UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the fiscal year ended December 31, 2013
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from _______________ to _______________
Commission File Number 001-35072
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
| B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
ATLANTIC COAST FINANCIAL CORPORATION
4655 Salisbury Road, Suite 110
Jacksonville, Florida 32256
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
Jacksonville, Florida
FINANCIAL STATEMENTS
December 31, 2013 and 2012
CONTENTS
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1 | ||
| FINANCIAL STATEMENTS | |||
| STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS | 2 | ||
| STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS | 3 | ||
| NOTES TO FINANCIAL STATEMENTS | 4 | ||
| SUPPLEMENTAL SCHEDULE | |||
| SCHEDULE H, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR) | 13 | ||
| SIGNATURE PAGE | 14 | ||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Participants and Audit Committee
Atlantic Coast Bank Employees’ Savings & Profit Sharing Plan and Trust
We have audited the accompanying statements of net assets available for benefits of Atlantic Coast Bank Employees’ Savings & Profit Sharing Plan and Trust (the Plan) as of December 31, 2013 and 2012, and the related statement of changes in net assets available for benefits for the year ended December 31, 2013. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and 2012, and the changes in net assets available for benefits for the year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2013 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ McGladrey LLP
Vienna, Virginia
June 27, 2014
| 1. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2013 and 2012
| 2013 | 2012 | |||||||
| ASSETS | ||||||||
| Investments, at fair value | $ | 4,379,461 | $ | 3,529,016 | ||||
| Cash and cash equivalents | 33,967 | 20,646 | ||||||
| Receivables: | ||||||||
| Notes receivable from participants | 248,688 | 236,412 | ||||||
| Net assets available for benefits, at fair value | 4,662,116 | 3,786,074 | ||||||
| Adjustments from fair value to contract value for fully benefit-responsive contracts | (6,310 | ) | (20,114 | ) | ||||
| Net assets available for benefits | $ | 4,655,806 | $ | 3,765,960 | ||||
See accompanying notes to financial statements.
| 2. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2013
| Additions to net assets attributed to: | ||||
| Investment income: | ||||
| Net appreciation in fair value of investments | $ | 803,957 | ||
| Interest and dividends | 1,293 | |||
| Net investment income | 805,250 | |||
| Interest income on notes receivable from participants | 9,395 | |||
| Contributions: | ||||
| Employer | 105,889 | |||
| Participants | 316,976 | |||
| Total contributions | 422,865 | |||
| Net additions | 1,237,510 | |||
| Deductions from net assets attributed to: | ||||
| Benefits paid to participants | 315,277 | |||
| Administrative expenses | 32,387 | |||
| Total deductions | 347,664 | |||
| Net increase in net assets available for benefits | 889,846 | |||
| Net assets available for benefits, beginning of year | 3,765,960 | |||
| Net assets available for benefits, end of year | $ | 4,655,806 | ||
See accompanying notes to financial statements
| 3. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE 1 - DESCRIPTION OF PLAN
The following description of the Atlantic Coast Bank Employees’ Savings & Profit Sharing Plan and Trust (the Plan) is provided for general information purposes only. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions. Copies of the Plan agreement are available from the Plan administrator.
General: The Plan, established on January 1, 1994, is a defined contribution 401(k) plan for the benefit of substantially all employees of Atlantic Coast Bank (the Employer, the Company, the Bank or the Plan Sponsor) who serves as Plan administrator and controls and manages the operation and administration of the Plan. Reliance Trust Company serves as the Plan’s trustee. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions: Each year, participants may elect to contribute up to 75% of their pretax annual compensation, as defined in the Plan, with a total amount not to exceed the applicable dollar limit established by the Internal Revenue Service each year. Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans. The Company provided matching contributions equal to 50 percent of compensation up to 6 percent for the year ended December 31, 2013. Matching contributions are subject to change as determined by the Company’s board of directors. On behalf of each eligible participant a discretionary contribution may also be made by the Company. There were no discretionary contributions for 2013.
Eligibility: Employees are eligible to enroll in the Plan after 3 consecutive months of employment. A participant’s entry into the Plan is effective in the calendar month coinciding with or next following the date the employee satisfies the eligibility requirements.
Participant Accounts: Each participant’s account is credited with the participant’s contribution and any allocations of (a) the Employer’s matching contribution (b) the Plan’s earnings and (c) forfeitures. Additionally, each participant’s account may be charged with an allocation of administrative expenses. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Vesting: Participants are immediately vested in their own contributions plus actual earnings thereon. Vesting in the Employer’s matching and discretionary contribution and the earnings thereon is based on years of credited service.
One year credited service is received when the participant works at least 1,000 hours within the Plan year. A participant is 20% vested after two years, 40% vested after three years, 60% vested after four years, 80% vested after five years, and 100% vested after six years of credited service. A participant also becomes 100% vested in the employer contributions and earnings thereon credited to their account upon death, approved disability or reaching the Plan’s normal retirement age (60) while employed.
| (continued) | 4. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE 1 - DESCRIPTION OF PLAN (continued)
Forfeitures: The non-vested portion of terminated participant accounts plus earnings thereon are considered forfeited and can be used by the Plan to reduce the amount of future employer contributions to the Plan or reallocated to participants at the Plan Sponsor’s discretion.
At December 31, 2013 and 2012, forfeited accounts totaled $19,976 and $5,056, respectively. During the year ended December 31, 2013, $8,813 of forfeitures were used to reduce employer contributions.
Investment Options: Each participant may direct their contributions into any of the investment options available under the Plan and may choose to allocate and reallocate amounts credited to their accounts among all or any combination of the investment funds. Participants may change the amount they contribute once per quarter. Participants may change the allocation of their contributions to the various investment funds daily.
Notes Receivable from Participants: Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan transactions are treated as a transfer to (from) the investment account from (to) the Participant Loan account. Loan terms range from 1 to 5 years or up to 15 years for the purchase of a primary residence. Loan rates ranged from 4.25% to 7.00% as of December 31, 2013. The loans are secured by the balance in the participant’s account and bear interest at rates that are comparable to those currently available from commercial institutions for similar loans. The interest rate remains unchanged for the duration of the loan. Principal and interest is paid ratably through bi-weekly payroll deductions.
Payment of Benefits: Participants may withdraw, in the form of lump-sum or installments, all or some of the vested account balance upon termination of employment, attainment of age 59½, death or disability. In the event of death or permanent disability, participants become fully vested.
Expenses: Certain administrative expenses are paid by the Plan Sponsor.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The policies and principles that significantly affect the determination of net assets and results of operations are summarized below.
Basis of Accounting: The financial statements of the Plan are prepared under the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (U.S. GAAP).
Reclassifications: Certain items in the prior year financial statements have been reclassified to conform to the current presentation. The reclassifications have no effect on net assets available for benefits as previously reported.
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates.
| (continued) | 5. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounting for Uncertainty in Income Taxes: Management evaluated the Plan’s tax positions and concluded that the Plan had maintained its tax exempt status and had taken no uncertain tax positions that require adjustment to the financial statements. Therefore, no provision or liability for income taxes has been included in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
Payment of Benefits: Benefits are recorded when paid.
Recent Accounting Pronouncement: In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) update 2012-04, Technical Corrections and Improvements (ASU 2012-04). ASU 2012-04 covers amendments to a wide range of topics, including plan accounting. These amendments include technical corrections and improvements to the codification and conforming amendments related to fair value measurements. The amendments in this update were generally effective for fiscal periods beginning after December 15, 2012, for public entities, except for amendments in this update where there was no transition guidance which were immediately effective upon issuance. The adoption of amendments in ASU 2012-04 did not have a material impact on the Plan’s financial statements.
Investment Valuation and Income Recognition: The Plan’s investments are reported at fair value. Employer contributions are accrued in the period in which they become obligations of the Employer, and the amount is determined in accordance with the provisions of the Plan. Purchases and sales of investments are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Risks and Uncertainties: The Plan provides for various investment options in collective trust funds, certificate of deposits, and the unitized stock fund of the Employer’s parent company, Atlantic Coast Financial Corporation (ACFC). ACFC is traded on the NASDAQ global market. The underlying investment securities are exposed to various risks, such as interest rate, market, liquidity and credit risks. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for benefits and participants' individual account balances.
Concentration of Credit Risk: At December 31, 2013 and 2012, 11.0% and 7.0% of the Plan’s net assets available for benefits were invested in ACFC common stock.
Cash and Cash Equivalents: Money market funds are classified as cash and cash equivalents on the statement of net assets available for benefits and are reported at carrying amount.
Notes Receivable from Participants: Participant loans are classified as notes receivable from participants on the statement of net assets available for benefits and are reported at their unpaid principal balance plus any accrued but unpaid interest. Delinquent participant loans are reclassified as distributions based upon the terms of the Plan document.
| (continued) | 6. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE 3 – FAIR VALUE OF INVESTMENTS
Fair value is the price that would be received by the Plan for an asset or paid by the Plan to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date in the Plan’s principal or most advantageous market for the asset or liability. U.S. GAAP establishes a fair value hierarchy which requires the Plan to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy places the highest priority on unadjusted quoted market prices in active markets for identical assets or liabilities and gives the lowest priority to unobservable inputs. The three levels of inputs within the fair value hierarchy are defined as follows:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Plan has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect the Plan’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
In some cases, a valuation technique used to measure fair value may include inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.
Investments measured at fair value on a recurring basis are summarized below at December 31, 2013:
| Level 1 | Level 2 | Total | ||||||||||
| At December 31, 2013: | ||||||||||||
| Company stock account, categorized by the nature of underlying investments: | ||||||||||||
| Unitized stock fund | $ | 510,414 | $ | - | $ | 510,414 | ||||||
| Certificate of deposit | - | 36,736 | 36,736 | |||||||||
| Collective trust funds, categorized by the nature of underlying investments: | ||||||||||||
| Commingled equity funds | - | 1,682,461 | 1,682,461 | |||||||||
| Equity index funds | - | 362,178 | 362,178 | |||||||||
| Blended index funds | - | 138,880 | 138,880 | |||||||||
| Commingled fixed funds | - | 551,219 | 551,219 | |||||||||
| Short-term investment funds | - | 577,383 | 577,383 | |||||||||
| Stable value fund | - | 520,190 | 520,190 | |||||||||
| Total investments | $ | 510,414 | $ | 3,869,047 | $ | 4,379,461 | ||||||
| (continued) | 7. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE 3 – FAIR VALUE OF INVESTMENTS (continued)
Investments measured at fair value on a recurring basis are summarized below at December 31, 2012:
| Level 1 | Level 2 | Total | ||||||||||
| At December 31, 2012: | ||||||||||||
| Company stock account, categorized by the nature of underlying investments: | ||||||||||||
| Unitized stock fund | $ | 265,437 | $ | - | $ | 265,437 | ||||||
| Certificate of deposit | - | 36,583 | 36,583 | |||||||||
| Collective trust funds, categorized by the nature of underlying investments: | ||||||||||||
| Commingled equity funds | - | 1,254,391 | 1,254,391 | |||||||||
| Equity index funds | - | 265,018 | 265,018 | |||||||||
| Blended index funds | - | 147,010 | 147,010 | |||||||||
| Commingled fixed funds | - | 440,563 | 440,563 | |||||||||
| Short-term investment funds | - | 550,716 | 550,716 | |||||||||
| Stable value fund | - | 569,298 | 569,298 | |||||||||
| Total investments | $ | 265,437 | $ | 3,263,579 | $ | 3,529,016 | ||||||
The following descriptions of the valuation methods and significant assumptions used by the Plan to estimate the fair values of investments apply to investments held directly by the Plan.
Unitized stock fund: Investments in the unitized stock fund are stated at fair value based on market value of the stock as obtained from quoted market prices on a nationally recognized exchange (Level 1).
Certificate of deposit accounts: Fair values are estimated to approximate deposit account balances, payable on demand, as no discounts for credit quality or liquidity were determined to be applicable (Level 2).
Collective trust funds - Commingled Equity Funds: The fair values of participation units held in collective trusts-commingled equity funds are based on the net asset values reported by the fund managers as of the financial statement dates and recent transaction prices (Level 2). The investment objectives and underlying investments of the collective trusts-commingled equity funds vary, with some holding diversified portfolios of domestic stocks, international stocks, some holding short-term and/or medium-term corporate, government and government agency bonds, mutual funds and collective investment funds.
Collective trust funds - Equity Index Funds: The fair values of participation units held in collective trusts - equity index funds are based on the net asset values reported by the fund managers as of the financial statement dates and recent transaction prices (Level 2). The investment objectives and underlying investments of the collective trusts - equity index funds vary, the collective trusts - equity index funds invest in various collective investment funds sponsored by State Street Bank and Trust Company in proportion to the fund’s investment objectives.
| (continued) | 8. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE 3 – FAIR VALUE OF INVESTMENTS (continued)
Collective trust funds - Blended Index Funds: The fair values of participation units held in collective trusts - blended index funds are based on the net asset values reported by the fund managers as of the financial statement dates and recent transaction prices (Level 2). The investment objectives and underlying investments of the collective trusts - blended index funds vary, the collective trusts - blended index funds invest in various collective investment funds sponsored by State Street Bank and Trust Company in proportion to the fund’s investment objectives.
Collective trust funds - Commingled Fixed Funds: The fair values of participation units held in collective trusts - commingled fixed funds are based on the net asset values reported by the fund managers as of the financial statement dates and recent transaction prices (Level 2). The investment objectives and underlying investments of the collective trusts - commingled fixed funds vary; the collective trusts - commingled fixed funds invest in U.S. Government and agency obligations, corporate and government debt instruments, repurchase agreements and various collective investment funds sponsored by State Street Bank and Trust Company in proportion to the fund’s investment objectives.
Collective trust funds - Short Term Investment Fund: The fair values of participation units held in collective trusts - short term investment fund is based on the net asset values reported by the fund managers as of the financial statement dates and recent transaction prices (Level 2). The investment objectives and underlying investments of the collective trusts - short term investment fund is to provide safety of principal, daily liquidity, and a competitive yield, the collective trusts-short term investment fund invests in U.S. Government and agency obligations, corporate and government debt instruments and repurchase agreements.
Collective trust funds - Stable value fund: The fair values of participation units in the stable value collective trust are based upon the net asset values of such fund, after adjustments to reflect all fund investments at fair value, including direct and indirect interests in fully benefit-responsive contracts, as reported in the audited financial statements of the fund (Level 2). The fund invests in debt instruments, U.S. Government obligations, insurance company investment contracts, conventional and synthetic investment contracts issued by life insurance companies, banks, and other financial institutions, with the objective of providing a high level of return that is consistent with also providing stability of investment return, preservation of capital and liquidity to pay plan benefits of its retirement plan investors. It is the Trustee’s intent to provide all participant-directed withdrawals at contract value, and to honor all such requests as soon as reasonably practicable, subject to the competing option restriction which states that participants may not directly transfer their interest in the fund to a plan investment option determined by the Trustee to be a competing investment option.
| (continued) | 9. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE 3 – FAIR VALUE OF INVESTMENTS (continued)
Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The statement of net assets available for benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The statement of changes in net assets available for benefits is prepared on a contract value basis with respect to fully benefit-responsive investment contracts. The Pentegra Stable Value Fund is a fully benefit-responsive investment contract. The average yield on the contract was 0.94% for the year ended December 31, 2013.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following table sets forth additional disclosures of Plan’s investments whose fair value is estimated using net asset value per share (or its equivalent) as of December 31, 2013 and 2012:
| Fair Value | Unfunded Commitment | Redemption Frequency | Redemption Notice Period | |||||||||||
| At December 31, 2013: | ||||||||||||||
| Commingled equity funds | $ | 1,682,461 | $ | - | Daily | None | ||||||||
| Equity index funds | 362,178 | - | Daily | None | ||||||||||
| Blended index funds | 138,880 | - | Daily | None | ||||||||||
| Commingled fixed funds | 551,219 | - | Daily | None | ||||||||||
| Short-term investment funds | 577,383 | - | Daily | None | ||||||||||
| Stable value fund | 520,190 | - | Immediate | None | ||||||||||
| Total | $ | 3,832,311 | ||||||||||||
| At December 31, 2012: | ||||||||||||||
| Commingled equity funds | $ | 1,254,391 | $ | - | Daily | None | ||||||||
| Equity index funds | 265,018 | - | Daily | None | ||||||||||
| Blended index funds | 147,010 | - | Daily | None | ||||||||||
| Commingled fixed funds | 440,563 | - | Daily | None | ||||||||||
| Short-term investment funds | 550,716 | - | Daily | None | ||||||||||
| Stable value fund | 569,298 | - | Immediate | None | ||||||||||
| Total | $ | 3,226,996 | ||||||||||||
| (continued) | 10. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE 4 - INVESTMENTS
Investments representing more than 5% of the net assets available for benefits at December 31, 2013 or 2012 are as follows:
| 2013 | 2012 | |||||||
| Investments at fair value: | ||||||||
| Collective trust funds: | ||||||||
| State Street Bank and Trust Company/SSgA Short-term Investment Fund | $ | 577,383 | $ | 550,716 | ||||
| State Street Bank and Trust Company/SSgA S&P MidCap Index Fund | 573,579 | 336,087 | ||||||
| Invesco/Pentegra Stable Value Fund (contract value of $513,880 in 2013 and $549,184 in 2012) | 520,190 | 569,298 | ||||||
| State Street Bank and Trust Company/SSgA NASDAQ 100 (1) | 214,978 | 221,375 | ||||||
| Investments at fair value as determined by quoted market price: | ||||||||
| Atlantic Coast Financial Corporation unitized stock fund | 510,414 | 265,437 | ||||||
(1) Fund was less than 5% of net assets in 2013.
During 2013, the Plan’s investments, including gains and losses on investments bought, sold and held during the year, changed in value as follows:
| Appreciation/(Depreciation) | ||||
| Collective trust funds | $ | 520,849 | ||
| Atlantic Coast Financial Corporation unitized stock fund | 283,108 | |||
| Total | $ | 803,957 | ||
At December 31, 2013 and 2012, the Plan held 112,392 and 124,696 shares of ACFC common stock.
NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS
A party-in-interest is defined under DOL regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer, and certain others. Certain professional fees for the administration of the Plan were paid by the Employer on behalf of the Plan. During 2013, fees of $29,952 were paid by the Plan to The Reliance Trust Company, trustee of the Plan, which represent party-in-interest transactions.
Party-in-interest assets held by the Plan at December 31, 2013 and 2012 include the Invesco/Pentegra Stable Value Fund totaling $520,190 and $569,298, respectively, ACFC common stock totaling $510,414 and $265,437, respectively, Atlantic Coast Financial Certificates of Deposit totaling $36,736 and $36,583, respectively and notes receivable from participants totaling $248,688 and $236,412, respectively. There were no dividends received for 2013 from the Atlantic Coast Financial Corporation common stock.
| (continued) | 11. |
ATLANTIC COAST BANK EMPLOYEES’ SAVINGS &
PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE 6 - INCOME TAX STATUS
The Plan is currently maintained on a prototype plan, which received an opinion letter from the Internal Revenue Service (IRS), dated March 31, 2008. The opinion letter stated that the form of the Plan is acceptable under section 401 of the Internal Revenue Code (IRC), and therefore the related trust is tax exempt. The Plan administrator has determined the Plan is eligible and has chosen to rely on the current prototype plan opinion letter from the IRS. The Plan was amended after the date of the opinion letter, but Plan management believes that the Plan is currently being operated in accordance with the IRC.
NOTE 7 – PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of the Plan’s termination, participants would become 100 percent vested in their employer contributions and their accounts would be distributed in accordance with the Plan document.
NOTE 8 – OTHER MATTERS
The Plan Sponsor had incurred recurring losses from operations through the end of 2013 which resulted in the Bank entering into a consent order (the Order) with the Office of the Comptroller of Currency (the OCC). The Order with the OCC required, among other matters, that the Bank achieve and maintain a total risk based capital ratio of 13.00% of risk weighted assets and a Tier 1 capital ratio of 9.00% of adjusted total assets. As of December 31, 2013 these ratios were 20.47% and 9.73%, respectively. The Plan’s management believes that ACFC will continue as a going concern and, therefore, the Plan will continue as a going concern.
| 12 |
SCHEDULE H, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2013
| Name of Plan Sponsor: | Atlantic Coast Bank | ||
| Employer Identification Number: | 58-0570960 | ||
| Three-digit Plan Number: | 003 |
| (a) | (b) Identity of Issue, Borrower, Lessor, or Similar Party | (c) Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value | (d) Cost | (e) Current Value | ||||||||||
| Collective Trust Funds | ||||||||||||||
| State Street Bank & Trust Co. | Short Term Investment Fund | (2 | ) | $ | 577,383 | |||||||||
| State Street Bank & Trust Co. | S&P MidCap Index Fund | (2 | ) | 573,579 | ||||||||||
| (1) | Invesco | Pentegra Stable Value Fund, at contract value | (2 | ) | 513,880 | |||||||||
| State Street Bank & Trust Co. | Russell 2000 Index Fund | (2 | ) | 225,153 | ||||||||||
| State Street Bank & Trust Co. | S&P 500 Growth Fund | (2 | ) | 224,636 | ||||||||||
| State Street Bank & Trust Co. | Nasdaq 100 | (2 | ) | 214,978 | ||||||||||
| State Street Bank & Trust Co. | S&P 500 Flagship Index | (2 | ) | 189,602 | ||||||||||
| State Street Bank & Trust Co. | S&P Value Fund | (2 | ) | 185,666 | ||||||||||
| State Street Bank & Trust Co. | Moderate Strategic Balanced Fund | (2 | ) | 147,394 | ||||||||||
| State Street Bank & Trust Co. | Daily EAFE Index | (2 | ) | 146,465 | ||||||||||
| State Street Bank & Trust Co. | Target Retirement 2035 | (2 | ) | 133,558 | ||||||||||
| State Street Bank & Trust Co. | Aggressive Strategic Balanced Fund | (2 | ) | 128,705 | ||||||||||
| State Street Bank & Trust Co. | Target Retirement 2015 | (2 | ) | 110,675 | ||||||||||
| State Street Bank & Trust Co. | REIT Index Non-Lending CL A | (2 | ) | 108,048 | ||||||||||
| State Street Bank & Trust Co. | US Long Treasury Index | (2 | ) | 92,097 | ||||||||||
| State Street Bank & Trust Co. | Conservative Strategic Balanced Fund | (2 | ) | 86,079 | ||||||||||
| State Street Bank & Trust Co. | Target Retirement 2025 | (2 | ) | 72,946 | ||||||||||
| State Street Bank & Trust Co. | Passive Bond Market Index | (2 | ) | 46,783 | ||||||||||
| State Street Bank & Trust Co. | Target Retirement 2045 | (2 | ) | 40,069 | ||||||||||
| State Street Bank & Trust Co. | Target Retirement 2030 | (2 | ) | 7,593 | ||||||||||
| State Street Bank & Trust Co. | Target Retirement 2050 | (2 | ) | 712 | ||||||||||
| Total Collective Trust Funds | 3,826,001 | |||||||||||||
| Common Stock | ||||||||||||||
| (1) | Atlantic Coast Financial Corporation | Unitized Stock Fund | (2 | ) | 510,414 | |||||||||
| Certificate of Deposit | ||||||||||||||
| (1) | Atlantic Coast Bank | Certificate of Deposit, interest rate of 0.45%, maturing on 12/8/2014 | (2 | ) | 36,736 | |||||||||
| Cash and Cash Equivalents | ||||||||||||||
| Federated Investment Management Co. | Money Market Fund, interest rate of 0.10% | (2 | ) | 33,967 | ||||||||||
| Notes Receivable From Participants | ||||||||||||||
| (1) | Atlantic Coast Bank | Interest rates ranging from 4.25% to 7.00%, maturities ranging from 2/14/2014 to 1/28/2019 | (2 | ) | 248,688 | |||||||||
| Total | $ | 4,655,806 | ||||||||||||
(1) Denotes party-in-interest.
(2) Investment is participant-directed, therefore historical cost is not required.
| 13 |
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| ATLANTIC COAST BANK EMPLOYEES’ SAVINGS & PROFIT SHARING PLAN AND TRUST | ||
| Date: June 27, 2014 | By: | /s/ John C. Lent |
| John C. Lent | ||
| Executive Vice President and Chief Financial Officer | ||
| Atlantic Coast Bank | ||
| 14 |