x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2011
|
|
o
|
TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Stewardship Financial Corporation
|
(Exact name of registrant as specified in its charter)
|
New Jersey
|
22-3351447
|
|
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.)
|
|
incorporation or organization)
|
||
630 Godwin Avenue, Midland Park, NJ
|
07432
|
|
(Address of principal executive offices)
|
(Zip Code)
|
(201) 444-7100
|
(Registrant’s telephone number, including area code)
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer o
|
Accelerated filer o
|
|
Non-accelerated filer o (Do not check if a smaller reporting company)
|
Smaller reporting company x
|
PAGE
NUMBER
|
|||
1
|
|||
2
|
|||
3
|
|||
4
|
|||
5 - 6
|
|||
7 - 28
|
|||
29 - 38
|
|||
39
|
|||
39
|
|||
40
|
|||
40
|
|||
41
|
|||
42
|
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Assets
|
||||||||
Cash and due from banks
|
$ | 22,536,000 | $ | 19,838,000 | ||||
Other interest-earning assets
|
1,200,000 | 145,000 | ||||||
Cash and cash equivalents
|
23,736,000 | 19,983,000 | ||||||
Securities available for sale
|
163,092,000 | 138,628,000 | ||||||
Securities held to maturity; estimated fair value of $42,555,000 (2011) and $47,316,000 (2010)
|
39,937,000 | 45,394,000 | ||||||
FHLB-NY stock, at cost
|
2,491,000 | 2,497,000 | ||||||
Loans, net of allowance for loan losses of $12,389,000 (2011) and $8,490,000 (2010)
|
448,055,000 | 443,245,000 | ||||||
Mortgage loans held for sale
|
1,152,000 | 9,818,000 | ||||||
Premises and equipment, net
|
6,169,000 | 6,395,000 | ||||||
Accrued interest receivable
|
2,660,000 | 2,806,000 | ||||||
Other real estate owned
|
434,000 | 615,000 | ||||||
Bank owned life insurance
|
10,063,000 | 9,819,000 | ||||||
Other assets
|
8,455,000 | 8,918,000 | ||||||
Total assets
|
$ | 706,244,000 | $ | 688,118,000 | ||||
Liabilities and stockholders’ equity
|
||||||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing
|
$ | 118,117,000 | $ | 99,723,000 | ||||
Interest-bearing
|
469,747,000 | 475,880,000 | ||||||
Total deposits
|
587,864,000 | 575,603,000 | ||||||
Federal Home Loan Bank of New York advances
|
33,000,000 | 36,000,000 | ||||||
Subordinated debentures
|
7,217,000 | 7,217,000 | ||||||
Securities sold under agreements to repurchase
|
15,191,000 | 14,642,000 | ||||||
Accrued interest payable
|
745,000 | 977,000 | ||||||
Accrued expenses and other liabilities
|
2,675,000 | 1,547,000 | ||||||
Total liabilities
|
646,692,000 | 635,986,000 | ||||||
Commitments and contingencies
|
— | — | ||||||
Stockholders’ equity
|
||||||||
Preferred stock, no par value; 2,500,000 shares authorized; 15,000 shares and 10,000 shares issued and outstanding with liquidation preference of $15,000,000 and $10,000,000 at September 30, 2011 and December 31, 2010, respectively.
|
14,958,000 | 9,796,000 | ||||||
Common stock, no par value; 10,000,000 shares authorized; 5,872,176 and 5,847,844 shares issued: 5,872,176 and 5,846,927 shares outstanding at September 30, 2011 and December 31, 2010, respectively
|
40,637,000 | 40,516,000 | ||||||
Treasury stock, 917 shares outstanding at December 31, 2010
|
— | (13,000 | ) | |||||
Retained earnings
|
2,176,000 | 1,959,000 | ||||||
Accumulated other comprehensive income (loss), net
|
1,781,000 | (126,000 | ) | |||||
Total stockholders’ equity
|
59,552,000 | 52,132,000 | ||||||
Total liabilities and stockholders’ equity
|
$ | 706,244,000 | $ | 688,118,000 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Interest income:
|
||||||||||||||||
Loans
|
$ | 6,723,000 | $ | 6,797,000 | $ | 19,829,000 | $ | 20,364,000 | ||||||||
Securities held to maturity
|
||||||||||||||||
Taxable
|
168,000 | 239,000 | 528,000 | 1,037,000 | ||||||||||||
Non-taxable
|
218,000 | 229,000 | 662,000 | 693,000 | ||||||||||||
Securities available for sale
|
||||||||||||||||
Taxable
|
811,000 | 758,000 | 2,528,000 | 2,463,000 | ||||||||||||
Non-taxable
|
58,000 | 34,000 | 154,000 | 121,000 | ||||||||||||
FHLB dividends
|
28,000 | 29,000 | 96,000 | 98,000 | ||||||||||||
Other interest-earning assets
|
12,000 | 9,000 | 29,000 | 15,000 | ||||||||||||
Total interest income
|
8,018,000 | 8,095,000 | 23,826,000 | 24,791,000 | ||||||||||||
Interest expense:
|
||||||||||||||||
Deposits
|
1,205,000 | 1,590,000 | 3,774,000 | 5,139,000 | ||||||||||||
Borrowed money
|
527,000 | 555,000 | 1,596,000 | 1,600,000 | ||||||||||||
Total interest expense
|
1,732,000 | 2,145,000 | 5,370,000 | 6,739,000 | ||||||||||||
Net interest income before provision for loan losses
|
6,286,000 | 5,950,000 | 18,456,000 | 18,052,000 | ||||||||||||
Provision for loan losses
|
2,330,000 | 1,500,000 | 5,920,000 | 7,755,000 | ||||||||||||
Net interest income after provision for loan losses
|
3,956,000 | 4,450,000 | 12,536,000 | 10,297,000 | ||||||||||||
Noninterest income:
|
||||||||||||||||
Fees and service charges
|
501,000 | 514,000 | 1,550,000 | 1,486,000 | ||||||||||||
Bank owned life insurance
|
83,000 | 82,000 | 244,000 | 249,000 | ||||||||||||
Gain on sales of mortgage loans
|
245,000 | 94,000 | 835,000 | 215,000 | ||||||||||||
Gain on calls and sales of securities
|
454,000 | — | 475,000 | 802,000 | ||||||||||||
Other
|
67,000 | 69,000 | 273,000 | 265,000 | ||||||||||||
Total noninterest income
|
1,350,000 | 759,000 | 3,377,000 | 3,017,000 | ||||||||||||
Noninterest expenses:
|
||||||||||||||||
Salaries and employee benefits
|
2,380,000 | 2,077,000 | 6,877,000 | 6,151,000 | ||||||||||||
Occupancy, net
|
516,000 | 501,000 | 1,536,000 | 1,471,000 | ||||||||||||
Equipment
|
235,000 | 285,000 | 731,000 | 871,000 | ||||||||||||
Data processing
|
335,000 | 334,000 | 1,010,000 | 986,000 | ||||||||||||
FDIC insurance premium
|
152,000 | 251,000 | 553,000 | 712,000 | ||||||||||||
Charitable contributions
|
140,000 | 150,000 | 315,000 | 300,000 | ||||||||||||
Other
|
857,000 | 1,010,000 | 2,813,000 | 2,712,000 | ||||||||||||
Total noninterest expenses
|
4,615,000 | 4,608,000 | 13,835,000 | 13,203,000 | ||||||||||||
Income before income tax expense (benefit)
|
691,000 | 601,000 | 2,078,000 | 111,000 | ||||||||||||
Income tax expense (benefit)
|
113,000 | 261,000 | 432,000 | (35,000 | ) | |||||||||||
Net income
|
578,000 | 340,000 | 1,646,000 | 146,000 | ||||||||||||
Dividends on preferred stock and accretion
|
244,000 | 137,000 | 520,000 | 412,000 | ||||||||||||
Net income (loss) available to common stockholders
|
$ | 334,000 | $ | 203,000 | $ | 1,126,000 | $ | (266,000 | ) | |||||||
Basic earnings (loss) per common share
|
$ | 0.06 | $ | 0.03 | $ | 0.19 | $ | (0.05 | ) | |||||||
Diluted earnings (loss) per common share
|
$ | 0.06 | $ | 0.03 | $ | 0.19 | $ | (0.05 | ) | |||||||
Weighted average number of common shares outstanding
|
5,866,575 | 5,842,366 | 5,855,663 | 5,842,565 | ||||||||||||
Weighted average number of diluted common shares outstanding
|
5,866,575 | 5,842,366 | 5,855,663 | 5,842,565 |
Nine Months Ended September 30, 2011
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||
Comprehensive
|
||||||||||||||||||||||||||||
Income
|
||||||||||||||||||||||||||||
Preferred
|
Common Stock
|
Retained
|
Treasury
|
(Loss)
|
||||||||||||||||||||||||
Stock
|
Shares
|
Amount
|
Earnings
|
Stock
|
Net
|
Total
|
||||||||||||||||||||||
Balance — December 31, 2010
|
$ | 9,796,000 | 5,846,927 | $ | 40,516,000 | $ | 1,959,000 | $ | (13,000 | ) | $ | (126,000 | ) | $ | 52,132,000 | |||||||||||||
Proceeds from issuance of preferred stock
|
15,000,000 | — | — | — | — | — | 15,000,000 | |||||||||||||||||||||
Preferred stock issuance costs
|
(42,000 | ) | — | — | — | — | — | (42,000 | ) | |||||||||||||||||||
Repurchase of preferred stock
|
(10,000,000 | ) | — | — | — | — | — | (10,000,000 | ) | |||||||||||||||||||
Cash dividends paid on common stock
|
— | — | — | (878,000 | ) | — | — | (878,000 | ) | |||||||||||||||||||
Payment of discount on dividend reinvestment plan
|
— | — | (13,000 | ) | — | — | — | (13,000 | ) | |||||||||||||||||||
Cash dividends accrued on preferred stock
|
— | — | — | (347,000 | ) | — | — | (347,000 | ) | |||||||||||||||||||
Common stock issued under dividend reinvestment plan
|
— | 10,169 | 47,000 | — | — | — | 47,000 | |||||||||||||||||||||
Common stock issued under stock plans
|
— | 15,080 | 68,000 | — | 13,000 | — | 81,000 | |||||||||||||||||||||
Stock option compensation expense
|
— | — | 19,000 | — | — | — | 19,000 | |||||||||||||||||||||
Accretion of discount on preferred stock
|
174,000 | — | — | (174,000 | ) | — | — | |||||||||||||||||||||
Amortization of issuance costs
|
30,000 | — | — | (30,000 | ) | — | — | |||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
— | — | — | 1,646,000 | — | — | 1,646,000 | |||||||||||||||||||||
Change in unrealized holding gains on securities available for sale arising during the period (net of taxes of $1,498,000)
|
— | — | — | — | — | 2,355,000 | 2,355,000 | |||||||||||||||||||||
Reclassification adjustment for gains in net income (net of taxes of $188,000)
|
— | — | — | — | — | (288,000 | ) | (287,000 | ) | |||||||||||||||||||
Change in fair value of interest rate swap (net of taxes of $107,000)
|
— | — | — | — | — | (160,000 | ) | (161,000 | ) | |||||||||||||||||||
Total comprehensive income
|
3,553,000 | |||||||||||||||||||||||||||
Balance — September 30, 2011
|
$ | 14,958,000 | 5,872,176 | $ | 40,637,000 | $ | 2,176,000 | $ | — | $ | 1,781,000 | $ | 59,552,000 |
Nine Months Ended September 30, 2010
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||
Comprehensive
|
||||||||||||||||||||||||||||
Preferred
|
Common Stock
|
Treasury
|
Retained
|
Gain (Loss),
|
||||||||||||||||||||||||
Stock
|
Shares
|
Amount
|
Stock
|
Earnings
|
Net
|
Total
|
||||||||||||||||||||||
Balance — December 31, 2009
|
$ | 9,736,000 | 5,834,515 | $ | 40,415,000 | $ | — | $ | 2,922,000 | $ | 438,000 | $ | 53,511,000 | |||||||||||||||
Cash dividends paid on common stock
|
— | — | — | — | (1,343,000 | ) | — | (1,343,000 | ) | |||||||||||||||||||
Payment of discount on dividend reinvestment plan
|
— | — | (23,000 | ) | — | — | — | (23,000 | ) | |||||||||||||||||||
Cash dividends accrued on preferred stock
|
— | — | — | — | (375,000 | ) | — | (375,000 | ) | |||||||||||||||||||
Common stock issued under stock plans
|
— | 3,037 | 24,000 | 29,000 | — | — | 53,000 | |||||||||||||||||||||
Stock option compensation expense
|
— | — | 38,000 | — | — | — | 38,000 | |||||||||||||||||||||
Stock options exercised
|
— | 9,376 | 55,000 | (43,000 | ) | — | — | 12,000 | ||||||||||||||||||||
Accretion of discount on preferred stock
|
38,000 | — | — | — | (38,000 | ) | — | |||||||||||||||||||||
Amortization of issuance costs
|
7,000 | — | — | — | (7,000 | ) | — | |||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
— | — | — | — | 146,000 | — | 146,000 | |||||||||||||||||||||
Change in unrealized holding gains on securities available for sale arising during the period (net taxes of $1,099,000)
|
— | — | — | — | — | 1,716,000 | 1,716,000 | |||||||||||||||||||||
Reclassification adjustment for gains in net income (net of taxes of $316,000)
|
— | — | — | — | — | (486,000 | ) | (486,000 | ) | |||||||||||||||||||
Change in fair value of interest rate swap (net of taxes of $266,000)
|
— | — | — | — | — | (400,000 | ) | (400,000 | ) | |||||||||||||||||||
Total comprehensive income
|
976,000 | |||||||||||||||||||||||||||
Balance — September 30, 2010
|
$ | 9,781,000 | 5,846,928 | $ | 40,509,000 | $ | (14,000 | ) | $ | 1,305,000 | $ | 1,268,000 | $ | 52,849,000 |
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net income
|
$ | 578,000 | $ | 340,000 | $ | 1,646,000 | $ | 146,000 | ||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Change in unrealized holding gains on securities available for sale arising during the period
|
1,741,000 | 505,000 | 3,852,000 | 2,814,000 | ||||||||||||
Reclassification adjustment for gains in net income
|
(454,000 | ) | — | (475,000 | ) | (802,000 | ) | |||||||||
Net unrealized gains
|
1,287,000 | 505,000 | 3,377,000 | 2,012,000 | ||||||||||||
Tax effect
|
(499,000 | ) | (194,000 | ) | (1,310,000 | ) | (782,000 | ) | ||||||||
Net unrealized gains, net of tax amount
|
788,000 | 311,000 | 2,067,000 | 1,230,000 | ||||||||||||
Change in fair value of interest rate swap
|
(210,000 | ) | (200,000 | ) | (267,000 | ) | (666,000 | ) | ||||||||
Tax effect
|
84,000 | 80,000 | 107,000 | 266,000 | ||||||||||||
Change in fair value of interest rate swap, net of tax amount
|
(126,000 | ) | (120,000 | ) | (160,000 | ) | (400,000 | ) | ||||||||
Total other comprehensive income
|
662,000 | 191,000 | 1,907,000 | 830,000 | ||||||||||||
Total comprehensive income (loss)
|
$ | 1,240,000 | $ | 531,000 | $ | 3,553,000 | $ | 976,000 |
9/30/2011
|
12/31/2010
|
|||||||
Unrealized gain on securities available for sale
|
$ | 2,340,000 | $ | 272,000 | ||||
Unrealized loss on fair value of interest rate swap
|
(559,000 | ) | (398,000 | ) | ||||
Accumulated other comprehensive income, net
|
$ | 1,781,000 | $ | (126,000 | ) |
Nine Months Ended
September 30,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 1,646,000 | $ | 146,000 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization of premises and equipment
|
449,000 | 609,000 | ||||||
Amortization of premiums and accretion of discounts, net
|
977,000 | 718,000 | ||||||
Accretion of deferred loan fees
|
(31,000 | ) | (88,000 | ) | ||||
Provision for loan losses
|
5,920,000 | 7,755,000 | ||||||
Originations of mortgage loans held for sale
|
(55,354,000 | ) | (29,568,000 | ) | ||||
Proceeds from sale of mortgage loans
|
64,855,000 | 21,118,000 | ||||||
Gain on sales of mortgage loans
|
(835,000 | ) | (215,000 | ) | ||||
Gain on sales and calls of securities
|
(475,000 | ) | (802,000 | ) | ||||
Deferred income tax benefit
|
(1,676,000 | ) | (1,044,000 | ) | ||||
Decrease in accrued interest receivable
|
146,000 | 38,000 | ||||||
Decrease in accrued interest payable
|
(232,000 | ) | (249,000 | ) | ||||
Earnings on bank owned life insurance
|
(244,000 | ) | 493,000 | |||||
Stock option expense
|
19,000 | (196,000 | ) | |||||
(Increase) decrease in other assets
|
804,000 | (275,000 | ) | |||||
Decrease in other liabilities
|
(33,000 | ) | (405,000 | ) | ||||
Net cash provided by (used in) operating activities
|
15,936,000 | (1,965,000 | ) | |||||
Cash flows from investing activities:
|
||||||||
Purchase of securities available for sale
|
(56,207,000 | ) | (82,727,000 | ) | ||||
Proceeds from maturities and principal repayments on securities available for sale
|
14,362,000 | 12,796,000 | ||||||
Proceeds from sales and calls on securities available for sale
|
21,423,000 | 47,951,000 | ||||||
Purchase of securities held to maturity
|
— | (5,566,000 | ) | |||||
Proceeds from maturities and principal repayments on securities held to maturity
|
3,950,000 | 4,469,000 | ||||||
Proceeds from calls on securities held to maturity
|
1,340,000 | 21,134,000 | ||||||
Sale of FHLB-NY stock
|
6,000 | 730,000 | ||||||
Net (increase) decrease in loans
|
(10,858,000 | ) | 4,206,000 | |||||
Additions to premises and equipment
|
(223,000 | ) | (225,000 | ) | ||||
Proceeds from sale of other real estate owned
|
366,000 | — | ||||||
Net cash provided by (used in) investing activities
|
(25,841,000 | ) | 2,768,000 | |||||
Cash flows from financing activities:
|
||||||||
Net increase in noninterest-bearing deposits
|
18,394,000 | 14,393,000 | ||||||
Net increase (decrease) in interest-bearing deposits
|
(6,133,000 | ) | 21,522,000 | |||||
Net increase in securities sold under agreements to repurchase
|
549,000 | (155,000 | ) | |||||
Repayment of long term borrowings
|
(18,000,000 | ) | (18,600,000 | ) | ||||
Proceeds from long term borrowings
|
15,000,000 | — | ||||||
Proceeds from issuance of preferred stock
|
14,958,000 | — | ||||||
Repurchase of preferred stock
|
(10,000,000 | ) | — | |||||
Cash dividends paid on common stock
|
(878,000 | ) | (1,343,000 | ) | ||||
Cash dividends paid on preferred stock
|
(347,000 | ) | (375,000 | ) | ||||
Payment of discount on dividend reinvestment plan
|
(13,000 | ) | (23,000 | ) | ||||
Exercise of stock options
|
— | 12,000 | ||||||
Issuance of common stock
|
128,000 | 53,000 | ||||||
Net cash provided by financing activities
|
13,658,000 | 15,484,000 | ||||||
Net increase in cash and cash equivalents
|
3,753,000 | 16,287,000 | ||||||
Cash and cash equivalents - beginning
|
19,983,000 | 8,871,000 | ||||||
Cash and cash equivalents - ending
|
$ | 23,736,000 | $ | 25,158,000 |
Nine Months Ended
September 30, 2011
|
||||||||
2011
|
2010
|
|||||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the period for interest
|
$ | 5,602,000 | $ | 7,014,000 | ||||
Cash paid during the period for income taxes
|
$ | 1,535,000 | $ | 1,930,000 | ||||
Noncash investing activities - security purchases due brokers
|
$ | 1,000,000 | $ | — | ||||
Supplemental schedule of non-cash flow activities:
|
||||||||
Transfer of loans receivable to other real estate owned, net
|
$ | 159,000 | $ | 356,000 |
September 30, 2011
|
||||||||||||||||
Amortized
|
Gross Unrealized
|
Fair
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
U.S. Treasury
|
$ | 13,129,000 | $ | 266,000 | $ | — | $ | 13,395,000 | ||||||||
U.S. government-sponsored agencies
|
21,273,000 | 195,000 | 18,000 | 21,450,000 | ||||||||||||
Obligations of state and political subdivisions
|
8,163,000 | 391,000 | 11,000 | 8,543,000 | ||||||||||||
Mortgage-backed securities - residential
|
113,446,000 | 2,975,000 | 35,000 | 116,386,000 | ||||||||||||
Other equity investments
|
3,249,000 | 69,000 | — | 3,318,000 | ||||||||||||
$ | 159,260,000 | $ | 3,896,000 | $ | 64,000 | $ | 163,092,000 |
December 31, 2010
|
||||||||||||||||
Amortized
|
Gross Unrealized
|
Fair
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
U.S. Treasury
|
$ | 9,141,000 | $ | 109,000 | $ | 1,000 | $ | 9,249,000 | ||||||||
U.S. government-sponsored agencies
|
13,600,000 | 97,000 | 111,000 | 13,586,000 | ||||||||||||
Obligations of state and political subdivisions
|
4,219,000 | 79,000 | 19,000 | 4,279,000 | ||||||||||||
Mortgage-backed securities - residential
|
108,078,000 | 1,169,000 | 920,000 | 108,327,000 | ||||||||||||
Other equity investments
|
3,135,000 | 52,000 | — | 3,187,000 | ||||||||||||
$ | 138,173,000 | $ | 1,506,000 | $ | 1,051,000 | $ | 138,628,000 |
September 30, 2011
|
||||||||||||||||
Amortized
|
Gross Unrecognized
|
Fair
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
U.S. government-sponsored agencies
|
$ | 2,779,000 | $ | 97,000 | $ | — | $ | 2,876,000 | ||||||||
Obligations of state and political subdivisions
|
25,147,000 | 1,641,000 | — | 26,788,000 | ||||||||||||
Mortgage-backed securities - residential
|
12,011,000 | 880,000 | — | 12,891,000 | ||||||||||||
$ | 39,937,000 | $ | 2,618,000 | $ | — | $ | 42,555,000 |
December 31, 2010
|
||||||||||||||||
Amortized
|
Gross Unrecognized
|
Fair
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
U.S. government-sponsored agencies
|
$ | 4,208,000 | $ | 146,000 | $ | — | $ | 4,354,000 | ||||||||
Obligations of state and political subdivisions
|
26,148,000 | 1,046,000 | 20,000 | 27,174,000 | ||||||||||||
Mortgage-backed securities - residential
|
15,038,000 | 750,000 | — | 15,788,000 | ||||||||||||
$ | 45,394,000 | $ | 1,942,000 | $ | 20,000 | $ | 47,316,000 |
Available for Sale
|
||||||||||||||||||||||||
September 30, 2011
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
|||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
U.S. Treasury
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
U.S. government-sponsored agencies
|
3,682,000 | (18,000 | ) | — | — | 3,682,000 | (18,000 | ) | ||||||||||||||||
Obligations of state and political subdivisions
|
1,200,000 | (11,000 | ) | — | — | 1,200,000 | (11,000 | ) | ||||||||||||||||
Mortgage-backed securities - residential
|
10,946,000 | (35,000 | ) | — | — | 10,946,000 | (35,000 | ) | ||||||||||||||||
Other equity investments
|
— | — | — | — | — | — | ||||||||||||||||||
Total temporarily impaired securities
|
$ | 15,828,000 | $ | (64,000 | ) | $ | — | $ | — | $ | 15,828,000 | $ | (64,000 | ) |
December 31, 2010
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
|||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
U.S. Treasury
|
$ | 1,522,000 | $ | (1,000 | ) | $ | — | $ | — | $ | 1,522,000 | $ | (1,000 | ) | ||||||||||
U.S. government-sponsored agencies
|
3,418,000 | (111,000 | ) | — | — | 3,418,000 | (111,000 | ) | ||||||||||||||||
Obligations of state and political subdivisions
|
1,153,000 | (19,000 | ) | — | — | 1,153,000 | (19,000 | ) | ||||||||||||||||
Mortgage-backed securities - residential
|
39,179,000 | (920,000 | ) | — | — | 39,179,000 | (920,000 | ) | ||||||||||||||||
Other equity investments
|
— | — | — | — | — | — | ||||||||||||||||||
Total temporarily impaired securities
|
$ | 45,272,000 | $ | (1,051,000 | ) | $ | — | $ | — | $ | 45,272,000 | $ | (1,051,000 | ) |
Held to Maturity
|
||||||||||||||||||||||||
September 30, 2011
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
|||||||||||||||||||||
Fair
|
Unrecognized
|
Fair
|
Unrecognized
|
Fair
|
Unrecognized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
U.S. government-sponsored agencies
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Obligations of state and political subdivisions
|
— | — | — | — | — | — | ||||||||||||||||||
Mortgage-backed securities - residential
|
— | — | — | — | — | — | ||||||||||||||||||
Total temporarily impaired securities
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
December 31, 2010
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
|||||||||||||||||||||
Fair
|
Unrecognized
|
Fair
|
Unrecognized
|
Fair
|
Unrecognized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
U.S. government-sponsored agencies
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Obligations of state and political subdivisions
|
1,403,000 | (20,000 | ) | — | — | 1,403,000 | (20,000 | ) | ||||||||||||||||
Mortgage-backed securities - residential
|
— | — | — | — | — | — | ||||||||||||||||||
Total temporarily impaired securities
|
$ | 1,403,000 | $ | (20,000 | ) | $ | — | $ | — | $ | 1,403,000 | $ | (20,000 | ) |
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Commercial:
|
||||||||
Secured by real estate
|
$ | 67,145,000 | $ | 65,200,000 | ||||
Other
|
37,440,000 | 44,327,000 | ||||||
Commercial real estate
|
246,922,000 | 219,875,000 | ||||||
Construction:
|
||||||||
Commercial
|
20,178,000 | 28,652,000 | ||||||
Residential
|
255,000 | 875,000 | ||||||
Residential real estate
|
47,129,000 | 42,145,000 | ||||||
Consumer:
|
||||||||
Secured by real estate
|
40,257,000 | 49,360,000 | ||||||
Other
|
1,115,000 | 1,280,000 | ||||||
Other
|
77,000 | 152,000 | ||||||
Total gross loans
|
460,518,000 | 451,866,000 | ||||||
Less: Deferred loan fees, net of costs
|
74,000 | 131,000 | ||||||
Allowance for loan losses
|
12,389,000 | 8,490,000 | ||||||
12,463,000 | 8,621,000 | |||||||
Loans, net
|
$ | 448,055,000 | $ | 443,245,000 |
For the three months ended September 30, 2011
|
||||||||||||||||||||||||||||||||
Commercial
|
Residential
|
Other
|
||||||||||||||||||||||||||||||
Commercial
|
Real Estate
|
Construction
|
Real Estate
|
Consumer
|
Loans
|
Unallocated
|
Total
|
|||||||||||||||||||||||||
Balance, beginning of period
|
$ | 5,577,000 | $ | 4,197,000 | $ | 570,000 | $ | 419,000 | $ | 460,000 | $ | 5,000 | $ | 2,000 | $ | 11,230,000 | ||||||||||||||||
Provision charged to operations
|
90,000 | 2,029,000 | 55,000 | 12,000 | 136,000 | (1,000 | ) | 9,000 | 2,330,000 | |||||||||||||||||||||||
Loans charged off
|
(281,000 | ) | (747,000 | ) | (19,000 | ) | (72,000 | ) | (64,000 | ) | — | — | (1,183,000 | ) | ||||||||||||||||||
Recoveries of loans charged off
|
4,000 | — | 4,000 | — | 2,000 | 2,000 | — | 12,000 | ||||||||||||||||||||||||
Balance, end of period
|
$ | 5,390,000 | $ | 5,479,000 | $ | 610,000 | $ | 359,000 | $ | 534,000 | $ | 6,000 | $ | 11,000 | $ | 12,389,000 |
For the nine months ended September 30, 2011
|
||||||||||||||||||||||||||||||||
Commercial
|
Residential
|
Other
|
||||||||||||||||||||||||||||||
Commercial
|
Real Estate
|
Construction
|
Real Estate
|
Consumer
|
Loans
|
Unallocated
|
Total
|
|||||||||||||||||||||||||
Balance, beginning of period
|
$ | 3,745,000 | $ | 3,112,000 | $ | 930,000 | $ | 184,000 | $ | 510,000 | $ | 2,000 | $ | 7,000 | $ | 8,490,000 | ||||||||||||||||
Provision charged to operations
|
2,291,000 | 3,506,000 | (282,000 | ) | 247,000 | 146,000 | 8,000 | 4,000 | 5,920,000 | |||||||||||||||||||||||
Loans charged off
|
(669,000 | ) | (1,139,000 | ) | (42,000 | ) | (72,000 | ) | (124,000 | ) | (8,000 | ) | — | (2,054,000 | ) | |||||||||||||||||
Recoveries of loans charged off
|
23,000 | — | 4,000 | — | 2,000 | 4,000 | — | 33,000 | ||||||||||||||||||||||||
Balance, end of period
|
$ | 5,390,000 | $ | 5,479,000 | $ | 610,000 | $ | 359,000 | $ | 534,000 | $ | 6,000 | $ | 11,000 | $ | 12,389,000 |
Three months ended
|
Nine months ended
|
|||||||
September 30, 2010
|
September 30, 2010
|
|||||||
Balance, beginning of period
|
$ | 8,745,000 | $ | 6,920,000 | ||||
Provision charged to operations
|
1,500,000 | 7,755,000 | ||||||
Loans charged off
|
921,000 | 5,435,000 | ||||||
Recoveries of loans charged off
|
3,000 | 87,000 | ||||||
Balance, end of period
|
$ | 9,327,000 | $ | 9,327,000 |
September 30, 2011
|
||||||||||||||||||||||||||||||||
Commercial
|
Residential
|
Other
|
||||||||||||||||||||||||||||||
Commercial
|
Real Estate
|
Construction
|
Real Estate
|
Consumer
|
Loans
|
Unallocated
|
Total
|
|||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||
Ending allowance balance attributable to loans
|
||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | 1,868,000 | $ | 1,157,000 | $ | 117,000 | $ | 3,000 | $ | 64,000 | $ | — | $ | — | $ | 3,209,000 | ||||||||||||||||
Collectively evaluated for impairment
|
3,522,000 | 4,322,000 | 493,000 | 357,000 | 469,000 | 6,000 | 11,000 | 9,180,000 | ||||||||||||||||||||||||
Total ending allowance balance
|
$ | 5,390,000 | $ | 5,479,000 | $ | 610,000 | $ | 360,000 | $ | 533,000 | $ | 6,000 | $ | 11,000 | $ | 12,389,000 | ||||||||||||||||
Loans:
|
||||||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$ | 11,843,000 | $ | 15,006,000 | $ | 3,472,000 | $ | 605,000 | $ | 835,000 | $ | — | $ | — | $ | 31,761,000 | ||||||||||||||||
Loans collectively evaluated for impairment
|
92,742,000 | 231,916,000 | 16,961,000 | 46,524,000 | 40,537,000 | 77,000 | — | 428,757,000 | ||||||||||||||||||||||||
Total ending loan balance
|
$ | 104,585,000 | $ | 246,922,000 | $ | 20,433,000 | $ | 47,129,000 | $ | 41,372,000 | $ | 77,000 | $ | — | $ | 460,518,000 |
December 31, 2010
|
||||||||||||||||||||||||||||||||
Commercial
|
Residential
|
Other
|
||||||||||||||||||||||||||||||
Commercial
|
Real Estate
|
Construction
|
Real Estate
|
Consumer
|
Loans
|
Unallocated
|
Total
|
|||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||
Ending allowance balance attributable to loans
|
||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | 1,336,000 | $ | 276,000 | $ | 29,000 | $ | 3,000 | $ | — | $ | — | $ | — | $ | 1,644,000 | ||||||||||||||||
Collectively evaluated for impairment
|
2,409,000 | 2,836,000 | 901,000 | 181,000 | 510,000 | 2,000 | 7,000 | 6,846,000 | ||||||||||||||||||||||||
Total ending allowance balance
|
$ | 3,745,000 | $ | 3,112,000 | $ | 930,000 | $ | 184,000 | $ | 510,000 | $ | 2,000 | $ | 7,000 | $ | 8,490,000 | ||||||||||||||||
Loans:
|
||||||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$ | 7,852,000 | $ | 10,540,000 | $ | 2,303,000 | $ | 1,106,000 | $ | 829,000 | $ | — | $ | — | $ | 22,630,000 | ||||||||||||||||
Loans collectively evaluated for impairment
|
101,675,000 | 209,335,000 | 27,224,000 | 41,039,000 | 49,811,000 | 152,000 | — | 429,236,000 | ||||||||||||||||||||||||
Total ending loan balance
|
$ | 109,527,000 | $ | 219,875,000 | $ | 29,527,000 | $ | 42,145,000 | $ | 50,640,000 | $ | 152,000 | $ | — | $ | 451,866,000 |
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Commercial:
|
||||||||
Secured by real estate
|
$ | 6,625,000 | $ | 5,924,000 | ||||
Other
|
1,852,000 | 1,798,000 | ||||||
Commercial real estate
|
11,594,000 | 10,540,000 | ||||||
Construction:
|
||||||||
Commercial
|
2,656,000 | 2,020,000 | ||||||
Residential
|
255,000 | 283,000 | ||||||
Residential real estate
|
605,000 | 1,106,000 | ||||||
Consumer:
|
||||||||
Secured by real estate
|
835,000 | 829,000 | ||||||
Other
|
— | — | ||||||
Other
|
— | — | ||||||
Total nonaccrual loans
|
$ | 24,422,000 | $ | 22,500,000 |
At September 30, 2011
|
||||||||||||
Unpaid
|
Allowance for
|
|||||||||||
Principal
|
Recorded
|
Loan Losses
|
||||||||||
Balance
|
Investment
|
Allocated
|
||||||||||
With no related allowance recorded:
|
||||||||||||
Commercial:
|
||||||||||||
Secured by real estate
|
$ | 4,701,000 | $ | 3,495,000 | ||||||||
Other
|
616,000 | 616,000 | ||||||||||
Commercial real estate
|
10,759,000 | 9,012,000 | ||||||||||
Construction:
|
||||||||||||
Commercial
|
2,525,000 | 2,193,000 | ||||||||||
Residential
|
275,000 | 255,000 | ||||||||||
Residential real estate
|
287,000 | 237,000 | ||||||||||
Consumer:
|
||||||||||||
Secured by real estate
|
687,000 | 680,000 | ||||||||||
Other
|
— | — | ||||||||||
Other
|
— | — | ||||||||||
With an allowance recorded:
|
||||||||||||
Commercial:
|
||||||||||||
Secured by real estate
|
5,875,000 | 5,713,000 | $ | 896,000 | ||||||||
Other
|
2,050,000 | 2,019,000 | 972,000 | |||||||||
Commercial real estate
|
6,698,000 | 5,994,000 | 1,157,000 | |||||||||
Construction:
|
||||||||||||
Commercial
|
1,024,000 | 1,024,000 | 117,000 | |||||||||
Residential
|
— | — | — | |||||||||
Residential real estate
|
415,000 | 368,000 | 3,000 | |||||||||
Consumer:
|
||||||||||||
Secured by real estate
|
155,000 | 155,000 | 64,000 | |||||||||
Other
|
— | — | — | |||||||||
Other
|
— | — | — | |||||||||
Total nonperfoming loans
|
$ | 36,067,000 | $ | 31,761,000 | $ | 3,209,000 |
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30, 2011
|
September 30, 2011
|
|||||||||||||||
Average
|
Interest
|
Average
|
Interest
|
|||||||||||||
Recorded
|
Income
|
Recorded
|
Income
|
|||||||||||||
Investment
|
Recognized
|
Investment
|
Recognized
|
|||||||||||||
With no related allowance recorded:
|
||||||||||||||||
Commercial:
|
||||||||||||||||
Secured by real estate
|
$ | 3,108,000 | $ | 7,000 | $ | 2,117,000 | $ | 11,000 | ||||||||
Other
|
538,000 | 4,000 | 495,000 | 16,000 | ||||||||||||
Commercial real estate
|
9,134,000 | 30,000 | 6,757,000 | 30,000 | ||||||||||||
Construction:
|
||||||||||||||||
Commercial
|
1,912,000 | 9,000 | 1,707,000 | 9,000 | ||||||||||||
Residential
|
266,000 | — | 273,000 | — | ||||||||||||
Residential real estate
|
119,000 | — | 310,000 | — | ||||||||||||
Consumer:
|
||||||||||||||||
Secured by real estate
|
753,000 | — | 791,000 | — | ||||||||||||
Other
|
— | — | — | — | ||||||||||||
Other
|
— | — | — | — | ||||||||||||
With an allowance recorded:
|
||||||||||||||||
Commercial:
|
||||||||||||||||
Secured by real estate
|
4,769,000 | 19,000 | 4,837,000 | 25,000 | ||||||||||||
Other
|
1,699,000 | 3,000 | 1,567,000 | 3,000 | ||||||||||||
Commercial real estate
|
5,756,000 | 16,000 | 6,301,000 | 26,000 | ||||||||||||
Construction:
|
||||||||||||||||
Commercial
|
695,000 | — | 606,000 | — | ||||||||||||
Residential
|
— | — | — | — | ||||||||||||
Residential real estate
|
737,000 | — | 671,000 | — | ||||||||||||
Consumer:
|
||||||||||||||||
Secured by real estate
|
78,000 | — | 39,000 | — | ||||||||||||
Other
|
— | — | — | — | ||||||||||||
Other
|
— | — | — | — | ||||||||||||
Total nonperfoming loans
|
$ | 29,564,000 | $ | 88,000 | $ | 26,471,000 | $ | 120,000 |
At and for the year ended December 31, 2010
|
||||||||||||||||||||
Unpaid |
Allowance for
|
Average
|
Interest
|
|||||||||||||||||
Principal
|
Recorded
|
Loan Losses
|
Recorded
|
Income
|
||||||||||||||||
Balance
|
Investment
|
Allocated
|
Investment
|
Recognized
|
||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial:
|
||||||||||||||||||||
Secured by real estate
|
$ | 1,037,000 | $ | 911,000 | ||||||||||||||||
Other
|
646,000 | 618,000 | ||||||||||||||||||
Commercial real estate
|
4,808,000 | 4,199,000 | ||||||||||||||||||
Construction:
|
||||||||||||||||||||
Commercial
|
1,540,000 | 1,504,000 | ||||||||||||||||||
Residential
|
284,000 | 283,000 | ||||||||||||||||||
Residential real estate
|
716,000 | 716,000 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||
Secured by real estate
|
1,037,000 | 829,000 | ||||||||||||||||||
Other
|
— | — | ||||||||||||||||||
Other
|
— | — | ||||||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial:
|
||||||||||||||||||||
Secured by real estate
|
6,056,000 | 5,013,000 | $ | 730,000 | ||||||||||||||||
Other
|
1,311,000 | 1,310,000 | 606,000 | |||||||||||||||||
Commercial real estate
|
6,777,000 | 6,341,000 | 276,000 | |||||||||||||||||
Construction:
|
||||||||||||||||||||
Commercial
|
959,000 | 516,000 | 29,000 | |||||||||||||||||
Residential
|
— | — | — | |||||||||||||||||
Residential real estate
|
415,000 | 390,000 | 3,000 | |||||||||||||||||
Consumer:
|
||||||||||||||||||||
Secured by real estate
|
— | — | — | |||||||||||||||||
Other
|
— | — | — | |||||||||||||||||
Other
|
— | — | — | |||||||||||||||||
Total nonperfoming loans
|
$ | 25,586,000 | $ | 22,630,000 | $ | 1,644,000 | $ | 23,766,000 | $ | 216,000 |
September 30, 2011
|
||||||||||||||||||||||||
|
Greater than
|
Loans
|
||||||||||||||||||||||
30-59 Days
|
60-89 Days
|
90 Days
|
Total
|
Not
|
||||||||||||||||||||
Past Due
|
Past Due
|
Past Due
|
Past Due
|
Past Due
|
Total
|
|||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Secured by real estate
|
$ | — | $ | 1,494,000 | $ | 6,078,000 | $ | 7,572,000 | $ | 59,573,000 | $ | 67,145,000 | ||||||||||||
Other
|
207,000 | 321,000 | 1,752,000 | 2,280,000 | 35,160,000 | 37,440,000 | ||||||||||||||||||
Commercial real estate:
|
— | — | 11,639,000 | (1) | 11,639,000 | 235,283,000 | 246,922,000 | |||||||||||||||||
Construction:
|
||||||||||||||||||||||||
Commercial
|
— | 1,101,000 | 1,741,000 | 2,842,000 | 17,336,000 | 20,178,000 | ||||||||||||||||||
Residential
|
— | — | 255,000 | 255,000 | — | 255,000 | ||||||||||||||||||
Residential real estate
|
— | — | 851,000 | 851,000 | 46,278,000 | 47,129,000 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Secured by real estate
|
242,000 | 298,000 | 835,000 | 1,375,000 | 38,882,000 | 40,257,000 | ||||||||||||||||||
Other
|
— | — | — | — | 1,115,000 | 1,115,000 | ||||||||||||||||||
Other
|
— | — | — | — | 77,000 | 77,000 | ||||||||||||||||||
Total
|
$ | 449,000 | $ | 3,214,000 | $ | 23,151,000 | $ | 26,814,000 | $ | 433,704,000 | $ | 460,518,000 |
December 31, 2010
|
||||||||||||||||||||||||
Greater than
|
Loans
|
|||||||||||||||||||||||
30-59 Days
|
60-89 Days
|
90 Days
|
Total
|
Not
|
||||||||||||||||||||
Past Due
|
Past Due
|
Past Due
|
Past Due
|
Past Due
|
Total
|
|||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Secured by real estate
|
$ | 490,000 | $ | 4,014,000 | $ | 2,296,000 | $ | 6,800,000 | $ | 58,400,000 | $ | 65,200,000 | ||||||||||||
Other
|
— | — | 1,798,000 | 1,798,000 | 42,529,000 | 44,327,000 | ||||||||||||||||||
Commercial real estate:
|
1,789,000 | 2,324,000 | 6,650,000 | 10,763,000 | 209,112,000 | 219,875,000 | ||||||||||||||||||
Construction:
|
||||||||||||||||||||||||
Commercial
|
— | 2,731,000 | 916,000 | 3,647,000 | 25,005,000 | 28,652,000 | ||||||||||||||||||
Residential
|
— | — | 283,000 | 283,000 | 592,000 | 875,000 | ||||||||||||||||||
Residential real estate
|
— | 458,000 | 1,106,000 | 1,564,000 | 40,581,000 | 42,145,000 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Secured by real estate
|
114,000 | 449,000 | 829,000 | 1,392,000 | 47,968,000 | 49,360,000 | ||||||||||||||||||
Other
|
3,000 | — | — | 3,000 | 1,277,000 | 1,280,000 | ||||||||||||||||||
Other
|
— | — | — | — | 152,000 | 152,000 | ||||||||||||||||||
Total
|
$ | 2,396,000 | $ | 9,976,000 | $ | 13,878,000 | $ | 26,250,000 | $ | 425,616,000 | $ | 451,866,000 |
For the three months ended
September 30, 2011 |
For the nine months ended
September 30, 2011 |
|||||||||||||||||||||||
Pre-
|
Post-
|
Pre-
|
Post-
|
|||||||||||||||||||||
Number
|
Modification
|
Modification
|
Number
|
Modification
|
Modification
|
|||||||||||||||||||
of
|
Recorded
|
Recorded
|
of
|
Recorded
|
Recorded
|
|||||||||||||||||||
Loans
|
Investment
|
Investment
|
Loans
|
Investment
|
Investment
|
|||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Secured by real estate
|
5 | $ | 1,155,000 | $ | 1,155,000 | 11 | $ | 2,602,000 | $ | 2,602,000 | ||||||||||||||
Other
|
6 | 396,000 | 396,000 | 10 | 793,000 | 793,000 | ||||||||||||||||||
Commercial real estate
|
2 | 586,000 | 586,000 | 3 | 2,864,000 | 2,864,000 | ||||||||||||||||||
Construction:
|
||||||||||||||||||||||||
Commercial
|
2 | 561,000 | 561,000 | 4 | 1,475,000 | 1,475,000 | ||||||||||||||||||
Total trouble debt restructure
|
15 | $ | 2,698,000 | $ | 2,698,000 | 28 | $ | 7,734,000 | $ | 7,734,000 |
|
Special Mention – A Special Mention asset has potential weaknesses that deserve management’s close attention, which, if left uncorrected, may result in deterioration of the repayment prospects for the asset or the Bank’s credit position at some future date. Special Mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. While potentially weak, the borrower is currently marginally acceptable and loss of principal or interest is not presently envisioned.
|
|
Substandard – Substandard loans are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the repayment and liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
|
|
Doubtful – A doubtful loan has all weaknesses inherent to those classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable or improbable. The likelihood of loss is extremely high, but because of certain important and reasonably specific factors, an estimated loss is deferred until a more exact status can be determined.
|
|
Loss – A loan classified Loss is considered uncollectible and of such little value that its continuance as an asset is not warranted. This classification does not necessarily mean that an asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off a basically worthless asset even though partial recovery may be effected in the future.
|
September 30, 2011
|
||||||||||||||||||||||||
Special
|
||||||||||||||||||||||||
Pass
|
Mention
|
Substandard
|
Doubtful
|
Loss
|
Total
|
|||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Secured by real estate
|
$ | 57,702,000 | $ | 3,325,000 | $ | 5,801,000 | $ | — | $ | 317,000 | $ | 67,145,000 | ||||||||||||
Other
|
34,805,000 | 808,000 | 100,000 | 1,727,000 | — | 37,440,000 | ||||||||||||||||||
Commercial real estate:
|
230,262,000 | 6,973,000 | 7,277,000 | 2,410,000 | — | 246,922,000 | ||||||||||||||||||
Construction:
|
||||||||||||||||||||||||
Commercial
|
16,961,000 | 2,571,000 | 646,000 | — | — | 20,178,000 | ||||||||||||||||||
Residential
|
— | 255,000 | — | — | — | 255,000 | ||||||||||||||||||
Total
|
$ | 339,730,000 | $ | 13,932,000 | $ | 13,824,000 | $ | 4,137,000 | $ | 317,000 | $ | 371,940,000 |
December 31, 2010
|
||||||||||||||||||||||||
Special
|
||||||||||||||||||||||||
Pass
|
Mention
|
Substandard
|
Doubtful
|
Loss
|
Total
|
|||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Secured by real estate
|
$ | 59,206,000 | $ | 4,173,000 | $ | 1,801,000 | $ | — | $ | 20,000 | $ | 65,200,000 | ||||||||||||
Other
|
42,399,000 | 618,000 | — | 1,267,000 | 43,000 | 44,327,000 | ||||||||||||||||||
Commercial real estate:
|
209,512,000 | 4,668,000 | 5,695,000 | — | — | 219,875,000 | ||||||||||||||||||
Construction:
|
||||||||||||||||||||||||
Commercial
|
26,631,000 | 1,614,000 | 407,000 | — | — | 28,652,000 | ||||||||||||||||||
Residential
|
592,000 | 283,000 | — | — | — | 875,000 | ||||||||||||||||||
Total
|
$ | 338,340,000 | $ | 11,356,000 | $ | 7,903,000 | $ | 1,267,000 | $ | 63,000 | $ | 358,929,000 |
September 30, 2011
|
||||||||||||
Past Due and
|
||||||||||||
Current
|
Nonaccrual
|
Total
|
||||||||||
Residential real estate
|
$ | 46,278,000 | $ | 851,000 | $ | 47,129,000 | ||||||
Consumer:
|
||||||||||||
Secured by real estate
|
38,882,000 | 1,375,000 | 40,257,000 | |||||||||
Other
|
1,115,000 | — | 1,115,000 | |||||||||
Total
|
$ | 86,275,000 | $ | 2,226,000 | $ | 88,501,000 |
December 31, 2010
|
||||||||||||
Past Due and
|
||||||||||||
Current
|
Nonaccrual
|
Total
|
||||||||||
Residential real estate
|
$ | 40,581,000 | $ | 1,564,000 | $ | 42,145,000 | ||||||
Consumer:
|
||||||||||||
Secured by real estate
|
47,968,000 | 1,392,000 | 49,360,000 | |||||||||
Other
|
1,277,000 | 3,000 | 1,280,000 | |||||||||
Total
|
$ | 89,826,000 | $ | 2,959,000 | $ | 92,785,000 |
Notional amount
|
$7,000,000
|
|
Pay rate
|
7.00%
|
|
Receive rate
|
3 month LIBOR plus 2.95%
|
|
Maturity
|
March 17, 2016
|
|
Fair value
|
($931,000)
|
For the nine months ended September 30, 2011
|
||||||||||||
Amount of gain
|
||||||||||||
Amount of gain
|
Amount of gain
|
(loss) recognized
|
||||||||||
(loss) recognized
|
(loss) reclassified
|
in other
|
||||||||||
in OCI
|
from OCI
|
noninterest income
|
||||||||||
(Effective Portion) |
to interest income
|
(Ineffective Portion)
|
||||||||||
Interest rate contract
|
$ | (161,000 | ) | $ | — | $ | — |
For the nine months ended September 30, 2010
|
||||||||||||
Amount of gain
|
||||||||||||
Amount of gain
|
Amount of gain
|
(loss) recognized
|
||||||||||
(loss) recognized
|
(loss) reclassified
|
in other
|
||||||||||
in OCI
|
from OCI
|
noninterest income
|
||||||||||
(Effective Portion)
|
to interest income
|
(Ineffective Portion)
|
||||||||||
Interest rate contract
|
$ | (400,000 | ) | $ | — | $ | — |
Fair Value Measurements Using:
|
||||||||||||||||
Quoted Prices in
|
Significant
|
|||||||||||||||
Active Markets
|
Other
|
Significant
|
||||||||||||||
for Identical
|
Observable
|
Unobservable
|
||||||||||||||
Carrying
|
Assets
|
Inputs
|
Inputs
|
|||||||||||||
Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
At September 30, 2011
|
||||||||||||||||
Assets:
|
||||||||||||||||
Available for sale securities
|
||||||||||||||||
U.S. Treasuries
|
$ | 13,395,000 | $ | — | 13,395,000 | $ | — | |||||||||
U.S. government - sponsered agencies
|
21,450,000 | — | 21,450,000 | — | ||||||||||||
Obligations of state and political subdivisions
|
8,543,000 | — | 8,543,000 | — | ||||||||||||
Mortgage-backed securities - residential
|
116,386,000 | — | 116,386,000 | — | ||||||||||||
Other equity investments
|
3,318,000 | — | 3,318,000 | — | ||||||||||||
Total available for sale securities
|
$ | 163,092,000 | $ | — | $ | 163,092,000 | $ | — | ||||||||
Liabilities:
|
||||||||||||||||
Interest rate swap
|
$ | 931,000 | $ | — | $ | 931,000 | $ | — |
At December 31, 2010
|
||||||||||||||||
Assets:
|
||||||||||||||||
Available for sale securities
|
||||||||||||||||
U.S. Treasuries
|
$ | 9,249,000 | $ | — | $ | 9,249,000 | $ | — | ||||||||
U.S. government - sponsered agencies
|
13,586,000 | — | 13,586,000 | — | ||||||||||||
Obligations of state and political subdivisions
|
4,279,000 | — | 4,279,000 | — | ||||||||||||
Mortgage-backed securities - residential
|
108,327,000 | — | 108,327,000 | — | ||||||||||||
Other equity investments
|
3,187,000 | — | 3,187,000 | — | ||||||||||||
Total available for sale securities
|
$ | 138,628,000 | $ | — | $ | 138,628,000 | $ | — | ||||||||
Liabilities:
|
||||||||||||||||
Interest rate swap
|
$ | 664,000 | $ | — | $ | 664,000 | $ | — |
Fair Value Measurements Using:
|
||||||||||||||||
Quoted Prices
|
Significant
|
|||||||||||||||
in Active
|
Other
|
Significant
|
||||||||||||||
Markets for
|
Observable
|
Unobservable
|
||||||||||||||
Carrying
|
Identical Assets
|
Inputs
|
Inputs
|
|||||||||||||
Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
At September 30, 2011
|
||||||||||||||||
Assets:
|
||||||||||||||||
Impaired loans
|
||||||||||||||||
Commercial:
|
||||||||||||||||
Secured by real estate
|
$ | 418,000 | $ | — | $ | — | $ | 418,000 | ||||||||
Other
|
— | — | — | — | ||||||||||||
Commercial real estate
|
3,043,000 | — | — | 3,043,000 | ||||||||||||
Construction:
|
||||||||||||||||
Commercial
|
907,000 | — | — | 907,000 | ||||||||||||
Residential real estate
|
365,000 | — | — | 365,000 | ||||||||||||
Construction:
|
||||||||||||||||
Secured by real estate
|
91,000 | — | — | 91,000 | ||||||||||||
$ | 4,824,000 | $ | — | $ | — | $ | 4,824,000 |
At December 31, 2010
|
||||||||||||||||
Assets:
|
||||||||||||||||
Impaired loans
|
||||||||||||||||
Commercial:
|
||||||||||||||||
Secured by real estate
|
$ | 1,725,000 | $ | — | $ | — | $ | 5,326,000 | ||||||||
Other
|
— | — | — | 704,000 | ||||||||||||
Commercial real estate
|
2,426,000 | — | — | 6,065,000 | ||||||||||||
Construction:
|
||||||||||||||||
Commercial
|
487,000 | — | — | 487,000 | ||||||||||||
Residential real estate
|
387,000 | — | — | 387,000 | ||||||||||||
$ | 5,025,000 | $ | — | $ | — | $ | 12,969,000 |
September 30, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
Amount
|
Fair Value
|
Amount
|
Fair Value
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Financial assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 23,736,000 | $ | 23,736,000 | $ | 19,983,000 | $ | 19,983,000 | ||||||||
Securities available for sale
|
163,092,000 | 163,092,000 | 138,628,000 | 138,628,000 | ||||||||||||
Securities held to maturity
|
39,937,000 | 42,555,000 | 45,394,000 | 47,316,000 | ||||||||||||
FHLB-NY stock
|
2,491,000 | N/A | 2,497,000 | N/A | ||||||||||||
Net loans
|
448,055,000 | 449,526,000 | 443,245,000 | 445,671,000 | ||||||||||||
Accrued interest receivable
|
2,660,000 | 2,660,000 | 2,806,000 | 2,806,000 | ||||||||||||
Financial liabilities:
|
||||||||||||||||
Deposits
|
587,864,000 | 590,710,000 | 575,603,000 | 577,485,000 | ||||||||||||
FHLB-NY Advances
|
33,000,000 | 33,942,233 | 36,000,000 | 33,892,000 | ||||||||||||
Securities sold under agreements to repurchase
|
15,191,000 | 15,191,000 | 14,642,000 | 14,642,000 | ||||||||||||
Subordinated debenture
|
7,217,000 | 6,382,000 | 7,217,000 | 6,803,000 | ||||||||||||
Accrued interest payable
|
745,000 | 745,000 | 977,000 | 977,000 | ||||||||||||
Interest rate swap
|
931,000 | 931,000 | 664,000 | 664,000 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(in thousands, except per share data)
|
||||||||||||||||
Net income
|
$ | 578 | $ | 340 | $ | 1,646 | $ | 146 | ||||||||
Dividends on preferred stock and accretion
|
244 | 137 | 520 | 412 | ||||||||||||
Net income (loss) available to common stockholders
|
$ | 334 | $ | 203 | $ | 1,126 | $ | (266 | ) | |||||||
Weighted average shares
|
5,867 | 5,842 | 5,856 | 5,843 | ||||||||||||
Effect of dilutive stock options
|
N/A | N/A | N/A | N/A | ||||||||||||
Total weighted average dilutive shares
|
5,867 | 5,842 | 5,856 | 5,843 | ||||||||||||
Basic earnings (loss) per common share
|
$ | 0.06 | $ | 0.03 | $ | 0.19 | $ | (0.05 | ) | |||||||
Diluted earnings (loss) per common share
|
$ | 0.06 | $ | 0.03 | $ | 0.19 | $ | (0.05 | ) |
2011
|
2010
|
|||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||
Interest
|
Rates
|
Interest
|
Rates
|
|||||||||||||||||||||
Average
|
Income/
|
Earned/
|
Average
|
Income/
|
Earned/
|
|||||||||||||||||||
Balance
|
Expense
|
Paid
|
Balance
|
Expense
|
Paid
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1) (2)
|
$ | 464,838 | $ | 6,735 | 5.75 | % | $ | 458,443 | $ | 6,809 | 5.96 | % | ||||||||||||
Taxable investment securities (1)
|
161,874 | 1,007 | 2.47 | 145,343 | 1,025 | 2.83 | ||||||||||||||||||
Tax-exempt investment securities (1) (2)
|
32,275 | 408 | 5.02 | 30,524 | 389 | 5.11 | ||||||||||||||||||
Other interest-earning assets
|
883 | 12 | 5.84 | 3,526 | 9 | 1.02 | ||||||||||||||||||
Total interest-earning assets
|
659,870 | 8,162 | 4.91 | 637,836 | 8,232 | 5.18 | ||||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Allowance for loan losses
|
(11,630 | ) | (9,032 | ) | ||||||||||||||||||||
Other assets
|
58,265 | 48,935 | ||||||||||||||||||||||
Total assets
|
$ | 706,505 | $ | 677,739 | ||||||||||||||||||||
Liabilities and Stockholders’ Equity
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing demand deposits
|
$ | 249,030 | $ | 426 | 0.68 | % | $ | 243,019 | $ | 703 | 1.16 | % | ||||||||||||
Savings deposits
|
53,283 | 35 | 0.26 | 46,054 | 37 | 0.32 | ||||||||||||||||||
Time deposits
|
171,842 | 744 | 1.72 | 172,760 | 849 | 1.97 | ||||||||||||||||||
Repurchase agreements
|
15,257 | 186 | 4.81 | 15,250 | 186 | 4.89 | ||||||||||||||||||
FHLB-NY borrowing
|
33,000 | 214 | 2.57 | 36,000 | 242 | 2.70 | ||||||||||||||||||
Subordinated debenture
|
7,217 | 127 | 6.98 | 7,217 | 127 | 7.06 | ||||||||||||||||||
Total interest-bearing liabilities
|
529,629 | 1,732 | 1.30 | 520,300 | 2,144 | 1.65 | ||||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Demand deposits
|
115,313 | 100,841 | ||||||||||||||||||||||
Other liabilities
|
5,252 | 3,269 | ||||||||||||||||||||||
Stockholders’ equity
|
56,311 | 53,329 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$ | 706,505 | $ | 677,739 | ||||||||||||||||||||
Net interest income (taxable equivalent basis)
|
6,430 | 6,088 | ||||||||||||||||||||||
Tax Equivalent adjustment
|
(144 | ) | (138 | ) | ||||||||||||||||||||
Net interest income
|
$ | 6,286 | $ | 5,950 | ||||||||||||||||||||
Net interest spread (taxable equivalent basis)
|
3.61 | % | 3.53 | % | ||||||||||||||||||||
Net yield on interest-earning assets (taxable equivalent basis) (3)
|
3.87 | % | 3.83 | % |
(1)
|
For purpose of these calculations, nonaccruing loans are included in the average balance. Loans and total interest-earning assets are net of unearned income. Securities are included at amortized cost.
|
|
(2)
|
The tax equivalent adjustments are based on a marginal tax rate of 34%.
|
|
(3)
|
Net interest income (taxable equivalent basis) divided by average interest-earning assets.
|
2011
|
2010
|
|||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||
Interest
|
Rates
|
Interest
|
Rates
|
|||||||||||||||||||||
Average
|
Income/
|
Earned/
|
Average
|
Income/
|
Earned/
|
|||||||||||||||||||
Balance
|
Expense
|
Paid
|
Balance
|
Expense
|
Paid
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1) (2)
|
$ | 461,718 | $ | 19,863 | 5.75 | % | $ | 460,761 | $ | 20,398 | 5.92 | % | ||||||||||||
Taxable investment securities (1)
|
159,074 | 3,152 | 2.65 | 139,247 | 3,598 | 3.45 | ||||||||||||||||||
Tax-exempt investment securities (1) (2)
|
31,732 | 1,209 | 5.09 | 31,396 | 1,201 | 5.11 | ||||||||||||||||||
Other interest-earning assets
|
782 | 29 | 4.96 | 1,639 | 15 | 1.22 | ||||||||||||||||||
Total interest-earning assets
|
653,306 | 24,253 | 4.96 | 633,043 | 25,212 | 5.32 | ||||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Allowance for loan losses
|
(10,237 | ) | (7,969 | ) | ||||||||||||||||||||
Other assets
|
53,696 | 42,911 | ||||||||||||||||||||||
Total assets
|
$ | 696,765 | $ | 667,985 | ||||||||||||||||||||
Liabilities and Stockholders’ Equity
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing demand deposits
|
$ | 248,906 | $ | 1,385 | 0.74 | % | $ | 234,097 | $ | 2,298 | 1.31 | % | ||||||||||||
Savings deposits
|
51,323 | 100 | 0.26 | 47,248 | 138 | 0.39 | ||||||||||||||||||
Time deposits
|
173,549 | 2,289 | 1.76 | 169,735 | 2,703 | 2.13 | ||||||||||||||||||
Repurchase agreements
|
15,445 | 551 | 4.76 | 15,348 | 551 | 4.80 | ||||||||||||||||||
FHLB-NY borrowing
|
33,748 | 668 | 2.65 | 39,324 | 728 | 2.48 | ||||||||||||||||||
Subordinated debenture
|
7,217 | 377 | 6.98 | 7,217 | 321 | 5.95 | ||||||||||||||||||
Total interest-bearing liabilities
|
530,188 | 5,370 | 1.35 | 512,969 | 6,739 | 1.76 | ||||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Demand deposits
|
108,850 | 96,960 | ||||||||||||||||||||||
Other liabilities
|
3,634 | 4,042 | ||||||||||||||||||||||
Stockholders’ equity
|
54,093 | 54,014 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$ | 696,765 | $ | 667,985 | ||||||||||||||||||||
Net interest income (taxable equivalent basis)
|
18,883 | 18,473 | ||||||||||||||||||||||
Tax Equivalent adjustment
|
(427 | ) | (421 | ) | ||||||||||||||||||||
Net interest income
|
$ | 18,456 | $ | 18,052 | ||||||||||||||||||||
Net interest spread (taxable equivalent basis)
|
3.61 | % | 3.56 | % | ||||||||||||||||||||
Net yield on interest-earning assets (taxable equivalent basis) (3)
|
3.86 | % | 3.90 | % |
(1)
|
For purpose of these calculations, nonaccruing loans are included in the average balance. Loans and total interest-earning assets are net of unearned income. Securities are included at amortized cost.
|
|
(2)
|
The tax equivalent adjustments are based on a marginal tax rate of 34%.
|
|
(3)
|
Net interest income (taxable equivalent basis) divided by average interest-earning assets.
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
|||||||||||||
2011
|
2011
|
2011
|
2010
|
|||||||||||||
Nonaccrual loans (1)
|
$ | 24,422 | $ | 23,834 | $ | 24,010 | $ | 22,500 | ||||||||
Loans past due 90 days or more and accruing (2)
|
2,589 | 2,342 | — | — | ||||||||||||
Total nonperforming loans
|
27,011 | 26,176 | 24,010 | 22,500 | ||||||||||||
Other real estate owned
|
434 | 275 | 313 | 615 | ||||||||||||
Total nonperforming assets
|
$ | 27,445 | $ | 26,451 | $ | 24,323 | $ | 23,115 | ||||||||
Performing restructured loans (3)
|
$ | 7,339 | $ | 3,527 | $ | 120 | $ | 130 | ||||||||
Allowance for loan losses
|
$ | 12,389 | $ | 11,230 | $ | 9,874 | $ | 8,490 | ||||||||
Nonperforming loans to total gross loans
|
5.87 | % | 5.59 | % | 5.23 | % | 4.98 | % | ||||||||
Nonperforming assets to total assets
|
3.89 | % | 3.78 | % | 3.47 | % | 3.36 | % | ||||||||
Allowance for loan losses to total gross loans
|
2.69 | % | 2.40 | % | 2.15 | % | 1.88 | % | ||||||||
Allowance for loan losses to nonperforming loans
|
45.87 | % | 42.90 | % | 41.12 | % | 37.73 | % |
To Be Well
|
||||||||||||
Capitalized
|
||||||||||||
Required for
|
Under Prompt
|
|||||||||||
Capital
|
Corrective
|
|||||||||||
Adequacy
|
Action
|
|||||||||||
Actual
|
Purposes
|
Regulations
|
||||||||||
Leverage ratio
|
||||||||||||
Corporation
|
9.17 | % | 4.00 | % | N/A | |||||||
Bank
|
8.81 | % | 4.00 | % | 5.00 | % | ||||||
Risk-based capital
|
||||||||||||
Tier I
|
||||||||||||
Corporation
|
13.10 | % | 4.00 | % | N/A | |||||||
Bank
|
12.57 | % | 4.00 | % | 6.00 | % | ||||||
Total
|
||||||||||||
Corporation
|
14.36 | % | 8.00 | % | N/A | |||||||
Bank
|
13.83 | % | 8.00 | % | 10.00 | % |
Stewardship Financial Corporation | ||||
Date:
|
November 14, 2011
|
By:
|
/s/ Paul Van Ostenbridge
|
|
Paul Van Ostenbridge
|
||||
President and Chief Executive Officer
|
||||
(Principal Executive Officer)
|
||||
Date:
|
November 14, 2011
|
By:
|
/s/ Claire M. Chadwick
|
|
Claire M. Chadwick
|
||||
Senior Vice President and Chief Financial Officer
|
||||
(Principal Financial and Accounting Officer)
|
Exhibit
Number
|
Description of Exhibits
|
|
3.1
|
Certificate of Amendment to the Restated Certificate of Incorporation of the Company establishing the terms of the Series B Preferred Stock1
|
|
4.1
|
Form of Certificate representing Series B Preferred Shares2
|
|
10.1
|
Securities Purchase Agreement, dated September 1, 2011, between the Company and the Secretary of the Treasury3
|
|
10.2
|
Repurchase Letter, dated September 1, 2011, between the Company and the United States Department of the Treasury4
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101
|
The following material from Stewardship Financial Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Income, (iii) Consolidated Statement of Changes in Stockholders’ Equity, (iv) Consolidated Statements of Comprehensive Income, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text5
|
I, Paul Van Ostenbridge, certify that: | ||
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Stewardship Financial Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 14, 2011
|
|
/s/ Paul Van Ostenbridge
|
|
Paul Van Ostenbridge
|
|
President and Chief Executive Officer
|
I, Claire M. Chadwick, certify that: | ||
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Stewardship Financial Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 14, 2011
|
|
/s/ Claire M. Chadwick
|
|
Claire M. Chadwick
|
|
Senior Vice President and Chief Financial Officer
|
(1)
|
the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: November 14, 2011
|
/s/ Paul Van Ostenbridge
|
|
Paul Van Ostenbridge
|
||
President and Chief Executive Officer
|
||
Dated: November 14, 2011
|
/s/ Claire M. Chadwick
|
|
Claire M. Chadwick
|
||
Senior Vice President and
|
||
Chief Financial Officer
|
Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Assets | ||
Estimated fair value of securities | $ 42,555,000 | $ 47,316,000 |
Allowance for loan losses | 12,389,000 | 8,490,000 |
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 2,500,000 | 2,500,000 |
Preferred stock, shares issued (in shares) | 15,000 | 10,000 |
Preferred stock, shares outstanding (in shares) | 15,000 | 10,000 |
Preferred stock, liquidation preference | $ 15,000,000 | $ 10,000,000 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, shares issued (in shares) | 5,872,176 | 5,847,844 |
Common stock, shares outstanding (in shares) | 5,872,176 | 5,846,927 |
Treasury stock (in shares) | 0 | 917 |
Consolidated Statements of Income (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Interest income: | ||||
Loans | $ 6,723,000 | $ 6,797,000 | $ 19,829,000 | $ 20,364,000 |
Securities held to maturity | ||||
Taxable | 168,000 | 239,000 | 528,000 | 1,037,000 |
Non-taxable | 218,000 | 229,000 | 662,000 | 693,000 |
Securities available for sale | ||||
Taxable | 811,000 | 758,000 | 2,528,000 | 2,463,000 |
Non-taxable | 58,000 | 34,000 | 154,000 | 121,000 |
FHLB dividends | 28,000 | 29,000 | 96,000 | 98,000 |
Other interest-earning assets | 12,000 | 9,000 | 29,000 | 15,000 |
Total interest income | 8,018,000 | 8,095,000 | 23,826,000 | 24,791,000 |
Interest expense: | ||||
Deposits | 1,205,000 | 1,590,000 | 3,774,000 | 5,139,000 |
Borrowed money | 527,000 | 555,000 | 1,596,000 | 1,600,000 |
Total interest expense | 1,732,000 | 2,145,000 | 5,370,000 | 6,739,000 |
Net interest income before provision for loan losses | 6,286,000 | 5,950,000 | 18,456,000 | 18,052,000 |
Provision for loan losses | 2,330,000 | 1,500,000 | 5,920,000 | 7,755,000 |
Net interest income after provision for loan losses | 3,956,000 | 4,450,000 | 12,536,000 | 10,297,000 |
Noninterest income: | ||||
Fees and service charges | 501,000 | 514,000 | 1,550,000 | 1,486,000 |
Bank owned life insurance | 83,000 | 82,000 | 244,000 | 249,000 |
Gain on sales of mortgage loans | 245,000 | 94,000 | 835,000 | 215,000 |
Gain on calls and sales of securities | 454,000 | 475,000 | 802,000 | |
Other | 67,000 | 69,000 | 273,000 | 265,000 |
Total noninterest income | 1,350,000 | 759,000 | 3,377,000 | 3,017,000 |
Noninterest expenses: | ||||
Salaries and employee benefits | 2,380,000 | 2,077,000 | 6,877,000 | 6,151,000 |
Occupancy, net | 516,000 | 501,000 | 1,536,000 | 1,471,000 |
Equipment | 235,000 | 285,000 | 731,000 | 871,000 |
Data processing | 335,000 | 334,000 | 1,010,000 | 986,000 |
FDIC insurance premium | 152,000 | 251,000 | 553,000 | 712,000 |
Charitable contributions | 140,000 | 150,000 | 315,000 | 300,000 |
Other | 857,000 | 1,010,000 | 2,813,000 | 2,712,000 |
Total noninterest expenses | 4,615,000 | 4,608,000 | 13,835,000 | 13,203,000 |
Income before income tax expense (benefit) | 691,000 | 601,000 | 2,078,000 | 111,000 |
Income tax expense (benefit) | 113,000 | 261,000 | 432,000 | (35,000) |
Net income | 578,000 | 340,000 | 1,646,000 | 146,000 |
Dividends on preferred stock and accretion | 244,000 | 137,000 | 520,000 | 412,000 |
Net income (loss) available to common stockholders | $ 334,000 | $ 203,000 | $ 1,126,000 | $ (266,000) |
Basic earnings (loss) per common share | $ 0.06 | $ 0.03 | $ 0.19 | $ (0.05) |
Diluted earnings (loss) per common share | $ 0.06 | $ 0.03 | $ 0.19 | $ (0.05) |
Weighted average number of common shares outstanding | 5,866,575 | 5,842,366 | 5,855,663 | 5,842,565 |
Weighted average number of diluted common shares outstanding | 5,866,575 | 5,842,366 | 5,855,663 | 5,842,565 |
Document And Entity Information (USD $) | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Nov. 09, 2011 | Jun. 30, 2010 | |
Entity Registrant Name | STEWARDSHIP FINANCIAL CORP | ||
Entity Central Index Key | 0001023860 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 42,508,000 | ||
Entity Common Stock, Shares Outstanding | 5,881,398 | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2011 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Federal Home Loan Bank of New York Advances | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Federal Home Loan Bank of New York Advances [Abstract] | |
Federal Home Loan Bank of New York Advances | Note 4. Federal Home Loan Bank of New York Advances On August 19, 2011 the Corporation refinanced borrowings with the FHLB in the amount of $15 million. The FHLB advances repaid had a blended rate of 3.30% and an average life of 1.8 years. The new borrowings have a blended stated rate of 1.67% and an average life of 4.0 year. In connection with the repayment, the Corporation incurred a prepayment penalty of $814,000. The prepayment penalty is being amortized into earnings over the life of the new borrowings resulting in an effective interest rate for the borrowings of 2.75%. |
Fair Value of Financial Instruments | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Note 6. Fair Value of Financial Instruments Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability. The fair values of investment securities are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). The interest rate swaps are reported at fair values obtained from brokers who utilize internal models with observable market data inputs to estimate the values of these instruments (Level 2 inputs). The Corporation measures impairment of collateralized loans based on the estimated fair value of the collateral less estimated costs to sell, incorporating assumptions that experienced parties might use in estimating the value of such collateral (Level 3 inputs). Assets and Liabilities Measured on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis are summarized below:
Assets and Liabilities Measured on a Non-Recurring Basis Assets and liabilities measured at fair value on a non-recurring basis are summarized below:
Collateral dependent impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a recorded investment of $6,091,000 at September 30, 2011, with a valuation allowance of $1,267,000, resulting in an additional provision for loan losses of $1,677,000 for the nine months ended September 30, 2011. Collateral dependent impaired loans had a recorded investment of $5,152,000 with a valuation allowance of $127,000, resulting in an additional provision for loan losses of $413,000 for the year ended December 31, 2010. Fair value estimates, methods and assumptions are set forth below for the Corporation's financial instruments.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents – The carrying amount approximates fair value. Securities available for sale and held to maturity – The methods for determining fair values were described previously. FHLB-NY stock – It is not practicable to determine the fair value of stock of the Federal Home Loan Bank of New York (“FHLB-NY”) due to restrictions placed on the transferability of the stock. Net loans – Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as residential and commercial mortgages, commercial and other installment. The fair value of loans is estimated by discounting cash flows using estimated marked discount rates which reflect the credit and interest rate risk inherent in the loans. Accrued interest receivable – The carrying amount approximates fair value. Deposits – The fair value of deposits, with no stated maturity, such as noninterest-bearing demand deposits, savings, NOW and money market accounts, is equal to the amount payable on demand. The fair value of the certificates of deposit is based on the discounted value of cash flows. The discount rate is estimated using marked discount rates which reflect interest rate risk inherent in the certificates of deposit. FHLB-NY advances – With respect to the FHLB-NY borrowings, the carrying amount of the borrowings which mature in one day approximates fair value. For borrowings with a longer maturity, the fair value is based on the discounted value of cash flows. The discount rate is estimated using market discount rates which reflect the interest rate risk inherent in the term borrowings. Securities sold under agreements to repurchase – The carrying value approximates fair value due to the relatively short time before maturity. Subordinated debenture – The fair value of the subordinated debenture is based on the discounted value of cash flows. The discount rate is estimated using market rates which reflect the interest rate risk inherent in the debenture. Accrued interest payable – The carrying amount approximates fair value. Interest rate swap – The methods for determining fair values were described previously. Commitments to extend credit – The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit worthiness of the counter-parties. At September 30, 2011 and December 31, 2010 the fair value of such commitments were not material. Limitations The preceding fair value estimates were made at September 30, 2011 and December 31, 2010 based on pertinent market data and relevant information on the financial instruments. These estimates do not include any premiums or discounts that could result from an offer to sell at one time the Corporation's entire holdings of a particular financial instrument or category thereof. Since no market exists for a substantial portion of the Corporation's financial instruments, fair value estimates were necessarily based on judgments with respect to future expected loss experience, current economic conditions, risk assessments of various financial instruments, and other factors. Given the subjective nature of these estimates, the uncertainties surrounding them and the matters of significant judgment that must be applied, these fair value estimates cannot be calculated with precision. Modifications in such assumptions could meaningfully alter these estimates. Since these fair value approximations were made solely for on and off balance sheet financial instruments at September 30, 2011 and December 31, 2010, no attempt was made to estimate the value of anticipated future business. Furthermore, certain tax implications related to the realization of unrealized gains and losses could have a substantial impact on these fair value estimates and have not been incorporated into the estimates. |
Earnings Per Share | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 7. Earnings Per Share Basic earnings per share is calculated by dividing net income available to common shareholders by the average daily number of shares of common stock outstanding during the period. Common stock equivalents are not included in the calculation. Diluted earnings per share is computed similar to that of basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potential dilutive shares of common stock were issued. The following reconciles the income available to common shareholders (numerator) and the weighted average common stock outstanding (denominator) for both basic and diluted earnings per share.
For periods in which a loss is reported, the impact of dilutive stock options and common stock warrants is not considered as the result would be antidilutive. For the three and nine months ended September 30, 2011, stock options to purchase 64,728 average shares of common stock were not considered in computing diluted earnings per share of common stock because they were antidilutive. Stock options to purchase average shares of common stock of 71,613 and 71,922 were not considered in computing diluted earnings per share for the three and nine months ended September 30, 2010, respectively, because they were antidilutive. The U.S. Treasury's warrant to purchase 133,475 average shares of common stock in both the three and nine month periods ended September 30, 2011 was not considered in computing diluted earnings per common share because it was antidilutive. |
Interest Rate Swap | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Rate Swap [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Rate Swap | Note 5. Interest Rate Swap The Corporation utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements. Interest Rate Swap Designated as Cash Flow Hedge: During the second quarter of 2009, the Corporation entered into a swap with an effective date of March 17, 2010. An interest rate swap with a notional amount of $7 million was designated as a cash flow hedge of the subordinated debentures and was determined to be fully effective during the three and nine months ended September 30, 2011. As such, no amount of ineffectiveness has been included in net income. Therefore, the aggregate fair value of the swap is recorded in other assets (liabilities) with changes in fair value recorded in other comprehensive income (loss). The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedge no longer be considered effective. The Corporation expects the hedge to remain fully effective during the remaining term of the swap. As of September 30, 2011, the interest rate swap is secured by investment securities with a fair value of $1,023,000. Summary information about the interest rate swap designated as a cash flow hedge as of September 30, 2011 is as follows:
The net expense recorded on the swap transaction totaled $68,000 and $200,000 for the three and nine months ended September 30, 2011, respectively, and is reported as a component of interest expense – borrowed money. The net expense recorded on the swap transaction totaled $63,000 and $140,000 for the three and nine months ended September 30, 2010, respectively. The fair value of the interest rate swap of ($931,000) and ($664,000) at September 30, 2011 and December 31, 2010, respectively, was included in accrued expenses and other liabilities on the Consolidated Statements of Financial Condition. The following table presents the after tax net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income relating to the cash flow derivative instruments for the periods indicated.
|
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) (USD $) | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | |
Comprehensive income: | ||
Tax effect of change in unrealized holding gains | $ 1,498,000 | $ 1,099,000 |
Tax effect of reclassified net income gains | 188,000 | 316,000 |
Tax effect on the change in fair value of interest rate swap | $ 107,000 | $ 266,000 |
Summary of Significant Accounting Policies | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 1. Summary of Significant Accounting Policies Certain information and footnote disclosures normally included in the unaudited consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Stewardship Financial Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the SEC on March 30, 2011 (the “2010 Annual Report”). Principles of consolidation The consolidated financial statements include the accounts of Stewardship Financial Corporation and its wholly owned subsidiary, Atlantic Stewardship Bank (the “Bank”), together referred to as “the Corporation”. The Bank includes its wholly owned subsidiaries, Stewardship Investment Corporation, Stewardship Realty LLC, Atlantic Stewardship Insurance Company, LLC and several other subsidiaries formed to hold title to properties acquired through deed in lieu of foreclosure. The Bank's subsidiaries have an insignificant impact on the Bank's daily operations. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. Certain prior period amounts have been reclassified to conform to the current presentation. The consolidated financial statements of the Corporation have been prepared in conformity with GAAP. In preparing the financial statements, management is required to make estimates and assumptions, based on available information, that affect the amounts reported in the financial statements and disclosures provided. Actual results could differ significantly from those estimates. Material estimates Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for loan losses and fair value of financial instruments. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize probable incurred losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions in the market area. Basis of presentation The interim unaudited consolidated financial statements included herein have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the SEC and, therefore, do not include information or footnotes necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with GAAP. However, all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary for a fair presentation of the interim consolidated financial statements, have been included. The results of operations for the nine months ended September 30, 2011 are not necessarily indicative of the results which may be expected for the entire year. Derivatives Derivative financial instruments are recognized as assets or liabilities at fair value. The Corporation's only derivative consists of an interest rate swap agreement, which is used as part of its asset liability management strategy to help manage interest rate risk related to its subordinated debentures issued in 2003 to Stewardship Statutory Trust I (the “Trust”), a statutory business trust (see Note 8 to the Notes to the Audited Consolidated Financial Statements of the Corporation contained in the 2010 Annual Report). The Corporation does not use derivatives for trading purposes. (See Note 4 to the Notes to the Consolidated Financial Statements). The Corporation designated the hedge as a cash flow hedge, which is a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. The Corporation formally documented the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking the fair value of cash flow hedge to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Corporation formally assessed, both at the hedge's inception and on an ongoing basis, whether the derivative instrument used is highly effective in offsetting changes in fair values or cash flows of the hedged items. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that would be accumulated in other comprehensive income are amortized into earnings over the same periods in which the hedged transactions will affect earnings. Recent Accounting Pronouncements In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-02, “Receivables (Topic 310): A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring”. This ASU provides additional guidance for companies when determining whether a loan modification constitutes a troubled debt restructuring. This ASU also provides additional disclosure requirements. The guidance on identifying and disclosing troubled debt restructurings is effective for interim and annual periods beginning on or after June 15, 2011 and applies retroactively to restructurings occurring on or after the beginning of the year. The guidance on measuring the impairment of a receivable restructured in a troubled debt restructuring is effective on a prospective basis. The adoption of this ASU did not have a significant impact on the Corporation's consolidated financial statements. In June 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This ASU represents the converged guidance of the FASB and the International Accounting Standards Board (“the Boards”) on fair value measurement. The collective efforts of the Boards and their staffs, reflected in ASU 2011-04, have resulted in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term “fair value.” The Boards have concluded the common requirements will result in greater comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and International Financial Reporting Standards. The amendments of this ASU are to be applied prospectively. The guidance is effective for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Corporation does not expect the adoption of this ASU to have a significant impact on the Corporation's consolidated financial statements. In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”. This ASU provides that an entity that reports items of other comprehensive income has the option to present comprehensive income in either one or two consecutive financial statements. The guidance is effective for interim and annual periods beginning after December 15, 2011. Early adoption is allowed. The Corporation does not expect the adoption of this ASU to have a significant impact on the Corporation's consolidated financial statements. |
Securities Available for Sale and Held to Maturity | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities - Available for Sale and Held to Maturity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities - Available for Sale and Held to Maturity | Note 2. Securities – Available for Sale and Held to Maturity The fair value of the available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:
Cash proceeds realized from sales and calls of securities available for sale for the three and nine months ended September 30, 2011 were $15,866,000 and $21,423,000, respectively. There were gross gains totaling $476,000 and gross losses of $1,000 realized on sales or calls during the nine months ended September 30, 2011. There were gross gains totaling $806,000 and gross losses totaling $4,000 on sales and calls during the nine months ended September 30, 2010. The following is a summary of the held to maturity securities and related unrecognized gains and losses:
Cash proceeds realized from calls of held to maturity for the three and nine months ended September 30, 2011 were $1,340,000 and $340,000, respectively. There were no gross gains and no gross losses realized from calls during the nine months ended September 30, 2011 or 2010. The following tables summarize the fair value and unrealized losses of those investment securities which reported an unrealized loss at September 30, 2011 and December 31, 2010, and if the unrealized loss was continuous for the twelve months prior to September 30, 2011 and December 31, 2010.
Other-Than-Temporary-Impairment At September 30, 2011 there were no securities in a continuous loss position for 12 months or longer. The Corporation's unrealized losses are primarily due to the changes in interest rates and other market conditions. These securities have not been considered other than temporarily impaired as scheduled principal and interest payments have been made and management anticipates collecting the entire principal balance as scheduled. Because the decline in fair value is attributable to changes in market conditions, and not credit quality, and because the Corporation does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Corporation does not consider these securities to be other-than-temporarily impaired at September 30, 2011. |
Loans and Allowance for Loan Losses | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Allowance for Loan Losses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Allowance for Loan Losses | Note 3. Loans and Allowance for Loan Losses The following table sets forth the composition of loans:
Activity in the allowance for loan losses is summarized as follows:
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of September 30, 2011 and December 31, 2010.
The following table presents the recorded investment in nonaccrual loans in the periods indicated:
The following presents loans individually evaluated for impairment by class of loans as of the periods indicated:
The following table presents the aging of the recorded investment in past due loans by class of loans as of September 30, 2011 and December 31, 2010. Nonaccrual loans are included in the disclosure by payment status.
(1) The $11,639,000 includes a single loan with a recorded investment of $2,342,000 representing a loan in the Corporation's portfolio that was past due 90 days or more and accruing. A full payoff of this loan occurred subsequent to September 30, 2011.
Troubled Debt Restructurings At September 30, 2011 and December 31, 2010, the Corporation had $11.7 million and $4.1 million, respectively, of loans whose terms have been modified in troubled debt restructurings. Of these loans, $7.3 million and $130,000 were performing in accordance with their new terms at September 30, 2011 and December 31, 2010, respectively. The remaining troubled debt restructures are reported as nonaccrual loans. Specific reserves of $59,000 have been allocated for the troubled debt restructurings at September 30, 2011. No reserves were deemed necessary at December 31, 2010. As of September 30, 2011 and December 31, 2010, the Corporation has not committed any additional funds to customers with outstanding loans that are classified as troubled debt restructurings. During the nine months ended September 30, 2011, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans primarily represent an extension of the maturity date at terms more favorable than the current market terms for new debt with similar risk, including a lower interest rate. Many of the modifications represent the term out of previous lines of credit that were not renewed. Modifications involving an extension of the maturity date were for periods ranging from 3 months to 15 years. The following table presents loans by class modified as troubled debt restructurings that occurred during the periods indicated:
For the three and nine months ended September 30, 2011, the troubled debt restructurings described above increased the allowance for loan losses by $27,000 and $159,000, respectively. There were no charge offs in 2011 related to these troubled debt restructurings. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There are no trouble debt restructurings that have defaulted since modification in 2011. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the company's internal underwriting policy. Credit Quality Indicators The Corporation categorizes certain loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial, commercial real estate and commercial construction loans. This analysis is performed at the time the loan is originated and annually thereafter. The Corporation uses the following definitions for risk ratings.
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of September 30, 2011 and December 31, 2010, and based on the most recent analysis performed at those times, the risk category of loans by class is as follows:
For residential real estate and consumer loan segments, the Corporation also evaluates credit quality based on payment activity. The following table presents the recorded investment in residential real estate and consumer loans based on payment activity as of September 30, 2011 and December 31, 2010. For purposes of the following table, Nonperforming means loans that are 30 days or more past due:
|
Preferred Stock | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Preferred Stock [Abstract] | |
Preferred Stock | Note 8. Preferred Stock On September 1, 2011, in exchange for issuing 15,000 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Shares”), having a liquidation preference of $1,000 per share, the Corporation received $15.0 million as part of the United States Treasury Department's Small Business Lending Fund (“SBLF”) program. The SBLF is a $30 billion fund established under the Small Business Jobs Act of 2010 that encourages lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion. Using proceeds of the issuance of the Series B Preferred Shares, the Corporation simultaneously repurchased all 10,000 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, liquidation amount $1,000 per share (the “Series A Preferred Shares”) previously issued under the United States Treasury Department's Troubled Assets Relief Program Capital Purchase Program (the “Capital Purchase Program”), for a purchase price of $10,022,222, including accrued but unpaid dividends through the date of repurchase. The Series B Preferred Shares pay a non-cumulative quarterly dividend in arrears. The Corporation accrues the preferred dividends as earned over the period the Series B Preferred Shares are outstanding. The dividend rate can fluctuate on a quarterly basis during the first ten quarters during which the Series B Preferred Shares are outstanding, based upon changes in the level of “Qualified Small Business Lending” (QSBL - as defined in the Securities Purchase Agreement). In general, the dividend rate decreases as the level of the Bank's QSBL increases. Based upon the Bank's level of QSBL over a baseline level, the dividend rate for the initial dividend period was 1%. The dividend rate for future dividend periods will be set based upon changes in the level of QSBL as compared to the baseline level. Such dividend rate may vary from 1% to 5% per annum for the second through tenth dividend periods and from 1% to 7% for the eleventh through the first half of the nineteenth dividend periods, to reflect the amount of change in the Bank's level of QBSL. In the event that the Series B Preferred Shares remain outstanding for more than four and one half years, the dividend rate will be fixed at 9%. Such dividends are not cumulative but the Corporation may only declare and pay dividends on its common stock (or any other equity securities junior to the Series B Preferred Stock) if it has declared and paid dividends on the Series B Preferred Shares for the current dividend period and will be subject to other restrictions on its ability to repurchase or redeem other securities. Subject to regulatory approval, the Corporation may redeem the Series B Preferred Shares at any time. The Series B Preferred Shares are includable in Tier I capital for regulatory capital. Subsequent to the end of the quarter, on October 26, 2011, the Corporation completed the repurchase of a warrant held by the United States Treasury Department. The 10-year warrant was issued on January 29, 2009 as part of the Corporation's participation in the Capital Purchase Program, and entitled the Treasury to purchase 133,475 shares of Stewardship Financial Corporation stock at an exercise price of $11.24 per share. The Corporation paid a total of $107,398 to the Treasury to repurchase the warrant. |