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
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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
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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 Deposits 80,720,943 75,090,456 Assets 91,850,778 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 and other 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
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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
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$ 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
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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