
Commitments to extend credit
|
$
|
9,187,730
|
$
|
8,320,292
|
||||
Standby letters of credit and financial guarantees written
|
155,000
|
155,000
|
||||||
$
|
9,342,730
|
$
|
8,475,292
|
·
|
4.5% CET1 to riskweighted assets;
|
·
|
6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to riskweighted assets;
|
·
|
8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to riskweighted assets; and
|
·
|
4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).
|
To Be Well Capitalized
|
||||||||||||||||||||||||
For Capital
|
Under Prompt Corrective
|
|||||||||||||||||||||||
Actual
|
Adequacy Purposes
|
Actions Provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
As of December 31, 2017
|
||||||||||||||||||||||||
CET1 (to Risk-Weighted Assets)
|
$
|
22,593
|
16.7
|
%
|
$
|
6,080
|
4.5
|
%
|
$
|
8,782
|
6.5
|
%
|
||||||||||||
Total Capital (to Risk-Weighted Assets)
|
$
|
24,255
|
18.0
|
%
|
$
|
10,809
|
8.0
|
%
|
$
|
13,511
|
10.0
|
%
|
||||||||||||
Tier I Capital (to Risk-Weighted Assets)
|
$
|
22,593
|
16.7
|
%
|
$
|
5,404
|
4.0
|
%
|
$
|
8,106
|
6.0
|
%
|
||||||||||||
Tier I Capital (to Average Assets)
|
$
|
22,593
|
11.8
|
%
|
$
|
7,667
|
4.0
|
%
|
$
|
9,583
|
5.0
|
%
|
To Be Well Capitalized
|
||||||||||||||||||||||||
For Capital
|
Under Prompt Corrective
|
|||||||||||||||||||||||
Actual
|
Adequacy Purposes
|
Actions Provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
As of December 31, 2016
|
||||||||||||||||||||||||
CET1 (to Risk-Weighted Assets)
|
$
|
22,103
|
15.1
|
%
|
$
|
6,573
|
4.5
|
%
|
$
|
9,494
|
6.5
|
%
|
||||||||||||
Total Capital (to Risk-Weighted Assets)
|
$
|
23,864
|
16.3
|
%
|
$
|
11,685
|
8.0
|
%
|
$
|
14,607
|
10.0
|
%
|
||||||||||||
Tier I Capital (to Risk-Weighted Assets)
|
$
|
22,103
|
15.1
|
%
|
$
|
5,843
|
4.0
|
%
|
$
|
8,764
|
6.0
|
%
|
||||||||||||
Tier I Capital (to Average Assets)
|
$
|
22,103
|
11.3
|
%
|
$
|
7,821
|
4.0
|
%
|
$
|
9,776
|
5.0
|
%
|
December 31, 2017
|
December 31, 2016
|
|||||||||||||||
Estimated
|
Estimated
|
|||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Value
|
Value
|
Value
|
Value
|
|||||||||||||
Financial Assets:
|
||||||||||||||||
Cash and due from banks
|
$
|
2,890,327
|
$
|
2,890,327
|
$
|
3,591,682
|
$
|
3,591,682
|
||||||||
Interest bearing deposits with other banks
|
88,662
|
88,662
|
15,149
|
15,149
|
||||||||||||
Federal funds sold
|
4,798,000
|
4,798,000
|
150,000
|
150,000
|
||||||||||||
Securities available for sale
|
41,739,865
|
41,739,865
|
40,770,013
|
40,770,013
|
||||||||||||
Loans
|
132,628,528
|
130,607,612
|
143,614,209
|
139,741,474
|
||||||||||||
Accrued interest receivable
|
545,632
|
545,632
|
551,206
|
551,206
|
||||||||||||
Total
|
$
|
182,691,014
|
$
|
180,670,098
|
$
|
188,692,259
|
$
|
184,819,524
|
||||||||
Financial Liabilities:
|
||||||||||||||||
Deposits
|
$
|
146,788,988
|
$
|
121,814,053
|
$
|
149,907,480
|
$
|
149,237,314
|
||||||||
Short-term borrowings
|
17,424,178
|
17,424,178
|
20,164,660
|
20,164,660
|
||||||||||||
Long-term borrowings
|
2,000,000
|
2,000,000
|
3,750,000
|
3,750,000
|
||||||||||||
Accrued interest payable
|
132,274
|
132,274
|
108,144
|
108,144
|
||||||||||||
Total
|
$
|
166,345,440
|
$
|
141,370,505
|
$
|
173,930,284
|
$
|
173,260,118
|
Total at
|
Fair Value Measurements Using:
|
|||||||||||||||
December 31,
|
||||||||||||||||
2017
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Available for Sale:
|
||||||||||||||||
Taxable:
|
||||||||||||||||
U.S. Government agencies and corporations
|
$
|
16,155,922
|
$
|
-
|
$
|
16,155,922
|
$
|
-
|
||||||||
Corporate bonds
|
3,554,411
|
-
|
3,554,411
|
-
|
||||||||||||
Collateralized mortgage obligations
|
15,290,311
|
-
|
15,290,311
|
-
|
||||||||||||
Investment in subordinated debt
|
474,956
|
-
|
474,956
|
-
|
||||||||||||
Equity securities - preferred securities
|
500,000
|
-
|
500,000
|
-
|
||||||||||||
Total
|
$
|
35,975,600
|
$
|
-
|
$
|
35,975,600
|
$
|
-
|
||||||||
Tax-exempt:
|
||||||||||||||||
State and county municipals
|
5,764,265
|
-
|
5,764,265
|
-
|
||||||||||||
Total
|
$
|
41,739,865
|
$
|
-
|
$
|
41,739,865
|
$
|
-
|
Total at
|
Fair Value Measurements Using:
|
|||||||||||||||
December 31,
|
||||||||||||||||
2016
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Available for Sale:
|
||||||||||||||||
Taxable:
|
||||||||||||||||
U.S. Government agencies and corporations
|
$
|
23,065,146
|
$
|
-
|
$
|
23,065,146
|
$
|
-
|
||||||||
Corporate bonds
|
6,106,478
|
-
|
6,106,478
|
-
|
||||||||||||
Collateralized mortgage obligations
|
7,903,357
|
-
|
7,903,357
|
-
|
||||||||||||
Investment in subordinated debt
|
500,000
|
-
|
500,000
|
-
|
||||||||||||
Equity securities - preferred securities
|
500,000
|
-
|
500,000
|
-
|
||||||||||||
Total
|
$
|
38,074,981
|
$
|
-
|
$
|
38,074,981
|
$
|
-
|
||||||||
Tax-exempt:
|
||||||||||||||||
State and county municipals
|
2,695,032
|
-
|
2,695,032
|
-
|
||||||||||||
Total
|
$
|
40,770,013
|
$
|
-
|
$
|
40,770,013
|
$
|
-
|
Total at
|
Fair Value Measurements Using:
|
|||||||||||||||
December 31,
|
||||||||||||||||
2017
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Impaired Loans
|
||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Commercial real estate
|
454,083
|
-
|
383,760
|
70,323
|
||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
||||||||||||
Total impaired loans
|
$
|
454,083
|
$
|
-
|
$
|
383,760
|
$
|
70,323
|
||||||||
OREO
|
$
|
90,000
|
$
|
-
|
$
|
-
|
$
|
90,000
|
Total at
|
Fair Value Measurements Using:
|
|||||||||||||||
December 31,
|
||||||||||||||||
2016
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Impaired Loans
|
||||||||||||||||
Commercial
|
$
|
215,000
|
$
|
-
|
$
|
215,000
|
$
|
-
|
||||||||
Commercial real estate
|
995,964
|
-
|
-
|
995,964
|
||||||||||||
Residential mortgages
|
292,450
|
-
|
-
|
292,450
|
||||||||||||
Total impaired loans
|
$
|
1,503,414
|
$
|
-
|
$
|
215,000
|
$
|
1,288,414
|
||||||||
OREO
|
$
|
97,000
|
$
|
-
|
$
|
-
|
$
|
97,000
|
March 31, 2018 and December 31, 2017
(Dollars in thousands)
|
||||||||
ASSETS
|
March 31, 2018
|
December 31, 2017
|
||||||
Cash and due from banks
|
$
|
2,773
|
$
|
2,890
|
||||
Interest bearing deposits with other banks
|
18
|
89
|
||||||
Federal funds sold
|
3,536
|
4,798
|
||||||
Securities available for sale
|
43,530
|
41,740
|
||||||
Loans, less allowance for loan losses of
|
||||||||
$1,813,000 and $1,662,000 respectively
|
124,583
|
132,629
|
||||||
Bank premises and equipment, net
|
4,568
|
4,422
|
||||||
Accrued interest receivable
|
529
|
546
|
||||||
Other assets
|
1,689
|
1,686
|
||||||
Total assets
|
$
|
181,226
|
$
|
188,800
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Non interest bearing
|
$
|
16,891
|
$
|
17,113
|
||||
Interest bearing
|
123,890
|
129,676
|
||||||
Total deposits
|
140,781
|
146,789
|
||||||
Short-term borrowings
|
10,669
|
17,424
|
||||||
Long-term borrowings
|
7,400
|
2,000
|
||||||
Other liabilities
|
458
|
378
|
||||||
Total liabilities
|
159,308
|
166,591
|
||||||
Shareholders' Equity
|
||||||||
Common stock, $1 par value, 1,436,371 shares authorized;1,032,379 and 1,030,379 issued and outstanding 2018 and 2017
|
|
|
1,032
|
|
|
|
1,030
|
|
Capital surplus
|
|
|
15,250
|
|
|
|
15,223
|
|
Retained earnings
|
|
|
6,523
|
|
|
|
6,340
|
|
Accumulated other comprehensive income (loss)
|
(887
|
)
|
(384
|
)
|
||||
Total shareholders' equity
|
|
|
21,918
|
|
|
|
22,209
|
|
Total liabilities and shareholders' equity
|
$
|
181,226
|
$
|
188,800
|
For the Three Months Ended March 31, 2018 and 2017
(Dollars in thousands except per share data)
|
||||||||
March 31, 2018
|
March 31, 2017
|
|||||||
Interest income:
|
||||||||
Interest and fees on loans
|
$
|
1,647
|
$
|
1,696
|
||||
Interest and dividends on securities:
|
||||||||
Taxable
|
238
|
189
|
||||||
Tax-exempt
|
33
|
15
|
||||||
Interest on Federal funds sold
|
8
|
6
|
||||||
Total interest income
|
1,926
|
1,906
|
||||||
Interest expense:
|
||||||||
Interest expense on deposits
|
273
|
250
|
||||||
Interest on other borrowings
|
78
|
56
|
||||||
Total interest expense
|
351
|
306
|
||||||
Net interest income
|
1,575
|
1,600
|
||||||
Provision for loan losses
|
90
|
140
|
||||||
Net interest income after provision for loan losses
|
1,485
|
1,460
|
||||||
Other income:
|
||||||||
Service charges and fees
|
45
|
50
|
||||||
Rental income
|
79
|
67
|
||||||
(Losses) gains from sale and writedown of OREO and ORA
|
(20
|
)
|
-
|
|||||
104
|
117
|
|||||||
Other expenses:
|
||||||||
Salaries and employee benefits
|
531
|
525
|
||||||
Net occupancy expense
|
83
|
72
|
||||||
Equipment rentals, depreciation, and maintenance
|
63
|
64
|
||||||
Legal and professional
|
47
|
43
|
||||||
Data processing
|
72
|
74
|
||||||
Regulatory assessments
|
32
|
30
|
||||||
Other operating expenses
|
228
|
178
|
||||||
1,056
|
986
|
|||||||
Income before income tax expense
|
533
|
591
|
||||||
Income tax expense
|
144
|
234
|
||||||
Net income
|
$
|
389
|
$
|
357
|
||||
Basic earnings per common share
|
||||||||
Net income - basic
|
$
|
0.38
|
$
|
0.35
|
||||
Net income - diluted
|
$
|
0.38
|
$
|
0.35
|
||||
Average common shares - basic
|
1,031,046
|
1,028,046
|
||||||
Average common shares - diluted
|
1,033,925
|
1,028,922
|
For the Three Months Ended March 31, 2018 and 2017
(Dollars in thousands)
|
||||||||
March 31, 2018
|
March 31, 2017
|
|||||||
Net income
|
$
|
389
|
$
|
357
|
||||
Other comprehensive income:
|
||||||||
Gross unrealized (losses) gains arising during the period
|
(690
|
)
|
230
|
|||||
Adjustments for income tax benefit (expense)
|
187
|
(92
|
)
|
|||||
Other comprehensive (loss) income, net of tax
|
(503
|
)
|
138
|
|||||
Comprehensive income
|
$
|
(114
|
)
|
$
|
495
|
For the Three Months Ended March 31, 2018 and 2017
(Dollars in thousands)
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Other
|
||||||||||||||||||||
Common
|
Capital
|
Retained
|
Comprehensive
|
|||||||||||||||||
Stock
|
Surplus
|
Earnings
|
Income
|
Total
|
||||||||||||||||
Balance, December 31, 2016
|
$
|
1,023
|
$
|
15,090
|
$
|
5,989
|
$
|
(383
|
)
|
$
|
21,719
|
|||||||||
Net income
|
-
|
-
|
357
|
-
|
357
|
|||||||||||||||
Cash dividend declared on common stock ($0.20 per share)
|
-
|
-
|
(205
|
)
|
-
|
(205
|
)
|
|||||||||||||
Unrealized (loss) on securities, net
|
-
|
-
|
-
|
138
|
138
|
|||||||||||||||
Balance, March 31, 2017
|
1,023
|
15,090
|
6,141
|
(245
|
)
|
22,009
|
||||||||||||||
Balance, December 31, 2017
|
1,030
|
15,223
|
6,340
|
(384
|
)
|
22,209
|
||||||||||||||
Net income
|
-
|
-
|
389
|
-
|
389
|
|||||||||||||||
Cash dividend declared on common stock ($0.20 per share)
|
-
|
-
|
(206
|
)
|
-
|
(206
|
)
|
|||||||||||||
Exercise of Stock Option
|
2
|
27
|
-
|
-
|
29
|
|||||||||||||||
Unrealized (loss) on securities, net
|
-
|
-
|
-
|
(503
|
)
|
(503
|
)
|
|||||||||||||
Balance, March 31, 2018
|
1,032
|
15,250
|
6,523
|
(887
|
)
|
21,918
|
For the Three Months Ended March 31, 2018 and 2017
(Dollars in thousands)
|
||||||||
March 31, 2018
|
March 31, 2017
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net Income
|
$
|
389
|
$
|
357
|
||||
Adjustments to reconcile net income to cash provided by (used in) operating activities:
|
||||||||
Depreciation
|
47
|
54
|
||||||
Provision for loan losses
|
90
|
140
|
||||||
(Accretion) of discounts, net
|
(60 | ) | (56 | ) | ||||
Loss (gain) on sale and unrealized writedown of OREO and ORA
|
20
|
-
|
||||||
Securities (gains) losses and writedown
|
-
|
-
|
||||||
(Increase) decrease in accrued interest receivable
|
17
|
8
|
||||||
Decrease (increase) in other assets
|
164
|
(239
|
)
|
|||||
Increase (decrease) in other liabilities
|
80
|
(3
|
)
|
|||||
Net cash provided by operating activities
|
747
|
261
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Proceeds from (purchase of) interest bearing deposits with other banks, net
|
71
|
(225
|
)
|
|||||
Purchases of securities available for sale
|
(4,223
|
)
|
(1,931
|
)
|
||||
Proceeds from sales of securities available for sale
|
-
|
-
|
||||||
Proceeds from maturities, calls and principal payments of securities available for sale
|
1,803
|
3,019
|
||||||
Net decrease (increase) in Federal funds sold
|
1,262
|
(4,030
|
)
|
|||||
Principal collected from (loans made to) customers, net
|
7,956
|
2,415
|
||||||
Proceeds on disposal of bank premises and equipment
|
-
|
-
|
||||||
Purchases of bank premises and equipment
|
(193
|
)
|
(25
|
)
|
||||
Proceeds from sale of other real estate and other assets
|
-
|
955
|
||||||
Net cash provided by (used in) investing activities
|
6,676
|
178
|
||||||
Unaudited Condensed Consolidated Statements of Cash Flows (Continued)
For the Three Months Ended March 31, 2018 and 2017
(Dollars in thousands)
|
||||||||
March 31, 2018
|
March 31, 2017
|
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Net (decrease) increase in demand deposits, NOW and savings accounts
|
(2,764
|
)
|
(3,457
|
)
|
||||
Proceeds from sales of (payments for maturing) time deposits, net
|
(3,244
|
)
|
7,366
|
|||||
Proceeds from FHLB borrowings
|
4,900
|
15,350
|
||||||
Payments on FHLB borrowings
|
(6,350
|
)
|
(20,550
|
)
|
||||
Net (decrease) increase in securities sold with agreement to repurchase
|
95
|
387
|
||||||
Exercise of stock options
|
29
|
-
|
||||||
Dividends paid – common stock
|
(206
|
)
|
(205
|
)
|
||||
Net cash (used in) provided by financing activities
|
(7,540
|
)
|
(1,109
|
)
|
||||
Increase (decrease) in cash and due from banks
|
(117
|
)
|
(670
|
)
|
||||
Cash and due from banks:
|
||||||||
Beginning
|
2,890
|
3,592
|
||||||
Ending
|
$
|
2,773
|
$
|
2,922
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Cash payments for:
|
||||||||
Interest on deposits and borrowings
|
$
|
351
|
$
|
1,126
|
||||
Income taxes
|
$
|
130
|
$
|
285
|
||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
|
||||||||
Other real estate and assets acquired in settlement of loans
|
$
|
-
|
$
|
423
|
March 31, 2018
|
||||||||||||||||
Carrying
|
||||||||||||||||
Value
|
||||||||||||||||
Amortized
|
Unrealized
|
(Estimated
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value)
|
|||||||||||||
Available for sale:
|
||||||||||||||||
Taxable:
|
||||||||||||||||
U.S. Government agencies and corporations
|
$
|
15,504
|
$
|
-
|
$
|
539
|
$
|
14,965
|
||||||||
Corporate bonds
|
3,550
|
-
|
66
|
3,484
|
||||||||||||
Collateralized mortgage obligations
|
18,911
|
-
|
455
|
18,456
|
||||||||||||
Investment in subordinated debt
|
475
|
-
|
-
|
475
|
||||||||||||
Equity securities - preferred securities
|
500
|
-
|
-
|
500
|
||||||||||||
Total
|
$
|
38,940
|
$
|
-
|
$
|
1,060
|
$
|
37,880
|
||||||||
Tax-exempt:
|
||||||||||||||||
State and county municipals
|
$
|
5,806
|
$
|
-
|
$
|
156
|
$
|
5,650
|
||||||||
Total
|
$
|
44,746
|
$
|
-
|
$
|
1,216
|
$
|
43,530
|
December 31, 2017
|
||||||||||||||||
Carrying
|
||||||||||||||||
Value
|
||||||||||||||||
Amortized
|
Unrealized
|
(Estimated
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value)
|
|||||||||||||
Available for sale:
|
||||||||||||||||
Taxable:
|
||||||||||||||||
U.S. Government agencies and corporations
|
$
|
16,504
|
$
|
-
|
$
|
348
|
$
|
16,156
|
||||||||
Corporate bonds
|
3,555
|
31
|
32
|
3,554
|
||||||||||||
Collateralized mortgage obligations
|
15,412
|
16
|
138
|
15,290
|
||||||||||||
Investment in subordinated debt
|
475
|
-
|
-
|
475
|
||||||||||||
Equity securities - preferred securities
|
500
|
-
|
-
|
500
|
||||||||||||
Total
|
$
|
36,446
|
$
|
47
|
$
|
518
|
$
|
35,975
|
||||||||
Tax-exempt:
|
||||||||||||||||
State and county municipals
|
$
|
5,821
|
$
|
25
|
$
|
81
|
$
|
5,765
|
||||||||
Total
|
$
|
42,267
|
$
|
72
|
$
|
599
|
$
|
41,740
|
Available for Sale
|
||||||||
Carrying
|
||||||||
Value
|
||||||||
Amortized
|
(Estimated
|
|||||||
Cost
|
Fair Value)
|
|||||||
Due within 1 year
|
$
|
3,510
|
$
|
3,501
|
||||
Due after 1 but within 5 years
|
19,989
|
19,541
|
||||||
Due after 5 but within 10 years
|
14,513
|
13,957
|
||||||
Due after 10 years
|
5,759
|
5,556
|
||||||
Investment in subordinated debt
|
475
|
475
|
||||||
Equity securities
|
500
|
500
|
||||||
$
|
44,746
|
$
|
43,530
|
March 31, 2018
|
||||||||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Available for Sale:
|
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
||||||||||||||||||
U.S. Government agencies and corporations
|
$
|
2,481
|
$
|
(19
|
)
|
$
|
12,483
|
$
|
(520
|
)
|
$
|
14,964
|
$
|
(539
|
)
|
|||||||||
State and county municipals
|
4,491
|
(54
|
)
|
1,158
|
(102
|
)
|
5,649
|
(156
|
)
|
|||||||||||||||
Corporate bonds
|
2,372
|
(5
|
)
|
1,112
|
(61
|
)
|
3,484
|
(66
|
)
|
|||||||||||||||
Mortgage backed securities
|
14,159
|
(190
|
)
|
4,270
|
(265
|
)
|
18,429
|
(455
|
)
|
|||||||||||||||
$
|
23,503
|
$
|
(268
|
)
|
$
|
19,023
|
$
|
(948
|
)
|
$
|
42,526
|
$
|
(1,216
|
)
|
December 31, 2017
|
||||||||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Available for Sale:
|
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
||||||||||||||||||
U.S. Government agencies and corporations
|
$
|
2,481
|
$
|
(19
|
)
|
$
|
13,675
|
$
|
(329
|
)
|
$
|
16,156
|
$
|
(348
|
)
|
|||||||||
State and county municipals
|
4,492
|
(53
|
)
|
748
|
(28
|
)
|
5,240
|
(81
|
)
|
|||||||||||||||
Corporate bonds
|
1,261
|
(5
|
)
|
754
|
(27
|
)
|
2,015
|
(32
|
)
|
|||||||||||||||
Mortgage backed securities
|
9,889
|
(90
|
)
|
2,828
|
(48
|
)
|
12,717
|
(138
|
)
|
|||||||||||||||
$
|
18,123
|
$
|
(167
|
)
|
$
|
18,005
|
$
|
(432
|
)
|
$
|
36,128
|
$
|
(599
|
)
|
March 31, 2018
|
December 31, 2017
|
|||||||
Commercial
|
$
|
18,306
|
$
|
18,702
|
||||
Commercial line of credit
|
8,223
|
10,971
|
||||||
Commercial real estate
|
69,695
|
73,126
|
||||||
Commercial real estate line of credit
|
897
|
1,348
|
||||||
Residential mortgage
|
20,610
|
20,755
|
||||||
Home equity
|
7,936
|
8,440
|
||||||
Consumer
|
918
|
1,147
|
||||||
Total loans
|
126,585
|
134,489
|
||||||
Less:
|
||||||||
Allowance for loan losses
|
(1,813
|
)
|
(1,662
|
)
|
||||
Unamortized loan origination (fees) costs, net
|
(189
|
)
|
(198
|
)
|
||||
Loans, net
|
$
|
124,583
|
$
|
132,629
|
After 1
|
||||||||||||
Within
|
But Within
|
After
|
||||||||||
1 Year
|
5 Years
|
5 Years
|
||||||||||
Commercial
|
$
|
2,596
|
$
|
10,915
|
$
|
4,795
|
||||||
Commercial line of credit
|
8,471
|
155
|
-
|
|||||||||
Commercial real estate line of credit
|
494
|
-
|
-
|
|||||||||
Commercial real estate
|
4,205
|
9,920
|
55,570
|
|||||||||
Residential mortgage
|
173
|
314
|
20,123
|
|||||||||
Home equity
|
34
|
98
|
7,804
|
|||||||||
Consumer
|
156
|
703
|
59
|
|||||||||
Total loans
|
$
|
16,129
|
$
|
22,105
|
$
|
88,351
|
Loans due after one year with:
|
||||
Variable rates
|
$
|
86,979
|
||
Fixed rates
|
23,477
|
|||
$
|
110,456
|
March 31, 2018
|
||||||||||||||||||||||||||||
Recorded
|
||||||||||||||||||||||||||||
Past Due
|
Investment
|
|||||||||||||||||||||||||||
30-59 days
|
60-89 days
|
≥ 90 days
|
Total
|
Current
|
Total Loans
|
≥ 90 days
and Accruing
|
||||||||||||||||||||||
Commercial
|
$
|
143
|
$
|
1
|
$
|
46
|
$
|
190
|
$
|
18,116
|
$
|
18,306
|
$
|
-
|
||||||||||||||
Commercial line of credit
|
-
|
-
|
-
|
-
|
8,223
|
8,223
|
-
|
|||||||||||||||||||||
Commercial real estate
|
-
|
94
|
1,044
|
1,138
|
68,557
|
69,695
|
-
|
|||||||||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
897
|
897
|
-
|
||||||||||||||||||||||
Residential Mortgages
|
233
|
187
|
533
|
953
|
19,657
|
20,610
|
-
|
|||||||||||||||||||||
Home Equity
|
279
|
-
|
279
|
7,657
|
7,936
|
-
|
||||||||||||||||||||||
Consumer
|
52
|
-
|
52
|
866
|
918
|
-
|
||||||||||||||||||||||
Total
|
$
|
707
|
$
|
282
|
$
|
1,623
|
$
|
2,612
|
$
|
123,973
|
$
|
126,585
|
$
|
-
|
December 31, 2017
|
||||||||||||||||||||||||||||
Recorded
|
||||||||||||||||||||||||||||
Past Due
|
Investment
|
|||||||||||||||||||||||||||
≥ 90 days
|
||||||||||||||||||||||||||||
30-59 days
|
60-89 days
|
≥ 90 days
|
Total
|
Current
|
Total Loans
|
and Accruing
|
||||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
94
|
$
|
53
|
$
|
147
|
$
|
18,556
|
$
|
18,702
|
$
|
-
|
||||||||||||||
Commercial line of credit
|
-
|
-
|
-
|
-
|
10,971
|
10,971
|
-
|
|||||||||||||||||||||
Commercial real estate
|
345
|
-
|
1,070
|
1,415
|
71,711
|
73,126
|
-
|
|||||||||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
-
|
1,348
|
1,348
|
-
|
|||||||||||||||||||||
Residential Mortgages
|
523
|
189
|
546
|
1,258
|
19,497
|
20,755
|
-
|
|||||||||||||||||||||
Home Equity
|
5
|
99
|
282
|
386
|
8,055
|
8,440
|
-
|
|||||||||||||||||||||
Consumer
|
198
|
-
|
-
|
198
|
950
|
1,147
|
-
|
|||||||||||||||||||||
Total
|
$
|
1,071
|
$
|
382
|
$
|
1,951
|
$
|
3,404
|
$
|
131,088
|
$
|
134,489
|
$
|
-
|
March 31, 2018
|
December 31, 2017
|
|||||||
Commercial
|
$
|
46
|
$
|
55
|
||||
Commercial real estate
|
1,706
|
1,846
|
||||||
Commercial real estate line of credit
|
-
|
-
|
||||||
Residential mortgage
|
268
|
268
|
||||||
Home equity
|
386
|
386
|
||||||
Consumer
|
4
|
4
|
||||||
Total
|
$
|
2,410
|
$
|
2,559
|
March 31, 2018
|
||||||||||||||||||||
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Impaired
Balance
|
Interest income
Recognized
While Impaired
|
||||||||||||||||
With no related allowance
|
||||||||||||||||||||
Commercial
|
$
|
121
|
$
|
121
|
$
|
-
|
$
|
151
|
$
|
1
|
||||||||||
Commercial real estate
|
2,281
|
2,281
|
-
|
2,370
|
10
|
|||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Residential mortgages
|
735
|
735
|
-
|
762
|
3
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total with no related allowance
|
$
|
3,137
|
$
|
3,137
|
$
|
-
|
$
|
3,283
|
$
|
14
|
||||||||||
With a related allowance
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Commercial real estate
|
591
|
591
|
40
|
497
|
-
|
|||||||||||||||
Residential mortgages
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total with a related allowance
|
$
|
591
|
$
|
591
|
$
|
40
|
$
|
497
|
$
|
-
|
||||||||||
Totals
|
||||||||||||||||||||
Commercial
|
$
|
121
|
$
|
121
|
$
|
-
|
$
|
151
|
$
|
1
|
||||||||||
Commercial real estate
|
2,872
|
2,872
|
40
|
2,867
|
10
|
|||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Residential mortgages
|
735
|
735
|
-
|
762
|
3
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
3,728
|
$
|
3,728
|
$
|
40
|
$
|
3,780
|
$
|
14
|
December 31, 2017
|
||||||||||||||||||||
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Impaired
Balance
|
Interest income
Recognized
While Impaired
|
||||||||||||||||
With no related allowance
|
||||||||||||||||||||
Commercial
|
$
|
126
|
$
|
126
|
$
|
-
|
$
|
154
|
$
|
5
|
||||||||||
Commercial real estate
|
2,518
|
2,518
|
-
|
2,572
|
43
|
|||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Residential mortgages
|
747
|
747
|
-
|
768
|
12
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total with no related allowance
|
$
|
3,391
|
$
|
3,391
|
$
|
-
|
$
|
3,494
|
$
|
60
|
||||||||||
With a related allowance
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Commercial real estate
|
454
|
454
|
11
|
497
|
-
|
|||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Residential mortgages
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total with a related allowance
|
$
|
454
|
$
|
454
|
$
|
11
|
$
|
497
|
$
|
-
|
||||||||||
Totals
|
||||||||||||||||||||
Commercial
|
$
|
126
|
$
|
126
|
$
|
-
|
$
|
154
|
$
|
5
|
||||||||||
Commercial line of credit
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Commercial real estate
|
2,972
|
2,972
|
11
|
3,069
|
43
|
|||||||||||||||
Commercial real estate line of credit
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Residential mortgages
|
747
|
747
|
-
|
768
|
12
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
3,845
|
$
|
3,845
|
$
|
11
|
$
|
3,991
|
$
|
60
|
March 31, 2018
|
||||||||||||||||||||||||||||||||
Commercial
|
Residential
|
Home
|
||||||||||||||||||||||||||||||
Commercial
|
Lines
|
CRE
|
CRE Lines
|
Mortgages
|
Equity
|
Consumer
|
Total
|
|||||||||||||||||||||||||
Pass
|
$
|
16,026
|
$
|
8,223
|
$
|
65,068
|
$
|
897
|
$
|
18,855
|
$
|
7,559
|
$
|
916
|
$
|
117,544
|
||||||||||||||||
Other Loans especially mentioned
|
2,194
|
-
|
2,691
|
-
|
403
|
-
|
-
|
5,288
|
||||||||||||||||||||||||
Substandard
|
87
|
-
|
1,937
|
-
|
1,110
|
377
|
2
|
3,513
|
||||||||||||||||||||||||
Doubtful
|
-
|
-
|
-
|
-
|
243
|
-
|
-
|
243
|
||||||||||||||||||||||||
Total
|
$
|
18,307
|
$
|
8,223
|
$
|
69,696
|
$
|
897
|
$
|
20,611
|
$
|
7,936
|
$
|
918
|
$
|
126,588
|
December 31, 2017
|
||||||||||||||||||||||||||||||||
Commercial
|
Residential
|
Home
|
||||||||||||||||||||||||||||||
Commercial
|
Lines
|
CRE
|
CRE Lines
|
Mortgages
|
Equity
|
Consumer
|
Total
|
|||||||||||||||||||||||||
Pass
|
$
|
16,626
|
$
|
10,971
|
$
|
64,778
|
$
|
1,348
|
$
|
18,917
|
$
|
8,053
|
$
|
1,143
|
$
|
121,836
|
||||||||||||||||
Other Loans especially mentioned
|
1,978
|
-
|
6,370
|
-
|
406
|
-
|
-
|
8,754
|
||||||||||||||||||||||||
Substandard
|
91
|
-
|
1,978
|
-
|
1,190
|
386
|
4
|
3,649
|
||||||||||||||||||||||||
Doubtful
|
6
|
-
|
-
|
-
|
243
|
-
|
-
|
249
|
||||||||||||||||||||||||
Total
|
$
|
18,701
|
$
|
10,971
|
$
|
73,126
|
$
|
1,348
|
$
|
20,756
|
$
|
8,439
|
$
|
1,147
|
$
|
134,488
|
March 31, 2018
|
December 31, 2017
|
|||||||
Balance, beginning
|
$
|
5,138
|
$
|
5,755
|
||||
Additions
|
-
|
257
|
||||||
Amounts collected
|
(150
|
)
|
(874
|
)
|
||||
Balance, ending
|
$
|
4,988
|
$
|
5,138
|
March 31, 2018
|
December 31, 2017
|
|||||||
Balance, beginning
|
$
|
1,662
|
$
|
1,761
|
||||
Losses:
|
-
|
-
|
||||||
Commercial
|
(53
|
)
|
(69
|
)
|
||||
Commercial Line of Credit
|
-
|
-
|
||||||
Commercial Real Estate
|
-
|
(1,324
|
)
|
|||||
Residential Mortgages
|
(5
|
)
|
(59
|
)
|
||||
Consumer
|
(1
|
)
|
(4
|
)
|
||||
Total
|
(59
|
)
|
(1,456
|
)
|
||||
Recoveries:
|
||||||||
Commercial
|
35
|
101
|
||||||
Commercial Real Estate
|
74
|
70
|
||||||
Residential Mortgages
|
8
|
-
|
||||||
Home Equity
|
-
|
-
|
||||||
Consumer
|
3
|
1
|
||||||
Total
|
120
|
172
|
||||||
Net (losses) recoveries
|
61
|
(1,284
|
)
|
|||||
Provision for loan losses
|
90
|
1,185
|
||||||
Balance, ending
|
$
|
1,813
|
$
|
1,662
|
March 31, 2018
|
||||||||||||||||||||||||
Commercial
|
||||||||||||||||||||||||
Commercial
|
Real Estate
|
Residential
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||
Beginning balance
|
$
|
275
|
$
|
1,042
|
$
|
333
|
$
|
12
|
-
|
$
|
1,662
|
|||||||||||||
Charge-offs
|
(53
|
)
|
-
|
(5
|
)
|
(1
|
)
|
-
|
(59
|
)
|
||||||||||||||
Recoveries
|
117
|
3
|
-
|
-
|
-
|
120
|
||||||||||||||||||
Provision
|
16
|
49
|
17
|
8
|
-
|
90
|
||||||||||||||||||
Ending balance
|
$
|
355
|
$
|
1,094
|
$
|
345
|
$
|
19
|
$
|
-
|
$
|
1,813
|
||||||||||||
Allowance related to:
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
-
|
$
|
40
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
40
|
||||||||||||
Collectively evaluated for impairment
|
355
|
1,054
|
345
|
19
|
-
|
1,773
|
||||||||||||||||||
Total
|
$
|
355
|
$
|
1,094
|
$
|
345
|
$
|
19
|
$
|
-
|
$
|
1,813
|
||||||||||||
Loans:
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
121
|
$
|
2,281
|
$
|
735
|
$
|
-
|
$
|
-
|
$
|
3,137
|
||||||||||||
Collectively evaluated for impairment
|
26,408
|
68,311
|
27,811
|
918
|
-
|
123,448
|
||||||||||||||||||
Total
|
$
|
26,529
|
$
|
70,592
|
$
|
28,546
|
$
|
918
|
$
|
-
|
$
|
126,585
|
March 31, 2018
|
||||||||||||
Number of
Contracts
|
Pre-Modification
Outstanding
Recorded
Investment
|
Post-Modification
Outstanding
Recorded
Investment
|
||||||||||
Troubled Debt Restructurings
|
||||||||||||
Commercial
|
3
|
$
|
1,140
|
$
|
1,086
|
|||||||
Commercial Real Estate
|
-
|
-
|
$
|
-
|
||||||||
Consumer
|
1
|
34
|
$
|
2
|
||||||||
Residential Mortgage
|
1
|
145
|
127
|
|||||||||
Total
|
5
|
$
|
1,319
|
$
|
1,215
|
December 31, 2017
|
||||||||||||
Number of
Contracts
|
Pre-Modification
Outstanding
Recorded
Investment
|
Post-Modification
Outstanding
Recorded
Investment
|
||||||||||
Troubled Debt Restructurings
|
||||||||||||
Commercial
|
2
|
$
|
632
|
$
|
584
|
|||||||
Commercial Real Estate
|
-
|
-
|
$
|
-
|
||||||||
Consumer
|
1
|
34
|
$
|
4
|
||||||||
Residential Mortgage
|
1
|
145
|
127
|
|||||||||
Total
|
4
|
$
|
811
|
$
|
715
|
For the Period Ended March 31, 2018
|
||||||||||||
Income
|
Shares
|
Per Share
|
||||||||||
Basic EPS
|
(Numerator)
|
(Denominator)
|
Amount
|
|||||||||
Income available to common stockholders
|
$
|
392
|
1,031,046
|
$
|
0.38
|
|||||||
Effect of Dilutive Securities
|
||||||||||||
Options
|
-
|
2,879
|
||||||||||
Diluted EPS
|
||||||||||||
Income available to common stockholders plus assumed conversions
|
$
|
392
|
1,033,925
|
$
|
0.38
|
|||||||
For the Period Ended March 31, 2017
|
||||||||||||
Income
|
Shares
|
Per Share
|
||||||||||
Basic EPS
|
(Numerator)
|
(Denominator)
|
Amount
|
|||||||||
Income available to common stockholders
|
$
|
357
|
1,028,046
|
$
|
0.35
|
|||||||
Effect of Dilutive Securities
|
||||||||||||
Options
|
-
|
876
|
||||||||||
Diluted EPS
|
||||||||||||
Income available to common stockholders plus assumed conversions
|
$
|
357
|
1,028,922
|
$
|
0.35
|
Options Outstanding
|
Options Exercisable
|
|||||||||
Weighted
|
||||||||||
Average
|
Weighted
|
Weighted
|
||||||||
Range of
|
Remaining
|
Average
|
Average
|
|||||||
Exercise
|
Number
|
Contractual
|
Exercise
|
Number
|
Exercise
|
|||||
Prices
|
Outstanding
|
Life in Years
|
Price
|
Exercisable
|
Price
|
|||||
$14.40 - 20.00
|
9,500
|
0
|
$ 19.41
|
9,500
|
$ 19.41
|
·
|
4.5% CET1 to riskweighted assets;
|
·
|
6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to riskweighted assets;
|
·
|
8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to riskweighted assets; and
|
·
|
4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).
|
To Be Well Capitalized
|
||||||||||||||||||||||||
For Capital
|
Under Prompt Corrective
|
|||||||||||||||||||||||
Actual
|
Adequacy Purposes
|
Actions Provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
As of March 31, 2018
|
||||||||||||||||||||||||
CET1 (to Risk-Weighted Assets)
|
$
|
22,805
|
17.7
|
%
|
$
|
5,794
|
4.5
|
%
|
$
|
8,369
|
6.5
|
%
|
||||||||||||
Total Capital (to Risk-Weighted Assets)
|
$
|
24,418
|
19.0
|
%
|
$
|
10,300
|
8.0
|
%
|
$
|
12,875
|
10.0
|
%
|
||||||||||||
Tier I Capital (to Risk-Weighted Assets)
|
$
|
22,805
|
17.7
|
%
|
$
|
5,150
|
4.0
|
%
|
$
|
7,725
|
6.0
|
%
|
||||||||||||
Tier I Capital (to Average Assets)
|
$
|
22,805
|
12.4
|
%
|
$
|
7,354
|
4.0
|
%
|
$
|
9,193
|
5.0
|
%
|
To Be Well Capitalized
|
||||||||||||||||||||||||
For Capital
|
Under Prompt Corrective
|
|||||||||||||||||||||||
Actual
|
Adequacy Purposes
|
Actions Provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
As of December 31, 2017
|
||||||||||||||||||||||||
CET1 (to Risk-Weighted Assets)
|
$
|
22,593
|
16.7
|
%
|
$
|
6,080
|
4.5
|
%
|
$
|
8,782
|
6.5
|
%
|
||||||||||||
Total Capital (to Risk-Weighted Assets)
|
$
|
24,255
|
18.0
|
%
|
$
|
10,809
|
8.0
|
%
|
$
|
13,511
|
10.0
|
%
|
||||||||||||
Tier I Capital (to Risk-Weighted Assets)
|
$
|
22,593
|
16.7
|
%
|
$
|
5,404
|
4.0
|
%
|
$
|
8,106
|
6.0
|
%
|
||||||||||||
Tier I Capital (to Average Assets)
|
$
|
22,593
|
11.8
|
%
|
$
|
7,667
|
4.0
|
%
|
$
|
9,583
|
5.0
|
%
|
March 31, 2018
|
December 31, 2017
|
|||||||||||||||
Estimated
|
Estimated
|
|||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Value
|
Value
|
Value
|
Value
|
|||||||||||||
Financial Assets:
|
||||||||||||||||
Cash and due from banks
|
$
|
2,773
|
$
|
2,773
|
$
|
2,890
|
$
|
2,890
|
||||||||
Interest bearing deposits with other banks
|
18
|
18
|
89
|
89
|
||||||||||||
Federal funds sold
|
3,536
|
3,536
|
4,798
|
4,798
|
||||||||||||
Securities available for sale
|
43,530
|
43,530
|
41,740
|
41,740
|
||||||||||||
Loans
|
124,583
|
104,913
|
132,629
|
130,608
|
||||||||||||
Accrued interest receivable
|
529
|
529
|
546
|
546
|
||||||||||||
Total
|
$
|
174,969
|
$
|
155,299
|
$
|
182,692
|
$
|
180,671
|
||||||||
Financial Liabilities:
|
||||||||||||||||
Deposits
|
$
|
140,781
|
$
|
121,000
|
$
|
146,789
|
$
|
121,814
|
||||||||
Short-term borrowings
|
10,669
|
10,669
|
17,424
|
17,424
|
||||||||||||
Long-term borrowings
|
7,400
|
7,400
|
2,000
|
2,000
|
||||||||||||
Accrued interest payable
|
149
|
149
|
132
|
132
|
||||||||||||
Total
|
$
|
158,999
|
$
|
139,218
|
$
|
166,345
|
$
|
141,370
|
Total at
|
Fair Value Measurements Using:
|
|||||||||||||||
March 31,
|
||||||||||||||||
2018
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Available for Sale:
|
||||||||||||||||
Taxable:
|
||||||||||||||||
U.S. Government agencies and corporations
|
$
|
14,965
|
$
|
-
|
$
|
14,965
|
$
|
-
|
||||||||
Corporate bonds
|
3,484
|
-
|
3,484
|
-
|
||||||||||||
Collateralized mortgage obligations
|
18,456
|
-
|
18,456
|
-
|
||||||||||||
Investment in subordinated debt
|
475
|
-
|
475
|
-
|
||||||||||||
Equity securities - preferred securities
|
500
|
-
|
500
|
-
|
||||||||||||
Total
|
$
|
37,880
|
$
|
-
|
$
|
37,880
|
$
|
-
|
||||||||
Tax-exempt:
|
||||||||||||||||
State and county municipals
|
5,650
|
-
|
5,650
|
-
|
||||||||||||
Total
|
$
|
43,530
|
$
|
-
|
$
|
43,530
|
$
|
-
|
Total at
|
Fair Value Measurements Using:
|
|||||||||||||||
December 31,
|
||||||||||||||||
2017
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Available for Sale:
|
||||||||||||||||
Taxable:
|
||||||||||||||||
U.S. Government agencies and corporations
|
$
|
16,156
|
$
|
-
|
$
|
16,156
|
$
|
-
|
||||||||
Corporate bonds
|
3,554
|
-
|
3,554
|
-
|
||||||||||||
Collateralized mortgage obligations
|
15,290
|
-
|
15,290
|
-
|
||||||||||||
Investment in subordinated debt
|
475
|
-
|
475
|
-
|
||||||||||||
Equity securities - preferred securities
|
500
|
-
|
500
|
-
|
||||||||||||
Total
|
$
|
35,975
|
$
|
-
|
$
|
35,975
|
$
|
-
|
||||||||
Tax-exempt:
|
||||||||||||||||
State and county municipals
|
5,765
|
-
|
5,765
|
-
|
||||||||||||
Total
|
$
|
41,740
|
$
|
-
|
$
|
41,740
|
$
|
-
|
Total at
|
Fair Value Measurements Using:
|
|||||||||||||||
March 31,
|
||||||||||||||||
2018
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Impaired Loans
|
||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Commercial real estate
|
628
|
-
|
628
|
-
|
||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
||||||||||||
Total impaired loans
|
$
|
628
|
$
|
-
|
$
|
628
|
$
|
-
|
||||||||
OREO
|
$
|
90
|
$
|
-
|
$
|
-
|
$
|
90
|
||||||||
Total at
|
Fair Value Measurements Using:
|
|||||||||||||||
December 31,
|
||||||||||||||||
2017
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Impaired Loans
|
||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Commercial real estate
|
454
|
-
|
384
|
70
|
||||||||||||
Residential mortgages
|
-
|
-
|
-
|
-
|
||||||||||||
Total impaired loans
|
$
|
454
|
$
|
-
|
$
|
384
|
$
|
70
|
||||||||
OREO
|
$
|
90
|
$
|
-
|
$
|
-
|
$
|
90
|
Total at
|
Fair Value Measurements Using:
|
|||||||||||||||
December 31,
|
||||||||||||||||
2017
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Impaired Loans
|
||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Commercial real estate
|
454
|
-
|
384
|
70
|
||||||||||||
Residential mortgages
|
-
|
-
|
-
|
-
|
||||||||||||
Total impaired loans
|
$
|
454
|
$
|
-
|
$
|
384
|
$
|
70
|
||||||||
OREO
|
$
|
90
|
$
|
-
|
$
|
-
|
$
|
90
|
Page
|
||
Section 1. Merger | ||
1.1
|
General Effect of Merger; Assets
|
2
|
1.2
|
Liabilities of Surviving Company
|
2
|
1.3
|
Name, Directors and Officers of Surviving Company
|
2
|
1.4
|
Capital Structure of Surviving Company
|
3
|
1.5
|
Change in Method of Effecting Acquisition
|
3
|
Section 2. Conversion, Exchange and Cancellation of Shares | ||
2.1
|
General
|
4
|
2.2
|
Conversion of First Bank Common Stock
|
4
|
2.3
|
Manner of Exchange
|
4
|
2.4
|
Fractional Shares
|
5
|
2.5
|
Lost Certificates
|
5
|
2.6
|
First Bank Stock Options
|
5
|
Section 3. Representations, Warranties and Covenants of Premier and Premier Bank | ||
3.1
|
Organization, Standing and Authority
|
8
|
3.2
|
Capital Structure
|
8
|
3.3
|
Premier Subsidiaries
|
9
|
3.4
|
Authority
|
9
|
3.5
|
Premier Financial Statements
|
10
|
3.6
|
Allowance for Possible Loan Losses
|
10
|
3.7
|
Accuracy of Annual Reports
|
10
|
3.8
|
Absence of Undisclosed Liabilities
|
11
|
3.9
|
Tax Matters
|
11
|
3.10
|
Loans
|
12
|
3.11
|
Properties
|
12
|
3.12
|
Compliance with Laws
|
12
|
3.13
|
Employee Benefit Plans
|
12
|
3.14
|
Commitments and Contracts
|
13
|
3.15
|
Labor
|
13
|
3.16
|
Material Contracts Furnished
|
14
|
3.17
|
Material Contracts
|
14
|
3.18
|
Material Contract Defaults
|
14
|
3.19
|
Legal Proceedings
|
14
|
3.20
|
Absence of Certain Changes or Events
|
14
|
3.21
|
Reports
|
15
|
3.22
|
Investments
|
15
|
3.23
|
Securities Portfolio
|
15
|
3.24
|
Environmental Matters
|
15
|
3.25
|
Preparation of Registration Statement On Form S-4/Accuracy of Proxy Statement
|
16 |
3.26
|
Filing of Application to Merge
|
16
|
3.27
|
Best Efforts
|
16
|
3.28
|
Conduct of Business - Acquisitions
|
16
|
3.29
|
Conduct of Business - Affirmative Covenants of Premier
|
16
|
3.30
|
Directors and Officers Indemnification and Insurance
|
17
|
3.31
|
Stock Listing
|
18
|
Section 4. Representations, Warranties and Covenants of First Bank | ||
4.1
|
Organization, Standing and Authority
|
19
|
4.2
|
Capital Structure
|
19
|
4.3
|
Subsidiaries
|
19
|
4.4
|
Authority
|
19
|
4.5
|
First Bank Financial Statements
|
19
|
4.6
|
Accuracy of Annual Reports
|
20
|
4.7
|
Allowance for Possible Loan Losses
|
20
|
4.8
|
Absence of Undisclosed Liabilities
|
21
|
4.9
|
Tax Matters
|
21
|
4.10
|
Loans
|
21
|
4.11
|
Properties
|
22
|
4.12
|
Compliance with Laws
|
22
|
4.13
|
Employee Benefit Plans
|
22
|
4.14
|
Commitments and Contracts
|
23
|
4.15
|
Labor
|
23
|
4.16
|
Material Contracts Furnished
|
24
|
4.17
|
Material Contracts
|
24
|
4.18
|
Material Contract Defaults
|
24
|
4.19
|
Legal Proceedings
|
24
|
4.20
|
Absence of Certain Changes or Events
|
24
|
4.21
|
Reports
|
25
|
4.22
|
Accuracy of Proxy Statement
|
25
|
4.23
|
Investments
|
25
|
4.24
|
Securities Portfolio
|
25
|
4.25
|
Environmental Matters
|
25
|
4.26
|
Best Efforts
|
26
|
4.27
|
Conduct of Business – Negative Covenants of First Bank
|
26
|
4.28
|
Conduct of Business – Affirmative Covenants of First Bank
|
27
|
4.29
|
Balance Sheet Due Diligence Checklist
|
29
|
4.30
|
Branch Operations Certification
|
29
|
4.31
|
Acquisition Proposals
|
29
|
Section 5. Indemnification and Confidentiality | ||
5.1
|
Access and Information
|
31
|
5.2
|
Furnishing Information and Indemnification
|
31
|
5.3
|
Confidentiality
|
32
|
5.4
|
Updates to Information
|
32
|
Section 6. Conditions Precedent | ||
(a)
|
Governmental Approvals
|
33
|
(b)
|
Shareholder Approval
|
33
|
(c)
|
Registration Statement
|
33
|
(d)
|
No Divestiture or Adverse Condition
|
33
|
(e)
|
Accuracy of Representations and Warranties; Performance of Obligations and Covenants – Premier and Premier Bank
|
34 |
(f)
|
Accuracy of Representations and Warranties; Performance of Obligations and Covenants – First Bank
|
34
|
(g)
|
Less than 10% Dissenters
|
34
|
(h)
|
Tax Ruling or Opinion Letter
|
34
|
(i)
|
Absence of Material Adverse Changes - Premier
|
35
|
(j)
|
Absence of Material Adverse Changes – First Bank
|
35
|
(k)
|
Consent of Premier Lenders
|
36
|
(l)
|
No Excess Parachute Payment
|
36
|
(m)
|
Fairness Opinion – First Bank
|
36
|
(n)
|
Fairness Opinion – Premier
|
36
|
Section 7. Closing Date and Effective Time | ||
7.1
|
Closing Date
|
37
|
7.2
|
Effective Time
|
37
|
Section 8. Conversion of Operating Systems
|
||
8.1
|
Cooperation in Preparation for Conversion
|
38
|
8.2
|
Conversion Expenses
|
38
|
8.3
|
Archived Records of First Bank
|
38
|
Section 9. Operations after the Closing Date | ||
9.1
|
Employees of First Bank
|
39
|
9.2
|
Severance
|
39
|
9.3
|
Survival
|
39
|
Section 10. Termination of Agreement | ||
10.1
|
Grounds for Termination
|
41
|
10.2
|
Effect of Termination
|
41
|
10.3
|
Lost Opportunity Costs
|
41
|
10.4
|
Return of Information
|
42
|
Section 11. Waiver and Amendment | 43 | |
Section 12. Meeting of Shareholders of First Bank
|
44 | |
Section 13. Rights of Dissenting Shareholders
|
45 |
Section 14. Miscellaneous | ||
14.1
|
Public Announcements
|
46
|
14.2
|
Brokers and Finders
|
46
|
14.3
|
Disclosed In Writing
|
46
|
14.4
|
Entire Agreement
|
46
|
14.5
|
Counterparts
|
46
|
14.6
|
Invalid Provisions
|
46
|
14.7
|
Notices
|
46
|
14.8
|
Headings
|
47
|
14.9
|
Expenses
|
47
|
14.10
|
Governing Law
|
47
|
14.11
|
No Assignment
|
47
|
14.12
|
Effectiveness of Agreement
|
47
|
14.13
|
Further Acts
|
48
|
14.14
|
Representations and Warranties Not to Survive
|
48
|
14.15
|
Disclosure Letter
|
48
|
EXHIBIT A – Plan of Merger of First Bank and Premier Bank |
(1) |
Any new loan, or renewal of an existing loan, that totals $250,000 or greater; or
|
(2) |
Any new loan, or renewal of an existing loan, which, when included with all other loans from First Bank to any such borrower and their related interests, would cause such borrower’s total loans from First Bank, including loans from First Bank to its related interests, to exceed $500,000.
|
(1) |
Terminate any defined benefit plan to which either First Bank is a party; provided, however, that if all appropriate steps are taken for termination and the defined benefit plan is frozen, the actual termination of any defined benefit plan need not be accomplished prior to, or at, Closing.
|
(2) |
Terminate any and all deferred compensation plans to which First Bank are parties.
|
(1) |
The Merger will constitute and qualify as a reorganization within the meaning of Sections 368 of the Internal Revenue Code and First Bank, Premier Bank and Premier will each qualify as “a party to a reorganization” as that term is defined in the Internal Revenue Code;
|
(2) |
No gain or loss will be recognized by the shareholders of First Bank who exchange their First Bank Common Stock for Premier Common Stock pursuant to the Merger, except that gain or loss may be recognized as to cash received in lieu of fractional share interests, Cash Merger Consideration and the Special Dividend;
|
(3) |
No gain or loss will be recognized by Premier, First Bank, or Premier Bank by reason of the Merger; and
|
(4) |
The holding period of Premier Common Stock received by First Bank shareholders in exchange for First Bank Common Stock will include the holding period of the shares of First Bank Common Stock so exchanged, provided that the First Bank Common Stock is held as a capital asset at the Effective Time.
|