Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. CECIL BANCORP INC (926865) 10-Q published on Nov 14, 2013 at 4:26 pm
Reporting Period: Sep 29, 2013
On August 16, 2013, the Bank sold its Aberdeen, Maryland branch office to Howard Bank (“Howard”), Ellicott City, Maryland. As part of the transaction, Howard acquired a pool of loans with an unpaid principal balance of approximately $37.1 million at book value. Under the agreement, Howard paid a 5.0% premium on the balance of non-interest bearing deposits and 4.0% on all other transaction accounts assumed. Certificates of deposit were assumed at the current balance on the closing date, with no premium or discount applied. As part of the transaction, the deposits assumed by Howard totaled approximately $35.2 million. The premium received on the assumption of deposits totaled approximately $240,000 and is included in other noninterest income on the consolidated statement of operations and comprehensive loss. Howard also purchased the branch premises and selected equipment at their book value, which totaled approximately $977,000.
Further, as previously disclosed, on November 6, 2013, Mary B. Halsey resigned as Chief Operating Officer of the Company and Director and Vice Chairman of the Company’s Board of Directors. In addition, on November 6, 2013, the Board of Directors of the Company announced the appointment of Terrie G. Spiro as Chief Executive Officer and President of the Company and the Bank. An experienced leader in the financial services industry with over 25 years of industry experience, Ms. Spiro will report to the Board. Ms. Spiro began her employment with the Company and the Bank on October 1, 2013, subject to regulatory approval by the Federal Reserve Bank of Richmond and the Maryland Commissioner of Financial Regulation of her appointment as Chief Executive Officer. Her appointment has since received the necessary regulatory approvals.
Interest and fees on loans receivable decreased by $1.3 million, or 29.7%, to $3.1 million for the three months ended September 30, 2013 from $4.4 million for the three months ended September 30, 2012. The decrease is attributable to decreases in both the average balance outstanding and the weighted-average yield. The average balance outstanding decreased by $56.0 million, or 17.9%, to $256.4 million for the three months ended September 30, 2013 from $312.4 million for the three months ending September 30, 2012. The weighted-average yield decreased to 4.85% for the three months ended September 30, 2013 from 5.67% for the three months ended September 30, 2012. The decrease in yield is primarily due to an increase in nonaccrual interest reversed out of income. In December 2012, the Bank upgraded nine loans to accruing status based on current information regarding the customers’ ability to repay and current financial status. During a routine examination, the banking regulators required us to return these loans to nonaccrual status and recapture any income recorded during the interim period. This income, totaling $362,000, was recaptured from income during the third quarter of 2013.
Noninterest income decreased $216,000, or 46.7%, to $247,000 for the three months ended September 30, 2013, from $463,000 over the same period in 2012 primarily due to an increased loss on sale of other real estate owned, which more than offset the $240,000 deposit premium received on the sale of the Aberdeen branch. Deposit account fees decreased by $12,000, or 9.6% to $113,000 for the three months ended September 30, 2013 from $125,000 for the three months ended September 30, 2012 due to lower deposit levels. There was a $331,000 loss on the sale of other real estate owned for the three months ended September 30, 2013 as compared to no gains or losses for the three months ended September 30, 2012. The entire 2013 loss is from the sale of one property. Income from bank owned life insurance decreased by $23,000, or 50.0%, to $23,000 for the third quarter of 2013 from $46,000 for the three months ended September 30, 2012 primarily due to a decrease in the crediting rate paid by the carriers. Other noninterest income decreased by $88,000, or 59.9%, to $59,000 for the third quarter of 2013 from $147,000 for the three months ended September 30, 2012 primarily due to declines in rental income on other real estate owned and income from our investment in Maryland Title Center, which was sold in the fourth quarter 2012.
Noninterest income decreased by $973,000, or 40.4%, to $1.4 million for the nine months ended September 30, 2013, from $2.4 million over the same period in 2012 primarily due to a decline in the gain on sale of loans, partially offset by the deposit premium received on the sale of the Aberdeen branch and an increase in the gain on sale of investments. Gain on sale of loans decreased $1.2 million, or 85.5%, to $200,000 for the nine months ended September 30, 2013 from $1.4 million for the nine months ended September 30, 2012 due to the Bank’s less active participation in the Small Business Administration loan program, the guaranteed portion of which are sold in the secondary market. Loss on sale of other real estate owned increased by $87,000 to $312,000 for the nine months ended September 30, 2013 as compared to $225,000 during the nine months ended September 30, 2012. Gain on sale of investments increased by $375,000 to $375,000 for the first nine months of 2013 from zero for the first nine months of 2012. During the first quarter of 2013, the Bank sold 11 securities that were in an unrealized gain position and recorded the gains in income. The proceeds from the sales were reinvested in securities with similar characteristics as those sold. Income from bank owned life insurance decreased by $43,000, or 31.2%, to $95,000 for the nine months ended September 30, 2013 from $138,000 for the nine months ended September 30, 2012 due to a decrease in the crediting rate paid by the insurance carriers.