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 o | 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, 2013 | December 31, 2012 | ||||||
ASSETS: | |||||||
Cash and due from banks: | |||||||
Noninterest-bearing | $ | 13,406 | $ | 16,364 | |||
Interest-bearing | 25,143 | 21,325 | |||||
Total cash and cash equivalents | 38,549 | 37,689 | |||||
Available for sale securities, at fair value | 190,902 | 176,513 | |||||
Loans held for sale | 525 | 5,069 | |||||
Loans receivable (net of allowance for loan losses of $6,007 at June 30, 2013 and $6,387 at December 31, 2012) | 670,445 | 685,163 | |||||
Federal Home Loan Bank stock, at cost | 7,753 | 8,078 | |||||
Bank-owned life insurance | 9,196 | 9,060 | |||||
Premises and equipment, net | 11,458 | 11,216 | |||||
Goodwill | 3,451 | 3,451 | |||||
Accrued interest receivable | 3,242 | 3,215 | |||||
Deferred tax asset, net | 5,448 | 4,639 | |||||
Other real estate owned, net | 731 | 1,293 | |||||
Prepaid FDIC deposit insurance assessment | — | 1,312 | |||||
Other assets | 7,126 | 6,552 | |||||
Total assets | $ | 948,826 | $ | 953,250 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Liabilities: | |||||||
Deposits: | |||||||
Noninterest-bearing | $ | 90,470 | $ | 89,834 | |||
Interest-bearing | 617,852 | 615,314 | |||||
Total deposits | 708,322 | 705,148 | |||||
Mortgagors' and investors' escrow accounts | 2,786 | 3,207 | |||||
Federal Home Loan Bank advances | 93,069 | 98,069 | |||||
Junior subordinated debt owed to unconsolidated trust | 8,248 | 8,248 | |||||
Accrued expenses and other liabilities | 12,236 | 12,819 | |||||
Total liabilities | 824,661 | 827,491 | |||||
Shareholders' Equity: | |||||||
Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued) | — | — | |||||
Common stock ($.01 par value; 35,000,000 shares authorized; 10,111,757 shares issued and outstanding at June 30, 2013; 10,112,310 shares issued and outstanding at December 31, 2012) | 101 | 101 | |||||
Additional paid-in-capital | 95,000 | 94,810 | |||||
Unallocated common shares held by ESOP | (4,848 | ) | (5,088 | ) | |||
Unearned restricted shares | (1,973 | ) | (2,210 | ) | |||
Retained earnings | 36,016 | 36,733 | |||||
Accumulated other comprehensive (loss) income | (131 | ) | 1,413 | ||||
Total shareholders' equity | 124,165 | 125,759 | |||||
Total liabilities and shareholders' equity | $ | 948,826 | $ | 953,250 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest and dividend income: | |||||||||||||||
Loans, including fees | $ | 7,194 | $ | 7,422 | $ | 14,717 | $ | 15,057 | |||||||
Securities: | |||||||||||||||
Taxable interest | 1,070 | 1,434 | 2,092 | 2,991 | |||||||||||
Tax-exempt interest | 20 | — | 20 | 1 | |||||||||||
Dividends | 7 | 10 | 7 | 26 | |||||||||||
Other | 11 | 12 | 21 | 24 | |||||||||||
Total interest and dividend income | 8,302 | 8,878 | 16,857 | 18,099 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | 1,284 | 1,515 | 2,636 | 3,110 | |||||||||||
Federal Home Loan Bank advances | 716 | 816 | 1,491 | 1,665 | |||||||||||
Subordinated debt | 83 | 61 | 166 | 168 | |||||||||||
Total interest expense | 2,083 | 2,392 | 4,293 | 4,943 | |||||||||||
Net interest income | 6,219 | 6,486 | 12,564 | 13,156 | |||||||||||
Provision for loan losses | 55 | 432 | 190 | 916 | |||||||||||
Net interest income after provision for loan losses | 6,164 | 6,054 | 12,374 | 12,240 | |||||||||||
Noninterest income: | |||||||||||||||
Total other-than-temporary impairment losses | (8 | ) | — | (8 | ) | (409 | ) | ||||||||
Portion of losses recognized in other comprehensive income/loss | — | — | — | 373 | |||||||||||
Net impairment losses | (8 | ) | — | (8 | ) | (36 | ) | ||||||||
Service fees | 1,233 | 1,221 | 2,449 | 2,431 | |||||||||||
Wealth management fees | 287 | 343 | 544 | 1,410 | |||||||||||
Increase in cash surrender value of bank-owned life insurance | 68 | 70 | 136 | 142 | |||||||||||
Net gain on sales of securities | — | 257 | 3 | 574 | |||||||||||
Mortgage banking | 271 | 398 | 850 | 677 | |||||||||||
Net gain (loss) on fair value of derivatives | 126 | (152 | ) | 173 | (201 | ) | |||||||||
Net loss on disposal of SI Trust Servicing operations | — | (212 | ) | — | (698 | ) | |||||||||
Other | 95 | 401 | 365 | 788 | |||||||||||
Total noninterest income | 2,072 | 2,326 | 4,512 | 5,087 | |||||||||||
Noninterest expenses: | |||||||||||||||
Salaries and employee benefits | 4,121 | 4,016 | 8,529 | 8,254 | |||||||||||
Occupancy and equipment | 1,304 | 1,332 | 2,687 | 2,818 | |||||||||||
Computer and electronic banking services | 971 | 896 | 1,839 | 1,889 | |||||||||||
Outside professional services | 382 | 313 | 650 | 677 | |||||||||||
Marketing and advertising | 171 | 220 | 301 | 372 | |||||||||||
Supplies | 106 | 91 | 206 | 228 | |||||||||||
FDIC deposit insurance and regulatory assessments | 230 | 220 | 463 | 492 | |||||||||||
Merger expenses | 209 | — | 893 | — | |||||||||||
Other | 715 | 469 | 1,222 | 1,177 | |||||||||||
Total noninterest expenses | 8,209 | 7,557 | 16,790 | 15,907 | |||||||||||
Income before income tax provision | 27 | 823 | 96 | 1,420 | |||||||||||
Income tax provision | 87 | 153 | 233 | 347 | |||||||||||
Net (loss) income | $ | (60 | ) | $ | 670 | $ | (137 | ) | $ | 1,073 | |||||
(Loss) earnings per share: | |||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.07 | $ | (0.01 | ) | $ | 0.11 | |||||
Diluted | $ | (0.01 | ) | $ | 0.07 | $ | (0.01 | ) | $ | 0.11 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Net (loss) income | $ | (60 | ) | $ | 670 | $ | (137 | ) | $ | 1,073 | |||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||||
Net unrealized (loss) gain on available for sale securities: | |||||||||||||||||
Net unrealized holding (loss) gain on available for sale securities | (1,576 | ) | 352 | (1,580 | ) | 979 | |||||||||||
Reclassification adjustment for gains recognized in net (loss) income (1) | — | (170 | ) | (2 | ) | (379 | ) | ||||||||||
Plus: credit portion of OTTI losses recognized in net (loss) income (2) | 5 | — | 5 | 24 | |||||||||||||
Plus: noncredit portion of OTTI (loss) gain on available for sale securities | (4 | ) | 307 | (39 | ) | 667 | |||||||||||
Net unrealized (losses) gains on available for sale securities | (1,575 | ) | 489 | (1,616 | ) | 1,291 | |||||||||||
Net unrealized gain (loss) on interest-rate swap derivative | 44 | (23 | ) | 72 | (18 | ) | |||||||||||
Other comprehensive (loss) income | (1,531 | ) | 466 | (1,544 | ) | 1,273 | |||||||||||
Comprehensive (loss) income | $ | (1,591 | ) | $ | 1,136 | $ | (1,681 | ) | $ | 2,346 | |||||||
Common Stock | Additional Paid-in Capital | Unallocated Common Shares Held by ESOP | Unearned Restricted Shares | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total Shareholders' Equity | ||||||||||||||||||||||||
Shares | Dollars | |||||||||||||||||||||||||||||
Balance at December 31, 2012 | 10,112,310 | $ | 101 | $ | 94,810 | $ | (5,088 | ) | $ | (2,210 | ) | $ | 36,733 | $ | 1,413 | $ | 125,759 | |||||||||||||
Comprehensive loss | — | — | — | — | — | (137 | ) | (1,544 | ) | (1,681 | ) | |||||||||||||||||||
Cash dividends declared ($0.06 per share) | — | — | — | — | — | (573 | ) | — | (573 | ) | ||||||||||||||||||||
Equity incentive plan compensation | — | — | 147 | — | 237 | — | — | 384 | ||||||||||||||||||||||
Allocation of 24,318 ESOP shares | — | — | 40 | 240 | — | — | — | 280 | ||||||||||||||||||||||
Tax benefit from share-based compensation | — | — | 3 | — | — | — | — | 3 | ||||||||||||||||||||||
Common shares repurchased | (553 | ) | — | — | — | — | (7 | ) | — | (7 | ) | |||||||||||||||||||
Balance at June 30, 2013 | 10,111,757 | $ | 101 | $ | 95,000 | $ | (4,848 | ) | $ | (1,973 | ) | $ | 36,016 | $ | (131 | ) | $ | 124,165 |
SI FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands / Unaudited) | |||||||
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net (loss) income | $ | (137 | ) | $ | 1,073 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||
Provision for loan losses | 190 | 916 | |||||
Employee stock ownership plan expense | 280 | 266 | |||||
Equity incentive plan expense | 384 | 56 | |||||
Excess tax benefit from share-based compensation | (3 | ) | (3 | ) | |||
Amortization of investment premiums and discounts, net | 603 | 591 | |||||
Amortization of loan premiums and discounts, net | 698 | 586 | |||||
Depreciation and amortization of premises and equipment | 854 | 959 | |||||
Amortization of core deposit intangible | — | 6 | |||||
Net gain on sales of securities | (3 | ) | (574 | ) | |||
Net (gain) loss on fair value of derivatives | (173 | ) | 201 | ||||
Deferred income tax benefit | (13 | ) | (3 | ) | |||
Loans originated for sale | (25,816 | ) | (21,446 | ) | |||
Proceeds from sale of loans held for sale | 30,804 | 24,440 | |||||
Net loss on disposal of SI Trust Servicing operations | — | 698 | |||||
Net gain on sales of loans held for sale | (731 | ) | (553 | ) | |||
Net gain on sales of loans held for investment | (201 | ) | — | ||||
Net loss on sales or write-downs of other real estate owned | 46 | 14 | |||||
Increase in cash surrender value of bank-owned life insurance | (136 | ) | (142 | ) | |||
Gain on bank-owned life insurance proceeds | — | (349 | ) | ||||
Other-than-temporary impairment losses on securities | 8 | 36 | |||||
Change in operating assets and liabilities: | |||||||
Accrued interest receivable | (27 | ) | 263 | ||||
Other assets | 1,035 | 34 | |||||
Accrued expenses and other liabilities | (308 | ) | 260 | ||||
Net cash provided by operating activities | 7,354 | 7,329 | |||||
Cash flows from investing activities: | |||||||
Purchases of available for sale securities | (40,863 | ) | (34,086 | ) | |||
Proceeds from sales of available for sale securities | 1,000 | 32,417 | |||||
Proceeds from maturities of and principal repayments on available for sale securities | 22,417 | 28,530 | |||||
Redemption of Federal Home Loan Bank stock | 325 | — | |||||
Net decrease (increase) in loans | 28,909 | (11,799 | ) | ||||
Purchases of loans | (18,448 | ) | (28,197 | ) | |||
Proceeds from sales of loans held for investment | 3,189 | — | |||||
Proceeds from sales of other real estate owned | 897 | 912 | |||||
Purchases of premises and equipment | (1,096 | ) | (842 | ) | |||
Proceeds from bank-owned life insurance | — | 585 | |||||
Net cash used in investing activities | (3,670 | ) | (12,480 | ) | |||
SI FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded) (In Thousands / Unaudited) | |||||||
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from financing activities: | |||||||
Net increase in deposits | 3,174 | 12,034 | |||||
Net decrease in mortgagors' and investors' escrow accounts | (421 | ) | (792 | ) | |||
Proceeds from Federal Home Loan Bank advances | 10,000 | — | |||||
Repayments of Federal Home Loan Bank advances | (15,000 | ) | (7,000 | ) | |||
Excess tax benefit from share-based compensation | 3 | 3 | |||||
Cash dividends on common stock | (573 | ) | (599 | ) | |||
Common shares repurchased | (7 | ) | (4,720 | ) | |||
Net cash used in financing activities | (2,824 | ) | (1,074 | ) | |||
Net change in cash and cash equivalents | 860 | (6,225 | ) | ||||
Cash and cash equivalents at beginning of period | 37,689 | 48,412 | |||||
Cash and cash equivalents at end of period | $ | 38,549 | $ | 42,187 | |||
Supplemental cash flow information: | |||||||
Interest paid | $ | 4,309 | $ | 4,944 | |||
Income taxes paid, net | 1,112 | 113 | |||||
Transfer of loans to other real estate owned | 381 | 597 |
• | 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 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Dollars in Thousands, Except Per Share Data) | |||||||||||||||
Net (loss) income | $ | (60 | ) | $ | 670 | $ | (137 | ) | $ | 1,073 | |||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 9,567,612 | 9,821,841 | 9,561,808 | 9,896,154 | |||||||||||
Effect of dilutive stock options | — | 38,300 | — | 32,661 | |||||||||||
Diluted | 9,567,612 | 9,860,141 | 9,561,808 | 9,928,815 | |||||||||||
(Loss) earnings per share: | |||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.07 | $ | (0.01 | ) | $ | 0.11 | |||||
Diluted | $ | (0.01 | ) | $ | 0.07 | $ | (0.01 | ) | $ | 0.11 |
June 30, 2013 | ||||||||||||||||
Amortized Cost (1) | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Debt securities: | ||||||||||||||||
U.S. Government and agency obligations | $ | 52,798 | $ | 1,430 | $ | (39 | ) | $ | 54,189 | |||||||
Government-sponsored enterprises | 28,783 | 342 | (179 | ) | 28,946 | |||||||||||
Mortgage-backed securities:(2) | ||||||||||||||||
Agency - residential | 81,831 | 1,328 | (1,304 | ) | 81,855 | |||||||||||
Non-agency - residential | 2,080 | 37 | (130 | ) | 1,987 | |||||||||||
Non-agency - HELOC | 2,255 | 74 | — | 2,329 | ||||||||||||
Corporate debt securities | 7,021 | 133 | (18 | ) | 7,136 | |||||||||||
Collateralized debt obligations | 5,806 | — | (1,353 | ) | 4,453 | |||||||||||
Obligations of state and political subdivisions | 6,258 | 182 | (58 | ) | 6,382 | |||||||||||
Tax-exempt securities | 3,884 | — | (284 | ) | 3,600 | |||||||||||
Foreign government securities | 25 | — | — | 25 | ||||||||||||
Total available for sale securities | $ | 190,741 | $ | 3,526 | $ | (3,365 | ) | $ | 190,902 | |||||||
December 31, 2012 | ||||||||||||||||
Amortized Cost (1) | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Debt securities: | ||||||||||||||||
U.S. Government and agency obligations | $ | 55,027 | $ | 1,255 | $ | (23 | ) | $ | 56,259 | |||||||
Government-sponsored enterprises | 23,388 | 579 | — | 23,967 | ||||||||||||
Mortgage-backed securities:(2) | ||||||||||||||||
Agency - residential | 69,399 | 2,211 | (66 | ) | 71,544 | |||||||||||
Non-agency - residential | 4,784 | 52 | (124 | ) | 4,712 | |||||||||||
Non-agency - HELOC | 2,555 | — | (78 | ) | 2,477 | |||||||||||
Corporate debt securities | 7,555 | 188 | (49 | ) | 7,694 | |||||||||||
Collateralized debt obligations | 5,993 | — | (1,597 | ) | 4,396 | |||||||||||
Obligations of state and political subdivisions | 5,152 | 262 | — | 5,414 | ||||||||||||
Foreign government securities | 50 | — | — | 50 | ||||||||||||
Total available for sale securities | $ | 173,903 | $ | 4,547 | $ | (1,937 | ) | $ | 176,513 | |||||||
Amortized Cost | Fair Value | ||||||
(In Thousands) | |||||||
Within 1 year | $ | 9,075 | $ | 9,129 | |||
After 1 but within 5 years | 25,041 | 25,502 | |||||
After 5 but within 10 years | 18,218 | 18,301 | |||||
After 10 years | 52,241 | 51,799 | |||||
104,575 | 104,731 | ||||||
Mortgage-backed securities | 86,166 | 86,171 | |||||
Total debt securities | $ | 190,741 | $ | 190,902 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In Thousands) | |||||||||||||||
Gross gains on sales | $ | — | $ | 257 | $ | 3 | $ | 627 | |||||||
Gross losses on sales | — | — | — | (53 | ) | ||||||||||
Net gain on sale of securities | $ | — | $ | 257 | $ | 3 | $ | 574 |
Less Than 12 Months | 12 Months Or More | Total | |||||||||||||||||||||
June 30, 2013: | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
U.S. Government and agency obligations | $ | 2,851 | $ | 17 | $ | 1,116 | $ | 22 | $ | 3,967 | $ | 39 | |||||||||||
Government sponsored enterprises | 6,818 | 179 | — | — | 6,818 | 179 | |||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Agency - residential | 42,368 | 1,290 | 669 | 14 | 43,037 | 1,304 | |||||||||||||||||
Non-agency - residential | — | — | 1,241 | 130 | 1,241 | 130 | |||||||||||||||||
Corporate debt securities | 978 | 18 | — | — | 978 | 18 | |||||||||||||||||
Collateralized debt obligations | — | — | 4,453 | 1,353 | 4,453 | 1,353 | |||||||||||||||||
Obligations of state and political subdivisions | 1,224 | 58 | — | — | 1,224 | 58 | |||||||||||||||||
Tax-exempt securities | 3,600 | 284 | — | — | 3,600 | 284 | |||||||||||||||||
Total | $ | 57,839 | $ | 1,846 | $ | 7,479 | $ | 1,519 | $ | 65,318 | $ | 3,365 |
Less Than 12 Months | 12 Months Or More | Total | |||||||||||||||||||||
December 31, 2012: | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
U.S. Government and agency obligations | $ | — | $ | — | $ | 1,367 | $ | 23 | $ | 1,367 | $ | 23 | |||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Agency - residential | 6,923 | 37 | 1,404 | 29 | 8,327 | 66 | |||||||||||||||||
Non-agency - residential | 1,926 | 8 | 1,417 | 116 | 3,343 | 124 | |||||||||||||||||
Non-agency - HELOC | — | — | 2,477 | 78 | 2,477 | 78 | |||||||||||||||||
Corporate debt securities | — | — | 946 | 49 | 946 | 49 | |||||||||||||||||
Collateralized debt obligations | — | — | 4,396 | 1,597 | 4,396 | 1,597 | |||||||||||||||||
Total | $ | 8,849 | $ | 45 | $ | 12,007 | $ | 1,892 | $ | 20,856 | $ | 1,937 |
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 | $ | 1,371 | $ | — | $ | (130 | ) | $ | 1,241 | D | $ | 197 | 0.00 | ||||||||||||
MBS 2 | PT, AS | 155 | 10 | — | 165 | C | 8 | 0.00 | ||||||||||||||||||
$ | 1,526 | $ | 10 | $ | (130 | ) | $ | 1,406 | $ | 205 | ||||||||||||||||
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 | $ | — | $ | (468 | ) | $ | 532 | CCC- | $ | — | 107.5 | ||||||||||||
CDO 2 | B3 | 1,000 | — | (446 | ) | 554 | CCC- | — | 107.5 | |||||||||||||||||
CDO 3 | A2 | 2,578 | — | (206 | ) | 2,372 | B- | 62 | 126.8 | |||||||||||||||||
CDO 4 | A1 | 1,228 | — | (233 | ) | 995 | BB- | — | 170.6 | |||||||||||||||||
$ | 5,806 | $ | — | $ | (1,353 | ) | $ | 4,453 | $ | 62 | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In Thousands) | |||||||||||||||
Balance at beginning of period | $ | 259 | $ | 1,243 | $ | 259 | $ | 1,207 | |||||||
Amounts related to credit for which OTTI losses were not previously recognized | 8 | — | 8 | — | |||||||||||
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 | ) | |||||||||
Balance at end of period | $ | 267 | $ | 172 | $ | 267 | $ | 172 |
June 30, 2013 | December 31, 2012 | |||||||
(In Thousands) | ||||||||
Real estate loans: | ||||||||
Residential - 1 to 4 family | $ | 222,011 | $ | 230,664 | ||||
Multi-family and commercial | 192,135 | 201,951 | ||||||
Construction | 3,511 | 3,284 | ||||||
Total real estate loans | 417,657 | 435,899 | ||||||
Commercial business loans: | ||||||||
SBA and USDA guaranteed | 147,223 | 148,385 | ||||||
Time share | 24,008 | 23,310 | ||||||
Condominium association | 16,729 | 15,493 | ||||||
Other | 31,106 | 26,339 | ||||||
Total commercial business loans | 219,066 | 213,527 | ||||||
Consumer loans: | ||||||||
Home equity | 27,980 | 28,375 | ||||||
Indirect automobile | 8,001 | 9,652 | ||||||
Other | 2,107 | 2,353 | ||||||
Total consumer loans | 38,088 | 40,380 | ||||||
Total loans | 674,811 | 689,806 | ||||||
Deferred loan origination costs, net of fees | 1,641 | 1,744 | ||||||
Allowance for loan losses | (6,007 | ) | (6,387 | ) | ||||
Loans receivable, net | $ | 670,445 | $ | 685,163 |
Three Months Ended June 30, 2013 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Balance at beginning of period | $ | 1,101 | $ | 3,168 | $ | 27 | $ | 1,534 | $ | 498 | $ | 6,328 | |||||||||||
Provision (credit) for loan losses | 60 | (26 | ) | 3 | (3 | ) | 21 | 55 | |||||||||||||||
Loans charged-off | (192 | ) | (197 | ) | — | — | (21 | ) | (410 | ) | |||||||||||||
Recoveries of loans previously charged-off | 30 | 2 | — | — | 2 | 34 | |||||||||||||||||
Balance at end of period | $ | 999 | $ | 2,947 | $ | 30 | $ | 1,531 | $ | 500 | $ | 6,007 |
Six Months Ended June 30, 2013 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Balance at beginning of period | $ | 1,125 | $ | 3,028 | $ | 22 | $ | 1,735 | $ | 477 | $ | 6,387 | |||||||||||
Provision (credit) for loan losses | 302 | 45 | 8 | (204 | ) | 39 | 190 | ||||||||||||||||
Loans charged-off | (458 | ) | (197 | ) | — | — | (61 | ) | (716 | ) | |||||||||||||
Recoveries of loans previously charged-off | 30 | 71 | — | — | 45 | 146 | |||||||||||||||||
Balance at end of period | $ | 999 | $ | 2,947 | $ | 30 | $ | 1,531 | $ | 500 | $ | 6,007 |
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 |
June 30, 2013 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Allowance for loans individually evaluated and deemed to be impaired | $ | 342 | $ | 100 | $ | — | $ | — | $ | — | $ | 442 | |||||||||||
Allowance for loans individually or collectively evaluated and not deemed to be impaired | 657 | 2,847 | 30 | 1,531 | 500 | 5,565 | |||||||||||||||||
Total allowance for loan losses | $ | 999 | $ | 2,947 | $ | 30 | $ | 1,531 | $ | 500 | $ | 6,007 | |||||||||||
Loans individually evaluated and deemed to be impaired | $ | 6,870 | $ | 3,252 | $ | — | $ | 475 | $ | 212 | $ | 10,809 | |||||||||||
Loans individually or collectively evaluated and not deemed to be impaired | 215,141 | 188,883 | 3,511 | 218,591 | 37,876 | 664,002 | |||||||||||||||||
Total loans | $ | 222,011 | $ | 192,135 | $ | 3,511 | $ | 219,066 | $ | 38,088 | $ | 674,811 |
December 31, 2012 | Residential - 1 to 4 Family | Multi-family and Commercial | Construction | Commercial Business | Consumer | Total | |||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Allowance for loans individually evaluated and deemed to be impaired | $ | 454 | $ | 88 | $ | — | $ | 39 | $ | — | $ | 581 | |||||||||||
Allowance for loans individually or collectively evaluated and not deemed to be impaired | 671 | 2,940 | 22 | 1,696 | 477 | 5,806 | |||||||||||||||||
Total allowance for loan losses | $ | 1,125 | $ | 3,028 | $ | 22 | $ | 1,735 | $ | 477 | $ | 6,387 | |||||||||||
Loans individually evaluated and deemed to be impaired | $ | 6,991 | $ | 5,873 | $ | — | $ | 618 | $ | 361 | $ | 13,843 | |||||||||||
Loans individually or collectively evaluated and not deemed to be impaired | 223,673 | 196,078 | 3,284 | 212,909 | 40,019 | 675,963 | |||||||||||||||||
Total loans | $ | 230,664 | $ | 201,951 | $ | 3,284 | $ | 213,527 | $ | 40,380 | $ | 689,806 |
June 30, 2013 | 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 | $ | 139 | $ | 21 | $ | 2,892 | $ | 3,052 | $ | 218,959 | $ | 222,011 | |||||||||||
Multi-family and commercial | 574 | 153 | 1,633 | 2,360 | 189,775 | 192,135 | |||||||||||||||||
Construction | — | — | — | — | 3,511 | 3,511 | |||||||||||||||||
Commercial Business: | |||||||||||||||||||||||
SBA and USDA guaranteed | 996 | 1,611 | — | 2,607 | 144,616 | 147,223 | |||||||||||||||||
Time share | — | — | — | — | 24,008 | 24,008 | |||||||||||||||||
Condominium association | — | — | — | — | 16,729 | 16,729 | |||||||||||||||||
Other | — | — | 376 | 376 | 30,730 | 31,106 | |||||||||||||||||
Consumer: | |||||||||||||||||||||||
Home equity | 50 | 1 | 24 | 75 | 27,905 | 27,980 | |||||||||||||||||
Indirect automobile | 49 | 28 | — | 77 | 7,924 | 8,001 | |||||||||||||||||
Other | 2 | — | 7 | 9 | 2,098 | 2,107 | |||||||||||||||||
Total | $ | 1,810 | $ | 1,814 | $ | 4,932 | $ | 8,556 | $ | 666,255 | $ | 674,811 |
December 31, 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 | $ | 3,245 | $ | 1,725 | $ | 3,285 | $ | 8,255 | $ | 222,409 | $ | 230,664 | |||||||||||
Multi-family and commercial | 4,149 | — | 1,266 | 5,415 | 196,536 | 201,951 | |||||||||||||||||
Construction | — | — | — | — | 3,284 | 3,284 | |||||||||||||||||
Commercial Business: | |||||||||||||||||||||||
SBA and USDA guaranteed | 5,014 | 1,087 | — | 6,101 | 142,284 | 148,385 | |||||||||||||||||
Time share | — | — | — | — | 23,310 | 23,310 | |||||||||||||||||
Condominium association | — | — | — | — | 15,493 | 15,493 | |||||||||||||||||
Other | — | — | 541 | 541 | 25,798 | 26,339 | |||||||||||||||||
Consumer: | |||||||||||||||||||||||
Home equity | 216 | — | 361 | 577 | 27,798 | 28,375 | |||||||||||||||||
Indirect automobile | 19 | — | — | 19 | 9,633 | 9,652 | |||||||||||||||||
Other | 21 | — | — | 21 | 2,332 | 2,353 | |||||||||||||||||
Total | $ | 12,664 | $ | 2,812 | $ | 5,453 | $ | 20,929 | $ | 668,877 | $ | 689,806 |
Impaired Loans | |||||||||||||||
June 30, 2013 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Nonaccrual Loans | |||||||||||
(In Thousands) | |||||||||||||||
Impaired loans without valuation allowance: | |||||||||||||||
Real Estate: | |||||||||||||||
Residential - 1 to 4 family | $ | 4,382 | $ | 4,714 | $ | — | $ | 4,371 | |||||||
Multi-family and commercial | 2,864 | 3,061 | — | 2,806 | |||||||||||
Commercial business - Other | 475 | 475 | — | 475 | |||||||||||
Consumer - Home equity | 212 | 247 | — | 217 | |||||||||||
Consumer - Other | — | — | — | 7 | |||||||||||
Total impaired loans without valuation allowance | 7,933 | 8,497 | — | 7,876 | |||||||||||
Impaired loans with valuation allowance: | |||||||||||||||
Real Estate: | |||||||||||||||
Residential - 1 to 4 family | 2,488 | 2,488 | 342 | 758 | |||||||||||
Multi-family and commercial | 388 | 478 | 100 | 388 | |||||||||||
Total impaired loans with valuation allowance | 2,876 | 2,966 | 442 | 1,146 | |||||||||||
Total impaired loans | $ | 10,809 | $ | 11,463 | $ | 442 | $ | 9,022 |
Impaired Loans | |||||||||||||||
December 31, 2012 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Nonaccrual Loans | |||||||||||
(In Thousands) | |||||||||||||||
Impaired loans without valuation allowance: | |||||||||||||||
Real Estate: | |||||||||||||||
Residential - 1 to 4 family | $ | 3,866 | $ | 4,013 | $ | — | $ | 3,855 | |||||||
Multi-family and commercial | 4,407 | 4,407 | — | 1,522 | |||||||||||
Commercial business - Other | 546 | 546 | — | 470 | |||||||||||
Consumer - Home equity | 361 | 435 | — | 366 | |||||||||||
Total impaired loans without valuation allowance | 9,180 | 9,401 | — | 6,213 | |||||||||||
Impaired loans with valuation allowance: | |||||||||||||||
Real Estate: | |||||||||||||||
Residential - 1 to 4 family | 3,125 | 3,125 | 454 | 1,133 | |||||||||||
Multi-family and commercial | 1,466 | 1,556 | 88 | 236 | |||||||||||
Commercial business - Other | 72 | 72 | 39 | 72 | |||||||||||
Total impaired loans with valuation allowance | 4,663 | 4,753 | 581 | 1,441 | |||||||||||
Total impaired loans | $ | 13,843 | $ | 14,154 | $ | 581 | $ | 7,654 |
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | ||||||||||||||||||||||
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 | $ | 7,292 | $ | 127 | $ | 110 | $ | 7,048 | $ | 158 | $ | 125 | |||||||||||
Multi-family and commercial | 3,287 | 1 | — | 4,891 | 46 | — | |||||||||||||||||
Commercial business - Other | 382 | 1 | 1 | 493 | 7 | 5 | |||||||||||||||||
Consumer - Home equity | 318 | 11 | 12 | 377 | 27 | 27 | |||||||||||||||||
Total | $ | 11,279 | $ | 140 | $ | 123 | $ | 12,809 | $ | 238 | $ | 157 |
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 |
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 assets is not warranted. |
June 30, 2013 | Not Rated | Pass | Special Mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||||||
Residential - 1 to 4 family | $ | — | $ | 213,266 | $ | 676 | $ | 8,069 | $ | — | $ | — | $ | 222,011 | |||||||||||||
Multi-family and commercial | — | 171,666 | 8,939 | 11,530 | — | — | 192,135 | ||||||||||||||||||||
Construction | — | 3,511 | — | — | — | — | 3,511 | ||||||||||||||||||||
Total real estate loans | — | 388,443 | 9,615 | 19,599 | — | — | 417,657 | ||||||||||||||||||||
Commercial Business: | |||||||||||||||||||||||||||
SBA and USDA guaranteed | 147,223 | — | — | — | — | — | 147,223 | ||||||||||||||||||||
Time share | — | 24,008 | — | — | — | — | 24,008 | ||||||||||||||||||||
Condominium association | — | 16,729 | — | — | — | — | 16,729 | ||||||||||||||||||||
Other | — | 27,318 | 2,537 | 1,251 | — | — | 31,106 | ||||||||||||||||||||
Total commercial business loans | 147,223 | 68,055 | 2,537 | 1,251 | — | — | 219,066 | ||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||
Home equity | — | 27,643 | — | 337 | — | — | 27,980 | ||||||||||||||||||||
Indirect automobile | — | 8,001 | — | — | — | — | 8,001 | ||||||||||||||||||||
Other | — | 2,100 | — | 7 | — | — | 2,107 | ||||||||||||||||||||
Total consumer loans | — | 37,744 | — | 344 | — | — | 38,088 | ||||||||||||||||||||
Total loans | $ | 147,223 | $ | 494,242 | $ | 12,152 | $ | 21,194 | $ | — | $ | — | $ | 674,811 |
December 31, 2012 | Not Rated | Pass | Special Mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||||||
Residential - 1 to 4 family | $ | — | $ | 222,262 | $ | 723 | $ | 7,679 | $ | — | $ | — | $ | 230,664 | |||||||||||||
Multi-family and commercial | — | 185,141 | 5,321 | 11,489 | — | — | 201,951 | ||||||||||||||||||||
Construction | — | 3,284 | — | — | — | — | 3,284 | ||||||||||||||||||||
Total real estate loans | — | 410,687 | 6,044 | 19,168 | — | — | 435,899 | ||||||||||||||||||||
Commercial Business: | |||||||||||||||||||||||||||
SBA and USDA guaranteed | 148,385 | — | — | — | — | — | 148,385 | ||||||||||||||||||||
Time share | — | 23,310 | — | — | — | — | 23,310 | ||||||||||||||||||||
Condominium association | — | 15,493 | — | — | — | — | 15,493 | ||||||||||||||||||||
Other | — | 22,244 | 3,399 | 696 | — | — | 26,339 | ||||||||||||||||||||
Total commercial business loans | 148,385 | 61,047 | 3,399 | 696 | — | — | 213,527 | ||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||
Home equity | — | 27,960 | — | 415 | — | — | 28,375 | ||||||||||||||||||||
Indirect automobile | — | 9,652 | — | — | — | — | 9,652 | ||||||||||||||||||||
Other | — | 2,353 | — | — | — | — | 2,353 | ||||||||||||||||||||
Total consumer loans | — | 39,965 | — | 415 | — | — | 40,380 | ||||||||||||||||||||
Total loans | $ | 148,385 | $ | 511,699 | $ | 9,443 | $ | 20,279 | $ | — | $ | — | $ | 689,806 |
Three Months Ended June 30, | |||||||||||
2013 | 2012 | ||||||||||
Number | Recorded | Number | Recorded | ||||||||
of Loans | Investment | of Loans | Investment | ||||||||
(Dollars in Thousands) | |||||||||||
Residential - 1 to 4 family | — | $ | — | 3 | $ | 434 | |||||
Total | — | $ | — | 3 | $ | 434 |
Six Months Ended June 30, | |||||||||||
2013 | 2012 | ||||||||||
Number | Recorded | Number | Recorded | ||||||||
of Loans | Investment | of Loans | Investment | ||||||||
(Dollars in Thousands) | |||||||||||
Residential - 1 to 4 family | 1 | $ | 408 | 3 | $ | 434 | |||||
Total | 1 | $ | 408 | 3 | $ | 434 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In Thousands) | ||||||||||||||||
Combination of rate and payment (1) | $ | — | $ | 434 | $ | — | $ | 434 | ||||||||
Combination of rate and maturity (2) | — | — | 408 | — | ||||||||||||
Total | $ | — | $ | 434 | $ | 408 | $ | 434 | ||||||||
June 30, 2013 | December 31, 2012 | ||||||
(In Thousands) | |||||||
Land | $ | 2,890 | $ | 2,098 | |||
Buildings | 7,018 | 7,052 | |||||
Leasehold improvements | 7,581 | 7,563 | |||||
Furniture and equipment | 11,243 | 10,867 | |||||
Construction in process | 24 | 84 | |||||
28,756 | 27,664 | ||||||
Accumulated depreciation and amortization | (17,298 | ) | (16,448 | ) | |||
Premises and equipment, net | $ | 11,458 | $ | 11,216 |
Six Months Ended June 30, 2013 | |||||||||||
Before Tax Amount | Tax Effects | Net of Tax Amount | |||||||||
(In Thousands) | |||||||||||
Securities: | |||||||||||
Unrealized holding losses on available for sale securities | $ | (2,394 | ) | $ | 814 | $ | (1,580 | ) | |||
Reclassification adjustment for gains recognized in net loss | (3 | ) | 1 | (2 | ) | ||||||
Credit portion of OTTI losses recognized in net loss | 8 | (3 | ) | 5 | |||||||
Noncredit portion of OTTI losses on available for sale securities | (60 | ) | 21 | (39 | ) | ||||||
Unrealized holding losses on available for sale securities, net of taxes | (2,449 | ) | 833 | (1,616 | ) | ||||||
Derivative instrument: | |||||||||||
Change in fair value of effective cash flow hedging derivative | 109 | (37 | ) | 72 | |||||||
Other comprehensive loss | $ | (2,340 | ) | $ | 796 | $ | (1,544 | ) |
June 30, 2013 | |||||||||||
Before Tax Amount | Tax Effects | Net of Tax Amount | |||||||||
(In Thousands) | |||||||||||
Net unrealized gains on available for sale securities | $ | 487 | $ | (165 | ) | $ | 322 | ||||
Noncredit portion of OTTI losses on available for sale securities | (326 | ) | 111 | (215 | ) | ||||||
Net unrealized loss on effective cash flow hedging derivative | (361 | ) | 123 | (238 | ) | ||||||
Accumulated other comprehensive loss | $ | (200 | ) | $ | 69 | $ | (131 | ) |
December 31, 2012 | |||||||||||
Before Tax Amount | Tax Effects | Net of Tax Amount | |||||||||
(In Thousands) | |||||||||||
Net unrealized gains on available for sale securities | $ | 2,876 | $ | (977 | ) | $ | 1,899 | ||||
Noncredit portion of OTTI losses on available for sale securities | (266 | ) | 90 | (176 | ) | ||||||
Net unrealized loss on effective cash flow hedging derivative | (470 | ) | 160 | (310 | ) | ||||||
Accumulated other comprehensive income | $ | 2,140 | $ | (727 | ) | $ | 1,413 |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
June 30, 2013 | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
Tier I Capital Ratio | $ | 104,771 | 11.25 | % | $ | 37,253 | 4.00 | % | $ | 46,567 | 5.00 | % | ||||||||
Tier I Risk-based Capital Ratio | 104,771 | 19.62 | 21,363 | 4.00 | 32,045 | 6.00 | ||||||||||||||
Total Risk-based Capital Ratio | 111,218 | 20.82 | 42,726 | 8.00 | 53,408 | 10.00 | ||||||||||||||
Tangible Equity Ratio | 104,771 | 11.25 | 13,970 | 1.50 | N/A | N/A |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
December 31, 2012 | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
Tier I Capital Ratio | $ | 103,547 | 11.08 | % | $ | 37,382 | 4.00 | % | $ | 46,727 | 5.00 | % | ||||||||
Tier I Risk-based Capital Ratio | 103,547 | 20.20 | 20,504 | 4.00 | 30,757 | 6.00 | ||||||||||||||
Total Risk-based Capital Ratio | 109,751 | 21.41 | 41,009 | 8.00 | 51,262 | 10.00 | ||||||||||||||
Tangible Equity Ratio | 103,547 | 11.08 | 14,018 | 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. Transfers between levels are recognized at the end of a reporting period, if applicable. |
• | 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 a nationally-recognized, third-party 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 that 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 flow calculation that applies current FHLB interest rates for advances of similar maturity to a schedule of maturities of such advances. |
• | 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 are 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 for derivative loan commitments, 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, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(In Thousands) | |||||||||||||||
Assets: | |||||||||||||||
U.S. Government and agency obligations | $ | 1,026 | $ | 53,163 | $ | — | $ | 54,189 | |||||||
Government-sponsored enterprises | — | 28,946 | — | 28,946 | |||||||||||
Mortgage-backed securities | — | 86,171 | — | 86,171 | |||||||||||
Corporate debt securities | — | 7,136 | — | 7,136 | |||||||||||
Collateralized debt obligations | — | — | 4,453 | 4,453 | |||||||||||
Obligations of state and political subdivisions | — | 6,382 | — | 6,382 | |||||||||||
Tax-exempt securities | — | 3,600 | — | 3,600 | |||||||||||
Foreign government securities | — | 25 | — | 25 | |||||||||||
Forward loan sale commitments and derivative loan commitments | — | — | 87 | 87 | |||||||||||
Total assets | $ | 1,026 | $ | 185,423 | $ | 4,540 | $ | 190,989 | |||||||
Liabilities: | |||||||||||||||
Forward loan sale commitments and derivative loan commitments | $ | — | $ | — | $ | 83 | $ | 83 | |||||||
Interest rate swap agreements | — | 498 | — | 498 | |||||||||||
Total liabilities | $ | — | $ | 498 | $ | 83 | $ | 581 |
December 31, 2012 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(In Thousands) | |||||||||||||||
Assets: | |||||||||||||||
U.S. Government and agency obligations | $ | 1,035 | $ | 55,224 | $ | — | $ | 56,259 | |||||||
Government-sponsored enterprises | — | 23,967 | — | 23,967 | |||||||||||
Mortgage-backed securities | — | 78,733 | — | 78,733 | |||||||||||
Corporate debt securities | — | 7,694 | — | 7,694 | |||||||||||
Collateralized debt obligations | — | — | 4,396 | 4,396 | |||||||||||
Obligations of state and political subdivisions | — | 5,414 | — | 5,414 | |||||||||||
Foreign government securities | — | 50 | — | 50 | |||||||||||
Forward loan sale commitments and derivative loan commitments | — | — | 17 | 17 | |||||||||||
Total assets | $ | 1,035 | $ | 171,082 | $ | 4,413 | $ | 176,530 | |||||||
Liabilities: | |||||||||||||||
Forward loan sale commitments and derivative loan commitments | $ | — | $ | — | $ | 4 | $ | 4 | |||||||
Interest rate swap agreements | — | 849 | — | 849 | |||||||||||
Total liabilities | $ | — | $ | 849 | $ | 4 | $ | 853 |
Collateralized Debt Obligations | Derivative Loan and Forward Loan Sale Commitments, Net | ||||||
(In Thousands) | |||||||
Balance at December 31, 2012 | $ | 4,396 | $ | 13 | |||
Total realized and unrealized losses included in net loss | — | (9 | ) | ||||
Total unrealized gains included in other comprehensive loss | 57 | — | |||||
Balance at June 30, 2013 | $ | 4,453 | $ | 4 |
At June 30, 2013 | At December 31, 2012 | ||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Impaired loans | $ | — | $ | — | $ | 1,484 | $ | — | $ | — | $ | 1,616 | |||||||||||
Other real estate owned | — | — | 731 | — | — | 1,293 | |||||||||||||||||
Total assets | $ | — | $ | — | $ | 2,215 | $ | — | $ | — | $ | 2,909 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In Thousands) | |||||||||||||||
Impaired loans | $ | 74 | $ | 171 | $ | 331 | $ | 274 | |||||||
Other real estate owned | 20 | — | 32 | — | |||||||||||
Total assets | $ | 94 | $ | 171 | $ | 363 | $ | 274 |
June 30, 2013 | |||||||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial Assets: | (In Thousands) | ||||||||||||||||||
Cash and cash equivalents | $ | 38,549 | $ | 38,549 | $ | — | $ | — | $ | 38,549 | |||||||||
Available for sale securities | 190,902 | 1,026 | 185,423 | 4,453 | 190,902 | ||||||||||||||
Loans held for sale | 525 | — | — | 525 | 525 | ||||||||||||||
Loans receivable, net | 670,445 | — | — | 677,973 | 677,973 | ||||||||||||||
Federal Home Loan Bank stock | 7,753 | — | — | 7,753 | 7,753 | ||||||||||||||
Accrued interest receivable | 3,242 | — | — | 3,242 | 3,242 | ||||||||||||||
Financial Liabilities: | |||||||||||||||||||
Deposits | 708,322 | — | — | 711,645 | 711,645 | ||||||||||||||
Mortgagors' and investors' escrow accounts | 2,786 | — | — | 2,786 | 2,786 | ||||||||||||||
Federal Home Loan Bank advances | 93,069 | — | 96,152 | — | 96,152 | ||||||||||||||
Junior subordinated debt owed to unconsolidated trust | 8,248 | — | 5,947 | — | 5,947 | ||||||||||||||
On-balance Sheet Derivative Financial Instruments: | |||||||||||||||||||
Assets: | |||||||||||||||||||
Derivative loan commitments | 64 | — | — | 64 | 64 | ||||||||||||||
Forward loan sale commitments | 23 | — | — | 23 | 23 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Derivative loan commitments | 83 | — | — | 83 | 83 | ||||||||||||||
Interest rate swap agreements | 498 | — | 498 | — | 498 |
December 31, 2012 | |||||||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial Assets: | (In Thousands) | ||||||||||||||||||
Cash and cash equivalents | $ | 37,689 | $ | 37,689 | $ | — | $ | — | $ | 37,689 | |||||||||
Available for sale securities | 176,513 | 1,035 | 171,082 | 4,396 | 176,513 | ||||||||||||||
Loans held for sale | 5,069 | — | — | 5,232 | 5,232 | ||||||||||||||
Loans receivable, net | 685,163 | — | — | 703,925 | 703,925 | ||||||||||||||
Federal Home Loan Bank stock | 8,078 | — | — | 8,078 | 8,078 | ||||||||||||||
Accrued interest receivable | 3,215 | — | — | 3,215 | 3,215 | ||||||||||||||
Financial Liabilities: | |||||||||||||||||||
Deposits | 705,148 | — | — | 709,357 | 709,357 | ||||||||||||||
Mortgagors' and investors' escrow accounts | 3,207 | — | — | 3,207 | 3,207 | ||||||||||||||
Federal Home Loan Bank advances | 98,069 | — | 102,919 | — | 102,919 | ||||||||||||||
Junior subordinated debt owed to unconsolidated trust | 8,248 | — | 5,268 | — | 5,268 | ||||||||||||||
On-balance Sheet Derivative Financial Instruments: | |||||||||||||||||||
Assets: | |||||||||||||||||||
Derivative loan commitments | 13 | — | — | 13 | 13 | ||||||||||||||
Forward loan sale commitments | 4 | — | — | 4 | 4 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Derivative loan commitments | 3 | — | — | 3 | 3 | ||||||||||||||
Forward loan sale commitments | 1 | — | — | 1 | 1 | ||||||||||||||
Interest rate swap agreements | 849 | — | 849 | — | 849 |
June 30, 2013 | December 31, 2012 | |||||||
(Dollars in Thousands) | ||||||||
Notional amount | $ | 8,000 | $ | 8,000 | ||||
Weighted average fixed pay rate | 2.44 | % | 2.44 | % | ||||
Weighted average variable receive rate | 0.27 | % | 0.31 | % | ||||
Weighted average maturity in years | 2.5 | 3.0 | ||||||
Unrealized loss relating to interest rate swap | $ | 361 | $ | 470 |
June 30, 2013 | December 31, 2012 | ||||||
(Dollars in Thousands) | |||||||
Notional amount | $ | 15,000 | $ | 15,000 | |||
Weighted average fixed pay rate | 1.26 | % | 1.26 | % | |||
Weighted average variable receive rate | 0.28 | % | 0.35 | % | |||
Weighted average maturity in years | 3.5 | 4.0 |
June 30, 2013 | December 31, 2012 | ||||||||||||||||
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 | $ | (361 | ) | $ | 8,000 | $ | (470 | ) | ||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Interest rate swap | Other Liabilities | 15,000 | (137 | ) | 15,000 | (379 | ) | ||||||||||
Derivative loan commitments | Other (Liabilities) Assets | 9,043 | (19 | ) | 7,844 | 10 | |||||||||||
Forward loan sale commitments | Other Assets | 5,323 | 23 | 5,919 | 3 |
• | Residential Real Estate. Residential mortgage loans comprised 32.9% of the total loan portfolio at June 30, 2013. The residential mortgage portfolio decreased $8.7 million, or 3.8%, primarily due to the sale of $30.4 million of fixed-rate residential mortgage loans, offset by residential mortgage loan originations of $43.8 million during the first six months of 2013 which represented an increase of $2.4 million over the comparable period in 2012. Interest rate volatility negatively impacted loan originations during 2013. |
• | Multi-family and Commercial Real Estate. Multi-family and commercial real estate loans represented 28.5% of total loans at June 30, 2013 and decreased $9.8 million, or 4.9%, during the first half of 2013. Loan originations for multi-family and commercial real estate loans were $1.6 million, representing a decrease of $29.1 million during the first six months of 2013 compared to the same period in 2012 resulting from a lack of demand in the market. |
• | Construction. Construction loans, which include both residential and commercial construction loans, increased $227,000. |
• | Commercial Business. Commercial business loans represented 32.5% of total loans at June 30, 2013. Commercial business loans increased $5.5 million, or 2.6%, primarily due to the purchase of $18.4 million in commercial business loans, of which $15.5 million were SBA and USDA guaranteed loans, and loan originations of $35.2 million, partially offset by the sale of $3.0 million of SBA and USDA guaranteed loans during the first half of 2013. Commercial business loan originations increased $6.2 million over the comparable period in 2012. Commercial business loans included growth in specialized products such as condominium and time share lending of $1.2 million and $698,000, respectively. At June 30, 2013, unfunded lines of credit related to time share lending totaled $26.4 million as a result of an experienced lender dedicated to identifying new opportunities for growth within the time share industry. |
• | Consumer. Consumer loans represented 5.6% of the Company’s total loan portfolio at June 30, 2013. Consumer loans decreased $2.3 million during the first half of 2013. Indirect automobile loans, home equity loans and other consumer loans decreased $1.7 million, $395,000 and $246,000, respectively. Loan originations for consumer loans totaled $6.6 million, representing an increase of $1.0 million for the six months ended June 30, 2013 compared to the same period in 2012. |
June 30, 2013 | December 31, 2012 | |||||||
(Dollars in Thousands) | ||||||||
Nonaccrual loans: | ||||||||
Real estate loans: | ||||||||
Residential - 1 to 4 family | $ | 5,129 | $ | 4,988 | ||||
Multi-family and commercial | 3,194 | 1,758 | ||||||
Total real estate loans | 8,323 | 6,746 | ||||||
Commercial business loans | 475 | 542 | ||||||
Consumer loans: | ||||||||
Home equity | 217 | 366 | ||||||
Other | 7 | — | ||||||
Total nonaccrual loans | 9,022 | 7,654 | ||||||
Accruing loans past due 90 days or more | — | — | ||||||
Total nonperforming loans (1) | 9,022 | 7,654 | ||||||
Other real estate owned, net (2) | 731 | 1,293 | ||||||
Total nonperforming assets | 9,753 | 8,947 | ||||||
Accruing troubled debt restructurings | 1,799 | 3,826 | ||||||
Total nonperforming assets and troubled debt restructurings | $ | 11,552 | $ | 12,773 | ||||
Allowance for loan losses as a percent of nonperforming loans | 66.58 | % | 83.45 | % | ||||
Total nonperforming loans to total loans | 1.34 | % | 1.11 | % | ||||
Total nonperforming loans to total assets | 0.95 | % | 0.80 | % | ||||
Total nonperforming assets and troubled debt restructurings to total assets | 1.22 | % | 1.34 | % | ||||
At or For the Three Months Ended June 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Average Balance | Interest & Dividends | Average Yield/ Rate | Average Balance | Interest & Dividends | Average Yield/ Rate | ||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Loans (1) (2) | $ | 673,787 | $ | 7,194 | 4.28 | % | $ | 650,233 | $ | 7,422 | 4.59 | % | |||||||||
Securities (3) | 203,653 | 1,104 | 2.17 | 229,664 | 1,445 | 2.53 | |||||||||||||||
Other interest-earning assets | 27,394 | 11 | 0.16 | 28,714 | 12 | 0.17 | |||||||||||||||
Total interest-earning assets | 904,834 | 8,309 | 3.68 | 908,611 | 8,879 | 3.93 | |||||||||||||||
Noninterest-earning assets | 45,524 | 49,201 | |||||||||||||||||||
Total assets | $ | 950,358 | $ | 957,812 | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Business checking | $ | 54 | — | — | $ | 70 | — | — | |||||||||||||
NOW and money market | 311,395 | 106 | 0.14 | 306,584 | 158 | 0.21 | |||||||||||||||
Savings (4) | 42,343 | 18 | 0.17 | 41,305 | 24 | 0.23 | |||||||||||||||
Certificates of deposit (5) | 270,093 | 1,160 | 1.72 | 275,807 | 1,333 | 1.94 | |||||||||||||||
Total interest-bearing deposits | 623,885 | 1,284 | 0.83 | 623,766 | 1,515 | 0.98 | |||||||||||||||
Federal Home Loan Bank advances | 93,168 | 716 | 3.08 | 95,223 | 816 | 3.45 | |||||||||||||||
Subordinated debt | 8,248 | 83 | 4.04 | 8,248 | 61 | 2.97 | |||||||||||||||
Total interest-bearing liabilities | 725,301 | 2,083 | 1.15 | 727,237 | 2,392 | 1.32 | |||||||||||||||
Noninterest-bearing liabilities | 98,831 | 99,405 | |||||||||||||||||||
Total liabilities | 824,132 | 826,642 | |||||||||||||||||||
Total shareholders' equity | 126,226 | 131,170 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 950,358 | $ | 957,812 | |||||||||||||||||
Net interest-earning assets | $ | 179,533 | $ | 181,374 | |||||||||||||||||
Tax equivalent net interest income (3) | 6,226 | 6,487 | |||||||||||||||||||
Tax equivalent interest rate spread (6) | 2.53 | % | 2.61 | % | |||||||||||||||||
Tax equivalent net interest margin as a percentage of interest-earning assets (7) | 2.76 | % | 2.87 | % | |||||||||||||||||
Average of interest-earning assets to average interest-bearing liabilities | 124.75 | % | 124.94 | % | |||||||||||||||||
Less tax equivalent adjustment (3) | (7 | ) | (1 | ) | |||||||||||||||||
Net interest income | $ | 6,219 | $ | 6,486 |
(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 operations. | |
(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, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Average Balance | Interest & Dividends | Average Yield/ Rate | Average Balance | Interest & Dividends | Average Yield/ Rate | ||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Loans (1) (2) | $ | 681,201 | $ | 14,717 | 4.36 | % | $ | 640,156 | $ | 15,057 | 4.73 | % | |||||||||
Securities (3) | 198,572 | 2,126 | 2.16 | 235,289 | 3,019 | 2.58 | |||||||||||||||
Other interest-earning assets | 26,247 | 21 | 0.16 | 35,195 | 24 | 0.14 | |||||||||||||||
Total interest-earning assets | 906,020 | 16,864 | 3.75 | 910,640 | 18,100 | 4.00 | |||||||||||||||
— | |||||||||||||||||||||
Noninterest-earning assets | 45,373 | 49,518 | |||||||||||||||||||
Total assets | $ | 951,393 | $ | 960,158 | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Business checking | $ | 56 | — | — | $ | 57 | — | — | |||||||||||||
NOW and money market | 307,994 | 222 | 0.15 | 310,282 | 373 | 0.24 | |||||||||||||||
Savings (4) | 41,293 | 37 | 0.18 | 40,206 | 59 | 0.30 | |||||||||||||||
Certificates of deposit (5) | 273,281 | 2,377 | 1.75 | 274,304 | 2,678 | 1.96 | |||||||||||||||
Total interest-bearing deposits | 622,624 | 2,636 | 0.85 | 624,849 | 3,110 | 1.00 | |||||||||||||||
Federal Home Loan Bank advances | 95,373 | 1,491 | 3.15 | 97,646 | 1,665 | 3.43 | |||||||||||||||
Subordinated debt | 8,248 | 166 | 4.06 | 8,248 | 168 | 4.10 | |||||||||||||||
Total interest-bearing liabilities | 726,245 | 4,293 | 1.19 | 730,743 | 4,943 | 1.36 | |||||||||||||||
Noninterest-bearing liabilities | 98,834 | 97,842 | |||||||||||||||||||
Total liabilities | 825,079 | 828,585 | |||||||||||||||||||
Total shareholders' equity | 126,314 | 131,573 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 951,393 | $ | 960,158 | |||||||||||||||||
Net interest-earning assets | $ | 179,775 | $ | 179,897 | |||||||||||||||||
Tax equivalent net interest income (3) | 12,571 | 13,157 | |||||||||||||||||||
Tax equivalent interest rate spread (6) | 2.56 | % | 2.64 | % | |||||||||||||||||
Tax equivalent net interest margin as a percentage of interest-earning assets (7) | 2.80 | % | 2.91 | % | |||||||||||||||||
Average of interest-earning assets to average interest-bearing liabilities | 124.75 | % | 124.62 | % | |||||||||||||||||
Less tax equivalent adjustment (3) | (7 | ) | (1 | ) | |||||||||||||||||
Net interest income | $ | 12,564 | $ | 13,156 |
(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 operations. | |
(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, 2013 and 2012 | Six Months Ended June 30, 2013 and 2012 | ||||||||||||||||||||||
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) | $ | (497 | ) | $ | 269 | $ | (228 | ) | $ | (1,253 | ) | $ | 913 | $ | (340 | ) | |||||||
Securities (3) | (189 | ) | (152 | ) | (341 | ) | (457 | ) | (436 | ) | (893 | ) | |||||||||||
Other interest-earning assets | (1 | ) | — | (1 | ) | 2 | (5 | ) | (3 | ) | |||||||||||||
Total interest-earning assets | (687 | ) | 117 | (570 | ) | (1,708 | ) | 472 | (1,236 | ) | |||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||
Interest expense: | |||||||||||||||||||||||
Deposits (4) | (207 | ) | (24 | ) | (231 | ) | (463 | ) | (11 | ) | (474 | ) | |||||||||||
Federal Home Loan Bank advances | (83 | ) | (17 | ) | (100 | ) | (135 | ) | (39 | ) | (174 | ) | |||||||||||
Subordinated debt | 22 | — | 22 | (2 | ) | — | (2 | ) | |||||||||||||||
Total interest-bearing liabilities | (268 | ) | (41 | ) | (309 | ) | (600 | ) | (50 | ) | (650 | ) | |||||||||||
Change in net interest income | $ | (419 | ) | $ | 158 | $ | (261 | ) | $ | (1,108 | ) | $ | 522 | $ | (586 | ) |
(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 operations. | |
(4) Includes mortgagors’ and investors’ escrow accounts and brokered deposits. |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||
2013 | 2012 | Dollars | Percent | 2013 | 2012 | Dollars | Percent | ||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||
Net impairment losses | $ | (8 | ) | $ | — | $ | (8 | ) | — | % | $ | (8 | ) | $ | (36 | ) | $ | 28 | (77.8 | )% | |||||||||
Service fees | 1,233 | 1,221 | 12 | 1.0 | 2,449 | 2,431 | 18 | 0.7 | |||||||||||||||||||||
Wealth management fees | 287 | 343 | (56 | ) | (16.3 | ) | 544 | 1,410 | (866 | ) | (61.4 | ) | |||||||||||||||||
Increase in cash surrender value of bank-owned life insurance | 68 | 70 | (2 | ) | (2.9 | ) | 136 | 142 | (6 | ) | (4.2 | ) | |||||||||||||||||
Net gain on sales of securities | — | 257 | (257 | ) | (100.0 | ) | 3 | 574 | (571 | ) | (99.5 | ) | |||||||||||||||||
Mortgage banking | 271 | 398 | (127 | ) | (31.9 | ) | 850 | 677 | 173 | 25.6 | |||||||||||||||||||
Net gain (loss) on fair value of derivatives | 126 | (152 | ) | 278 | (182.9 | ) | 173 | (201 | ) | 374 | (186.1 | ) | |||||||||||||||||
Net loss on disposal of SI Trust Servicing operations | — | (212 | ) | 212 | (100.0 | ) | — | (698 | ) | 698 | (100.0 | ) | |||||||||||||||||
Other | 95 | 401 | (306 | ) | (76.3 | ) | 365 | 788 | (423 | ) | (53.7 | ) | |||||||||||||||||
Total noninterest income | $ | 2,072 | $ | 2,326 | $ | (254 | ) | (10.9 | )% | $ | 4,512 | $ | 5,087 | $ | (575 | ) | (11.3 | )% |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||
2013 | 2012 | Dollars | Percent | 2013 | 2012 | Dollars | Percent | ||||||||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||||||||||
Salaries and employee benefits | $ | 4,121 | $ | 4,016 | $ | 105 | 2.6 | % | $ | 8,529 | $ | 8,254 | $ | 275 | 3.3 | % | |||||||||||||
Occupancy and equipment | 1,304 | 1,332 | (28 | ) | (2.1 | ) | 2,687 | 2,818 | (131 | ) | (4.6 | ) | |||||||||||||||||
Computer and electronic banking services | 971 | 896 | 75 | 8.4 | 1,839 | 1,889 | (50 | ) | (2.6 | ) | |||||||||||||||||||
Outside professional services | 382 | 313 | 69 | 22.0 | 650 | 677 | (27 | ) | (4.0 | ) | |||||||||||||||||||
Marketing and advertising | 171 | 220 | (49 | ) | (22.3 | ) | 301 | 372 | (71 | ) | (19.1 | ) | |||||||||||||||||
Supplies | 106 | 91 | 15 | 16.5 | 206 | 228 | (22 | ) | (9.6 | ) | |||||||||||||||||||
FDIC deposit insurance and regulatory assessments | 230 | 220 | 10 | 4.5 | 463 | 492 | (29 | ) | (5.9 | ) | |||||||||||||||||||
Merger expenses | 209 | — | 209 | — | 893 | — | 893 | — | |||||||||||||||||||||
Other | 715 | 469 | 246 | 52.5 | 1,222 | 1,177 | 45 | 3.8 | |||||||||||||||||||||
Total noninterest expenses | $ | 8,209 | $ | 7,557 | $ | 652 | 8.6 | % | $ | 16,790 | $ | 15,907 | $ | 883 | 5.6 | % |
June 30, 2013 | December 31, 2012 | ||||||
(In Thousands) | |||||||
Commitments to extend credit: | |||||||
Future loan commitments | $ | 35,784 | $ | 11,123 | |||
Undisbursed construction loans | 2,868 | 3,406 | |||||
Undisbursed home equity lines of credit | 24,935 | 23,019 | |||||
Undisbursed commercial lines of credit | 42,206 | 23,842 | |||||
Overdraft protection lines | 1,233 | 1,190 | |||||
Standby letters of credit | 61 | 611 | |||||
Total commitments | $ | 107,087 | $ | 63,191 |
Percentage Change in Estimated Net Interest Income Over | |||||
12 Months | 24 Months | ||||
50 basis point decrease in rates | (3.17 | )% | (4.25 | )% | |
300 basis point increase in rates | (0.39 | ) | 0.10 | ||
300 basis point increase in rates w/assumption sensitivity testing | (1.95 | ) | (3.10 | ) |
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) |
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, 2013, formatted in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive (Loss) 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(3) |
(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 December 19, 2012. | |
(3) 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 7, 2013 | /s/ Rheo A. Brouillard | |
Rheo A. Brouillard | |||
President and Chief Executive Officer | |||
(principal executive officer) |
Date: | August 7, 2013 | /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 7, 2013 |
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 7, 2013 |
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 7, 2013 |
By:/s/ Brian J. Hull | |
Brian J. Hull | |
Executive Vice President, Chief Financial Officer, Treasurer and Chief Operating Officer | |
August 7, 2013 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Financial Instruments The Company has stand-alone derivative financial instruments in the form of interest rate swap agreements, which derive their value from underlying interest rates. These transactions involve both credit and market risk. The notional amounts are amounts on which calculations, payments and the value of the derivatives are based. Notional amounts do not represent direct credit exposures. Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any. Such difference, which represents the fair value of the derivative instruments, is reflected on the Company’s balance sheets as other assets and other liabilities. The Company is exposed to credit-related losses in the event of nonperformance by the counterparties to these agreements. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures and does not expect any counterparties to fail their obligations. Derivative instruments are generally either negotiated over-the-counter contracts or standardized contracts executed on a recognized exchange. Negotiated over-the-counter derivative contracts are generally entered into between two counterparties that negotiate specific agreement terms, including the underlying instrument, amount, exercise prices and maturity. Derivative Instruments Designated As Hedging Instruments The Company uses long-term variable rate debt as a source of funds for use in the Company’s lending and investment activities and other general business purposes. These debt obligations expose the Company to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense decreases. Management believes it is prudent to limit the variability of a portion of its interest payments and, therefore, generally hedges a portion of its variable-rate interest payments. To meet this objective, management entered into an interest rate swap agreement, characterized as a cash flow hedge, whereby the Company receives variable interest rate payments determined by three-month LIBOR in exchange for making payments at a fixed interest rate. At June 30, 2013 and December 31, 2012, information pertaining to the outstanding interest rate swap agreement used to hedge variable rate debt is as follows:
At June 30, 2013 and December 31, 2012, the unrealized loss related to the above mentioned interest rate swap was recorded as a derivative liability. Changes in the fair value of an interest rate swap designated as a hedging instrument of the variability of cash flows associated with long-term debt are reported in other comprehensive income. These amounts are subsequently reclassified into interest expense as a yield adjustment in the same period in which the related interest on the long-term debt affects earnings. Risk management results for the periods ended June 30, 2013 and December 31, 2012, related to the balance sheet hedging of long-term debt indicate that the hedge was 100% effective and that there was no component of the derivative instrument’s loss which was excluded from the assessment of hedge effectiveness. The Company’s derivative contract contains a provision establishing a collateral requirement (subject to minimum collateral posting thresholds) based on the Company’s external credit rating. If the Company’s junior subordinated debt rating was to fall below the level generally recognized as investment grade, the counterparty to such derivative contract could require additional collateral on the derivative transaction in a net liability position (after considering the effect of bilateral netting arrangements and posted collateral). The Company had previously posted collateral of $600,000 in the normal course of business for a derivative instrument, with a credit-related contingent feature, that was in a net liability position at June 30, 2013 and December 31, 2012. Derivative Instruments Not Designated As Hedging Instruments Certain derivative instruments do not meet the requirements to be accounted for as hedging instruments. These undesignated derivative instruments are recognized on the consolidated balance sheets at fair value, with changes in fair value recorded in other noninterest income. Interest Rate Swap Agreement - During the first quarter of 2012, management entered into an interest rate swap agreement, that does not meet the strict hedge accounting requirements of FASB's "Derivatives and Hedging" standard, to manage the Company's exposure to interest rate movements and other identified risks. Changes in fair value of this instrument are recorded as a component of noninterest income. At June 30, 2013 and December 31, 2012, information pertaining to the Company's interest rate swap agreement not designated as a hedge is as follows:
The Company reported a gain in fair value on the interest rate swap not designated as a hedge of $198,000 and $242,000 in noninterest income for the three and six months ended June 30, 2013, respectively. Derivative Loan Commitments - Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. The Company enters into commitments to fund residential mortgage loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. A mortgage loan commitment binds the Company to lend funds to a potential borrower at a specified interest rate and within a specified period of time, generally up to 60 days after inception of the rate lock. Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. If interest rates increase, the value of these loan commitments decrease. Conversely, if interest rates decrease, the value of these loan commitments increase. The notional amount of undesignated mortgage loan commitments was $9.0 million at June 30, 2013. At June 30, 2013, the fair values of such commitments were a net liability of $19,000. Forward Loan Sale Commitments - To protect against the price risk inherent in derivative loan commitments, the Company utilizes “mandatory delivery” forward loan sale commitments to mitigate the risk of potential decreases in the value of loans that would result from the exercise of the derivative loan commitments. With a “mandatory delivery” contract, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, it is obligated to pay a “pair-off” fee, based on then-current market prices, to the investor to compensate the investor for the shortfall. The Company expects that these forward loan sale commitments will experience changes in fair value opposite to the change in fair value of derivative loan commitments. The notional amount of undesiginated forward loan sale commitments was $5.3 million at June 30, 2013. The fair value of such commitments was a net asset of $23,000 at June 30, 2013. Interest Rate Risk Management - Derivative Instruments The following table presents the fair values of derivative instruments as well as their classification on the consolidated balance sheets at June 30, 2013 and December 31, 2012.
|
EARNINGS (LOSS) PER SHARE
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is calculated by dividing the net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Unvested restricted shares are considered outstanding in the computation of basic earnings (loss) per share since the shares participate in dividends and the rights to the dividends are non-forfeitable. Diluted earnings (loss) per share is computed in a manner similar to basic earnings (loss) per share except that the weighted average number of common shares outstanding is increased to include the incremental common shares (as computed using the treasury stock method) that would have been outstanding if all potentially dilutive common stock equivalents were issued during the period. The Company’s common stock equivalents relate solely to stock options. Repurchased common shares and unallocated common shares held by the Bank’s ESOP are not deemed outstanding for earnings (loss) per share calculations. Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the weighted average market value for the periods presented, and are not considered in diluted earnings (loss) per share calculations. The Company had anti-dilutive common shares outstanding of 771,538 and 626,396 for the three and six months ended June 30, 2013, respectively, and 131,016 and 237,412 for the three and six months ended June 30, 2012, respectively. For the three and six months ended June 30, 2013, all common stock equivalents were anti-dilutive and were not included in the computation of loss per share because it would result in a reduction in the net loss per share. The computation of (loss) earnings per share is as follows:
|
OTHER COMPREHENSIVE (LOSS) INCOME (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Comprehensive Income (Loss) [Table Text Block] | Components of other comprehensive loss and related tax effects are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The components of accumulated other comprehensive (loss) income included in shareholders’ equity are as follows:
|
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 | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Fair Value, Measurements, Nonrecurring [Member]
|
||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Impaired Loans | $ 74 | $ 171 | $ 331 | $ 274 |
Other real estate owned | 20 | 0 | 32 | 0 |
Total Adjustments to Fair Value, Assets Measured on a Nonrecurring Basis | $ 94 | $ 171 | $ 363 | $ 274 |
ACQUISITION OF NEWPORT BANCORP, INC. (Notes)
|
3 Months Ended |
---|---|
Jun. 30, 2013
|
|
Subsequent Events [Abstract] | |
Pending Business Combination Disclosure [Text Block] | ACQUISITION OF NEWPORT BANCORP, INC. On March 5, 2013, the Company entered into a definitive merger agreement to acquire Newport Bancorp, Inc. Under the terms of the merger agreement, the shareholders of Newport Bancorp will have the right to elect to receive either $17.55 in cash or 1.5129 shares of SI Financial Group's common stock in exchange for each share of Newport Bancorp held by them, subject to proration and allocation procedures so that 50% of the outstanding shares of Newport Bancorp common stock is converted into Company common stock and the balance is converted into the cash consideration. The acquisition will add approximately $426.6 million in assets, $356.3 million in loans and $281.0 million in deposits before acquisition accounting adjustments, as well as six full-service banking offices. The Company incurred merger-related costs totaling $209,000 and $893,000 (pre-tax) for the three and six months ended June 30, 2013, respectively. The Company anticipates the transaction will close in the third quarter of 2013, subject to shareholder and regulatory approvals and other customary closing conditions. |
PREMISES AND EQUIPMENT (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Land | $ 2,890 | $ 2,098 |
Buildings | 7,018 | 7,052 |
Leasehold Improvements | 7,581 | 7,563 |
Furniture and Equipment | 11,243 | 10,867 |
Construction in Process | 24 | 84 |
Total | 28,756 | 27,664 |
Accumulated depreciation and amortization | (17,298) | (16,448) |
Premises and equipment, net | $ 11,458 | $ 11,216 |
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Loan Portfolio (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Mar. 31, 2013
|
Dec. 31, 2012
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | $ 674,811 | $ 689,806 | ||||
Allowance for loan losses | (6,007) | (6,387) | ||||
Loans receivable, net | 670,445 | 685,163 | ||||
Total real estate loans [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 417,657 | 435,899 | ||||
Real estate: Residential - 1 to 4 family [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 222,011 | 230,664 | ||||
Allowance for loan losses | (999) | (1,101) | (1,125) | (725) | (735) | (759) |
Real estate: Multi-family and commercial [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 192,135 | 201,951 | ||||
Allowance for loan losses | (2,947) | (3,168) | (3,028) | (2,700) | (2,678) | (2,337) |
Real estate: Construction [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 3,511 | 3,284 | ||||
Allowance for loan losses | (30) | (27) | (22) | (314) | (368) | (280) |
Total commercial business loans [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 219,066 | 213,527 | ||||
Allowance for loan losses | (1,531) | (1,534) | (1,735) | (1,418) | (1,127) | (1,148) |
Commercial business: SBA and USDA guaranteed [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 147,223 | 148,385 | ||||
Commercial business: Time share [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 24,008 | 23,310 | ||||
Commercial business: Condominium association [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 16,729 | 15,493 | ||||
Commercial business: Other [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 31,106 | 26,339 | ||||
Total consumer loans [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 38,088 | 40,380 | ||||
Allowance for loan losses | (500) | (498) | (477) | (487) | (470) | (446) |
Consumer: Home equity [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 27,980 | 28,375 | ||||
Consumer: Indirect automobile [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 8,001 | 9,652 | ||||
Consumer: Other [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Total loans | 2,107 | 2,353 | ||||
Deferred loan origination costs, net of fees [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Deferred loan origination costs, net of fees | 1,641 | 1,744 | ||||
Allowance for loan losses [Member]
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Allowance for loan losses | $ (6,007) | $ (6,328) | $ (6,387) | $ (5,644) | $ (5,378) | $ (4,970) |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments Designated as Hedging Instruments [Table Text Block] | At June 30, 2013 and December 31, 2012, information pertaining to the outstanding interest rate swap agreement used to hedge variable rate debt is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments [Table Text Block] | At June 30, 2013 and December 31, 2012, information pertaining to the Company's interest rate swap agreement not designated as a hedge is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The following table presents the fair values of derivative instruments as well as their classification on the consolidated balance sheets at June 30, 2013 and December 31, 2012.
|
FAIR VALUE OF ASSETS AND LIABILITIES (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 tables present assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012. The Company had no significant transfers into or out of Levels 1, 2 or 3 during the six months ended June 30, 2013.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 at June 30, 2013 and December 31, 2012. There were no liabilities measured at fair value on a nonrecurring basis at June 30, 2013 and December 31, 2012.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping [Table Text Block] | As of June 30, 2013 and December 31, 2012, the recorded carrying amounts and estimated fair values of the Company's financial instruments are as follows:
|
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Loans Modified as TDRs (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Financing Receivable, Modifications [Line Items] | ||||
Financing Receivables Modifications, Contracts Number | 0 | 3 | 1 | 3 |
Financing Receivable Modifications Investment Recorded | $ 0 | $ 434 | $ 408 | $ 434 |
Real estate: Residential - 1 to 4 family [Member]
|
||||
Financing Receivable, Modifications [Line Items] | ||||
Financing Receivables Modifications, Contracts Number | 0 | 3 | 1 | 3 |
Financing Receivable Modifications Investment Recorded | $ 0 | $ 434 | $ 408 | $ 434 |
PREMISES AND EQUIPMENT Premises and Equipment - Narrative (Details) (USD $)
|
Dec. 31, 2012
|
---|---|
Property, Plant and Equipment [Abstract] | |
Purchase Obligation | $ 450,000 |
SECURITIES Summary of Available for Sale Securities (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
||||||
---|---|---|---|---|---|---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Fair Value | $ 190,902 | $ 176,513 | ||||||
Debt Securities [Member]
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 190,741 | [1] | 173,903 | [1] | ||||
Gross Unrealized Gains | 3,526 | 4,547 | ||||||
Gross Unrealized Losses | (3,365) | (1,937) | ||||||
Fair Value | 190,902 | 176,513 | ||||||
U.S. Government and agency obligations
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 52,798 | [1] | 55,027 | [1] | ||||
Gross Unrealized Gains | 1,430 | 1,255 | ||||||
Gross Unrealized Losses | (39) | (23) | ||||||
Fair Value | 54,189 | 56,259 | ||||||
Government-sponsored enterprises
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 28,783 | [1] | 23,388 | [1] | ||||
Gross Unrealized Gains | 342 | 579 | ||||||
Gross Unrealized Losses | (179) | 0 | ||||||
Fair Value | 28,946 | 23,967 | ||||||
Agency - residential
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 81,831 | [1],[2] | 69,399 | [1],[2] | ||||
Gross Unrealized Gains | 1,328 | [2] | 2,211 | [2] | ||||
Gross Unrealized Losses | (1,304) | [2] | (66) | [2] | ||||
Fair Value | 81,855 | [2] | 71,544 | [2] | ||||
Non-agency - residential
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 2,080 | [1],[2] | 4,784 | [1],[2] | ||||
Gross Unrealized Gains | 37 | [2] | 52 | [2] | ||||
Gross Unrealized Losses | (130) | [2] | (124) | [2] | ||||
Fair Value | 1,987 | [2] | 4,712 | [2] | ||||
Non-agency - HELOC
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 2,255 | [1],[2] | 2,555 | [1],[2] | ||||
Gross Unrealized Gains | 74 | [2] | 0 | [2] | ||||
Gross Unrealized Losses | 0 | [2] | (78) | [2] | ||||
Fair Value | 2,329 | [2] | 2,477 | [2] | ||||
Corporate debt securities
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 7,021 | [1] | 7,555 | [1] | ||||
Gross Unrealized Gains | 133 | 188 | ||||||
Gross Unrealized Losses | (18) | (49) | ||||||
Fair Value | 7,136 | 7,694 | ||||||
Collateralized debt obligations
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 5,806 | [1] | 5,993 | [1] | ||||
Gross Unrealized Gains | 0 | 0 | ||||||
Gross Unrealized Losses | (1,353) | (1,597) | ||||||
Fair Value | 4,453 | 4,396 | ||||||
Obligations of state and political subdivisions
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 6,258 | [1] | 5,152 | [1] | ||||
Gross Unrealized Gains | 182 | 262 | ||||||
Gross Unrealized Losses | (58) | 0 | ||||||
Fair Value | 6,382 | 5,414 | ||||||
Tax-exempt securities
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 3,884 | [1] | ||||||
Gross Unrealized Gains | 0 | |||||||
Gross Unrealized Losses | (284) | |||||||
Fair Value | 3,600 | |||||||
Foreign government securities
|
||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Amortized Cost | 25 | [1] | 50 | [1] | ||||
Gross Unrealized Gains | 0 | 0 | ||||||
Gross Unrealized Losses | 0 | 0 | ||||||
Fair Value | $ 25 | $ 50 | ||||||
|
REGULATORY CAPITAL (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block] | The Bank’s actual capital amounts and ratios as of June 30, 2013 and December 31, 2012 were as follows:
|
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $)
In Thousands, except Share data, unless otherwise specified |
Total
|
Common Stock [Member]
|
Additional Paid-in Capital [Member]
|
Unallocated Common Shares Held By ESOP [Member]
|
Unearned Restricted Shares [Member]
|
Retained Earnings [Member]
|
Accumulated Other Comprehensive Income [Member]
|
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2012 | $ 125,759 | $ 101 | $ 94,810 | $ (5,088) | $ (2,210) | $ 36,733 | $ 1,413 |
Balance (in shares) at Dec. 31, 2012 | 10,112,310 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Comprehensive loss | (1,681) | (137) | (1,544) | ||||
Cash dividends declared ($0.06 per share) | (573) | (573) | |||||
Equity incentive plan compensation | 384 | 147 | 237 | ||||
Allocation of 24,318 ESOP shares | 280 | 40 | 240 | ||||
Tax benefit from share-based compensation | 3 | 3 | |||||
Common shares repurchased | (553) | ||||||
Common shares repurchased, Value | (7) | 0 | (7) | ||||
Balance at Jun. 30, 2013 | $ 124,165 | $ 101 | $ 95,000 | $ (4,848) | $ (1,973) | $ 36,016 | $ (131) |
Balance (in shares) at Jun. 30, 2013 | 10,111,757 |
SECURITIES
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES [Text Block] | SECURITIES Available for sale securities: The amortized cost, gross unrealized gains and losses and approximate fair values of available for sale securities at June 30, 2013 and December 31, 2012 are as follows:
(2) Agency securities refer to debt obligations issued or guaranteed by government corporations or government-sponsored enterprises (“GSEs”). Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by one of the GSEs or the U.S. Government.
(1) Net of OTTI write-downs recognized in earnings. (2) Agency securities refer to debt obligations issued or guaranteed by government corporations or government-sponsored enterprises (“GSEs”). Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by one of the GSEs or the U.S. Government. The amortized cost and fair value of debt securities by contractual maturities at June 30, 2013 are presented below. Actual maturities of mortgage-backed securities ("MBS") may differ from contractual maturities because the mortgages underlying the securities may be called or repaid without any penalties. Because MBSs are not due at a single maturity date, they are not included in the maturity categories in the following maturity summary.
The following is a summary of realized gains and losses on the sales of securities for the three and six months ended June 30, 2013 and 2012:
Proceeds from the sale of available for sale securities were $1.0 million for the three and six months ended June 30, 2013 and $23.1 million and $32.4 million for the three and six months ended June 30, 2012, respectively. The following tables present information pertaining to securities with gross unrealized losses at June 30, 2013 and December 31, 2012, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position.
For debt securities with OTTI losses, the Company estimated the portion of loss attributable to credit using a discounted cash flow model in accordance with applicable guidance. Significant inputs for the non-agency mortgage-backed securities included the estimated cash flows of the underlying collateral based on key assumptions, such as default rate, loss severity and prepayment rate. Assumptions used can vary widely from loan to loan, and are influenced by such factors as loan interest rate, geographical location of the borrower, borrower characteristics and collateral type. Significant inputs for the collateralized debt obligations included estimated cash flows and prospective deferrals, defaults and recoveries based on the underlying seniority status and subordination structure of the pooled trust preferred debt tranche at the time of measurement. Prospective deferral, default and recovery estimates affecting projected cash flows were based on an analysis of the underlying financial condition of the individual issuers, with consideration of the account’s capital adequacy, credit quality, lending concentrations and other factors. All cash flow estimates were based on the securities’ tranche structure and contractual rate and maturity terms. The Company utilized the services of an independent third-party valuation firm to obtain information about the structure in order to determine how the underlying collateral cash flows will be distributed to each security issued from the structure. The present value of the expected cash flows was compared to the Company’s holdings to determine the credit-related impairment loss, if any. To the extent that continued changes in interest rates, credit movements and other factors that influence fair value of investments occur, the Company may be required to record impairment charges for OTTI in future periods. At June 30, 2013, thirty-one debt securities with gross unrealized losses had aggregate depreciation of approximately 4.9% of the Company’s amortized cost basis. The majority of the unrealized losses related to the Company’s collateralized debt obligations and non-agency mortgage-backed securities. Impairment charges recognized on investments deemed other-than-temporarily impaired were $8,000 for the three and six months ended June 30, 2013 compared to $36,000 of net impairment losses recognized by the Company for the six months ended June 30, 2012. No net impairment losses on securities were recognized for the three months ended June 30, 2012. The following summarizes, by security type, the basis for management’s determination during the preparation of the financial statements of whether the applicable investments within the Company’s securities portfolio were other-than-temporarily impaired at June 30, 2013. U.S. Government and Agency Obligations. The unrealized losses on the Company’s U.S. Government and agency obligations related primarily to a widening of the rate spread to comparable treasury securities. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell the securities before their anticipated recovery, which may be at maturity, the Company did not consider these securities to be other-than-temporarily impaired at June 30, 2013. Mortgage-backed Securities - Agency - Residential. The unrealized losses on the Company’s agency–residential mortgage-backed securities were caused by increases in the rate spread to comparable treasury securities. The Company does not expect these securities to settle at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired at June 30, 2013. Mortgage-backed Securities - Non-agency - Residential. Despite significant improvement in the market, these securities continue to trade well below historic levels, particularly those backed by jumbo or hybrid loan collateral. At June 30, 2013, management evaluated credit rating details for the tranche, as well as credit information on subordinate tranches, potential future credit losses and loss analyses. Additionally, management reviewed reports prepared by an independent third party for certain non-agency mortgage-backed securities. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity. The following table details the Company's non-agency residential mortgage-backed securities that were rated below investment grade at June 30, 2013:
(1) Class definitions: PT – Pass Through, AS – Accelerated, and SSNR – Super Senior. (2) The Company utilized credit ratings provided by Moody’s, S&P and Fitch in its evaluation of issuers. (3) The OTTI amounts provided in the table represent cumulative credit loss amounts through June 30, 2013. (4) The credit support coverage ratio, which is the ratio that determines the multiple of credit support, is based on assumptions for the performance of loans within the delinquency pipeline. The assumptions used are: current collateral support/((60 day delinquencies x .60) + (90 day delinquencies x .70) + (foreclosures x 1.00) + (other real estate x 1.00)) x .40 for loss severity. Collateralized Debt Obligations. The unrealized losses on the Company’s collateralized debt obligations relate to investments in pooled trust preferred securities (“PTPS”). The PTPS market has stabilized at depressed market values as a result of market saturation. Transactions for PTPS have been limited and have occurred primarily as a result of distressed or forced liquidation sales. The securities were widely held by hedge funds and European banks and used to offset interest rate exposure tied to LIBOR. As the positions have unwound, an excess supply of these securities has saturated the market. Management evaluated current credit ratings, credit support and stress testing for future defaults related to the Company’s PTPS. Management also reviewed analytics provided by the trustee and independent OTTI reviews and associated cash flow analyses performed by an independent third party. The unrealized losses on the Company’s PTPS investments were caused by a lack of liquidity, credit downgrades and decreasing credit support. The increased number of bank and insurance company failures has decreased the level of credit support for these investments. A number of lower tranches have foregone payments or have received payment in kind through increased principal allocations. However, the number of deferring securities has been decreasing and a number of reinstatements have occurred recently. Based on the existing credit profile of the remainder of the Company's PTPS investments, management does not believe that these investments will suffer from any further credit-related losses. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not record additional impairment losses at June 30, 2013. The following table details the Company's collateralized debt obligations that are rated below investment grade at June 30, 2013:
(1) The Company utilized credit ratings provided by Moody’s, S&P and Fitch in its evaluation of issuers. (2) The OTTI amounts provided in the table represent cumulative credit loss amounts through June 30, 2013. The following table presents a roll-forward of the balance of credit losses on the Company’s debt securities for which a portion of OTTI was recognized in other comprehensive (loss) income for the three and six months ended June 30, 2013 and 2012.
|
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||
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 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. 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 10.01 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, 2013 and for the three and six months ended June 30, 2013 and 2012 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, 2012 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, 2013 are not necessarily indicative of the operating results for the year ending December 31, 2013 or for any other period. 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 impairment of long-lived assets. Reclassifications Certain amounts in the Company’s 2012 consolidated financial statements have been reclassified to conform to the 2013 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 ("TDR") 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 TDR. Management considers all nonaccrual loans, with the exception of certain consumer loans, to be impaired. Also, all TDRs are initially classified as 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 cash flows of 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 but increasing extent, the Bank provides financing for investors in the time share industry, which are secured by consumer receivables, and 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. See Note 4 for details. 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 local 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, the regulatory agencies, 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. Common Share Repurchases The Company is chartered in the state of Maryland. Maryland law does not provide for treasury shares, rather shares repurchased by the Company constitute authorized but unissued shares. GAAP states that accounting for treasury stock shall conform to state law. Therefore, the cost of shares repurchased by the Company has been allocated to common stock and retained earnings balances. Recent Accounting Pronouncements Disclosures about Offsetting Assets and Liabilities – In December 2011, the Financial Accounting Standards Board ("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 were 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 had no impact on the Company's consolidated financial statements. Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities - In January 2013, the FASB issued amendments to clarify that the scope of Disclosures about Offsetting Assets and Liabilities applies to derivatives accounted for in accordance with Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements, reverse repurchase agreements, securities borrowing and securities lending transactions that are either offset in accordance with applicable guidance or subject to an enforceable master netting arrangement or similar agreement. The amendments in this update were effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The adoption of this amendment had no impact on the Company's consolidated financial statements. Comprehensive Income - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income - In February 2012, the FASB issued an amendment to improve the transparency of reporting these reclassifications by requiring an organization to 1) present the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income and 2) cross-reference to other disclosures currently required under GAAP for other reclassification items to be reclassified directly to net income in their entirety in the same reporting period. The amendments were effective for reporting periods beginning after December 15, 2012. The adoption of this amendment did not have a material impact on the Company's consolidated financial statements. See Consolidated Statements of Comprehensive (Loss) Income. |
EARNINGS (LOSS) PER SHARE (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Earnings Per Share, Basic and Diluted [Line Items] | ||||
Net (loss) income | $ (60) | $ 670 | $ (137) | $ 1,073 |
Weighted average common shares outstanding: | ||||
Basic | 9,567,612 | 9,821,841 | 9,561,808 | 9,896,154 |
Effect of dilutive stock options | 0 | 38,300 | 0 | 32,661 |
Diluted | 9,567,612 | 9,860,141 | 9,561,808 | 9,928,815 |
(Loss) earnings per share: | ||||
Basic | $ (0.01) | $ 0.07 | $ (0.01) | $ 0.11 |
Diluted | $ (0.01) | $ 0.07 | $ (0.01) | $ 0.11 |
SECURITIES Debt Securities by Contractual Maturities (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
---|---|
Investments, Debt and Equity Securities [Abstract] | |
Within 1 year, Amortized Cost | $ 9,075 |
Within 1 year, Fair Value | 9,129 |
After 1 but within 5 years, Amortized Cost | 25,041 |
After 1 but within 5 years, Fair Value | 25,502 |
After 5 but within 10 years, Amortized Cost | 18,218 |
After 5 but within 10 years, Fair Value | 18,301 |
After 10 years, Amortized Cost | 52,241 |
After 10 years, Fair Value | 51,799 |
Available-for-Sale Securities, Debt Maturities, excluding Mortgage-Backed Securities, Amortized Cost | 104,575 |
Available-for-Sale, Debt Securities, Excluding Mortgage-Backed Securities | 104,731 |
Mortgage-backed securities, Amortized Cost | 86,166 |
Mortgage-backed securities, Fair Value | 86,171 |
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis | 190,741 |
Available-for-sale Securities, Debt Securities | $ 190,902 |
SECURITIES Securities OTTI Roll-Forward (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||||
Balance at beginning of period | $ 259 | $ 1,243 | $ 259 | $ 1,207 |
Amounts related to credit for which OTTI losses were not previously recognized | 8 | 0 | 8 | 0 |
Additional credit losses for which OTTI losses were previously recognized | 0 | 0 | 0 | 36 |
Reduction for permanent loss in value of securities during the period | 0 | (1,071) | 0 | (1,071) |
Balance at end of period | $ 267 | $ 172 | $ 267 | $ 172 |