pab bankshares, inc. - SNL Financial

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. REGULATORY OVERSIGHT, CAPITAL ADEQUACY, OPERATING LOSSES, LIQUIDITY AND
MANAGEMENT’S PLANS (Continued)
Operating Losses
The Company incurred a net loss of $51.2 million for the year ended December 31, 2009. This loss was largely the result
of increases in non-performing assets, which caused the Company to record increased provisions for loan losses, carrying
costs on foreclosed properties and losses on the sale of foreclosed properties, and other non-recurring accounting
adjustments. Carrying costs on foreclosed assets are expected to remain elevated during 2010 as the Company works
towards liquidation of these non-performing assets. Margin compression also contributed to the net loss for 2009. In
addition, during the fourth quarter of 2009, the Company recorded a $6.0 million goodwill impairment charge and a
deferred tax valuation allowance of $11.1 million.
Liquidity
The Bank’s primary sources of liquidity are provided by its deposits, the scheduled repayments on its loans, and interest
and maturities of its investments. Cash and due from banks and federal funds sold can also be utilized to meet liquidity
needs. At December 31, 2009, the Bank had approximately $142.7 million, or approximately 12% of its total assets, in
cash balances on account at the Federal Reserve. All securities have been classified as available for sale, which means
they are carried at fair value with unrealized gains and losses excluded from earnings and reported as a separate
component of other comprehensive income. If necessary, the Bank has the ability to sell a portion of its unpledged
investment securities to manage its interest rate sensitivity or liquidity. Unpledged securities totaled $20.2 million at
December 31, 2009. Since the Bank is not considered “well capitalized” as of December 31, 2009, it is unable to accept,
rollover, or renew any brokered deposits without prior regulatory approval. Approximately $53.3 million of the Bank’s
existing brokered deposits are scheduled to mature in 2010. Based on current and expected liquidity needs and sources,
the Company expects to be able to meet its obligations through December 31, 2010.
NOTE 3.
RESTRICTIONS ON CASH AND BALANCES DUE FROM BANKS
The Bank is required to maintain reserve balances in cash or on deposit with correspondent banks and the Federal Reserve
Bank of Atlanta, based on a percentage of deposits. The total of those reserve balances was approximately $16,579,000
and $6,992,000 at December 31, 2009 and 2008, respectively.
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