UNITED
STATES
|
SECURITIES
AND EXCHANGE COMMISSION
|
Washington,
DC 20549
|
West Virginia
|
55-0650793
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(IRS
Employer Identification No.)
|
Large
Accelerated Filer [ ]
|
Accelerated
Filer [ ]
|
Non-accelerated
filer [ ]
(Do not check if a smaller reporting company) |
Smaller
reporting company [X]
|
HIGHLANDS
BANKSHARES, INC.
|
||
Quarterly
Report on Form 10-Q For The Period Ended March 31, 2010
|
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INDEX
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Page
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1
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2
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3
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4
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5
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10
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22
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22
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23
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23
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23
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23
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23
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23
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23
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24
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Item 1.
|
Financial
Statements
|
HIGHLANDS BANKSHARES, INC.
|
||||||||
CONSOLIDATED
STATEMENTS OF INCOME
|
||||||||
(In
Thousands of Dollars, Except Per Share Data)
|
||||||||
Three
Months Ended March 31
|
||||||||
2010
|
2009
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
Interest
Income
|
||||||||
Interest
and fees on loans
|
$ | 5,482 | $ | 5,890 | ||||
Interest
on federal funds sold
|
5 | 5 | ||||||
Interest
on deposits in other banks
|
3 | 3 | ||||||
Interest
and dividends on securities
|
187 | 227 | ||||||
Total
Interest Income
|
5,677 | 6,125 | ||||||
Interest
Expense
|
||||||||
Interest
on deposits
|
1,606 | 1,838 | ||||||
Interest
on borrowed money
|
115 | 137 | ||||||
Total
Interest Expense
|
1,721 | 1,975 | ||||||
Net
Interest Income
|
3,956 | 4,150 | ||||||
Provision
for Loan Losses
|
1,092 | 284 | ||||||
Net
Interest Income After Provision for Loan Losses
|
2,864 | 3,866 | ||||||
Non-interest
Income
|
||||||||
Service
charges
|
357 | 367 | ||||||
Life
insurance investment income
|
66 | 61 | ||||||
Gains
(losses) on securities transactions
|
33 | (13 | ) | |||||
Gains
on sale of foreclosed property
|
4 | 0 | ||||||
Other
non-interest income
|
87 | 114 | ||||||
Total
Non-interest Income
|
547 | 529 | ||||||
Non-interest
Expense
|
||||||||
Salaries
and employee benefits
|
1,720 | 1,661 | ||||||
Occupancy
and equipment expense
|
368 | 329 | ||||||
Data
processing expense
|
271 | 169 | ||||||
Directors
fees
|
99 | 103 | ||||||
Legal
and professional fees
|
182 | 123 | ||||||
Other
non-interest expense
|
558 | 505 | ||||||
Total
Non-interest Expense
|
3,198 | 2,890 | ||||||
Income
Before Provision For Income Taxes
|
213 | 1,505 | ||||||
Provision
for Income Taxes
|
52 | 542 | ||||||
Net
Income
|
$ | 161 | $ | 963 | ||||
Per
Share Data
|
||||||||
Net
Income
|
$ | 0.12 | $ | 0.72 | ||||
Cash
Dividends
|
$ | 0.27 | $ | 0.29 | ||||
Weighted
Average Common Shares Outstanding
|
1,336,873 | 1,336,873 | ||||||
|
HIGHLANDS BANKSHARES, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(In
thousands of dollars)
|
March 31, 2010
|
December 31, 2009
|
|||||||
(unaudited)
|
(audited)
|
|||||||
ASSETS
|
||||||||
Cash
and due from banks
|
$ | 6,098 | $ | 7,062 | ||||
Interest
bearing deposits in banks
|
2,707 | 1,880 | ||||||
Federal
funds sold
|
12,556 | 8,936 | ||||||
Investment
securities available for sale
|
28,071 | 26,936 | ||||||
Restricted
investments
|
2,185 | 2,185 | ||||||
Loans
|
334,053 | 335,483 | ||||||
Allowance
for loan losses
|
(4,512 | ) | (4,021 | ) | ||||
Bank
premises and equipment, net of depreciation
|
9,427 | 9,326 | ||||||
Interest
receivable
|
1,798 | 1,908 | ||||||
Investment
in life insurance contracts
|
6,821 | 6,755 | ||||||
Foreclosed
Assets
|
3,522 | 3,223 | ||||||
Goodwill
|
1,534 | 1,534 | ||||||
Other
intangible assets
|
971 | 1,020 | ||||||
Other
assets
|
5,239 | 5,583 | ||||||
Total
Assets
|
$ | 410,470 | $ | 407,810 | ||||
LIABILITIES
|
||||||||
Deposits
|
||||||||
Non-interest
bearing deposits
|
$ | 52,311 | $ | 52,378 | ||||
Interest
bearing transaction and savings accounts
|
76,841 | 73,053 | ||||||
Time
deposits over $100,000
|
75,299 | 75,596 | ||||||
All
other time deposits
|
148,244 | 148,850 | ||||||
Total
Deposits
|
352,695 | 349,877 | ||||||
Long
term debt instruments
|
10,750 | 10,866 | ||||||
Accrued
expenses and other liabilities
|
5,844 | 5,645 | ||||||
Total
Liabilities
|
369,289 | 366,388 | ||||||
STOCKHOLDERS’
EQUITY
|
||||||||
Common
Stock, $5 par value, 3,000,000 shares authorized, 1,436,874
shares issued
|
||||||||
7,184 | 7,184 | |||||||
Surplus
|
1,662 | 1,662 | ||||||
Treasury
stock (100,001 shares, at cost)
|
(3,372 | ) | (3,372 | ) | ||||
Retained
earnings
|
36,763 | 36,963 | ||||||
Other
accumulated comprehensive loss
|
(1,056 | ) | (1,015 | ) | ||||
Total
Stockholders’ Equity
|
41,181 | 41,422 | ||||||
Total
Liabilities and Stockholders’ Equity
|
$ | 410,470 | $ | 407,810 | ||||
The
accompanying notes are an integral part of these financial
statements
|
HIGHLANDS
BANKSHARES, INC.
|
||||||
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY
|
||||||
(In
Thousands of Dollars)
|
||||||
Common
Stock |
Surplus
|
Treasury
Stock |
Retained
Earnings |
Accumulated
Other Comprehensive Income (Loss) |
Total
|
|||||||||||||||||||
Balances
at December 31, 2008
|
$ | 7,184 | $ | 1,662 | $ | (3,372 | ) | $ | 35,157 | $ | (1,232 | ) | $ | 39,399 | ||||||||||
Other
Comprehensive Income:
|
||||||||||||||||||||||||
Net
Income
|
963 | 963 | ||||||||||||||||||||||
Change
in other comprehensive income
|
68 | 68 | ||||||||||||||||||||||
Total
Comprehensive Income
|
1,031 | |||||||||||||||||||||||
Dividends
Paid
|
(388 | ) | (388 | ) | ||||||||||||||||||||
Balances
March 31, 2009
|
$ | 7,184 | $ | 1,662 | $ | (3,372 | ) | $ | 35,732 | $ | (1,164 | ) | $ | 40,042 | ||||||||||
Balances
at December 31, 2009
|
$ | 7,184 | $ | 1,662 | $ | (3,372 | ) | $ | 36,963 | $ | (1,015 | ) | $ | 41,422 | ||||||||||
Other
Comprehensive Income:
|
||||||||||||||||||||||||
Net
Income
|
161 | 161 | ||||||||||||||||||||||
Change
in other comprehensive income
|
(41 | ) | (41 | ) | ||||||||||||||||||||
Total
Comprehensive Income
|
120 | |||||||||||||||||||||||
Dividends
Paid
|
(361 | ) | (361 | ) | ||||||||||||||||||||
Balances
March 31, 2010
|
$ | 7,184 | $ | 1,662 | $ | (3,372 | ) | $ | 36,763 | $ | (1,056 | ) | $ | 41,181 | ||||||||||
The
accompanying notes are an integral part of these financial
statements
|
HIGHLANDS
BANKSHARES, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
Thousands of Dollars)
|
Three
Months Ended March 31,
|
||||||||
2010
|
2009
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
Cash
Flows From Operating Activities
|
||||||||
Net
Income
|
$ | 161 | $ | 963 | ||||
Adjustments
to reconcile net income to net
|
||||||||
cash
provided by operating activities
|
||||||||
Loss
(gain) on securities transactions
|
(33 | ) | 13 | |||||
(Gain)
on sale of OREO
|
(4 | ) | 0 | |||||
Depreciation
|
182 | 155 | ||||||
Change
in insurance contracts
|
(66 | ) | (61 | ) | ||||
Net
amortization of securities
|
31 | 24 | ||||||
Provision
for loan losses
|
1,092 | 284 | ||||||
Write-down
of OREO
|
18 | 0 | ||||||
Amortization
of intangibles
|
49 | 49 | ||||||
Decrease
in interest receivable
|
110 | 141 | ||||||
(Increase)
decrease in other assets
|
344 | (47 | ) | |||||
Increase
in accrued expenses and other liabilities
|
223 | 484 | ||||||
Net
Cash Provided by Operating Activities
|
2,107 | 2,005 | ||||||
Cash
Flows From Investing Activities
|
||||||||
(Increase)
in federal funds sold
|
(3,620 | ) | (8,824 | ) | ||||
Proceeds
from maturities of securities available for sale
|
1,442 | 1,963 | ||||||
Purchase
of securities available for sale
|
(2,640 | ) | (1,000 | ) | ||||
(Increase)
in restricted investments
|
0 | (8 | ) | |||||
Proceeds
from sale of fixed assets and OREO
|
63 | 0 | ||||||
(Increase)
in interest bearing deposits in banks
|
(827 | ) | (22 | ) | ||||
Purchase
of property and equipment
|
(283 | ) | (1,159 | ) | ||||
Net
(increase) decrease in loans
|
453 | (7,138 | ) | |||||
Net
Cash (Used in) Investing Activities
|
(5,412 | ) | (16,188 | ) | ||||
Cash
Flows From Financing Activities
|
||||||||
Net
change in time deposits
|
(904 | ) | 9,519 | |||||
Net
change in other deposit accounts
|
3,722 | 4,411 | ||||||
Net
change in short term borrowings
|
0 | 200 | ||||||
Repayment
of long term borrowings
|
(116 | ) | (110 | ) | ||||
Dividends
paid in cash
|
(361 | ) | (388 | ) | ||||
Net
Cash Provided by Financing Activities
|
2,341 | 13,632 | ||||||
Net
(decrease) in Cash and Cash Equivalents
|
(964 | ) | (551 | ) | ||||
Cash
and Cash Equivalents, Beginning of Period
|
7,062 | 7,589 | ||||||
Cash
and Cash Equivalents, End of Period
|
$ | 6,098 | $ | 7,038 | ||||
Supplemental
Disclosures
|
||||||||
Cash
paid for income taxes
|
$ | 0 | $ | 0 | ||||
Cash
paid for interest
|
$ | 1,733 | $ | 2,044 | ||||
The
accompanying notes are an integral part of these financial
statements.
|
NOTE
ONE:
|
ACCOUNTING
PRINCIPLES
|
NOTE
TWO:
|
LOANS
|
March
31, 2010
|
December
31, 2009
|
|||||||
Loan
Type
|
||||||||
Real
Estate mortgage
|
$ | 159,807 | $ | 162,619 | ||||
Real
Estate construction
|
29,914 | 30,759 | ||||||
Commercial
|
100,120 | 97,606 | ||||||
Installment
|
44,212 | 44,499 | ||||||
Total
Loans
|
$ | 334,053 | $ | 335,483 | ||||
Allowance
for loan losses
|
$ | (4,512 | ) | $ | (4,021 | ) |
NOTE
THREE:
|
ALLOWANCE
FOR LOAN LOSSES
|
2010
|
2009
|
|||||||
Balance,
beginning of period
|
$ | 4,021 | $ | 3,667 | ||||
Provisions
charged to operations
|
1,092 | 284 | ||||||
Loan
recoveries
|
93 | 65 | ||||||
Loan
charge-offs
|
(694 | ) | (437 | ) | ||||
Balance,
end of period
|
$ | 4,512 | $ | 3,579 |
2010
|
2009
|
|||||||
Period
end balance, impaired loans
|
$ | 5,029 | $ | 3,425 | ||||
Allowance
for impairments, period end
|
1,097 | 662 |
NOTE
FOUR:
|
INVESTMENT
IN INSURANCE CONTRACTS
|
NOTE
FIVE:
|
SECURITIES
AND RESTRICTED INVESTMENTS
|
March
31, 2010
|
December
31, 2009
|
|||||||||||||||
Amortized
|
Market
|
Amortized
|
Market
|
|||||||||||||
Cost
|
Value
|
Cost
|
Value
|
|||||||||||||
Available For Sale
Securities
|
||||||||||||||||
U.S.
Treasuries and Agencies
|
$ | 13,227 | $ | 13,375 | $ | 12,250 | $ | 12,426 | ||||||||
Mortgage
backed securities
|
5,196 | 5,395 | 5,630 | 5,836 | ||||||||||||
States
and municipalities
|
3,589 | 3,666 | 3,832 | 3,946 | ||||||||||||
Certificates
of deposit
|
5,595 | 5,607 | 4,696 | 4,703 | ||||||||||||
Marketable
equities
|
15 | 28 | 15 | 25 | ||||||||||||
Total
Available For Sale Securities
|
$ | 27,622 | $ | 28,071 | $ | 26,423 | $ | 26,936 |
Total
|
Less
than 12 Months
|
12
Months or Greater
|
||||||||||||||||||||||
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
|||||||||||||||||||
March 31, 2010
|
||||||||||||||||||||||||
Investment
Category
|
||||||||||||||||||||||||
U.S.
Treasuries and Agencies
|
999 | (1 | ) | 999 | (1 | ) | 0 | 0 | ||||||||||||||||
Mortgage
backed securities
|
26 | 0 | 26 | 0 | 0 | 0 | ||||||||||||||||||
Certificates
of deposit
|
1,230 | (8 | ) | 1,230 | (8 | ) | 0 | 0 | ||||||||||||||||
Marketable
equities
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Total
|
$ | 2,255 | $ | (9 | ) | $ | 2,255 | $ | (9 | ) | $ | 0 | $ | 0 | ||||||||||
December 31, 2009
|
||||||||||||||||||||||||
Investment
Category
|
||||||||||||||||||||||||
U.S.
Treasuries and Agencies
|
999 | (1 | ) | 999 | (1 | ) | 0 | 0 | ||||||||||||||||
Mortgage
backed securities
|
24 | 0 | 24 | 0 | 0 | 0 | ||||||||||||||||||
Certificates
of deposit
|
246 | (2 | ) | 246 | (2 | ) | 0 | 0 | ||||||||||||||||
Marketable
equities
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Total
|
$ | 1,269 | $ | (3 | ) | $ | 1,269 | $ | (3 | ) | $ | 0 | $ | 0 |
NOTE
SIX:
|
EARNINGS
PER SHARE
|
NOTE
SEVEN:
|
BORROWINGS
|
NOTE
EIGHT:
|
INTANGIBLE
ASSETS
|
NOTE
NINE:
|
EMPLOYEE
BENEFITS
|
2010
|
2009
|
|||||||
Service
cost
|
$ | 47 | $ | 51 | ||||
Interest
cost
|
76 | 81 | ||||||
Expected
return on plan assets
|
(84 | ) | (98 | ) | ||||
Recognized
net actuarial loss
|
24 | 16 | ||||||
Amortization
of unrecognized prior service costs
|
0 | 1 | ||||||
Net
periodic expense
|
$ | 63 | $ | 51 |
NOTE
TEN:
|
FAIR
VALUE MEASUREMENTS
|
|
·
|
Level One:
Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active
markets.
|
|
·
|
Level Two:
Inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial
instrument.
|
|
·
|
Level Three:
Inputs to the valuation methodology are unobservable and significant to
the fair value measurement.
|
31-Mar-10
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
Measurements
|
||||||||||||
U.S.
Treasuries and Agencies
|
$ | 0 | $ | 13,375 | $ | 0 | $ | 13,375 | ||||||||
Mortgage
backed securities
|
0 | 5,395 | 0 | 5,395 | ||||||||||||
States
and municipalities
|
0 | 3,666 | 0 | 3,666 | ||||||||||||
Certificates
of deposit
|
0 | 5,607 | 0 | 5,607 | ||||||||||||
Marketable
equities
|
0 | 28 | 0 | 28 | ||||||||||||
Total
Available For Sale Securities
|
$ | 0 | $ | 28,071 | $ | 0 | $ | 28,071 |
31-Mar-09
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
Measurements
|
||||||||||||
U.S.
Treasuries and Agencies
|
$ | 0 | $ | 7,596 | $ | 0 | $ | 7,596 | ||||||||
Mortgage
backed securities
|
0 | 9,520 | 0 | 9,520 | ||||||||||||
States
and municipalities
|
0 | 3,669 | 0 | 3,669 | ||||||||||||
Marketable
equities
|
0 | 16 | 0 | 16 | ||||||||||||
Total
Available For Sale Securities
|
$ | 0 | $ | 20,801 | $ | 0 | $ | 20,801 |
31-Mar-10
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
Measurements
|
||||||||||||
Other
real estate owned
|
$ | 0 | $ | 3,522 | $ | 0 | $ | 3,522 | ||||||||
Impaired
Loans
|
0 | 1,078 | 2,854 | 3,932 | ||||||||||||
Total
|
$ | 0 | $ | 4,600 | $ | 2,854 | $ | 7,454 |
31-Dec-09
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
Measurements
|
||||||||||||
Other
real estate owned
|
$ | 0 | $ | 3,223 | $ | 0 | $ | 3,223 | ||||||||
Impaired
Loans
|
0 | 602 | 2,161 | 2,763 | ||||||||||||
Total
|
$ | 0 | $ | 3,825 | $ | 2,161 | $ | 5,986 |
March 31, 2010
|
December 31, 2009
|
|||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
Amount
|
Fair
Value
|
Amount
|
Fair
Value
|
|||||||||||||
Financial
Assets:
|
||||||||||||||||
Cash
and due from banks
|
6,098 | 6,098 | 7,062 | 7,062 | ||||||||||||
Interest
bearing deposits
|
2,707 | 2,707 | 1,880 | 1,880 | ||||||||||||
Federal
funds sold
|
12,556 | 12,556 | 8,936 | 8,936 | ||||||||||||
Securities
available for sale
|
28,071 | 28,071 | 26,936 | 26,936 | ||||||||||||
Restricted
investments
|
2,185 | 2,185 | 2,185 | 2,185 | ||||||||||||
Loans,
net
|
329,541 | 331,069 | 331,462 | 332,999 | ||||||||||||
Interest
receivable
|
1,798 | 1,798 | 1,908 | 1,908 | ||||||||||||
Life
insurance contracts
|
6,821 | 6,821 | 6,755 | 6,755 | ||||||||||||
Financial
Liabilities:
|
||||||||||||||||
Demand
and savings deposits
|
129,152 | 129,152 | 125,431 | 125,431 | ||||||||||||
Time
deposits
|
223,543 | 225,148 | 224,446 | 226,057 | ||||||||||||
Overnight
and other short term debt instruments
|
0 | 0 | 0 | 0 | ||||||||||||
Long
term debt instruments
|
10,750 | 11,275 | 10,866 | 11,733 | ||||||||||||
Interest
payable
|
598 | 598 | 656 | 656 |
Item
2.
|
Management’s Discussion and Analysis of Financial
Condition and Results of
Operations
|
Three
months ended March 31,
|
||||||||
2010
|
2009
|
|||||||
Annualized
return on average assets
|
0.16 | % | 1.00 | % | ||||
Annualized
return on average equity
|
1.57 | % | 9.69 | % | ||||
Net
interest margin (1)
|
4.23 | % | 4.66 | % | ||||
Efficiency
Ratio (2)
|
71.02 | % | 61.87 | % | ||||
Earnings
per share (3)
|
$ | 0.12 | $ | 0.72 |
|
(1)
|
On
a fully taxable equivalent basis and including loan origination
fees.
|
|
(2)
|
Non-interest
expenses for the period indicated divided by the sum of net interest
income and non-interest income for the period
indicated.
|
|
(3)
|
Per
weighted average shares of common stock outstanding for the period
indicated.
|
|
March 31, 2010
|
December 31, 2009
|
|||||||
Allowance
for loan losses as a percentage of gross loans
|
1.35 | % | 1.20 | % | ||||
Non
performing loans as a percentage of gross loans
|
2.44 | % | 1.97 | % | ||||
Ratio
of allowance for loan losses to non-performing loans
|
0.55 | 0.61 |
March
31, 2010
|
December
31, 2009
|
|||||||
Non-accrual
loans
|
$ | 6,019 | $ | 2,567 | ||||
Loans
past due 90 days and still accruing interest
|
681 | 2,192 | ||||||
Restructured
Loans
|
1,435 | 1,836 | ||||||
Total
non-performing loans
|
$ | 8,135 | $ | 6,595 |
2010
|
2009
|
|||||||
Charge-offs
|
||||||||
Commercial
|
$ | (154 | ) | $ | (98 | ) | ||
Mortgage
and construction
|
(313 | ) | (136 | ) | ||||
Consumer
|
(227 | ) | (204 | ) | ||||
Total
Charge-offs
|
(694 | ) | (438 | ) | ||||
Recoveries
|
||||||||
Commercial
|
0 | 3 | ||||||
Mortgage
|
0 | 0 | ||||||
Consumer
|
93 | 62 | ||||||
Total
Recoveries
|
93 | 65 | ||||||
Total
Net Charge-offs
|
$ | (601 | ) | $ | (373 | ) |
March
31, 2010
|
December
31, 2009
|
|||||||||||||||
Amount
|
Percent
of Loans
|
Amount
|
Percent
of Loans
|
|||||||||||||
Loan Type
|
||||||||||||||||
Commercial-Mortgage
|
$ | 1,863 | 39 | % | $ | 1,314 | 39 | % | ||||||||
Commercial-Other
|
349 | 5 | % | 340 | 4 | % | ||||||||||
Consumer-Mortgage
|
1,013 | 45 | % | 1,051 | 45 | % | ||||||||||
Consumer-Other
|
1,287 | 11 | % | 1,316 | 12 | % | ||||||||||
Totals
|
$ | 4,512 | 100 | % | $ | 4,021 | 100 | % |
EFFECT
OF RATE-VOLUME CHANGES ON NET INTEREST INCOME
|
||||||||||||
Increase
(Decrease) Three Months Ended March 31, 2010 Compared to Three Months
Ended March 31, 2009
|
||||||||||||
Due
to change in:
|
||||||||||||
Average Volume
|
Average Rate
|
Total Change
|
||||||||||
Interest
Income
|
||||||||||||
Loans
|
$ | 82 | $ | (490 | ) | $ | (408 | ) | ||||
Federal
funds sold
|
1 | (1 | ) | 0 | ||||||||
Interest
bearing deposits
|
2 | (2 | ) | 0 | ||||||||
Taxable
investment securities
|
41 | (85 | ) | (44 | ) | |||||||
Nontaxable
investment securities
|
8 | (10 | ) | (2 | ) | |||||||
Total
Interest Income
|
$ | 134 | $ | (588 | ) | $ | (454 | ) | ||||
Interest
Expense
|
||||||||||||
Demand
deposits
|
0 | (6 | ) | (6 | ) | |||||||
Savings
deposits
|
3 | (12 | ) | (9 | ) | |||||||
Time
deposits
|
150 | (367 | ) | (217 | ) | |||||||
Borrowings
|
(71 | ) | 49 | (22 | ) | |||||||
Total
Interest Expense
|
82 | (336 | ) | (254 | ) | |||||||
Net
Interest Income
|
$ | 52 | $ | (252 | ) | $ | (200 | ) |
2010
|
2009
|
|||||||||||||||||||||||
Average
|
Income/
|
Average
|
Income/
|
|||||||||||||||||||||
Balance
|
Expense
|
Rate
|
Balance
|
Expense
|
Rate
|
|||||||||||||||||||
Earning
Assets
|
||||||||||||||||||||||||
Loans
|
$ | 334,232 | $ | 5,482 | 6.56 | % | $ | 329,207 | $ | 5,890 | 7.16 | % | ||||||||||||
Taxable
investment securities
|
23,684 | 148 | 2.51 | % | 17,092 | 192 | 4.49 | % | ||||||||||||||||
Non-taxable
investment securities
|
3,871 | 53 | 5.49 | % | 3,255 | 55 | 6.76 | % | ||||||||||||||||
Interest
bearing deposits
|
2,144 | 3 | 0.48 | % | 547 | 3 | 2.19 | % | ||||||||||||||||
Federal
funds sold
|
11,515 | 5 | 0.18 | % | 8,192 | 5 | 0.24 | % | ||||||||||||||||
Total
Earning Assets
|
375,446 | 5,691 | 6.06 | % | 358,293 | 6,145 | 6.86 | % | ||||||||||||||||
Allowance
for loan losses
|
(3,954 | ) | (3,686 | ) | ||||||||||||||||||||
Other
non-earning assets
|
38,143 | 31,993 | ||||||||||||||||||||||
Total
Assets
|
$ | 409,635 | $ | 386,600 | ||||||||||||||||||||
Interest
Bearing Liabilities
|
||||||||||||||||||||||||
Demand
deposits
|
$ | 23,000 | $ | 7 | 0.12 | % | $ | 22,463 | $ | 13 | 0.23 | % | ||||||||||||
Savings
deposits
|
51,668 | 46 | 0.36 | % | 47,840 | 55 | 0.46 | % | ||||||||||||||||
Time
deposits
|
224,235 | 1,553 | 2.77 | % | 202,579 | 1,770 | 3.49 | % | ||||||||||||||||
Overnight
and other short-tem debt
|
0 | 0 | 5,038 | 5 | 0.40 | % | ||||||||||||||||||
Long-term
debt
|
10,813 | 115 | 4.26 | % | 12,486 | 132 | 4.23 | % | ||||||||||||||||
Total
Interest Bearing Liabilities
|
309,716 | 1,721 | 2.22 | % | 290,406 | 1,975 | 2.72 | % | ||||||||||||||||
Demand
deposits
|
52,484 | 49,070 | ||||||||||||||||||||||
Other
liabilities
|
6,439 | 7,385 | ||||||||||||||||||||||
Stockholders’
equity
|
40,996 | 39,739 | ||||||||||||||||||||||
Total
liabilities and stockholders’ equity
|
$ | 409,635 | $ | 386,600 | ||||||||||||||||||||
Net
Interest Income
|
$ | 3,970 | $ | 4,170 | ||||||||||||||||||||
Net
Yield on Earning Assets
|
4.23 | % | 4.66 | % | ||||||||||||||||||||
Notes:
|
||||||||||||||||||||||||
Yields
are computed on a taxable equivalent basis using a 37% tax
rate
|
||||||||||||||||||||||||
Average
balances are based upon daily balances
|
||||||||||||||||||||||||
Includes
loans in non-accrual status
|
||||||||||||||||||||||||
Income
on loans includes fees
|
||||||||||||||||||||||||
Salary
and Benefits Expense
|
||||||||||||
2010
|
2009
|
Increase
(Decrease)
|
||||||||||
Employee
salaries
|
$ | 1,097 | $ | 1,103 | $ | (6 | ) | |||||
Employee
benefit insurance
|
271 | 227 | 44 | |||||||||
Payroll
taxes
|
101 | 103 | (2 | ) | ||||||||
Post
retirement plans
|
251 | 228 | 23 | |||||||||
Total
|
$ | 1,720 | $ | 1,661 | $ | 59 |
Amount
|
||||
Changes
due to adjustment in average salary per full time equivalent
employee
|
$ | 3 | ||
Changes
due to fluctuations in the average full time equivalent employees for the
periods
|
(9 | ) | ||
Total
decrease in salary expense
|
$ | (6 | ) |
2010
|
2009
|
Increase
(Decrease)
|
||||||||||
Depreciation
of buildings and equipment
|
$ | 183 | $ | 155 | $ | 28 | ||||||
Maintenance
expense on buildings and equipment
|
102 | 97 | 5 | |||||||||
Utilities
expense
|
40 | 36 | 4 | |||||||||
Real
estate and personal property tax
|
21 | 20 | 1 | |||||||||
Other
expense related to occupancy and equipment
|
22 | 21 | 1 | |||||||||
Total
occupancy and equipment expense
|
$ | 368 | $ | 329 | $ | 39 |
2010
|
2009
|
Increase
(Decrease)
|
||||||||||
Office
supplies and postage & freight expense
|
$ | 121 | $ | 122 | $ | (1 | ) | |||||
FDIC
Premiums
|
162 | 55 | 107 | |||||||||
ATM
expense
|
(12 | ) | 53 | (65 | ) | |||||||
Amortization
of intangible assets
|
49 | 49 | 0 | |||||||||
Advertising
and marketing expense
|
37 | 38 | (1 | ) | ||||||||
Miscellaneous
components of other non interest expense
|
201 | 188 | 13 | |||||||||
Total
|
$ | 558 | $ | 505 | $ | 53 |
March
31, 2010
|
December
31, 2009
|
|||||||||||||||
Actual
|
Regulatory
|
Actual
|
Regulatory
|
|||||||||||||
Ratio
|
Minimum
|
Ratio
|
Minimum
|
|||||||||||||
Total Risk Based Capital
Ratio
|
||||||||||||||||
Highlands
Bankshares
|
14.28 | % | 8.00 | % | 14.33 | % | 8.00 | % | ||||||||
Capon
Valley Bank
|
12.75 | % | 8.00 | % | 12.86 | % | 8.00 | % | ||||||||
The
Grant County Bank
|
14.18 | % | 8.00 | % | 14.12 | % | 8.00 | % | ||||||||
Tier 1 Leverage Ratio
|
||||||||||||||||
Highlands
Bankshares
|
9.76 | % | 4.00 | % | 9.81 | % | 4.00 | % | ||||||||
Capon
Valley Bank
|
8.24 | % | 4.00 | % | 8.38 | % | 4.00 | % | ||||||||
The
Grant County Bank
|
9.95 | % | 4.00 | % | 9.91 | % | 4.00 | % | ||||||||
Tier 1 Risk Based Capital
Ratio
|
||||||||||||||||
Highlands
Bankshares
|
13.03 | % | 4.00 | % | 13.08 | % | 4.00 | % | ||||||||
Capon
Valley Bank
|
11.49 | % | 4.00 | % | 11.60 | % | 4.00 | % | ||||||||
The
Grant County Bank
|
12.93 | % | 4.00 | % | 12.89 | % | 4.00 | % |
EXHIBIT
INDEX
|
|
Exhibit
Number
|
Description
|
3(i)
|
Articles
of Incorporation of Highlands Bankshares, Inc., as restated, are hereby
incorporated by reference to Exhibit 3(i) to Highlands Bankshares Inc.’s
Form 10-Q filed November 13, 2007.
|
3(ii)
|
Amended
Bylaws of Highlands Bankshares, Inc. are incorporated by reference to
Exhibit 3(ii) to Highlands Bankshares Inc.’s Report on Form 8-K filed
January 9, 2008.
|
31.1
|
Certification
of Chief Executive Officer Pursuant to section 302 of the
Sarbanes-Oxley Act of
2002
Chapter 63, Title 18 USC Section 1350 (A) and (B).
|
31.2
|
Certification
of Principal Financial Officer Pursuant to section 302 of the
Sarbanes-Oxley Act of
2002
Chapter 63, Title 18 USC Section 1350 (A) and (B).
|
32.1
|
Statement
of Chief Executive Officer Pursuant to 18 U.S.C.
§1350.
|
32.2
|
Statement
of Principal Financial Officer Pursuant to 18 U.S.C.
§1350.
|
HIGHLANDS
BANKSHARES, INC.
|
|
/s/ C.E. Porter
|
|
C.E.
Porter
|
|
President
& Chief Executive Officer
|
|
/s/ Jeffrey B. Reedy
|
|
Jeffrey
B. Reedy
|
|
Chief
Financial Officer
|
|
May
13, 2010
|