annual report 2013 - Frontier Community Bank

FRONTIER COMMUNITY BANK
2011 ANNUAL REPORT
ANNUAL REPORT 2013
FRONTIER COMMUNITY BANK
FROM YOUR PRESIDENT
Dear Shareholders:
the U.S. out of a recession seven of the last eight times, and we
intend to be well positioned for this opportunity as it evolves.
I am pleased to inform you that 2013 marked another successful
year for Frontier. Net income totaled $426,748, contributing to a
stockholders’ equity increase of fifteen and a half percent. Total
assets increased by ten percent, ending the year at $91.9MM.
Frontier experienced its first loan charge off in the history of
the bank during 2013. An $186,723 loan loss was recorded
during the third quarter of the year. The loan charge off, and the
ultra competitive pricing environment were the only factors
that prevented Frontier from outpacing 2012 earnings. It is
important to note that asset quality remains strong. Frontier
did not report any other loan delinquencies at the end of the
most recent quarter. This single loan is the only credit problem
the bank has experienced throughout the entire recession.
We plan to foreclose upon the collateralized property during
the second quarter of this year, and subsequently market it
in the most appropriate fashion to minimize the potential for
additional losses.
I am also delighted to inform you about two significant
enhancements to the corporate governance team. James
A. Morris joined the board of directors on Jan 1, 2013. Mr.
Morris is the President of WM Management Ltd., DICAM, and
Roxie, LLC. He provides the board with a broad base of real
estate planning and technology experience. Donna H. Snyder
joined the board of directors in May of 2014. Ms. Snyder was
a career banker, serving as the Senior Vice President and
Cashier for Virginia Financial Corporation prior to retiring
from Stellar One Corporation in 2008. Her banking experience
includes accounting, financial reporting, and interest rate risk
management practices. James and Donna offer substantial
talents and skills that are unique to the existing board of
directors, making each an excellent addition.
Please keep Frontier in mind for any financial services that
you desire. As always, feel free to contact me directly at
540.294.3181 with any questions about Frontier. Thank you for
your continued support.
First quarter 2014 earnings are encouraging, pacing in
accordance with the annual budget despite extremely harsh
winter conditions. Maintaining loan volume in the housing
services division during the previous quarter was quite an
accomplishment. Frontier will continue to focus upon the
strategic objective of expanding our business presence in the
local housing market. The residential construction industry led
Alan J. Sweet
President & CEO
KIDS DAY/CUSTOMER APPRECIATION
2013 ANNUAL REPORT
1
FRONTIER COMMUNITY BANK
FROM YOUR PRESIDENT
OUR PEOPLE
Christopher S. Chamberlin
Frederick W. Galway
Laurie L. Landes
Seth G. Bokelman
President & CEO
Executive Vice President
Chief Financial Officer
Senior Vice President
Senior Vice President
Tara L. Cale
Elizabeth A. Ralston
C. William Cecil
Ashley B. Helmick
Tatiana E. Stevens
Executive Assistant
Credit Analyst
Angela J. Humphries
Amanda R. Drumheller
Alan J. Sweet
Compliance & Loan Review Officer Operations & BSA Officer
Rhonda W. Fix
Marcie M. Talbott
Loan Operations Supervisor
Personal Banking Supervisor
IT & HR Officer
Victoria E. Schullery
Loan Operations
Loan Processor
Personal Banker
NEW WEBSITE
We are excited to announce the unveiling of a new and improved
website in April. The website includes a better overview of
products and services Frontier offers. In addition, visitors will be
able to determine payments through featured loan calculators and
download loan applications for personal and commercial financing.
Mortgage Calculator Example
2013 ANNUAL REPORT
2
401k Calculator Example
FRONTIER COMMUNITY BANK
FINANCIAL HIGHLIGHTS
DECEMBER 31
2013
2012
Results of Operations:
Interest income$ 3,696,498
$ 3,769,556
Interest expense 1,060,159 1,151,429
Net interest income 2,636,339
2,618,127
Provision for loan losses
102,000
82,550
Noninterest income
168,693
142,673
Noninterest expense 2,276,284
2,155,794
Net income (before and after tax)$ 426,748
$ 522,456
Period-end Balances:
Loans, net of unearned income$ 75,396,723
$ 72,626,872
Deposits80,720,943
75,090,456
Assets91,850,778
83,529,019
Shareholder’s equity 9,533,808 8,251,282
Per Share Information:
Earnings – basic
0.37
0.49
Earnings – diluted
0.37
0.49
Book value
8.16
7.79
Ratios:
Return on average assets
0.5 %
0.6 %
Return on average equity
5.8 %
6.6 %
Net interest margin
3.09 %
3.43 %
Charged-off loans$
186,723
$
0
2014 FIRST QUARTER
Frontier Community Bank Balance Sheet (unaudited)
March 31, 2014 (in 000’s)
Assets: Cash & cash equivalents
$ 1,455
(non-interest bearing) Interest-bearing 13,863 cash equivalents
Gross loans 75,462 Allowance (1,013)
Net loans 74,449 Liabilities & Capital:
Non-interest bearing deposits $ 6,131
Interest bearing deposits 75,836
Total deposits 81,967
Other liabilities
273
Fixed assets 2,843 Total liabilities 83,625
Other assets Total capital 9,658
Total Assets 2013 ANNUAL REPORT
673 $ 93,283
Other borrowings
Total Capital and Liabilities 3
1,385
$ 93,283
Frontier Community Bank
Income Statement (unaudited)
Quarter ended March 31, 2014
(in 000’s except per share data)
Interest income $ 927
Interest expense (261)
Net interest income 666
Provision for loan loss (24)
Non interest income 59
Non interest expense (590)
Net income $ 111
EPS - 1st Quarter $ 0.10
Book value $ 8.27
FRONTIER COMMUNITY BANK
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31 (unaudited)
2013
Interest and Dividend Income
Loans, including fees
$ 3,644,801
Federal funds sold and deposits in other banks
32,268
Dividends on restricted stock
19,429
Total interest and dividend income
3,696,498 2012
$ 3,734,296
19,138
16,122
3,769,556
Interest Expense Deposits
1,042,344
1,151,138
Federal funds purchased andother borrowed funds
17,815
291
Total interest expense
1,060,159
1,151,429
Net Interest Income
Provision for loan losses
Net interest income after provision for loan losses
2,636,339
102,000
2,534,339
2,618,127
82,550
2,535,577
Noninterest Income
Service charges on deposit accounts
13,095
15,274
Mortgage origination fee income
97,148
52,391
Other income
58,450
75,008
Total noninterest income
168,693
142,673
Noninterest Expense
Salaries and employee benefits
Occupancy expense
Equipment and supplies expense
Marketing
Professional fees
Data processing fees
FDIC insurance expense
Bank franchise tax
Other operating expenses
Total noninterest expense
Net income before income taxes
Income tax expense
Net income
Earnings per common share, basic
Earnings per common share, diluted
1,190,481
1,162,125
135,344
127,542
82,550
107,746
74,710
67,806
150,520
110,910
155,698
154,828
112,468
104,914
65,232
59,588
309,281
260,335
2,276,284
2,155,794
426,748
522,456
--
-$ 426,748
$ 522,456
$ 0.37
$ 0.37
$ 0.49
$ 0.49
2013 ANNUAL REPORT
4
FRONTIER COMMUNITY BANK
BALANCE SHEETS
FOR THE YEARS ENDED DECEMBER 31 (unaudited)
2013
Assets
Cash and due from banks
$ 1,434,753
Interest bearing deposits with other banks
11,423,719
Total cash and cash equivalents
12,858,472
Restricted stock, at cost
Loans held for sale
Loans, net of allowance for loan losses of $988,277 and $1,073,000, respectively
Premises and equipment, net
Accrued interest receivable
Other assets
2012
$ 1,314,581
6,010,458
7,325,039
428,450
--
75,396,723
362,600
917,463
71,709,409
2,864,692
176,467
125,974
2,922,096
184,261
108,151
Total assets $ 91,850,778
Liabilities
Deposits:
Noninterest-bearing deposits
$ 5,145,558
Interest-bearing deposits
75,575,385
Total deposits
80,720,943
Subordinated debt
385,000
Long-term borrowings
1,000,000
Accrued interest payable
49,610
Other accrued expenses and other liabilities
161,417
Total liabilities
82,316,970
$ 83,529,019
$ 5,211,201
69,879,255
75,090,456
--
--
53,868
133,413
75,277,737
Stockholders’ Equity
Preferred stock, $5 par value, 1,000,000
shares authorized, none issued
Common stock, $5 par value, 10,000,000
shares authorized; 1,167,890 and 1,059,765
shares issued and outstanding as of
December 31, 2013 and 2012, respectively
Additional paid-in capital
Retained (deficit)
--
--
5,839,450
6,053,499
(2,359,141)
5,298,825
5,738,346
(2,785,889)
Total stockholders’ equity
9,533,808
8,251,282
Total liabilities and stockholder’s equity
$ 91,850,778
2013 ANNUAL REPORT
5
$ 83,529,019
FRONTIER COMMUNITY BANK
BOARD OF DIRECTORS
BOARD OF DIRECTORS
Unless otherwise indicated, all directors have served the
Bank since it commenced business in February of 2008.
Gianfranco “John” Avoli
Mr. Avoli is the Chief Executive Officer of the Frontier
Culture Museum of Virginia. He is the former Mayor of
the City of Staunton, Virginia.
Julian Q. Moffett
Mr. Moffett is the Chief Executive Officer of Moffett
Paving & Excavating Corporation and past Assistant City
Manager and Director of Public Works for the City of
Staunton.
Roller “Petey” L. Eavers. Jr.
Mr. Eavers is President and Chief Executive Officer of
Eavers Enterprises, Inc. and Roller Eavers Partnership. He
operates several local businesses including Eavers Tire
and Eavers BP.
James A. Morris
Mr. Morris joined the board on Jan 1, 2013. He is
the President of WM Management Ltd, a real estate
investment and management firm, President of DICAM,
Inc., a technology company and President of ROXIE,
LLC, which is a real estate consulting and acquisition
company.
Robert O. Errett
Mr. Errett has served as the Chairman of the Board
of Directors for Frontier Community Bank since May
of 2011. He is the Chief Executive Officer of Parker
Compound Bows, Inc., a manufacturer of hunting bows
and crossbows headquartered in Augusta County and
Chairman of Outdoor Colors, LLC, an outdoor products
decoration company in North Carolina.
Alan J. Sweet
Mr. Sweet is the President and Chief Executive Officer.
He has worked for Frontier Community Bank since
inception.
M. Terry Westhafer
Mr. Westhafer is the Vice Chairman of the Board of
Directors for Frontier Community Bank. He is the
President of Central Tire Corporation, a tire company
based in Verona, Virginia and the managing member of
Westhafer Company, LLC.
Paul J. Hodgen
Mr. Hodgen retired as Chief Financial Officer of Sandvik,
Inc., a Swedish materials engineering and manufacturing
company where he has experience with treasury,
financial reporting, risk management and long-range
planning.
2013 ANNUAL REPORT
6
2012 ANNUAL REPORT -
FRONTIER COMMUNITY BANK
FRONTIER COMMUNITY BANK
6
400 Lew Dewitt Boulevard
400 Lew Dewitt Boulevard • Waynesboro, Virginia 22980 • 540.932.9100
www.frontiercommunitybank.com
Waynesboro, Virginia 22980
FRONTIER COMMUNITY BANK