UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
X
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the Quarterly Period Ended March 31, 2010
OR
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For
the Transition Period from _________to_________
Commission File
Number:
000-53249
AB&T
FINANCIAL CORPORATION
(Exact
name of registrant as specified in its charter)
North
Carolina
|
26-2588442
|
(State
or other jurisdiction
|
(I.R.S.
Employer
|
of
incorporation or organization)
|
Identification
No.)
|
292
W. Main Avenue
Gastonia,
North Carolina 28052
(Address
of principal executive offices and zip code)
(704)
867-5828
(Registrant's
telephone number, including area code)
NA
(Former
name, former address and former fiscal year, if changed since last
report)
________________________________________________
Indicate by check mark
whether the registrant (1) has
filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
YES
X
NO
Indicate by
check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). YES___
NO____
Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act
.
Large
accelerated
filer___
Accelerated
filer_
___
Non-accelerated filer___
(Do not check if a smaller reporting
company) Smaller
reporting company
X
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act)
YES ___ NO
X
APPLICABLE
ONLY TO CORPORATE ISSUERS:
State the
number of shares outstanding of each of the issuer's classes of common stock as
of the latest practicable date.
2,668,205
shares of common stock, $1.00 par value, as of May 14, 2010
INDEX
PART
I – FINANCIAL INFORMATION
|
Page
No.
|
|
|
Item
1. Financial Statements (Unaudited)
|
|
|
|
Consolidated
Balance Sheets – March 31, 2010 and December 31,
2009
|
3
|
|
|
Consolidated
Statements of Operations – Three months ended March 31, 2010 and
2009
|
4
|
|
|
Consolidated
Statements of Changes in Shareholders’ Equity and
Comprehensive
|
|
Income
(Loss) - Three months ended March 31, 2010 and
2009
|
5
|
|
|
Consolidated
Statements of Cash Flows – Three months ended March 31, 2010 and
2009
|
6
|
|
|
Notes to
Consolidated Financial Statements
|
7-12
|
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
13-17
|
|
|
Item
4T. Controls and Procedures
|
18
|
|
|
PART
II – OTHER INFORMATION
|
|
|
|
Item
6. Exhibits
|
18
|
PART
I - FINANCIAL INFORMATION
Item
1 - Financial Statements
AB&T FINANCIAL CORPORATION
Consolidated
Balance Sheets
|
|
March
31,
2010
|
|
|
December
31,
2009
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
|
Cash and due from
banks
|
|
$
|
3,091,388
|
|
|
$
|
4,701,944
|
|
Federal funds
sold
|
|
|
9,258,877
|
|
|
|
16,729,661
|
|
Time deposits with
other banks
|
|
|
1,037,518
|
|
|
|
1,296,527
|
|
Total cash and cash
equivalents
|
|
|
13,387,783
|
|
|
|
22,728,132
|
|
Securities available
for sale at fair value
|
|
|
12,521,238
|
|
|
|
5,031,414
|
|
Nonmarketable equity
securities
|
|
|
1,413,180
|
|
|
|
1,413,180
|
|
Total
investments
|
|
|
14,971,936
|
|
|
|
6,444,594
|
|
Loans
receivable
|
|
|
137,640,105
|
|
|
|
139,974,913
|
|
Less allowance for
loan losses
|
|
|
(2,521,012
|
)
|
|
|
(2,408,990
|
)
|
Loans,
net
|
|
|
135,119,093
|
|
|
|
137,565,923
|
|
Premises, furniture
and equipment, net
|
|
|
3,938,115
|
|
|
|
3,952,877
|
|
Accrued interest
receivable
|
|
|
553,048
|
|
|
|
566,318
|
|
Deferred tax
asset
|
|
|
2,649,540
|
|
|
|
1,937,482
|
|
Other real estate
owned
|
|
|
3,135,185
|
|
|
|
2,050,272
|
|
Other
assets
|
|
|
697,208
|
|
|
|
1,485,400
|
|
Total
assets
|
|
$
|
173,414,390
|
|
|
$
|
176,730,998
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
Noninterest-bearing
transaction accounts
|
|
$
|
6,248,528
|
|
|
$
|
5,626,494
|
|
Interest-bearing
transaction accounts
|
|
|
5,452,464
|
|
|
|
4,759,708
|
|
Savings and money
market
|
|
|
28,205,770
|
|
|
|
24,279,357
|
|
Time deposits
$100,000 and over
|
|
|
7,460,145
|
|
|
|
6,934,915
|
|
Other time
deposits
|
|
|
92,803,092
|
|
|
|
102,069,318
|
|
Total
deposits
|
|
|
140,169,999
|
|
|
|
143,669,792
|
|
Borrowed
funds
|
|
|
21,374
|
|
|
|
-
|
|
FHLB
advances
|
|
|
8,000,000
|
|
|
|
8,000,000
|
|
Accrued interest
payable
|
|
|
70,379
|
|
|
|
55,169
|
|
Other
liabilities
|
|
|
156,245
|
|
|
|
112,331
|
|
Total
liabilities
|
|
|
148,417,997
|
|
|
|
151,837,292
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity
|
|
|
|
|
|
|
|
|
Preferred stock, no
par value, 1,000,000 shares authorized, issued
and
outstanding
– 3,500 at March 31, 2010 and at December 31, 2009
|
|
|
3,391,986
|
|
|
|
3,385,908
|
|
Common stock, $1.00
par value; 11,000,000 shares authorized, issued
and outstanding
– 2,678,205 at March 31, 2010 and December 31, 2009
|
|
|
2,678,205
|
|
|
|
2,678,205
|
|
Treasury stock, at
cost (10,000 shares at March 31, 2010 and December 31,
2009)
|
|
|
(55,600
|
)
|
|
|
(55,600
|
)
|
Warrants
|
|
|
136,850
|
|
|
|
136,850
|
|
Capital
surplus
|
|
|
21,757,432
|
|
|
|
21,734,686
|
|
Retained
deficit
|
|
|
(2,991,146
|
)
|
|
|
(3,066,700
|
)
|
Accumulated other
comprehensive income
|
|
|
78,666
|
|
|
|
80,357
|
|
Total shareholders’
equity
|
|
|
24,996,393
|
|
|
|
24,893,706
|
|
Total
liabilities and shareholders’ equity
|
|
$
|
173,414,390
|
|
|
$
|
176,730,998
|
|
See
notes to consolidated financial
statements
AB&T
FINANCIAL CORPORATION
Consolidated
Statements of Operations
(Unaudited)
|
|
For
the three months ended
March
31,
|
|
|
|
2010
|
|
|
2009
|
|
Interest
income:
|
|
|
|
|
|
|
Loans, including
fees
|
|
$
|
1,689,925
|
|
|
$
|
1,644,474
|
|
Investment
securities, taxable
|
|
|
63,302
|
|
|
|
61,962
|
|
FHLB, interest and
dividends
|
|
|
931
|
|
|
|
-
|
|
Federal funds
sold
|
|
|
10,941
|
|
|
|
3,663
|
|
Time deposits with
other banks
|
|
|
3,683
|
|
|
|
19,167
|
|
Total
|
|
|
1,768,782
|
|
|
|
1,729,266
|
|
Interest
expense:
|
|
|
|
|
|
|
|
|
Time deposits
$100,000 and over
|
|
|
41,971
|
|
|
|
624,574
|
|
Other
deposits
|
|
|
446,634
|
|
|
|
158,449
|
|
Other interest
expense
|
|
|
76,407
|
|
|
|
200,827
|
|
Total
|
|
|
565,012
|
|
|
|
983,850
|
|
Net
interest income
|
|
|
1,203,770
|
|
|
|
745,416
|
|
Provision for loan
losses
|
|
|
36,528
|
|
|
|
341,314
|
|
Net
interest income after provision
|
|
|
|
|
|
|
|
|
for loan
losses
|
|
|
1,167,242
|
|
|
|
404,102
|
|
Other
operating income:
|
|
|
|
|
|
|
|
|
Service charges on
deposit accounts
|
|
|
89,425
|
|
|
|
82,872
|
|
Residential mortgage
application fees
|
|
|
-
|
|
|
|
12,405
|
|
Rental
income
|
|
|
750
|
|
|
|
900
|
|
Other service
charges, commission and fees
|
|
|
10,449
|
|
|
|
13,003
|
|
Total
|
|
|
100,624
|
|
|
|
109,180
|
|
Other
operating expenses:
|
|
|
|
|
|
|
|
|
Salaries and
employee benefits
|
|
|
557,418
|
|
|
|
595,942
|
|
Occupancy
expense
|
|
|
46,539
|
|
|
|
47,351
|
|
Furniture and
equipment expense
|
|
|
42,718
|
|
|
|
51,606
|
|
Loss on sale of
other real estate
|
|
|
448
|
|
|
|
-
|
|
Other operating
expenses
|
|
|
486,522
|
|
|
|
341,459
|
|
Total
|
|
|
1,133,645
|
|
|
|
1,036,358
|
|
Income
(loss) before income taxes
|
|
|
134,221
|
|
|
|
(523,076
|
)
|
Income
tax expense (benefit)
|
|
|
51,982
|
|
|
|
(200,598
|
)
|
Net
income (loss)
|
|
$
|
82,239
|
|
|
$
|
(322,478
|
)
|
Accretion
of preferred stock to redemption value
|
|
|
6,078
|
|
|
|
4,524
|
|
Preferred
stock dividends
|
|
|
43,750
|
|
|
|
43,750
|
|
Net
income (loss) available to
|
|
|
|
|
|
|
|
|
common
shareholders
|
|
$
|
32,411
|
|
|
$
|
(370,752
|
)
|
Income
(loss) per common share
|
|
|
|
|
|
|
|
|
Basic
income (loss) per common share
|
|
$
|
0.01
|
|
|
$
|
(0.14
|
)
|
Diluted
income (loss) per common share
|
|
$
|
0.01
|
|
|
$
|
(0.14
|
)
|
See
notes to consolidated financial statements
AB&T
FINANCIAL CORPORATION
Consolidated
Statements of Changes in Shareholders' Equity and Comprehensive Income
(Loss)
For
the three months ended March 31, 2010 and 2010
(dollars
in thousands except for share data)
(Unaudited)
|
Common
Stock
|
Preferred
Stock
|
|
|
|
Accumu-
lated
Other
Compre-
hensive
|
Retained
|
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Treasury
Stock
|
Warrants
|
Capital
Surplus
|
Income
(loss)
|
Earnings
(Deficit)
|
Total
|
Balance,
December
31, 2008
|
2,678,205
|
$
2,678
|
-
|
$
-
|
$
-
|
$
-
|
$
21,607
|
$
66
|
$
(157)
|
$
24,194
|
Net
loss
|
|
|
|
|
|
|
|
|
(322)
|
(322)
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive
income,
net of tax
|
|
|
|
|
|
|
|
24
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
(298)
|
Issuance
of
preferred
stock
|
|
|
3,500
|
3,363
|
|
|
|
|
|
3,363
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common
stock
warrants
|
|
|
|
|
|
137
|
|
|
|
137
|
|
|
|
|
|
|
|
|
|
|
|
Accretion
of
preferred
stock to
redemption
value
|
|
|
|
5
|
|
|
|
|
(5)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Dividends,
preferred
|
|
|
|
|
|
|
(11)
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of Treasury
stock
(10,000 shares)
|
|
|
|
|
(56)
|
|
|
|
|
(56)
|
Stock-based
employee compensation
|
|
|
|
|
|
|
66
|
|
|
66
|
Balance
|
|
|
|
|
|
|
|
|
|
|
March
31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December
31, 2009
|
2,678,205
|
$
2,678
|
3,500
|
$
3,386
|
$
(56)
|
$
137
|
$
21,734
|
$
80
|
$
(3,067)
|
$
24,893
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
82
|
82
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive
loss,
net of tax
|
|
|
|
|
|
|
|
(1)
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
Accretion
of
preferred
stock to
redemption
value
|
|
|
|
6
|
|
|
|
|
(6)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Dividends,
preferred
|
|
|
|
|
|
|
(44)
|
|
|
(44)
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based employee
compensation expense
|
|
|
|
|
|
|
67
|
|
|
67
|
Balance
|
|
|
|
|
|
|
|
|
|
|
March
31, 2010
|
|
|
|
|
|
|
|
|
|
|
See
notes to consolidated financial statements
AB&T
FINANCIAL CORPORATION
Consolidated
Statements of Cash Flows
For
the three months ended March 31, 2010 and 2009
(Unaudited)
|
|
For
the three months
ended
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
82,239
|
|
|
$
|
(322,478
|
)
|
Adjustments to
reconcile net income (loss) to net
cash
provided by operating activities
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
|
36,528
|
|
|
|
341,314
|
|
Loss on sale of
other real estate
|
|
|
448
|
|
|
|
-
|
|
Depreciation and
amortization expense
|
|
|
41,923
|
|
|
|
54,431
|
|
Discount accretion
and premium amortization
|
|
|
1,471
|
|
|
|
110,063
|
|
Deferred income tax
benefit
|
|
|
(1,079
|
)
|
|
|
(216,280
|
)
|
Decrease in interest
receivable
|
|
|
13,270
|
|
|
|
35,110
|
|
Increase in interest
payable
|
|
|
15,210
|
|
|
|
22,214
|
|
Decrease in other
assets
|
|
|
78,292
|
|
|
|
10,391
|
|
Increase in other
liabilities
|
|
|
64,681
|
|
|
|
91,150
|
|
Stock based compensation expense
|
|
|
66,496
|
|
|
|
66,371
|
|
Net cash provided by
operating activities
|
|
|
399,479
|
|
|
|
192,286
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of
securities available for sale
|
|
|
(7,536,998
|
)
|
|
|
-
|
|
Purchase of
nonmarketable equity securities
|
|
|
-
|
|
|
|
(41,900
|
)
|
Redemption
(purchase) of certificates of deposit from other
banks
|
|
|
259,009
|
|
|
|
(11,449
|
)
|
Calls and maturities
of securities available for sale
|
|
|
42,933
|
|
|
|
-
|
|
Net decrease
(increase) in loans receivable
|
|
|
1,269,635
|
|
|
|
(161,901
|
)
|
Proceeds from sale
of other real estate
|
|
|
55,306
|
|
|
|
370,246
|
|
Purchases of
premises, furniture, and equipment
|
|
|
(27,161
|
)
|
|
|
(2,976
|
)
|
Net cash provided
(used) by investing activities
|
|
|
(5,936,276
|
)
|
|
|
152,020
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in demand deposits, interest-
bearing
transaction accounts and savings accounts
|
|
|
5,241,203
|
|
|
|
(1,262,834
|
)
|
Net decrease in
certificates of deposit and
other time
deposits
|
|
|
(8,740,996
|
)
|
|
|
(1,458,467
|
)
|
Net decrease in
borrowed funds
|
|
|
-
|
|
|
|
(1,066,883
|
)
|
Proceeds from
issuance of preferred stock, net
|
|
|
-
|
|
|
|
3,363,150
|
|
Dividends
paid
|
|
|
(43,750
|
)
|
|
|
(10,694
|
)
|
Purchase of treasury
stock
|
|
|
-
|
|
|
|
(55,600
|
)
|
Proceeds from
issuance of stock warrants
|
|
|
-
|
|
|
|
136,850
|
|
Net cash used by
financing activities
|
|
|
(3,543,543
|
)
|
|
|
(354,478
|
)
|
|
|
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents
|
|
$
|
(9,081,340
|
)
|
|
$
|
(10,172
|
)
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
|
$
|
22,728,132
|
|
|
$
|
17,168,629
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
|
$
|
13,387,783
|
|
|
$
|
17,158,457
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
Transfer
of loans to real estate acquired in settlement of loans
|
|
$
|
1,140,667
|
|
|
$
|
1,266,727
|
|
Interest
paid
|
|
$
|
549,802
|
|
|
$
|
3,298,739
|
|
Taxes
paid
|
|
$
|
-
|
|
|
$
|
-
|
|
See
notes to consolidated financial statements
AB&T
FINANCIAL CORPORATION
Notes
to Consolidated Financial Statements
(Unaudited)
Note
1 – Organization
AB&T
Financial Corporation (the “Company”), was incorporated under the laws of the
State of North Carolina on June 25, 2007. On May 14, 2008, the Company became
the sole owner of all the shares of the capital stock of Alliance Bank &
Trust Company (the “Bank”). Alliance Bank & Trust Company is a
state-chartered bank which was organized and incorporated under the laws of the
State of North Carolina in September 2004. The Bank is not a member of the
Federal Reserve System. The Bank commenced operations on September 8,
2004.
The Bank
is headquartered in Gastonia, North Carolina and currently conducts business in
two North Carolina counties through four full service branch offices. The
principal business activity of the Bank is to provide commercial banking
services to domestic markets, principally in Gaston and Cleveland counties. As a
state-chartered bank, the Bank is subject to regulation by the North Carolina
Office of the Commissioner of Banks and the Federal Deposit Insurance
Corporation. The Company is also regulated, supervised and examined by the
Federal Reserve. The consolidated financial statements include the accounts of
the parent company and its wholly-owned subsidiary after elimination of all
significant intercompany balances and transactions.
Note
2 – Basis of Presentation
The
accompanying financial statements have been prepared in accordance with the
requirements for interim financial statements and, accordingly, they are
consolidated to omit disclosures, which would substantially duplicate those
contained in the Company’s 2009 Annual Report on Form 10-K. The
financial statements as of March 31, 2010 and for the interim periods ended
March 31, 2010 and 2009 are unaudited and, in the opinion of management, include
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation. The financial information as of December 31,
2009 has been derived from the audited financial statements as of that
date. For further information, refer to the financial statements and
the notes included in the Company’s 2009 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 30, 2010.
The
preparation of the consolidated financial statements are in conformity with
accounting principles generally accepted in the United States of America (GAAP)
which requires management to make estimates and assumptions. These
estimates and assumptions affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the
financial statements. In addition, they affect the reported amounts
of income and expense during the reporting period. Actual results
could differ from these estimates and assumptions.
In
preparing these financial statements, the Company has evaluated events and
transactions for potential recognition or disclosure through the date the
financial statements were issued.
Note
3 – Recently Issued Accounting Pronouncements
In
January 2010, fair value guidance was amended to require disclosures for
significant amounts transferred in and out of Levels 1 and 2 and the reasons for
such transfers and to require that gross amounts of purchases, sales, issuances
and settlements be provided in the Level 3 reconciliation. The new
disclosures are effective for the Company for the current quarter and have been
reflected in the Fair Value footnote.
Guidance
related to subsequent events was amended in February 2010 to remove the
requirement for an SEC filer to disclose the date through which subsequent
events were evaluated. The amendments were effective upon issuance
and had no significant impact on the Company’s financial
statements.
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.
AB&T
FINANCIAL CORPORATION
Notes
to Consolidated Financial Statements
(Unaudited)
Note
4 – Comprehensive Income
Comprehensive
income includes net income and other comprehensive income, which is defined as
nonowner related transactions in equity. The following table sets
forth the amounts of other comprehensive income included in equity along with
the related tax effect for the three month periods ended March 31, 2010 and
2009:
|
|
Three
months ended
March
31,
|
|
|
|
2010
|
|
|
2009
|
|
Unrealized
gains (losses) on securities available for sale
|
|
$
|
(2,772
|
)
|
|
$
|
40,198
|
|
Reclassification
of (gains) losses recognized in net income
|
|
|
-
|
|
|
|
-
|
|
Income
tax expense (benefit)
|
|
|
1,078
|
|
|
|
(15,657
|
)
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
$
|
(1,694
|
)
|
|
$
|
24,541
|
|
Note
5 – Income (loss) per
common
share
Basic
income per common share is computed by dividing net income available to common
shareholders by the weighted-average number of common shares
outstanding. Diluted income per common share is computed by dividing
net income available to common shareholders by the weighted-average number of
common shares outstanding and dilutive common share equivalents using the
treasury stock method.
Three
months ended March 31, 2010
|
|
Income
(Numerator)
|
|
|
Shares
(Denominator)
|
|
|
Per
Share
Amount
|
|
Basic
loss per share
|
|
|
|
|
|
|
|
|
|
Income available to
common shareholders
|
|
$
|
32,411
|
|
|
|
2,668,205
|
|
|
$
|
0.01
|
|
Effect
of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Dilutive
income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to
common shareholders
plus assumed
conversions
|
|
$
|
32,411
|
|
|
|
2,668,205
|
|
|
$
|
0.01
|
|
Three months ended March 31, 2009
|
|
Income
(Numerator)
|
|
|
Shares
(Denominator)
|
|
|
Per
Share
Amount
|
|
Basic
loss per share
|
|
|
|
|
|
|
|
|
|
Loss available to
common shareholders
|
|
$
|
(370,752
|
)
|
|
|
2,668,205
|
|
|
$
|
(0.14
|
)
|
Effect
of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Dilutive
loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss available to
common shareholders
plus assumed
conversions
|
|
$
|
(370,752
|
)
|
|
|
2,668,205
|
|
|
$
|
(0.14
|
)
|
AB&T
FINANCIAL CORPORATION
Notes
to Consolidated Financial Statements
Note
6 –
Fair
Value Measurements
Effective
January 1, 2008, the Company adopted ASC Topic 820, Fair Value Measurements and
Disclosures, which provides a framework for measuring and disclosing fair value
under generally accepted accounting principles. ASC Topic 820 requires
disclosures about the fair value of assets and liabilities recognized in the
balance sheet in periods subsequent to initial recognition, whether the
measurements are made on a recurring basis (for example, available for sale
investment securities) or on a nonrecurring basis (for example, impaired
loans).
ASC Topic
820 defines fair value as the exchange price that would be received for an asset
or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. ASC Topic 820 also establishes a
fair value hierarchy which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value.
The standard describes three levels of inputs that may be used to measure fair
value:
Level
1
|
Quoted
prices in active markets for identical assets or liabilities. Level 1
assets and liabilities include debt and equity securities and derivative
contracts that are traded in an active exchange market, as well as U.S.
Treasuries, other securities that are highly liquid and are actively
traded in over-the-counter markets and money market funds.
|
Level
2
|
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, mortgage-backed
securities, municipal bond, corporate debt securities, 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. This category generally includes
certain derivative contracts and impaired loans.
|
Level
3
|
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. For example,
this category generally includes certain private equity investments,
retained residual interests in securitizations, residential mortgage
servicing rights, and highly-structured or long-term derivative
contracts.
|
Assets
measured at fair value on a recurring basis are as follows as of March 31,
2010:
|
|
Quoted
market price in active markets
(Level
1)
|
|
|
Significant
other observable inputs
(Level
2)
|
|
|
Significant
unobservable inputs
(Level
3)
|
|
|
|
|
|
|
|
|
|
|
|
Available
for sale investments
|
|
$
|
-
|
|
|
$
|
12,521,238
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
12,521,238
|
|
|
$
|
-
|
|
Assets
measured at fair value on a recurring basis are as follows as of December 31,
2009:
|
|
Quoted
market price in active markets
(Level
1)
|
|
|
Significant
other observable inputs
(Level
2)
|
|
|
Significant
unobservable inputs
(Level
3)
|
|
|
|
|
|
|
|
|
|
|
|
Available
for sale investments
|
|
$
|
-
|
|
|
$
|
5,031,414
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
5,031,414
|
|
|
$
|
-
|
|
AB&T
FINANCIAL CORPORATION
Notes
to Consolidated Financial Statements
(Unaudited)
Note 6 – Fair Value Measurements -
continued
The
Company had no liabilities carried at fair value or measured at fair value on a
recurring basis at March 31, 2010 or December 31, 2009.
Assets
measured at fair value on a non-recurring basis are as follows as of March 31,
2010:
|
|
Quoted
market price in active markets
(Level
1)
|
|
|
Significant
other observable inputs
(Level
2)
|
|
|
Significant
unobservable inputs
(Level
3)
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
loans
|
|
$
|
-
|
|
|
$
|
6,249,354
|
|
|
$
|
-
|
|
Real
estate acquired through foreclosure
|
|
|
|
|
|
|
3,135,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
9,384,539
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
measured at fair value on a non-recurring basis are as follows as of December
31, 2009:
|
|
Quoted
market price in active markets
(Level
1)
|
|
|
Significant
other observable inputs
(Level
2)
|
|
|
Significant
unobservable inputs
(Level
3)
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
loans
|
|
$
|
-
|
|
|
$
|
6,066,187
|
|
|
$
|
-
|
|
Real
estate acquired through foreclosure
|
|
|
|
|
|
|
2,050,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
8,116,459
|
|
|
$
|
-
|
|
The
Company had no liabilities carried at fair value or measured at fair value on a
non-recurring basis at March 31, 2010 or December 31, 2009.
The
Company has no assets or liabilities whose fair values are measured using Level
3 inputs.
The
following table summarizes fair value estimates as of March 31, 2010 and
December 31, 2009 for financial instruments, as defined by ASC Topic 825,
excluding short-term financial assets and liabilities, for which carrying
amounts approximate fair value, and financial instruments recorded at fair value
on a recurring basis at March 31, 2010 and December 31, 2009.
In
accordance with ASC Topic 825, the Company has not included assets and
liabilities that are not financial instruments in its disclosure, such as the
value of the long-term relationships with the Company’s deposit, net premises
and equipment, net core deposit intangibles, deferred taxes and other assets and
liabilities. Additionally, the amounts in the table have not been updated since
the date indicated; therefore the valuations may have changed since that point
in time. For these reasons, the total of the fair value calculations presented
does not represent, and should not be construed to represent, the underlying
value of the Company.
The
following disclosures represent financial instruments in which the ending
balance at March 31, 2010, and December 31, 2009 are not carried at fair value
in its entirety on the Company’s Consolidated Balance Sheet.
Short-term
Financial Instruments
- The carrying value of short-term financial
instruments, including cash and cash equivalents, time deposits placed, federal
funds purchased, repurchase agreements, and other short-term investments and
borrowings, approximates the fair value of these instruments. These financial
instruments generally expose the Company to limited credit risk and have no
stated maturities or have short-term maturities and carry interest rates that
approximate market.
AB&T
FINANCIAL CORPORATION
Notes
to Consolidated Financial Statements
(Unaudited)
Note 6 – Fair Value Measurements -
continued
Loans
-
Fair values were generally determined by discounting both principal and
interest cash flows expected to be collected using an observable discount rate
for similar instruments with adjustments that the Company believes a market
participant would consider in determining fair value. The Company estimates the
cash flows expected to be collected using internal credit risk, interest rate
and prepayment risk models that incorporate the Company’s best estimate of
current key assumptions, such as default rates, loss severity and prepayment
speeds for the life of the loan.
Long-Term
Debt
-
The Company uses quoted market prices for its long-term debt when
available. When quoted market prices are not available, fair value is estimated
based on current market interest rates and credit spreads for debt with similar
maturities.
The
carrying and fair values of certain financial instruments at March 31, 2010 and
December 31, 2009 were as follows:
|
|
March
31, 2010
|
|
|
December
31, 2009
|
|
|
|
Carrying
|
|
|
Estimated
|
|
|
Carrying
|
|
|
Estimated
|
|
|
|
Amount
|
|
|
Fair
Value
|
|
|
Amount
|
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable,
net
|
|
$
|
133,560,000
|
|
|
$
|
137,565,923
|
|
|
$
|
137,205,000
|
|
|
$
|
135,119,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
deposits
|
|
$
|
135,462,000
|
|
|
$
|
143,669,792
|
|
|
$
|
139,206,000
|
|
|
$
|
140,169,999
|
|
FHLB
advances
|
|
$
|
8,000,000
|
|
|
$
|
8,248,000
|
|
|
$
|
8,000,000
|
|
|
$
|
8,004,000
|
|
Note
7 – Investment Securities
The
amortized cost and estimated fair values of securities available for sale
were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed
securities
|
|
$
|
10,348,629
|
|
|
$
|
150,052
|
|
|
$
|
15,175
|
|
|
$
|
10,483,506
|
|
Agencies
|
|
|
1,041,282
|
|
|
|
3,849
|
|
|
|
-
|
|
|
|
1,045,132
|
|
Municipals
|
|
|
1,002,471
|
|
|
|
-
|
|
|
|
9,871
|
|
|
|
992,600
|
|
Total
|
|
$
|
12,392,382
|
|
|
$
|
153,901
|
|
|
$
|
25,046
|
|
|
$
|
12,521,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed
securities
|
|
$
|
3,857,417
|
|
|
$
|
155,987
|
|
|
$
|
21,581
|
|
|
$
|
3,991,823
|
|
Agencies
|
|
|
1,042,373
|
|
|
|
-
|
|
|
|
2,782
|
|
|
|
1,039,591
|
|
Total
|
|
$
|
4,899,790
|
|
|
$
|
155,987
|
|
|
$
|
24,363
|
|
|
$
|
5,031,414
|
|
AB&T
FINANCIAL CORPORATION
Notes
to Consolidated Financial Statements
(Unaudited)
Note 7 – Investment Securities -
continued
The
following is a summary of maturities of securities available for sale as of
March 31, 2010. The amortized cost and estimated fair values are
based on the contractual maturity dates. Actual maturities may differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without penalty.
|
|
Securities
Available-for-Sale
|
|
|
|
|
|
|
|
|
Due
in one year or less
|
|
$
|
892,666
|
|
|
$
|
922,971
|
|
Due
after one year but within five years
|
|
|
1,446,288
|
|
|
|
1,520,688
|
|
Due
after five years but within ten years
|
|
|
7,725,461
|
|
|
|
7,759,465
|
|
Due
after ten years
|
|
|
2,327,969
|
|
|
|
2,318,113
|
|
|
|
$
|
12,392,384
|
|
|
$
|
12,521,238
|
|
The
following table shows gross unrealized losses and fair value, aggregated by
investment category, and length of time that individual securities have been in
a continuous unrealized loss position at March 31, 2010 and December 31,
2009.
|
|
Less
than
twelve
months
|
|
|
Twelve
months
or
more
|
|
|
Total
|
|
|
|
Fair
Value
|
|
|
Unrealized
losses
|
|
|
Fair
Value
|
|
|
Unrealized
losses
|
|
|
Fair
Value
|
|
|
Unrealized
losses
|
|
March
31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed
securities
|
|
$
|
2,243,082
|
|
|
$
|
15,175
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,243,082
|
|
|
$
|
15,175
|
|
Agencies
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Municipals
|
|
|
992,600
|
|
|
|
9,871
|
|
|
|
-
|
|
|
|
-
|
|
|
|
992,600
|
|
|
|
9,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,269,387
|
|
|
$
|
25,046
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,269,387
|
|
|
$
|
25,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
than
twelve
months
|
|
|
Twelve
months
or
more
|
|
|
Total
|
|
|
|
Fair
Value
|
|
|
Unrealized
losses
|
|
|
Fair
Value
|
|
|
Unrealized
losses
|
|
|
Fair
Value
|
|
|
Unrealized
losses
|
|
December
31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed
securities
|
|
$
|
1,229,796
|
|
|
$
|
21,581
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,229,796
|
|
|
$
|
21,581
|
|
Agencies
|
|
|
1,039,591
|
|
|
|
2,782
|
|
|
|
-
|
|
|
|
|
|
|
|
1,039,591
|
|
|
|
2,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,269,387
|
|
|
$
|
24,363
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,269,387
|
|
|
$
|
24,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
8 – United States Department of the Treasury Capital Purchase
Program
On
January 23, 2009, the Company entered into a Letter Agreement, with the United
States Department of the Treasury (the “Treasury”), pursuant to which the
Company issued and sold to the Treasury (1) 3,500 shares of the Company’s Fixed
Rate Cumulative Perpetual Preferred Stock, Series A (the “Preferred Stock”) and
(2) a warrant to purchase 80,153 shares of the Company’s common stock, $1.00 par
value per share, for an aggregate purchase price of $3,500,000 in
cash. The Preferred Stock qualifies as Tier 1 capital and pays
cumulative dividends at a rate of 5% per annum for the first five years, and 9%
per annum thereafter. The Company may redeem the Preferred Stock
subject to consultation with the appropriate federal banking
agency. The Preferred Stock is generally nonvoting. The
warrant has a 10-year term and is immediately exercisable upon its issuance,
with an initial per share exercise price of $6.55. The warrant has
anti-dilution protections, registration rights, and certain other protections
for the holder. Pursuant to the Purchase Agreement, the Treasury has
agreed not to exercise voting power with respect to any shares of common stock
issued upon exercise of the Warrant.
Item
2 – Management's Discussion and Analysis of Financial Condition and Results of
Operations
The
following is a discussion of the Company’s financial condition as of March 31,
2010 compared to December 31, 2009, and the results of operations for the three
month periods ended March 31, 2010 and 2009. This discussion should
be read in conjunction with the Company’s consolidated financial statements and
accompanying notes appearing in this report and in conjunction with the
financial statements and related notes and disclosures in the Company’s 2009
Annual Report on Form 10-K. This report contains “forward-looking statements”
relating to, without limitation, future economic performance, plans and
objectives of management for future operations, and projections of revenues and
other financial items that are based on the beliefs of the Company's management,
as well as assumptions made by and information currently available to the
Company’s management. The words “expect,” “estimate,” “anticipate,”
"plan," and “believe,” as well as similar expressions, are intended to identify
forward-looking statements. The Company’s actual results may differ
materially from the results discussed in the forward-looking statements, and the
Company’s operating performance each quarter is subject to various risks and
uncertainties that are discussed in detail in the Company’s filings with the
Securities and Exchange Commission.
Results
of Operations
Net
Interest Income
For the
three months ended March 31, 2010, net interest income was $1,203,770 as
compared to $745,416 for the same period in 2009. The average rate
paid on interest-bearing liabilities for the three months ended March 31, 2010
and 2009 was 1.56% and 2.71%, respectively. The average rate realized
on interest-earning assets was 4.43% and 4.49% for the three months ended March
31, 2010 and 2009, respectively. This increase in the net interest
income was primarily due to the reduction in interest rates paid by the Bank as
liabilities repriced over the remainder of 2009 and the first quarter of
2010.
The net
interest spread was 2.87% and 1.78% for the three month periods ended March 31,
2010 and 2009, respectively.
Provision
and Allowance for Loan Losses
The
provision for loan losses is the charge to operating earnings that in
management’s judgment is necessary to maintain the allowance for loan losses at
an adequate level in relation to the risk of future losses inherent in the loan
portfolio. For the three month periods ended March 31, 2010 and 2009
the provision was $36,528 and $341,314, respectively. On March 31,
2010, there were $7,424,481 in loans in nonaccrual status. On March
31, 2009, there were $1,166,791 in loans in nonaccrual status. Based
on present information, management believes the allowance for loan losses is
adequate at March 31, 2010 to meet presently known and inherent risks in the
loan portfolio. The allowance for loan losses is 1.83% and 1.26% of
total loans at March 31, 2010 and 2009, respectively. There are risks
inherent in making all loans, including risks with respect to the period of time
over which loans may be repaid, risks resulting from changes in economic and
industry conditions, risks inherent in dealing with individual borrowers, and,
in the case of a collateralized loan, risks resulting from uncertainties about
the future value of the collateral. The Company maintains an
allowance for loan losses based on, among other things, historical experience,
including management’s experience at other institutions, an evaluation of
economic conditions, and regular reviews of delinquencies and loan portfolio
quality. Management’s judgment about the adequacy of the allowance is based upon
a number of assumptions about future events, which it believes to be reasonable,
but which may not prove to be accurate. Thus, there is a risk that
charge-offs in future periods could exceed the allowance for loan losses or that
substantial additional increases in the allowance for loan losses could be
required. Additions to the allowance for loan losses would result in
a decrease in the Company’s net income and, possibly, a reduction of its
capital.
Noninterest
Income
Total
noninterest income for the three months ended March 31, 2010 was $100,624 or
7.84% less than total noninterest income for the same period last
year. This decrease was due to the decrease in residential mortgage
application fees. There were no such fees for the three month period
ended March 31, 2010 and $12,405 for the three month period ended March 31,
2009. The largest component of noninterest income for the three month
period ended March 31, 2010 was service charges on deposit accounts, which
totaled $89,425 or 7.91% higher than those for the three month period ended
March 31, 2009. This increase was driven largely by the Company’s
expanded efforts in the acquisition of retail demand deposit
accounts. Rental income for the three months ended March 31, 2010 was
$750 or 16.67% less than the three month period ended March 31,
2009.
Item
2 – Management's Discussion and Analysis of Financial Condition and Results of
Operations
-
continued
Noninterest
Expense
Total
noninterest expense for the three months ended March 31, 2010 was $1,133,645 or
9.39% more than total noninterest expense for the same period last year. The
primary component of noninterest expense is salaries and benefits, which were
$557,418 and $595,942 for the three months ended March 31, 2010 and 2009,
respectively. Salaries and benefits decreased due to the decrease in the number
of active employees and the reduction in the expense of accrued bonuses and
other benefits. Other operating expenses were $486,522 and $341,459
for the three months ended March 31, 2010 and 2009, respectively. The increase
in other operating expense for the three months ended March 31, 2010 was
primarily the result of effects of the additional deposit insurance assessments
imposed by the FDIC during 2009.
Income
Taxes
For the
three months ended March 31, 2010 and 2009, the effective income tax rate was
38.73% and 38.35%, respectively. The income tax expense was $51,982,
for the three months ended March 31, 2010 compared to an income tax benefit of
$200,598 for the three months ended March 31, 2009.
Net
Income (loss)
The
combination of the above factors resulted in net income of $82,239 for the three
months ended March 31, 2010 compared to net loss of $322,478 for the comparable
period in 2009..
Assets
and Liabilities
During
the first three months of 2010, total assets decreased $3,316,608 or 1.88% when
compared to December 31, 2009. The decrease is primarily due to a
decrease in loans outstanding. In addition, we experienced a decrease
in federal funds sold of $7,470,784, or 44.66% during the three months ended
March 31, 2010. This is primarily a result of investing excess liquidity in
investment securities in order to increase our net interest margin.
Investment
Securities
Investment
securities totaled $14,971,936 as of March 31, 2010 as compared to $6,444,594 at
December 31, 2009. Of this amount, $12,521,238 was designated as
available for sale as of March 31, 2010. The other investments were
nonmarketable equity securities consisting of $1,368,000 in Federal Home Loan
Bank stock and a $45,180 investment in Community Bankers Bank
stock.
Loans
Loans
decreased $2,334,808, or 1.67%, during the period. As shown below,
the largest decrease was in real estate – construction loans which decreased
$3,582,000 or 12.17%, to $25,862,000 at March 31, 2010. Real estate –
mortgage loans increased $688,000, or .73%, to
$95,127,000. Commercial and industrial loans increased $22,000 or
.14% to $15,242,000 at March 31, 2010. Consumer and other loans
increased $537,192 or 61.61%, to $1,409,105. Balances within the major loans
receivable categories as of March 31, 2010 and December 31, 2009 are as
follows:
|
|
March
31,
2010
|
|
|
December
31,
2009
|
|
Real
estate – construction
|
|
$
|
25,862,000
|
|
|
$
|
29,444,000
|
|
Real
estate – mortgage
|
|
|
95,127,000
|
|
|
|
94,439,000
|
|
Commercial
and industrial
|
|
|
15,242,000
|
|
|
|
15,220,000
|
|
Consumer
and other
|
|
|
1,409,105
|
|
|
|
871,913
|
|
Total
gross loans
|
|
$
|
137,640,105
|
|
|
$
|
139,974,913
|
|
Item
2 - Management's Discussion And Analysis of Financial Condition and Results of
Operations
–
continued
Risk
Elements in the Loan Portfolio
Criticized
loans are loans that have potential weaknesses that deserve close attention and
which could, if uncorrected, result in deterioration of the prospects for
repayment of the Company’s credit position at a future
date. Classified loans are loans that are inadequately protected by
the sound worth and paying capacity of the borrower or any collateral and as to
which there is a distinct possibility or probability that we will sustain a loss
if the deficiencies are not corrected. At March 31, 2010 and December
31, 2009, the Company had criticized loans totaling $14,358,027 and $8,742,720,
respectively. At March 31, 2010 and December 31, 2009, the Company
had classified loans totaling $9,268,463 and $9,112,635,
respectively. At March 31, 2010, the Company had $7,424,481 or 5.39%
of total gross loans in nonaccrual status and $77,696 in loans that were 90 days
or more past due and still accruing.
The
following table depicts the activity in the allowance for loan losses for the
three months ended March 31, 2010 and 2009:
|
|
March
31,
2010
|
|
|
March
31,
2009
|
|
Balance,
January 1
|
|
$
|
2,408,990
|
|
|
$
|
1,935,702
|
|
Provision
for loan losses for the period
|
|
|
36,528
|
|
|
|
341,314
|
|
Net
loans (charged-off) recovered during the period
|
|
|
75,494
|
|
|
|
(534,651
|
)
|
Balance, March
31,
|
|
$
|
2,521,012
|
|
|
$
|
1,742,365
|
|
Gross
loans outstanding, March 31,
|
|
$
|
137,640,105
|
|
|
$
|
138,240,108
|
|
Allowance
for loan losses to loans outstanding
|
|
|
1.83
|
%
|
|
|
1.26
|
%
|
Deposits
Total
deposits decreased $3,499,793 or 2.44%, from December 31, 2009 to $140,169,999
at March 31, 2010. Total time deposits decreased $8,740,996, or 8.02%
to $100,263,237 at March 31, 2010. This decrease was due to the
decision of management to decrease the concentration of brokered deposits and
focus on increasing our local market penetration. The decrease in
time deposits was partially offset by increases in interest-bearing and
non-interest bearing transaction accounts which, in total, increased $1,314,790
or 12.66% since December 31, 2009 There was an increase in savings and money
market accounts as well, which increased $3,926,413 or 16.17%, to $28,205,770 at
March 31, 2010. This increase in non time deposit accounts is a
combination of the Bank instituting a revised market pricing strategy to attract
new deposit accounts and implementing a retail focusing on growing the core
deposits of the Bank. Brokered deposits represent a source of fixed
rate funds priced competitively with Federal Home Loan Bank (“FHLB”) but do not
require collateralization like FHLB borrowings.
Balances
within the major deposit categories as of March 31, 2010 and December 31, 2009
are as follows:
|
|
March
31,
2010
|
|
|
December
31,
2009
|
|
Noninterest-bearing
transaction accounts
|
|
$
|
6,248,528
|
|
|
$
|
5,626,494
|
|
Interest-bearing
transaction accounts
|
|
|
5,452,464
|
|
|
|
4,759,708
|
|
Savings
and money market
|
|
|
28,205,770
|
|
|
|
24,279,357
|
|
Time
deposits $100,000 and over
|
|
|
7,460,145
|
|
|
|
6,934,915
|
|
Other
time deposits
|
|
|
92,803,092
|
|
|
|
102,069,318
|
|
Total
deposits
|
|
$
|
140,169,999
|
|
|
$
|
143,669,792
|
|
Item
2 - Management's Discussion And Analysis of Financial Condition and Results of
Operations –
continued
Advances
from Federal Home Loan Bank
The Bank
did not borrow additional funds from the Federal Home Loan Bank of Atlanta
(FHLB) during the first three months of 2010. The advances from the
FHLB total $8,000,000 as of March 31, 2010 and December 31, 2009. The
Bank utilizes the advances to fund loans and general liquidity purposes.
Advances from the Federal Home Loan Bank consisted of the following at March 31,
2010:
Description
|
|
Interest
Rate
|
|
|
Amount
|
|
Convertible
rate advances maturing:
|
|
|
|
|
|
|
September 20,
2012
|
|
|
3.86
|
%
|
|
$
|
8,000,000
|
|
|
|
|
|
|
|
$
|
8,000,000
|
|
Scheduled
principal reductions of Federal Home Loan Bank advances are as
follows:
2010
|
|
$
|
-
|
|
2011
|
|
|
-
|
|
2012
|
|
|
8,000,000
|
|
|
|
$
|
8,000,000
|
|
Liquidity
Liquidity
needs are met by the Company through cash and short-term investments, and
scheduled maturities of loans on the asset side and through pricing policies on
the liability side for interest-bearing deposit accounts. The Company
also has the capacity to pledge certain loans as collateral for additional
borrowings from FHLB during times when the comparable interest rate is favorable
to the interest rate on deposit products. As of March 31, 2010, the
Company’s primary sources of liquidity included cash and equivalents of
$3,091,388, federal funds sold totaling $9,258,877 and securities
available-for-sale totaling $12,521,238, credit availability with the Federal
Home Loan Bank of $14,500,000 and unused lines of credit with correspondent
banks to purchase federal funds totaling $18,500,000 at March 31,
2010.
Capital
Resources
Total
shareholders' equity increased $102,687 to $24,996,393 for the three month
period ended March 31, 2010. This is primarily the result of the net
income for the period of $82,239, and stock based compensation expense of
$66,496.
The
Federal Reserve Board and bank regulatory agencies require bank holding
companies and financial institutions to maintain capital at adequate levels
based on a percentage of assets and off-balance sheet exposures, adjusted for
risk-weights ranging from 0% to 100%. Under the risk-based standard,
capital is classified into two tiers. Tier 1 capital consists of
common shareholders' equity, excluding the unrealized gain (loss) on
available-for-sale securities, minus certain intangible assets. Tier
2 capital consists of the general reserve for loan losses subject to
certain
limitations. An institution's qualifying capital base for purposes of
its risk-based capital ratio consists of the sum of its
Tier
1 and Tier 2 capital. The regulatory minimum requirements are 4% for
Tier 1 and 8% for total risk-based capital.
Banks and
bank holding companies are also required to maintain capital at a minimum level
based on total assets, which is known as the leverage ratio. The
minimum requirement for the leverage ratio is 3%; however all but the highest
rated institutions are required to maintain ratios 100 to 200 basis points above
the minimum. Both the Company and the Bank exceeded their minimum
regulatory capital ratios as of March 31, 2010 as well as the ratios to be
considered "well capitalized."
The
following table summarizes the Company’s risk-based capital at March 31,
2010
Item
2 - Management's Discussion And Analysis of Financial Condition and Results of
Operations
–
continued
Shareholders'
equity
|
|
$
|
24,996,393
|
|
Plus
– unrealized (gain) loss on available-for-sale securities
|
|
|
(78,666
|
)
|
Tier
1 capital
|
|
$
|
24,917,727
|
|
Plus - allowance for
loan losses
(1)
|
|
|
1,707,000
|
|
Total
capital
|
|
$
|
26,624,727
|
|
Risk-weighted
assets
|
|
$
|
136,583,000
|
|
Risk-based
capital ratios:
|
|
|
|
|
Tier 1 capital (to
risk-weighted assets)
|
|
|
18.24
|
%
|
Total capital (to
risk-weighted assets)
|
|
|
19.49
|
%
|
Leverage
ratio
|
|
|
14.16
|
%
|
(1)
Limited to 1.25% of risk-weighted assets
Off-Balance
Sheet Risk
Through
its operations, the Company has made contractual commitments to extend credit in
the ordinary course of its business activities. These commitments are legally
binding agreements to lend money to the Company’s customers at predetermined
interest rates for a specified period of time. At March 31, 2010, the
Company had issued commitments to extend credit of $9,932,270 through various
types of commercial lending arrangements. All of these commitments to
extend credit had variable rates.
The
following table sets forth the length of time until maturity for unused
commitments to extend credit and standby letters of credit at March 31,
2010
|
|
Within
One
Month
|
|
|
After
One
Through
Three
Months
|
|
|
After
Three
Through
Twelve
Months
|
|
|
Greater
Than
One
Year
|
|
|
Total
|
|
Unused
commitments to extend credit
|
|
$
|
265,006
|
|
|
$
|
682,805
|
|
|
$
|
3,483,722
|
|
|
$
|
5,321,042
|
|
|
$
|
9,752,575
|
|
Standby
letters of credit
|
|
|
179,695
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
179,695
|
|
Totals
|
|
$
|
444,701
|
|
|
$
|
682,805
|
|
|
$
|
3,483,722
|
|
|
$
|
5,321,042
|
|
|
$
|
9,932,270
|
|
Based on
historical experience, many of the commitments and letters of credit will expire
unfunded. Accordingly, the amounts shown in the table above do not
necessarily reflect the Company's need for funds in the periods
shown.
The
Company evaluates each customer’s creditworthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the
Company upon extension of credit, is based on its credit evaluation of the
borrower. Collateral varies but may include accounts receivable,
inventory, property, plant and equipment, commercial and residential real
estate.
Critical
Accounting Policies
We have
adopted various accounting policies which govern the application of accounting
principles generally accepted in the United States in the preparation of our
financial statements. Our significant accounting policies are
described in the notes to the financial statements at December 31, 2009 as
contained in our 2009 Annual Report to on Form 10-K. Certain
accounting policies involve significant judgments and assumptions by us which
have a material impact on the carrying value of certain assets and liabilities.
We consider these accounting policies to be critical accounting
policies. The judgments and assumptions we use are based on
historical experience and other factors, which we believe to be reasonable under
the circumstances. Because of the nature of the judgments and
assumptions we make, actual results could differ from these judgments and
estimates which could have a material impact on our carrying values of assets
and liabilities and our results of operations.
We
believe the allowance for loan losses is a critical accounting policy that
requires the most significant judgments and estimates used in preparation of our
financial statements. Refer to the portions of the discussion in this
report on Form 10-Q and in our 2009 Annual Report on Form 10-K that address our
allowance for loan losses for a description of our processes and methodology for
determining our allowance for loan losses.
Item
4T. Controls and Procedures
(a)
|
Based
on their evaluation of the Company’s disclosure controls and procedures
(as defined in 17 C.F.R. Sections 240.13a-15(e) and 240.15d-15(e)) as of
March 31, 2010, our chief executive officer and chief financial officer
concluded that such controls and procedures were
effective.
|
(b)
|
There
was no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting subsequent
to the date of its evaluation, including any corrective actions with
regard to significant deficiencies and material
weaknesses.
|
PART
II - OTHER INFORMATION
Item
6. Exhibits
Exhibit
Number
|
Description
of Exhibit
|
31.1
|
Certification
of Principal Executive Officer pursuant to Rule
13a-14(a)
|
31.2
|
Certification
of Principal Financial Officer pursuant to Rule
13a-14(a)
|
32
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to
18 USC 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
|
AB&T
FINANCIAL CORPORATION
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
AB&T
FINANCIAL CORPORATION
(Registrant)
Date:
May
17, 2010
/s/Daniel C.
Ayscue
Daniel C.
Ayscue
President and Chief
Executive Office
(Principal Executive
Officer)
EXHIBIT
INDEX
Exhibit
Number
Description of
Exhibit
31.1
|
Certification
of Principal Executive Officer pursuant to Rule
13a-14(a)
|
31.2
|
Certification
of Principal Financial Officer pursuant to Rule
13a-14(a)
|
32
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to
18 USC 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
|
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