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BCB BANCORP INC - Quarter Report: 2017 September (Form 10-Q)





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, 2017

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, a non-accelerated filer, or an emerging growth company. See definition of “accelerated filer, larger accelerated filer, non-accelerated filer, smaller reporting company, or emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

Large Accelerated Filer

 

  

Accelerated Filer

 

 

 

 

 

 

Non-Accelerated Filer

 

 (Do not check if a smaller reporting company)

  

Smaller Reporting Company   

 

 



 

 

 

 

 

 



 

 

 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

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 7th, 2017, BCB Bancorp, Inc., had 15,031,691 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, 2017 (unaudited) and December 31, 2016

  

 

  

 

 

Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016 (unaudited)

  

 

  



 

 

 

 

Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016 (unaudited)

 

 

 

 

 

Consolidated Statement of Changes in Stockholders’ Equity for the nine months ended September 30, 2017 and 2016 (unaudited)

  

 

  



Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 (unaudited)

  

 

  



Notes to Unaudited Consolidated Financial Statements

  

 

  

 

 

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

  

 

42 

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

  

 

49 

 

 

 

Item 4. Controls and Procedures

  

 

50 

  

 

 

PART II. OTHER INFORMATION

  

 

51 

 

 

 

Item 1. Legal Proceedings

  

 

51 

  

 

 

Item 1A. Risk Factors

  

 

51 

  

 

 

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

  

 

51 

  

 

 

Item 3. Defaults Upon Senior Securities

  

 

51 

  

 

 

Item 4. Mine Safety Disclosures

  

 

51 

  

 

 

Item 5. Other Information

  

 

51 

  

 

 

Item 6. Exhibits

 

 

51 

 





 

 

 


 

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,



2017

 

2016



 

 

 

 

 

ASSETS

 

 

 

 

 

Cash and amounts due from depository institutions

$

15,035 

 

$

12,121 

Interest-earning deposits

 

82,583 

 

 

52,917 

  Total cash and cash equivalents

 

97,618 

 

 

65,038 



 

 

 

 

 

Interest-earning time deposits

 

980 

 

 

980 

Securities available for sale

 

100,077 

 

 

94,765 

Loans held for sale

 

2,484 

 

 

4,153 

Loans receivable, net of allowance for loan losses

 

 

 

 

 

  of $18,449 and $17,209 respectively

 

1,619,245 

 

 

1,485,159 

Federal Home Loan Bank of New York stock, at cost

 

8,096 

 

 

9,306 

Premises and equipment, net

 

19,259 

 

 

19,382 

Accrued interest receivable

 

5,808 

 

 

5,573 

Other real estate owned

 

1,410 

 

 

3,525 

Deferred income taxes

 

6,481 

 

 

9,953 

Other assets

 

10,282 

 

 

10,374 

   Total Assets

$

1,871,740 

 

$

1,708,208 



 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 



 

 

 

 

 

LIABILITIES

 

 

 

 

 

Non-interest bearing deposits

$

169,222 

 

$

158,523 

Interest bearing deposits

 

1,376,926 

 

 

1,233,682 

 Total deposits

 

1,546,148 

 

 

1,392,205 

Short-term debt

 

 -

 

 

20,000 

Long-term debt

 

138,000 

 

 

155,000 

Subordinated debentures

 

4,124 

 

 

4,124 

Other liabilities and accrued interest payable

 

5,900 

 

 

5,798 

   Total Liabilities

 

1,694,172 

 

 

1,577,127 



 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

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

 

 

 

 

 

   issued and outstanding 1,342 shares of series C 6% and series D 4.5% noncumulative

 

 

 

 

 

 perpetual preferred stock (liquidation value $10,000 per share) at September 30, 2017 and 1,560 shares

 

 

 

 

 

 of series A, B, C 6% noncumulative preferred stock at December 31, 2016

 

 -

 

 

 -

Additional paid-in capital preferred stock

 

13,241 

 

 

15,464 

Common stock; no par value; 20,000,000 shares authorized, issued 17,562,454 and 13,797,088

 

 

 

 

 

 at September 30, 2017 and December 31, 2016, respectively, outstanding 15,031,691 shares and

 

 

 

 

 

   11,267,225 shares, respectively

 

 -

 

 

 -

Additional paid-in capital common stock

 

164,010 

 

 

120,417 

Retained earnings

 

31,613 

 

 

28,159 

Accumulated other comprehensive (loss)

 

(2,180)

 

 

(3,856)

Treasury stock, at cost, 2,530,763 and 2,529,863 shares, respectively, at September 30, 2017 and December 31, 2016

 

(29,116)

 

 

(29,103)

   Total Stockholders' Equity

 

177,568 

 

 

131,081 



 

 

 

 

 

    Total Liabilities and Stockholders' Equity

$

1,871,740 

 

$

1,708,208 



 

 

 

 

 



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,



 

2017

 

 

2016

 

2017

 

 

2016



 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 Loans, including fees

$

18,399 

 

$

17,191 

$

53,967 

 

$

51,947 

 Mortgage-backed securities

 

581 

 

 

167 

 

1,712 

 

 

291 

 Municipal bonds and other debt

 

113 

 

 

 -

 

377 

 

 

 -

 FHLB stock and other interest earning assets

 

313 

 

 

373 

 

874 

 

 

1,005 

    Total interest income

 

19,406 

 

 

17,731 

 

56,930 

 

 

53,243 



 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 Deposits:

 

 

 

 

 

 

 

 

 

 

    Demand

 

700 

 

 

585 

 

2,050 

 

 

1,417 

    Savings and club

 

100 

 

 

99 

 

299 

 

 

281 

    Certificates of deposit

 

2,284 

 

 

2,077 

 

6,437 

 

 

6,237 



 

3,084 

 

 

2,761 

 

8,786 

 

 

7,935 

    Borrowed money

 

748 

 

 

1,373 

 

2,902 

 

 

4,650 

      Total interest expense

 

3,832 

 

 

4,134 

 

11,688 

 

 

12,585 



 

 

 

 

 

 

 

 

 

 

Net interest income

 

15,574 

 

 

13,597 

 

45,242 

 

 

40,658 

Provision (credit) for loan losses

 

511 

 

 

(301)

 

1,785 

 

 

(75)



 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

15,063 

 

 

13,898 

 

43,457 

 

 

40,733 



 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

  Fees and service charges

 

749 

 

 

873 

 

2,383 

 

 

2,320 

  Gain on sales of loans

 

540 

 

 

718 

 

1,611 

 

 

2,671 

  Loss on bulk sale of impaired loans held in portfolio

 

 -

 

 

(88)

 

 -

 

 

(373)

  Gain on sales of other real estate owned

 

222 

 

 

 -

 

1,570 

 

 

 -

  Gain on sale of investment securities

 

97 

 

 

 -

 

97 

 

 

 -

  Other

 

25 

 

 

27 

 

307 

 

 

72 

     Total non-interest income

 

1,633 

 

 

1,530 

 

5,968 

 

 

4,690 



 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

  Salaries and employee benefits

 

5,925 

 

 

6,747 

 

17,893 

 

 

18,931 

  Occupancy and equipment

 

2,038 

 

 

2,192 

 

6,185 

 

 

6,107 

  Data processing and service fees

 

703 

 

 

358 

 

2,034 

 

 

2,253 

  Professional fees

 

491 

 

 

457 

 

2,237 

 

 

1,367 

  Director fees

 

198 

 

 

183 

 

576 

 

 

519 

  Regulatory assessments

 

318 

 

 

429 

 

1,010 

 

 

1,139 

  Advertising and promotional

 

117 

 

 

482 

 

375 

 

 

1,235 

  Other real estate owned, net

 

 

 

36 

 

64 

 

 

146 

  Other

 

1,500 

 

 

1,459 

 

4,635 

 

 

4,549 

     Total non-interest expense

 

11,299 

 

 

12,343 

 

35,009 

 

 

36,246 



 

 

 

 

 

 

 

 

 

 

Income before income tax provision

 

5,397 

 

 

3,085 

 

14,416 

 

 

9,177 

Income tax provision

 

2,180 

 

 

1,171 

 

5,773 

 

 

3,647 



 

 

 

 

 

 

 

 

 

 

Net Income

$

3,217 

 

$

1,914 

$

8,643 

 

$

5,530 

Preferred stock dividends

 

166 

 

 

234 

 

449 

 

 

702 

Net Income available to common stockholders

$

3,051 

 

$

1,680 

$

8,194 

 

$

4,828 



 

 

 

 

 

 

 

 

 

 

Net Income per common share-basic and diluted

 

 

 

 

 

 

 

 

 

 

Basic

$

0.25 

 

$

0.15 

$

0.71 

 

$

0.43 

Diluted

$

0.25 

 

$

0.15 

$

0.70 

 

$

0.43 



 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

Basic

 

12,142 

 

 

11,246 

 

11,572 

 

 

11,230 

Diluted

 

12,226 

 

 

11,258 

 

11,664 

 

 

11,236 



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,



2017

 

2016

 

2017

 

2016



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Net Income

$

3,217 

 

$

1,914 

 

$

8,643 

 

$

5,530 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period (a)

 

293 

 

 

(297)

 

 

1,676 

 

 

(144)

Benefit plans (b)

 

 -

 

 

(24)

 

 

 -

 

 

(39)

Other comprehensive income (loss)

 

293 

 

 

(321)

 

 

1,676 

 

 

(183)

Comprehensive income

$

3,510 

 

$

1,593 

 

$

10,319 

 

$

5,347 





(a)

Represents the net change of the unrealized gain on available-for-sale securities. Represents unrealized gains (losses) of $496,000,  ($502,000),  $2,833,000 and ($243,000), respectively, less deferred taxes of $203,000,  ($205,000),  $1,157,000 and ($99,000),  respectively.

(b)

Represents the net change of unrecognized loss included in net periodic pension cost. Represents a gross change of $0,  $40,000,  $0, and $65,000, respectively, less deferred taxes of $0,  $16,000,  $0, and $26,000, 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, 2017

$

 -

 

$

 -

 

$

135,881 

 

$

28,159 

 

$

(29,103)

 

$

(3,856)

 

$

131,081 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Issuance of Common Stock

 

 -

 

 

 -

 

 

42,759 

 

 

 -

 

 

 -

 

 

 -

 

 

42,759 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redemption of Series A and B Preferred Stock

 

 -

 

 

 -

 

 

(11,720)

 

 

 -

 

 

 -

 

 

 -

 

 

(11,720)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series D Preferred Stock

 

 -

 

 

 -

 

 

9,497 

 

 

 -

 

 

 -

 

 

 -

 

 

9,497 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of Stock Options (700 shares)

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 -

 

 

 -

 

 

126 

 

 

 -

 

 

 -

 

 

 -

 

 

126 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury Stock purchases

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(13)

 

 

 -

 

 

(13)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends payable on Series C 6% and Series D 4.5% noncumulative perpetual preferred stock

 

 -

 

 

 -

 

 

 -

 

 

(449)

 

 

 -

 

 

 -

 

 

(449)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 -

 

 

 -

 

 

 -

 

 

(4,519)

 

 

 -

 

 

 -

 

 

(4,519)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Reinvestment Plan

 

 -

 

 

 -

 

 

221 

 

 

(221)

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Purchase Plan

 

 -

 

 

 -

 

 

485 

 

 

 -

 

 

 -

 

 

 -

 

 

485 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 -

 

 

 -

 

 

 -

 

 

8,643 

 

 

 -

 

 

 -

 

 

8,643 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

1,676 

 

 

1,676 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance at September 30, 2017

$

 -

 

$

 -

 

$

177,251 

 

$

31,613 

 

$

(29,116)

 

$

(2,180)

 

$

177,568 







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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 

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,



2017

 

2016

Cash Flows from Operating Activities :

 

 

 

 

 

  Net Income

$

8,643 

 

$

5,530 

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

 

 

 

 

 

        Depreciation of premises and equipment

 

1,927 

 

 

1,790 

        Amortization and accretion, net

 

(1,013)

 

 

(1,440)

        Provision (credit) for loan losses

 

1,785 

 

 

(75)

        Deferred income tax

 

2,314 

 

 

1,460 

        Loans originated for sale

 

(19,371)

 

 

(26,568)

        Proceeds from sales of loans originated for sale

 

22,651 

 

 

29,748 

        Gain on sales of loans originated for sale

 

(1,611)

 

 

(2,671)

        Gain on sales of securities available for sale

 

(97)

 

 

 -

        Fair value adjustment of OREO

 

 -

 

 

392 

        Loss on bulk sale of impaired loans held in portfolio

 

 -

 

 

373 

        Stock compensation expense

 

126 

 

 

84 

        (Increase) decrease in interest receivable

 

(235)

 

 

366 

        Decrease (increase) in other assets

 

92 

 

 

(2,353)

        (Decrease) in accrued interest payable

 

(209)

 

 

(298)

        Increase in other liabilities

 

311 

 

 

552 

Net Cash Provided by Operating Activities

 

15,313 

 

 

6,890 

Cash flows from investing activities:

 

 

 

 

 

        Proceeds from calls on securities available for sale

 

22,423 

 

 

1,764 

        Purchases of securities available for sale

 

(46,298)

 

 

(45,332)

        Proceeds from sales of other real estate owned

 

4,813 

 

 

952 

        Proceeds from bulk sale of impaired loans held

 

 -

 

 

1,180 

        Proceeds from sales of securities available for sale

 

21,165 

 

 

 -

        Gains on sales of other real estate owned

 

(1,570)

 

 

 -

        Purchase of interest-bearing time deposits

 

 -

 

 

258 

        Net increase in loans receivable

 

(135,657)

 

 

(13,837)

        Additions to premises and equipment

 

(1,804)

 

 

(3,303)

        Redemption of Federal Home Loan Bank of New York stock

 

1,210 

 

 

1,720 

Net Cash Used In Investing Activities

 

(135,718)

 

 

(56,598)

Cash flows from financing ofctivities:

 

 

 

 

 

        Net increase in deposits

 

153,943 

 

 

106,456 

        Proceeds from long-term debt

 

38,000 

 

 

10,000 

        Repayments of long-term debt

 

(55,000)

 

 

(55,000)

        Net change in short-term debt

 

(20,000)

 

 

 -

        Purchases/adjustments of treasury stock

 

(13)

 

 

 -

        Cash dividend paid on common stock

 

(4,519)

 

 

(4,509)

        Cash dividend paid on preferred stock

 

(449)

 

 

(702)

        Net proceeds from issuance of common stock

 

43,244 

 

 

245 

        Net proceeds from issuance of preferred stock

 

9,497 

 

 

 -

        Net payment on redemption of preferred stock

 

(11,720)

 

 

(1,710)

        Exercise of stock options

 

 

 

 -

Net Cash Provided by Financing Activities

 

152,985 

 

 

54,780 



 

 

 

 

 

Net Increase In Cash and Cash Equivalents

 

32,580 

 

 

5,072 

Cash and Cash Equivalents-Beginning

 

65,038 

 

 

132,635 



 

 

 

 

 

Cash and Cash Equivalents-Ending

$

97,618 

 

$

137,707 



 

 

 

 

 

Supplementary Cash Flow Information:

 

 

 

 

 

     Cash paid during the year for:

 

 

 

 

 

        Income taxes

$

4,285 

 

$

5,317 

        Interest

$

11,898 

 

$

12,883 



 

 

 

 

 



 

 

 

 

 

Non-cash items:

 

 

 

 

 

        Transfer of loans to other real estate owned

$

1,128 

 

$

2,747 









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 consolidated 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, 2017 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, 2016, 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, 2017, and the date these consolidated financial statements were issued. See Note 9 related to subsequent events. 





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 scope of ASC 606 excludes net interest income or other revenues associated with financial assets and liabilities, including loans, leases, securities and derivatives, which would then exclude the majority of the Company's revenues. However, the recognition and measurement of certain non-interest income items such as gain on sale of other real estate owned and deposit-related fees, could be affected by ASC 606.



In February 2016, the Financial Accounting Standards Board (“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 June 2016, the 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. The Company has begun evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and results of operations. The effect of this change cannot be ascertained at this point, and will depend upon factors including asset components, asset quality and market conditions at the adoption date.



In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting”. The amendments in this update requires that an entity account for the effects of a modification unless the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified, the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. ASU 2017-09 is effective for all entities on a prospective basis for annual periods beginning after December 15, 2017. Due to prospective application, the new guidance is not expected to have an impact on the Company’s Consolidated Financial Statements upon adoption.



ASU 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities." ASU 2017-08 was issued to enhance the accounting for the amortization of premiums for purchased callable debt securities. This amendment requires that the amortization premium be shortened to the earliest call date. For public business entities, ASU 2017-08 is effective for fiscal years after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of the adoptions of ASU 2017-08 on its consolidated financial statements.





6

 


 



Note 2 – Reclassification



Certain amounts as of December 31, 2016 and the three and nine month periods ended September 30, 2016, respectively 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,



 

2017

 

 

2016

 

 

2017

 

 

2016



 

 

 

 

 

 

 

 

 

 

 

Pension plan:

  

 

 

  

 

 

  

 

 

  

 

Interest cost

$

75 

 

$

82 

  

$

225 

 

$

246 

Expected return on plan assets

  

(113)

 

  

(131)

 

  

(339)

 

  

(393)

Amortization of unrecognized loss

  

29 

 

  

36 

 

  

87 

 

  

108 



 

 

 

 

 

 

 

 

 

 

 

Net periodic pension benefit

  

(9)

 

  

(13)

 

 

(27)

 

  

(39)



  

 

 

  

 

 

  

 

 

  

 

SERP plan:

  

 

 

  

 

 

  

 

 

  

 

Interest cost

$

 

$

  

$

12 

 

$



  

 

 

  

 

 

  

 

 

  

 

Net periodic postretirement cost

$

 

$

  

$

12 

 

$





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, 2017, a grant of 350,000 options was declared for members of the Board of Directors and Executive Officers which vest at a rate of 10% per year and 20% per year, respectively, commencing on the first anniversary of the grant date. On September 16, 2016, a grant of 160,000 options was declared for members of the Board of Directors and the Chief Executive Officer, which vest at a rate of 10% per year and 33% per year, respectively, 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.









 

 

 

 

 

 

 

 



 

Number of  Option

 

 

 

 

 

 



  

Shares

 

 

Range of Exercise Prices

 

 

Weighted Average Exercise Price



 

 

 

 

 

 

 

 

Outstanding at December 31, 2016

 

575,000 

 

$

8.93-13.32

 

$

10.78 



 

 

 

 

 

 

 

 

Options granted                                         

 

350,000 

 

 

12.40 

 

 

12.40 

Options exercised                                        

 

(700)

 

 

10.55 

 

 

 -

Options forfeited                                    

 

(35,000)

 

 

8.93-13.32

 

 

 -

Options expired                                      

 

 -

 

 

 

 

 

 



 

 

 

 

 

 

 

 

Outstanding at September 30, 2017

 

889,300 

 

$

8.93-13.32

 

$

11.42 





As of September 30, 2017, stock options which were granted and were exercisable totaled 139,367 stock options.





It is Company policy to issue new shares upon share option exercise. Expected future compensation expense relating to the 749,933 shares of unvested options outstanding as of September 30,  2017 was $1,783,000 over a weighted average period of 6.60 years.











 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

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                                      

 

(2,000)

 

 

15.11 

 

 

15.11 



 

 

 

 

 

 

 

 

Outstanding at September 30, 2016

 

575,000 

 

$

8.93-13.32

 

$

10.28 









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 496,800 shares of unvested options outstanding as of September 30, 2016 was $1,238,000 over a weighted average period of 7.33 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 and nine months ended September 30, 2017 and 2016, 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, 2017 and 2016 the weighted average number of outstanding options considered to be anti-dilutive were 0 and 24,823 respectively. For the nine months ended September 30, 2017 and 2016 the weighted average number of outstanding options considered to be anti-dilutive were 0 and 32,619 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,



 

2017

 

2016



 

 

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

 

$

3,051 

 

 

 

 

 

 

$

1,680 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income available to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stockholders

 

$

3,051 

 

12,142 

 

$

0.25 

 

$

1,680 

 

11,246 

 

$

0.15 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

 -

 

84 

 

 

 

 

 

 -

 

12 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income available to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stockholders

 

$

3,051 

 

12,226 

 

$

0.25 

 

$

1,680 

 

11,258 

 

$

0.15 













 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Nine Months Ended September 30,



 

2017

 

2016



 

 

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

 

$

8,194 

 

 

 

 

 

 

$

4,828 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income available to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stockholders

 

$

8,194 

 

11,572 

 

$

0.71 

 

$

4,828 

 

11,230 

 

$

0.43 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

 -

 

92 

 

 

 

 

 

 -

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income available to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stockholders

 

$

8,194 

 

11,664 

 

$

0.70 

 

$

4,828 

 

11,236 

 

$

0.43 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



























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,  2017 and December 31, 2016: 









 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



September 30, 2017



 

 

  

Gross

  

Gross

  

 



Amortized

 

Unrealized

 

Unrealized

 

 

 



Cost

 

Gains

 

Losses

 

Fair Value



(In Thousands)

Residential mortgage-backed securities:

 

 

  

 

 

  

 

 

  

 

 

  Due after one year through five years

$

3,295 

 

$

23 

 

$

62 

 

$

3,256 

  Due after five years through ten years

 

674 

  

 

 -

  

 

  

 

668 

  Due after ten years

 

87,027 

  

 

76 

  

 

1,835 

  

 

85,268 



 

 

 

 

 

 

 

 

 

 

 

Municipal obligations:

 

 

 

 

 

 

 

 

 

 

 

  Due within one year

 

2,512 

 

 

 -

 

 

 

 

2,509 



 

 

 

 

 

 

 

 

 

 

 

Preferred Stock:

 

 

 

 

 

 

 

 

 

 

 

  Due after 10 years

 

8,119 

 

 

286 

 

 

29 

 

 

8,376 



$

101,627 

  

$

385 

  

$

1,935 

  

$

100,077 









 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



December 31, 2016



 

 

  

Gross

  

Gross

  

 



Amortized

 

Unrealized

 

Unrealized

 

 

 



Cost

 

Gains

 

Losses

 

Fair Value



(In Thousands)

Residential mortgage-backed securities:

 

 

  

 

 

  

 

 

  

 

 

Due after five years through ten years

$

6,230 

  

$

23 

  

$

86 

  

$

6,167 

Due after ten years

 

80,594 

  

 

65 

  

 

4,354 

  

 

76,305 



 

 

 

 

 

 

 

 

 

 

 

Municipal obligations:

 

 

 

 

 

 

 

 

 

 

 

  Due within one year

 

6,968 

 

 

 -

 

 

 

 

6,961 



 

 

 

 

 

 

 

 

 

 

 

Preferred Stock:

 

 

 

 

 

 

 

 

 

 

 

  Due after 10 years

 

5,356 

 

 

 -

 

 

24 

 

 

5,332 



$

99,148 

  

$

88 

  

$

4,471 

  

$

94,765 

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, 2017

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

Residential mortgage-backed securities

$

77,797 

  

$

1,787 

  

$

3,219 

  

$

116 

  

$

81,016 

  

$

1,903 

Municipal obligations

 

2,509 

 

 

 

 

 -

 

 

 -

 

 

2,509 

 

 

Preferred stock

 

2,499 

 

 

29 

 

 

 -

 

 

 -

 

 

2,499 

 

 

29 



$

82,805 

  

$

1,819 

  

$

3,219 

  

$

116 

  

$

86,024 

  

$

1,935 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

Residential mortgage-backed securities

$

74,672 

  

$

4,313 

  

$

3,379 

  

$

127 

  

$

78,051 

  

$

4,440 

Municipal obligations

 

6,961 

 

 

 

 

 -

 

 

 -

 

 

6,961 

 

 

Preferred stock

 

1,983 

 

 

24 

 

 

 -

 

 

 -

 

 

1,983 

 

 

24 



$

83,616 

  

$

4,344 

  

$

3,379 

  

$

127 

  

$

86,995 

  

$

4,471 

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, 2017 and December 31, 2016, the unrealized losses on the municipal obligations and preferred stock were very minimal and all less than 12 months in duration. At September 30, 2017 and December 31, 2016, 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 securities, at September 30, 2017 and December 31, 2016 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, 2017 and December 31, 2016 by segment and class:







 

 

 

 

 



 

 

 

 

 



September 30, 2017

 

December 31, 2016



 

(In Thousands)

Originated loans:

 

 

 

 

 

Residential one-to-four family

$

178,533 

 

$

142,081 

Commercial and multi-family

 

1,182,098 

 

 

1,056,806 

Construction

 

60,699 

 

 

70,867 

Commercial business(1) 

 

63,705 

 

 

63,444 

Home equity(2) 

 

38,297 

 

 

32,417 

Consumer

 

1,239 

 

 

1,269 



 

 

 

 

 

Sub-total

 

1,524,571 

 

 

1,366,884 



 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

Residential one-to-four family

 

50,602 

 

 

56,310 

Commercial and multi-family

 

49,546 

 

 

60,422 

Construction

 

 -

 

 

 -

Commercial business(1) 

 

3,355 

 

 

4,460 

Home equity(2) 

 

9,216 

 

 

13,877 

Consumer

 

156 

 

 

225 



 

 

 

 

 

Sub-total

 

112,875 

 

 

135,294 



 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

Residential one-to-four family

 

1,419 

 

 

1,443 

Commercial and multi-family

 

737 

 

 

753 

Construction

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

Sub-total

 

2,156 

 

 

2,196 



 

 

 

 

 

Total Loans

 

1,639,602 

 

 

1,504,374 



 

 

 

 

 

Less:

 

 

 

 

 

Deferred loan fees, net

 

(1,908)

 

 

(2,006)

Allowance for loan losses

 

(18,449)

 

 

(17,209)



 

 

 

 

 



 

(20,357)

 

 

(19,215)



 

 

 

 

 

Total Loans, net

$

1,619,245 

 

$

1,485,159 



 

 

 

 

 

_____________________________

 

 

 

 

 

(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 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 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 or troubled debt restructured.  These loans are individually evaluated for loan loss either by current appraisal, or net present value. 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 single family real estate 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 Bank 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.



Construction lending is generally considered to involve a 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 Bank than construction loans to individuals on their personal residence.



Commercial and multi-family real estate lending entails significant additional risks as compared with residential family property lending. 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.



Commercial business lending, including lines of credit, is 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 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 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 Bank’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 Bank 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 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.



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.

















12

 


 

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



Classified Assets.    



Our policies provide for a classification system for problem assets. Under this classification system, problem assets are classified as “substandard,” “doubtful,” “loss” or “special mention.”



When we classify problem assets, we 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. 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 due to payment status, because updated financial information has not been timely provided, or the collateral underlying the loan is in the process of being revalued.



The Company’s internal credit risk grades are based on the definitions currently utilized by the banking regulatory agencies.  The grades assigned and definitions are as follows, and loans graded excellent, above average, good and watch list (risk ratings 1-4) are treated as “pass” for grading purposes:



5 – Special Mention- Loans currently performing but with potential weaknesses including adverse trends in borrower’s operations, credit quality, financial strength, or possible collateral deficiency.



6 – Substandard- Loans that are inadequately protected by current sound worth, paying capacity, and collateral support.  Loans on “nonaccrual” status.  The loan needs special and corrective attention.



7 – Doubtful- Weaknesses in credit quality and collateral support make full collection improbable, but pending reasonable factors remain sufficient to defer the loss status.



8 – Loss- Continuance as a bankable asset is not warranted. However, this does not preclude future attempts at partial recovery.

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, 2017. 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, 2017. (In Thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Residential

 

 

Commercial & Multi-family

 

Construction

 

Commercial Business (1)

 

Home Equity (2)

 

Consumer

 

Unallocated

 

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

$

2,092 

 

$

11,182 

 

$

753 

 

$

3,229 

 

$

347 

 

$

 

$

99 

 

$

17,707 

Acquired loans recorded at fair value:

 

203 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

203 

Acquired loans with deteriorated credit:

 

41 

 

 

13 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

54 

Beginning Balance, June 30, 2017

 

2,336 

 

 

11,195 

 

 

753 

 

 

3,229 

 

 

347 

 

 

 

 

99 

 

 

17,964 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 

 

 -

 

 

Acquired loans recorded at fair value:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

20 

 

 

 -

 

 

 -

 

 

20 

Acquired loans with deteriorated credit:

 

 -

 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

 -

 

 

 -

 

 

 -

 

 

 

 

20 

 

 

 

 

 -

 

 

26 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Acquired loans recorded at fair value:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Acquired loans with deteriorated credit:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

234 

 

 

304 

 

 

(135)

 

 

46 

 

 

(20)

 

 

 

 

 

 

443 

Acquired loans recorded at fair value:

 

47 

 

 

 

 

 -

 

 

 -

 

 

20 

 

 

 -

 

 

 -

 

 

70 

Acquired loans with deteriorated credit:

 

(1)

 

 

(1)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(2)

Sub-total:

 

280 

 

 

306 

 

 

(135)

 

 

46 

 

 

 -

 

 

 

 

 

 

511 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

2,326 

 

 

11,486 

 

 

618 

 

 

3,274 

 

 

327 

 

 

 

 

106 

 

 

18,144 

Acquired loans recorded at fair value:

 

250 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

253 

Acquired loans with deteriorated credit:

 

40 

 

 

12 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

52 

Ending Balance, September 30, 2017

$

2,616 

 

$

11,501 

 

$

618 

 

$

3,274 

 

$

327 

 

$

 

$

106 

 

$

18,449 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans Receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

$

178,533 

 

$

1,182,098 

 

$

60,699 

 

$

63,705 

 

$

38,297 

 

$

1,239 

 

$

 -

 

$

1,524,571 

Ending Balance Acquired loans recorded at fair value:

 

50,602 

 

 

49,546 

 

 

 -

 

 

3,355 

 

 

9,216 

 

 

156 

 

 

 -

 

 

112,875 

Ending Balance Acquired loans with deteriorated credit:

 

1,419 

 

 

737 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

2,156 

Total Gross Loans:

$

230,554 

 

$

1,232,381 

 

$

60,699 

 

$

67,060 

 

$

47,513 

 

$

1,395 

 

$

 -

 

$

1,639,602 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

$

8,257 

 

$

12,469 

 

$

 -

 

$

3,539 

 

$

1,055 

 

$

 -

 

$

 -

 

$

25,320 

Ending Balance Acquired loans recorded at fair value:

 

7,647 

 

 

5,662 

 

 

 -

 

 

 -

 

 

429 

 

 

 -

 

 

 -

 

 

13,738 

Ending Balance Acquired loans with deteriorated credit:

 

1,419 

 

 

515 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

1,934 

Ending Balance Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

$

17,323 

 

$

18,646 

 

$

 -

 

$

3,539 

 

$

1,484 

 

$

 -

 

$

 -

 

$

40,992 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

$

170,276 

 

$

1,169,629 

 

$

60,699 

 

$

60,166 

 

$

37,242 

 

$

1,239 

 

$

 -

 

$

1,499,251 

Ending Balance Acquired loans recorded at fair value:

 

42,955 

 

 

43,884 

 

 

 -

 

 

3,355 

 

 

8,787 

 

 

156 

 

 

 -

 

 

99,137 

Ending Balance Acquired loans with deteriorated credit:

 

 -

 

 

222 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

222 

Ending Balance Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

$

213,231 

 

$

1,213,735 

 

$

60,699 

 

$

63,521 

 

$

46,029 

 

$

1,395 

 

$

 -

 

$

1,598,610 

_____________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 set forth the activity in the Company’s allowance for loan losses for the nine months ended September 30, 2017, 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 credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

$

2,098 

 

$

10,621 

 

$

736 

 

$

3,079 

 

$

374 

 

$

 

$

69 

 

$

16,979 

Acquired loans recorded at fair value:

 

 

170 

 

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

174 

Acquired loans with deteriorated credit:

 

 

43 

 

 

13 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

56 

Beginning Balance, December 31, 2016

 

 

2,311 

 

 

10,634 

 

 

736 

 

 

3,079 

 

 

378 

 

 

 

 

69 

 

 

17,209 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

 -

 

 -

190 

 

 

 -

 

 -

 

 -

 -

 

 -

11 

 

 -

 -

 

 -

202 

Acquired loans recorded at fair value:

 

 

308 

 

 -

 -

 

 

 -

 

 -

 -

 

 -

54 

 

 -

 -

 

 -

 -

 

 -

362 

Acquired loans with deteriorated credit:

 

 

 -

 

 -

 -

 

 

 -

 

 -

 -

 

 -

 -

 

 -

 -

 

 -

 -

 

 -

 -

Sub-total:

 

 

308 

 

 

190 

 

 

 -

 

 

 

 

54 

 

 

11 

 

 

 -

 

 

564 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Acquired loans recorded at fair value:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Acquired loans with deteriorated credit:

 

 

 -

 

 

 -

 

 

 -

 

 

19 

 

 

 -

 

 

 -

 

 

 -

 

 

19 

Sub-total:

 

 

 -

 

 

 -

 

 

 -

 

 

19 

 

 

 -

 

 

 -

 

 

 -

 

 

19 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

228 

 

 

1,055 

 

 

(118)

 

 

196 

 

 

(47)

 

 

16 

 

 

37 

 

 

1,367 

Acquired loans recorded at fair value:

 

 

388 

 

 

 

 

 -

 

 

 -

 

 

50 

 

 

 -

 

 

 -

 

 

441 

Acquired loans with deteriorated credit:

 

 

(3)

 

 

(1)

 

 

 -

 

 

(19)

 

 

 -

 

 

 -

 

 

 -

 

 

(23)

Sub-total:

 

 

613 

 

 

1,057 

 

 

(118)

 

 

177 

 

 

 

 

16 

 

 

37 

 

 

1,785 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

2,326 

 

 

11,486 

 

 

618 

 

 

3,274 

 

 

327 

 

 

 

 

106 

 

 

18,144 

Acquired loans recorded at fair value:

 

 

250 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

253 

Acquired loans with deteriorated credit:

 

 

40 

 

 

12 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

52 

Ending Balance, September 30, 2017

 

$

2,616 

 

$

11,501 

 

$

618 

 

$

3,274 

 

$

327 

 

$

 

$

106 

 

$

18,449 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

_____________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2016. 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, 2016. (In Thousands):

____



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

Residential

 

 

Commercial & Multi-family

 

 

Construction

 

 

Commercial Business (1)

 

Home Equity (2)

 

Consumer

 

 

Unallocated

 

 

Total

Allowance for credit 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:

 

 

 -

 

 

367 

 

 

 -

 

 

160 

 -

 

 -

 

 

 -

 

 

 -

 

 

527 

Acquired loans recorded at fair value:

 

 

459 

 

 

38 

 

 

 -

 

 

 

 

54 

 

 

 -

 

 

 -

 

 

554 

Acquired loans with deteriorated credit:

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Sub-total:

 

 

459 

 

 

405 

 

 

 -

 

 

163 

 

 

54 

 

 

 -

 

 

 -

 

 

1,081 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

 -

 

 

74 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

74 

Acquired loans recorded at fair value:

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

14 

 -

 

 -

 

 

 -

 

 

18 

Acquired loans with deteriorated credit:

 

 

 -

 

 

 -

 

 

 -

 

 

129 

 

 

 -

 

 

 -

 

 

 -

 

 

129 

Sub-total:

 

 

 -

 

 

78 

 

 

 -

 

 

129 

 

 

14 

 

 

 -

 

 

 -

 

 

221 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

(9)

 

 

(729)

 

 

14 

 

 

1,490 

 

 

 

 

(877)

 

 

(99)

 

 

(205)

Acquired loans recorded at fair value:

 

 

359 

 

 

17 

 

 

 -

 

 

 

 

(6)

 

 

 -

 

 

 -

 

 

373 

Acquired loans with deteriorated credit:

 

 

(4)

 

 

(1)

 

 

 -

 

 

(133)

 

 

(3)

 

 

 -

 

 

 -

 

 

(141)

Sub-total:

 

 

346 

 

 

(713)

 

 

14 

 

 

1,360 

 

 

(4)

 

 

(877)

 

 

(99)

 

 

27 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans:

 

 

2,098 

 

 

10,621 

 

 

736 

 

 

3,079 

 

 

374 

 

 

 

 

69 

 

 

16,979 

Acquired loans recorded at fair value:

 

 

170 

 

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

174 

Acquired loans with deteriorated credit:

 

 

43 

 

 

13 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

56 

Ending Balance, December 31, 2016

 

$

2,311 

 

$

10,634 

 

$

736 

 

$

3,079 

 

$

378 

 

$

 

$

69 

 

$

17,209 

Loans Receivables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

 

$

142,081 

 

$

1,056,806 

 

$

70,867 

 

$

63,444 

 

$

32,417 

 

$

1,269 

 

$

-

 

$

1,366,884 

Ending Balance Acquired Loans:

 

 

56,310 

 

 

60,422 

 

 

 -

 

 

4,460 

 

 

13,877 

 

 

225 

 

 

-

 

 

135,294 

Ending Balance Acquired loans with deteriorated credit:

 

 

1,443 

 

 

753 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

-

 

 

2,196 

Total Gross Loans:

 

$

199,834 

 

$

1,117,981 

 

$

70,867 

 

$

67,904 

 

$

46,294 

 

$

1,494 

 

$

-

 

$

1,504,374 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

 

$

10,651 

 

$

12,325 

 

$

 

$

4,088 

 

$

1,362 

 

$

 -

 

$

-

 

$

28,432 

Ending Balance Acquired Loans:

 

 

7,600 

 

 

6,356 

 

 

 -

 

 

 -

 

 

1,065 

 

 

 -

 

 

-

 

 

15,021 

Ending Balance Acquired loans with deteriorated credit:

 

 

1,443 

 

 

523 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

-

 

 

1,966 

Ending Balance Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

$

19,694 

 

$

19,204 

 

$

 

$

4,088 

 

$

2,427 

 

$

 -

 

$

-

 

$

45,419 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance: Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance Originated Loans:

 

$

131,430 

 

$

1,044,481 

 

$

70,861 

 

$

59,356 

 

$

31,055 

 

$

1,269 

 

$

-

 

$

1,338,452 

Ending Balance Acquired Loans:

 

 

48,710 

 

 

54,066 

 

 

 -

 

 

4,460 

 

 

12,812 

 

 

225 

 

 

-

 

 

120,273 

Ending Balance Acquired loans with deteriorated credit:

 

 

 -

 

 

230 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

-

 

 

230 

Ending Balance Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for impairment:

 

$

180,140 

 

$

1,098,777 

 

$

70,861 

 

$

63,816 

 

$

43,867 

 

$

1,494 

 

$

-

 

$

1,458,955 



(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, 2016. 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, 2016 (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Residential

 

 

Commercial & Multi-family

 

Construction

 

Business (1)

 

Equity (2)

 

Consumer

 

Unallocated

 

Total

Allowance for credit 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 

17

 


 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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

The following table sets forth the activity in the Company’s allowance for loans 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 credit 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 





18

 


 

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, 2017 and December 31, 2016. 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, 2017 and December 31, 2016, 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, 2017

 

 

As of December 31, 2016



 

(In Thousands)

 

 

(In Thousands)

Non-Accruing Loans:

 

 

 

 

 



 

 

 

 

 

Originated loans:

 

 

 

 

 

Residential one-to-four family

$

3,698 

 

$

3,693 

Commercial and multi-family

 

6,994 

 

 

5,437 

Construction

 

 -

 

 

 -

Commercial business(1) 

 

2,080 

 

 

726 

Home equity(2) 

 

205 

 

 

416 

Consumer

 

 -

 

 



 

 

 

 

 

Sub-total:

$

12,977 

 

$

10,278 



 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

Residential one-to-four family

$

126 

 

$

3,429 

Commercial and multi-family

 

590 

 

 

1,182 

Construction

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

Home equity(2) 

 

3,265 

 

 

763 

Consumer

 

 -

 

 

 -



 

 

 

 

 

Sub-total:

$

3,981 

 

$

5,374 



 

 

 

 

 

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

$

16,958 

 

$

15,652 



 

 

 

 

 



__________

(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 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, 2017 and 2016 (In Thousands):









 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 



 

2017

 

 

2017

 

 

2016

 

 

2016

 

2017

 

 

2017

 

 

2016

 

 

2016

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

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

$

2,761 

 

$

10 

 

$

4,931 

 

$

24 

$

3,121 

 

$

30 

 

$

4,431 

 

$

72 

 

Commercial and Multi-family

 

12,269 

 

 

68 

 

 

11,411 

 

 

88 

 

12,397 

 

 

205 

 

 

10,928 

 

 

265 

 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

995 

 

 

 -

 

Commercial business(1) 

 

664 

 

 

 -

 

 

1,800 

 

 

37 

 

528 

 

 

 -

 

 

1,897 

 

 

112 

 

Home equity(2) 

 

879 

 

 

10 

 

 

924 

 

 

 

875 

 

 

29 

 

 

995 

 

 

22 

 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

16,573 

 

$

88 

 

$

19,066 

 

$

156 

$

16,921 

 

$

264 

 

$

19,246 

 

$

471 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

4,360 

 

$

35 

 

$

4,771 

 

$

35 

$

4,970 

 

$

105 

 

$

5,119 

 

$

104 

 

Commercial and Multi-family

 

4,036 

 

 

56 

 

 

5,197 

 

 

58 

 

4,070 

 

 

168 

 

 

4,882 

 

 

174 

 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

Home equity(2) 

 

462 

 

 

 -

 

 

571 

 

 

 

533 

 

 

10 

 

 

595 

 

 

 

Consumer

 

 -

 

 

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total

$

8,858 

 

$

95 

 

$

10,539 

 

$

95 

$

9,573 

 

$

283 

 

$

10,596 

 

$

284 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

1,422 

 

$

22 

 

$

1,455 

 

$

 -

$

1,426 

 

$

65 

 

$

1,458 

 

$

 -

 

Commercial and Multi-family

 

517 

 

 

 

 

527 

 

 

 

518 

 

 

20 

 

 

528 

 

 

21 

 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

22 

 

 -

 

 

 -

 

 

25 

 

 

67 

 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

1,939 

 

$

29 

 

$

1,982 

 

$

29 

$

1,944 

 

$

85 

 

$

2,011 

 

$

88 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With no related allowance recorded:

$

27,370 

 

$

212 

 

$

31,587 

 

$

280 

$

28,438 

 

$

632 

 

$

31,853 

 

$

843 

 





__________

(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 allowance recorded by portfolio class for the three and nine months ended September 30, 2017 and 2016. (In Thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 



 

2017

 

 

2017

 

 

2016

 

 

2016

 

2017

 

 

2017

 

 

2016

 

 

2016

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

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

$

5,887 

 

$

46 

 

$

5,570 

 

$

64 

$

6,075 

 

$

137 

 

$

5,587 

 

$

191 

 

 

Commercial and Multi-family

 

357 

 

 

 -

 

 

2,997 

 

 

24 

 

561 

 

 

 -

 

 

3,554 

 

 

72 

 

 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

Commercial business(1) 

 

3,196 

 

 

20 

 

 

2,273 

 

 

26 

 

3,411 

 

 

61 

 

 

2,186 

 

 

78 

 

 

Home equity(2) 

 

196 

 

 

 

 

265 

 

 

 

242 

 

 

 

 

257 

 

 

12 

 

 

Consumer

 

 -

 

 

 -

 

 

632 

 

 

 -

 

 -

 

 

 -

 

 

842 

 

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

9,636 

 

$

68 

 

$

11,737 

 

$

118 

$

10,289 

 

$

203 

 

$

12,426 

 

$

353 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

3,350 

 

$

21 

 

$

3,867 

 

$

22 

$

2,842 

 

$

64 

 

$

3,782 

 

$

66 

 

 

Commercial and Multi-family

 

1,712 

 

 

16 

 

 

1,033 

 

 

11 

 

1,714 

 

 

47 

 

 

1,175 

 

 

34 

 

 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

Home equity(2) 

 

96 

 

 

 

 

730 

 

 

 

99 

 

 

 

 

725 

 

 

13 

 

 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total

$

5,158 

 

$

39 

 

$

5,630 

 

$

38 

$

4,655 

 

$

116 

 

$

5,682 

 

$

113 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

 

$

 -

$

 -

 

$

 -

 

$

 -

 

$

 -

 

 

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

54 

 

 

 -

 

 

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

 -

 

$

 -

 

$

 -

 

$

 -

$

 -

 

$

 -

 

$

54 

 

$

 -

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with an allowance recorded:

$

14,794 

 

$

107 

 

$

17,367 

 

$

156 

$

14,944 

 

$

319 

 

$

18,162 

 

$

466 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 





__________

(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 recorded investment and unpaid principal balances where there is no related allowance on impaired loans by portfolio class at

September 30, 2017 and December 31, 2016. (In Thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

As of September 30, 2017

 

 

As of December 31, 2016



 

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

$

2,082 

 

$

2,242 

 

$

-

 

$

5,158 

 

$

5,341 

 

$

-

Commercial and multi-family

 

12,462 

 

 

13,148 

 

 

-

 

 

10,498 

 

 

10,722 

 

 

-

Construction

 

 -

 

 

 -

 

 

-

 

 

 

 

 

 

-

Commercial business(1) 

 

159 

 

 

727 

 

 

-

 

 

1,022 

 

 

1,966 

 

 

-

Home equity(2) 

 

897 

 

 

942 

 

 

-

 

 

1,022 

 

 

1,101 

 

 

-

Consumer

 

 -

 

 

 -

 

 

-

 

 

 -

 

 

 -

 

 

-



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

15,600 

 

$

17,059 

 

$

 -

 

$

17,706 

 

$

19,136 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

value with no related allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

4,300 

 

$

4,432 

 

$

-

 

$

5,577 

 

$

6,149 

 

$

-

Commercial and Multi-family

 

3,956 

 

 

3,956 

 

 

-

 

 

5,575 

 

 

5,710 

 

 

-

Construction

 

 -

 

 

 -

 

 

-

 

 

 -

 

 

 -

 

 

-

Commercial business(1) 

 

 -

 

 

 -

 

 

-

 

 

 -

 

 

 -

 

 

-

Home equity(2) 

 

343 

 

 

394 

 

 

-

 

 

545 

 

 

650 

 

 

-

Consumer

 

 -

 

 

 -

 

 

-

 

 

 -

 

 

 -

 

 

-



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

8,599 

 

$

8,782 

 

$

 -

 

$

11,697 

 

$

12,509 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

credit with no related allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

1,419 

 

$

2,041 

 

$

-

 

$

1,443 

 

$

2,069 

 

$

-

Commercial and Multi-family

 

515 

 

 

541 

 

 

-

 

 

523 

 

 

552 

 

 

-

Construction

 

 -

 

 

 -

 

 

-

 

 

 -

 

 

 -

 

 

-

Commercial business(1) 

 

 -

 

 

 -

 

 

-

 

 

 -

 

 

 -

 

 

-

Home equity(2) 

 

 -

 

 

 -

 

 

-

 

 

 -

 

 

 -

 

 

-

Consumer

 

 -

 

 

 -

 

 

-

 

 

 -

 

 

 -

 

 

-



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

1,934 

 

$

2,582 

 

$

 -

 

$

1,966 

 

$

2,621 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with no related allowance recorded:

$

26,133 

 

$

28,423 

 

$

 -

 

$

31,369 

 

$

34,266 

 

$

 -



__________

(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, unpaid principal balance, and the related allowance on impaired loans by portfolio class at September 30, 2017 and December 31, 2016. (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

As of September 30, 2017

 

 

As of December 31, 2016



 

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

$

6,175 

 

$

6,276 

 

$

508 

 

$

5,493 

 

$

5,493 

 

$

496 

Commercial and Multi-family

 

 

 

 

 

 

 

1,827 

 

 

1,866 

 

 

380 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

3,380 

 

 

4,202 

 

 

2,617 

 

 

3,066 

 

 

4,006 

 

 

2,359 

Home equity(2) 

 

158 

 

 

158 

 

 

26 

 

 

340 

 

 

340 

 

 

32 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

9,720 

 

$

10,643 

 

$

3,158 

 

$

10,726 

 

$

11,705 

 

$

3,267 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

value with an allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

 

 

Residential one-to-four family

$

3,347 

 

$

3,588 

 

$

288 

 

$

2,023 

 

$

2,080 

 

$

202 

Commercial and Multi-family

 

1,706 

 

 

1,759 

 

 

194 

 

 

781 

 

 

781 

 

 

37 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

86 

 

 

86 

 

 

 

 

520 

 

 

571 

 

 

24 

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total

$

5,139 

 

$

5,433 

 

$

489 

 

$

3,324 

 

$

3,432 

 

$

263 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

credit with an allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

 -

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with an allowance recorded:

$

14,859 

 

$

16,076 

 

$

3,647 

 

$

14,050 

 

$

15,137 

 

$

3,530 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with no related allowance recorded:

$

26,133 

 

$

28,423 

 

$

 -

 

$

31,369 

 

$

34,266 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Impaired Loans:

$

40,992 

 

$

44,499 

 

$

3,647 

 

$

45,419 

 

$

49,403 

 

$

3,530 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

__________

(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 presents the total troubled debt restructured (“TDR”) loans at September 30, 2017, excluding the purchase impairment mark on the acquired loans with deteriorated credit. (Dollars In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Accrual

 

Non-accrual

 

Total

September 30, 2017

 

# of Loans

 

 

Amount

 

# of Loans

 

 

Amount

 

# of Loans

 

 

Amount

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

1,113 

 

 

$

2,239 

 

 

$

3,352 

Commercial and multi-family

 

 

 

4,865 

 

 

 

5,493 

 

16 

 

 

10,358 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Commercial business(1) 

 

 

 

416 

 

 

 

1,412 

 

 

 

1,828 

Home equity(2) 

 

 

 

794 

 

 

 

44 

 

 

 

838 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

18 

 

$

7,188 

 

14 

 

$

9,188 

 

32 

 

$

16,376 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

19 

 

$

4,203 

 

 

$

2,079 

 

26 

 

$

6,282 

Commercial and Multi-family

 

13 

 

 

4,725 

 

 

 

590 

 

14 

 

 

5,315 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Home equity(2) 

 

 

 

263 

 

 -

 

 

 -

 

 

 

263 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

34 

 

$

9,191 

 

 

$

2,669 

 

42 

 

$

11,860 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

2,041 

 

 -

 

$

 -

 

 

$

2,041 

Commercial and Multi-family

 

 

 

541 

 

 -

 

 

 -

 

 

 

541 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

 

$

2,582 

 

 -

 

$

 -

 

 

$

2,582 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

58 

 

$

18,961 

 

22 

 

$

11,857 

 

80 

 

$

30,818 



__________

(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 December 31, 2016, excluding the purchase impairment mark on the acquired loans with deteriorated credit. (Dollars In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Accrual

 

Non-accrual

 

Total

December 31, 2016

 

# of Loans

 

 

Amount

 

# of Loans

 

 

Amount

 

# of Loans

 

 

Amount

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

2,687 

 

 -

 

$

 -

 

 

$

2,687 

Commercial and multi-family

 

 

 

5,141 

 

 

 

2,297 

 

17 

 

 

7,438 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Commercial business(1) 

 

 

 

1,868 

 

 

 

345 

 

 

 

2,213 

Home equity(2) 

 

 

 

817 

 

 

 

46 

 

 

 

863 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

24 

 

$

10,513 

 

10 

 

$

2,688 

 

34 

 

$

13,201 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

18 

 

$

3,979 

 

 

$

1,893 

 

23 

 

$

5,872 

Commercial and Multi-family

 

13 

 

 

4,807 

 

 

 

583 

 

14 

 

 

5,390 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Home equity(2) 

 

 

 

265 

 

 

 

219 

 

 

 

484 

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

33 

 

$

9,051 

 

 

$

2,695 

 

40 

 

$

11,746 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

2,069 

 

 -

 

$

 -

 

 

$

2,069 

Commercial and Multi-family

 

 

 

552 

 

 -

 

 

 -

 

 

 

552 

Construction

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

 

 

$

2,621 

 

 -

 

$

 -

 

 

$

2,621 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

63 

 

$

22,185 

 

17 

 

$

5,383 

 

80 

 

$

27,568 

__________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



25

 


 

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

A (“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, 2017. (Dollars in Thousands):







   

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2017

 

 

 

 

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) 

 

-

 

 

-

 

 

-

Home equity(2) 

 

-

 

 

-

 

 

-

Consumer

 

-

 

 

-

 

 

-



 

 

 

 

 

 

 

 

Sub-total:

 

 -

 

$

 -

 

$

 -



 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

Residential one-to-four family

 

 

$

212 

 

$

243 

Commercial and Multi-family

 

 -

 

 

 -

 

 

 -

Construction

 

 -

 

 

-

 

 

-

Commercial business(1) 

 

-

 

 

-

 

 

-

Home equity(2) 

 

 -

 

 

 -

 

 

 -

Consumer

 

-

 

 

-

 

 

-



 

 

 

 

 

 

 

 

Sub-total:

 

 

$

212 

 

$

243 



 

 

 

 

 

 

 

 

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

 

 

$

212 

 

$

243 

__________

(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.



26

 


 

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

The following table summarizes information in regards to troubled debt restructurings for which there was a payment default within twelve months of restructuring during the three months ended September 30, 2017. (Dollars in thousands)







 

 

 

 

 

Three Months Ended September 30, 2017

 

 

 

 

 



 

Number of Contracts

 

 

Recorded Investment



 

 

 

 

 

Originated loans:

 

 

 

 

 

Residential one-to-four family

 

1

 

$

299

Commercial and multi-family

 

2

 

 

772

Construction

 

-

 

 

-

Commercial business(1) 

 

-

 

 

-

Home equity(2) 

 

-

 

 

-

Consumer

 

-

 

 

-



 

 

 

 

 

Sub-total:

 

3

 

$

1,071



 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

Residential one-to-four family

 

1

 

$

103

Commercial and Multi-family

 

-

 

 

-

Construction

 

-

 

 

-

Commercial business(1) 

 

-

 

 

-

Home equity(2) 

 

-

 

 

-

Consumer

 

-

 

 

-



 

 

 

 

 

Sub-total:

 

1

 

$

103



 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

Residential one-to-four family

 

-

 

$

-

Commercial and Multi-family

 

-

 

 

-

Construction

 

-

 

 

-

Commercial business(1) 

 

-

 

 

-

Home equity(2) 

 

-

 

 

-

Consumer

 

-

 

 

-



 

 

 

 

 

Sub-total:

 

0

 

$

0



 

 

 

 

 

Total

 

4

 

$

1,174



(1) Includes business lines of credit.

(2) Includes home equity lines of credit.





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, 2017 (dollars in thousands): 





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2017

 

 

 

 

Pre-Modification Outstanding

 

 

Post-Modification Outstanding



 

Number of Contracts

 

 

Recorded Investments

 

 

Recorded Investments



 

 

 

 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 

$

1,445 

 

$

1,556 

Commercial and multi-family

 

 

 

4,441 

 

 

4,608 

Construction

 

-

 

 

-

 

 

-

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

-

 

 

-

 

 

-

Consumer

 

-

 

 

-

 

 

-



 

 

 

 

 

 

 

 

Sub-total:

$

 

$

5,886 

 

$

6,164 



 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 

$

1,052 

 

$

1,266 

Commercial and Multi-family

 

-

 

 

-

 

 

-

Construction

 

-

 

 

-

 

 

-

Commercial business(1) 

 

-

 

 

-

 

 

-

Home equity(2) 

 

 -

 

 

 -

 

 

 -

Consumer

 

-

 

 

-

 

 

-



 

 

 

 

 

 

 

 

Sub-total:

$

 

$

1,052 

 

$

1,266 



 

 

 

 

 

 

 

 

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

$

10 

 

$

6,938 

 

$

7,430 



(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



28

 


 

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

The following table summarizes information in regard to troubled debt restructurings for which there was a payment default within twelve months of restructuring during the nine months ended September 30, 2017. (Dollars in Thousands)





 

 

 

 

 

Nine Months Ended September 30, 2017

 

 

 

 

 



 

Number of Contracts

 

 

Recorded Investment



 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

$

299 

Commercial and multi-family

 

 

 

772 

Construction

 

-

 

 

-

Commercial business(1) 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

Consumer

 

-

 

 

-



 

 

 

 

 

Sub-total:

 

 

$

1,071 



 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

Residential one-to-four family

 

 

$

103 

Commercial and Multi-family

 

 -

 

 

 -

Construction

 

-

 

 

-

Commercial business(1) 

 

-

 

 

-

Home equity(2) 

 

-

 

 

-

Consumer

 

-

 

 

-



 

 

 

 

 

Sub-total:

 

 

$

103 



 

 

 

 

 

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

 

 

$

1,174 



(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 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 

 

$

1939 



 

 

 

 

 

 

 

 

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 





30

 


 

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

The following table summarizes information in regards to troubled debt restructurings for which there was a payment default within twelve months of restructuring during the three months ended September 30, 2016 (dollars in thousands):





 

 

 

 

 

Three Months Ended September 30, 2016

 

 

 

 

 



 

Number of Contracts

 

 

Recorded Investment



 

 

 

 

 

Originated loans:

 

 

 

 

 

Residential one-to-four family

 

-

 

$

-

Commercial and multi-family

 

-

 

 

-

Construction

 

-

 

 

-

Commercial business(1) 

 

 

 

226 

Home equity(2) 

 

 -

 

 

 -

Consumer

 

-

 

 

-



 

 

 

 

 

Sub-total:

 

 

$

226 



 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

Residential one-to-four family

 

 -

 

$

 -

Commercial and Multi-family

 

-

 

 

-

Construction

 

-

 

 

-

Commercial business(1) 

 

-

 

 

-

Home equity(2) 

 

-

 

 

-

Consumer

 

-

 

 

-



 

 

 

 

 

Sub-total:

 

 -

 

$

 -



 

 

 

 

 

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

 

 

$

226 



(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 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 

 

$

2010 



 

 

 

 

 

 

 

 

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 



There were no troubled debt restructurings for which there was a payment default within twelve months of restructuring during the nine months ended September 30, 2016.

32

 


 

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, 2017. (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

$

1,212 

 

$

1,425 

 

$

2,272 

 

$

4,909 

 

$

173,624 

 

$

178,533 

 

$

 -

Commercial and multi-family

 

16,542 

 

 

830 

 

 

127 

 

 

17,499 

 

 

1,164,599 

 

 

1,182,098 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

60,699 

 

 

60,699 

 

 

 -

Commercial business(1) 

 

625 

 

 

 -

 

 

1,658 

 

 

2,283 

 

 

61,422 

 

 

63,705 

 

 

 -

Home equity(2) 

 

325 

 

 

 -

 

 

44 

 

 

369 

 

 

37,928 

 

 

38,297 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

1,239 

 

 

1,239 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

18,704 

 

$

2,255 

 

$

4,101 

 

$

25,060 

 

$

1,499,511 

 

$

1,524,571 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

391 

 

$

 -

 

$

1,790 

 

$

2,181 

 

$

48,421 

 

 

50,602 

 

$

233 

Commercial and multi-family

 

2,204 

 

 

 -

 

 

1,291 

 

 

3,495 

 

 

46,051 

 

 

49,546 

 

 

701 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

3,355 

 

 

3,355 

 

 

 -

Home equity(2) 

 

233 

 

 

89 

 

 

133 

 

 

455 

 

 

8,761 

 

 

9,216 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

156 

 

 

156 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

2,828 

 

$

89 

 

$

3,214 

 

$

6,131 

 

$

106,744 

 

$

112,875 

 

$

934 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

1,419 

 

 

1,419 

 

$

-

Commercial and multi-family

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

737 

 

 

737 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

2,156 

 

$

2,156 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

21,532 

 

$

2,344 

 

$

7,315 

 

$

31,191 

 

$

1,608,411 

 

$

1,639,602 

 

$

934 



 

_________

(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 sets forth the delinquency status of total loans receivable at December 31, 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

$

2,873 

 

$

963 

 

$

1,889 

 

$

5,725 

 

$

136,356 

 

$

142,081 

 

$

-

Commercial and multi-family

 

10,472 

 

 

989 

 

 

5,182 

 

 

16,643 

 

 

1,040,163 

 

 

1,056,806 

 

 

2,828 

Construction

 

348 

 

 

 -

 

 

 -

 

 

348 

 

 

70,519 

 

 

70,867 

 

 

 -

Commercial business(1) 

 

491 

 

 

69 

 

 

315 

 

 

875 

 

 

62,569 

 

 

63,444 

 

 

 -

Home equity(2) 

 

78 

 

 

218 

 

 

 -

 

 

296 

 

 

32,121 

 

 

32,417 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 

 

 

 

1,263 

 

 

1,269 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

14,262 

 

$

2,239 

 

$

7,392 

 

$

23,893 

 

$

1,342,991 

 

$

1,366,884 

 

$

2,828 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

498 

 

$

515 

 

$

3,138 

 

$

4,151 

 

$

52,159 

 

 

56,310 

 

$

-

Commercial and multi-family

 

1,958 

 

 

221 

 

 

737 

 

 

2,916 

 

 

57,506 

 

 

60,422 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

4,460 

 

 

4,460 

 

 

 -

Home equity(2) 

 

309 

 

 

132 

 

 

280 

 

 

721 

 

 

13,156 

 

 

13,877 

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

225 

 

 

225 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

2,765 

 

$

868 

 

$

4,155 

 

$

7,788 

 

$

127,506 

 

$

135,294 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

1,443 

 

$

1,443 

 

$

-

Commercial and multi-family

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

753 

 

 

753 

 

 

 -

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

2,196 

 

$

2,196 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

17,027 

 

$

3,107 

 

$

11,547 

 

$

31,681 

 

$

1,472,693 

 

$

1,504,374 

 

$

2,828 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

__________

(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 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, 2017. (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Pass

 

Special Mention

 

Substandard

 

Doubtful

 

Loss

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

170,010 

 

$

4,825 

 

$

3,698 

 

$

 -

 

$

 -

 

$

178,533 

Commercial and multi-family

 

1,167,586 

 

 

3,332 

 

 

11,109 

 

 

 -

 

 

71 

 

 

1,182,098 

Construction

 

60,232 

 

 

467 

 

 

 -

 

 

 -

 

 

 -

 

 

60,699 

Commercial business(1) 

 

58,440 

 

 

1,728 

 

 

3,495 

 

 

 -

 

 

42 

 

 

63,705 

Home equity(2) 

 

36,998 

 

 

910 

 

 

389 

 

 

 -

 

 

 -

 

 

38,297 

Consumer

 

1,232 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

1,239 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

1,494,498 

 

$

11,269 

 

$

18,691 

 

$

 -

 

$

113 

 

$

1,524,571 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

46,246 

 

$

611 

 

$

3,745 

 

$

 -

 

$

 -

 

 

50,602 

Commercial and multi-family

 

45,626 

 

 

669 

 

 

3,251 

 

 

 -

 

 

 -

 

 

49,546 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

3,355 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

3,355 

Home equity(2) 

 

9,050 

 

 

 -

 

 

159 

 

 

 -

 

 

 

 

9,216 

Consumer

 

156 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

156 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

104,433 

 

$

1,280 

 

$

7,155 

 

$

 -

 

$

 

$

112,875 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

150 

 

$

572 

 

$

697 

 

$

 -

 

$

 -

 

 

1,419 

Commercial and multi-family

 

222 

 

 

515 

 

 

 -

 

 

 -

 

 

 -

 

 

737 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

372 

 

$

1,087 

 

$

697 

 

$

 -

 

$

 -

 

$

2,156 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gross Loans

$

1,599,303 

 

$

13,636 

 

$

26,543 

 

$

 -

 

$

120 

 

$

1,639,602 



_________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

35

 


 

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, 2016. (In Thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Pass

 

Special Mention

 

Substandard

 

Doubtful

 

Loss

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

131,807 

 

$

6,393 

 

$

3,881 

 

$

 -

 

$

 -

 

$

142,081 

Commercial and multi-family

 

1,039,519 

 

 

6,263 

 

 

10,811 

 

 

 -

 

 

213 

 

 

1,056,806 

Construction

 

70,391 

 

 

476 

 

 

 -

 

 

 -

 

 

 -

 

 

70,867 

Commercial business(1) 

 

57,567 

 

 

1,789 

 

 

4,000 

 

 

 -

 

 

88 

 

 

63,444 

Home equity(2) 

 

31,052 

 

 

816 

 

 

549 

 

 

 -

 

 

 -

 

 

32,417 

Consumer

 

1,249 

 

 

14 

 

 

 

 

 -

 

 

 -

 

 

1,269 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

1,331,585 

 

$

15,751 

 

$

19,247 

 

$

 -

 

$

301 

 

$

1,366,884 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans recorded at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

51,628 

 

$

626 

 

$

4,056 

 

$

 -

 

$

 -

 

 

56,310 

Commercial and multi-family

 

55,216 

 

 

1,311 

 

 

3,895 

 

 

 -

 

 

 -

 

 

60,422 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

4,460 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

4,460 

Home equity(2) 

 

12,652 

 

 

424 

 

 

782 

 

 

 -

 

 

19 

 

 

13,877 

Consumer

 

225 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

225 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

124,181 

 

$

2,361 

 

$

8,733 

 

$

 -

 

$

19 

 

$

135,294 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans with deteriorated credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential one-to-four family

$

147 

 

$

272 

 

$

1,024 

 

$

 -

 

$

 -

 

 

1,443 

Commercial and multi-family

 

230 

 

 

523 

 

 

 -

 

 

 -

 

 

 -

 

 

753 

Construction

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Commercial business(1) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Home equity(2) 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Consumer

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-total:

$

377 

 

$

795 

 

$

1,024 

 

$

 -

 

$

 -

 

$

2,196 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gross Loans

$

1,456,143 

 

$

18,907 

 

$

29,004 

 

$

 -

 

$

320 

 

$

1,504,374 





________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

36

 


 

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,



2017

 

2016



 

 

 

 

 

Unpaid principal balance

$

117,345 

 

$

140,049 

Recorded investment

 

115,031 

 

 

137,045 









The following table presents changes in the accretable discount on loans acquired for the three and nine months ended September 30, 2017 and 2016. (In Thousands):





 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



Three Months Ended September 30,

Nine Months Ended September 30,



2017

 

2016

2017

 

2016



 

 

 

 

 

 

 

 

 

 

Balance, Beginning of Period

$

32,720 

 

$

46,332 

$

39,119 

 

$

53,612 

     Accretion

 

(2,512)

 

 

(3,926)

 

(9,071)

 

 

(11,528)

     Net Reclassification from Non-Accretable Difference

 

84 

 

 

80 

 

244 

 

 

402 

Balance, End of Period

$

30,292 

 

$

42,486 

$

30,292 

 

$

42,486 







The following table presents changes in the non-accretable yield on loans acquired for the three and nine months ended September 30, 2017 and 2016. (In Thousands):







 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



Three Months Ended September 30,

Nine Months Ended September 30,



2017

 

2016

2017

 

2016



 

 

 

 

 

 

 

 

 

 

Balance, Beginning of Period

$

2,398 

 

$

2,719 

$

2,558 

 

$

3,041 

     Loans Sold

 

 -

 

 

 -

 

 -

 

 

 -

     Net Reclassification to Accretable Difference

 

(84)

 

 

(80)

 

(244)

 

 

(402)

Balance, End of Period

$

2,314 

 

$

2,639 

$

2,314 

 

$

2,639 





















37

 


 



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, 2017:

 

 

 

  

 

 

  

 

 

  

 

 

Securities available for sale - Residential mortgage-backed securities, Municipal obligations and Preferred Stock

 

$

100,077 

  

$

 -

  

$

100,077 

  

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2016:

 

 

 

  

 

 

  

 

 

  

 

 

Securities available for sale — Residential mortgage-backed securities, Municipal obligations and Preferred Stock

 

$

94,765 

  

$

 -

  

$

94,765 

  

$

 -







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, 2017 and 2016.

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, 2017

 

 

 

  

 

 

  

 

 

  

 

 

Impaired Loans

 

$

11,212 

  

$

 -

  

$

 -

  

$

11,212 

Other real estate owned

 

$

1,410 

  

$

 -

  

$

 -

  

$

1,410 



 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2016:

 

 

 

  

 

 

  

 

 

  

 

 

Impaired Loans

 

$

10,519 

 

$

 -

 

$

 -

 

$

10,519 

Other real estate owned

 

$

3,525 

  

$

 -

  

$

 -

  

$

3,525 













38

 


 

Note 7 – Fair Values of Financial Instruments (Continued)

The following tables present additional quantitative information as of September 30, 2017 and December 31, 2016 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, 2017:

 

 

 

 

 

Impaired Loans

$

11,212 

Appraisal of collateral (1)

Appraisal adjustments (2)

0%-10%



 

 

 

Liquidation expenses (3)

0%-10%



 

 

 

 

 

Other real estate owned

$

1,410 

Appraisal of collateral (1)

Appraisal adjustments (2)

0%-10%



 

 

 

Liquidation expenses (3)

0%-10%

















 

 

 

 

 



 

Fair Value

Valuation

Unobservable

Range



 

Estimate

Techniques

Input

 

December 31, 2016:

 

 

 

 

 

Impaired Loans

$

10,519 

Appraisal of collateral (1)

Appraisal adjustments (2)

0%-10%



 

 

 

Liquidation expenses (3)

0%-10%



 

 

 

 

 

Other real estate owned

$

3,525 

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, 2017 and December 31, 2016.

  





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, 2017 and December 31, 2016.

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.







39

 


 

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, 2017 and December 31, 2016 consisted of the loan balances of $14.86 million and $14.05 million, net of a valuation allowance of $3.65 million and $3.53 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.

 







40

 


 

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, 2017 and December 31, 2016:

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

As of September 30, 2017



 

 



 

 

 

 

 

 

 

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

 

$

97,618 

 

$

97,618 

  

$

97,618 

  

$

 -

 

$

 -

Interest-earning time deposits

 

 

980 

 

 

980 

  

 

980 

  

 

 -

 

 

 -

Securities available for sale

 

 

100,077 

 

 

100,077 

  

 

 -

  

 

100,077 

 

 

 -

Loans held for sale

 

 

2,484 

 

 

2,505 

  

 

 -

  

 

2,505 

 

 

 -

Loans receivable, net

 

 

1,619,245 

 

 

1,629,647 

  

 

 -

  

 

 -

 

 

1,629,647 

FHLB of New York stock, at cost

 

 

8,096 

 

 

8,096 

  

 

 -

  

 

8,096 

 

 

 -

Accrued interest receivable

 

 

5,808 

 

 

5,808 

  

 

 -

  

 

5,808 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

  

 

 

  

 

 

 

 

 

Deposits

 

 

1,546,148 

 

 

1,549,372 

  

 

897,870 

  

 

651,502 

 

 

 -

Borrowings

 

 

138,000 

 

 

137,357 

  

 

 -

  

 

137,357 

 

 

 -

Subordinated debentures

 

 

4,124 

 

 

4,105 

 

 

 -

 

 

4,105 

 

 

 -

Accrued interest payable

 

 

616 

 

 

616 

  

 

 -

  

 

616 

 

 

 -











 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

As of December 31, 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

 

$

65,038 

 

$

65,038 

  

$

65,038 

  

$

 -

 

$

 -

Interest-earning time deposits

 

 

980 

 

 

980 

  

 

980 

  

 

 -

 

 

 -

Securities available for sale

 

 

94,765 

 

 

94,765 

  

 

 -

  

 

94,765 

 

 

 -

Loans held for sale

 

 

4,153 

 

 

4,273 

  

 

 -

  

 

4,273 

 

 

 -

Loans receivable, net

 

 

1,485,159 

 

 

1,515,088 

  

 

 -

  

 

 -

 

 

1,515,088 

FHLB of New York stock, at cost

 

 

9,306 

 

 

9,306 

  

 

 -

  

 

9,306 

 

 

 -

Accrued interest receivable

 

 

5,573 

 

 

5,573 

  

 

 -

  

 

5,573 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

  

 

 

  

 

 

 

 

 

Deposits

 

 

1,392,205 

 

 

1,384,578 

  

 

834,665 

  

 

549,913 

 

 

 -

Borrowings

 

 

175,000 

 

 

176,109 

  

 

 -

  

 

176,109 

 

 

 -

Subordinated debentures

 

 

4,124 

 

 

4,150 

 

 

 -

 

 

4,150 

 

 

 -

Accrued interest payable

 

 

825 

 

 

825 

  

 

 -

  

 

825 

 

 

 -































41

 


 

Note 8 – Definitive Merger Agreement



On June 7, 2017, the Company entered into an Agreement and Plan of Reorganization (the "Agreement") with IA Bancorp, Inc. ("IAB"), providing for, among other things, the merger of IAB with and into the Company (the "Merger"), with the Company as the surviving entity. The Agreement also provides for the merger of Indus-American Bank, a New Jersey chartered bank and wholly owned subsidiary of IAB, with and into the Bank, with the Bank as the surviving entity. The Agreement has been unanimously approved by the boards of directors of each of the Company and IAB.



Subject to the terms and conditions of the Agreement, at the effective time of the Merger (the "Effective Time"), IAB shareholders will have the right to receive, for each share of IAB common stock, either (i) 0.189 of a share of the Company’s common stock, or (ii) $3.05 in cash, at the election of such holder, subject to adjustment if IAB's tangible common equity falls below a certain level. All such elections are subject to adjustment on a pro rata basis, so that approximately 20% of the aggregate consideration paid to IAB shareholders will be cash and approximately 80% will be the Company’s common stock. In addition, the Company is issuing two series of preferred stock in exchange for two outstanding series of IAB preferred stock. The two series of the Company’s preferred stock will have terms substantially similar to the terms of the two series of IAB preferred stock.



At the Effective Time, each option granted by IAB to purchase shares of IAB common stock under IAB's equity plan that is unexpired, unexercised and outstanding, whether vested or unvested, will be canceled and converted into the right to receive a cash payment equal to the difference, if positive, between $3.05 and the exercise price of the option.



The Agreement contains certain termination rights for both the Company and IAB and further provides that a termination fee of $800,000 will be payable by IAB to the Company upon termination of the Agreement under certain specified circumstances. Subject to regulatory and shareholder approval, the Company anticipates the Merger to close in the fourth quarter of 2017 or the first quarter of 2018.



Note 9 – Common Stock Offering



On September 12, 2017, the Company issued and sold in a public offering an aggregate 3,265,306 shares of our common stock at a public offering price of $12.25 per share. The Shares were registered under the Securities Act of 1933, as amended, pursuant to the Company’s shelf registration statement on Form S-3 (Registration Statement No. 333-219617) which became effective on August 10, 2017. On September 19, 2017 the Company’s underwriters exercised, in part, their over-allotment option and purchased an additional 449,796 shares of common stock. The net proceeds totaled approximately $42.8 million, after deducting underwriting discounts and commissions and other offering expenses of $2.8 million payable by us.



Keefe, Bruyette & Woods, A Stifel Company, and D.A. Davidson & Co. served as joint book-running managers for the offering. Oppenheimer & Co. acted as co-manager for the offering. None of the underwriting discounts and commissions or other offering expenses were incurred or paid to our directors or officers or their associates or to persons owning 10% or more of our common stock or to any of our affiliates.

 

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;

· Any potential delay in completing the merger;

· 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

42

 


 

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, 2017 we had approximately $1.872 billion in consolidated assets, $1.546 billion in deposits and $177.6 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, 2017 the Bank operated through twenty-two branches in Bayonne, Carteret, Colonia, Edison, Jersey City, Hoboken, Fairfield, Holmdel, Lodi, Lyndhurst, Monroe Township, Rutherford, South Orange, Union, 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.



For descriptions of the merger recently entered into by the Company and the stock offering recently completed by the Company, see Notes  8 and 9 to the Company’s unaudited financial statements.



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, 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 2017, 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, 2016 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 Form 10-K.





Financial Condition



Total assets increased by $163.5 million, or 9.6 percent, to $1.872 billion at September 30, 2017 from $1.708 billion at December 31, 2016. The increase in total assets occurred primarily as a result of an increase in loans receivable of $134.1 million, an increase in cash and cash equivalents of $32.6 million, and an increase in securities available for sale of $5.3 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.

Loans receivable increased by $134.1 million, or 9.0 percent, to $1.619 billion at September 30, 2017 from $1.485 billion at December 31, 2016, and is consistent with the Company’s growth strategy for 2017. The increase resulted primarily from increases of $114.4 million in commercial real estate and multi-family loans, $30.7 million in residential one-to-four family loans, and $1.2 million in home equity loans, partly offset by decreases in construction loans of $10.2 million, commercial business loans of $844,000, and consumer loans of $99,000. As of September 30, 2017, the allowance for loan losses was $18.4 million or 108.8 percent, of non-performing loans and 1.12 percent of gross loans.

Total cash and cash equivalents increased by $32.6 million, or 50.1 percent, to $97.6 million at September 30, 2017 from $65.0 million at December 31, 2016 primarily due to the Company’s capital raise in the third quarter and the Company’s strategy to increase our deposit base including the success of our 17-month promotional CD product in the first quarter of 2017.

Securities available for sale increased by $5.3 million, or 5.6 percent, to $100.1 million at September 30, 2017 from $94.8 million at December 31, 2016, as the Company deployed excess cash to improve returns on interest-earning assets and liquidity.

Deposit liabilities increased by $153.9 million, or 11.1 percent, to $1.546 billion at September 30, 2017 from $1.392 billion at December 31, 2016. The increase resulted primarily from increases of $102.9 million in certificates of deposit, $19.9 million in NOW deposit accounts, $10.7 million in non-interest bearing deposit accounts, $17.1 million in money market checking accounts and $1.2 million in savings and club accounts. In addition to organic deposit growth resulting from the opening of seven

43

 


 

additional branches in 2016, the Company has also added listing service certificates of deposit and brokered certificates of deposit to fund loan growth, which totaled $35.9 million and $42.1 million, respectively, at September 30, 2017.

Long-term debt decreased by $17.0 million, or 11.0 percent, to $138.0 million at September 30, 2017 from $155.0 million at December 31, 2016, the net result of scheduled maturities of FHLB advances and the issuance of new 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 investment securities. Short-term debt borrowings of $20.0 million at December 31, 2016 were repaid in 2017. The weighted average interest rate of borrowings was 1.71 percent at September 30, 2017.

Stockholders’ equity increased by $46.5 million, or 35.5 percent, to $177.6 million at September 30, 2017 from $131.1 million at December 31, 2016. The increase in stockholders’ equity was primarily attributable to proceeds received from the issuance of $42.8 million of common stock, proceeds received from the issuance of $9.5 million of series D 4.5 percent non-cumulative perpetual preferred stock, as well as an increase in retained earnings of $3.5 million for the nine months ended September 30, 2017, partly offset by the redemption of $11.7 million of series A and B 6 percent noncumulative perpetual preferred stock that occurred in the first quarter of 2017. The Company accrued a dividend payable for the third quarter on our outstanding preferred stock of $166,000 which will be paid in the fourth quarter.





Net Interest Income Analysis



Net interest income represents the difference between income earned on our interest-earning assets and the expense incurred on our interest-bearing liabilities, and is analyzed and monitored by the Company on a regular basis. The following tables set forth average balance sheets, yields, and costs. The yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or expense.







 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,



 

2017

 

 

2016



 

Average Balance

 

Interest Earned/Paid

Average Yield/Rate

 

 

Average Balance

 

Interest Earned/Paid

Average Yield/Rate



 

(Dollars in thousands)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

Loans Receivable

$

1,610,388 

$

18,399  4.57% 

 

$

1,443,121 

$

17,191  4.76% 

Investment Securities

 

95,834 

 

694  2.90% 

 

 

27,454 

 

167  2.42% 

Interest-earning deposits

 

72,668 

 

313  1.72% 

 

 

216,926 

 

373  0.69% 

  Total Interest-earning assets

 

1,778,890 

 

19,406  4.36% 

 

 

1,687,501 

 

17,731  4.20% 

Non-interest-earning assets

 

49,868 

 

 

 

 

 

45,451 

 

 

 

  Total assets

$

1,828,758 

 

 

 

 

$

1,732,952 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand accounts

$

303,737 

$

402  0.53% 

 

$

301,709 

$

427  0.57% 

Money market accounts

 

138,088 

 

298  0.86% 

 

 

91,579 

 

158  0.69% 

Savings accounts

 

264,841 

 

100  0.15% 

 

 

257,069 

 

99  0.15% 

Certificates of Deposit

 

625,951 

 

2,284  1.46% 

 

 

593,145 

 

2,077  1.40% 

  Total interest-bearing deposits

 

1,332,617 

 

3,084  0.93% 

 

 

1,243,502 

 

2,761  0.89% 

Borrowed funds

 

151,706 

 

748  1.97% 

 

 

184,504 

 

1,373  2.98% 

  Total interest-bearing liabilities

 

1,484,323 

 

3,832  1.03% 

 

 

1,428,006 

 

4,134  1.16% 

Non-interest-bearing liabilities

 

204,156 

 

 

 

 

 

173,400 

 

 

 

  Total liabilities

 

1,688,479 

 

 

 

 

 

1,601,406 

 

 

 

Stockholders' equity

 

140,279 

 

 

 

 

 

131,546 

 

 

 

  Total liabilities and stockholders' equity

$

1,828,758 

 

 

 

 

$

1,732,952 

 

 

 

Net interest income

 

 

$

15,574 

 

 

 

 

$

13,597 

 

Net interest rate spread(1)

 

 

 

 

3.33% 

 

 

 

 

 

3.04% 

Net interest margin(2)

 

 

 

 

3.50% 

 

 

 

 

 

3.22% 



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

(1)

Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities.

(2)

Net interest margin represents net interest income divided by average total interest-earning assets.

















 

 

 

 

 

 

 

 

 

 

 

44

 


 



 

Nine Months Ended September 30,



 

2017

 

 

2016



 

Average Balance

 

Interest Earned/Paid

Average Yield/Rate

 

 

Average Balance

 

Interest Earned/Paid

Average Yield/Rate



 

(Dollars in thousands)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

Loans Receivable

$

1,570,033 

$

53,967  4.58% 

 

$

1,443,500 

$

51,947  4.80% 

Investment Securities

 

92,791 

 

2,089  3.00% 

 

 

15,797 

 

291  2.46% 

Interest-earning deposits

 

79,171 

 

874  1.47% 

 

 

202,629 

 

1,005  0.66% 

  Total Interest-earning assets

 

1,741,995 

 

56,930  4.36% 

 

 

1,661,926 

 

53,243  4.27% 

Non-interest-earning assets

 

55,605 

 

 

 

 

 

44,893 

 

 

 

  Total assets

$

1,797,601 

 

 

 

 

$

1,706,819 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand accounts

$

302,615 

$

1,235  0.54% 

 

$

274,974 

$

1,108  0.54% 

Money market accounts

 

132,342 

 

815  0.82% 

 

 

68,127 

 

309  0.60% 

Savings accounts

 

264,963 

 

299  0.15% 

 

 

254,488 

 

281  0.15% 

Certificates of Deposit

 

608,608 

 

6,437  1.41% 

 

 

610,073 

 

6,237  1.36% 

  Total interest-bearing deposits

 

1,308,528 

 

8,786  0.90% 

 

 

1,207,662 

 

7,935  0.88% 

Borrowed funds

 

159,676 

 

2,902  2.42% 

 

 

201,040 

 

4,650  3.08% 

  Total interest-bearing liabilities

 

1,468,204 

 

11,688  1.06% 

 

 

1,408,702 

 

12,585  1.19% 

Non-interest-bearing liabilities

 

196,404 

 

 

 

 

 

165,817 

 

 

 

  Total liabilities

 

1,664,608 

 

 

 

 

 

1,574,519 

 

 

 

Stockholders' equity

 

132,993 

 

 

 

 

 

132,300 

 

 

 

  Total liabilities and stockholders' equity

$

1,797,601 

 

 

 

 

$

1,706,819 

 

 

 

Net interest income

 

 

$

45,242 

 

 

 

 

$

40,658 

 

Net interest rate spread(1)

 

 

 

 

3.30% 

 

 

 

 

 

3.08% 

Net interest margin(2)

 

 

 

 

3.46% 

 

 

 

 

 

3.26% 



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



(1)

Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities.

(2)

Net interest margin represents net interest income divided by average total interest-earning assets.



45

 


 



Results of Operations comparison for the Three Months Ended September 30, 2017 and 2016



Net income increased $1.3 million, or 68.1 percent, to $3.2 million for the three months ended September 30, 2017, compared with $1.9 million for the three months ended September 30, 2016. The increase in net income was primarily related to an increase in total interest income, a decrease in total interest expense, an increase in total non-interest income, and a decrease in total non-interest expense, partly offset by a higher provision for loan losses and a higher income tax provision for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016.

Net interest income increased by $2.0 million, or 14.5 percent, to $15.6 million for the three months ended September 30, 2017 from $13.6 million for the three months ended September 30, 2016. The increase in net interest income resulted primarily from an increase in the average balance on total interest earning assets of $91.4 million, or 5.4 percent, to $1.779 billion for the three months ended September 30, 2017 from $1.687 billion for the three months ended September 30, 2016, as well as an increase in the average yield on total interest earning assets of 16 basis points, or 3.8 percent, to 4.36 percent for the three months ended September 30, 2017 from 4.20 percent for the three months ended September 30, 2016.

Interest income on loans receivable increased by $1.2 million or 7.0 percent, to $18.4 million for the three months ended September 30, 2017 from $17.2 million for the three months ended September 30, 2016. The increase was primarily attributable to an increase in the average balance of loans receivable of $167.3 million, or 11.6 percent, to $1.610 billion for the three months ended September 30, 2017 from $1.443 billion for the three months ended September 30, 2016, partly offset by a decrease in the average yield on loans receivable of 19 basis points, or 4.09 percent, to 4.57 percent for the three months ended September 30, 2017 from 4.76 percent for the three months ended September 30, 2016. The increase in the average balance of loans receivable was in accordance with the Company’s growth strategy, which included growing the Bank’s geographic footprint vis-à-vis our organic branching strategy and the hiring of seasoned loan and business development officers. 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 equity and debt securities increased by $527,000 to $694,000 for the three months ended September 30, 2017 from $167,000 for the three months ended September 30, 2016. The increase was primarily attributable to an increase in the average balance of investment securities of $68.4 million, or 249.1 percent, to $95.8 million for the three months ended September 30, 2017 from $27.4 million for the three months ended September 30, 2016, and an increase in the average yield on investment securities of 48 basis points, or 19.8 percent, to 2.90 percent, for the three months ended September 30, 2017 from 2.42 percent for the three months ended September 30, 2016. The increase in the average balance and average yield of equity and debt securities resulted from deploying excess cash to improve returns on interest earning assets and liquidity.

Interest income on other interest-earning assets decreased by $60,000, or 16.1 percent, to $313,000 for the three months ended September 30, 2017 from $373,000 for the three months ended September 30, 2016. The decrease was primarily attributable to a decrease in the average balance of other interest-earning assets of $144.3 million, or 66.5 percent, to $72.7 million for the three months ended September 30, 2017 from $217.0 million for the three months ended September 30, 2016 partly offset by as an increase in the average yield of other interest-earning deposits of 103 basis points, or 149.8 percent, to 1.72 percent for the three months ended September 30, 2017 from 0.69 percent for the three months ended September, 30, 2016. The decrease in the average balance of other interest-earning assets related to a decrease in cash as funds were deployed for repayment of Federal Home Loan Bank (“FHLB”) borrowings, purchases of investment securities and to fund loan growth, while the increase in the average yield primarily resulted from increases in the Fed Funds rate.

Total interest expense decreased by $302,000, or 7.3 percent, to $3.8 million for the three months ended September 30, 2017 from $4.1 million for the three months ended September 30, 2016. Despite an increase in the average balance of interest-bearing liabilities of $56.3 million, or 3.9 percent, to $1.484 billion for the three months ended September 30, 2017 from $1.428 billion for the three months ended September 30, 2016, the average cost of funds decreased 13 basis points, or 10.8 percent, to 1.03 percent for the three months ended September 30, 2017 from 1.16 percent for the three months ended September 30, 2016. Interest expense decreased due to a decrease in the average balance of average cost of borrowings. The average balance of total deposit liabilities increased by $89.1 million, or 7.2 percent, to $1.333 billion for the three months ended September 30, 2017 from $1.244 billion for the three months ended September 30, 2016, and the average cost of deposits increased by 4 basis points, or 4.2 percent, to 0.93 percent for the three months ended September 30, 2017 from 0.89 percent for the three months ended September 30, 2016. The average balance of borrowings decreased by $32.8 million, or 17.8 percent, to $151.7 million for the three months ended September 30, 2017 from $184.5 million for the three months ended September 30, 2016, and the average cost of borrowings decreased 101 basis points, or 33.7 percent, to 1.97 percent, for the three months ended September 30, 2017 from 2.98 percent for the three months ended September 30, 2016. The net decrease in borrowings was primarily the result of scheduled repayments of high-cost Federal Home Loan Bank advances.

Net interest margin was 3.50 percent for the three-month period ended September 30, 2017 and 3.22 percent for the three-month period ended September 30, 2016. The improvement in the net interest margin was primarily the result of the repayment of higher cost FHLB borrowings in 2017, partly offset by competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and a slight increase in the average cost of deposit liabilities.

The provision for loan losses increased by $812,000 to $511,000 for the three months ended September 30, 2017 from ($301,000) for the three months ended September 30, 2016. The negative provision for loan losses in the prior period reflects the excess specific provisions previously accrued on certain loans that were settled in that 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, 2017, the Company experienced $26,000 in net charge-offs compared to $447,000 in net charge-offs for the three months ended September 30, 2016. The Bank had non-performing loans totaling $17.0 million, or 1.03 percent, of gross loans at September 30, 2017 and $15.7 million, or 1.04 percent, of gross loans at December 31, 2016. The allowance for loan losses was $18.4 million, or 1.12 percent, of gross loans at September 30, 2017, $17.2 million, or 1.14 percent, of gross loans at December 31, 2016 and $17.6 million, or 1.21 percent, of gross loans at September 30, 2016. 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

46

 


 

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, 2017 and December 31, 2016.

Total non-interest income increased by $103,000, or 6.7 percent, to $1.6 million for the three months ended September 30, 2017 from $1.5 million for the three months ended September 30, 2016. The increase was primarily attributable to gains on sales on other real estate owned properties of $222,000 for the three months ended September 30, 2017 with no comparable sales for the three months ended September 30, 2016, a gain on sales of investment securities of $97,000 for the three months ended September 30, 2017 with no comparable sales for the three months ended September 30, 2016, a loss on a  bulk sale of impaired loans held in the portfolio of $88,000 for the three months ended September 30, 2016 with no comparable sale for the three months ended September 30, 2017. The increase in total non-interest income was partly offset by a decrease in gains on sales of loans of $178,000, or 24.8 percent, to $540,000, for the three months ended September 30, 2017 from $718,000 for the three months ended September 30, 2016, as well as a decrease in fees and service charges of $124,000, or 14.2 percent, to $749,000 for the three months ended September 30, 2017, from $873,000 for the three months ended September 30, 2016.

Total non-interest expense decreased by $1.0 million, or 8.5 percent, to $11.3 million for the three months ended September 30, 2017 from $12.3 million for the three months ended September 30, 2016. Salaries and employee benefits decreased by $822,000, or 12.2 percent, to $5.9 million for the three months ended September 30, 2017 from $6.7 million for the three months ended September 30, 2016, primarily related to a reduction in workforce over the last 12 months. Advertising expense decreased by $365,000, or 75.7 percent, to $117,000 for the three months ended September 30, 2017 from $482,000 for the three months ended September 30, 2016, aa result of advertising efforts with the opening of several de novo branches in 2016. Occupancy and equipment expense decreased by $154,000, or 7.0 percent, to $2.0 million for the three months ended September 30, 2017 from $ 2.2 million for the three months ended September 30, 2016, also related to costs associated with opening de novo branches in 2016. Regulatory assessment expense decreased by $111,000, or 25.9 percent, to $318,000 for the three months ended September 30, 2017 from $429,000 for the three months ended September 30, 2016, primarily related to lower FDIC rates. The decrease in total non-interest expense was partly offset by an increase in data processing expense of $345,000, or 96.4 percent, to $703,000 for the three months ended September 30, 2017 from $358,000 for the three months ended September 30, 2016, mainly attributable to credit adjustments related to the new core processing system implemented in the prior year period. Other non-interest expense consisted of occupancy and equipment, director fees, regulatory assessments, other real estate owned (net), and other fees/expenses.

The income tax provision increased by $1.0 million or 86.2 percent, to $2.2 million for the three months ended September 30, 2017 from $1.2 million for the three months ended September 30, 2016. The increase in income tax provision was a result of higher taxable income during the three-month period ended September 30, 2017 as compared with the three months ended September 30, 2016. The consolidated effective tax rate for the three months ended September 30, 2017 was 40.0 percent compared to 39.7 percent for the three months ended September 30, 2016.



Results of Operations comparison for the Nine Months Ended September 30, 2017 and 2016

Net income increased $3.1 million, or 56.3 percent, to $8.6 million for the nine months ended September 30, 2017 compared with $5.5 million for the nine months ended September 30, 2016. The increase in net income was primarily related to increases in total interest income, a decrease in total interest expense, an increase in total non-interest income, and a decrease in non-interest expense, partly offset by an increase in the provision for loan losses and a higher income tax provision for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.

Net interest income increased by $4.6 million, or 11.3 percent, to $45.2 million for the nine months ended September 30, 2017 from $40.6 million for the nine months ended September 30, 2016. The increase in net interest income was primarily related to an increase in the average balance of total interest-earning assets of $80.0 million, or 4.8 percent, to $1.742 billion for the nine months ended September 30, 2017 as compared to $1.662 billion for the nine months ended September 30, 2016 as well as an increase in the average yield in total interest-earning assets of 9 basis points, or 2.0 percent, to 4.36 percent for the nine months ended September 30, 2017 from 4.27 percent for the nine months ended September 30, 2016.

Interest income on loans receivable increased by $2.0 million, or 3.9 percent, to $54.0 million for the nine months ended September 30, 2017 from $52.0 million for the nine months ended September 30, 2016. The increase was primarily attributable to an increase in the average balance of loans receivable of $126.5 million, or 8.8 percent, to $1.570 billion for the nine months ended September 30, 2017 from $1.443 billion for the nine months ended September 30, 2016, partly offset by a decrease in the average yield on loans receivable of 22 basis points, or 4.5 percent, to 4.58 percent for the nine months ended September 30, 2017 from 4.80 percent for the nine months ended September 30, 2016. 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 seven additional branches in 2016. 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 equity and debt securities increased by $1.8 million to $2.1 million for the nine months ended September 30, 2017 from $291,000 for the nine months ended September 30, 2016. This increase was primarily related to an increase in the average balance of investment securities of $77.0 million, or 487.4 percent, to $92.8 million for the nine months ended September 30, 2017 from $15.8 million for the nine months ended September 30, 2016, and an increase in the average yield of 54 basis points, or 22.2 percent, to 3.0 percent, for the nine months ended September 30, 2017 from 2.46 percent for the nine months ended September 30, 2016. The increase in the average balance and average yield of equity and debt securities resulted from deploying excess cash to improve returns on interest earning assets and liquidity.

Interest income on other interest-earning assets decreased by $131,000, or 13.0 percent, to $874,000 for the nine months ended September 30, 2017 from $1.0 million for the nine months ended September 30, 2016. The decrease was primarily related to a decrease in the average balance on other interest-earning assets of $123.4 million, or 60.9 percent, to $79.2 million for the nine months ended September 30, 2017 from $202.6 million for the nine months ended September 30, 2016, partly offset by an increase in the average yield of other interest-earning assets of 81 basis points, or 122.6 percent, to 1.47 percent for the nine months ended September 30, 2017 from 0.66 percent for the nine months ended September 30, 2016. The decrease in the average balance of other interest-earning assets related to a decrease in cash as funds were deployed for repayment of (“FHLB”) borrowings, purchases of investment securities, and to fund loan growth, while the increase in the average yield resulted primarily from increases in the Fed Funds rate.

Total interest expense decreased by $897,000, or 7.1 percent, to $11.7 million for the nine months ended September 30, 2017 from $12.6 million for the nine months ended September 30, 2016. Despite an increase in the average balance of interest-bearing liabilities of $59.5 million, or 4.2 percent, to $1.468 billion for the nine months ended September 30, 2017 from $1.409 billion for the nine months ended September 30, 2016, the average cost of funds decreased 13 basis points, or 10.9 percent, to 1.06 percent for the nine months ended September 30, 2017 from 1.19 percent for the nine months ended September 30, 2016. Interest expense decreased due to a decrease

47

 


 

in the average balance and average cost of borrowings. The average balance of total deposit liabilities increased by $100.9 million, or 8.4 percent, to $1.309 billion for the nine months ended September 30, 2017 from $1.208 billion for the nine months ended September 30, 2016, and the average cost of deposits increased two basis points to 0.90 percent for the nine months ended September 30, 2017 from 0.88 percent for the nine months ended September 30, 2016. The average balance of borrowings decreased by $41.4 million, or 20.6 percent, to $159.7 million for the nine months ended September 30, 2017 from $201.1 million for the nine months ended September 30, 2016, and the average cost of borrowings decreased 66 basis points, or 21.4 percent, to 2.42 percent for the nine months ended September 30, 2017 from 3.08 percent for the nine months ended September 30, 2016. The decrease in borrowings was primarily the result of scheduled repayments of high-cost Federal Home Loan Bank advances.

The net interest margin was 3.46 percent for the nine-month period ended September 30, 2017 and 3.26 percent for the nine-month period ended September 30, 2016. The improvement in the net interest margin was primarily the result of the repayment of higher cost FHLB borrowings in 2017, partly offset by competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and a slight increase in the average cost of deposit liabilities.

The provision for loan losses increased by $1.9 million, to $1.8 million for the nine months ended September 30, 2017 from ($75,000) for the nine months ended September 30, 2016. The negative provision for loan losses in the prior period reflects the excess specific provisions previously accrued on certain loans that were settled in that 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, 2017, the Company experienced $546,000 in net charge-offs compared to $377,000 in net recoveries for the nine months ended September 30, 2016. The Bank had non-performing loans totaling $17.0 million, or 1.03 percent, of gross loans at September 30, 2017 and $15.7 million, or 1.04 percent, of gross loans at December 31, 2016. The allowance for loan losses was $18.4 million, or 1.12 percent, of gross loans at September 30, 2017, $17.2 million, or 1.14 percent, of gross loans at December 31, 2016 and $17.6 million, or 1.21 percent, of gross loans at September 30, 2016.  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 increase in the allowance for loan loss reflected growth in the loan portfolio. Management believes that the allowance for loan losses was adequate at September 30, 2017 and December 31, 2016.

Total non-interest income increased by $1.3 million, or 27.2 percent, to $6.0 million for the nine months ended September 30, 2017 from $4.7 million for the nine months ended September 30, 2016. Total non-interest income increased primarily as a result of gains on sales of other real estate owned properties of $1.6 million for the nine months ended September 30, 2017 with no comparable gain for the nine months ended September 30, 2016, a loss on a  bulk sale of impaired loans held in the portfolio of $373,000 for the nine months ended September 30, 2016 with no comparable sale for the nine months ended September 30, 2017, an increase in other non-interest income of $235,000, or 326.4 percent, to $307,000 for the nine months ended September 30, 2017 from $72,000 for the nine months ended September 30, 2016, a gain on sale of investment securities of $97,000 for the nine months ended September 30, 2017 with no comparable sale for the nine months ended September 30, 2016, partly offset by a decrease in gains on sales of loans of $1.1 million, or 39.7 percent, to $1.6 million for the nine months ended September 30, 2017 from $2.7 million for the nine months ended September 30, 2016. The sales of loans and other real estate owned properties is generally based on market conditions. The increase in other non-interest income related to $237,000 of proceeds from a legal settlement in the second quarter of 2017.

Total non-interest expense decreased by $1.2 million, or 3.4 percent, to $35.0 million for the nine months ended September 30, 2017 from $36.2 million for the nine months ended September 30, 2016. Salaries and benefits decreased by $1.0 million, or 5.5 percent, to $17.9 million for the nine months ended September 30, 2017 from $18.9 million for the nine months ended September 30, 2016, primarily related to a reduction in workforce over the last 12 months. Advertising expense decreased by $860,000, or 69.6 percent, to $375,000 for the nine months ended September 30, 2017 from $1.2 million for the nine months ended September 30, 2016, as a result of advertising efforts with the opening of several de novo branches throughout 2016. Data processing expense decreased by $219,000, or 9.7 percent, to $2.0 million for the nine months ended September 30, 2017 from $2.2 million for the nine months ended September 30, 2016, primarily related to cost efficiencies achieved with the conversion to a new core system. Regulatory assessment expense decreased by $129,000, or 11.3 percent, to $1.0 million for the nine months ended September 30, 2017 from $1.1 million for the nine months ended September 30, 2016, primarily related to lower FDIC rates. Professional fee expense increased by $870,000, or 63.6 percent, to $2.2 million for the nine months ended September 30, 2017 from $1.3 million for the nine months ended  September 30, 2016, primarily related to counsel fees and litigation expenses awarded to the plaintiff’s class counsel of $1.0 million in the matter of Kube v. Pamrapo Bancorp, Inc. et al. Other non-interest expense consisted of occupancy and equipment, director fees, regulatory assessments, other real estate owned (net), and other fees/expenses.

Income tax provision increased by $2.1 million, or 58.3 percent, to $5.8 million for the nine months ended September 30, 2017 from $3.7 million for the nine months ended September 30, 2016. The increase in income tax provision was a result of higher taxable income during the nine months ended September 30, 2017 as compared with the nine months ended September 30, 2016. The consolidated effective tax rate for the nine months ended September 30, 2017 was 40.0 percent compared to 39.7 percent for the nine months ended September 30, 2016.

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.



48

 


 

At September 30, 2017, the Company had no overnight borrowings outstanding with the FHLB, as compared to $20.0 million at December 31, 2016. The Company utilizes overnight borrowings from time to time to fund short-term liquidity needs. The Company had total borrowings of $142.1 million at September 30, 2017 and  $179.1 million at December 31, 2016. The average rate of FHLB borrowings was 1.71 percent at September 30, 2017, as compared with 2.45 percent at December 31, 2016.



The Company had the ability at September 30, 2017 to obtain additional funding from the FHLB of up to $87.0 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 $390.9 million at September 30, 2017. Based upon historical experience data, management estimates that a significant portion of such deposits will remain with the Company.



Capital Resources



At September 30, 2017, and December 31, 2016, BCB Community Bank exceeded all of its regulatory capital requirements to which it was 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, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

Bank

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk-weighted assets)

$

200,797  13.67 

%

$

117,475  8.00 

%

$

146,844  10.00 

%

Tier 1 capital (to risk-weighted assets)

  

182,440  12.42 

 

 

88,106  6.00 

 

 

117,475  8.00 

 

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

  

182,440  12.42 

 

 

66,080  4.50 

 

 

95,449  6.50 

 

Tier 1 capital (to average assets)

 

182,440  9.97 

 

 

73,163  4.00 

 

 

91,454  5.00 

 



 

 

 

 

 

 

 

 

 

 

 

 

 As of December 31, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

Bank

 

 

 

 

 

 

 

 

 

 

 

 

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

$

154,923  11.34 

%

$

109,330  8.00 

%

$

136,663  10.00 

%

Tier 1 capital (to risk-weighted assets)

 

137,839  10.09 

 

 

81,998  6.00 

 

 

109,330  8.00 

 

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

 

137,839  10.09 

 

 

61,498  4.50 

 

 

88,831  6.50 

 

Tier 1 capital (to average assets)

 

137,839  8.10 

 

 

68,074  4.00 

 

 

85,092  5.00 

 







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. For 2017, it is 1.25% of risk-weighted assets. The Bank and the Company currently comply with the minimum capital and capital conservation buffer requirements set forth in the final rule.



At September 30, 2017  and December 31, 2016, 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, 2017. Assumptions have been made by the Company relating to interest rates, loan prepayment rates, core deposit duration, and the market values of

49

 


 

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, 2017. 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

  

$

185,845 

  

$

(67,272)

 

(26.58)

%

 

10.68 

%

 

(262)

bps

+200bp

  

 

207,280 

 

 

(45,837)

 

(18.11)

 

 

11.57 

 

 

(174)

bps

+100bp

  

 

230,529 

  

 

(22,588)

 

(8.92)

 

 

12.49 

 

 

(81)

bps

PAR

  

 

253,117 

  

 

 -

 

 -

 

 

13.30 

 

 

 -

bps

-100bp

 

 

268,765 

 

 

15,648 

 

6.18 

 

 

13.74 

 

 

44 

bps

bp – basis points



The table above indicates that as of September 30, 2017, in the event of a 100 basis point increase in interest rates, we would experience a 8.92%  decrease in NPV.

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.



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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, 2017, 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 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 vigorously opposed that motion. By Order, dated July 5, 2017, the court awarded counsel fees and litigation expenses to the plaintiff’s class counsel in the amount of $1,000,000.00. The Company satisfied the Order by July 31, 2017.  

     

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 awards 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 consideration of these motions, a Settlement Conference was held before the court on November 16, 2016. The Plaintiffs and Progressive did not settle their respective claims at that Settlement Conference.  



The Plaintiffs have filed a motion for partial summary judgment. Progressive has filed a motion for summary judgment. These motions were returnable before the court on December 5, 2016.



By Order, dated September 18, 2017, the court granted the Plaintiffs’ motion for partial summary judgment, and denied Progressive’ motion for summary judgment.



A Status Conference was held before the court on October 26, 2017. As a result thereof, a Settlement Conference has been scheduled for December 1, 2017, before the court.



Discovery has been stayed until the conclusion of the Settlement Conference.



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, 2016.



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



The stock repurchase plans have terminated, as no shares remain under any of the former plans.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.



ITEM 4. MINE SAFTEY DISCLOSURES

Not applicable



ITEM 5. OTHER INFORMATION

None.



51

 


 

ITEM 6. EXHIBITS





 

Exhibit 11.0

Computation of Earnings Per Share.

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2

Certification of Principal Accounting Officer 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



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 8th, 2017

 

By:

 

/s/ Thomas Coughlin

 

 

 

 

Thomas Coughlin

 

 

 

 

President and Chief Executive Officer

(Principal Executive Officer)

 

 

 

Date: November 8th, 2017

 

By:

 

/s/ Thomas P. Keating

 

 

 

 

Thomas P. Keating

Senior Vice President and Chief Financial Officer

 

 

 

 

(Principal Accounting and Financial Officer)



52