FORM 10-Q |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 80-0643149 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
803 Main Street, Willimantic, Connecticut | 06226 | |
(Address of principal executive offices) | (Zip Code) |
Large Accelerated Filer o | Accelerated Filer x | ||
Non-Accelerated Filer ¨ | Smaller Reporting Company o |
Page No. | |||
PART I. FINANCIAL INFORMATION | |||
Item 1. | Financial Statements (Unaudited): | ||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II. OTHER INFORMATION | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Item 5. | |||
Item 6. | |||
June 30, 2012 | December 31, 2011 | ||||||
ASSETS: | |||||||
Cash and due from banks: | |||||||
Noninterest-bearing | $ | 16,367 | $ | 13,980 | |||
Interest-bearing | 25,820 | 34,432 | |||||
Total cash and cash equivalents | 42,187 | 48,412 | |||||
Available for sale securities, at fair value | 206,096 | 230,814 | |||||
Loans held for sale | 2,926 | 5,558 | |||||
Loans receivable (net of allowance for loan losses of $5,644 at June 30, 2012 and $4,970 at December 31, 2011) | 656,523 | 618,626 | |||||
Federal Home Loan Bank stock, at cost | 8,078 | 8,388 | |||||
Bank-owned life insurance | 8,918 | 9,012 | |||||
Premises and equipment, net | 11,838 | 12,651 | |||||
Goodwill and other intangibles | 3,456 | 4,105 | |||||
Accrued interest receivable | 3,276 | 3,539 | |||||
Deferred tax asset, net | 3,961 | 4,614 | |||||
Other real estate owned, net | 598 | 976 | |||||
Prepaid FDIC deposit insurance assessment | 1,615 | 1,974 | |||||
Other assets | 7,741 | 6,378 | |||||
Total assets | $ | 957,213 | $ | 955,047 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Liabilities: | |||||||
Deposits: | |||||||
Noninterest-bearing | $ | 93,739 | $ | 85,958 | |||
Interest-bearing | 620,221 | 615,968 | |||||
Total deposits | 713,960 | 701,926 | |||||
Mortgagors' and investors' escrow accounts | 2,499 | 3,291 | |||||
Federal Home Loan Bank advances | 93,069 | 100,069 | |||||
Junior subordinated debt owed to unconsolidated trust | 8,248 | 8,248 | |||||
Accrued expenses and other liabilities | 11,568 | 10,996 | |||||
Total liabilities | 829,344 | 824,530 | |||||
Shareholders' Equity: | |||||||
Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued) | — | — | |||||
Common stock ($.01 par value; 35,000,000 shares authorized; 10,576,849 shares issued; 10,161,876 and 10,576,302 shares outstanding at June 30, 2012 and December 31, 2011, respectively) | 106 | 106 | |||||
Additional paid-in-capital | 94,691 | 94,612 | |||||
Unallocated common shares held by ESOP | (5,328 | ) | (5,568 | ) | |||
Unearned restricted shares | (32 | ) | (38 | ) | |||
Retained earnings | 42,559 | 42,085 | |||||
Accumulated other comprehensive income (loss) | 598 | (675 | ) | ||||
Treasury stock, at cost (414,973 and 547 shares at June 30, 2012 and December 31, 2011, respectively) | (4,725 | ) | (5 | ) | |||
Total shareholders' equity | 127,869 | 130,517 | |||||
Total liabilities and shareholders' equity | $ | 957,213 | $ | 955,047 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Interest and dividend income: | |||||||||||||||
Loans, including fees | $ | 7,422 | $ | 7,806 | $ | 15,057 | $ | 15,714 | |||||||
Securities: | |||||||||||||||
Taxable interest | 1,434 | 1,738 | 2,991 | 3,299 | |||||||||||
Tax-exempt interest | — | 1 | 1 | 2 | |||||||||||
Dividends | 10 | 23 | 26 | 43 | |||||||||||
Other | 12 | 16 | 24 | 46 | |||||||||||
Total interest and dividend income | 8,878 | 9,584 | 18,099 | 19,104 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | 1,515 | 1,892 | 3,110 | 3,789 | |||||||||||
Federal Home Loan Bank advances | 816 | 956 | 1,665 | 1,968 | |||||||||||
Subordinated debt | 61 | 84 | 168 | 167 | |||||||||||
Total interest expense | 2,392 | 2,932 | 4,943 | 5,924 | |||||||||||
Net interest income | 6,486 | 6,652 | 13,156 | 13,180 | |||||||||||
Provision for loan losses | 432 | 190 | 916 | 400 | |||||||||||
Net interest income after provision for loan losses | 6,054 | 6,462 | 12,240 | 12,780 | |||||||||||
Noninterest income: | |||||||||||||||
Total other-than-temporary impairment losses on securities | — | — | (409 | ) | — | ||||||||||
Portion of losses recognized in other comprehensive income | — | — | 373 | — | |||||||||||
Net impairment losses recognized in earnings | — | — | (36 | ) | — | ||||||||||
Service fees | 1,221 | 1,211 | 2,431 | 2,391 | |||||||||||
Wealth management fees | 343 | 1,051 | 1,410 | 2,117 | |||||||||||
Increase in cash surrender value of bank-owned life insurance | 70 | 71 | 142 | 143 | |||||||||||
Net gain on sale of securities | 257 | 183 | 574 | 218 | |||||||||||
Mortgage banking | 398 | 133 | 677 | 302 | |||||||||||
Net (loss) gain in fair value on trading securities and derivatives | (152 | ) | 181 | (201 | ) | 208 | |||||||||
Net loss on disposal of SI Trust Servicing operations | (212 | ) | — | (698 | ) | — | |||||||||
Other | 401 | 66 | 788 | 166 | |||||||||||
Total noninterest income | 2,326 | 2,896 | 5,087 | 5,545 | |||||||||||
Noninterest expenses: | |||||||||||||||
Salaries and employee benefits | 4,016 | 4,232 | 8,254 | 8,376 | |||||||||||
Occupancy and equipment | 1,332 | 1,388 | 2,818 | 2,923 | |||||||||||
Computer and electronic banking services | 896 | 987 | 1,889 | 1,943 | |||||||||||
Outside professional services | 313 | 314 | 677 | 581 | |||||||||||
Marketing and advertising | 220 | 241 | 372 | 401 | |||||||||||
Supplies | 91 | 132 | 228 | 267 | |||||||||||
FDIC deposit insurance and regulatory assessments | 220 | 303 | 492 | 608 | |||||||||||
Contribution to SI Financial Group Foundation | — | — | — | 500 | |||||||||||
Other | 469 | 713 | 1,177 | 1,424 | |||||||||||
Total noninterest expenses | 7,557 | 8,310 | 15,907 | 17,023 | |||||||||||
Income before income tax provision | 823 | 1,048 | 1,420 | 1,302 | |||||||||||
Income tax provision | 153 | 341 | 347 | 386 | |||||||||||
Net income | $ | 670 | $ | 707 | $ | 1,073 | $ | 916 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.07 | $ | 0.07 | $ | 0.11 | $ | 0.09 | |||||||
Diluted | $ | 0.07 | $ | 0.07 | $ | 0.11 | $ | 0.09 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Net Income | $ | 670 | $ | 707 | $ | 1,073 | $ | 916 | ||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Net unrealized gain on available for sale securities: | ||||||||||||||||
Net unrealized holding gain on available for sale securities | 352 | 773 | 979 | 1,272 | ||||||||||||
Less: reclassification adjustment for gains realized in net income | (170 | ) | (121 | ) | (379 | ) | (144 | ) | ||||||||
Plus: credit portion of OTTI losses recognized in net income | — | — | 24 | — | ||||||||||||
Plus: noncredit portion of OTTI losses (gains) on available for sale securities | 307 | (52 | ) | 667 | 28 | |||||||||||
Net unrealized holding gains on available for sale securities | 489 | 600 | 1,291 | 1,156 | ||||||||||||
Net unrealized loss on interest-rate swap derivative | (23 | ) | (126 | ) | (18 | ) | (77 | ) | ||||||||
Other comprehensive income | 466 | 474 | 1,273 | 1,079 | ||||||||||||
Comprehensive income | $ | 1,136 | $ | 1,181 | $ | 2,346 | $ | 1,995 | ||||||||
Common Stock | Additional Paid-in Capital | Unallocated Common Shares Held by ESOP | Unearned Restricted Shares | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Shareholders' Equity | |||||||||||||||||||||||||||
Shares | Dollars | |||||||||||||||||||||||||||||||||
Balance at December 31, 2011 | 10,576,849 | $ | 106 | $ | 94,612 | $ | (5,568 | ) | $ | (38 | ) | $ | 42,085 | $ | (675 | ) | $ | (5 | ) | $ | 130,517 | |||||||||||||
Net income | — | — | — | — | — | 1,073 | — | — | 1,073 | |||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 1,273 | — | 1,273 | |||||||||||||||||||||||||
Cash dividends declared ($.06 per share) | — | — | — | — | — | (599 | ) | — | — | (599 | ) | |||||||||||||||||||||||
Equity incentive plan compensation | — | — | 50 | — | 6 | — | — | — | 56 | |||||||||||||||||||||||||
Allocation of 24,318 ESOP shares | — | — | 26 | 240 | — | — | — | — | 266 | |||||||||||||||||||||||||
Tax benefit from share-based compensation | — | — | 3 | — | — | — | — | — | 3 | |||||||||||||||||||||||||
Treasury stock purchased (414,426 shares) | — | — | — | — | — | — | — | (4,720 | ) | (4,720 | ) | |||||||||||||||||||||||
Balance at June 30, 2012 | 10,576,849 | $ | 106 | $ | 94,691 | $ | (5,328 | ) | $ | (32 | ) | $ | 42,559 | $ | 598 | $ | (4,725 | ) | $ | 127,869 |
SI FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands / Unaudited) | |||||||
Six Months Ended June 30, | |||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 1,073 | $ | 916 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for loan losses | 916 | 400 | |||||
Employee stock ownership plan expense | 266 | 236 | |||||
Equity incentive plan expense | 56 | 47 | |||||
Excess tax benefit from share-based compensation | (3 | ) | (2 | ) | |||
Amortization of investment premiums and discounts, net | 591 | 216 | |||||
Amortization of loan premiums and discounts, net | 586 | 558 | |||||
Depreciation and amortization of premises and equipment | 959 | 939 | |||||
Amortization of core deposit intangible | 6 | 10 | |||||
Net gain on sale of securities | (574 | ) | (218 | ) | |||
Net loss (gain) on trading securities and derivatives | 201 | (208 | ) | ||||
Deferred income tax benefit | (3 | ) | (3 | ) | |||
Loans originated for sale | (21,446 | ) | (20,237 | ) | |||
Proceeds from sale of loans held for sale | 24,440 | 26,196 | |||||
Net loss on disposal of SI Trust Servicing operations | 698 | — | |||||
Net gain on sale of loans held for sale | (553 | ) | (211 | ) | |||
Net loss on disposal of equipment | — | 8 | |||||
Net loss on sales or write-downs of other real estate owned | 14 | 177 | |||||
Increase in cash surrender value of bank-owned life insurance | (142 | ) | (143 | ) | |||
Gain on bank-owned life insurance proceeds | (349 | ) | (122 | ) | |||
Other-than-temporary impairment losses on securities | 36 | — | |||||
Change in operating assets and liabilities: | |||||||
Accrued interest receivable | 263 | (412 | ) | ||||
Other assets | 34 | 1,868 | |||||
Accrued expenses and other liabilities | 260 | (51 | ) | ||||
Net cash provided by operating activities | 7,329 | 9,964 | |||||
Cash flows from investing activities: | |||||||
Purchases of available for sale securities | (34,086 | ) | (107,825 | ) | |||
Proceeds from sales of available for sale securities | 32,417 | 32,569 | |||||
Proceeds from maturities of and principal repayments on available for sale securities | 28,530 | 22,082 | |||||
Net (increase) decrease in loans | (11,799 | ) | 22,668 | ||||
Purchases of loans | (28,197 | ) | (41,197 | ) | |||
Proceeds from sale of other real estate owned | 912 | 473 | |||||
Purchases of premises and equipment | (842 | ) | (1,311 | ) | |||
Proceeds from bank-owned life insurance | 585 | 602 | |||||
Net cash used in investing activities | (12,480 | ) | (71,939 | ) | |||
Cash flows from financing activities: | |||||||
Net increase in deposits | 12,034 | 28,622 | |||||
Net decrease in mortgagors' and investors' escrow accounts | (792 | ) | (1,567 | ) | |||
Proceeds from Federal Home Loan Bank advances | — | 14,000 | |||||
Repayments of Federal Home Loan Bank advances | (7,000 | ) | (19,000 | ) | |||
Net proceeds from common stock offering | — | 2,769 | |||||
Excess tax benefit from share-based compensation | 3 | 2 | |||||
Purchase of shares by ESOP pursuant to reorganization | — | (3,141 | ) | ||||
Cash dividends on common stock | (599 | ) | (596 | ) | |||
Treasury stock purchased | (4,720 | ) | (5 | ) | |||
Net cash (used in) provided by financing activities | (1,074 | ) | 21,084 | ||||
SI FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded) (In Thousands / Unaudited) | |||||||
Six Months Ended June 30, | |||||||
2012 | 2011 | ||||||
Net change in cash and cash equivalents | (6,225 | ) | (40,891 | ) | |||
Cash and cash equivalents at beginning of period | 48,412 | 78,321 | |||||
Cash and cash equivalents at end of period | $ | 42,187 | $ | 37,430 | |||
Supplemental cash flow information: | |||||||
Interest paid | $ | 4,944 | $ | 5,927 | |||
Income taxes paid, net | 113 | 50 | |||||
Transfer of stock offering escrow for issuance of common shares | — | 47,556 | |||||
Transfer of loans to other real estate owned | 597 | 80 |
• | Specific allowance for identified impaired loans. For loans that are identified as impaired, an allowance is established when the present value of expected cash flows (or observable market price of the loan or fair value of the collateral if the loan is collateral dependent) of the impaired loan is lower than the carrying value of that loan. |
• | General valuation allowance. The general component represents a valuation allowance on the remainder of the loan portfolio, after excluding impaired loans. For this portion of the allowance, loans are segregated by category and assigned an allowance percentage based on historical loan loss experience adjusted for qualitative factors stratified by the following loan segments: residential one- to four-family, multi-family and commercial real estate, construction, commercial business and consumer. Management uses a rolling average of historical losses based on the time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies, classified loans and nonaccrual loans; level of loan charge-offs; trends in volume, nature and terms of loans; existence and effect of/or changes in the level of credit concentrations; effects of changes in risk selection, underwriting standards and other changes in lending policies, procedures and practices; experience/ability and depth of lending management and staff, national and local economic trends and conditions and impact on value of underlying collateral for collateral dependent loans. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands, Except Share Data) | |||||||||||||||
Net income | $ | 670 | $ | 707 | $ | 1,073 | $ | 916 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 9,821,841 | 9,934,883 | 9,896,154 | 10,024,108 | |||||||||||
Effect of dilutive stock options | 38,300 | 24,524 | 32,661 | 21,637 | |||||||||||
Diluted | 9,860,141 | 9,959,407 | 9,928,815 | 10,045,745 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.07 | $ | 0.07 | $ | 0.11 | $ | 0.09 | |||||||
Diluted | $ | 0.07 | $ | 0.07 | $ | 0.11 | $ | 0.09 |
June 30, 2012 | ||||||||||||||||
Amortized Cost (1) | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
(In Thousands) | ||||||||||||||||
U.S. Government and agency obligations | $ | 58,388 | $ | 798 | $ | (26 | ) | $ | 59,160 | |||||||
Government-sponsored enterprises | 26,026 | 575 | — | 26,601 | ||||||||||||
Mortgage-backed securities:(2) | ||||||||||||||||
Agency - residential | 82,701 | 2,664 | (134 | ) | 85,231 | |||||||||||
Non-agency - residential | 8,771 | 21 | (437 | ) | 8,355 | |||||||||||
Non-agency - HELOC | 2,858 | — | (426 | ) | 2,432 | |||||||||||
Asset-backed securities | 1,943 | 1 | — | 1,944 | ||||||||||||
Corporate debt securities | 11,553 | 222 | (199 | ) | 11,576 | |||||||||||
Collateralized debt obligations | 6,024 | — | (1,950 | ) | 4,074 | |||||||||||
Obligations of state and political subdivisions | 6,317 | 285 | — | 6,602 | ||||||||||||
Tax-exempt securities | 70 | 1 | — | 71 | ||||||||||||
Foreign government securities | 50 | — | — | 50 | ||||||||||||
Total available for sale securities | $ | 204,701 | $ | 4,567 | $ | (3,172 | ) | $ | 206,096 | |||||||
December 31, 2011 | ||||||||||||||||
Amortized Cost (1) | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Debt securities: | ||||||||||||||||
U.S. Government and agency obligations | $ | 88,917 | $ | 770 | $ | (100 | ) | $ | 89,587 | |||||||
Government-sponsored enterprises | 17,204 | 462 | — | 17,666 | ||||||||||||
Mortgage-backed securities:(2) | ||||||||||||||||
Agency - residential | 85,552 | 3,070 | (178 | ) | 88,444 | |||||||||||
Non-agency - residential | 7,766 | 21 | (899 | ) | 6,888 | |||||||||||
Non-agency - HELOC | 3,097 | — | (559 | ) | 2,538 | |||||||||||
Corporate debt securities | 14,094 | 240 | (287 | ) | 14,047 | |||||||||||
Collateralized debt obligations | 6,275 | — | (3,358 | ) | 2,917 | |||||||||||
Obligations of state and political subdivisions | 6,488 | 278 | — | 6,766 | ||||||||||||
Tax-exempt securities | 70 | 1 | — | 71 | ||||||||||||
Foreign government securities | 75 | — | — | 75 | ||||||||||||
Total debt securities | 229,538 | 4,842 | (5,381 | ) | 228,999 | |||||||||||
Equity securities: | ||||||||||||||||
Equity securities - financial services | 228 | 1 | (24 | ) | 205 | |||||||||||
Equity securities - other | 1,609 | 96 | (95 | ) | 1,610 | |||||||||||
Total equity securities | 1,837 | 97 | (119 | ) | 1,815 | |||||||||||
Total available for sale securities | $ | 231,375 | $ | 4,939 | $ | (5,500 | ) | $ | 230,814 | |||||||
Amortized Cost | Fair Value | ||||||
(In Thousands) | |||||||
Within 1 year | $ | 4,282 | $ | 4,314 | |||
After 1 but within 5 years | 36,811 | 37,525 | |||||
After 5 but within 10 years | 10,054 | 10,125 | |||||
After 10 years | 57,281 | 56,170 | |||||
108,428 | 108,134 | ||||||
Mortgage-backed and asset-backed securities | 96,273 | 97,962 | |||||
Total debt securities | $ | 204,701 | $ | 206,096 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Gross gains on sales | $ | 257 | $ | 230 | $ | 627 | $ | 265 | |||||||
Gross losses on sales | — | (47 | ) | (53 | ) | (47 | ) | ||||||||
Net gain on sale of securities | $ | 257 | $ | 183 | $ | 574 | $ | 218 |
Less Than 12 Months | 12 Months Or More | Total | |||||||||||||||||||||
June 30, 2012: | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
U.S. Government and agency obligations | $ | 2,913 | $ | 3 | $ | 1,637 | $ | 23 | $ | 4,550 | $ | 26 | |||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Agency - residential | 10,256 | 121 | 307 | 13 | 10,563 | 134 | |||||||||||||||||
Non-agency - residential | 2,635 | 21 | 4,885 | 416 | 7,520 | 437 | |||||||||||||||||
Non-agency - HELOC | — | — | 2,432 | 426 | 2,432 | 426 | |||||||||||||||||
Corporate debt securities | 1,877 | 115 | 1,856 | 84 | 3,733 | 199 | |||||||||||||||||
Collateralized debt obligations | — | — | 4,074 | 1,950 | 4,074 | 1,950 | |||||||||||||||||
Total | $ | 17,681 | $ | 260 | $ | 15,191 | $ | 2,912 | $ | 32,872 | $ | 3,172 |
Less Than 12 Months | 12 Months Or More | Total | |||||||||||||||||||||
December 31, 2011: | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
U.S. Government and agency obligations | $ | 32,390 | $ | 94 | $ | 415 | $ | 6 | $ | 32,805 | $ | 100 | |||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Agency - residential | 8,241 | 111 | 1,969 | 67 | 10,210 | 178 | |||||||||||||||||
Non-agency - residential | — | — | 5,305 | 899 | 5,305 | 899 | |||||||||||||||||
Non-agency - HELOC | — | — | 2,538 | 559 | 2,538 | 559 | |||||||||||||||||
Corporate debt securities | 3,482 | 234 | 946 | 53 | 4,428 | 287 | |||||||||||||||||
Collateralized debt obligations | — | — | 2,917 | 3,358 | 2,917 | 3,358 | |||||||||||||||||
Equity securities - financial services | 169 | 24 | — | — | 169 | 24 | |||||||||||||||||
Equity services - other | 708 | 95 | — | — | 708 | 95 | |||||||||||||||||
Total | $ | 44,990 | $ | 558 | $ | 14,090 | $ | 4,942 | $ | 59,080 | $ | 5,500 |
Security | Class (1) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Lowest Credit Rating (2) | Total Credit- Related OTTI (3) | Credit Support Coverage Ratios (4) | ||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||||
MBS 1 | SSNR, AS | $ | 1,886 | $ | — | $ | (372 | ) | $ | 1,514 | D | $ | 110 | 0.00 | ||||||||||||
MBS 2 | PT, AS | 250 | — | (1 | ) | 249 | C | — | 2.12 | |||||||||||||||||
MBS 3 | CSTR | 3,165 | — | (43 | ) | 3,122 | BB- | — | 12.44 | |||||||||||||||||
$ | 5,301 | $ | — | $ | (416 | ) | $ | 4,885 | $ | 110 | ||||||||||||||||
Security | Class | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Lowest Credit Rating (1) | Total Credit- Related OTTI (2) | % of Current Performing Collateral Coverage | ||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||||
CDO 1 | B1 | $ | 1,000 | $ | — | $ | (692 | ) | $ | 308 | CCC- | $ | — | 103.9 | ||||||||||||
CDO 2 | B3 | 1,000 | — | (679 | ) | 321 | CCC- | — | 103.9 | |||||||||||||||||
CDO 3 | A2 | 2,578 | — | (298 | ) | 2,280 | B- | 62 | 116.8 | |||||||||||||||||
CDO 4 | A1 | 1,446 | — | (281 | ) | 1,165 | BB- | — | 155.6 | |||||||||||||||||
$ | 6,024 | $ | — | $ | (1,950 | ) | $ | 4,074 | $ | 62 | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Balance at beginning of period | $ | 1,243 | $ | 1,093 | $ | 1,207 | $ | 1,093 | |||||||
Additional credit losses for which OTTI losses were previously recognized | — | — | 36 | — | |||||||||||
Reduction for permanent loss in value of securities during the period | (1,071 | ) | — | (1,071 | ) | — | |||||||||
Reduction for securities sold during the period (realized) | — | (34 | ) | — | (34 | ) | |||||||||
Balance at end of period | $ | 172 | $ | 1,059 | $ | 172 | $ | 1,059 |
June 30, 2012 | December 31, 2011 | ||||||
(In Thousands) | |||||||
Real estate loans: | |||||||
Residential - 1 to 4 family | $ | 240,210 | $ | 247,426 | |||
Multi-family and commercial | 174,210 | 158,384 | |||||
Construction | 13,254 | 12,290 | |||||
Total real estate loans | 427,674 | 418,100 | |||||
Commercial business loans: | |||||||
SBA and USDA guaranteed | 138,825 | 127,359 | |||||
Other | 51,834 | 40,442 | |||||
Total commercial business loans | 190,659 | 167,801 | |||||
Consumer loans: | |||||||
Home equity | 28,260 | 27,425 | |||||
Indirect automobile | 11,467 | 5,733 | |||||
Other | 2,384 | 2,824 | |||||
Total consumer loans | 42,111 | 35,982 | |||||
Total loans | 660,444 | 621,883 | |||||
Deferred loan origination costs, net of fees | 1,723 | 1,713 | |||||
Allowance for loan losses | (5,644 | ) | (4,970 | ) | |||
Loans receivable, net | $ | 656,523 | $ | 618,626 |
Three Months Ended June 30, 2012 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Balance at beginning of period | $ | 735 | $ | 2,678 | $ | 368 | $ | 1,127 | $ | 470 | $ | 5,378 | |||||||||||
Provision (credit) for loan losses | (32 | ) | 121 | (54 | ) | 280 | 117 | 432 | |||||||||||||||
Loans charged-off | (29 | ) | (102 | ) | — | — | (103 | ) | (234 | ) | |||||||||||||
Recoveries of loans previously charged-off | 51 | 3 | — | 11 | 3 | 68 | |||||||||||||||||
Balance at end of period | $ | 725 | $ | 2,700 | $ | 314 | $ | 1,418 | $ | 487 | $ | 5,644 |
Six Months Ended June 30, 2012 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Balance at beginning of period | $ | 759 | $ | 2,337 | $ | 280 | $ | 1,148 | $ | 446 | $ | 4,970 | |||||||||||
Provision for loan losses | 5 | 461 | 34 | 258 | 158 | 916 | |||||||||||||||||
Loans charged-off | (92 | ) | (102 | ) | — | — | (122 | ) | (316 | ) | |||||||||||||
Recoveries of loans previously charged-off | 53 | 4 | — | 12 | 5 | 74 | |||||||||||||||||
Balance at end of period | $ | 725 | $ | 2,700 | $ | 314 | $ | 1,418 | $ | 487 | $ | 5,644 |
Three Months Ended June 30, 2011 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Balance at beginning of period | $ | 707 | $ | 2,598 | $ | 90 | $ | 747 | $ | 421 | $ | 4,563 | |||||||||||
Provision (credit) for loan losses | 197 | (90 | ) | 47 | 29 | 7 | 190 | ||||||||||||||||
Loans charged-off | — | — | — | — | (11 | ) | (11 | ) | |||||||||||||||
Recoveries of loans previously charged-off | — | — | 19 | — | — | 19 | |||||||||||||||||
Balance at end of period | $ | 904 | $ | 2,508 | $ | 156 | $ | 776 | $ | 417 | $ | 4,761 |
Six Months Ended June 30, 2011 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Balance at beginning of period | $ | 915 | $ | 2,700 | $ | 64 | $ | 790 | $ | 330 | $ | 4,799 | |||||||||||
Provision (credit) for loan losses | 278 | (160 | ) | 156 | 14 | 112 | 400 | ||||||||||||||||
Loans charged-off | (289 | ) | (32 | ) | (83 | ) | (31 | ) | (25 | ) | (460 | ) | |||||||||||
Recoveries of loans previously charged-off | — | — | 19 | 3 | — | 22 | |||||||||||||||||
Balance at end of period | $ | 904 | $ | 2,508 | $ | 156 | $ | 776 | $ | 417 | $ | 4,761 |
June 30, 2012 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Allowance for loans deemed to be impaired and individually evaluated | $ | 21 | $ | 232 | $ | — | $ | 75 | $ | — | $ | 328 | |||||||||||
Allowance for loans not deemed to be impaired and collectively evaluated | 704 | 2,468 | 314 | 1,343 | 487 | 5,316 | |||||||||||||||||
Total loan loss allowance | $ | 725 | $ | 2,700 | $ | 314 | $ | 1,418 | $ | 487 | $ | 5,644 | |||||||||||
Loans deemed to be impaired and individually evaluated | $ | 5,478 | $ | 9,523 | $ | — | $ | 577 | $ | 461 | $ | 16,039 | |||||||||||
Loans not deemed to be impaired and collectively evaluated | 234,732 | 164,687 | 13,254 | 190,082 | 41,650 | 644,405 | |||||||||||||||||
Total loans | $ | 240,210 | $ | 174,210 | $ | 13,254 | $ | 190,659 | $ | 42,111 | $ | 660,444 |
December 31, 2011 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Allowance for loans deemed to be impaired and individually evaluated | $ | 33 | $ | 107 | $ | — | $ | 105 | $ | — | $ | 245 | |||||||||||
Allowance for loans not deemed to be impaired and collectively evaluated | 726 | 2,230 | 280 | 1,043 | 446 | 4,725 | |||||||||||||||||
Total loan loss allowance | $ | 759 | $ | 2,337 | $ | 280 | $ | 1,148 | $ | 446 | $ | 4,970 | |||||||||||
Loans deemed to be impaired and individually evaluated | $ | 5,590 | $ | 8,650 | $ | — | $ | 654 | $ | 316 | $ | 15,210 | |||||||||||
Loans not deemed to be impaired and collectively evaluated | 241,836 | 149,734 | 12,290 | 167,147 | 35,666 | 606,673 | |||||||||||||||||
Total loans | $ | 247,426 | $ | 158,384 | $ | 12,290 | $ | 167,801 | $ | 35,982 | $ | 621,883 |
June 30, 2012 | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due | Total 30 Days or More Past Due | Current | Total Loans | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||
Residential - 1 to 4 family | $ | — | $ | 963 | $ | 3,652 | $ | 4,615 | $ | 235,595 | $ | 240,210 | |||||||||||
Multi-family and commercial | — | — | 3,789 | 3,789 | 170,421 | 174,210 | |||||||||||||||||
Construction | — | — | — | — | 13,254 | 13,254 | |||||||||||||||||
Commercial Business: | |||||||||||||||||||||||
SBA and USDA guaranteed | 788 | 323 | — | 1,111 | 137,714 | 138,825 | |||||||||||||||||
Other | 72 | — | 548 | 620 | 51,214 | 51,834 | |||||||||||||||||
Consumer: | |||||||||||||||||||||||
Home equity | — | 81 | 461 | 542 | 27,718 | 28,260 | |||||||||||||||||
Indirect automobile | 46 | — | — | 46 | 11,421 | 11,467 | |||||||||||||||||
Other | 20 | — | — | 20 | 2,364 | 2,384 | |||||||||||||||||
Total | $ | 926 | $ | 1,367 | $ | 8,450 | $ | 10,743 | $ | 649,701 | $ | 660,444 |
December 31, 2011 | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due | Total 30 Days or More Past Due | Current | Total Loans | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||
Residential - 1 to 4 family | $ | 4,065 | $ | 995 | $ | 3,835 | $ | 8,895 | $ | 238,531 | $ | 247,426 | |||||||||||
Multi-family and commercial | 292 | — | 1,703 | 1,995 | 156,389 | 158,384 | |||||||||||||||||
Construction | — | — | — | — | 12,290 | 12,290 | |||||||||||||||||
Commercial Business: | |||||||||||||||||||||||
SBA and USDA guaranteed | 2,729 | 327 | — | 3,056 | 124,303 | 127,359 | |||||||||||||||||
Other | — | — | 623 | 623 | 39,819 | 40,442 | |||||||||||||||||
Consumer: | |||||||||||||||||||||||
Home equity | — | — | 269 | 269 | 27,156 | 27,425 | |||||||||||||||||
Indirect automobile | — | — | — | — | 5,733 | 5,733 | |||||||||||||||||
Other | 124 | — | — | 124 | 2,700 | 2,824 | |||||||||||||||||
Total | $ | 7,210 | $ | 1,322 | $ | 6,430 | $ | 14,962 | $ | 606,921 | $ | 621,883 |
Impaired Loans | |||||||||||||||
June 30, 2012 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Nonaccrual Loans | |||||||||||
(In Thousands) | |||||||||||||||
Impaired loans without valuation allowance: | |||||||||||||||
Real Estate: | |||||||||||||||
Residential - 1 to 4 family | $ | 5,127 | $ | 5,227 | $ | — | $ | 5,117 | |||||||
Multi-family and commercial | 4,576 | 5,136 | — | 3,616 | |||||||||||
Commercial business - Other | 29 | 29 | — | 29 | |||||||||||
Consumer - Home equity | 461 | 545 | — | 528 | |||||||||||
Total impaired loans without valuation allowance | 10,193 | 10,937 | — | 9,290 | |||||||||||
Impaired loans with valuation allowance: | |||||||||||||||
Real Estate: | |||||||||||||||
Residential - 1 to 4 family | 351 | 351 | 21 | 351 | |||||||||||
Multi-family and commercial | 4,947 | 5,037 | 232 | 1,318 | |||||||||||
Commercial business - Other | 548 | 548 | 75 | 548 | |||||||||||
Total impaired loans with valuation allowance | 5,846 | 5,936 | 328 | 2,217 | |||||||||||
Total impaired loans | $ | 16,039 | $ | 16,873 | $ | 328 | $ | 11,507 |
Impaired Loans | |||||||||||||||
December 31, 2011 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Nonaccrual Loans | |||||||||||
(In Thousands) | |||||||||||||||
Impaired loans without valuation allowance: | |||||||||||||||
Real Estate: | |||||||||||||||
Residential - 1 to 4 family | $ | 5,232 | $ | 5,536 | $ | — | $ | 5,232 | |||||||
Multi-family and commercial | 4,757 | 5,215 | — | 3,795 | |||||||||||
Commercial business - Other | 31 | 31 | — | 31 | |||||||||||
Consumer - Home equity | 316 | 331 | — | 316 | |||||||||||
Total impaired loans without valuation allowance | 10,336 | 11,113 | — | 9,374 | |||||||||||
Impaired loans with valuation allowance: | |||||||||||||||
Real Estate: | |||||||||||||||
Residential - 1 to 4 family | 358 | 358 | 33 | 358 | |||||||||||
Multi-family and commercial | 3,893 | 3,983 | 107 | 236 | |||||||||||
Commercial business - Other | 623 | 623 | 105 | 623 | |||||||||||
Total impaired loans with valuation allowance | 4,874 | 4,964 | 245 | 1,217 | |||||||||||
Total impaired loans | $ | 15,210 | $ | 16,077 | $ | 245 | $ | 10,591 |
Three Months Ended June 30, 2012 | Six Months Ended June 30, 2012 | ||||||||||||||||||||||
Average Recorded Investment | Interest Income Recognized | Interest Income Recognized on Cash Basis | Average Recorded Investment | Interest Income Recognized | Interest Income Recognized on Cash Basis | ||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||
Residential - 1 to 4 family | $ | 5,422 | $ | 39 | $ | 39 | $ | 5,655 | $ | 105 | $ | 105 | |||||||||||
Multi-family and commercial | 9,601 | 69 | — | 9,291 | 133 | — | |||||||||||||||||
Commercial business - Other | 601 | — | — | 696 | — | — | |||||||||||||||||
Consumer - Home equity | 388 | — | — | 344 | — | — | |||||||||||||||||
Total | $ | 16,012 | $ | 108 | $ | 39 | $ | 15,986 | $ | 238 | $ | 105 |
Three Months Ended June 30, 2011 | Six Months Ended June 30, 2011 | ||||||||||||||||||||||
Average Recorded Investment | Interest Income Recognized | Interest Income Recognized on Cash Basis | Average Recorded Investment | Interest Income Recognized | Interest Income Recognized on Cash Basis | ||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||
Residential - 1 to 4 family | 6,236 | 11 | — | 4,086 | 24 | — | |||||||||||||||||
Multi-family and commercial | 7,345 | 65 | — | 5,472 | 138 | — | |||||||||||||||||
Construction | — | — | — | 166 | — | — | |||||||||||||||||
Commercial business - Other | 51 | — | — | 162 | — | — | |||||||||||||||||
Consumer - Home equity | 184 | — | — | 37 | — | — | |||||||||||||||||
Total | $ | 13,816 | $ | 76 | $ | — | $ | 9,923 | $ | 162 | $ | — |
o | Pass (Ratings 1-4): Loans in these categories are considered low to average risk. |
o | Special Mention (Rating 5): Loans in this category are starting to show signs of potential weakness and are being closely monitored by management. |
o | Substandard (Rating 6): Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected. |
o | Doubtful (Rating 7): Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. |
o | Loss (Rating 8): Loans in this category are considered uncollectible and of such little value that their continuance as loans is not warranted. |
June 30, 2012 | Not Rated | Pass | Special Mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||||||
Residential - 1 to 4 family | $ | — | $ | 233,567 | $ | 731 | $ | 5,912 | $ | — | $ | — | $ | 240,210 | |||||||||||||
Multi-family and commercial | — | 144,910 | 11,147 | 18,153 | — | — | 174,210 | ||||||||||||||||||||
Construction | — | 13,254 | — | — | — | — | 13,254 | ||||||||||||||||||||
Total real estate loans | — | 391,731 | 11,878 | 24,065 | — | — | 427,674 | ||||||||||||||||||||
Commercial Business: | |||||||||||||||||||||||||||
SBA and USDA guaranteed | 138,825 | — | — | — | — | — | 138,825 | ||||||||||||||||||||
Other | — | 46,488 | 4,301 | 1,045 | — | — | 51,834 | ||||||||||||||||||||
Total commercial business loans | 138,825 | 46,488 | 4,301 | 1,045 | — | — | 190,659 | ||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||
Home equity | — | 27,677 | — | 583 | — | — | 28,260 | ||||||||||||||||||||
Indirect automobile | — | 11,467 | — | — | — | — | 11,467 | ||||||||||||||||||||
Other | — | 2,384 | — | — | — | — | 2,384 | ||||||||||||||||||||
Total consumer loans | — | 41,528 | — | 583 | — | — | 42,111 | ||||||||||||||||||||
Total loans | $ | 138,825 | $ | 479,747 | $ | 16,179 | $ | 25,693 | $ | — | $ | — | $ | 660,444 |
December 31, 2011 | Not Rated | Pass | Special Mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||||||
Residential - 1 to 4 family | $ | — | $ | 240,904 | $ | 769 | $ | 5,753 | $ | — | $ | — | $ | 247,426 | |||||||||||||
Multi-family and commercial | — | 135,859 | 8,699 | 13,826 | — | — | 158,384 | ||||||||||||||||||||
Construction | — | 11,707 | 583 | — | — | — | 12,290 | ||||||||||||||||||||
Total real estate loans | — | 388,470 | 10,051 | 19,579 | — | — | 418,100 | ||||||||||||||||||||
Commercial Business: | |||||||||||||||||||||||||||
SBA and USDA guaranteed | 127,359 | — | — | — | — | — | 127,359 | ||||||||||||||||||||
Other | — | 34,788 | 3,977 | 1,677 | — | — | 40,442 | ||||||||||||||||||||
Total commercial business loans | 127,359 | 34,788 | 3,977 | 1,677 | — | — | 167,801 | ||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||
Home equity | — | 27,109 | — | 316 | — | — | 27,425 | ||||||||||||||||||||
Indirect automobile | — | 5,733 | — | — | — | — | 5,733 | ||||||||||||||||||||
Other | — | 2,824 | — | — | — | — | 2,824 | ||||||||||||||||||||
Total consumer loans | — | 35,666 | — | 316 | — | — | 35,982 | ||||||||||||||||||||
Total loans | $ | 127,359 | $ | 458,924 | $ | 14,028 | $ | 21,572 | $ | — | $ | — | $ | 621,883 |
Allowance for | |||||||||
Number | Recorded | Loan Losses | |||||||
of Loans | Investment (1) | (End of Period) | |||||||
(Dollars in Thousands) | |||||||||
Residential - 1 to 4 family | 3 | $ | 434 | $ | 10 | ||||
Total | 3 | $ | 434 | $ | 10 |
(1) There were no loan charge-offs or principal reductions during the modification process. |
Recorded Investment | ||||
(In Thousands) | ||||
Interest Rate Adjustments | $ | 2,459 | ||
Principal Deferrals (1) | 443 | |||
Combination of Rate and Payment (2) | 2,558 | |||
Total | $ | 5,460 |
(1) Terms of modifications include temporary interest-only payments with deferral of principal. | |
(2) Terms include combination of interest rate adjustments and interest-only payments with deferral of principal. |
June 30, 2012 | December 31, 2011 | ||||||
(In Thousands) | |||||||
Land | $ | 2,098 | $ | 2,098 | |||
Buildings | 6,776 | 6,660 | |||||
Leasehold improvements | 8,001 | 7,822 | |||||
Furniture and equipment | 10,992 | 12,272 | |||||
Construction in process | 25 | 20 | |||||
27,892 | 28,872 | ||||||
Accumulated depreciation and amortization | (16,054 | ) | (16,221 | ) | |||
Premises and equipment, net | $ | 11,838 | $ | 12,651 |
Six Months Ended June 30, 2012 | |||||||||||
Before Tax Amount | Tax Effects | Net of Tax Amount | |||||||||
(In Thousands) | |||||||||||
Securities: | |||||||||||
Unrealized holding gains on available for sale securities | $ | 1,483 | $ | (504 | ) | $ | 979 | ||||
Reclassification adjustment for gains realized in net income | (574 | ) | 195 | (379 | ) | ||||||
Credit portion of OTTI losses recognized in net income | 36 | (12 | ) | 24 | |||||||
Noncredit portion of OTTI losses on available for sale securities | 1,011 | (344 | ) | 667 | |||||||
Unrealized holding gains on available for sale securities, net of taxes | 1,956 | (665 | ) | 1,291 | |||||||
Derivative instrument: | |||||||||||
Change in fair value of effective cash flow hedging derivative | (27 | ) | 9 | (18 | ) | ||||||
Other comprehensive income | $ | 1,929 | $ | (656 | ) | $ | 1,273 |
June 30, 2012 | |||||||||||
Before Tax Amount | Tax Effects | Net of Tax Amount | |||||||||
(In Thousands) | |||||||||||
Net unrealized gain on available for sale securities | $ | 2,066 | $ | (702 | ) | $ | 1,364 | ||||
Noncredit portion of OTTI losses on available for sale securities | (671 | ) | 228 | (443 | ) | ||||||
Net unrealized loss on effective cash flow hedging derivative | (489 | ) | 166 | (323 | ) | ||||||
Accumulated other comprehensive income | $ | 906 | $ | (308 | ) | $ | 598 |
December 31, 2011 | |||||||||||
Before Tax Amount | Tax Effects | Net of Tax Amount | |||||||||
(In Thousands) | |||||||||||
Net unrealized gain on available for sale securities | $ | 1,121 | $ | (381 | ) | $ | 740 | ||||
Noncredit portion of OTTI losses on available for sale securities | (1,682 | ) | 572 | (1,110 | ) | ||||||
Net unrealized loss on effective cash flow hedging derivative | (462 | ) | 157 | (305 | ) | ||||||
Accumulated other comprehensive loss | $ | (1,023 | ) | $ | 348 | $ | (675 | ) |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
June 30, 2012 | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
Total Risk-based Capital Ratio | $ | 110,003 | 22.02 | % | $ | 39,965 | 8.00 | % | $ | 49,956 | 10.00 | % | ||||||||
Tier I Risk-based Capital Ratio | 103,940 | 20.81 | 19,979 | 4.00 | 29,968 | 6.00 | ||||||||||||||
Tier I Capital Ratio | 103,940 | 11.08 | 37,523 | 4.00 | 46,904 | 5.00 | ||||||||||||||
Tangible Equity Ratio | 103,940 | 11.08 | 14,071 | 1.50 | N/A | N/A |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
December 31, 2011 | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
Total Risk-based Capital Ratio | $ | 106,997 | 22.21 | % | $ | 38,540 | 8.00 | % | $ | 48,175 | 10.00 | % | ||||||||
Tier I Risk-based Capital Ratio | 101,574 | 21.09 | 19,265 | 4.00 | 28,897 | 6.00 | ||||||||||||||
Tier I Capital Ratio | 101,574 | 10.86 | 37,412 | 4.00 | 46,765 | 5.00 | ||||||||||||||
Tangible Equity Ratio | 101,574 | 10.86 | 14,030 | 1.50 | N/A | N/A |
Level 1: | Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. |
Level 2: | Valuation is based on 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 for substantially the full term of the assets or liabilities. |
Level 3: | Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
• | Cash and cash equivalents. The carrying amounts of cash and short-term instruments approximate the fair values based on the short-term nature of the assets. |
• | Securities available for sale. Included in the available for sale category are both debt and equity securities. The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market. Securities measured at fair value in Level 2 are based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data. The Company utilizes Interactive Data Corporation (“IDC”), a third-party, nationally-recognized pricing service to estimate fair value measurements for the majority of its portfolio. The pricing service evaluates each asset class based on relevant market information considering observable data but these prices do not represent binding quotes. The fair value prices on all investments are reviewed for reasonableness by management. Securities measured at fair value in Level 3 include collateralized debt obligations that are backed by trust preferred securities issued by banks, thrifts and insurance companies. Management determined that an orderly and active market for these securities and similar securities did not exist based on a significant reduction in trading volume and widening spreads relative to historical levels. The Company estimates future cash flows discounted using a rate management believes is representative of current market conditions. Factors in determining the discount rate include the current level of deferrals and/or defaults, changes in credit rating and the financial condition of the debtors within the underlying securities, broker quotes for securities with similar structure and credit risk, interest rate movements and pricing for new issuances. |
• | Federal Home Loan Bank stock. The carrying value of Federal Home Loan Bank (“FHLB”) stock approximates fair value based on the redemption provisions of the FHLB. |
• | Loans held for sale. The fair value of loans held for sale is estimated using quoted market prices. |
• | Loans receivable. For variable rate loans which reprice frequently and have no significant change in credit risk, fair values are based on carrying values. The fair value of fixed-rate loans are estimated by discounting the future cash flows using the rates at the end of the period in which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. |
• | Accrued interest receivable. The carrying amount of accrued interest approximates fair value. |
• | Deposits. The fair value of demand deposits, negotiable orders of withdrawal, regular savings, certain money market deposits and mortgagors’ and investors’ escrow accounts is the amount payable on demand at the reporting date. The fair value of certificates of deposit and other time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities to a schedule of aggregated expected maturities on such deposits. |
• | Federal Home Loan Bank advances. The fair value of the advances is estimated using a discounted cash |
• | Junior subordinated debt owed to unconsolidated trust. Rates currently available for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. |
• | Interest rate swap agreements. The fair values of the Company’s interest rate swaps are obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of the derivative. The pricing analysis is based on observable inputs for the contractual term of the derivative, including the period to maturity and interest rate curves. |
• | Forward loan sale commitments and derivative loan commitments. Forward loan sale commitments and derivative loan commitments are based on the fair values of the underlying mortgage loans, including the servicing rights, and the probability of such commitments being exercised. Significant management judgment and estimation is required in determining these fair value measurements. |
• | Off-balance sheet instruments. Fair values for off-balance sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standings. |
June 30, 2012 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(In Thousands) | |||||||||||||||
Assets: | |||||||||||||||
U.S. Government and agency obligations | $ | 1,042 | $ | 58,118 | $ | — | $ | 59,160 | |||||||
Government-sponsored enterprises | — | 26,601 | — | 26,601 | |||||||||||
Mortgage-backed securities | — | 96,018 | — | 96,018 | |||||||||||
Asset-backed securities | — | 1,944 | — | 1,944 | |||||||||||
Corporate debt securities | — | 11,576 | — | 11,576 | |||||||||||
Collateralized debt obligations | — | — | 4,074 | 4,074 | |||||||||||
Obligations of state and political subdivisions | — | 6,602 | — | 6,602 | |||||||||||
Tax-exempt securities | — | 71 | — | 71 | |||||||||||
Foreign government securities | — | 50 | — | 50 | |||||||||||
Forward loan sale commitments and derivative loan commitments | — | — | 62 | 62 | |||||||||||
Total assets | $ | 1,042 | $ | 200,980 | $ | 4,136 | $ | 206,158 | |||||||
Liabilities: | |||||||||||||||
Interest rate swap agreements | $ | — | $ | 760 | $ | — | $ | 760 | |||||||
Total liabilities | $ | — | $ | 760 | $ | — | $ | 760 |
December 31, 2011 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(In Thousands) | |||||||||||||||
Assets: | |||||||||||||||
U.S. Government and agency obligations | $ | 1,051 | $ | 88,536 | $ | — | $ | 89,587 | |||||||
Government-sponsored enterprises | — | 17,666 | — | 17,666 | |||||||||||
Mortgage-backed securities | — | 97,870 | — | 97,870 | |||||||||||
Corporate debt securities | — | 14,047 | — | 14,047 | |||||||||||
Collateralized debt obligations | — | — | 2,917 | 2,917 | |||||||||||
Obligations of state and political subdivisions | — | 6,766 | — | 6,766 | |||||||||||
Tax-exempt securities | — | 71 | — | 71 | |||||||||||
Foreign government securities | — | 75 | — | 75 | |||||||||||
Equity securities | 1,815 | — | — | 1,815 | |||||||||||
Forward loan sale commitments and derivative loan commitments | — | — | 82 | 82 | |||||||||||
Total assets | $ | 2,866 | $ | 225,031 | $ | 2,999 | $ | 230,896 | |||||||
Liabilities: | |||||||||||||||
Forward loan sale commitments and derivative loan commitments | $ | — | $ | — | $ | 90 | $ | 90 | |||||||
Interest rate swap agreement | — | 462 | — | 462 | |||||||||||
Total liabilities | $ | — | $ | 462 | $ | 90 | $ | 552 |
Collateralized Debt Obligations | Derivative Loan and Forward Loan Sale Commitments, Net | ||||||
(In Thousands) | |||||||
Balance at December 31, 2011 | $ | 2,917 | $ | (8 | ) | ||
Increase in fair value included in net income | — | 70 | |||||
Increase in fair value included in other comprehensive income | 1,157 | — | |||||
Balance at June 30, 2012 | $ | 4,074 | $ | 62 |
At June 30, 2012 | At December 31, 2011 | ||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Impaired loans | $ | — | $ | — | $ | 2,334 | $ | — | $ | — | $ | 3,002 | |||||||||||
Other real estate owned | — | — | 598 | — | — | 976 | |||||||||||||||||
Total assets | $ | — | $ | — | $ | 2,932 | $ | — | $ | — | $ | 3,978 |
Three Months Ended June 30, 2012 | Six Months Ended June 30, 2012 | Three Months Ended June 30, 2011 | Six Months Ended June 30, 2011 | |||||||||||||
Total Losses | Total Losses | Total Losses | Total Losses | |||||||||||||
(In Thousands) | ||||||||||||||||
Impaired loans | $ | 171 | $ | 274 | $ | 202 | $ | 207 | ||||||||
Other real estate owned | — | — | 115 | 140 | ||||||||||||
Total assets | $ | 171 | $ | 274 | $ | 317 | $ | 347 |
June 30, 2012 | |||||||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial Assets: | (In Thousands) | ||||||||||||||||||
Cash and cash equivalents | $ | 42,187 | $ | 42,187 | $ | — | $ | — | $ | 42,187 | |||||||||
Available for sale securities | 206,096 | 1,042 | 200,980 | 4,074 | 206,096 | ||||||||||||||
Federal Home Loan Bank stock | 8,078 | — | — | 8,078 | 8,078 | ||||||||||||||
Loans held for sale | 2,926 | — | — | 3,027 | 3,027 | ||||||||||||||
Loans receivable, net | 656,523 | — | — | 676,764 | 676,764 | ||||||||||||||
Accrued interest receivable | 3,276 | — | — | 3,276 | 3,276 | ||||||||||||||
Financial Liabilities: | |||||||||||||||||||
Deposits | 713,960 | — | — | 718,247 | 718,247 | ||||||||||||||
Mortgagors' and investors' escrow accounts | 2,499 | — | — | 2,499 | 2,499 | ||||||||||||||
Federal Home Loan Bank advances | 93,069 | — | 98,590 | — | 98,590 | ||||||||||||||
Junior subordinated debt owed to unconsolidated trust | 8,248 | — | 4,707 | — | 4,707 | ||||||||||||||
On-balance sheet derivative financial instruments: | |||||||||||||||||||
Assets: | |||||||||||||||||||
Derivative loan commitments | 55 | — | — | 55 | 55 | ||||||||||||||
Forward loan sale commitments | 7 | — | — | 7 | 7 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Interest rate swap agreements | 760 | — | 760 | — | 760 |
December 31, 2011 | |||||||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial Assets: | (In Thousands) | ||||||||||||||||||
Cash and cash equivalents | $ | 48,412 | $ | 48,412 | $ | — | $ | — | $ | 48,412 | |||||||||
Available for sale securities | 230,814 | 2,866 | 225,031 | 2,917 | 230,814 | ||||||||||||||
Federal Home Loan Bank stock | 8,388 | — | — | 8,388 | 8,388 | ||||||||||||||
Loans held for sale | 5,558 | — | — | 5,652 | 5,652 | ||||||||||||||
Loans receivable, net | 618,626 | — | — | 629,142 | 629,142 | ||||||||||||||
Accrued interest receivable | 3,539 | — | — | 3,539 | 3,539 | ||||||||||||||
Financial Liabilities: | |||||||||||||||||||
Deposits | 701,926 | — | — | 704,333 | 704,333 | ||||||||||||||
Mortgagors' and investors' escrow accounts | 3,291 | — | — | 3,291 | 3,291 | ||||||||||||||
Federal Home Loan Bank advances | 100,069 | — | 105,666 | — | 105,666 | ||||||||||||||
Junior subordinated debt owed to unconsolidated trust | 8,248 | — | 4,399 | — | 4,399 | ||||||||||||||
On-balance sheet derivative financial instruments: | |||||||||||||||||||
Assets: | |||||||||||||||||||
Derivative loan commitments | 78 | — | — | 78 | 78 | ||||||||||||||
Forward sale loan commitments | 4 | — | — | 4 | 4 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Forward sale loan commitments | 90 | — | — | 90 | 90 | ||||||||||||||
Interest rate swap agreement | 462 | — | 462 | — | 462 |
June 30, 2012 | December 31, 2011 | |||||||
(Dollars in Thousands) | ||||||||
Notional amount | $ | 8,000 | $ | 8,000 | ||||
Weighted average fixed pay rate | 2.44 | % | 2.44 | % | ||||
Weighted average variable receive rate | 0.47 | % | 0.55 | % | ||||
Weighted average maturity in years | 3.5 | 4.0 | ||||||
Unrealized loss relating to interest rate swap | $ | 489 | $ | 462 |
June 30, 2012 | |||
(Dollars in Thousands) | |||
Notional amount | $ | 15,000 | |
Weighted average fixed pay rate | 1.26 | % | |
Weighted average variable receive rate | 0.47 | % | |
Weighted average maturity in years | 4.5 |
June 30, 2012 | December 31, 2011 | ||||||||||||||||
Balance Sheet Location | Notional Amount | Estimated Fair Value | Notional Amount | Estimated Fair Value | |||||||||||||
(In Thousands) | |||||||||||||||||
Derivative designated as hedging instrument: | |||||||||||||||||
Interest rate swap | Other Liabilities | $ | 8,000 | $ | (489 | ) | $ | 8,000 | $ | (462 | ) | ||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Interest rate swap | Other Liabilities | 15,000 | (271 | ) | — | — | |||||||||||
Derivative loan commitments | Other Assets | 9,712 | 55 | 9,074 | 78 | ||||||||||||
Forward loan sale commitments | Other Assets (Liabilities) | 2,777 | 7 | 9,108 | (86 | ) |
• | Residential Loans. Residential mortgage loans comprised 36.4% of the total loan portfolio at June 30, 2012. Residential mortgage loans decreased $7.2 million, or 2.9%, primarily due to prepayments and the sale of $24.1 million of longer-term fixed-rate residential mortgage loans, offset by $41.5 million in residential mortgage loan originations. Residential loan originations increased $4.2 million during the first six months of 2012 over the comparable period in 2011. |
• | Commercial Loans. The commercial loan portfolio, which includes multi-family and commercial real estate and commercial business loans, represented 55.3% of total loans at June 30, 2012. Multi-family and commercial real estate loans increased $15.8 million, or 10.0%, largely due to loan originations of $30.7 million. Loan originations for commercial real estate loans increased $16.3 million during the first six months of 2012 compared to the same period in 2011. Commercial business loans increased $22.9 million, or 13.6%, primarily due to loan originations of $29.0 million. Loan originations for commercial business loans increased $24.2 million during the first six months of 2012, resulting from the addition of several new commercial lenders. |
• | Construction Loans. Construction loans, which include both residential and commercial construction loans, increased $1.0 million. |
• | Consumer Loans. Consumer loans represented 6.4% of the Company’s total loan portfolio at June 30, 2012. Consumer loans increased $6.1 million during the first six months of 2012, primarily due to an increase in indirect automobile loans of $5.7 million. Home equity loans increased $835,000, while other consumer loans decreased $440,000. Loan originations for consumer loans totaled $5.5 million, representing a decrease of $77,000 for the six months ended June 30, 2012 from the comparable period in 2011. |
June 30, 2012 | December 31, 2011 | ||||||
(Dollars in Thousands) | |||||||
Nonaccrual loans: | |||||||
Real estate loans: | |||||||
Residential - 1 to 4 family | $ | 5,468 | $ | 5,590 | |||
Multi-family and commercial | 4,934 | 4,031 | |||||
Total real estate loans | 10,402 | 9,621 | |||||
Commercial business loans | 577 | 654 | |||||
Consumer loans: | |||||||
Home equity | 528 | 316 | |||||
Total nonaccrual loans | 11,507 | 10,591 | |||||
Accruing loans past due 90 days or more | — | — | |||||
Total nonperforming loans | 11,507 | 10,591 | |||||
Other real estate owned, net (1) | 598 | 976 | |||||
Total nonperforming assets | 12,105 | 11,567 | |||||
Accruing troubled debt restructurings | 4,600 | 4,620 | |||||
Total nonperforming assets and troubled debt restructurings | $ | 16,705 | $ | 16,187 | |||
Allowance for loan losses as a percent of nonperforming loans | 49.05 | % | 46.93 | % | |||
Total nonperforming loans to total loans | 1.74 | % | 1.70 | % | |||
Total nonperforming loans to total assets | 1.20 | % | 1.11 | % | |||
Total nonperforming assets and troubled debt restructurings to total assets | 1.75 | % | 1.69 | % |
(1) Other real estate owned balances are shown net of related write-downs or valuation allowance. |
At or For the Three Months Ended June 30, | |||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||
Average Balance | Interest & Dividends | Average Yield/ Rate | Average Balance | Interest & Dividends | Average Yield/ Rate | ||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Loans (1) (2) | $ | 650,233 | $ | 7,422 | 4.59 | % | $ | 621,402 | $ | 7,806 | 5.04 | % | |||||||||
Securities (3) | 229,664 | 1,445 | 2.53 | 230,311 | 1,763 | 3.07 | |||||||||||||||
Other interest-earning assets | 28,714 | 12 | 0.17 | 37,405 | 16 | 0.17 | |||||||||||||||
Total interest-earning assets | 908,611 | 8,879 | 3.93 | 889,118 | 9,585 | 4.32 | |||||||||||||||
Noninterest-earning assets | 49,201 | 49,281 | |||||||||||||||||||
Total assets | $ | 957,812 | $ | 938,399 | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Interest-bearing demand | $ | 70 | — | — | $ | — | — | — | |||||||||||||
NOW and money market | 306,584 | 158 | 0.21 | 276,072 | 367 | 0.53 | |||||||||||||||
Savings (4) | 41,305 | 24 | 0.23 | 53,338 | 58 | 0.44 | |||||||||||||||
Certificates of deposit (5) | 275,807 | 1,333 | 1.94 | 280,038 | 1,467 | 2.10 | |||||||||||||||
Total interest-bearing deposits | 623,766 | 1,515 | 0.98 | 609,448 | 1,892 | 1.25 | |||||||||||||||
Federal Home Loan Bank advances | 95,223 | 816 | 3.45 | 109,169 | 956 | 3.51 | |||||||||||||||
Subordinated debt | 8,248 | 61 | 2.97 | 8,248 | 84 | 4.08 | |||||||||||||||
Total interest-bearing liabilities | 727,237 | 2,392 | 1.32 | 726,865 | 2,932 | 1.62 | |||||||||||||||
Noninterest-bearing liabilities | 99,405 | 81,460 | |||||||||||||||||||
Total liabilities | 826,642 | 808,325 | |||||||||||||||||||
Total shareholders' equity | 131,170 | 130,074 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 957,812 | $ | 938,399 | |||||||||||||||||
Net interest-earning assets | $ | 181,374 | $ | 162,253 | |||||||||||||||||
Tax equivalent net interest income (3) | 6,487 | 6,653 | |||||||||||||||||||
Tax equivalent interest rate spread (6) | 2.61 | % | 2.70 | % | |||||||||||||||||
Tax equivalent net interest margin as a percentage of interest-earning assets (7) | 2.87 | % | 3.00 | % | |||||||||||||||||
Average of interest-earning assets to average interest-bearing liabilities | 124.94 | % | 122.32 | % | |||||||||||||||||
Less tax equivalent adjustment (3) | (1 | ) | (1 | ) | |||||||||||||||||
Net interest income | $ | 6,486 | $ | 6,652 |
(1) Amount is net of deferred loan origination fees and costs. Average balances include nonaccrual loans and loans held for sale and excludes the allowance for loan losses. | |
(2) Loan fees are included in interest income and are immaterial. | |
(3) Municipal securities income and net interest income are presented on a tax equivalent basis using a tax rate of 34%. The tax equivalent adjustment is deducted from tax equivalent net interest income to agree to the amounts reported in the statements of income. | |
(4) Includes mortgagors’ and investors’ escrow accounts. | |
(5) Includes brokered deposits. | |
(6) Tax equivalent net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. | |
(7) Tax equivalent net interest margin represents tax equivalent net interest income divided by average interest-earning assets. |
At or For the Six Months Ended June 30, | |||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||
Average Balance | Interest & Dividends | Average Yield/ Rate | Average Balance | Interest & Dividends | Average Yield/ Rate | ||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Loans (1) (2) | $ | 640,156 | $ | 15,057 | 4.73 | % | $ | 617,944 | $ | 15,714 | 5.13 | % | |||||||||
Securities (3) | 235,289 | 3,019 | 2.58 | 221,129 | 3,345 | 3.05 | |||||||||||||||
Other interest-earning assets | 35,195 | 24 | 0.14 | 47,103 | 46 | 0.20 | |||||||||||||||
Total interest-earning assets | 910,640 | 18,100 | 4.00 | 886,176 | 19,105 | 4.35 | |||||||||||||||
Noninterest-earning assets | 49,518 | 53,896 | |||||||||||||||||||
Total assets | $ | 960,158 | $ | 940,072 | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Interest-bearing demand | $ | 57 | — | — | $ | — | — | — | |||||||||||||
NOW and money market | 310,282 | 373 | 0.24 | 269,093 | 706 | 0.53 | |||||||||||||||
Savings (4) | 40,206 | 59 | 0.30 | 54,293 | 112 | 0.42 | |||||||||||||||
Certificates of deposit (5) | 274,304 | 2,678 | 1.96 | 282,470 | 2,971 | 2.12 | |||||||||||||||
Total interest-bearing deposits | 624,849 | 3,110 | 1.00 | 605,856 | 3,789 | 1.26 | |||||||||||||||
Federal Home Loan Bank advances | 97,646 | 1,665 | 3.43 | 111,296 | 1,968 | 3.57 | |||||||||||||||
Subordinated debt | 8,248 | 168 | 4.10 | 8,248 | 167 | 4.08 | |||||||||||||||
Total interest-bearing liabilities | 730,743 | 4,943 | 1.36 | 725,400 | 5,924 | 1.65 | |||||||||||||||
Noninterest-bearing liabilities | 97,842 | 84,332 | |||||||||||||||||||
Total liabilities | 828,585 | 809,732 | |||||||||||||||||||
Total shareholders' equity | 131,573 | 130,340 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 960,158 | $ | 940,072 | |||||||||||||||||
Net interest-earning assets | $ | 179,897 | $ | 160,776 | |||||||||||||||||
Tax equivalent net interest income (3) | 13,157 | 13,181 | |||||||||||||||||||
Tax equivalent interest rate spread (6) | 2.64 | % | 2.70 | % | |||||||||||||||||
Tax equivalent net interest margin as a percentage of interest-earning assets (7) | 2.91 | % | 3.00 | % | |||||||||||||||||
Average of interest-earning assets to average interest-bearing liabilities | 124.62 | % | 122.16 | % | |||||||||||||||||
Less tax equivalent adjustment (3) | (1 | ) | (1 | ) | |||||||||||||||||
Net interest income | $ | 13,156 | $ | 13,180 |
(1) Amount is net of deferred loan origination fees and costs. Average balances include nonaccrual loans and loans held for sale and excludes the allowance for loan losses. | |
(2) Loan fees are included in interest income and are immaterial. | |
(3) Municipal securities income and net interest income are presented on a tax equivalent basis using a tax rate of 34%. The tax equivalent adjustment is deducted from tax equivalent net interest income to agree to the amounts reported in the statements of income. | |
(4) Includes mortgagors’ and investors’ escrow accounts. | |
(5) Includes brokered deposits. | |
(6) Tax equivalent net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. | |
(7) Tax equivalent net interest margin represents tax equivalent net interest income divided by average interest-earning assets. |
Three Months Ended June 30, 2012 and 2011 | Six Months Ended June 30, 2012 and 2011 | ||||||||||||||||||||||
Increase (Decrease) Due To | Increase (Decrease) Due To | ||||||||||||||||||||||
Rate | Volume | Net | Rate | Volume | Net | ||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||
Interest and dividend income: | |||||||||||||||||||||||
Loans (1)(2) | $ | (728 | ) | $ | 344 | $ | (384 | ) | $ | (1,221 | ) | $ | 564 | $ | (657 | ) | |||||||
Securities (3) | (313 | ) | (5 | ) | (318 | ) | (533 | ) | 207 | (326 | ) | ||||||||||||
Other interest-earning assets | — | (4 | ) | (4 | ) | (12 | ) | (10 | ) | (22 | ) | ||||||||||||
Total interest-earning assets | (1,041 | ) | 335 | (706 | ) | (1,766 | ) | 761 | (1,005 | ) | |||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||
Interest expense: | |||||||||||||||||||||||
Deposits (4) | (381 | ) | 4 | (377 | ) | (667 | ) | (12 | ) | (679 | ) | ||||||||||||
Federal Home Loan Bank advances | (18 | ) | (122 | ) | (140 | ) | (73 | ) | (230 | ) | (303 | ) | |||||||||||
Subordinated debt | (23 | ) | — | (23 | ) | 1 | — | 1 | |||||||||||||||
Total interest-bearing liabilities | (422 | ) | (118 | ) | (540 | ) | (739 | ) | (242 | ) | (981 | ) | |||||||||||
Change in net interest income | $ | (619 | ) | $ | 453 | $ | (166 | ) | $ | (1,027 | ) | $ | 1,003 | $ | (24 | ) |
(1) Amount is net of deferred loan origination fees and costs. Average balances include nonaccrual loans and loans held for sale. | |
(2) Loan fees are included in interest income and are immaterial. | |
(3) Municipal securities income and net interest income are presented on a tax equivalent basis using a tax rate of 34%. The tax equivalent adjustment is deducted from tax equivalent net interest income to agree to the amount reported in the statements of income. | |
(4) Includes mortgagors’ and investors’ escrow accounts. |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||
2012 | 2011 | Dollars | Percent | 2012 | 2011 | Dollars | Percent | ||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||
Net impairment losses recognized in earnings | $ | — | $ | — | $ | — | N/A | $ | (36 | ) | $ | — | $ | (36 | ) | N/A | |||||||||||||
Service fees | 1,221 | 1,211 | 10 | 0.8 | 2,431 | 2,391 | 40 | 1.7 | |||||||||||||||||||||
Wealth management fees | 343 | 1,051 | (708 | ) | (67.4 | ) | 1,410 | 2,117 | (707 | ) | (33.4 | ) | |||||||||||||||||
Increase in cash surrender value of bank-owned life insurance | 70 | 71 | (1 | ) | (1.4 | ) | 142 | 143 | (1 | ) | (0.7 | ) | |||||||||||||||||
Net gain on sale of securities | 257 | 183 | 74 | 40.4 | 574 | 218 | 356 | 163.3 | |||||||||||||||||||||
Mortgage banking | 398 | 133 | 265 | 199.2 | 677 | 302 | 375 | 124.2 | |||||||||||||||||||||
Net (loss) gain in fair value on trading securities and derivatives | (152 | ) | 181 | (333 | ) | (184.0 | ) | (201 | ) | 208 | (409 | ) | (196.6 | ) | |||||||||||||||
Net loss on disposal of SI Trust Servicing operations | (212 | ) | — | (212 | ) | N/A | (698 | ) | — | (698 | ) | N/A | |||||||||||||||||
Other | 401 | 66 | 335 | 507.6 | 788 | 166 | 622 | 374.7 | |||||||||||||||||||||
Total noninterest income | $ | 2,326 | $ | 2,896 | $ | (570 | ) | (19.7 | )% | $ | 5,087 | $ | 5,545 | $ | (458 | ) | (8.3 | )% |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||
2012 | 2011 | Dollars | Percent | 2012 | 2011 | Dollars | Percent | ||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||
Salaries and employee benefits | $ | 4,016 | $ | 4,232 | $ | (216 | ) | (5.1 | )% | $ | 8,254 | $ | 8,376 | $ | (122 | ) | (1.5 | )% | |||||||||||
Occupancy and equipment | 1,332 | 1,388 | (56 | ) | (4.0 | ) | 2,818 | 2,923 | (105 | ) | (3.6 | ) | |||||||||||||||||
Computer and electronic banking services | 896 | 987 | (91 | ) | (9.2 | ) | 1,889 | 1,943 | (54 | ) | (2.8 | ) | |||||||||||||||||
Outside professional services | 313 | 314 | (1 | ) | (0.3 | ) | 677 | 581 | 96 | 16.5 | |||||||||||||||||||
Marketing and advertising | 220 | 241 | (21 | ) | (8.7 | ) | 372 | 401 | (29 | ) | (7.2 | ) | |||||||||||||||||
Supplies | 91 | 132 | (41 | ) | (31.1 | ) | 228 | 267 | (39 | ) | (14.6 | ) | |||||||||||||||||
FDIC deposit insurance and regulatory assessments | 220 | 303 | (83 | ) | (27.4 | ) | 492 | 608 | (116 | ) | (19.1 | ) | |||||||||||||||||
Contribution to SI Financial Group Foundation | — | — | — | N/A | — | 500 | (500 | ) | (100.0 | ) | |||||||||||||||||||
Other | 469 | 713 | (244 | ) | (34.2 | ) | 1,177 | 1,424 | (247 | ) | (17.3 | ) | |||||||||||||||||
Total noninterest expenses | $ | 7,557 | $ | 8,310 | $ | (753 | ) | (9.1 | )% | $ | 15,907 | $ | 17,023 | $ | (1,116 | ) | (6.6 | )% |
June 30, 2012 | December 31, 2011 | ||||||
(In Thousands) | |||||||
Commitments to extend credit: | |||||||
Future loan commitments | $ | 38,936 | $ | 31,211 | |||
Undisbursed construction loans | 2,972 | 5,673 | |||||
Undisbursed home equity lines of credit | 23,627 | 23,172 | |||||
Undisbursed commercial lines of credit | 31,172 | 17,995 | |||||
Overdraft protection lines | 1,216 | 1,190 | |||||
Standby letters of credit | 571 | 34 | |||||
Total commitments | $ | 98,494 | $ | 79,275 |
Percentage Change in Estimated Net Interest Income Over | |||||
12 Months | 24 Months | ||||
50 basis point decrease in rates | (2.87 | )% | (3.41 | )% | |
300 basis point increase in rates | 6.65 | 6.37 | |||
400 basis point increase in rates | 3.68 | 3.76 |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs | |||||||||
April 1 - 30, 2012 | — | $ | — | — | — | ||||||||
May 1 - 31, 2012 | 269,900 | 11.41 | 269,900 | 258,915 | |||||||||
June 1 - 30, 2012 | 144,000 | 11.35 | 144,000 | 114,915 | |||||||||
Total | 413,900 | $ | 11.39 | 413,900 |
(1) On May 8, 2012, the Company announced that the Board of Directors had approved a stock repurchase program authorizing the Company to repurchase up to 5%, or 528,815 shares, of its common stock. The repurchase program will continue until it is completed or terminated by the Company's Board of Directors. |
3.1 | Articles of Incorporation of SI Financial Group, Inc. (1) |
3.2 | Bylaws of SI Financial Group, Inc. (2) |
4 | Specimen Stock Certificate of SI Financial Group, Inc. (1) |
10 | SI Financial Group, Inc. 2012 Equity Incentive Plan (3) |
31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer |
31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer |
32 | 18 U.S.C. Section 1350 Certifications |
101 | The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Condensed Statement of Changes in Shareholders' Equity, (v) the Condensed Consolidated Statements of Cash Flows and (vi) related Notes to Consolidated Financial Statements(4) |
(1) Incorporated herein by reference into this document from the Exhibits on the Registration Statement on Form S-1 (File No. 333-169302), and any amendments thereto, filed with the Securities and Exchange Commission on September 10, 2010. | |
(2) Incorporated herein by reference into this document from the Exhibits to the Company’s Current Report on Form 8-K (File No. 000-54241) filed with the Securities and Exchange Commission on February 17, 2011. | |
(3) Incorporated herein by reference into this document from Appendix A to the Company's Definitive Proxy Materials (File No. 000-54241) filed with the Securities and Exchange Commission on March 30, 2012. | |
(4) This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Act of 1934. As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Act of 1934. |
SI FINANCIAL GROUP, INC. | |||
Date: | August 8, 2012 | /s/ Rheo A. Brouillard | |
Rheo A. Brouillard | |||
President and Chief Executive Officer | |||
(principal executive officer) |
Date: | August 8, 2012 | /s/ Brian J. Hull | |
Brian J. Hull | |||
Executive Vice President, Chief Financial Officer, Treasurer and Chief Operating Officer | |||
(principal financial and accounting officer) |
1. | I have reviewed this report on Form 10-Q of SI Financial Group, Inc.; |
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 13a-15(f) and 15d-15(f)) for the registrant and have: |
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. |
/s/ Rheo A. Brouillard | |
Rheo A. Brouillard | |
President and Chief Executive Officer | |
August 8, 2012 |
1. | I have reviewed this report on Form 10-Q of SI Financial Group, Inc.; |
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 13a-15(f) and 15d-15(f))for the registrant and have: |
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): |
/s/ Brian J. Hull | |
Brian J. Hull | |
Executive Vice President, Chief Financial Officer, | |
Treasurer and Chief Operating Officer | |
August 8, 2012 |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in this Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company as of and for the period covered by this Report. |
By:/s/ Rheo A. Brouillard | |
Rheo A. Brouillard | |
President and Chief Executive Officer | |
August 8, 2012 |
By:/s/ Brian J. Hull | |
Brian J. Hull | |
Executive Vice President, Chief Financial Officer, Treasurer and Chief Operating Officer | |
August 8, 2012 |
PREMISES AND EQUIPMENT (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Land | $ 2,098 | $ 2,098 |
Buildings | 6,776 | 6,660 |
Leasehold Improvements | 8,001 | 7,822 |
Furniture and Equipment | 10,992 | 12,272 |
Construction in Process | 25 | 20 |
Total | 27,892 | 28,872 |
Accumulated depreciation and amortization | (16,054) | (16,221) |
Premises and equipment, net | $ 11,838 | $ 12,651 |
FAIR VALUE OF ASSETS AND LIABILITIES Fair Value - Nonrecurring Gain/Loss Adjustments (Details) (Fair Value, Measurements, Nonrecurring [Member], USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2012
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Jun. 30, 2011
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Jun. 30, 2012
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Jun. 30, 2011
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Fair Value, Measurements, Nonrecurring [Member]
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Change in Fair Value of Fair Value Measured Impaired Loans | $ 171 | $ 202 | $ 274 | $ 207 |
Real Estate, Other Deductions | 0 | 115 | 0 | 140 |
Total Adjustments to Fair Value, Assets Measured on a Nonrecurring Basis | $ 171 | $ 317 | $ 274 | $ 347 |
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES TDR - By Type of Modification (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
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Financing Receivable, Modifications [Line Items] | ||||
Financing Receivable, Modifications, Recorded Investment | $ 5,460 | |||
Adjusted Interest Rate [Member]
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Financing Receivable, Modifications [Line Items] | ||||
Financing Receivable, Modifications, Recorded Investment | 2,459 | |||
Principal Deferrals [Member]
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Financing Receivable, Modifications [Line Items] | ||||
Financing Receivable, Modifications, Recorded Investment | 443 | [1] | ||
Combination of Rate and Payment [Member]
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Financing Receivable, Modifications [Line Items] | ||||
Financing Receivable, Modifications, Recorded Investment | $ 2,558 | [1] | ||
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SECURITIES Summary of Realized Gains/Losses (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Jun. 30, 2012
|
Jun. 30, 2011
|
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Investments, Debt and Equity Securities [Abstract] | ||||
Gross gains on sales | $ 257 | $ 230 | $ 627 | $ 265 |
Gross losses on sales | 0 | (47) | (53) | (47) |
Net gain on sale of securities | $ 257 | $ 183 | $ 574 | $ 218 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Instrument - Cash Flow Hedge (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Dec. 31, 2011
|
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Derivative [Line Items] | |||
Collateral Already Posted, Aggregate Fair Value | $ 600 | ||
Cash Flow Hedging [Member]
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Derivative [Line Items] | |||
Notional Amount of Interest Rate Cash Flow Hedge Derivatives | 8,000 | 8,000 | |
Derivative, Average Fixed Interest Rate | 2.44% | 2.44% | |
Derivative, Average Variable Interest Rate | 0.47% | 0.55% | |
Derivative, Average Remaining Maturity | 3 years 6 months 0 days | 4 years 0 months 0 days | |
Interest Rate Cash Flow Hedge Liability at Fair Value | $ 489 | $ 462 |
FAIR VALUE OF ASSETS AND LIABILITIES (Tables)
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Jun. 30, 2012
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011. The Company had no significant transfers into or out of Levels 1, 2 or 3 during the six months ended June 30, 2012.
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following table shows a reconciliation of the beginning and ending balances for Level 3 assets (liabilities):
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Fair Value Measurements, Nonrecurring [Table Text Block] | The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets for the periods presented. There were no liabilities measured at fair value on a nonrecurring basis for the periods presented.
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Fair Value - Nonrecurring Gain/Loss Adjustments [Table Text Block] | The following table summarizes losses resulting from fair value adjustments for assets measured at fair value on a nonrecurring basis.
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Fair Value, by Balance Sheet Grouping [Table Text Block] | As of June 30, 2012 and December 31, 2011, the recorded carrying amounts and estimated fair values of the Company's financial instruments are as follows:
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SECURITIES Securities OTTI Roll-Forward (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
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Jun. 30, 2011
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Jun. 30, 2012
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Jun. 30, 2011
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Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||||
Balance at beginning of period | $ 1,243 | $ 1,093 | $ 1,207 | $ 1,093 |
Additional credit losses for which OTTI losses were previously recognized | 0 | 0 | 36 | 0 |
Other Than Temporary Impairment, Credit Losses Recognized in Earnings, Reductions, Permanent Loss in Valu | (1,071) | 0 | (1,071) | 0 |
Reduction for securities sold during the period (realized) | 0 | (34) | 0 | (34) |
Balance at end of period | $ 172 | $ 1,059 | $ 172 | $ 1,059 |
FAIR VALUE OF ASSETS AND LIABILITIES Fair Value Measurements - Recurring (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | $ 206,158 | $ 230,896 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 760 | 552 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 1,042 | 2,866 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 200,980 | 225,031 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 760 | 462 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 4,136 | 2,999 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 0 | 90 |
Forward loan sale commitments and derivative loan commitments [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 0 | |
Forward loan sale commitments and derivative loan commitments [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 0 | |
Forward loan sale commitments and derivative loan commitments [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 62 | 82 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 90 | |
Forward loan sale commitments and derivative loan commitments [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 62 | 82 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 90 | |
Interest rate swap agreement [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 0 | 0 |
Interest rate swap agreement [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 760 | 462 |
Interest rate swap agreement [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 0 | 0 |
Interest rate swap agreement [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Liabilities, Fair Value Disclosure [Abstract] | ||
Liabilities, Fair Value Disclosure, Recurring | 760 | 462 |
U.S. Government and agency obligations [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 1,042 | 1,051 |
U.S. Government and agency obligations [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 58,118 | 88,536 |
U.S. Government and agency obligations [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
U.S. Government and agency obligations [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 59,160 | 89,587 |
Government-sponsored enterprises [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Government-sponsored enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 26,601 | 17,666 |
Government-sponsored enterprises [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Government-sponsored enterprises [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 26,601 | 17,666 |
Mortgage-backed securities [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Mortgage-backed securities [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 96,018 | 97,870 |
Mortgage-backed securities [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 96,018 | 97,870 |
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 1,944 | |
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | |
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 1,944 | |
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | |
Corporate debt securities [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Corporate debt securities [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 11,576 | 14,047 |
Corporate debt securities [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Corporate debt securities [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 11,576 | 14,047 |
Collateralized debt obligations [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Collateralized debt obligations [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Collateralized debt obligations [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 4,074 | 2,917 |
Collateralized debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 4,074 | 2,917 |
Obligations of state and political subdivisions [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Obligations of state and political subdivisions [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 6,602 | 6,766 |
Obligations of state and political subdivisions [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Obligations of state and political subdivisions [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 6,602 | 6,766 |
Tax-exempt securities [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Tax-exempt securities [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 71 | 71 |
Tax-exempt securities [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Tax-exempt securities [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 71 | 71 |
Foreign government securities [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Foreign government securities [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 50 | 75 |
Foreign government securities [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | 0 |
Foreign government securities [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 50 | 75 |
Equity securities [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 1,815 | |
Equity securities [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | |
Equity securities [Member] | Fair Value, Inputs, Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | 0 | |
Equity securities [Member] | Fair Value, Measurements, Recurring [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Recurring | $ 1,815 |
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES TDR - Narrative (Details) (Real estate: Multi-family and commercial [Member], USD $)
|
Jun. 30, 2012
|
---|---|
Real estate: Multi-family and commercial [Member]
|
|
Financing Receivable, Modifications [Line Items] | |
Financing Receivable, Modifications, Subsequent Default, Number of Contracts | 1 |
Financing Receivable, Modifications, Subsequent Default, Recorded Investment | $ 437,000 |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
|||||||||
Accounting Policies [Abstract] | |||||||||
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business SI Financial Group, Inc. (the “Company”) is the holding company for Savings Institute Bank and Trust Company (the “Bank”). Established in 1842, the Bank is a community-oriented financial institution headquartered in Willimantic, Connecticut. The Bank provides a variety of financial services to individuals, businesses and municipalities through its twenty-one offices in eastern Connecticut. Its primary products include savings, checking and certificate of deposit accounts, residential and commercial mortgage loans, commercial business loans and consumer loans. In addition, wealth management services, which include trust, financial planning, life insurance and investment services, are offered to individuals and businesses through the Bank’s offices. The Company does not conduct any material business other than owning all of the stock of the Bank and making payments on the subordinated debentures held by the Company. In January 2011, the Company completed a public stock offering and concurrent conversion of the Bank from the mutual holding company form of organization to the stock form of organization (the "Conversion"). A total of 6,544,493 shares of common stock were sold in the subscription and community offerings at $8.00 per share. Additional shares totaling 4,032,356 were issued in exchange for shares of the former SI Financial Group, Inc. at an exchange ratio of 0.8981. Shares outstanding after the stock offering and the exchange totaled 10,576,849. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, the Bank, and the Bank’s wholly-owned subsidiaries, 803 Financial Corp., SI Mortgage Company and SI Realty Company, Inc. All significant intercompany accounts and transactions have been eliminated. Basis of Financial Statement Presentation The interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and general practices within the banking industry. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been omitted. Information in the accompanying interim consolidated financial statements and notes to the financial statements of the Company as of June 30, 2012 and for the three and six months ended June 30, 2012 and 2011 is unaudited. These unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited financial statements of the Company and the accompanying notes for the year ended December 31, 2011 contained in the Company’s Form 10-K. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all of the adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial condition, results of operations and cash flows as of and for the period covered herein. The results of operations for the three and six months ended June 30, 2012 are not necessarily indicative of the operating results for the year ending December 31, 2012. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the balance sheets and reported amounts of revenues and expenses for the periods presented. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, other-than-temporary impairment (“OTTI”) of securities, deferred income taxes and the valuation of intangible assets. Reclassifications Certain amounts in the Company’s 2011 consolidated financial statements have been reclassified to conform to the 2012 presentation. Such reclassifications had no effect on net income. Loans Receivable Loans receivable are stated at current unpaid principal balances, net of the allowance for loan losses and deferred loan origination fees and costs. Management has the ability and intent to hold its loans receivable for the foreseeable future or until maturity or pay-off. A loan is impaired when, based on current information and events, it is probable the Company will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan by loan basis for residential and commercial mortgage loans and commercial business loans by either the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not typically identify individual consumer loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement. The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and concessions have been made to the original contractual terms, such as reductions of interest rates or deferral of interest or principal payments due to the borrower’s financial condition, the modification is considered a troubled debt restructuring (“TDR”). All TDRs are initially classified as impaired. Management considers all nonaccrual loans, with the exception of certain consumer loans, and TDRs to be impaired. In most cases, loan payments less than 90 days past due are considered minor collection delays and the related loans are generally not considered impaired. Allowance for Loan Losses The allowance for loan losses, a material estimate which could change significantly in the near-term, is established through a provision for loan losses charged to earnings to account for losses that are inherent in the loan portfolio and estimated to occur, and is maintained at a level that management considers adequate to absorb losses in the loan portfolio. Loan losses are charged against the allowance for loan losses when management believes that the uncollectibility of the principal loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses when received. In the determination of the allowance for loan losses, management may obtain independent appraisals for significant properties, if necessary. Management's judgment in determining the adequacy of the allowance is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses is evaluated on a monthly basis by management and is based on the evaluation of the known and inherent risk characteristics and size and composition of the loan portfolio, the assessment of current economic and real estate market conditions, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, historical loan loss experience, the level of nonperforming loans, delinquencies, classified assets and loan charge-offs and evaluations of loans and other relevant factors. The allowance for loan losses consists of the following key elements:
The qualitative factors are determined based on the following various risk characteristics for each loan segment. Risk characteristics relevant to each portfolio segment are as follows: Residential – One- to Four-Family – The Bank primarily originates conventional loans with loan-to-value ratios less than 95% and generally originates loans with loan-to-value ratios in excess of 80% only when secured by first liens on owner-occupied one- to four-family residences. Loans with loan-to-value ratios in excess of 80% generally require private mortgage insurance or additional collateral. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality of this segment. Multi-family and Commercial – Loans in this segment are originated for the purpose of acquiring, developing, improving or refinancing multi-family and commercial real estate where the property is the primary collateral securing the loan, and the income generated from the property is the primary repayment source. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Payments on loans secured by income-producing properties often depend on the successful operation and management of the properties. Management continually monitors the underlying cash flows related to these loans. Construction – This segment includes loans to individuals, and to a lesser extent builders, to finance the construction of residential dwellings. The Bank also originates construction loans for commercial development projects. Upon the completion of construction, the loan generally converts to a permanent mortgage loan. Credit risk is affected by cost overruns, time to sell at an adequate price and market conditions. Commercial Business – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy and reduced viability of the industry in which the customer operates will have a negative impact on the credit quality in this segment. To a lesser extent, the Bank finances capital improvements for condominium associations which are secured by the assigned rights to levy special assessments to condominium owners. Consumer – Loans in this segment primarily include home equity lines of credit (representing both first and second liens) and indirect automobile loans and, to a lesser extent, loans secured by marketable securities, passbook or certificate accounts, motorcycles, automobiles and recreational vehicles, as well as unsecured loans. Consumer loan collections depend on the borrower’s continuing financial stability, and therefore, are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. In computing the allowance for loan losses, we do not assign a general valuation allowance to the Small Business Administration (“SBA”) and United States Department of Agriculture (“USDA”) loans that we purchase as such loans are fully guaranteed. These loans are included in commercial business loans. The majority of the Company's loans are collateralized by real estate located in eastern Connecticut. To a lesser extent, certain commercial real estate loans are secured by collateral located outside of our primary market area. Accordingly, the collateral value of a substantial portion of the Company's loan portfolio and real estate acquired through foreclosure is susceptible to changes in market conditions. Although management believes that it uses the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and the Company’s results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while management believes it has established the allowance for loan losses in conformity with GAAP, our regulators, in reviewing the loan portfolio, may request us to increase our allowance for loan losses based on judgments different from ours. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for loan losses may not be adequate or increases may be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses would adversely affect the Company’s financial condition and results of operations. Interest and Fees on Loans Interest on loans is accrued and included in net interest income based on contractual rates applied to principal amounts outstanding. Accrual of interest is discontinued when loan payments are 90 days or more past due, based on contractual terms, or when, in the judgment of management, collectibility of the loan or loan interest becomes uncertain. Subsequent recognition of income occurs only to the extent payment is received subject to management's assessment of the collectibility of the remaining interest and principal. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectibility of interest and principal is no longer in doubt and the borrower has made regular payments in accordance with the terms of the loan over a period of at least six months. Interest collected on nonaccrual loans is recognized only to the extent cash payments are received, and may be recorded as a reduction to principal if the collectibility of the principal balance of the loan is unlikely. Loan origination fees and direct loan origination costs are deferred, and the net amount is recognized as an adjustment of the related loan's yield utilizing the interest method over the contractual life of the loan. Recent Accounting Pronouncements Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements – In May 2011, the Financial Accounting Standards Board ("FASB") amended its standard related to fair value measurement and disclosure requirements in accordance with GAAP and International Financial Reporting Standards. The amendments (1) change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurement, (2) clarify the intent of the application of existing fair value measurement requirements and (3) change the requirements for measuring fair value and for disclosing information about fair value. The amendments are not intended to change the application of existing requirements for fair value measurement. The amendments should be applied prospectively effective during the first interim and annual periods beginning after December 15, 2011. The adoption of these amendments did not have a material impact on the Company’s consolidated financial statements. Presentation of Comprehensive Income – In June 2011, the FASB amended its standard related to the presentation of comprehensive income. Under this amendment, an entity will have the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement or in two separate but consecutive statements. The Company adopted this amendment as of December 31, 2011 with the presentation of separate consolidated statements of comprehensive income. Testing of Goodwill for Impairment – In September 2011, the FASB amended its standard related to how entities test goodwill for impairment. Under this amendment, an entity is now permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If after assessing the totality of events and circumstances, an entity determines it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. Under this amendment, an entity is no longer permitted to carry forward its detailed calculation of a reporting unit’s fair value from a prior year. The amendments in this update are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company adopted this amendment as of January 1, 2012 and it did not have a material impact on the Company’s consolidated financial statements. Disclosures about Offsetting Assets and Liabilities – In December 2011, the FASB amended its standard related to disclosure requirements for offsetting assets and liabilities. Under this amendment, an entity will be required to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. The amendments in this update are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by these amendments retrospectively for all comparative periods presented. The adoption of this amendment is not expected to have a material impact on the Company's consolidated financial statements. |