Document And Entity Information
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Document And Entity Information
9 Months Ended
Sep. 30, 2012
Oct. 31, 2012
Document And Entity Information [Abstract]    
Document type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2012  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2012  
Entity Registrant Name HERITAGE BANKSHARES INC /VA  
Entity Central Index Key 0000719731  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   2,275,891

Consolidated Balance Sheets
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
ASSETS    
Cash and due from banks $ 5,693 $ 5,335
Interest-bearing deposits in other banks 33,502 8,646
Federal funds sold 28 33
Total cash and cash equivalents 39,223 14,014
Certificates of deposit in other banks 13,695  
Securities available for sale, at fair value 26,188 [1] 45,310 [1]
Loans, net    
Held for investment, net of allowance for loan losses 213,082 213,183
Accrued interest receivable 588 694
Stock in Federal Reserve Bank, at cost 594 591
Stock in Federal Home Loan Bank of Atlanta, at cost 440 834
Premises and equipment, net 10,743 11,029
Other real estate owned 591 1,719
Bank owned life insurance 5,648 5,616
Other assets 1,904 1,594
Total assets 312,696 294,584
LIABILITIES AND STOCKHOLDERS' EQUITY    
Noninterest-bearing 100,960 92,839
Interest-bearing 171,664 157,139
Total deposits 272,624 249,978
Federal Home Loan Bank Advances   4,000
Securities sold under agreements to repurchase 212 1,502
Other borrowings 545 782
Accrued interest payable 36 83
Other liabilities 2,074 1,802
Total liabilities 275,491 258,147
Commitments and contingencies      
Stockholders' equity    
Preferred stock, no par value- 1,000,000 shares authorized; Senior non-cumulative perpetual preferred stock; Series C, 7,800 shares issued and outstanding at both September 30, 2012 and December 31, 2011 7,800 7,800
Common stock, $5 par value - 6,000,000 shares authorized; 2,275,891 shares and 2,304,965 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively 11,379 11,525
Additional paid-in capital 6,732 6,704
Retained earnings 11,169 9,967
Accumulated other comprehensive income, net 125 441
Total stockholders' equity 37,205 36,437
Total liabilities and stockholders' equity $ 312,696 $ 294,584
[1] At September 30, 2012 and December 31, 2011, the Company held no securities classified as held to maturity.

Consolidated Balance Sheets (Parenthetical)
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Consolidated Balance Sheets (Parenthetical) (USD $)
Sep. 30, 2012
Dec. 31, 2011
Preferred stock, par value      
Preferred stock, shares authorized 1,000,000 1,000,000
Common stock, par value $ 5 $ 5
Common stock, shares authorized 6,000,000 6,000,000
Common stock, shares issued 2,275,891 2,304,965
Common stock, shares outstanding 2,275,891 2,304,965
Senior Non-Cumulative Perpetual Preferred Stock, Series C [Member]
   
Preferred stock, shares issued 7,800 7,800
Preferred stock, shares outstanding 7,800 7,800

Consolidated Statements Of Income
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Consolidated Statements Of Income (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Interest income        
Interest income and fees on loans $ 2,485 $ 2,833 $ 7,740 $ 8,543
Interest on taxable investment securities 174 193 716 514
Other interest and dividend income 61 37 106 112
Total interest income 2,720 3,063 8,562 9,169
Interest expense        
Deposits 228 309 702 923
Borrowings 6 10 23 36
Total interest expense 234 319 725 959
Net interest income 2,486 2,744 7,837 8,210
Provision for loan losses    33 35 44
Net interest income after provision for loan losses 2,486 2,711 7,802 8,166
Noninterest income        
Service charges on deposit accounts 67 87 195 259
Late charges and other fees on loans 11 25 77 57
Gain on sale of investment securities 284   284 87
Income from bank-owned life insurance 43   161  
Other 87 85 241 224
Total noninterest income 492 197 958 627
Noninterest expense        
Compensation 1,008 1,090 3,179 3,283
Data processing 160 148 471 435
Occupancy 221 234 668 622
Furniture and equipment 161 142 446 438
Taxes and licenses 79 86 239 252
Professional fees 57 74 243 292
FDIC assessment 39 37 116 137
(Gain) loss on sale or impairment of other real estate owned (10)   41 1
Other 282 250 743 773
Total noninterest expense 1,997 2,061 6,146 6,233
Income before provision for income taxes 981 847 2,614 2,560
Provision for income taxes 288 299 749 861
Net income 693 548 1,865 1,699
Preferred stock dividend and accretion of discount (20) (252) (86) (562)
Net income available to common stockholders $ 673 $ 296 $ 1,779 $ 1,137
Earnings per common share        
Basic $ 0.30 $ 0.13 $ 0.77 $ 0.49
Diluted $ 0.29 $ 0.13 $ 0.76 $ 0.49
Dividends per share $ 0.06 $ 0.06 $ 0.18 $ 0.18
Weighted average shares outstanding - basic 2,275,891 2,303,107 2,295,413 2,305,652
Effect of dilutive equity awards 54,362 13,441 49,385 11,246
Weighted average shares outstanding - diluted 2,330,253 2,316,548 2,344,798 2,316,898

Consolidated Statements Of Cash Flows
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Consolidated Statements Of Cash Flows (USD $)
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Cash flows from operating activities:    
Net income $ 1,865,000 $ 1,699,000
Adjustments to reconcile net income to net cash provided by operating activities:    
Provision for loan losses 35,000 44,000
Amortization of loan yield adjustments, net 209,000 242,000
Depreciation, amortization and accretion, net 462,000 451,000
Stock based compensation 79,000 68,000
Deferred compensation 45,000 28,000
Exercise of stock options tax benefit 1,000  
Net (gains) losses on:    
Sale of securities (284,000) (87,000)
Sale or impairment of other real estate owned 41,000 1,000
Net income on bank owned life insurance (161,000)  
Changes in assets/liabilities, net    
Increase in interest receivable and other assets (43,000) (3,000)
Increase (decrease) in interest payable and other liabilities (154,000) 3,000
Net cash provided by operating activities 2,095,000 2,445,000
Cash flows from investing activities:    
Proceeds from maturities and principal repayments of securities available for sale 23,200,000 6,487,000
Purchases of securities available for sale (18,996,000) (36,921,000)
Proceeds from sales of securities available for sale 14,696,000 6,005,000
Proceeds from sale of other real estate owned 1,535,000  
Net decrease (increase) in certificates of deposit in other banks (13,695,000) 2,011,000
Net increase in loans held for investment (239,000) (311,000)
Purchases of Federal Home Loan Bank stock and Federal Reserve Bank stock (59,000) (4,000)
Redemption of FHLB stock and Federal Reserve Bank stock 450,000 679,000
Purchases of premises and equipment (166,000) (292,000)
Purchases of and premiums paid for bank-owned life insurance (12,000) (13,000)
Proceeds from bank owned life insurance 141,000  
Net cash provided by/(used for) investing activities 6,855,000 (22,359,000)
Cash flows from financing activities:    
Proceeds from exercise of stock options 8,000  
Net increase in deposits 22,646,000 33,494,000
Net decrease in Federal Home Loan Bank advances (4,000,000)  
Net decrease in securities sold under agreements to repurchase (1,290,000) (833,000)
Repayments of other borrowings (237,000) (228,000)
Proceeds from issuance of preferred stock   7,788,000
Redemption of preferred stock   (10,406,000)
Retirement of common stock (368,000) (55,000)
Cash dividends paid (500,000) (810,000)
Net cash provided by financing activities 16,259,000 28,950,000
Increase in cash and cash equivalents 25,209,000 9,036,000
Cash and cash equivalents, beginning of period 14,014,000 16,380,000
Cash and cash equivalents, end of period 39,223,000 25,416,000
Supplemental disclosure:    
Interest paid 773,000 965,000
Income taxes paid 813,000 1,079,000
Noncash financing activities:    
Transfer of loans to other real estate owned $ 96,000 $ 25,000

Consolidated Statements Of Comprehensive Income
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Consolidated Statements Of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Consolidated Statements Of Comprehensive Income [Abstract]        
Net income for period ended September 30 $ 693 $ 548 $ 1,865 $ 1,699
Unrealized holding gains (losses) on securities available for sale (66) 191 (196) 69
Tax effect on unrealized gains (losses) 22 (65) 67 (23)
Realized gains on sales of available for sale securities (284)   (284) (87)
Tax effect on realized gains 97   97 29
Total comprehensive income $ 462 $ 674 $ 1,549 $ 1,687

Principles Of Consolidation And Basis Of Presentation
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Principles Of Consolidation And Basis Of Presentation
9 Months Ended
Sep. 30, 2012
Principles Of Consolidation And Basis Of Presentation [Abstract]  
Principles Of Consolidation And Basis Of Presentation

Note 1 – Principles of Consolidation and Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Heritage Bankshares, Inc. and its wholly-owned subsidiary, Heritage Bank.  All significant intercompany balances and transactions have been eliminated in consolidation. 

Heritage Bankshares, Inc. (the “Company”) is a bank holding company incorporated under the laws of the Commonwealth of Virginia in 1983, and the Company serves as the holding company for its wholly-owned subsidiaries.  The Company’s only subsidiary, Heritage Bank (the “Bank”), is a state banking corporation engaged in the general commercial and retail banking business.  The Bank is a full-service bank conducting a general commercial and consumer banking business with its customers located throughout the Hampton Roads area of Virginia. 

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting and with the instructions for Form 10‑Q.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  These unaudited consolidated financial statements should be read in conjunction with and with reference to the audited consolidated financial statements and accompanying footnotes included in the Company’s annual report on Form 10‑K for the year ended December 31, 2011.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented.  Actual results could differ from those estimates.  Certain reclassifications have been made to prior year financial statements to conform to current period presentation.

The Company believes its critical accounting policies are those that are particularly sensitive in terms of judgments and the extent to which estimates are used, and such policies include (a) the valuation of the allowance for loan losses and the impairment of loans, (b) the impairment of financial investments and other accounts, (c) the deferral of loan fees and direct loan origination costs, and (d) accounting for income taxes.

Allowance for Loan Losses; Impairment of Loans.  The Bank maintains an allowance for loan losses at a level that, in management’s judgment, is adequate to absorb estimated credit losses on existing loans.  The amount of the allowance is affected by:  (1) loan charge-offs, which decrease the allowance, (2) recoveries on loans previously charged-off, which increase the allowance, and (3) the provision for loan losses charged to income, which increases the allowance.

The Bank analyzes its loan portfolio through ongoing credit review processes and constructs a comprehensive allowance analysis for its loan portfolio at least quarterly.  This analysis includes two basic elements:  (1) specific allowances for individual loans, and (2) general allowances for loan portfolio segments, which factor in historical loan loss experience and delinquency rates for the Bank and the banking industry and numerous other environmental factors.

The Bank evaluates various loans individually for impairment based on guidance for receivables.  The evaluation is based upon either discounted cash flows or collateral evaluations.  If the evaluation shows that a particular loan is impaired, then a specific reserve is established, or a charge-off is made, for the amount of any impairment.

For loans without an individual measure of impairment, the Bank makes estimates of losses for groups of loans in accordance with guidance for contingencies.  As part of the loan loss reserve methodology, loans are placed into one of four major categories or segments of loans:  (1) commercial and industrial loans, (2) consumer loans, (3) 1-4 family residential loans (including home equity loans and lines), and (4) multi-family and other commercial real estate loans.

The Bank then considers the impact of various bank, industry, economic and other environmental factors and documents, which are further used in the analysis.

The Bank’s allowance for loan losses is divided into four distinct portions:  (1) Historical – an amount based on the Bank’s actual net charge-offs; (2) Impaired Loans – an amount for specific allocations on significant individual credits as prescribed by guidance for receivables; (3) Loan Segments – an amount to adjust the historical allocation for the four loan segments based on environmental factors as provided by guidance for contingencies; and (4) Unallocated – an amount to reflect the imprecision inherent in these calculations.  

Impairment of Financial Investments and Other Accounts.  Impairment of investment securities, other equity investments and other asset accounts results in a write-down that must be included in net income when the fair value of the asset declines below cost and the decline is other-than-temporary.  The fair values of these investments and other assets are subject to change, as they are influenced by market conditions and management decisions.

Deferral of Loan Fees and Direct Loan Origination Costs.  Generally accepted accounting principles relating to accounts receivable require that loan fees and direct loan origination costs be deferred and recognized as an adjustment to the loan’s yield.  While the amount of fees to be deferred is generally apparent in the origination of a loan, the Company utilizes estimates to determine the amount of deferred direct origination costs, especially payroll costs, that are attributable to the loan origination process.  Management’s estimates of the amount of costs associated with successful loan origination activities are reviewed and updated annually.

Accounting for Income Taxes.  The determination of the Company’s effective tax rate requires judgment.  In the ordinary course of business, there are transactions and calculations for which the ultimate tax outcomes are uncertain.  In addition, the Company’s tax returns are subject to audit by various tax authorities.  Although we believe that our estimates are reasonable, there can be no assurance that the final tax outcome will not be materially different than that which is reflected in the income tax provision and accrual.

Subsequent Events.  In accordance with accounting guidance, the Company has evaluated events and transactions for potential recognition or disclosure in these financial statements through the date the financial statements were issued.

Recent Accounting Pronouncements

There were no authoritative pronouncements that would have a material impact on the Company during the quarter ending September 30, 2012.

 

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.


Principles Of Consolidation And Basis Of Presentation (Policy)
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Principles Of Consolidation And Basis Of Presentation (Policy)
9 Months Ended
Sep. 30, 2012
Principles Of Consolidation And Basis Of Presentation [Abstract]  
Allowance For Loan Losses; Impairment Of Loans

Allowance for Loan Losses; Impairment of Loans.  The Bank maintains an allowance for loan losses at a level that, in management’s judgment, is adequate to absorb estimated credit losses on existing loans.  The amount of the allowance is affected by:  (1) loan charge-offs, which decrease the allowance, (2) recoveries on loans previously charged-off, which increase the allowance, and (3) the provision for loan losses charged to income, which increases the allowance.

The Bank analyzes its loan portfolio through ongoing credit review processes and constructs a comprehensive allowance analysis for its loan portfolio at least quarterly.  This analysis includes two basic elements:  (1) specific allowances for individual loans, and (2) general allowances for loan portfolio segments, which factor in historical loan loss experience and delinquency rates for the Bank and the banking industry and numerous other environmental factors.

The Bank evaluates various loans individually for impairment based on guidance for receivables.  The evaluation is based upon either discounted cash flows or collateral evaluations.  If the evaluation shows that a particular loan is impaired, then a specific reserve is established, or a charge-off is made, for the amount of any impairment.

For loans without an individual measure of impairment, the Bank makes estimates of losses for groups of loans in accordance with guidance for contingencies.  As part of the loan loss reserve methodology, loans are placed into one of four major categories or segments of loans:  (1) commercial and industrial loans, (2) consumer loans, (3) 1-4 family residential loans (including home equity loans and lines), and (4) multi-family and other commercial real estate loans.

The Bank then considers the impact of various bank, industry, economic and other environmental factors and documents, which are further used in the analysis.

The Bank’s allowance for loan losses is divided into four distinct portions:  (1) Historical – an amount based on the Bank’s actual net charge-offs; (2) Impaired Loans – an amount for specific allocations on significant individual credits as prescribed by guidance for receivables; (3) Loan Segments – an amount to adjust the historical allocation for the four loan segments based on environmental factors as provided by guidance for contingencies; and (4) Unallocated – an amount to reflect the imprecision inherent in these calculations.

Impairment Of Financial Investments And Other Accounts

Impairment of Financial Investments and Other Accounts.  Impairment of investment securities, other equity investments and other asset accounts results in a write-down that must be included in net income when the fair value of the asset declines below cost and the decline is other-than-temporary.  The fair values of these investments and other assets are subject to change, as they are influenced by market conditions and management decisions.

Deferral Of Loan Fees And Direct Loan Origination Costs

Deferral of Loan Fees and Direct Loan Origination Costs.  Generally accepted accounting principles relating to accounts receivable require that loan fees and direct loan origination costs be deferred and recognized as an adjustment to the loan’s yield.  While the amount of fees to be deferred is generally apparent in the origination of a loan, the Company utilizes estimates to determine the amount of deferred direct origination costs, especially payroll costs, that are attributable to the loan origination process.  Management’s estimates of the amount of costs associated with successful loan origination activities are reviewed and updated annually.

Accounting For Income Taxes

Accounting for Income Taxes.  The determination of the Company’s effective tax rate requires judgment.  In the ordinary course of business, there are transactions and calculations for which the ultimate tax outcomes are uncertain.  In addition, the Company’s tax returns are subject to audit by various tax authorities.  Although we believe that our estimates are reasonable, there can be no assurance that the final tax outcome will not be materially different than that which is reflected in the income tax provision and accrual.

Subsequent Events

Subsequent Events.  In accordance with accounting guidance, the Company has evaluated events and transactions for potential recognition or disclosure in these financial statements through the date the financial statements were issued.


Share-Based Compensation
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Share-Based Compensation
9 Months Ended
Sep. 30, 2012
Share-Based Compensation [Abstract]  
Share-Based Compensation

Note 2 – Share-Based Compensation

The following table presents a summary of stock option activity for the period of January 1, 2012 through September 30, 2012.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Weighted Average Exercise Price

 

Weighted Average Remaining Term(years)

 

Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at January 1, 2012

235,800 

 

 

$

12.65 

 

 

 

 

 

 

Granted

 -

 

 

 

 -

 

 

 

 

 

 

Exercised

(1,000)

 

 

 

(7.50)

 

 

 

 

 

 

Forfeited/expired

(800)

 

 

 

(12.12)

 

 

 

 

 

 

Outstanding at September 30, 2012

234,000 

 

 

$

12.67 

 

 

4.0 

 

$

133 

Exercisable at September 30, 2012

226,400 

 

 

$

12.75 

 

 

3.9 

 

$

121 

 

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2012.  The amount changes based on the fair market value of the Company’s common stock, as reflected by stock market prices.  The Company’s current policy is to issue new shares of common stock to satisfy option exercises.  The aggregate intrinsic value of options exercised during the nine months ended September 30, 2012 was $3,700.  Cash received from exercises of options during the first nine months of 2012 was $7,500.  There were no options exercised during the nine months ended September 30, 2011.

On January 25, 2012, the Company’s Board of Directors granted, effective February 1, 2012, 43,600 shares of restricted stock to certain executives under the Heritage 2006 Equity Incentive Plan, as amended (“2006 Incentive Plan”).  The shares vest at a rate of 20% over a five year period beginning on February 1, 2013 and on each February 1 thereafter.  Upon the death or permanent disability of the executive or a change of control of the Company, any remaining unvested shares will vest immediately.

 

As defined in the 2006 Incentive Plan, fair value of the shares was measured by the closing price of a share of the Company’s common stock on the OTC Markets Group, Inc. reporting system on the grant date of the applicable award or, if the Company’s shares were not traded on the grant-date, then the closing price of a share of common stock on the OTC Markets Group, Inc. reporting system on the next preceding date on which a trade occurred.  In addition, because the share-recipients are not entitled to dividends until the shares vest, the grant date fair value of the award was reduced by the present value of the dividends expected to be paid on the underlying shares during the service period, discounted at the appropriate risk-free interest rate.

 

The following table presents a summary of restricted stock award activity for the period of January 1, 2012 to September 30, 2012.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

Fair Value at Grant Date

 

 

 

 

 

 

Outstanding at January 1, 2012

 -

 

 

 

 -

Granted

43,600 

 

 

$

11.28 

Vested

 -

 

 

 

 -

Forfeited/expired

 -

 

 

 

 -

Outstanding at September 30, 2012

43,600 

 

 

$

11.28 

 

The amount charged against income, before income tax benefit of $22,295, in relation to stock‑based payment arrangements was $79,059 for the nine months ended September 30, 2012.  The amount charged against income, before income tax benefit of $1,423, in relation to stock‑based payment arrangements was $67,642 for the nine months ended September 30, 2011.  At September 30, 2012, unrecognized compensation expense, net of estimated forfeitures, related to unvested stock option and restricted stock grants was $433,754 and is currently expected to be recognized over a weighted average period of 2.2 years as follows:

 

 

 

 

 

 

 

 

At September 30, 2012:

Stock-Based Compensation Expense

 

 

 

 

(in thousands)

 

 

 

2012 …………………………………………

$

28 

2013 …………………………………………

 

102 

2014 …………………………………………

 

98 

2015 …………………………………………

 

99 

2016 …………………………………………

 

99 

2017 …………………………………………

 

Total

$

434 

 


Share-Based Compensation (Tables)
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Share-Based Compensation (Tables)
9 Months Ended
Sep. 30, 2012
Share-Based Compensation [Abstract]  
Summary Of Stock Option Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Weighted Average Exercise Price

 

Weighted Average Remaining Term(years)

 

Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at January 1, 2012

235,800 

 

 

$

12.65 

 

 

 

 

 

 

Granted

 -

 

 

 

 -

 

 

 

 

 

 

Exercised

(1,000)

 

 

 

(7.50)

 

 

 

 

 

 

Forfeited/expired

(800)

 

 

 

(12.12)

 

 

 

 

 

 

Outstanding at September 30, 2012

234,000 

 

 

$

12.67 

 

 

4.0 

 

$

133 

Exercisable at September 30, 2012

226,400 

 

 

$

12.75 

 

 

3.9 

 

$

121 

 

Summary Of Restricted Stock Award Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

Fair Value at Grant Date

 

 

 

 

 

 

Outstanding at January 1, 2012

 -

 

 

 

 -

Granted

43,600 

 

 

$

11.28 

Vested

 -

 

 

 

 -

Forfeited/expired

 -

 

 

 

 -

Outstanding at September 30, 2012

43,600 

 

 

$

11.28 

 

Schedule Of Stock-Based Compensation Expense

 

 

 

 

 

 

At September 30, 2012:

Stock-Based Compensation Expense

 

 

 

 

(in thousands)

 

 

 

2012 …………………………………………

$

28 

2013 …………………………………………

 

102 

2014 …………………………………………

 

98 

2015 …………………………………………

 

99 

2016 …………………………………………

 

99 

2017 …………………………………………

 

Total

$

434 

 


Share-Based Compensation (Narrative) (Details)
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Share-Based Compensation (Narrative) (Details) (USD $)
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Share-Based Compensation [Abstract]    
Aggregate intrinsic value of options exercised $ 3,700  
Cash received from exercises of options 7,500  
Shares of restricted stock granted 43,600  
Vesting rate 20.00%  
Vesting period 5 years  
Income tax benefit 22,295 1,423
Amount charged against income in relation to stock-based payment arrangements 79,059 67,642
Unrecognized compensation expense $ 433,754  
Unrecognized compensation expense, expected recognition period 2 years 2 months 12 days  

Share-Based Compensation (Summary Of Stock Option Activity) (Details)
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Share-Based Compensation (Summary Of Stock Option Activity) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Share-Based Compensation [Abstract]  
Shares, Outstanding at January 1, 2012 235,800
Shares, Exercised (1,000)
Shares, Forfeited/expired (800)
Shares, Outstanding at September 30, 2012 234,000
Shares, Exercisable at September 30, 2012 226,400
Weighted Average Exercise Price, Outstanding at January 1, 2012 $ 12.65
Weighted Average Exercise Price, Exercised $ (7.50)
Weighted Average Exercise Price, Forfeited/expired $ (12.12)
Weighted Average Exercise Price, Outstanding at September 30, 2012 $ 12.67
Weighted Average Exercisable Price, Exercisable at September 30, 2012 $ 12.75
Weighted Average Remaining Term (Years), Outstanding at September 30, 2012 4 years
Weighted Average Remaining Term (Years), Exercisable at September 30, 2012 3 years 10 months 24 days
Aggregate Intrinsic Value, Outstanding at September 30, 2012 $ 133
Aggregate Intrinsic Value, Exercisable at September 30, 2012 $ 121

Share-Based Compensation (Summary Of Restricted Stock Activity) (Details)
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Share-Based Compensation (Summary Of Restricted Stock Activity) (Details) (USD $)
9 Months Ended
Sep. 30, 2012
Share-Based Compensation [Abstract]  
Shares, Granted 43,600
Shares, Outstanding at September 30, 2012 43,600
Fair Value at Grant Date, Granted $ 11.28
Fair Value at Grant Date, Outstanding at September 30, 2012 $ 11.28

Share-Based Compensation (Schedule Of Stock-Based Compensation Expense) (Details)
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Share-Based Compensation (Schedule Of Stock-Based Compensation Expense) (Details) (USD $)
Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-Based Compensation Expense $ 433,754
2012 [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-Based Compensation Expense 28,000
2013 [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-Based Compensation Expense 102,000
2014 [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-Based Compensation Expense 98,000
2015 [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-Based Compensation Expense 99,000
2016 [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-Based Compensation Expense 99,000
2017 [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-Based Compensation Expense $ 8,000

Disclosure About Fair Value Of Financial Instruments
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Disclosure About Fair Value Of Financial Instruments
9 Months Ended
Sep. 30, 2012
Disclosure About Fair Value Of Financial Instruments [Abstract]  
Disclosure About Fair Value Of Financial Instruments

Note 3 – Disclosure About Fair Value of Financial Instruments

The following summary presents an estimate of the fair value of the Company’s financial instruments.  Because no active market readily exists for a portion of the Company’s financial instruments, fair values of some financial instruments are based on estimates using present value and other valuation techniques.  Much of the information used to determine fair value is highly subjective in nature and therefore the results may not be precise.  The subjective factors include, among other things, estimates of cash flows, risk characteristics, credit quality and interest rates, all of which are subject to change.  Accordingly, the amounts that will actually be realized or paid upon settlement or maturity of the various instruments could be significantly different.

The following table presents the carrying amounts, fair value and level of input of those financial instruments whose fair value differs from carrying amount at September 30, 2012 and December 31, 2011. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount

 

Fair Value

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Assets:

(in thousands)

Loans held for investment

$

213,082 

 

$

216,733 

 

$

 -

 

$

1,494 

 

$

215,239 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

272,624 

 

$

272,691 

 

$

 -

 

$

272,691 

 

$

 -

Other borrowings

 

545 

 

 

573 

 

 

 -

 

 

 -

 

 

573 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount

 

Fair Value

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Assets:

(in thousands)

Loans held for investment

$

213,183 

 

$

219,056 

 

$

 -

 

$

 -

 

$

219,056 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

249,978 

 

$

250,167 

 

$

 -

 

$

250,167 

 

$

 -

Other borrowings

 

782 

 

 

823 

 

 

 -

 

 

 -

 

 

823 

 

 

Fair Value Hierarchy

“Fair Value Measurements and Disclosures” establishes three levels of inputs that may be used to measure fair value:

Level 1:  Valuation is based on quoted prices in active markets for identical assets or liabilities.

Level 2:  Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. 

Level 3:  Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.  Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Investment Securities Available for Sale

Investment securities available for sale are recorded at fair value on a recurring basis.  Fair value is measured by quoted prices, if available.  If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.  Level 2 securities include Treasury notes and bills, mortgage-backed securities issued by government sponsored entities, municipal bonds and other securities issued by government sponsored agencies.

Loans

The Company does not record loans at fair value on a recurring basis.  Fair value is measured using modeling software that incorporates various assumptions based on observable market data such as interest rate fluctuations and cash flow data.  From time to time, a loan is considered impaired.  Loans that are deemed to be impaired are valued in accordance with guidance related to receivables.  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows. 

When the fair value of collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as Level 2.  If the fair value of the loan is based on criteria other than observable market prices or current appraised value, the loan is recorded as Level 3.

Other Real Estate Owned

Foreclosed assets are adjusted to fair value upon transfer of the loans to foreclosed assets.  Foreclosed assets are carried at the lower of the carrying value or fair value.  Once management’s intentions change regarding the utilization of its own property, that property is transferred to other real estate owned at fair value.  Fair value is based upon independent observable market prices or appraised values of the collateral, which the Company considers to be Level 2 inputs.  The Company may, from time to time, revise its evaluation of the fair value of a property and provide an allowance based on subjective criteria such as declines in assessed value, which the Company considers to be Level 3 inputs.

Other Financial Assets

Other financial assets are recorded at fair value on a recurring basis.  Fair value is based on quoted market prices which are considered to be Level 2 inputs.

General

The Company has no liabilities carried at fair value or measured at fair value on a recurring or nonrecurring basis.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets Recorded at Fair Value on a Recurring Basis

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2012

 

Total

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Investment in securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury notes

$

2,031 

 

$

 -

 

$

2,031 

 

$

 -

U.S. government sponsored enterprises

 

24,157