Annual Statements Open main menu

BCB BANCORP INC - Quarter Report: 2016 September (Form 10-Q)

95864 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

Or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 0-50275

 

BCB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

New Jersey

 

26-0065262

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

I.D. No.)

 

 

104-110 Avenue C Bayonne, New Jersey

 

07002

(Address of principal executive offices)

 

(Zip Code)



(201) 823-0700

(Registrant’s telephone number, including area code)

 



Not Applicable

(Former name, former address and former fiscal year if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes       No



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).       Yes       No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and larger accelerated filer” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

Large Accelerated Filer

 

  

Accelerated Filer

 

 

 

 

 

 

Non-Accelerated Filer

 

  

Smaller Reporting Company   

 

 

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).      Yes      No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 1st, 2016, BCB Bancorp, Inc., had 11,254,103 shares of common stock, no par value, outstanding.



 

 


 





 



 

BCB BANCORP INC. AND SUBSIDIARIES

INDEX

 



 

 

 

 

 

 

 

 

 

 

  

Page

 

PART I. CONSOLIDATED FINANCIAL INFORMATION

  

 

 

 

 

 

Item 1. Consolidated Financial Statements

  

 

 

 

 

 

Consolidated Statements of Financial Condition as of September 30, 2016 (unaudited) and December 31, 2015

  

 

  

 

 

Consolidated Statements of Income for the three and nine months ended September 30, 2016 and 2015 (unaudited)

  

 

  



 

 

 

 

Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015 (unaudited)

 

 

 

 

 

Consolidated Statement of Changes in Stockholders’ Equity for the nine months ended September 30, 2016 and 2015 (unaudited)

  

 

  



Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (unaudited)

  

 

  



Notes to Unaudited Consolidated Financial Statements

  

 

  

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

 

40 

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

  

 

45 

 

 

 

Item 4. Controls and Procedures

  

 

46 

  

 

 

PART II. OTHER INFORMATION

  

 

47 

 

 

 

Item 1. Legal Proceedings

  

 

47 

  

 

 

Item 1A. Risk Factors

  

 

47 

  

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

  

 

47 

  

 

 

Item 3. Defaults Upon Senior Securities

  

 

47 

  

 

 

Item 4. Mine Safety Disclosures

  

 

47 

  

 

 

Item 5. Other Information

  

 

47 

  

 

 

Item 6. Exhibits

  

 

50 

  





 

 

 


 

PART I. CONSOLIDATED FINANCIAL INFORMATION

ITEM I. CONSOLIDATED FINANCIAL STATEMENTS

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(In  Thousands, Except Share and Per Share Data, Unaudited)



 



 

 

 

 

 



 

 

 

 

 



September 30,

 

December 31,



2016

 

2015



 

 

 

 

 

ASSETS

 

 

 

 

 

Cash and amounts due from depository institutions

$

16,801 

 

$

11,808 

Interest-earning deposits

 

120,906 

 

 

120,827 

  Total cash and cash equivalents

 

137,707 

 

 

132,635 



 

 

 

 

 

Interest-earning time deposits

 

980 

 

 

1,238 

Securities available for sale

 

52,907 

 

 

9,623 

Loans held for sale

 

1,474 

 

 

1,983 

Loans receivable, net of allowance for loan losses of $17,590 and

 

 

 

 

 

  $18,042 respectively

 

1,431,211 

 

 

1,420,118 

Federal Home Loan Bank of New York stock, at cost

 

8,991 

 

 

10,711 

Premises and equipment, net

 

17,240 

 

 

15,727 

Accrued interest receivable

 

5,229 

 

 

5,595 

Other real estate owned

 

2,967 

 

 

1,564 

Deferred income taxes

 

8,546 

 

 

9,881 

Other assets

 

11,684 

 

 

9,331 

   Total Assets

$

1,678,936 

 

$

1,618,406 



 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 



 

 

 

 

 

LIABILITIES

 

 

 

 

 

Non-interest bearing deposits

$

143,093 

 

$

130,920 

Interest bearing deposits

 

1,237,292 

 

 

1,143,009 

 Total deposits

 

1,380,385 

 

 

1,273,929 



 

 

 

 

 

Borrowed funds

 

155,000 

 

 

200,000 

Subordinated debentures

 

4,124 

 

 

4,124 

Other liabilities and accrued interest payable

 

7,128 

 

 

6,809 

   Total Liabilities

 

1,546,637 

 

 

1,484,862 



 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

Preferred stock: $0.01 par value, 10,000,000 shares authorized,

 

 

 

 

 

   issued and outstanding 1,560 shares of series A, B, and C 6% noncumulative perpetual

 

 

 

 

 

 preferred stock (liquidation value $10,000 per share) at September 30, 2016 and 1,731 at December 31, 2015

 

 -

 

 

 -

Additional paid-in capital preferred stock

 

15,464 

 

 

17,174 

Common stock; no par value; 20,000,000 shares authorized, issued 13,783,366 and 13,738,587

 

 

 

 

 

 at September 30,2016 and December 31, 2015, respectively, outstanding 11,254,103 shares and

 

 

 

 

 

   11,209,324 shares, respectively

 

882 

 

 

879 

Additional paid-in capital common stock

 

119,333 

 

 

118,803 

Retained earnings

 

27,497 

 

 

27,382 

Accumulated other comprehensive (loss)

 

(1,781)

 

 

(1,598)

Treasury stock, at cost, 2,529,263 shares at September 30, 2016 and December 31, 2015

 

(29,096)

 

 

(29,096)

   Total Stockholders' Equity

 

132,299 

 

 

133,544 



 

 

 

 

 

    Total Liabilities and Stockholders' Equity

$

1,678,936 

 

$

1,618,406 



 

 

 

 

 



See accompanying notes to unaudited consolidated financial statements.





 







1

 


 



BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Income 

(In Thousands, except for per share amounts, Unaudited)





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Three Months Ended September 30,

 

Nine Months Ended September 30,



 

2016

 

 

2015

 

 

2016

 

 

2015



 

 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 Loans, including fees

$

17,191 

 

$

17,033 

 

$

51,947 

 

$

49,264 

 Investments, taxable

 

300 

 

 

165 

 

 

673 

 

 

463 

 Other interest-earning assets

 

240 

 

 

18 

 

 

623 

 

 

45 

    Total interest income

 

17,731 

 

 

17,216 

 

 

53,243 

 

 

49,772 



 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 Deposits:

 

 

 

 

 

 

 

 

 

 

 

    Demand

 

585 

 

 

245 

 

 

1,417 

 

 

644 

    Savings and club

 

99 

 

 

93 

 

 

281 

 

 

309 

    Certificates of deposit

 

2,077 

 

 

1,681 

 

 

6,237 

 

 

4,184 



 

2,761 

 

 

2,019 

 

 

7,935 

 

 

5,137 

    Borrowed funds

 

1,373 

 

 

1,654 

 

 

4,650 

 

 

4,805 

      Total interest expense

 

4,134 

 

 

3,673 

 

 

12,585 

 

 

9,942 



 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

13,597 

 

 

13,543 

 

 

40,658 

 

 

39,830 

Provision (credit) for loan losses

 

(301)

 

 

70 

 

 

(75)

 

 

1,920 



 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision (credit) for loan losses

 

13,898 

 

 

13,473 

 

 

40,733 

 

 

37,910 



 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

  Fees and service charges

 

873 

 

 

520 

 

 

2,320 

 

 

1,553 

  Gain on sales of loans

 

718 

 

 

1,415 

 

 

2,671 

 

 

3,328 

  Loss on bulk sale of impaired loans held in portfolio

 

(88)

 

 

 -

 

 

(373)

 

 

 -

  Other

 

27 

 

 

29 

 

 

72 

 

 

75 

     Total non-interest income

 

1,530 

 

 

1,964 

 

 

4,690 

 

 

4,956 



 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

  Salaries and employee benefits

 

6,747 

 

 

5,941 

 

 

18,931 

 

 

16,782 

  Occupancy and equipment

 

2,192 

 

 

1,949 

 

 

6,107 

 

 

5,682 

  Data processing and service fees

 

358 

 

 

1,013 

 

 

2,253 

 

 

3,074 

  Professional fees

 

457 

 

 

421 

 

 

1,367 

 

 

827 

  Director fees

 

183 

 

 

181 

 

 

519 

 

 

560 

  Regulatory assessments

 

429 

 

 

328 

 

 

1,139 

 

 

868 

  Advertising and promotional

 

482 

 

 

359 

 

 

1,235 

 

 

1,034 

  Other real estate owned, net

 

36 

 

 

27 

 

 

146 

 

 

196 

  Other

 

1,459 

 

 

1,473 

 

 

4,549 

 

 

3,816 

     Total non-interest expense

 

12,343 

 

 

11,692 

 

 

36,246 

 

 

32,839 



 

 

 

 

 

 

 

 

 

 

 

Income before income tax provision

 

3,085 

 

 

3,745 

 

 

9,177 

 

 

10,027 

Income tax provision

 

1,171 

 

 

1,463 

 

 

3,647 

 

 

4,018 



 

 

 

 

 

 

 

 

 

 

 

Net Income

$

1,914 

 

$

2,282 

 

$

5,530 

 

$

6,009 

Preferred stock dividends

 

234 

 

 

254 

 

 

702 

 

 

657 

Net Income available to common stockholders

$

1,680 

 

$

2,028 

 

$

4,828 

 

$

5,352 



 

 

 

 

 

 

 

 

 

 

 

Net Income per common share-basic and diluted

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.15 

 

$

0.24 

 

$

0.43 

 

$

0.64 

Diluted

$

0.15 

 

$

0.24 

 

$

0.43 

 

$

0.63 



 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

11,246 

 

 

8,436 

 

 

11,230 

 

 

8,419 

Diluted

 

11,258 

 

 

8,453 

 

 

11,236 

 

 

8,441 

See accompanying notes to unaudited consolidated financial statements.

 

2

 


 

BCB BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In Thousands, Unaudited)







 

 

 

 

 

 

 

 

 

 



Three Months Ended September 30,

 

Nine Months Ended September 30,



2016

2015

 

2016

 

2015



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Net Income

$

1,914 

$

2,282 

 

$

5,530 

 

$

6,009 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

Unrealized gains on available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains arising during the period (a)

 

(297)

 

54 

 

 

(144)

 

 

Benefit plans (b)

 

(24)

 

 -

 

 

(39)

 

 

(15)

Other comprehensive income

 

(321)

 

54 

 

 

(183)

 

 

(10)

Comprehensive income

$

1,593 

$

2,336 

 

$

5,347 

 

$

5,999 





(a)

Represents the net change of the unrealized gain (loss) on available-for-sale securities. Represents unrealized gains (losses) of ($502,000), $91,000,  ($243,000) and $8,000, respectively less deferred taxes of ($205,000),  $37,000,  ($99,000) and $3,000,  respectively.

(b)

Represents the net change of unrecognized loss included in net periodic pension cost. Represents a gross change of $40,000,  $0,  $65,000, and $25,000, respectively, less deferred taxes of $16,000, $0,  $26,000, and $10,000, respectively.  The Consolidated Statements of Income line items impacted by these amounts are salaries and employee benefits and income tax provision.





See accompanying notes to unaudited consolidated financial statements.







 

3

 


 





BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholders’ Equity

(In Thousands, except share and per share data, Unaudited)

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Preferred Stock

 

Common Stock

 

Additional             Paid-In Capital

 

Retained Earnings

 

Treasury Stock

 

Accumulated Other Comprehensive Income (Loss)

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance at January 1, 2016

$

 -

 

$

879 

 

$

135,977 

 

$

27,382 

 

$

(29,096)

 

$

(1,598)

 

$

133,544 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redemption of Series A Preferred Stock

 

 -

 

 

 -

 

 

(1,710)

 

 

 -

 

 

 -

 

 

 -

 

 

(1,710)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 -

 

 

 -

 

 

84 

 

 

 -

 

 

 -

 

 

 -

 

 

84 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends payable on Series A, B and C 6% noncumulative perpetual preferred stock

 

 -

 

 

 -

 

 

 -

 

 

(702)

 

 

 -

 

 

 -

 

 

(702)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends on common stock ($0.14 per share declared)

 

 -

 

 

 -

 

 

 -

 

 

(4,509)

 

 

 -

 

 

 -

 

 

(4,509)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Reinvestment Plan

 

 -

 

 

 

 

204 

 

 

(204)

 

 

 -

 

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Purchase Plan

 

 -

 

 

 -

 

 

242 

 

 

 -

 

 

 -

 

 

 -

 

 

242 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 -

 

 

 -

 

 

 -

 

 

5,530 

 

 

 -

 

 

 -

 

 

5,530 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(183)

 

 

(183)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance at September 30, 2016

$

 -

 

$

882 

 

$

134,797 

 

$

27,497 

 

$

(29,096)

 

$

(1,781)

 

$

132,299 













 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Preferred Stock

 

Common Stock

 

Additional             Paid-In Capital

 

Retained Earnings

 

Treasury Stock

 

Accumulated Other Comprehensive Income (Loss)

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance at January 1, 2015

$

 -

 

$

699 

 

$

106,012 

 

$

25,983 

 

$

(29,105)

 

$

(1,337)

 

$

102,252 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Proceeds from issuance of Series C preferred stock

 

 -

 

 

 -

 

 

3,540 

 

 

 -

 

 

 -

 

 

 -

 

 

3,540 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 -

 

 

 -

 

 

48 

 

 

 -

 

 

 -

 

 

 -

 

 

48 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury Stock Adjustment

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends payable on Series A, B and C 6% noncumulative perpetual preferred stock

 

 -

 

 

 -

 

 

 -

 

 

(657)

 

 

 -

 

 

 -

 

 

(657)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends on Common Stock ($0.14 per share) declared

 

 -

 

 

 -

 

 

 -

 

 

(3,346)

 

 

 -

 

 

 -

 

 

(3,346)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Reinvestment Plan

 

 -

 

 

 -

 

 

187 

 

 

(187)

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Purchase Plan

 

 -

 

 

 

 

353 

 

 

 -

 

 

 -

 

 

 -

 

 

356 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 -

 

 

 -

 

 

 -

 

 

6,009 

 

 

 -

 

 

 -

 

 

6,009 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(10)

 

 

(10)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance at September 30, 2015

$

 -

 

$

702 

 

$

110,140 

 

$

27,802 

 

$

(29,096)

 

$

(1,347)

 

$

108,201 



See accompanying notes to unaudited consolidated financial statements.

 



















4

 


 

 



BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In Thousands, Unaudited)





 

 

 

 

 



Nine Months Ended September 30,



2016

 

2015

Cash Flows from Operating Activities :

 

 

 

 

 

  Net Income

$

5,530 

 

$

6,009 

  Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

        Depreciation of premises and equipment

 

1,790 

 

 

1,573 

        Amortization and accretion, net

 

(1,440)

 

 

(404)

        Provision for loan losses

 

(75)

 

 

1,920 

        Deferred income tax benefit

 

1,460 

 

 

726 

        Loans originated for sale

 

(26,568)

 

 

(14,284)

        Proceeds from sale of loans originated for sale

 

29,748 

 

 

19,554 

        Gain on sales of loans originated for sale

 

(2,671)

 

 

(3,328)

        Fair value adjustment of OREO

 

392 

 

 

72 

        Loss on bulk sale of impaired loans held in portfolio

 

373 

 

 

 -

        Stock compensation expense

 

84 

 

 

48 

       Decrease (Increase) in interest receivable

 

366 

 

 

(704)

       (Increase) in other assets

 

(2,353)

 

 

(1,329)

       (Decrease) Increase in accrued interest payable

 

(298)

 

 

242 

       Increase in other liabilities

 

552 

 

 

1,016 

Net Cash Provided by Operating Activities

 

6,890 

 

 

11,111 

Cash flows from investing activities:

 

 

 

 

 

        Proceeds from calls on securities available for sale

 

1,764 

 

 

1,109 

        Purchases of securities available for sale

 

(45,332)

 

 

(1,174)

        Proceeds from sales of other real estate owned

 

952 

 

 

1,300 

        Proceeds from bulk sale of impaired loans held

 

1,180 

 

 

 -

        Purchase (Redemption) of interest-bearing time deposits

 

258 

 

 

(245)

        Net increase in loans receivable

 

(13,837)

 

 

(189,012)

        Additions to premises and equipment

 

(3,303)

 

 

(3,178)

        Purchase of Federal Home Loan Bank of New York stock

 

1,720 

 

 

(1,881)

Net Cash Used In Investing Activities

 

(56,598)

 

 

(193,081)

Cash flows from financing activities:

 

 

 

 

 

        Net increase in deposits

 

106,456 

 

 

204,723 

        Proceeds from long-term debt

 

(45,000)

 

 

67,000 

        Net change in short-term debt

 

 -

 

 

(26,000)

        Purchases/adjustments of treasury stock

 

 -

 

 

        Cash dividend paid on common stock

 

(4,509)

 

 

(3,346)

        Cash dividend paid on preferred stock

 

(702)

 

 

(657)

        Net proceeds from issuance of common stock

 

245 

 

 

356 

        Net proceeds from (redemption)/issuance of preferred stock

 

(1,710)

 

 

3,540 

Net Cash Provided by Financing Activities

 

54,780 

 

 

245,625 



 

 

 

 

 

Net Increase In Cash and Cash Equivalents

 

5,072 

 

 

63,655 

Cash and Cash Equivalents-Beginning

 

132,635 

 

 

32,123 



 

 

 

 

 

Cash and Cash Equivalents-Ending

$

137,707 

 

$

95,778 



 

 

 

 

 

Supplementary Cash Flow Information:

 

 

 

 

 

     Cash paid during the year for:

 

 

 

 

 

        Income taxes

$

5,317 

 

$

2,172 

        Interest

$

12,883 

 

$

9,700 



 

 

 

 

 



 

 

 

 

 

Non-cash items:

 

 

 

 

 

        Transfer of loans to other real estate owned

$

2,747 

 

$

 -

        Reclassification of loans originated for sale to held to maturity

$

 -

 

$

870 



















5

 


 





BCB Bancorp Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of BCB Bancorp, Inc. (the “Company”) and the Company’s wholly owned subsidiaries, BCB Community Bank (the “Bank”), BCB Holding Company Investment Company, BCB New York Asset Management, Inc. and Pamrapo Service Corporation. The Company’s business is conducted principally through the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and, therefore, do not necessarily include all information that would be included in audited financial statements. The information furnished reflects all adjustments that are, in the opinion of management, necessary for a fair presentation of consolidated financial condition and results of operations. All such adjustments are of a normal recurring nature. These results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2016 or any other future period. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statement of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2015, which are included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission. In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred between September 30, 2016, and the date these consolidated financial statements were issued.





Recent Accounting Pronouncements





In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede the current revenue recognition requirements in Topic 605, Revenue Recognition. The ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year.  The new guidance will be effective for public companies for periods beginning after December 15, 2017 with private companies provided a one-year deferral until periods beginning after December 15, 2018. The ASU permits application of the new revenue recognition guidance to be applied using one of two retrospective application methods. The Company has not yet determined which application method it will use or the potential effects of the new standard on the financial statements, if any. The Company is currently assessing the impacts this new standard will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will supersede the current lease requirements in Topic 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of income. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new guidance will be effective for years beginning after December 15, 2018 for public companies and for years beginning after December 15, 2019 for private companies. Once effective, the standard will be applied using a modified retrospective transition method to the beginning of the earliest period presented. The Company is currently assessing the impacts this new standard will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718).  This ASU was issued as part of FASB’s Simplification Initiative.  The areas for simplification in this Update include income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows for share-based payment transactions.  For public companies, this ASU will be effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  For all other entities, the amendments will be effective for annual periods beginning after December 31, 2017, and interim periods within annual periods beginning after December 15, 2018.  Early adoption is permitted.  The Company is currently assessing the impacts this new standard will have on its consolidated financial statements.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. For public business entities that are U.S. Securities and Exchange Commission filers, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and results of operations.



6

 


 



Note 2 – Reclassification



Certain amounts as of December 31, 2015 and the three and nine month periods ended September 30, 2015 have been reclassified to conform to the current period’s presentation. These changes had no effect on the Company’s results of operations or financial position.





Note 3 – Pension and Other Postretirement Plans

The Company assumed, through the merger with Pamrapo Bancorp, Inc., a non-contributory defined benefit pension plan covering all eligible employees of Pamrapo Savings Bank. Effective January 1, 2010, the defined benefit pension plan (“Pension Plan”), was frozen by Pamrapo Savings Bank. All benefits for eligible participants accrued in the “Pension Plan” to the freeze date have been retained. Accordingly, no employees are permitted to commence participation in the Pension Plan and future salary increases and future years of service are not considered when computing an employee’s benefits under the Pension Plan. The Pension Plan is funded in conformity with the funding requirements of applicable government regulations. The Company also acquired through the merger with Pamrapo Bancorp, Inc. a supplemental executive retirement plan (“SERP”) in which certain former employees of Pamrapo Savings Bank are covered. A SERP is an unfunded non-qualified deferred retirement plan. Participants who retire at the age of 65  (the “Normal Retirement Age”), are entitled to an annual retirement benefit equal to 75% of compensation reduced by their retirement plan annual benefits. Participants retiring before the Normal Retirement Age receive the same benefits reduced by a percentage based on years of service to the Company and the number of years prior to the Normal Retirement Age that participants retire.



Periodic pension and SERP cost, which is recorded as part of salaries and employee benefits expense in our Consolidated Statements of Income, is comprised of the following. (In Thousands):





 



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



Three months ended September 30,

 

Nine months ended September 30,



 

2016

 

2015

 

 

2016

 

 

2015



 

 

 

 

 

 

 

 

 

 

Pension plan:

  

 

  

 

 

  

 

 

  

 

Interest cost

$

82 

$

96 

 

$

246 

 

$

257 

Expected return on plan assets

  

(131)

  

(163)

 

  

(393)

 

  

(435)

Amortization of unrecognized loss

  

36 

  

27 

 

  

108 

 

  

72 



 

 

 

 

 

 

 

 

 

 

Net periodic pension benefit

  

(13)

  

(40)

 

  

(39)

 

  

(106)



  

 

  

 

 

  

 

 

  

 

SERP plan:

  

 

  

 

 

  

 

 

  

 

Interest cost

$

$

 

$

 

$

10 



  

 

  

 

 

  

 

 

  

 

Net periodic postretirement cost

$

$

 

$

 

$

10 





7

 


 

Note 3 – Pension and Other Postretirement Plans (Continued) 



The Company, under the plan approved by its stockholders on April 28, 2011 (“2011 Stock Plan”), authorized the issuance of up to 900,000 shares of common stock of the Company pursuant to grants of stock options. Employees and directors of the Company and the Bank are eligible to participate in the 2011 Stock Plan. All stock options will be granted in the form of either "incentive" stock options or "non-qualified" stock options. Incentive stock options have certain tax advantages that must comply with the requirements of Section 422 of the Internal Revenue Code.  Only employees are permitted to receive incentive stock options. On September 13, 2016, a grant of 160,000 options was declared for members of the Board of Directors which vest at a rate of 10% per year commencing on the first anniversary of the grant date. On December 2, 2015, a grant of 120,000 options and on March 7, 2014, a grant of 110,000 options was declared for certain members of the Board of Directors which vest at a rate of 10% per year, over ten years commencing on the first anniversary of the grant date. There were 32,500 and 6,000 stock options granted to employees in the fourth quarters of 2015 and 2014, respectively, which vest at a rate of 20% per year over the years, commencing on the first anniversary of the grant date.









 

 

 

 

 

 

 

 



 

Number of  Option

 

 

 

 

 

 



  

Shares

 

 

Range of Exercise Prices

 

 

Weighted Average Exercise Price



 

 

 

 

 

 

 

 

Outstanding at December 31, 2015

 

417,000 

 

$

8.93-15.65

 

$

10.75



 

 

 

 

 

 

 

 

Options granted                                         

 

160,000 

 

 

10.92

 

 

10.92

Options exercised                                        

 

 -

 

 

 -

 

 

 -

Options forfeited                                    

 

 -

 

 

 -

 

 

 -

Options expired                                      

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Outstanding at September 30, 2016

 

577,000 

 

$

8.93-15.65

 

$

10.78













As of September 30, 2016, stock options which were granted and were exercisable totaled 78,200 stock options.





It is Company policy to issue new shares upon share option exercise. Expected future compensation expense relating to the 496,800 shares underlying unexercised options outstanding as of September 30, 2016 was $1,238,000 over a weighted average period of 7.33 years. 











 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

Number of  Option

 

 

 

 

 

 



  

Shares

 

 

Range of Exercise Prices

 

 

Weighted Average Exercise Price



 

 

 

 

 

 

 

 

Outstanding at December 31, 2014

 

289,720 

 

$

8.93-15.65

 

$

11.18



 

 

 

 

 

 

 

 

Options granted                                         

 

 -

 

 

 -

 

 

 -

Options exercised                                        

 

 -

 

 

 -

 

 

 -

Options forfeited                                    

 

 -

 

 

 -

 

 

 -

Options expired                                      

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Outstanding at September 30, 2015

 

289,720 

 

$

8.93-15.65

 

$

11.18









As of September 30, 2015, stock options which are granted and were exercisable totaled 78,720 stock options.





It is Company policy to issue new shares upon share option exercise. Expected future compensation expense relating to the unvested options outstanding as of September 30, 2015 was $553,613 over a weighted average period of 7.76 years. 









8

 


 



Note 4 – Net Income per Common Share



Basic net income per common share is computed by dividing net income less dividends on preferred stock by the weighted average number of shares of common stock outstanding. The diluted net income per common share is computed by adjusting the weighted average number of shares of common stock outstanding to include the effects of outstanding stock options, if dilutive, using the treasury stock method. Dilution is not applicable in periods of net loss. For the three months and nine months ended September 30, 2016 and 2015, the difference in the weighted average number of basic and diluted common shares was due solely to the effects of outstanding stock options. No adjustments to net income were necessary in calculating basic and diluted net income per share. For the three months ended September 30, 2016 and 2015 the weighted average number of outstanding options considered to be anti-dilutive were 24,823 and 127,000 respectively, and for the nine months ended September 30, 2016 and 2015, the weighted average number of outstanding options considered to be anti-dilutive were 32,619 and 127,000, respectively. 





The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations: 







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Three Months Ended September 30,



 

2016

 

2015



 

 

Income

 

Shares

 

 

Per Share

 

 

Income

 

Shares

 

 

Per Share



 

 

(Numerator)

 

(Denominator)

 

 

Amount

 

 

(Numerator)

 

(Denominator)

 

 

Amount



 

(In Thousands, Except per share data)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

1,680 

 

 

 

 

 

 

$

2,028 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income available to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stockholders

 

$

1,680 

 

11,246 

 

$

0.15 

 

$

2,028 

 

8,436 

 

$

0.24 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

 -

 

12 

 

 

 

 

 

 -

 

17 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income available to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stockholders

 

$

1,680 

 

11,258 

 

$

0.15 

 

$

2,028 

 

8,453 

 

$

0.24 

















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Nine Months Ended September 30,



 

2016

 

2015



 

 

Income

 

Shares

 

 

Per Share

 

 

Income

 

Shares

 

 

Per Share



 

 

(Numerator)

 

(Denominator)

 

 

Amount

 

 

(Numerator)

 

(Denominator)

 

 

Amount



 

(In Thousands, Except per share data)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

4,828 

 

 

 

 

 

 

$

5,352 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income available to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stockholders

 

$

4,828 

 

11,230 

 

$

0.43 

 

$

5,352 

 

8,419 

 

$

0.64 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

 -

 

 

 

 

 

 

 -

 

22 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income available to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stockholders

 

$

4,828 

 

11,236 

 

$

0.43 

 

$

5,352 

 

8,441 

 

$

0.63 











9

 


 

Note 5 – Securities Available for Sale



The following tables present by maturity the amortized cost, gross unrealized gains and losses on, and fair value of, securities available for sale as of September 30,  2016 and December 31, 2015: 









 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



September 30, 2016



 

 

  

Gross

  

Gross

  

 



Amortized

 

Unrealized

 

Unrealized

 

 

 



Cost

 

Gains

 

Losses

 

Fair Value



(In Thousands)

Residential mortgage-backed securities:

 

 

  

 

 

  

 

 

  

 

 

 Due after five years through ten years

$

4,271 

  

$

89 

  

$

19 

  

$

4,341 

 Due after ten years

 

48,913 

 

 

207 

  

 

554 

  

 

48,566 



$

53,184 

  

$

296 

  

$

573 

  

$

52,907 











 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



December 31, 2015



 

 

  

Gross

  

Gross

  

 



Amortized

 

Unrealized

 

Unrealized

 

 

 



Cost

 

Gains

 

Losses

 

Fair Value



(In Thousands)

Residential mortgage-backed securities:

 

 

  

 

 

  

 

 

  

 

 

Due after five years through ten years

$

3,418 

  

$

13 

  

$

73 

  

$

3,358 

Due after ten years

 

6,238 

  

 

89 

  

 

62 

  

 

6,265 



$

9,656 

  

$

102 

  

$

135 

  

$

9,623 



The unrealized losses, categorized by the length of time of continuous loss position, and fair value of related securities available for sale were as follows:





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Less than 12 Months

  

More than 12 Months

  

Total



Fair

  

Unrealized

  

Fair

  

Unrealized

  

Fair

  

Unrealized



Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses



(In Thousands)

September 30, 2016

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

Residential mortgage-backed securities

$

20,914 

  

$

549 

  

$

3,728 

  

$

24 

  

$

24,642 

  

$

573 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



$

20,914 

  

$

549 

  

$

3,728 

  

$

24 

  

$

24,642 

  

$

573 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

Residential mortgage-backed securities

$

1,163 

  

$

  

$

3,686 

  

$

131 

  

$

4,849 

  

$

135 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



$

1,163 

  

$

  

$

3,686 

  

$

131 

  

$

4,849 

  

$

135 







Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Company  intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery. At September 30, 2016 and December 31, 2015, management performed an assessment for possible OTTI of the Company’s residential mortgage-backed securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Company’s investment, as well as management’s perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of these residential mortgage-backed securities, at September 30, 2016 and December 31, 2015 to be temporary.

10

 


 









Note 6 - Loans Receivable and Allowance for Loan Losses

The following table presents the recorded investment in loans receivable as of September 30, 2016 and December 31, 2015 by segment and class:







 

 

 

 

 



 

 

 

 

 



September 30, 2016

 

December 31, 2015



 

(In Thousands)

Originated loans:

 

 

 

 

 

Residential one-to-four family

$

138,681 

 

$

117,165 

Commercial and multi-family

 

1,010,989 

 

 

982,828 

Construction

 

67,747 

 

 

64,008 

Commercial business(1) 

 

55,176 

 

 

70,340 

Home equity(2) 

 

31,788 

 

 

31,237 

Consumer

 

817 

 

 

2,365 



 

 

 

 

 

Sub-total

 

1,305,198 

 

 

1,267,943 



 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

Residential one-to-four family

 

59,594 

 

 

67,587 

Commercial and multi-family

 

63,471 

 

 

79,308 

Construction

 

 -

 

 

 -

Commercial business(1) 

 

4,157 

 

 

4,281 

Home equity(2) 

 

16,003 

 

 

18,851 

Consumer

 

229 

 

 

263 



 

 

 

 

 

Sub-total

 

143,454 

 

 

170,290 



 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

Residential one-to-four family

 

1,451 

 

 

1,474 

Commercial and multi-family

 

760 

 

 

669 

Construction

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

167 

Home equity(2) 

 

 -

 

 

71 

Consumer

 

 -

 

 

 -

Sub-total

 

2,211 

 

 

2,381 



 

 

 

 

 

Total Loans

 

1,450,863 

 

 

1,440,614 



 

 

 

 

 

Less:

 

 

 

 

 

Deferred loan fees, net

 

(2,062)

 

 

(2,454)

Allowance for loan losses

 

(17,590)

 

 

(18,042)



 

 

 

 

 



 

(19,652)

 

 

(20,496)



 

 

 

 

 

Total Loans, net

$

1,431,211 

 

$

1,420,118 



 

 

 

 

 

_____________________________

 

 

 

 

 

(1) Includes business lines of credit.

 

 

 

 

 

(2) Includes home equity lines of credit.

 

 

 

 

 



 

 

 

 

 



 

 

 

 

 



 

 

 

 

 





11

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

Allowance for Loan Losses



Management reviews the adequacy of the allowance on at least a quarterly basis to ensure that the provision for loan losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is adequate based on management’s assessment of probable estimated losses.  The Company’s methodology for assessing the adequacy of the allowance for loan losses consists of several key elements.  These elements include a general allocated reserve for performing impaired loans, a specific reserve for impaired loans and an unallocated portion.  



The Company consistently applies the following comprehensive methodology.  During the quarterly review of the allowance for loan losses, the Company considers a variety of qualitative factors that include:

·

General economic conditions.

·

Trends in charge-offs.

·

Trends and levels of delinquent loans.

·

Trends and levels of non-performing loans, including loans over 90 days delinquent.

·

Trends in volume and terms of loans.

·

Levels of allowance for specific classified loans.

·

Credit concentrations.



The methodology includes the segregation of the loan portfolio into two divisions. Loans that are performing and loans that are impaired. Loans which are performing are evaluated homogeneously by loan class or loan type. The allowance for performing loans is evaluated based on historical loan loss experience, including consideration of peer loss analysis, with an adjustment for qualitative factors referred to above. Impaired loans are loans which are more than 90 days delinquent, troubled debt restructured, or where contractual principal and interest collections are not expected to be received. These loans are individually evaluated for loan loss either by current appraisal, or net present value of cash flows, and assigned a specific reserve when it is probable that we will be unable to collect all amounts due (interest and principal) in accordance with the contractual terms of the loan agreement. Management reviews the overall estimate for feasibility and bases the loan loss provision accordingly.



The loan portfolio is segmented into the following loan classes, where the risk level for each class is analyzed when determining the allowance for loan losses:



Residential one-to-four family real estate loans. These loans involve certain risks such as interest rate risk and risk of non-repayment. Adjustable-rate residential family real estate loans decreases the interest rate risk to the Company that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying property may be adversely affected by higher interest rates. Repayment risk may be affected by a number of factors including, but not necessarily limited to, job loss, divorce, illness and personal bankruptcy of the borrower.



Commercial and multi-family real estate loans. These loans entail significant additional risks as compared with residential real estate loans. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for commercial real estate as well as economic conditions generally.



Construction loans. These loans are generally considered to be high risk due to the concentration of principal in a limited number of loans and borrowers and the effects of the general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not necessarily pre-sold and thus pose a greater potential risk to the Company than construction loans to individuals on their personal residence.



Commercial business loans. These types of loans which include lines of credit, are generally considered higher risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on the business. Commercial business loans are primarily secured by inventories and other business assets. In most cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance.



Home Equity Loans. Home equity lending entails certain risks such as interest rate risk and risk of non-repayment. The marketability of the underlying property may be adversely affected by higher interest rates, decreasing the value of the collateral securing the loan. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy of the borrower. Home equity line of credit lending entails securing an equity interest in the borrower’s home. In many cases, the Company’s position in these loans is as a junior lien holder to another institution’s superior lien. This type of lending is often priced on an adjustable rate basis with the rate set at or above a predefined index. Adjustable-rate loans decreases the interest rate risk to the Company that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default.



Other consumer loans. Other consumer loans generally have more credit risk because of the type and nature of the collateral and, in certain cases, the absence of collateral. Consumer loans generally have shorter terms and higher interest rates than other lending. In addition, consumer lending collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely effected by job loss, divorce, illness and personal bankruptcy. In most cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan.



        Acquired loans. For acquired loans that have been added to portfolio via our purchase of banks are recorded at fair value with no carryover of a related allowance for loan losses. Determining the fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.



          We have acquired loans in two separate acquisitions.(Pamrapo Savings Bank in 2010 “Pamrapo” and Allegiance Community Bank in 2011 “Allegiance”) For each acquisition, we reviewed all acquired loans and considered the following factors as indicators that such acquired loan had evidence of deterioration in credit quality and was therefore in the scope of Accounting Standards Codification (“ASC”) 310-30:



12

 


 



Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

·

Loans that were 90 days or more past due,

·

Loans that had an internal risk rating of substandard or worse. Substandard is consistent with regulatory definitions and is defined as having a well defined weakness that jeopardizes liquidation of the loan,

·

Loans that were classified as nonaccrual by the acquired bank at the time of acquisition, or,

·

Loans that had been previously modified in a troubled debt restructuring.

         Any acquired loans that were not individually in the scope of ASC 310-30 because they did not meet the criteria above were accounted for under ASC 310-20 (Nonrefundable fees and other costs.)  Charge-offs of the principal amount on acquired loans accounted for under ASC 310-20 would be charged off against the allowance for loan losses.   



Acquired loans accounted for under ASC 310-30



         We performed a fair market valuation on each of the loans and each loan was recorded at a discount which includes the establishment of an associated “Credit Mark” reducing the carrying value of that loan to its fair value at the time of acquisition. We determined that at least part of the discount on the acquired loans was attributable to credit quality by reference to the valuation model used to estimate the fair value of the loans. The valuation model incorporated lifetime expected credit losses into the loans’ fair valuation in consideration of factors such as evidence of credit deterioration since origination and the amounts of contractually required principal and interest that we did not expect to collect as of the acquisition date. The excess of expected cash flows from acquired loans over the estimated fair value of acquired loans at acquisition is referred to as the accretable discount and is recognized into interest income over the remaining life of the acquired loans using the interest method. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. The nonaccretable discount represents estimated future credit losses expected to be incurred over the life of the acquired loans.



          Subsequent decreases to the expected cash flows require us to evaluate the need for an addition to the allowance for loan losses. Subsequent improvements in expected cash flows result in the reversal of a corresponding amount of the nonaccretable discount which we then reclassify as accretable discount that is recognized into interest income over the remaining life of the loan using the interest method. Our evaluation of the amount of future cash flows that we expect to collect takes into account actual credit performance of the acquired loans to date and our best estimates for the expected lifetime credit performance of the loans using currently available information. Charge-offs of the principal amount on acquired loans would be first applied to the nonaccretable discount portion of the fair value adjustment. To the extent that we experience a deterioration in credit quality in our expected cash flows subsequent to the acquisition of the loans, an allowance for loan losses would be established based on our estimate of future credit losses over the remaining life of the loans.



          In accordance with ASC 310-30, recognition of income is dependent on having a reasonable expectation about the timing and amount of cash flows expected to be collected.  We perform such an evaluation on a quarterly basis on our acquired loans individually accounted for under ASC 310-30. Cash flows for acquired loans individually accounted for under ASC 310-30 are estimated on a quarterly basis.  Based on this evaluation, a determination is made as to whether or not we have a reasonable expectation about the timing and amount of cash flows.  Such an expectation includes cash flows from normal customer repayment, foreclosure or other collection efforts. To the extent that we cannot reasonably estimate cash flows, interest income recognition is discontinued. 



          The Company also maintains an unallocated allowance.  The unallocated allowance is used to cover any factors or conditions which may cause a potential loan loss but are not specifically identifiable.  It is prudent to maintain an unallocated portion of the allowance because no matter how detailed an analysis of potential loan losses is performed, these estimates lack some element of precision.  Management must make estimates using assumptions and information that is often subjective and changing rapidly. In addition, as an integral part of their examination process, the Federal Deposit Insurance Corporation and the New Jersey Department of Banking and Insurance will periodically review the allowance for loan losses and may require us to adjust the allowance based on their analysis of information available to it at the time of its examination.



Classified Assets.  The Company’s policies provide for a classification system for problem assets.  Under this classification system, problem assets are classified as “substandard,” “doubtful,” “loss” or “special mention.”  An asset is considered substandard if it is inadequately protected by its current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard assets include those characterized by the “distinct possibility” that “some loss” will be sustained if the deficiencies are not corrected.  Assets classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weakness present makes “collection or liquidation in full” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.”  Assets classified as loss are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted, and the loan, or a portion thereof, is charged-off.  Assets may be designated special mention because of potential weaknesses that do not currently warrant classification in one of the aforementioned categories.

When the Company classifies problem loans, it may establish general allowances for loan losses in an amount deemed prudent by management.  General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. A portion of general loss allowances established to cover possible losses related to assets classified as substandard or doubtful may be included in determining our regulatory capital. Specific valuation allowances for loan losses generally do not qualify as regulatory capital. As of September 30, 2016, we had $31.3 million in loans classified as substandard, $17.8 million in loans classified as special mention and no loans classified as doubtful or loss. The loans classified as substandard represent primarily commercial loans secured either by residential real estate, commercial real estate or heavy equipment.  The loans that have been classified substandard were classified as such primarily because either updated financial information had not been provided timely, or the collateral underlying the loan was in the process of being revalued.

The current methodology for this calculation is determined with the Company’s specific Historical Loss Percentage (“HLP”) for each loan class, using two years of prior Company data (or eight quarters). The relative weights of prior quarters are decayed logarithmically and are further adjusted based on the trend of the historical loss percentage at the time. Also, instead of applying consistent percentages to each of the credit risk grades, the current methodology applies a higher factor to classified loans based on a delinquency risk trend and concentration risk trend by using the past due and non-accrual loans as a percentage of the specific loan category.

13

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended September 30, 2016. The table also details the amount of total loans receivable, loans receivable that are evaluated individually and collectively for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class, as of September 30, 2016. (In Thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Residential

 

 

Commercial & Multi-family

 

Construction

 

Commercial Business (1)

 

Home Equity (2)

 

Consumer

 

Unallocated

 

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

$

1,995 

 

$

11,730 

 

$

764 

 

$

1,759 

 

$

375 

 

$

1,029 

 

$

216 

 

$

17,868 

Acquired loans recorded at fair value:

 

357 

 

 

 -

 

 

 -

 

 

 -

 

 

56 

 

 

 -

 

 

 -

 

 

413 

Acquired loans with deteriorated credit:

 

43 

 

 

14 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

57 

Beginning Balance, June 30, 2016

 

2,395 

 

 

11,744 

 

 

764 

 

 

1,759 

 

 

431 

 

 

1,029 

 

 

216 

 

 

18,338 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 -

 

 

293 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

293 

Acquired loans recorded at fair value:

 

154 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

154 

Acquired loans with deteriorated credit:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

154 

 

 

293 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

447 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Acquired loans recorded at fair value:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Acquired loans with deteriorated credit:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

48 

 

 

(414)

 

 

(61)

 

 

1,069 

 

 

27 

 

 

(1,026)

 

 

(94)

 

 

(451)

Acquired loans recorded at fair value:

 

148 

 

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

151 

Acquired loans with deteriorated credit:

 

 -

 

 

(1)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(1)

Sub-total:

 

196 

 

 

(415)

 

 

(61)

 

 

1,069 

 

 

30 

 

 

(1,026)

 

 

(94)

 

 

(301)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

2,043 

 

 

11,023 

 

 

703 

 

 

2,828 

 

 

402 

 

 

 

 

122 

 

 

17,124 

Acquired loans recorded at fair value:

 

351 

 

 

 -

 

 

 -

 

 

 -

 

 

59 

 

 

 -

 

 

 -

 

 

410 

Acquired loans with deteriorated credit:

 

43 

 

 

13 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

56 

Ending Balance, September 30, 2016

$

2,437 

 

$

11,036 

 

$

703 

 

$

2,828 

 

$

461 

 

$

 

$

122 

 

$

17,590 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans Receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

$

138,681 

 

$

1,010,989 

 

$

67,747 

 

$

55,176 

 

$

31,788 

 

$

817 

 

$

 -

 

$

1,305,198 

Ending Balance Acquired loans recorded at fair value:

 

59,594 

 

 

63,471 

 

 

 -

 

 

4,157 

 

 

16,003 

 

 

229 

 

 

 -

 

 

143,454 

Ending Balance Acquired loans with deteriorated credit:

 

1,451 

 

 

760 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

2,211 

Total Gross Loans:

$

199,726 

 

$

1,075,220 

 

$

67,747 

 

$

59,333 

 

$

47,791 

 

$

1,046 

 

$

 -

 

$

1,450,863 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

$

10,645 

 

$

14,302 

 

$

 -

 

$

4,347 

 

$

1,251 

 

$

 -

 

$

 -

 

$

30,545 

Ending Balance Acquired loans recorded at fair value:

 

8,524 

 

 

6,178 

 

 

 -

 

 

 -

 

 

1,324 

 

 

 -

 

 

 -

 

 

16,026 

Ending Balance Acquired loans with deteriorated credit:

 

1,451 

 

 

525 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

1,976 

Ending Balance Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

$

20,620 

 

$

21,005 

 

$

 -

 

$

4,347 

 

$

2,575 

 

$

 -

 

$

 -

 

$

48,547 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

$

128,036 

 

$

996,687 

 

$

67,747 

 

$

50,829 

 

$

30,537 

 

$

817 

 

$

 -

 

$

1,274,653 

Ending Balance Acquired loans recorded at fair value:

 

51,070 

 

 

57,293 

 

 

 -

 

 

4,157 

 

 

14,679 

 

 

229 

 

 

 -

 

 

127,428 

Ending Balance Acquired loans with deteriorated credit:

 

 -

 

 

235 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

235 

Ending Balance Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

$

179,106 

 

$

1,054,215 

 

$

67,747 

 

$

54,986 

 

$

45,216 

 

$

1,046 

 

$

 -

 

$

1,402,316 

_____________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes business lines of credit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Includes home equity lines of credit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



14

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the nine months ended September 30, 2016, and the related portion of the allowance for loan losses that is allocated to each loan class (in thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Residential

 

 

Commercial & Multi-family

 

Construction

 

Commercial Business (1)

 

Home Equity (2)

 

Consumer

 

Unallocated

 

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

$

2,107 

 

$

11,643 

 

$

722 

 

$

1,749 

 

$

369 

 

$

879 

 

$

168 

 

$

17,637 

Acquired loans recorded at fair value:

 

270 

 

 

17 

 

 

 -

 

 

 -

 

 

50 

 

 

 -

 

 

 -

 

 

337 

Acquired loans with deteriorated credit:

 

47 

 

 

14 

 

 

 -

 

 

 

 

 

 

 -

 

 

 -

 

 

68 

Beginning Balance, December 31, 2015

 

2,424 

 

 

11,674 

 

 

722 

 

 

1,753 

 

 

422 

 

 

879 

 

 

168 

 

 

18,042 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 -

 

 

293 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

293 

Acquired loans recorded at fair value:

 

221 

 

 

 -

 

 

 -

 

 

 

 

 

 

 -

 

 

 -

 

 

227 

Acquired loans with deteriorated credit:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

221 

 

 

293 

 

 

 -

 

 

 

 

 

 

 -

 

 

 -

 

 

520 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Acquired loans recorded at fair value:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

14 

 

 

 -

 

 

 -

 

 

14 

Acquired loans with deteriorated credit:

 

 -

 

 

 -

 

 

 -

 

 

129 

 

 

 -

 

 

 -

 

 

 -

 

 

129 

Sub-total:

 

 -

 

 

 -

 

 

 -

 

 

129 

 

 

14 

 

 

 -

 

 

 -

 

 

143 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

(64)

 

 

(327)

 

 

(19)

 

 

1,079 

 

 

33 

 

 

(876)

 

 

(46)

 

 

(220)

Acquired loans recorded at fair value:

 

302 

 

 

(17)

 

 

 -

 

 

 

 

(2)

 

 

 -

 

 

 -

 

 

286 

Acquired loans with deteriorated credit:

 

(4)

 

 

(1)

 

 

 -

 

 

(133)

 

 

(3)

 

 

 -

 

 

 -

 

 

(141)

Sub-total:

 

234 

 

 

(345)

 

 

(19)

 

 

949 

 

 

28 

 

 

(876)

 

 

(46)

 

 

(75)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

2,043 

 

 

11,023 

 

 

703 

 

 

2,828 

 

 

402 

 

 

 

 

122 

 

 

17,124 

Acquired loans recorded at fair value:

 

351 

 

 

 -

 

 

 -

 

 

 -

 

 

59 

 

 

 -

 

 

 -

 

 

410 

Acquired loans with deteriorated credit:

 

43 

 

 

13 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

56 

Ending Balance, September 30, 2016

$

2,437 

 

$

11,036 

 

$

703 

 

$

2,828 

 

$

461 

 

$

 

$

122 

 

$

17,590 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes business lines of credit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Includes home equity lines of credit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 





15

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the year ended December 31, 2015. The table also details the amount of total loans receivable that are evaluated individually and collectively for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class, as of December 31, 2015. (In Thousands):

____



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

Residential

 

 

Commercial & Multi-family

 

 

Construction

 

 

Commercial Business (1)

 

Home Equity (2)

 

Consumer

 

 

Unallocated

 

 

Total

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

$

2,364 

 

$

10,028 

 

$

1,080 

 

$

876 

 

$

333 

 

$

449 

 

$

121 

 

$

15,251 

Acquired loans recorded at fair value:

 

 

417 

 

 

102 

 

 

 -

 

 

 -

 

 

58 

 

 

 -

 

 

 -

 

 

577 

Acquired loans with deteriorated credit:

 

 

64 

 

 

23 

 

 

 -

 

 

233 

 

 

 

 

 -

 

 

 -

 

 

323 

Beginning Balance, December 31, 2014

 

 

2,845 

 

 

10,153 

 

 

1,080 

 

 

1,109 

 

 

394 

 

 

449 

 

 

121 

 

 

16,151 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

 -

 

 

10 

 

 

 -

 

 

80 

 

 

 -

 

 

 -

 

 

 -

 

 

90 

Acquired loans recorded at fair value:

 

 

67 

 

 

 -

 

 

 -

 

 

 -

 

 

106 

 

 

 -

 

 

 -

 

 

173 

Acquired loans with deteriorated credit:

 

 

 -

 

 

 -

 

 

 -

 

 

199 

 

 

 -

 

 

 -

 

 

 -

 

 

199 

Sub-total:

 

 

67 

 

 

10 

 

 

 -

 

 

279 

 

 

106 

 

 

 -

 

 

 -

 

 

462 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

 -

 

 

70 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

70 

Acquired loans recorded at fair value:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

Acquired loans with deteriorated credit:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

 

 -

 

 

70 

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

73 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

(257)

 

 

1,555 

 

 

(358)

 

 

953 

 

 

36 

 

 

430 

 

 

47 

 

 

2,406 

Acquired loans recorded at fair value:

 

 

(80)

 

 

(85)

 

 

 -

 

 

 -

 

 

95 

 

 

 -

 

 

 -

 

 

(70)

Acquired loans with deteriorated credit:

 

 

(17)

 

 

(9)

 

 

 -

 

 

(30)

 

 

 -

 

 

 -

 

 

 -

 

 

(56)

Sub-total:

 

 

(354)

 

 

1,461 

 

 

(358)

 

 

923 

 

 

131 

 

 

430 

 

 

47 

 

 

2,280 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

2,107 

 

 

11,643 

 

 

722 

 

 

1,749 

 

 

369 

 

 

879 

 

 

168 

 

 

17,637 

Acquired loans recorded at fair value:

 

 

270 

 

 

17 

 

 

 -

 

 

 -

 

 

50 

 

 

 -

 

 

 -

 

 

337 

Acquired loans with deteriorated credit:

 

 

47 

 

 

14 

 

 

 -

 

 

 

 

 

 

 -

 

 

 -

 

 

68 

Ending Balance, December 31, 2015

 

$

2,424 

 

$

11,674 

 

$

722 

 

$

1,753 

 

$

422 

 

$

879 

 

$

168 

 

$

18,042 

Loans Receivables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

 

$

117,165 

 

$

982,828 

 

$

64,008 

 

$

70,340 

 

$

31,237 

 

$

2,365 

 

$

 -

 

$

1,267,943

Ending Balance Acquired Loans:

 

 

67,587 

 

 

79,308 

 

 

 -

 

 

4,281 

 

 

18,851 

 

 

263 

 

 

 -

 

 

170,290

Ending Balance Acquired loans with deteriorated credit:

 

 

1,474 

 

 

669 

 

 

 -

 

 

167 

 

 

71 

 

 

 -

 

 

 -

 

 

2,381

Total Gross Loans:

 

$

186,226 

 

$

1,062,805 

 

$

64,008 

 

$

74,788 

 

$

50,159 

 

$

2,628 

 

$

 -

 

$

1,440,614



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

 

$

9,120 

 

$

14,681 

 

$

 -

 

$

4,203 

 

$

1,456 

 

$

1,463 

 

$

 -

 

$

30,923 

Ending Balance Acquired Loans:

 

 

9,885 

 

 

6,775 

 

 

 -

 

 

 -

 

 

1,363 

 

 

 -

 

 

 -

 

 

18,023 

Ending Balance Acquired loans with deteriorated credit:

 

 

1,474 

 

 

426 

 

 

 -

 

 

167 

 

 

71 

 

 

 -

 

 

 -

 

 

2,138 

Ending Balance Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

$

20,479 

 

$

21,882 

 

$

 -

 

$

4,370 

 

$

2,890 

 

$

1,463 

 

$

 -

 

$

51,084 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

 

$

108,045 

 

$

968,147 

 

$

64,008 

 

$

66,137 

 

$

29,781 

 

$

902 

 

$

 -

 

$

1,237,020

Ending Balance Acquired Loans:

 

 

57,702 

 

 

72,533 

 

 

 -

 

 

4,281 

 

 

17,488 

 

 

263 

 

 

 -

 

 

152,267

Ending Balance Acquired loans with deteriorated credit:

 

 

 -

 

 

243 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

243

Ending Balance Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

$

165,747 

 

$

1,040,923 

 

$

64,008 

 

$

70,418 

 

$

47,269 

 

$

1,165 

 

$

-

 

$

1,389,530



(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

16

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)



The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended September 30, 2015. The table also details the amount of total loans receivable that are evaluated individually and collectively for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class, as of September 30, 2015 (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Residential

 

 

Commercial & Multi-family

 

Construction

 

Commercial Business (1)

 

Home Equity (2)

 

Consumer

 

Unallocated

 

Total

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

$

2,168 

 

$

11,446 

 

$

1,136 

 

$

1,392 

 

$

318 

 

$

722 

 

$

163 

 

$

17,345 

Acquired loans recorded at fair value:

 

 

180 

 

 

75 

 

 

 -

 

 

 -

 

 

31 

 

 

 -

 

 

 -

 

 

286 

Acquired loans with deteriorated credit:

 

 

54 

 

 

20 

 

 

 -

 

 

 

 

 

 

 -

 

 

 -

 

 

81 

Beginning Balance, June 30, 2015

 

 

2,402 

 

 

11,541 

 

 

1,136 

 

 

1,396 

 

 

352 

 

 

722 

 

 

163 

 

 

17,712 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

 -

 

 

 -

 

 

 -

 

 

50 

 

 

 -

 

 

 -

 

 

 -

 

 

50 

Acquired loans recorded at fair value:

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

38 

 

 

 -

 

 

 -

 

 

43 

Acquired loans with deteriorated credit:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

 

 

 

 -

 

 

 -

 

 

50 

 

 

38 

 

 

 -

 

 

 -

 

 

93 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Acquired loans recorded at fair value:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

Acquired loans with deteriorated credit:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

246 

 

 

(401)

 

 

(154)

 

 

111 

 

 

73 

 

 

68 

 

 

(37)

 

 

(94)

Acquired loans recorded at fair value:

 

 

116 

 

 

 

 

 -

 

 

 -

 

 

39 

 

 

 -

 

 

 -

 

 

164 

Acquired loans with deteriorated credit:

 

 

 

 

(1)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

 

363 

 

 

(393)

 

 

(154)

 

 

111 

 

 

112 

 

 

68 

 

 

(37)

 

 

70 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

2,414 

 

 

11,045 

 

 

982 

 

 

1,453 

 

 

391 

 

 

790 

 

 

126 

 

 

17,201 

Acquired loans recorded at fair value:

 

 

291 

 

 

84 

 

 

 -

 

 

 -

 

 

33 

 

 

 -

 

 

 -

 

 

408 

Acquired loans with deteriorated credit:

 

 

55 

 

 

19 

 

 

 -

 

 

 

 

 

 

 -

 

 

 -

 

 

81 

Ending Balance, September 30, 2015

 

$

2,760 

 

$

11,148 

 

$

982 

 

$

1,457 

 

$

427 

 

$

790 

 

$

126 

 

$

17,690 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans Receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

 

$

140,032

 

$

915,099 

 

$

83,900 

 

$

60,543 

 

$

31,713 

 

$

2,000 

 

$

 -

 

$

1,233,287 

Ending Balance Acquired loans recorded at fair value:

 

 

72,401

 

 

83,186 

 

 

 -

 

 

4,554 

 

 

19,728 

 

 

437 

 

 

 -

 

 

180,306 

Ending Balance Acquired loans with deteriorated credit:

 

 

1,571

 

 

1,113 

 

 

 -

 

 

167 

 

 

75 

 

 

 -

 

 

 -

 

 

2,926 

Total Gross Loans:

 

$

214,004

 

$

999,398 

 

$

83,900 

 

$

65,264 

 

$

51,516 

 

$

2,437 

 

$

 -

 

$

1,416,519 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

 

$

10,730 

 

$

16,700 

 

$

 -

 

$

4,395 

 

$

1,472 

 

$

1,463 

 

$

 -

 

$

34,760 

Ending Balance Acquired loans recorded at fair value:

 

 

10,376 

 

 

6,910 

 

 

 -

 

 

 -

 

 

1,097 

 

 

 -

 

 

 -

 

 

18,383 

Ending Balance Acquired loans with deteriorated credit:

 

 

1,571 

 

 

868 

 

 

 -

 

 

167 

 

 

75 

 

 

 -

 

 

 -

 

 

2,681 

Ending Balance Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

$

22,677 

 

$

24,478 

 

$

 -

 

$

4,562 

 

$

2,644 

 

$

1,463 

 

$

 -

 

$

55,824 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

 

$

129,302

 

$

898,399 

 

$

83,900 

 

$

56,148 

 

$

30,241 

 

$

537 

 

$

 -

 

$

1,198,527 

17

 


 

Ending Balance Acquired loans recorded at fair value:

 

 

62,025 

 

 

76,276 

 

 

 -

 

 

4,554 

 

 

18,631 

 

 

437 

 

 

 -

 

 

161,923 

Ending Balance Acquired loans with deteriorated credit:

 

 

 -

 

 

245 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

245 

Ending Balance Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

$

191,327 

 

$

974,920 

 

$

83,900 

 

$

60,702 

 

$

48,872 

 

$

974 

 

$

 -

 

$

1,360,695 

_____________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes business lines of credit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Includes home equity lines of credit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 







18

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the nine months ended September 30, 2015, and the related portion of the allowance for loan losses that is allocated to each loan class (in thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

Home

 

 

 

 

 

 

 

 

 



 

Residential

 

 

Commercial & Multi-family

 

Construction

 

Business (1)

 

Equity (2)

 

Consumer

 

Unallocated

 

Total

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

$

2,364 

 

$

10,028 

 

$

1,080 

 

$

876 

 

$

333 

 

$

449 

 

$

121 

 

$

15,251 

Acquired loans recorded at fair value:

 

 

417 

 

 

102 

 

 

 -

 

 

 -

 

 

58 

 

 

 -

 

 

 -

 

 

577 

Acquired loans with deteriorated credit:

 

 

64 

 

 

23 

 

 

 -

 

 

233 

 

 

 

 

 -

 

 

 -

 

 

323 

Beginning Balance, December 31, 2014

 

 

2,845 

 

 

10,153 

 

 

1,080 

 

 

1,109 

 

 

394 

 

 

449 

 

 

121 

 

 

16,151 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

 -

 

 

10 

 

 

 -

 

 

72 

 

 

 -

 

 

 -

 

 

 -

 

 -

82 

Acquired loans recorded at fair value:

 

 

67 

 

 

 -

 

 

 -

 

 

 -

 

 

106 

 

 

 -

 

 

 -

 

 -

173 

Acquired loans with deteriorated credit:

 

 

 -

 

 

 -

 

 

 -

 

 

199 

 

 

 -

 

 

 -

 

 

 -

 

 -

199 

Sub-total:

 

 

67 

 

 

10 

 

 

 -

 

 

271 

 

 

106 

 

 

 -

 

 

 -

 

 

454 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

 -

 

 

70 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

70 

Acquired loans recorded at fair value:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

Acquired loans with deteriorated credit:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

 

 -

 

 

70 

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

73 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

50 

 

 

957 

 

 

(98)

 

 

649 

 

 

58 

 

 

341 

 

 

 

 

1,962 

Acquired loans recorded at fair value:

 

 

(59)

 

 

(18)

 

 

 -

 

 

 -

 

 

78 

 

 

 -

 

 

 -

 

 

Acquired loans with deteriorated credit:

 

 

(9)

 

 

(4)

 

 

 -

 

 

(30)

 

 

 -

 

 

 -

 

 

 -

 

 

(43)

Sub-total:

 

 

(18)

 

 

935 

 

 

(98)

 

 

619 

 

 

136 

 

 

341 

 

 

 

 

1,920 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

2,414 

 

 

11,045 

 

 

982 

 

 

1,453 

 

 

391 

 

 

790 

 

 

126 

 

 

17,201 

Acquired loans recorded at fair value:

 

 

291 

 

 

84 

 

 

 -

 

 

 -

 

 

33 

 

 

 -

 

 

 -

 

 

408 

Acquired loans with deteriorated credit:

 

 

55 

 

 

19 

 

 

 -

 

 

 

 

 

 

 -

 

 

 -

 

 

81 

Ending Balance, September 30, 2015

 

$

2,760 

 

$

11,148 

 

$

982 

 

$

1,457 

 

$

427 

 

$

790 

 

$

126 

 

$

17,690 

  



(1) Includes business lines of credit.
(2) Includes home equity lines of credit.







19

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The table below sets forth the amounts and types of non-accrual loans in the Company’s loan portfolio as of September 30, 2016 and December 31, 2015. Loans are placed on non-accrual status when they become more than 90 days delinquent, or when the collection of principal and/or interest become doubtful. As of September 30, 2016 and December 31, 2015, total non-accrual loans differed from the amount of total loans past due greater than 90 days due to troubled debt restructuring of loans which are maintained on non-accrual status for a minimum of six months and until the borrower has demonstrated its ability to satisfy the terms of the restructured loan.   










 

 

 

 

 



 

 

 

 

 



 

As of September 30, 2016

 

 

As of December 31, 2015



 

(In Thousands)

 

 

(In Thousands)

Non-Accruing Loans:

 

 

 

 

 



 

 

 

 

 

Originated loans:

 

 

 

 

 

Residential one-to-four family

$

3,647 

 

$

2,603 

Commercial and multi-family

 

8,181 

 

 

9,782 

Construction

 

 -

 

 

 -

Commercial business(1) 

 

830 

 

 

718 

Home equity(2) 

 

430 

 

 

777 

Consumer

 

 -

 

 

 -



 

 

 

 

 

Sub-total:

$

13,088 

 

$

13,880 



 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

Residential one-to-four family

$

4,032 

 

$

5,592 

Commercial and multi-family

 

1,344 

 

 

3,025 

Construction

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

Home equity(2) 

 

881 

 

 

665 

Consumer

 

 -

 

 

 -



 

 

 

 

 

Sub-total:

$

6,257 

 

$

9,282 



 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

Commercial and multi-family

 

 -

 

 

 -

Construction

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

167 

Home equity(2) 

 

 -

 

 

118 

Consumer

 

 -

 

 

 -



 

 

 

 

 

Sub-total:

$

 -

 

$

285 



 

 

 

 

 

Total

$

19,345 

 

$

23,447 



 

 

 

 

 



__________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

20

 


 

Note 6-Loans Receivable and Allowance for Loan Losses (Continued)



The following table summarizes the average recorded investment and interest income recognized on impaired loans with no related allowance recorded by portfolio class for the three and nine months ended September 30, 2016 and 2015. (In Thousands):









 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,

 

 

 

Nine Months Ended September 30,



 

2016

 

 

2016

 

 

2015

 

 

2015

 

 

 

2016

 

 

2016

 

 

2015

 

 

2015



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Average

 

 

Interest

 

 

Average

 

 

Interest

 

 

 

Average

 

 

Interest

 

 

Average

 

 

Interest



 

Recorded

 

 

Income

 

 

Recorded

 

 

Income

 

 

 

Recorded

 

 

Income

 

 

Recorded

 

 

Income

Originated loans

 

Investment

 

 

Recognized

 

 

Investment

 

 

Recognized

 

 

 

Investment

 

 

Recognized

 

 

Investment

 

 

Recognized

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

4,931 

 

$

24 

 

$

3,424 

 

$

30 

 

 

$

4,431 

 

$

72 

 

$

2,949 

 

$

91 

Commercial and Multi-family

 

11,411 

 

 

88 

 

 

10,265 

 

 

111 

 

 

 

10,928 

 

 

265 

 

 

9,228 

 

 

334 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

995 

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

1,800 

 

 

37 

 

 

2,463 

 

 

34 

 

 

 

1,897 

 

 

112 

 

 

2,543 

 

 

102 

Home equity(2) 

 

924 

 

 

 

 

1,238 

 

 

 

 

 

995 

 

 

22 

 

 

1,008 

 

 

26 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

19,066 

 

$

156 

 

$

17,390 

 

$

184 

 

 

$

19,246 

 

$

471 

 

$

15,728 

 

$

553 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

4,771 

 

$

35 

 

$

7,650 

 

$

47 

 

 

$

5,119 

 

$

104 

 

$

6,583 

 

$

141 

Commercial and Multi-family

 

5,197 

 

 

58 

 

 

4,674 

 

 

48 

 

 

 

4,882 

 

 

174 

 

 

4,724 

 

 

145 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

571 

 

 

 

 

731 

 

 

 

 

 

595 

 

 

 

 

767 

 

 

23 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total

$

10,539 

 

$

95 

 

$

13,055 

 

$

103 

 

 

$

10,596 

 

$

284 

 

$

12,074 

 

$

309 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

1,455 

 

$

 -

 

$

1,486 

 

$

30 

 

 

$

1,458 

 

$

 -

 

$

1,490 

 

$

90 

Commercial and Multi-family

 

527 

 

 

 

 

870 

 

 

 

 

 

528 

 

 

21 

 

 

871 

 

 

23 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

84 

 

 

 -

 

 

 

 -

 

 

 -

 

 

120 

 

 

 -

Home equity(2) 

 

 -

 

 

22 

 

 

76 

 

 

 -

 

 

 

25 

 

 

67 

 

 

77 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

1,982 

 

$

29 

 

$

2,516 

 

$

38 

 

 

$

2,011 

 

$

88 

 

$

2,558 

 

$

113 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With no related allowance recorded:

$

31,587 

 

$

280 

 

$

32,961 

 

$

325 

 

 

$

31,853 

 

$

843 

 

$

30,360 

 

$

975 





__________

(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

21

 


 

Note 6-Loans Receivable and Allowance for Loan Losses (Continued)



The following table summarizes the average recorded investment and interest income recognized on impaired loans with allowance recorded by portfolio class for the three and nine months ended September 30, 2016 and 2015. (In Thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,

 

 

 

Nine Months Ended September 30,



 

2016

 

 

2016

 

 

2015

 

 

2015

 

 

 

2016

 

 

2016

 

 

2015

 

 

2015



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Average

 

 

Interest

 

 

Average

 

 

Interest

 

 

 

Average

 

 

Interest

 

 

Average

 

 

Interest



 

Recorded

 

 

Income

 

 

Recorded

 

 

Income

 

 

 

Recorded

 

 

Income

 

 

Recorded

 

 

Income

Originated loans

 

Investment

 

 

Recognized

 

 

Investment

 

 

Recognized

 

 

 

Investment

 

 

Recognized

 

 

Investment

 

 

Recognized

with an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

5,570 

 

$

64 

 

$

7,064 

 

$

76 

 

 

$

5,587 

 

$

191 

 

$

7,620 

 

$

229 

Commercial and Multi-family

 

2,997 

 

 

24 

 

 

3,907 

 

 

 -

 

 

 

3,554 

 

 

72 

 

 

3,543 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

2,273 

 

 

26 

 

 

2,159 

 

 

23 

 

 

 

2,186 

 

 

78 

 

 

2,200 

 

 

68 

Home equity(2) 

 

265 

 

 

 

 

196 

 

 

 

 

 

257 

 

 

12 

 

 

313 

 

 

Consumer

 

632 

 

 

 -

 

 

1,463 

 

 

 -

 

 

 

842 

 

 

 -

 

 

1,532 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

11,737 

 

$

118 

 

$

14,789 

 

$

100 

 

 

$

12,426 

 

$

353 

 

$

15,208 

 

$

299 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

3,867 

 

$

22 

 

$

2,710 

 

$

32 

 

 

$

3,782 

 

$

66 

 

$

3,503 

 

$

97 

Commercial and Multi-family

 

1,033 

 

 

11 

 

 

2,276 

 

 

20 

 

 

 

1,175 

 

 

34 

 

 

2,236 

 

 

60 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

730 

 

 

 

 

298 

 

 

 

 

 

725 

 

 

13 

 

 

317 

 

 

13 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total

$

5,630 

 

$

38 

 

$

5,284 

 

$

57 

 

 

$

5,682 

 

$

113 

 

$

6,056 

 

$

170 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

89 

 

$

 

 

$

 -

 

$

 -

 

$

89 

 

$

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

84 

 

 

 -

 

 

 

54 

 

 

 -

 

 

56 

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

 

$

 

$

173 

 

$

 

 

$

54 

 

$

 

$

145 

 

$



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with an allowance recorded:

$

17,367 

 

$

156 

 

$

20,246 

 

$

159 

 

 

$

18,162 

 

$

466 

 

$

21,409 

 

$

474 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 





__________

(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

22

 


 

Note 6-Loans Receivable and Allowance for Loan Losses (Continued)



The following table summarizes the recorded investment and unpaid principal balances where there is no related allowance on impaired loans by portfolio class at

September 30, 2016 and December 31, 2015. (In Thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

As of September 30, 2016

 

 

As of December 31, 2015



 

Recorded

 

 

Unpaid Principal

 

 

Related

 

 

Recorded

 

 

Unpaid Principal

 

 

Related

Originated loans

 

Investment

 

 

Balance

 

 

Allowance

 

 

Investment

 

 

Balance

 

 

Allowance

with no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

5,123 

 

$

5,276 

 

$

 -

 

$

3,136 

 

$

3,199 

 

$

 -

Commercial and multi-family

 

12,157 

 

 

12,356 

 

 

 -

 

 

10,709 

 

 

10,934 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

1,631 

 

 

2,412 

 

 

 -

 

 

2,123 

 

 

3,183 

 

 

 -

Home equity(2) 

 

907 

 

 

979 

 

 

 -

 

 

1,270 

 

 

1,326 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

19,818 

 

$

21,023 

 

$

 -

 

$

17,238 

 

$

18,642 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

value with no related allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

4,742 

 

$

5,167 

 

$

 -

 

$

7,646 

 

$

8,082 

 

$

 -

Commercial and Multi-family

 

5,372 

 

 

5,466 

 

 

 -

 

 

4,383 

 

 

4,483 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

609 

 

 

706 

 

 

 -

 

 

884 

 

 

1,061 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

10,723 

 

$

11,339 

 

$

 -

 

$

12,913 

 

$

13,626 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

credit with no related allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

1,451 

 

$

2,077 

 

$

 -

 

$

1,474 

 

$

2,101 

 

$

 -

Commercial and Multi-family

 

525 

 

 

556 

 

 

 -

 

 

426 

 

 

574 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

71 

 

 

135 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

1,976 

 

$

2,633 

 

$

 -

 

$

1,971 

 

$

2,810 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with no related allowance recorded:

$

32,517 

 

$

34,995 

 

$

 -

 

$

32,122 

 

$

35,078 

 

$

 -



__________

(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

23

 


 

Note 6-Loans Receivable and Allowance for Loan Losses (Continued)



The following table summarizes the recorded investment, unpaid principal balance, and the related allowance on impaired loans by portfolio class at September 30, 2016 and December 31, 2015. (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

As of September 30, 2016

 

 

As of December 31, 2015



 

Recorded

 

 

Unpaid Principal

 

 

Related

 

 

Recorded

 

 

Unpaid Principal

 

 

Related

Originated loans

 

Investment

 

 

Balance

 

 

Allowance

 

 

Investment

 

 

Balance

 

 

Allowance

with an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

5,522 

 

$

5,522 

 

$

505 

 

$

5,984 

 

$

5,993 

 

$

594 

Commercial and Multi-family

 

2,145 

 

 

2,181 

 

 

472 

 

 

3,972 

 

 

3,972 

 

 

1,069 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

2,716 

 

 

2,962 

 

 

2,151 

 

 

2,080 

 

 

2,445 

 

 

841 

Home equity(2) 

 

344 

 

 

344 

 

 

34 

 

 

186 

 

 

189 

 

 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

1,463 

 

 

1,463 

 

 

876 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

10,727 

 

$

11,009 

 

$

3,162 

 

$

13,685 

 

$

14,062 

 

$

3,383 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

value with an allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

3,782 

 

$

3,966 

 

$

452 

 

$

2,239 

 

$

2,402 

 

$

219 

Commercial and Multi-family

 

806 

 

 

810 

 

 

51 

 

 

2,392 

 

 

2,496 

 

 

85 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

715 

 

 

764 

 

 

100 

 

 

479 

 

 

518 

 

 

36 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total

$

5,303 

 

$

5,540 

 

$

603 

 

$

5,110 

 

$

5,416 

 

$

340 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

credit with an allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

 -

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

167 

 

 

368 

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

 -

 

$

 -

 

$

 -

 

$

167 

 

$

368 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with an allowance recorded:

$

16,030 

 

$

16,549 

 

$

3,765 

 

$

18,962 

 

$

19,846 

 

$

3,723 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with no related allowance recorded:

$

32,517 

 

$

34,995 

 

$

 -

 

$

32,122 

 

$

35,078 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans:

$

48,547 

 

$

51,544 

 

$

3,765 

 

$

51,084 

 

$

54,924 

 

$

3,723 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

__________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



24

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table presents the total troubled debt restructured loans at September 30, 2016, excluding the purchase impairment mark on the acquired loans with deteriorated credit. (Dollars In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Accrual

 

Non-accrual

 

Total

September 30, 2016

 

# of Loans

 

 

Amount

 

# of Loans

 

 

Amount

 

# of Loans

 

 

Amount

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

2,705 

 

 -

 

$

 -

 

 

$

2,705 

Commercial and multi-family

 

 

 

3,824 

 

 

 

2,365 

 

14 

 

 

6,189 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

Commercial business(1) 

 

 

 

1,906 

 

 

 

360 

 

 

 

2,266 

Home equity(2) 

 

 

 

737 

 

 -

 

 

 -

 

 

 

737 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

20 

 

$

9,172 

 

10 

 

$

2,725 

 

30 

 

$

11,897 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

19 

 

$

4,299 

 

 

$

1,932 

 

24 

 

$

6,231 

Commercial and Multi-family

 

13 

 

 

4,834 

 

 

 

581 

 

14 

 

 

5,415 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

Commercial business(1) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

Home equity(2) 

 

 

 

650 

 

 -

 

 

 -

 

 

 

650 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

37 

 

$

9,783 

 

 

$

2,513 

 

43 

 

$

12,296 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

2,077 

 

 -

 

$

 -

 

 

$

2,077 

Commercial and Multi-family

 

 

 

556 

 

 -

 

 

 -

 

 

 

556 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

Commercial business(1) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

Home equity(2) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

 

$

2,633 

 

 -

 

$

 -

 

 

$

2,633 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

63 

 

$

21,588 

 

16 

 

$

5,238 

 

79 

 

$

26,826 



__________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



25

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table presents the total troubled debt restructured loans at December 31, 2015, excluding the purchase impairment mark on the acquired loans with deteriorated credit. (Dollars In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Accrual

 

Non-accrual

 

Total

December 31, 2015

 

# of Loans

 

 

Amount

 

# of Loans

 

 

Amount

 

# of Loans

 

 

Amount

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

1,845 

 

 

$

824 

 

 

$

2,669 

Commercial and multi-family

 

 

 

3,270 

 

 

 

4,297 

 

13 

 

 

7,567 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Commercial business(1) 

 

 

 

778 

 

 

 

705 

 

 

 

1,483 

Home equity(2) 

 

 

 

491 

 

 

 

157 

 

 

 

648 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

13 

 

$

6,384 

 

15 

 

$

5,983 

 

28 

 

$

12,367 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

16 

 

$

3,604 

 

13 

 

$

3,402 

 

29 

 

$

7,006 

Commercial and Multi-family

 

13 

 

 

4,863 

 

 

 

582 

 

14 

 

 

5,445 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Home equity(2) 

 

 

 

512 

 

 

 

220 

 

 

 

732 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

34 

 

$

8,979 

 

15 

 

$

4,204 

 

49 

 

$

13,183 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

2,101 

 

 -

 

$

 -

 

 

$

2,101 

Commercial and Multi-family

 

 

 

574 

 

 -

 

 

 -

 

 

 

574 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 

167 

 

 

 

167 

Home equity(2) 

 

 -

 

 

 -

 

 

 

118 

 

 

 

118 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

 

$

2,675 

 

 

$

285 

 

 

$

2,960 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

54 

 

$

18,038 

 

32 

 

$

10,472 

 

86 

 

$

28,510 



__________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



26

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

A troubled debt restructuring (“TDR”) is a loan that has been modified whereby the Company has agreed to make certain concessions to a borrower to meet the needs of both the borrower and the Company to maximize the ultimate recovery of a loan. A TDR occurs when a borrower is experiencing, or is expected to experience, financial difficulties and the loan is modified using a modification that would otherwise not be granted to the borrower. The types of concessions granted generally include, but are not limited to interest rate reductions, limitations on the accrued interest charged, term extensions, and deferment of principal.



The following table summarizes information with regards to troubled debt restructurings which occurred during the three months ended September 30, 2016. (Dollars in Thousands):









 

 

 

 

 

 

 

 

Three Months Ended September 30, 2016

 

 

 

 

Pre-Modification Outstanding

 

 

Post-Modification Outstanding



 

Number of Contracts

 

 

Recorded Investments

 

 

Recorded Investments



 

 

 

 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 -

 

$

 -

 

$

 -

Commercial and multi-family

 

 

 

537 

 

 

640 

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 

 

 -

 

 

1,137 

Home equity(2) 

 

 

 

155 

 

 

162 

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

 

 

$

692 

 

$

1,939 



 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

278 

 

$

320 

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

 

 

$

278 

 

$

320 



 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 -

 

$

 -

 

$

 -

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

 

 -

 

$

 -

 

$

 -



 

 

 

 

 

 

 

 

Total

 

 

$

970 

 

$

2,259 

__________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



The loans included above are considered TDRs as a result of the Company implementing one or more of the following concessions: granting a material extension of time, issuing a forbearance agreement, adjusting the interest rate to a below market rate, accepting interest only for a period of time or a change in amortization period. All TDRs were considered impaired and therefore were individually evaluated for impairment in the calculation of the allowance for loan losses. Prior to their classification as TDRs, certain of these loans had been collectively evaluated for impairment in the calculation of the allowance for loan losses.



27

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued 

The following table summarizes information with regards to troubled debt restructurings which occurred during the nine months ended September 30, 2016. (Dollars In Thousands):





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2016

 

 

 

 

Pre-Modification Outstanding

 

 

Post-Modification Outstanding



 

Number of Contracts

 

 

Recorded Investments

 

 

Recorded Investments



 

 

 

 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

71 

 

$

71 

Commercial and multi-family

 

 

 

536 

 

 

640 

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 

 

 -

 

 

1,137 

Home equity(2) 

 

 

 

155 

 

 

162 

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

 

 

$

762 

 

$

2,010 



 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

278 

 

$

320 

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 

 

223 

 

 

223 

Consumer

 

 -

 

 

 -

 

 

 



 

 

 

 

 

 

 

 

Sub-total:

 

 

$

501 

 

$

543 



 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 -

 

$

 -

 

$

 -

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

 

 -

 

$

 -

 

$

 -



 

 

 

 

 

 

 

 

Total

 

 

$

1,263 

 

$

2,553 



(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



There were no payment defaults for loans modified as TDR in the 12 months ended September 30, 2016. Payment defaults for loans modified as TDRs in the 12 months ended September 30, 2015 consisted of four residential loans with a recorded investment of $2.0 million at September 30, 2015.































28

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes information with regards to troubled debt restructurings which occurred during the three months ended September 30, 2015 (dollars in thousands): 





 

 

 

 

 

 

 

 

Three Months Ended September 30, 2015

 

 

 

 

Pre-Modification Outstanding

 

 

Post-Modification Outstanding



 

Number of Contracts

 

 

Recorded Investments

 

 

Recorded Investments



 

 

 

 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

Commercial and multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 

 

236 

 

 

246 

Home equity(2) 

 

 

 

17 

 

 

53 

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

$

 

$

253 

 

$

299 



 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 

 

175 

 

 

144 

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

$

 

$

175 

 

$

144 



 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

$

-

 

$

-

 

$

-



 

 

 

 

 

 

 

 

Total

$

 

$

428 

 

$

443 



(1) Includes business lines of credit.

(2) Includes home equity lines of credit.















29

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes information in regard to troubled debt restructurings which occurred during the nine months ended September 30, 2015 (dollars in thousands):





 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2015

 

 

 

 

Pre-Modification Outstanding

 

 

Post-Modification Outstanding



 

Number of Contracts

 

 

Recorded Investments

 

 

Recorded Investments



 

 

 

 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

836 

 

$

836 

Commercial and multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 

 

236 

 

 

246 

Home equity(2) 

 

 

 

17 

 

 

53 

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

 

 

$

1,089 

 

$

1,135 



 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

1,533 

 

$

1,562 

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 

 

398 

 

 

367 

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

 

 

$

1,931 

 

$

1,929 



 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 -

 

$

 -

 

$

 -

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

Sub-total:

 

 -

 

$

 -

 

$

 -



 

 

 

 

 

 

 

 

Total

 

 

$

3,020 

 

$

3,064 



(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



















30

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the delinquency status of total loans receivable as of September 30, 2016. (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans Receivable



30-59 Days

 

60-90 Days

 

Greater Than

 

Total Past

 

 

 

 

Total Loans

 

>90 Days



Past Due

 

Past Due

 

90 Days

 

Due

 

Current

 

Receivable

 

and Accruing



 

(In Thousands)

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

2,759 

 

$

574 

 

$

1,992 

 

$

5,325 

 

$

133,356 

 

$

138,681 

 

$

94 

Commercial and multi-family

 

17,708 

 

 

13,103 

 

 

4,911 

 

 

35,722 

 

 

975,267 

 

 

1,010,989 

 

 

909 

Construction

 

241 

 

 

 -

 

 

 -

 

 

241 

 

 

67,506 

 

 

67,747 

 

 

 -

Commercial business(1) 

 

2,762 

 

 

851 

 

 

1,302 

 

 

4,915 

 

 

50,261 

 

 

55,176 

 

 

 -

Home equity(2) 

 

386 

 

 

41 

 

 

 -

 

 

427 

 

 

31,361 

 

 

31,788 

 

 

 -

Consumer

 

13 

 

 

 -

 

 

 -

 

 

13 

 

 

804 

 

 

817 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

23,869 

 

$

14,569 

 

$

8,205 

 

$

46,643 

 

$

1,258,555 

 

$

1,305,198 

 

$

1,003 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

2,035 

 

$

297 

 

$

3,002 

 

$

5,334 

 

$

54,260 

 

 

59,594 

 

$

218 

Commercial and multi-family

 

2,397 

 

 

 -

 

 

700 

 

 

3,097 

 

 

60,374 

 

 

63,471 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

4,157 

 

 

4,157 

 

 

 -

Home equity(2) 

 

165 

 

 

191 

 

 

434 

 

 

790 

 

 

15,213 

 

 

16,003 

 

 

122 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

229 

 

 

229 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

4,597 

 

$

488 

 

$

4,136 

 

$

9,221 

 

$

134,233 

 

$

143,454 

 

$

340 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

1,451 

 

 

1,451 

 

$

 -

Commercial and multi-family

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

760 

 

 

760 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

2,211 

 

$

2,211 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

28,466 

 

$

15,057 

 

$

12,341 

 

$

55,864 

 

$

1,394,999 

 

$

1,450,863 

 

$

1,343 



 

_________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



31

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the delinquency status of total loans receivable at December 31, 2015. (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans Receivable



30-59 Days

 

60-90 Days

 

Greater Than

 

Total Past

 

 

 

 

Total Loans

 

>90 Days



Past Due

 

Past Due

 

90 Days

 

Due

 

Current

 

Receivable

 

and Accruing



 

(In Thousands)

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

3,495 

 

$

786 

 

$

1,577 

 

$

5,858 

 

$

111,307 

 

$

117,165 

 

$

 -

Commercial and multi-family

 

12,491 

 

 

3,362 

 

 

6,467 

 

 

22,320 

 

 

960,508 

 

 

982,828 

 

 

578 

Construction

 

4,677 

 

 

80 

 

 

 -

 

 

4,757 

 

 

59,251 

 

 

64,008 

 

 

 -

Commercial business(1) 

 

909 

 

 

 -

 

 

684 

 

 

1,593 

 

 

68,747 

 

 

70,340 

 

 

 -

Home equity(2) 

 

517 

 

 

333 

 

 

485 

 

 

1,335 

 

 

29,902 

 

 

31,237 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

2,365 

 

 

2,365 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

22,089 

 

$

4,561 

 

$

9,213 

 

$

35,863 

 

$

1,232,080 

 

$

1,267,943 

 

$

578 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

3,340 

 

$

311 

 

$

3,512 

 

$

7,163 

 

$

60,424 

 

 

67,587 

 

$

 -

Commercial and multi-family

 

1,913 

 

 

1,313 

 

 

1,285 

 

 

4,511 

 

 

74,797 

 

 

79,308 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

418 

 

 

 -

 

 

 -

 

 

418 

 

 

3,863 

 

 

4,281 

 

 

 -

Home equity(2) 

 

727 

 

 

 -

 

 

331 

 

 

1,058 

 

 

17,793 

 

 

18,851 

 

 

 -

Consumer

 

12 

 

 

 -

 

 

 -

 

 

12 

 

 

251 

 

 

263 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

6,410 

 

$

1,624 

 

$

5,128 

 

$

13,162 

 

$

157,128 

 

$

170,290 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

1,474 

 

$

1,474 

 

$

 -

Commercial and multi-family

 

244 

 

 

 -

 

 

 

 

252 

 

 

417 

 

 

669 

 

 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

167 

 

 

167 

 

 

 -

 

 

167 

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

71 

 

 

71 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

244 

 

$

 -

 

$

175 

 

$

419 

 

$

1,962 

 

$

2,381 

 

$



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

28,743 

 

$

6,185 

 

$

14,516 

 

$

49,444 

 

$

1,391,170 

 

$

1,440,614 

 

$

586 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

__________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

32

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table presents the loan portfolio types summarized by the aggregate pass rating and the classified ratings of special mention, substandard, doubtful, and loss within the Company’s internal risk rating system as of September 30, 2016. (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Pass

 

Special Mention

 

Substandard

 

Doubtful

 

Loss

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

128,784 

 

$

6,061 

 

$

3,836 

 

$

 -

 

$

 -

 

$

138,681 

Commercial and multi-family

 

994,281 

 

 

4,194 

 

 

12,514 

 

 

 -

 

 

 -

 

 

1,010,989 

Construction

 

67,267 

 

 

480 

 

 

 -

 

 

 -

 

 

 -

 

 

67,747 

Commercial business(1) 

 

49,057 

 

 

1,772 

 

 

4,347 

 

 

 -

 

 

 -

 

 

55,176 

Home equity(2) 

 

30,557 

 

 

801 

 

 

430 

 

 

 -

 

 

 -

 

 

31,788 

Consumer

 

795 

 

 

22 

 

 

 -

 

 

 -

 

 

 -

 

 

817 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

1,270,741 

 

$

13,330 

 

$

21,127 

 

$

 -

 

$

 -

 

$

1,305,198 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

53,786 

 

$

1,145 

 

$

4,663 

 

$

 -

 

$

 -

 

 

59,594 

Commercial and multi-family

 

58,066 

 

 

1,703 

 

 

3,702 

 

 

 -

 

 

 -

 

 

63,471 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

4,157 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

4,157 

Home equity(2) 

 

14,400 

 

 

545 

 

 

1,058 

 

 

 -

 

 

 -

 

 

16,003 

Consumer

 

229 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

229 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

130,638 

 

$

3,393 

 

$

9,423 

 

$

 -

 

$

 -

 

$

143,454 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

147 

 

$

578 

 

$

726 

 

$

 -

 

$

 -

 

 

1,451 

Commercial and multi-family

 

235 

 

 

525 

 

 

 -

 

 

 -

 

 

 -

 

 

760 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

382 

 

$

1,103 

 

$

726 

 

$

 -

 

$

 -

 

$

2,211 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gross Loans

$

1,401,761 

 

$

17,826 

 

$

31,276 

 

$

 -

 

$

 -

 

$

1,450,863 



_________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

33

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table presents the loan portfolio types summarized by the aggregate pass rating and the classified ratings of special mention, substandard, doubtful, and loss within the Company’s internal risk rating system as of December 31, 2015. (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Pass

 

Special Mention

 

Substandard

 

Doubtful

 

Loss

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

108,259 

 

$

4,857 

 

$

4,049 

 

$

 -

 

$

 -

 

$

117,165 

Commercial and multi-family

 

966,229 

 

 

1,868 

 

 

14,731 

 

 

 -

 

 

 -

 

 

982,828 

Construction

 

63,292 

 

 

716 

 

 

 -

 

 

 -

 

 

 -

 

 

64,008 

Commercial business(1) 

 

64,645 

 

 

2,018 

 

 

3,677 

 

 

 -

 

 

 -

 

 

70,340 

Home equity(2) 

 

29,694 

 

 

714 

 

 

829 

 

 

 -

 

 

 -

 

 

31,237 

Consumer

 

1,198 

 

 

30 

 

 

1,137 

 

 

 -

 

 

 -

 

 

2,365 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

1,233,317 

 

$

10,203 

 

$

24,423 

 

$

 -

 

$

 -

 

$

1,267,943 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

58,362 

 

$

2,574 

 

$

6,651 

 

$

 -

 

$

 -

 

 

67,587 

Commercial and multi-family

 

72,770 

 

 

1,780 

 

 

4,758 

 

 

 -

 

 

 -

 

 

79,308 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

4,281 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

4,281 

Home equity(2) 

 

17,571 

 

 

382 

 

 

898 

 

 

 -

 

 

 -

 

 

18,851 

Consumer

 

263 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

263 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

153,247 

 

$

4,736 

 

$

12,307 

 

$

 -

 

$

 -

 

$

170,290 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

147 

 

$

279 

 

$

1,048 

 

$

 -

 

$

 -

 

 

1,474 

Commercial and multi-family

 

137 

 

 

532 

 

 

 -

 

 

 -

 

 

 -

 

 

669 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

167 

 

 

 -

 

 

 -

 

 

167 

Home equity(2) 

 

 -

 

 

 -

 

 

71 

 

 

 -

 

 

 -

 

 

71 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

284 

 

$

811 

 

$

1,286 

 

$

 -

 

$

 -

 

$

2,381 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gross Loans

$

1,386,848 

 

$

15,750 

 

$

38,016 

 

$

 -

 

$

 -

 

$

1,440,614 





________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

34

 


 

Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table presents the unpaid principal balance and the related recorded investment of acquired loans included in our Consolidated Statements of Financial Condition. (In Thousands):









 

 

 

 

 



 

 

 

 

 



September 30,

 

December 31,



2016

 

2015



 

 

 

 

 

Unpaid principal balance

$

151,763 

 

$

183,046 

Recorded investment

 

145,665 

 

 

172,671 









The following table presents changes in the accretable discount on loans acquired for the three and nine months ended September 30, 2016 and 2015. (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



Three Months Ended September 30,

 

 

Nine Months Ended September 30,



2016

 

2015

 

 

2016

 

2015



 

 

 

 

 

 

 

 

 

 

 

 

Balance, Beginning of Period

$

46,332 

 

$

61,939 

 

 

$

53,612 

 

$

70,522 

     Accretion

 

(3,926)

 

 

(3,029)

 

 

 

(11,528)

 

 

(12,167)

     Net Reclassification from Non-Accretable Difference

 

80 

 

 

72 

 

 

 

402 

 

 

627 

Balance, End of Period

$

42,486 

 

$

58,982 

 

 

$

42,486 

 

$

58,982 







The following table presents changes in the non-accretable yield on loans acquired for the three and nine months ended September 30, 2016 and 2015. (In Thousands):







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



Three Months Ended September 30,

 

 

Nine Months Ended September 30,



2016

 

2015

 

 

2016

 

2015



 

 

 

 

 

 

 

 

 

 

 

 

Balance, Beginning of Period

$

2,719 

 

$

3,218 

 

 

$

3,041 

 

$

3,773 

     Loans Sold

 

 -

 

 

 -

 

 

 

 -

 

 

 -

     Net Reclassification to Accretable Difference

 

(80)

 

 

(72)

 

 

 

(402)

 

 

(627)

Balance, End of Period

$

2,639 

 

$

3,146 

 

 

$

2,639 

 

$

3,146 





35

 


 



Note 7 – Fair Values of Financial Instruments



Guidance on fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).

An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

 



 

The only assets or liabilities that the Company measured at fair value on a recurring basis were as follows. (In Thousands):

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

  

(Level 1)

  

(Level 2)

  

 

 



 

 

 

 

Quoted Prices in

 

Significant

 

(Level 3)



 

 

 

 

Active Markets

 

Other

 

Significant



 

 

 

 

for Identical

 

Observable

 

Unobservable

Description

 

Total

 

Assets

 

Inputs

 

Inputs

As of September 30, 2016

 

 

 

  

 

 

  

 

 

  

 

 

Securities available for sale — Residential Mortgage Backed Securities

 

$

52,907 

  

$

 -

  

$

52,907 

  

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2015:

 

 

 

  

 

 

  

 

 

  

 

 

Securities available for sale — Residential mortgage-backed securities

 

$

9,623 

  

$

 -

  

$

9,623 

  

$

 -







The Company’s policy is to recognize transfers between levels as of the actual date of the event or change in circumstances that caused the transfer. There were no transfers of assets or liabilities into or out of Level 1, Level 2, or Level 3 of the fair value hierarchy during the nine months ended September 30, 2016 and 2015.

The only assets or liabilities that the Company measured at fair value on a nonrecurring basis were as follows. (In Thousands):

 





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

  

(Level 1)

  

(Level 2)

  

 

 



 

 

 

 

Quoted Prices in

 

Significant

 

(Level 3)



 

 

 

 

Active Markets

 

Other

 

Significant



 

 

 

 

for Identical

 

Observable

 

Unobservable

Description

 

Total

 

Assets

 

Inputs

 

Inputs

As of September 30, 2016

 

 

 

  

 

 

  

 

 

  

 

 

Impaired Loans

 

$

12,265 

  

$

 -

  

$

 -

  

$

12,265 

Other real estate owned

 

$

2,967 

  

$

 -

  

$

 -

  

$

2,967 



 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2015:

 

 

 

  

 

 

  

 

 

  

 

 

Impaired Loans

 

$

15,239 

 

$

 -

 

$

 -

 

$

15,239 

Other real estate owned

 

$

1,564 

  

$

 -

  

$

 -

  

$

1,564 















36

 


 



Note 7 – Fair Values of Financial Instruments (Continued)

The following tables present additional quantitative information as of September 30, 2016 and December 31, 2015 about assets measured at fair value on a nonrecurring basis and for which the Company has utilized adjusted Level 3 inputs to determine fair value. (Dollars in thousands):







 

 

 

 

 

Quantitative Information about Level 3 Fair Value Measurements



 

Fair Value

Valuation

Unobservable

Range



 

Estimate

Techniques

Input

 

September 30, 2016:

 

 

 

 

 

Impaired Loans

$

12,265 

Appraisal of collateral (1)

Appraisal adjustments (2)

0%-10%



 

 

 

Liquidation expenses (3)

0%-10%



 

 

 

 

 

Other real estate owned

$

2,967 

Appraisal of collateral (1)

Appraisal adjustments (2)

0%-10%



 

 

 

Liquidation expenses (3)

0%-10%

















 

 

 

 

 



 

Fair Value

Valuation

Unobservable

Range



 

Estimate

Techniques

Input

 

December 31, 2015:

 

 

 

 

 

Impaired Loans

$

15,239 

Appraisal of collateral (1)

Appraisal adjustments (2)

0%-10%



 

 

 

Liquidation expenses (3)

0%-10%



 

 

 

 

 

Other real estate owned

$

1,564 

Appraisal of collateral (1)

Appraisal adjustments (2)

0%-10%



 

 

 

Liquidation expenses (3)

0%-10%



(1)

Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2)

Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3)

Includes qualitative adjustments by management and estimated liquidation expenses.



The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments as of September 30, 2016 and December 31, 2015.

  





Cash and Cash Equivalents and Interest-Earning Time Deposits (Carried at Cost)

The carrying amounts reported in the consolidated statements of financial condition for cash and short-term instruments approximate those assets’ fair values.

Securities

The fair value of securities available for sale (carried at fair value) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.

Loans Held for Sale (Carried at Lower of Cost or Fair Value)

The fair value of loans held for sale is determined, when possible, using quoted secondary-market prices. If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for specific attributes of that loan. Loans held for sale are carried at their cost as of September 30, 2016 and December 31, 2015.

Loans Receivable (Carried at Cost)

The fair value of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.







37

 


 

Note 7 – Fair Values of Financial Instruments (Continued)

Impaired Loans (Generally Carried at Fair Value)

A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, at the loans observable market price or the fair value of the collateral if the loan is collateral dependent. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value at September 30, 2016 and December 31, 2015 consisted of the loan balances of $19.8 million and $19.0 million, net of a valuation allowance of $3.80 million and $3.79 million, respectively.





Real Estate Owned (Generally Carried at Fair Value)

Real Estate Owned is generally carried at fair value, when the carrying value is written down to fair value, which is determined based upon independent third-party appraisals of the properties, or based upon the expected proceeds from a pending sale. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

FHLB of New York Stock (Carried at Cost)

The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.

Interest Receivable and Payable (Carried at Cost)

The carrying amount of interest receivable and interest payable approximates its fair value.

Deposits (Carried at Cost)

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Long-Term Debt (Carried at Cost)

Fair values of long-term debt are estimated using discounted cash flow analysis, based on quoted prices for new long-term debt with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Off-Balance Sheet Financial Instruments

Fair values for the Company’s off-balance sheet financial instruments (lending commitments and unused lines of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing. The fair value of these commitments was deemed immaterial and is not presented in the accompanying table.

 































38

 


 

Note 7 – Fair Values of Financial Instruments (Continued)





The carrying values and estimated fair values of financial instruments were as follows as of September 30, 2016 and December 31, 2015:

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

As of September 30, 2016



 

 



 

 

 

 

 

 

 

Quoted Prices in Active

 

Significant

 

Significant



 

Carrying

 

 

 

 

Markets for Identical Assets

 

Other Observable Inputs

 

Unobservable Inputs



 

Value

 

Fair Value

 

(Level 1)

 

(Level 2)

 

(Level 3)



 

  

 

 

 

 

 

 

 

 

 

 

 

 

 



 

(In Thousands)

Financial assets:

 

  

 

 

 

 

  

 

 

  

 

 

 

 

 

Cash and cash equivalents

 

$

16,801 

 

$

16,801 

  

$

16,801 

  

$

 

 

$

 

Interest-earning time deposits

 

 

120,906 

 

 

120,906 

  

 

120,906 

  

 

 

 

 

 

Securities available for sale

 

 

52,907 

 

 

52,907 

  

 

 

  

 

52,907 

 

 

 

Loans held for sale

 

 

1,474 

 

 

1,480 

  

 

 

  

 

1,480 

 

 

 

Loans receivable, net

 

 

1,431,211 

 

 

1,475,329 

  

 

 

  

 

 

 

 

1,475,329 

FHLB of New York stock, at cost

 

 

8,991 

 

 

8,991 

  

 

 

  

 

8,991 

 

 

 

Accrued interest receivable

 

 

5,229 

 

 

5,229 

  

 

 

  

 

5,229 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

  

 

 

  

 

 

 

 

 

Deposits

 

 

1,380,385 

 

 

1,370,845 

  

 

808,676 

  

 

562,169 

 

 

 

Borrowings

 

 

155,000 

 

 

158,296 

  

 

 

  

 

158,296 

 

 

 

Subordinated debentures

 

 

4,124 

 

 

4,212 

 

 

 

 

 

4,212 

 

 

 

Accrued interest payable

 

 

756 

 

 

756 

  

 

 

  

 

756 

 

 

 











 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

As of December 31, 2015



 

 



 

 

 

 

 

 

 

Quoted Prices in Active

 

Significant

 

Significant



 

Carrying

 

 

 

 

Markets for Identical Assets

 

Other Observable Inputs

 

Unobservable Inputs



 

Value

 

Fair Value

 

(Level 1)

 

(Level 2)

 

(Level 3)



 

  

 

 

 

 

 

 

 

 

 

 

 

 

 



 

(In Thousands)

Financial assets:

 

  

 

 

 

 

  

 

 

  

 

 

 

 

 

Cash and cash equivalents

 

$

132,635 

 

$

132,635 

  

$

132,635 

  

$

 -

 

$

 -

Interest-earning time deposits

 

 

1,238 

 

 

1,238 

  

 

1,238 

  

 

 -

 

 

 -

Securities available for sale

 

 

9,623 

 

 

9,623 

  

 

 -

  

 

9,623 

 

 

 -

Loans held for sale

 

 

1,983 

 

 

2,004 

  

 

 -

  

 

2,004 

 

 

 -

Loans receivable, net

 

 

1,420,118 

 

 

1,443,739 

  

 

 -

  

 

 -

 

 

1,443,739 

FHLB of New York stock, at cost

 

 

10,711 

 

 

10,711 

  

 

 -

  

 

10,711 

 

 

 -

Accrued interest receivable

 

 

5,595 

 

 

5,595 

  

 

 -

  

 

5,595 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

  

 

 

  

 

 

 

 

 

Deposits

 

 

1,273,929 

 

 

1,270,267 

  

 

653,763 

  

 

616,504 

 

 

 -

Borrowings

 

 

200,000 

 

 

202,948 

  

 

 -

  

 

202,948 

 

 

 -

Subordinated debentures

 

 

4,124 

 

 

4,185 

 

 

 -

 

 

4,185 

 

 

 -

Accrued interest payable

 

 

1,053 

 

 

1,053 

  

 

 -

  

 

1,053 

 

 

 -

























39

 


 

ITEM 2.



Management’s Discussion and Analysis of Financial Condition and Results of Operations



Forward-Looking Statements



This report on Form 10-Q contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, or the PSLRA. Such forward-looking statements, in addition to historical information, involve risk and uncertainties, and are based on the beliefs, assumptions and expectations of our management team. Words such as “expects,” “believes,” “should,” “plans,” “anticipates,” “will,” “potential,” “could,” “intend,” “may,” “outlook,” “predict,” “project,” “would,” “estimated,” “assumes,” “likely,” and variation of such similar expressions are intended to identify such forward-looking statements. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possible materially, from those that we anticipated in our forward-looking statements and future results could differ materially from historical performance.

 

Factors that could cause future results to vary from current management expectations as reflected in our forward looking statements include, but are not limited to:



· unfavorable economic conditions in the United States generally and particularly in our primary market area;

· the effects of declines in housing markets and real estate values that may adversely impact the collateral underlying our loans;

· increase in unemployment levels and slowdowns in economic growth;

· our level of non-performing assets and the costs associated with resolving any problem loans including litigation and other costs;

· the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of our loan and investment securities portfolios;

· the credit risk associated with our loan portfolio;

· changes in the quality and composition of the Bank’s loan and investment portfolios;

· changes in our ability to access cost-effective funding;

· deposit flows;

· legislative and regulatory changes, including increases in Federal Deposit Insurance Corporation, or FDIC, insurance rates;

· monetary and fiscal policies of the federal government;

· changes in tax policies, rates and regulations of federal, state and local tax authorities;

· inflation;

· demands for our loan products;

· demand for financial services;

· competition;

· changes in the securities or secondary mortgage markets;

· changes in management’s business strategies;

· our ability to enter new markets successfully;

· our ability to successfully integrate acquired businesses;

· changes in consumer spending;

· our ability to retain key employees;

· the effects of any reputational, credit, interest rate, market, operational, legal, liquidity, regulatory risk;

· expanded regulatory requirements as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which could adversely affect operating results; and

· other factors discussed elsewhere in this report, and in other reports we filed with the SEC, including under “Risk Factors” in Part I, Item 1A of our annual Report on Form 10-K and our other periodic reports that we file with the SEC.







You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Form 10-Q. We do not assume any obligation to revise forward-looking statements except as may be required by law.





Overview



BCB Bancorp, Inc. is a New Jersey corporation, and is the holding company parent of BCB Community Bank, or the Bank. The Company has not engaged in any significant business activity other than owning all of the outstanding common stock of BCB Community Bank. Our executive office is located at 104-110 Avenue C, Bayonne, New Jersey 07002. At September 30, 2016 we had approximately $1.679 billion in consolidated assets, $1.380 billion in deposits and $132.3 million in consolidated stockholders’ equity.



BCB Community Bank opened for business on November 1, 2000 as Bayonne Community Bank, a New Jersey chartered commercial bank. The Bank changed its name from Bayonne Community Bank to BCB Community Bank in April 2007. At September 30, 2016 the Bank operated through twenty branches in Bayonne, Colonia, Edison, Jersey City, Hoboken, Fairfield, Holmdel, Lodi, Lyndhurst, Monroe Township, Rutherford, South Orange, and Woodbridge, New Jersey, as well as two branches in Staten Island, NY, and through executive offices located at 104-110 Avenue C and an administrative office located at 591-595 Avenue C, Bayonne, New Jersey 07002. The Bank’s deposit accounts are insured by the FDIC, and the Bank is a member of the Federal Home Loan Bank System.

 

We are a community-oriented financial institution. Our business is to offer FDIC-insured deposit products and to invest funds held in deposit accounts at the Bank, together with funds generated from operations, in loans and investment securities. We offer our customers:



· loans, including commercial and multi-family real estate loans, one- to four-family mortgage loans, home equity loans, construction loans, consumer loans and commercial business loans.  In recent years the primary growth in our loan portfolio has been in loans secured by commercial real estate and multi-family properties;



· FDIC-insured deposit products, including savings and club accounts, interest and non-interest bearing demand accounts, money market accounts, certificates of deposit and individual retirement accounts; and



· retail and commercial banking services including wire transfers, money orders, safe deposit boxes, a night depository, debit cards, online banking, mobile banking, gift cards, fraud detection (positive pay), and automated teller services.

40

 


 







Critical Accounting Policies



The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenue and expenses. We regularly evaluate these estimates and assumptions including those used to determine the allowance for loan losses, investment in reverse mortgages, deferred taxes, fair value measurements, goodwill and other intangible assets. We base our estimates on historical experience and various other factors and assumptions that are believed to be reasonable under the circumstances. These form the basis for making judgments on the carrying value of assets and liabilities that are not readily apparent from other sources.  Although our current estimates contemplate current economic conditions and how we expect them to change in the future, for the remainder of 2016, it is reasonably possible that actual conditions may be worse than anticipated in those estimates, which could materially affect our results of operations and financial condition. Actual results may differ from these estimates under different assumptions or conditions.



See further discussion of these critical accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2015 and Note 1, Basis of Presentation, to the unaudited Consolidated Financial Statements. There has been no change in critical accounting policies since the Company’s last reported 10-K.





Financial Condition



Total assets increased by $60.5 million, or 3.7 percent, to $1.679 billion at September 30, 2016 from $1.618 billion at December 31, 2015. The increase in total assets occurred primarily as a result of an increase in cash and cash equivalents of $5.1 million, an increase in securities available for sale of $43.3 million, and an increase in loans receivable, net of $11.1 million. Management is concentrating on maintaining adequate liquidity in anticipation of funding loans in the loan pipeline as well as seeking opportunities to purchase securities in the secondary market that provide competitive returns in a risk-mitigated environment. It is our intention to grow our assets at a measured pace consistent with our capital levels and as business opportunities permit. Organic growth should occur consistent with our strategic plan under which we anticipate opening additional branch offices in 2016.



Total cash and cash equivalents increased by $5.1 million, or 3.8 percent, to $137.7 million at September 30, 2016 from $132.6 million at December 31, 2015 due to the Company’s strategy to increase our deposit base.



Securities available for sale increased by $43.3 million, or 449.8%, to $52.9 million at September 30, 2016 from $9.6 million at December 31, 2015 as the Company deployed excess cash to improve returns on earning assets and liquidity.



Loans receivable, net increased by $11.1 million, or 0.8 percent, to $1.431 billion at September 30, 2016 from $1.420 billion at December 31, 2015. The increase resulted primarily from increases of $13.5 million in residential real estate loans, $12.4 million in commercial real estate and multi-family loans, and construction loans of $3.7 million. The increase in loans receivable was partly offset by decreases of $15.5 million in commercial business loans, $2.4 million in home equity loans and home equity lines of credit, and $1.6 million in consumer loans. As of September 30, 2016, the allowance for loan losses was $17.6 million, or 90.9 percent, of non-performing loans and 1.21 percent of gross loans.  

.  

Deposit liabilities increased by $106.5 million, or 8.4 percent, to $1.380 billion at September 30, 2016 from $1.274 billion at December 31, 2015. The increase resulted primarily from increases of $98.5 million in NOW deposits, $18.1 million in non-interest-bearing deposits, $6.1 million in savings and club deposits, and $44.0 million in money market interest-bearing deposits, partly offset by a decrease of $60.2 million in certificates of deposit. In addition to organic deposit growth resulting from the opening of five additional branches over the last 18 months, the Company has also added listing service certificates of deposit and brokered certificates of deposit to fund loan growth, which totaled $35.5 million and $20.8 million, respectively, at September 30, 2016. The decrease in certificates of deposit related to maturities of a promotional 15-month program from 2015 that were not retained by the Company.



Long-term debt decreased by $45.0 million, or 22.5 percent, to $155.0 million at September 31, 2016 from $200.0 million at December 31, 2016 due to net repayments of outstanding FHLB advances. The purpose of these borrowings reflected the use of long-term Federal Home Loan Bank advances to augment deposits as the Company’s funding source for originating loans and investing in GSE investment securities. The decrease in Federal Home Loan Bank advances resulted from the Company’s pay downs of medium-term, fixed rate FHLB advances as part of our interest rate risk management strategy. The weighted average interest rate of borrowings was 2.66 percent at September 30, 2016.



Stockholders’ equity decreased by $1.2 million, or 0.9 percent, to $132.3 million at September 30, 2016 from $133.5 million at December 31, 2015. The decrease in stockholders’ equity was primarily attributable to the redemption of $1.7 million in Series A preferred stock, cash dividends paid during the nine-month period ended September 30, 2016, totaling $4.5 million on outstanding shares of common stock and $702,000 on outstanding preferred stock, partly offset by net income of $5.5 million. The Company accrued a dividend payable for the third quarter on our outstanding preferred stock of $234,000 which will be paid in the fourth quarter. As of September 30, 2016, the Bank’s Total capital to risk-weighted assets, Tier 1 capital to risk-weighted assets, Common Equity Tier 1 capital to risk-weighted assets, and Tier 1 capital to average assets were 11.57 percent, 10.40 percent, 10.40 percent and 7.83 percent, respectively.



Results of Operations comparison for the Three Months Ended September 30, 2016 and 2015

Net income was $1.9 million for the three months ended September 30, 2016, compared with $2.3 million for the three months ended September 30, 2015. The decrease in net income was primarily related to an increase in non-interest expense, and a decreases in non-interest income, partly offset by a decrease in the provision for loan losses and income tax provision.



Net interest income increased by $54,000, or 0.4 percent, to $13.6 million for the three months ended September 30, 2016 from $13.5 million for the three months ended September 30, 2015. The increase in net interest income resulted primarily from an increase in the average balance of interest-earning assets of $201.6 million, or 13.6 percent, to $1.688 billion for the three months ended September 30, 2016 from $1.486 billion for the three months ended September 30, 2015, partly offset by a decrease in the average yield on interest-earning assets of 43 basis points, or 9.3 percent to 4.20 percent for the three months ended September 30, 2016 from 4.63 percent for the three months ended September 30, 2015.



Interest income on loans receivable increased by $158,000, or 0.9 percent, to $17.2 million for the three months ended September 30, 2016 from $17.0 million for the three months ended September 30, 2015. The increase was primarily attributable to an increase in the average balance of loans receivable of $34.6 million, or 2.5 percent, to $1.443 billion for the three months ended September 30, 2016 from $1.409 billion for the three months ended September 30, 2015, partly offset by a decrease in the average yield on loans receivable to 4.76 percent for the three months ended September 30, 2016 from 4.84 percent for the three months ended September 30, 2015. The increase in the average balance of loans receivable was in accordance with the Company’s growth strategy, which included the hiring of additional loan production and

41

 


 

business development personnel and the opening of five additional branches over the last 18 months. The decrease in average yield on loans reflected the competitive price environment prevalent in the Company’s primary market area on loan facilities, as well as the repricing downward of certain variable rate loans.

Interest income on securities increased by $135,000, or 81.8 percent, to $300,000 for the three months ended September 30, 2016 from $165,000 for the three months ended September 30, 2015. This increase was primarily due to an increase in the average balance of securities of $17.7 million, or 89.0 percent, to $37.7 million for the three months ended September 30, 2016 from $20.0 million for the three months ended September 30, 2015, partly offset by a decrease in the average yield of securities to 3.19 percent for the three months ended September 30, 2016 from 3.31 percent for the three months ended September 30, 2015.

Interest income on other interest-earning assets increased by $222,000, or 1233.3 percent, to $240,000 for the three months ended September 30, 2016 from $18,000 for the three months ended September 30, 2015. This increase was primarily due to an increase in the average balance of other interest-earning assets of $149.3 million to $206.7 million for the three months ended September 30, 2016 from $57.4 million for the three months ended September 30, 2015. The increase in the average balance of other interest-earning assets related to an increase in cash as a result of the growth in deposits, the funds of which will be deployed for purchases of investment securities and to fund loan growth.

Total interest expense increased by $461,000, or 12.6 percent, to $4.1 million for the three months ended September 30, 2016 from $3.7 million for the three months ended September 30, 2015. The increase resulted primarily from an increase in the average balance of interest-bearing liabilities of $168.3 million, or 13.4 percent, to $1.428 billion for the three months ended September 30, 2016 from $1.260 billion for the three months ended September 30, 2015, while the average cost of interest-bearing liabilities decreased by 1 basis point to 1.16 percent for the three months ended September 30, 2016 from 1.17 percent for the three months ended September 30, 2015. The average balance of deposits increased $187.9 million, or 17.8 percent, to $1.244 billion for the three months ended September 30, 2016 from $1.056 billion for the three months ended September 30, 2015, while the average balance of borrowings decreased $19.6 million, or 9.6 percent, to $184.5 million for the three months ended September 30, 2016 from $204.1 million and for the three months ended September 30, 2015. The increase in the average balance of interest-bearing liabilities was primarily due to the Bank’s 15-month CD promotion initiated in the second quarter of 2015. The decrease in Federal Home Loan Bank advance borrowings resulted from the scheduled repayments. The increase in the average rate on interest-bearing primarily related to a  decrease in the average rate of Federal Home Loan Bank advance borrowings, resulting from scheduled repayments of much higher cost funds. 



Net interest margin was 3.22 percent for the three-month period ended September 30, 2016 and 3.65 percent for the three-month period ended September 30, 2015. The decline in net interest margin was the result of competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and an increase in the average cost of deposits.

The provision for loan losses decreased by $371,000, to ($301,000) for the three months ended September 30, 2016 from $70,000 for the three months ended September 30, 2015. The negative provision for loan losses in the current period reflects the excess specific provisions previously accrued on certain loans that were settled in the current period. The provision for loan losses is established based upon management’s review of the Company’s loans and consideration of a variety of factors, including but not limited to: (1) the risk characteristics of the loan portfolio; (2) current economic conditions; (3) actual losses previously experienced; (4) the dynamic activity and fluctuating balance of loans receivable; and (5) the existing level of reserves for loan losses that are probable and estimable. During the three months ended September 30, 2016, the Company experienced $447,000 in net charge-offs compared to $92,000 in net charge-offs for the three months ended September 30, 2015. The Bank had non-performing loans totaling $19.3 million, or 1.34 percent, of gross loans at September 30, 2016 and $23.4 million, or 1.65 percent, of gross loans at December 31, 2015. The allowance for loan losses was $17.6 million, or 1.21 percent, of gross loans at September 30, 2016, $18.0 million, or 1.25 percent, of gross loans at December 31, 2015 and $17.7 million, or 1.25 percent, of gross loans at September 30, 2015. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in the aforementioned criteria. In addition various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require the Company to recognize additional provisions based on their judgment of information available to them at the time of their examination. Management believes that the allowance for loan losses was adequate at September 30, 2016 and December 31, 2015.



Total non-interest income decreased by $434,000, or 22.1 percent, to $1.5 million for the three months ended September 30, 2016 from $2.0 million for the three months ended September 30, 2015. Gain on sales of loans decreased by $635,000 to $718,000 for the three months ended September 30, 2016 compared to $1.4 million for the three months ended September 30, 2015. A loss on a bulk sale of impaired loans held in portfolio of $88,000 was incurred during the three months ended September 30, 2016, with no comparable sale for the three months ended September 30, 2015. The decrease in total non-interest income was partly offset by increases in fees and service charges of $291,000 to $873,000 for the three months ended September 30, 2016 from $582,000 for the three months ended September 30, 2015.



Total non-interest expense increased by $651,000, or 5.6 percent, to $12.3 million for the three months ended September 30, 2016 from $11.7 million for the three months ended September 30, 2015. Salaries and employee benefits expense increased by $806,000, or 13.6 percent, to $6.7 million for the three months ended September 30, 2016 from $5.9 million for the three months ended September 30, 2015. This increase in both salaries and employee benefits was mainly attributable to an increase of 33 full-time equivalent employees, or 9.9 percent, to 367 at September 30, 2016 from 334 at September 30, 2015, which relates to the addition of business development and loan administration employees and the opening of five new branch offices in the last 18 months. Occupancy and equipment expense increased by $243,000, or 12.5 percent, to $2.2 million for the three months ended September 30, 2016 from $1.9 million for the three months ended September 30, 2015. The increase in occupancy and equipment expense also related primarily to the opening of the new branch offices. Professional fees increased by $36,000, or 8.6 percent, to $457,000 for the three months ended September 30, 2016 from $421,000 for the three months ended September 30, 2015. Regulatory assessments increased by $101,000, or 30.8 percent, to $429,000 for the three months ended September 30, 2016 from $328,000 for the three months ended September 30, 2015, primarily related to asset growth. Advertising expense increased by $123,000, or 34.3 percent, to $482,000 for the three months ended September 30, 2016 from $359,000 for the three months ended September 30, 2015, resulting from continued expansion into new market areas. Other Real Estate Owned (OREO) expense increased by $9,000, or 33.3 percent, to $36,000 for the three months ended September 30, 2016 from $27,000 for the three months ended September 30, 2015. Other non-interest expense decreased by $14,000, or 1.0 percent, to $1.5 million for the three months ended September 30, 2016 as compared to the three months ended September 30, 2015. Other non-interest expense consisted of loan expense, business development, office supplies, correspondent bank fees, telephone and communication and other fees and expenses. The above increases in non-interest expense were partly offset by a decrease in data processing expense of $655,000, or 64.7 percent, to $358,000 for the three months ended September 30, 2016 as compared to $1.0 million for the three months ended September 30, 2015. The decrease in data processing expense primarily related to efficiencies achieved with the conversion to a new core system.



Income tax provision decreased by $292,000, or 20.0 percent, to $1.2 million for the three months ended September 30, 2016 from $1.5 million for the three months ended September 30, 2015. The decrease in income tax provision was a result of lower taxable income during the three-month period ended September 30, 2016 as compared with the three months ended September 30, 2015. The consolidated effective tax rate for the three months ended September 30, 2016 was 38.0 percent compared to 39.1 percent for the three months ended September 30, 2015.





Results of Operations comparison for the Nine Months Ended September 30, 2016 and 2015

42

 


 

Net income was $5.5 million for the nine months ended September 30, 2016, compared with $6.0 million for the nine months ended September 30, 2015. The decrease in net income was primarily related to an increase in non-interest expense, and a decrease in non-interest income, partly offset by an increase in net interest income and decreases in the provision for loan losses and income tax provision.



Net interest income increased by $828,000, or 2.1 percent, to $40.7 million for the nine months ended September 30, 2016 from $39.8 million for the nine months ended September 30, 2015. The increase in net interest income resulted primarily from an increase in the average balance of interest-earning assets of $259.2 million, or 18.5 percent, to $1.662 billion for the nine months ended September 30, 2016 from $1.403 billion for the nine months ended September 30, 2015, partly offset by a decrease in the average yield on interest-earning assets of 46 basis points, or 9.7 percent, to 4.27 percent for the nine months ended September 30, 2016 from 4.73 percent for the nine months ended September 30, 2015.



Interest income on loans receivable increased by $2.7 million, or 5.5 percent, to $51.9 million for the nine months ended September 30, 2016 from $49.3 million for the nine months ended September 30, 2015. The increase was primarily attributable an increase in the average balance of loans receivable of $101.6 million, or 7.6 percent, to $1.443 billion for the nine months ended September 30, 2016 from $1.342 billion for the nine months ended September 30, 2015 partly offset by a decrease in the average yield on loans receivable to 4.80 percent for the nine months ended September 30, 2016 from 4.89 percent for the nine months ended September 30, 2015. The increase in the average balance of loans receivable was in accordance with the Company’s growth strategy, which included the hiring of additional loan production and business development personnel and the opening of five additional branches over the last 18 months. The decrease in average yield on loans reflected the competitive price environment prevalent in the Company’s primary market area on loan facilities, as well as the repricing downward of certain variable rate loans.

Interest income on securities increased by $210,000, or 45.4 percent, to $673,000 for the nine months ended September 30, 2016 from $463,000 for the nine months ended September 30, 2015. This increase was primarily due to an increase in the average balance of securities of $7.0 million, or 35.5 percent, to $26.6 million for the nine months ended September 30, 2016 from $19.6 million for the nine months ended September 30, 2015, and by an increase in the average yield of securities to 3.37 percent for the nine months ended September 30, 2016 from 3.14 percent for the nine months ended September 30, 2015.

Interest income on other interest-earning assets increased by $578,000 to $623,000 for the nine months ended September 30, 2016 from $45,000 for the nine months ended September 30, 2015. This increase was primarily due to an increase in the average balance of other interest-earning assets of $150.6 million to $191.8 million for the nine months ended September 30, 2016 from $41.2 million for the nine months ended September 30, 2015.

Total interest expense increased by $2.6 million, or 26.6 percent, to $12.6 million for the nine months ended September 30, 2016 from $10.0 million for the nine months ended September 30, 2015. The increase resulted primarily from an increase in the average balance of interest-bearing liabilities of $225.5 million, or 19.1 percent to $1.409 billion for the nine months ended September 30, 2016 from $1.183 billion for the nine months ended September 30, 2015, and an increase in the average cost of interest-bearing liabilities of 7 basis points to 1.19 percent for the nine months ended September 30, 2016 from 1.12 percent for the nine months ended September 30, 2015. The average balance of deposits increased $220.3 million, or 22.3 percent, to $1.208 billion for the nine months ended September 30, 2016 from $987.3 million for the nine months ended September 30, 2015, while the average balance of borrowings decreased $5.2 million, or 2.7 percent, to $201.0 million for the nine months ended September 30, 2016 from $195.8 million for the nine months ended September 30, 2015. The increase in the average balance of interest-bearing liabilities was primarily due to the Bank’s 15-month CD promotion initiated in the second quarter of 2015. The decrease in Federal Home Loan Bank advance borrowings resulted from scheduled repayments. The increase in the average rate on interest-bearing liabilities was due to competitive forces in attracting new deposits and a change in the mix of funding sources and terms, including interest expense associated with the Bank’s 15-month CD promotion, to support aggressive loan growth, partly offset by a decrease in the average rate of Federal Home Loan Bank advance borrowings, resulting from scheduled repayments of much higher cost funds. 

The net interest margin was 3.26 percent for the nine-month period ended September 30, 2016 and 3.79 percent for the nine-month period ended September 30, 2015. The decline in net interest margin was the result of competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and an increase in the average cost of deposits.

The provision for loan losses decreased by $2.0 million to ($75,000) for the nine months ended September 30, 2016 from $1.9 million for the nine months ended September 30, 2015. The negative provision for loan losses in the current period reflects the excess specific provisions previously accrued on certain loans that were settled in the current period.  The provision for loan losses is established based upon management’s review of the Company’s loans and consideration of a variety of factors, including but not limited to: (1) the risk characteristics of the loan portfolio; (2) current economic conditions; (3) actual losses previously experienced; (4) the dynamic activity and fluctuating balance of loans receivable; and (5) the existing level of reserves for loan losses that are probable and estimable. During the nine months ended September 30, 2016, the Company experienced $377,000 in net charge-offs compared to $381,000 in net charge-offs for the nine months ended September 30, 2015. The Bank had non-performing loans totaling $19.3 million, or 1.34 percent, of gross loans at September 30, 2016 and $23.4 million, or 1.65 percent, of gross loans at December 31, 2015. The allowance for loan losses was $17.6 million, or 1.21 percent, of gross loans at September 30, 2016, $18.0 million, or 1.25 percent, of gross loans at December 31, 2015 and $17.7 million, or 1.25 percent, of gross loans at September 30, 2015. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in the aforementioned criteria. In addition various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require the Company to recognize additional provisions based on their judgment of information available to them at the time of their examination. The decrease in the allowance for loan loss. Management believes that the allowance for loan losses was adequate at September 30, 2016 and December 31, 2015.



Total non-interest income decreased by $266,000, or 5.4 percent, to $4.7 million for the nine months ended September 30, 2016 from $5.0 million for the nine months ended September 30, 2015. Gain on sale of loans decreased by $657,000, or 19.7 percent, to $2.7 million for the nine months ended September 30, 2016 compared to $3.3 million for the nine months ended September 30, 2015. Losses on bulk sales of impaired loans held in portfolio were $373,000 for the nine months ended September 30, 2016, with no comparable figure for the nine months ended September 30, 2015. Other non-interest income decreased by $3,000, or 4.0 percent, to $72,000 for the nine months ended September 30, 2016 from $75,000 for the nine months ended September 30, 2015. The above decreases in total non-interest income were partly offset by an increase in fees and service charges of $767,000, or 49.4 percent, to $2.3 million for the nine months ended September 30, 2016 from $1.6 million for the nine months ended September 30, 2015.



Total non-interest expense increased by $3.4 million, or 10.4 percent, to $36.2 million for the nine months ended September 30, 2016 from $32.8 million for the nine months ended September 30, 2015. Salaries and employee benefits expense increased by $2.1 million, or 12.8 percent, to $18.9 million for the nine months ended September 30, 2016 from $16.8 million for the nine months ended September 30, 2015. This increase in both salaries and employee benefits was mainly attributable to an increase of 33 full-time equivalent employees, or 9.9 percent, to 367 at September 30, 2016 from 334 at September 30, 2015, which relates to the addition of business development and loan administration employees and the opening of five new branch offices in the last 18 months. Occupancy and equipment expense increased by $425,000, or 7.5 percent, to $6.1 million for the nine months ended September 30, 2016 from $5.7 million for the nine months ended September 30, 2015. The increase in occupancy and equipment expense also related primarily to the opening of the new branch offices. Professional fees increased by $540,000, or 65.3 percent, to $1.4 million for the nine months ended September 30, 2016 as compared to $827,000 for the nine months ended September 30, 2015. The increase in professional fees resulted from a $400,000 reduction in expense in the prior-year period upon the settlement of a litigation issue. Regulatory assessments increased by $271,000, or 31.2 percent, to $1.1 million for the nine months ended September 30, 2016 from $868,000 for the nine months ended September 30, 2015, primarily related to asset growth. Advertising expense increased by $201,000, or 19.4 percent, to $1.2 million for the nine months ended September 30, 2016 from $1.0 million for the nine months ended September 30, 2015, resulting from continued expansion into new market areas. Other non-interest expense increased by $733,000, or 19.2 percent, to $4.6 million for the nine

43

 


 

months ended September 30, 2016 from $3.8 million for the nine months ended September 30, 2015. Other non-interest expense consisted of loan expense, business development, office supplies, correspondent bank fees, telephone and communication and other fees and expenses, which all experienced increases as part of the Company’s growth strategy. The above increases in non-interest expense were partly offset by a decrease in data processing expense of $821,000, or 26.7 percent, to $2.3 million for the nine months ended September 30, 2016 as compared to $3.1 million for the nine months ended September 30, 2015. The decrease in data processing expense primarily related to efficiencies achieved with the conversion to a new core system.



Income tax provision decreased by $371,000, or 9.2 percent, to $3.6 million for the nine months ended September 30, 2016 from $4.0 million for the nine months ended September 30, 2015. The decrease in income tax provision was a result of lower taxable income during the nine-month period ended September 30, 2016 as compared with the nine months ended September 30, 2015. The consolidated effective tax rate for the nine months ended September 30, 2016 was 39.7 percent compared with 40.1 percent for the nine months ended September 30, 2015.











Liquidity and Capital Resources 



Liquidity



The overall objective of our liquidity management practices is to ensure the availability of sufficient funds to meet financial commitments and to take advantage of lending and investment opportunities.  The Company manages liquidity in order to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings and other obligations as they mature, and to fund loan and investment portfolio opportunities as they arise.



The Company’s primary sources of funds to satisfy its objectives are net growth in deposits (primarily retail), principal and interest payments on loans and investment securities, proceeds from the sale of originated loans and FHLB and other borrowings. The scheduled amortization of loans is a predictable source of funds. Deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company has other sources of liquidity if a need for additional funds arises, including unsecured overnight lines of credit and other collateralized borrowings from the FHLB and other correspondent banks.

At September 30, 2016 and December 31, 2015, the Company had no overnight borrowings outstanding with the FHLB. The Company utilizes overnight borrowings from time to time to fund short-term liquidity needs. The Company had total borrowings of $159.1 million at September 30, 2016 and  $204.1 million at December 31, 2015. The average rate of these FHLB borrowings was 2.66 percent at September 30, 2016, as compared with 3.19 percent at December 31, 2015.



The Company had the ability at September 30, 2016 to obtain additional funding from the FHLB of up to $25.2 million, utilizing unencumbered loan collateral. The Company expects to have sufficient funds available to meet current loan commitments in the normal course of business through typical sources of liquidity. Time deposits scheduled to mature in one year or less totaled $351.7 million at September 30, 2016. Based upon historical experience data, management estimates that a significant portion of such deposits will remain with the Company.





Capital Resources



At September 30, 2016, and December 31, 2015, BCB Community Bank and the Company exceeded all of its regulatory capital requirements to which they were subject. The following table sets forth the regulatory capital ratios for BCB Community Bank as well as regulatory capital requirements for the periods presented.











 

 

 

 

 

 

 

 

 

 

 

 



  

Actual

 

 

For Capital Adequacy Purposes

 

 

For Well Capitalized Under Prompt Corrective Action



 

 

 

 

 

 

 

 

 

 

 

 

 As of September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

Bank

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk-weighted assets)

$

151,929 

11.57 

%

$

105,044 

8.00 

%

$

131,305 

10.00 

%

Tier 1 capital (to risk-weighted assets)

  

135,501 

10.32 

 

 

78,783 

6.00 

 

 

105,044 

8.00 

 

Common Equity Tier 1 Capital (to risk-weighted assets)

  

135,501 

10.32 

 

 

59,087 

4.50 

 

 

85,348 

6.50 

 

Tier 1 capital (to average assets)

 

135,501 

7.83 

 

 

69,212 

4.00 

 

 

86,515 

5.00 

 



 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk-weighted assets)

$

154,664 

11.75 

%

$

105,268 

8.00 

%

 

N/A

N/A

 

Tier 1 capital (to risk-weighted assets)

 

138,202 

10.50 

 

 

78,951 

6.00 

 

 

N/A

N/A

 

Common Equity Tier 1 Capital (to risk-weighted assets)

 

118,614 

9.01 

 

 

59,213 

4.50 

 

 

N/A

N/A

 

Tier 1 capital (to average assets)

 

138,202 

7.98 

 

 

69,314 

4.00 

 

 

N/A

N/A

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 As of December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

Bank

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk-weighted assets)

$

153,806 

12.06 

%

$

102,011 

8.00 

%

$

127,514 

10.00 

%

Tier 1 capital (to risk-weighted assets)

 

137,841 

10.81 

 

 

76,508 

6.00 

 

 

102,011 

8.00 

 

Common Equity Tier 1 Capital (to risk-weighted assets)

 

137,841 

10.81 

 

 

57,381 

4.50 

 

 

82,884 

6.50 

 

Tier 1 capital (to average assets)

 

137,841 

8.61 

 

 

64,048 

4.00 

 

 

80,060 

5.00 

 

44

 


 



 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk-weighted assets)

$

155,250 

12.16 

%

$

102,147 

8.00 

%

 

N/A

N/A

 

Tier 1 capital (to risk-weighted assets)

 

139,264 

10.91 

 

 

76,610 

6.00 

 

 

N/A

N/A

 

Common Equity Tier 1 Capital (to risk-weighted assets)

 

139,264 

9.24 

 

 

67,831 

4.50 

 

 

N/A

N/A

 

Tier 1 capital (to average assets)

 

139,264 

8.75 

 

 

63,649 

4.00 

 

 

N/A

N/A

 



 

 

 

 

 

 

 

 

 

 

 

 







In July 2013, the FDIC and the other federal bank regulatory agencies issued a final rule that revised their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act.  Among other things, the new rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increased the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property.  The final rule also requires unrealized gains and losses on certain available-for-sale securities holdings and defined benefit plan obligations to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised.  The Bank exercised the opt-out election. The rule limits a banking organization's capital distributions and certain discretionary bonus payments if the banking organization does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. 



The final rule became effective for the Bank and the Company on January 1, 2015.  The capital conservation buffer requirement is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. The Bank and the Company currently comply with the minimum capital requirements set forth in the final rule.



At September 30, 2016 and December 31, 2015, the capital ratios of the Bank and the Company exceeded the quantitative capital ratios required for an institution to be considered “well-capitalized.”



Item 3. Quantitative and Qualitative Disclosures About Market Risk

Management of Market Risk

General. The majority of our assets and liabilities are monetary in nature. Consequently, one of our most significant forms of market risk is interest rate risk. Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has established an Asset/Liability Committee which is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors. Senior management monitors the level of interest rate risk on a regular basis and the Asset/Liability Committee, which consists of senior management and outside directors operating under a policy adopted by the Board of Directors, meets quarterly to review our asset/liability policies and interest rate risk position.

The following table presents the Company’s net portfolio value (“NPV”). These calculations were based upon assumptions believed to be fundamentally sound, although they may vary from assumptions utilized by other financial institutions. The information set forth below is based on data that included all financial instruments as of September 30, 2016. Assumptions have been made by the Company relating to interest rates, loan prepayment rates, core deposit duration, and the market values of certain assets and liabilities under the various interest rate scenarios. Actual maturity dates were used for fixed rate loans and certificate accounts. Investment securities were scheduled at either the maturity date or the next scheduled call date based upon management’s judgment of whether the particular security would be called in the current interest rate environment and under assumed interest rate scenarios. Variable rate loans were scheduled as of their next scheduled interest rate repricing date. Additional assumptions made in the preparation of the NPV table include prepayment rates on loans and mortgage-backed securities, core deposits without stated maturity dates were scheduled with an assumed term of 48 months, and money market and non-interest bearing accounts were scheduled with an assumed term of 24 months. The NPV at “PAR” represents the difference between the Company’s estimated value of assets and estimated value of liabilities assuming no change in interest rates. The NPV for a decrease of 200 to 300 basis points has been excluded since it would not be meaningful, in the interest rate environment as of September 30, 2016. The following sets forth the Company’s NPV as of that date.

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



  

 

 

 

 

 

 

 

 

 

NPV as a % of Assets

 

Change in Calculation

  

Net Portfolio Value

 

$ Change from PAR

 

% Change from PAR

 

NPV Ratio

 

Change



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

+300bp

  

$

145,504 

  

$

(61,986)

 

(29.87)

%

 

9.12 

%

 

(278)

bps

+200bp

  

 

164,831 

 

 

(42,659)

 

(20.56)

 

 

10.04 

 

 

(186)

bps

+100bp

  

 

185,639 

  

 

(21,851)

 

(10.53)

 

 

10.99 

 

 

(92)

bps

PAR

  

 

207,490 

  

 

 -

 

 -

 

 

11.90 

 

 

 -

bps

-100bp

 

 

242,267 

 

 

34,777 

 

16.76 

 

 

13.46 

 

 

156 

bps



bp – basis points





The table above indicates that as of September 30, 2016, in the event of a 100 basis point increase in interest rates, we would experience a 10.53%  decrease in NPV.

45

 


 

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in NPV require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the NPV table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the NPV table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income, and will differ from actual results.

 



ITEM 4.

Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There has been no change in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.



46

 


 

PART II. OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



     We are involved, from time to time, as plaintiff or defendant in various legal actions arising in the normal course of business. Other than as set forth below, as of September 30, 2016, we were not involved in any material legal proceedings the outcome of which, if determined in a manner adverse to the Company, would have a material adverse effect on our financial condition or results of operations.

    

      The Company, as the successor to Pamrapo Bancorp, Inc., and in its own corporate capacity, was a named defendant in a shareholder class action lawsuit, Kube v. Pamrapo Bancorp, Inc., et al., filed in the Superior Court of New Jersey, Hudson County, Chancery Division, General Equity (the "Action”).



      On September 21, 2015, the court entered an Order and Final Judgment (“Judgment”), whereby the Stipulation of Settlement ("Stipulation") agreed to by the plaintiff class, the Company and the remaining defendants was approved.    



      Pursuant to the Stipulation, the plaintiff class's counsel reserved the right to seek an award of counsel fees and litigation expenses (“Fees Motion”). The maximum amount which may be awarded as a result of the Fees Motion is $1,000,000.00. The plaintiff class’s counsel has made a Fee Motion to the court seeking a final award of counsel fees and litigation expenses of approximately $1,000,000.00. The Company and the remaining defendants have vigorously opposed that motion. It is anticipated that the plaintiff class’s counsel will submit a reply to the opposition filed by the Company and the remaining defendants. The court has not scheduled a hearing date for the Fee Motion. 

     

      The Company and the other defendants in the Action ("Plaintiffs") brought an action ("Carrier Suit") against Progressive Insurance Company ("Progressive"), the Directors' and Officers' Liability insurance carrier for Pamrapo Bancorp, Inc., at the time of its merger with the Company on July 6, 2010, and Colonial American Insurance Company ("Colonial"), the Directors' and Officers' Liability insurance carrier for the Company at the time of the merger.  The Carrier Suit seeks, among other claims, indemnification, payment of and/or contribution toward the above settlement, payment of and/or contribution toward the above award of interim attorney's fees to the plaintiff class's counsel, payment of and/or contribution toward any future award of attorney's fees to the plaintiff class's counsel, and reimbursement of the attorney's fees and defense costs incurred by the Plaintiffs in defending the Action and pursuing the Carrier Suit.   Progressive made a motion to dismiss the Carrier Suit in 2014. The Plaintiffs opposed that motion. That motion was administratively terminated by Order of the court, dated December 3, 2014.  By Order of the court, dated December 3, 2014, the Plaintiffs' motion to file an Amended Complaint was granted.  



      On or about January 6, 2015, Progressive again made a motion to dismiss the Carrier Suit. The Plaintiffs opposed that motion. That motion was denied by oral decision on October 22, 2015, and by written Order, dated January 20, 2016.   

 

      A Mediation session ("Mediation") was held on March 11, 2015, among the parties. Following the Mediation, the Plaintiffs and Colonial agreed to settle the Plaintiffs’ claims against Colonial for $1,750,000.00. A Settlement Agreement and Release, dated June 30, 2015, was entered into by the Plaintiffs and Colonial. The Plaintiffs received the settlement amount of $1,750,000.00 from Colonial on July 9, 2015.   



      The Plaintiffs and Progressive did not settle their respective claims at the Mediation. The Carrier Suit continues with respect to these parties. Initial discovery has been exchanged between the parties.



By Order of the court, dated August 10, 2016, the parties were granted permission to serve and file motions for summary judgment by November 9, 2016. Prior to disposition of these motions, a Settlement Conference is scheduled before the court on November 16, 2016. Representatives of the parties with full settlement authority have been ordered to appear at the Settlement Conference. All discovery has been stayed until disposition of the above motions.



      The Plaintiffs are vigorously pursuing full recovery.



ITEM 1.A. RISK FACTORS

There have been no changes to the risk factors set forth under Item 1.A Risk Factors as set forth in the Company’s Form 10-K for the year ended December 31, 2015 or as updated in other quarterly reports on Form 10-Q during 2016.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



On June 28, 2012, the Company announced a seventh stock repurchase plan to repurchase 5% or 440,000 shares of the Company’s common stock. On July 17, 2013, the Company announced an eighth stock repurchase plan to repurchase 5% or 400,000 shares of the Company’s common stock. There were no stock purchases for the three months ended September 30, 2016.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.



ITEM 4. MINE SAFTEY DISCLOSURES

Not applicable



ITEM 5. OTHER INFORMATION

None.



ITEM 6. EXHIBITS



 

Exhibit 11.0 Computation of Earnings per Share.

Exhibit 31.1 and 31.2  Officers’ Certification filed pursuant to section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32            Officers’ Certification filed pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS        XBRL Instance Document

Exhibit 101.SCH       XBRL Taxonomy Extension Schema

Exhibit 101.CAL       XBRL Taxonomy Extension Calculation LinkBase

Exhibit 101.DEF       XBRL Taxonomy Extension Definition LinkBase

Exhibit 101.LAB       XBRL Taxonomy Extension Label LinkBase

Exhibit 101.PRE       XBRL Taxonomy Extension Presentation LinkBase

____



47

 


 



Signatures

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 



 

 

 

 

 

 

 

 

 

 

 

BCB BANCORP, INC.

 

 

 

Date: November 4, 2016

 

By:

 

/s/ Thomas Coughlin

 

 

 

 

Thomas Coughlin

 

 

 

 

President and Chief Executive Officer

(Principal Executive Officer)

 

 

 

Date: November 4, 2016

 

By:

 

/s/ Thomas P. Keating

 

 

 

 

Thomas P. Keating

Senior Vice President and Chief Financial Officer

 

 

 

 

(Principal Accounting and Financial Officer)



48