|
x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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New Jersey
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52-1273725
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(State or Other Jurisdiction of
Incorporation or Organization)
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(IRS Employer
Identification No.)
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Large accelerated filer ¨
|
Accelerated filer x
|
Non-accelerated filer ¨
(Do not check if smaller
reporting company)
|
Smaller reporting company ¨
|
Common Stock, no par value:
|
16,290,700 shares
|
(Title of Class)
|
(Outstanding as of October 31, 2011)
|
Page
|
||
PART I – FINANCIAL INFORMATION
|
1
|
|
Item 1.
|
Financial Statements
|
|
Consolidated Statements of Condition at September 30, 2011 and December 31, 2010 (unaudited)
|
2
|
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Consolidated Statements of Income for the three and nine months ended September 30, 2011 and 2010 (unaudited)
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3
|
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Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2011 and 2010 (unaudited)
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4
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Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010 (unaudited)
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5
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Notes to Consolidated Financial Statements
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6
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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32
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Item 3.
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Qualitative and Quantitative Disclosures about Market Risks
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52
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Item 4.
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Controls and Procedures
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53
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PART II – OTHER INFORMATION
|
||
Item 1.
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Legal Proceedings
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53
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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53
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Item 1A.
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Risk Factors
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53
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Item 6.
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Exhibits
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54
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SIGNATURES
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55
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(in thousands, except for share data)
|
September 30,
2011
|
December 31,
2010
|
||||||
ASSETS
|
||||||||
Cash and due from banks
|
$ | 113,080 | $ | 37,497 | ||||
Investment securities:
|
||||||||
Available for sale
|
388,858 | 378,080 | ||||||
Held to maturity (fair value of $72,371 in 2011 and $0 in 2010)
|
70,142 | — | ||||||
Loans
|
721,608 | 708,444 | ||||||
Less: Allowance for loan losses
|
9,536 | 8,867 | ||||||
Net loans
|
712,072 | 699,577 | ||||||
Restricted investment in bank stocks, at cost
|
9,194 | 9,596 | ||||||
Premises and equipment, net
|
12,386 | 12,937 | ||||||
Accrued interest receivable
|
5,616 | 4,134 | ||||||
Bank-owned life insurance
|
28,685 | 27,905 | ||||||
Goodwill and other intangible assets
|
16,915 | 16,959 | ||||||
Prepaid FDIC assessments
|
2,048 | 3,582 | ||||||
Other assets
|
17,521 | 17,118 | ||||||
Total assets
|
$ | 1,376,517 | $ | 1,207,385 | ||||
LIABILITIES
|
||||||||
Deposits:
|
||||||||
Non interest-bearing
|
$ | 161,340 | $ | 144,210 | ||||
Interest-bearing:
|
||||||||
Time deposits $100 and over
|
141,421 | 119,651 | ||||||
Interest-bearing transaction, savings and time deposits $100 and less
|
757,261 | 596,471 | ||||||
Total deposits
|
1,060,022 | 860,332 | ||||||
Short-term borrowings
|
— | 41,855 | ||||||
Long-term borrowings
|
161,000 | 171,000 | ||||||
Subordinated debentures
|
5,155 | 5,155 | ||||||
Accounts payable and accrued liabilities
|
16,532 | 8,086 | ||||||
Total liabilities
|
1,242,709 | 1,086,428 | ||||||
STOCKHOLDERS’ EQUITY
|
||||||||
Preferred stock, $1,000 liquidation value per share, authorized 5,000,000 shares; issued and outstanding 11,250 shares of Series B Preferred Stock at September 30, 2011 and 0 at December 31, 2010; and issued and outstanding 0 shares of Series A Preferred Stock at September 30, 2011 and 10,000 shares at December 31, 2010
|
11,012 | 9,700 | ||||||
Common stock, no par value, authorized 25,000,000 shares; issued 18,477,412, outstanding 16,290,700 shares at September 30, 2011 and 16,289,832 shares at December 31, 2010
|
110,056 | 110,056 | ||||||
Additional paid-in capital
|
4,968 | 4,941 | ||||||
Retained earnings
|
30,028 | 21,633 | ||||||
Treasury stock, at cost (2,186,712 common shares at September 30, 2011 and 2,187,580 common shares at December 31, 2010)
|
(17,691 | ) | (17,698 | ) | ||||
Accumulated other comprehensive loss
|
(4,565 | ) | (7,675 | ) | ||||
Total stockholders’ equity
|
133,808 | 120,957 | ||||||
Total liabilities and stockholders’ equity
|
$ | 1,376,517 | $ | 1,207,385 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(in thousands, except for share data)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Interest income
|
||||||||||||||||
Interest and fees on loans
|
$ | 8,956 | $ | 9,378 | $ | 27,123 | $ | 28,165 | ||||||||
Interest and dividends on investment securities:
|
||||||||||||||||
Taxable
|
3,273 | 2,464 | 10,079 | 8,337 | ||||||||||||
Tax-exempt
|
544 | 21 | 983 | 194 | ||||||||||||
Dividends
|
146 | 172 | 479 | 499 | ||||||||||||
Total interest income
|
12,919 | 12,035 | 38,664 | 37,195 | ||||||||||||
Interest expense
|
||||||||||||||||
Interest on certificates of deposit $100 or more
|
332 | 282 | 945 | 1,036 | ||||||||||||
Interest on other deposits
|
1,059 | 1,213 | 3,133 | 3,712 | ||||||||||||
Interest on borrowings
|
1,678 | 2,158 | 4,998 | 6,899 | ||||||||||||
Total interest expense
|
3,069 | 3,653 | 9,076 | 11,647 | ||||||||||||
Net interest income
|
9,850 | 8,382 | 29,588 | 25,548 | ||||||||||||
Provision for loan losses
|
1,020 | 1,307 | 2,148 | 3,028 | ||||||||||||
Net interest income after provision for loan losses
|
8,830 | 7,075 | 27,440 | 22,520 | ||||||||||||
Other income
|
||||||||||||||||
Service charges, commissions and fees
|
505 | 535 | 1,415 | 1,424 | ||||||||||||
Annuities and insurance commissions
|
42 | 3 | 81 | 119 | ||||||||||||
Bank-owned life insurance
|
259 | 429 | 780 | 957 | ||||||||||||
Other
|
227 | 135 | 519 | 322 | ||||||||||||
Other-than-temporary impairment losses on investment securities
|
(66 | ) | (23 | ) | (303 | ) | (8,495 | ) | ||||||||
Portion of losses recognized in other comprehensive income, before taxes
|
— | — | — | 3,377 | ||||||||||||
Net other-than-temporary impairment losses on investment securities
|
(66 | ) | (23 | ) | (303 | ) | (5,118 | ) | ||||||||
Net gains on sale of investment securities
|
1,316 | 1,056 | 3,120 | 3,464 | ||||||||||||
Net investment securities gains (losses)
|
1,250 | 1,033 | 2,817 | (1,654 | ) | |||||||||||
Total other income
|
2,283 | 2,135 | 5,612 | 1,168 | ||||||||||||
Other expense
|
||||||||||||||||
Salaries and employee benefits
|
2,848 | 2,721 | 8,618 | 8,106 | ||||||||||||
Occupancy and equipment
|
713 | 754 | 2,246 | 2,377 | ||||||||||||
FDIC insurance
|
328 | 510 | 1,384 | 1,586 | ||||||||||||
Professional and consulting
|
319 | 153 | 805 | 849 | ||||||||||||
Stationery and printing
|
73 | 68 | 273 | 242 | ||||||||||||
Marketing and advertising
|
30 | 36 | 116 | 234 | ||||||||||||
Computer expense
|
300 | 320 | 989 | 1,001 | ||||||||||||
Other real estate owned, net
|
— | 20 | (1 | ) | 63 | |||||||||||
Loss on fixed assets, net
|
— | — | — | 427 | ||||||||||||
Repurchase agreement termination fee
|
— | — | — | 594 | ||||||||||||
All other
|
918 | 860 | 2,791 | 2,622 | ||||||||||||
Total other expense
|
5,529 | 5,442 | 17,221 | 18,101 | ||||||||||||
Income before income tax expense
|
5,584 | 3,768 | 15,831 | 5,587 | ||||||||||||
Income tax expense
|
1,882 | 1,629 | 5,527 | 1,153 | ||||||||||||
Net Income
|
3,702 | 2,139 | 10,304 | 4,434 | ||||||||||||
Preferred stock dividends and accretion
|
145 | 146 | 436 | 437 | ||||||||||||
Net income available to common stockholders
|
$ | 3,557 | $ | 1,993 | $ | 9,868 | $ | 3,997 | ||||||||
Earnings per common share
|
||||||||||||||||
Basic
|
$ | 0.22 | $ | 0.14 | $ | 0.61 | $ | 0.27 | ||||||||
Diluted
|
$ | 0.22 | $ | 0.14 | $ | 0.61 | $ | 0.27 | ||||||||
Weighted Average Common Shares Outstanding
|
||||||||||||||||
Basic
|
16,290,700 | 14,649,397 | 16,290,598 | 14,599,919 | ||||||||||||
Diluted
|
16,313,366 | 14,649,397 | 16,310,557 | 14,601,478 | ||||||||||||
Dividend paid per common share
|
$ | 0.03 | $ | 0.03 | $ | 0.09 | $ | 0.09 |
(in thousands, except for share data)
|
Preferred
Stock
|
Common
Stock |
Additional
Paid In
Capital
|
Retained
Earnings
|
Treasury
Stock
|
Accumulated
Other
Comprehensive
Loss |
Total
Stockholders’
Equity
|
|||||||||||||||||||||
Balance—December 31, 2009
|
$ | 9,619 | $ | 97,908 | $ | 5,650 | $ | 17,068 | $ | (17,720 | ) | $ | (10,776 | ) | $ | 101,749 | ||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
4,434 | 4,434 | ||||||||||||||||||||||||||
Other comprehensive income, net of tax
|
6,203 | 6,203 | ||||||||||||||||||||||||||
Total comprehensive income
|
10,637 | |||||||||||||||||||||||||||
Accretion of discount on preferred stock
|
61 | (61 | ) | — | ||||||||||||||||||||||||
Issuance cost of common stock
|
(4 | ) | (4 | ) | ||||||||||||||||||||||||
Proceeds from common stock offering (1,715,000 shares)
|
12,148 | (758 | ) | 11,390 | ||||||||||||||||||||||||
Cash dividends on preferred stock
|
(375 | ) | (375 | ) | ||||||||||||||||||||||||
Cash dividends declared on common stock ($0.09 per share)
|
(1,312 | ) | (1,312 | ) | ||||||||||||||||||||||||
Restricted stock awarded (2,083 shares)
|
3 | 22 | 25 | |||||||||||||||||||||||||
Taxes related to stock-based compensation
|
8 | 8 | ||||||||||||||||||||||||||
Stock-based compensation expense
|
39 | 39 | ||||||||||||||||||||||||||
Balance—September 30, 2010
|
$ | 9,680 | $ | 110,056 | $ | 4,942 | $ | 19,750 | $ | (17,698 | ) | $ | (4,573 | ) | $ | 122,157 | ||||||||||||
Balance—December 31, 2010
|
$ | 9,700 | $ | 110,056 | $ | 4,941 | $ | 21,633 | $ | (17,698 | ) | $ | (7,675 | ) | $ | 120,957 | ||||||||||||
Comprehensive income, net of tax:
|
||||||||||||||||||||||||||||
Net income
|
10,304 | 10,304 | ||||||||||||||||||||||||||
Other comprehensive income, net of tax
|
3,110 | 3,110 | ||||||||||||||||||||||||||
Total comprehensive income
|
13,414 | |||||||||||||||||||||||||||
Accretion of discount on preferred stock
|
62 | (62 | ) | — | ||||||||||||||||||||||||
Redemption of preferred stock series A
|
(10,000 | ) | (10,000 | ) | ||||||||||||||||||||||||
Proceeds from issuance of series B preferred stock
|
11,250 | 11,250 | ||||||||||||||||||||||||||
Accrual of dividend on series B preferred stock
|
(23 | ) | (23 | ) | ||||||||||||||||||||||||
Issuance cost of common stock
|
(4 | ) | (4 | ) | ||||||||||||||||||||||||
Cash dividends on preferred stock series A
|
(354 | ) | (354 | ) | ||||||||||||||||||||||||
Cash dividends declared on common stock ($0.09 per share)
|
(1,466 | ) | (1,466 | ) | ||||||||||||||||||||||||
Stock issued for options exercise (868 shares)
|
7 | 7 | ||||||||||||||||||||||||||
Stock-based compensation expense
|
27 | 27 | ||||||||||||||||||||||||||
Balance—September 30, 2011
|
$ | 11,012 | $ | 110,056 | $ | 4,968 | $ | 30,028 | $ | (17,691 | ) | $ | (4,565 | ) | $ | 133,808 |
(in thousands)
|
Nine Months Ended
September 30,
|
|||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
|
|
||||||
Net income
|
$ | 10,304 | $ | 4,434 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Amortization of premiums and accretion of discounts on investment securities, net
|
2,983 | 1,400 | ||||||
Depreciation and amortization
|
725 | 874 | ||||||
Stock-based compensation
|
27 | 39 | ||||||
Provision for loan losses
|
2,148 | 3,028 | ||||||
Provision for deferred taxes
|
249 | 193 | ||||||
Net other-than-temporary impairment losses on investment securities
|
303 | 5,118 | ||||||
Gains on sales of investment securities, net
|
(3,120 | ) | (3,464 | ) | ||||
Net Loans originated for resale
|
(200 | ) | — | |||||
Net loss on sales and dispositions of premises and equipment
|
— | 427 | ||||||
(Increase) in accrued interest receivable
|
(1,482 | ) | (58 | ) | ||||
Decrease in prepaid FDIC insurance assessments
|
1,534 | 1,332 | ||||||
Increase in cash surrender value of bank-owned life insurance
|
(780 | ) | (957 | ) | ||||
(Increase) decrease in other assets
|
(3,104 | ) | 1,949 | |||||
Increase in other liabilities
|
5,492 | 10 | ||||||
Net cash provided by operating activities
|
15,079 | 14,325 | ||||||
Cash flows from investing activities:
|
||||||||
Investment securities available-for-sale:
|
||||||||
Purchases
|
(341,429 | ) | (620,693 | ) | ||||
Sales
|
236,388 | 547,733 | ||||||
Maturities, calls and principal repayments
|
35,979 | 37,605 | ||||||
Investment securities held-to-maturity:
|
||||||||
Purchases
|
(5,843 | ) | — | |||||
Maturities and principal repayments
|
2,375 | — | ||||||
Net redemption of restricted investment in bank stocks
|
402 | 417 | ||||||
Net decrease (increase) in loans
|
(14,443 | ) | 16,474 | |||||
Purchases of premises and equipment
|
(130 | ) | (266 | ) | ||||
Redemption of bank-owned life insurance
|
— | 5,610 | ||||||
Purchase of bank-owned life insurance
|
— | (6,000 | ) | |||||
Proceeds from life insurance death benefit
|
— | 15 | ||||||
Proceeds from sale of premises and equipment
|
— | 1 | ||||||
Net cash used in investing activities
|
(86,701 | ) | (19,104 | ) | ||||
Cash flows from financing activities:
|
||||||||
Net increase in deposits
|
199,690 | 23,197 | ||||||
Net decrease in short-term borrowings
|
(41,855 | ) | (9,723 | ) | ||||
Repayments of long-term borrowings
|
(10,000 | ) | (32,117 | ) | ||||
Cash dividends on preferred stock
|
(417 | ) | (375 | ) | ||||
Cash dividends on common stock
|
(1,466 | ) | (1,312 | ) | ||||
Proceeds from issuance of SBLF preferred stock
|
11,250 | — | ||||||
Redemption of preferred stock
|
(10,000 | ) | — | |||||
Proceeds from insurance of common stock from common stock offerings
|
— | 12,148 | ||||||
Issuance cost of common stock from common stock offerings
|
— | (758 | ) | |||||
Issuance cost of common stock
|
(4 | ) | (4 | ) | ||||
Issuance cost of restricted stock award
|
— | 25 | ||||||
Proceeds from exercise of stock options
|
7 | — | ||||||
Taxes related to stock based awards
|
— | 8 | ||||||
Net cash provided by (used in) financing activities
|
147,205 | (8,911 | ) | |||||
Net change in cash and cash equivalents
|
75,583 | (13,690 | ) | |||||
Cash and cash equivalents at beginning of period
|
37,497 | 89,168 | ||||||
Cash and cash equivalents at end of period
|
$ | 113,080 | $ | 75,478 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash payments for:
|
||||||||
Interest paid on deposits and borrowings
|
$ | 9,192 | $ | 12,193 | ||||
Income taxes
|
3,529 | 433 | ||||||
Supplemental disclosures of non-cash investing activities:
|
||||||||
Trade date accounting settlements for investments, net
|
$ | 2,999 | $ | 22,195 | ||||
Transfer of loan to other real estate owned
|
$ | — | $ | 1,927 | ||||
Net investment in direct financing lease
|
$ | — | $ | 3,700 | ||||
Transfer from investment securities available-for-sale to investment securities
Held-to-maturity |
$ | 66,833 | $ | — |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(in thousands, except per share amounts)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Net income
|
$ | 3,702 | $ | 2,139 | $ | 10,304 | $ | 4,434 | ||||||||
Preferred stock dividends and accretion
|
145 | 146 | 436 | 437 | ||||||||||||
Net income available to common shareholders
|
$ | 3,557 | $ | 1,993 | $ | 9,868 | $ | 3,997 | ||||||||
Basic weighted average common shares outstanding
|
16,291 | 14,649 | 16,291 | 14,600 | ||||||||||||
Plus: effect of dilutive options and warrants
|
22 | — | 20 | 1 | ||||||||||||
Diluted weighted average common shares outstanding
|
16,313 | 14,649 | 16,311 | 14,601 | ||||||||||||
Earning per common share:
|
||||||||||||||||
Basic
|
$ | 0.22 | $ | 0.14 | $ | 0.61 | $ | 0.27 | ||||||||
Diluted
|
$ | 0.22 | $ | 0.14 | $ | 0.61 | $ | 0.27 |
Nine Months Ended
September 30,
|
||||||||
2011
|
2010
|
|||||||
Weighted average fair value of grants
|
$ | 1.89 | $ | 2.16 | ||||
Risk-free interest rate
|
2.19 | % | 2.29 | % | ||||
Dividend yield
|
1.32 | % | 1.41 | % | ||||
Expected volatility
|
22.25 | % | 28.6 | % | ||||
Expected life in months
|
65 | 62 |
|
Shares
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term
(Years)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding at December 31, 2010
|
198,946 | $ | 9.75 | |||||||||||||
Granted
|
30,564 | 8.28 | ||||||||||||||
Exercised
|
(3,648 | ) | 1.83 | |||||||||||||
Forfeited/cancelled/expired
|
(12,857 | ) | 11.75 | |||||||||||||
Outstanding at September 30, 2011
|
213,005 | $ | 9.56 | 5.06 | $ | 181,091 | ||||||||||
Exercisable at September 30, 2011
|
147,015 | $ | 9.89 | 3.52 | $ | 118,686 |
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(Dollars in Thousands)
|
||||||||
Commercial and industrial
|
$ | 125,970 | $ | 121,034 | ||||
Commercial real estate
|
388,204 | 372,001 | ||||||
Construction
|
39,606 | 49,744 | ||||||
Residential mortgage
|
167,604 | 165,154 | ||||||
Installment
|
224 | 511 | ||||||
Total loans
|
$ | 721,608 | $ | 708,444 |
Loans Receivable on Non-Accrual Status
|
||||||||
September 30, 2011
|
December 31, 2010
|
|||||||
(Dollars in Thousands)
|
||||||||
Commercial and industrial
|
$ | 100 | $ | 456 | ||||
Commercial real estate
|
3,854 | 3,563 | ||||||
Construction
|
5,660 | 5,865 | ||||||
Residential mortgage
|
4,469 | 1,290 | ||||||
Total loans receivable on non-accrual status
|
$ | 14,083 | $ | 11,174 |
Credit Quality Indicators
|
||||||||||||||||||||
September 30, 2011
|
||||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||
Pass
|
Special Mention
|
Substandard
|
Doubtful
|
Total
|
||||||||||||||||
Commercial and industrial
|
$ | 122,334 | $ | 2,181 | $ | 1,455 | $ | — | $ | 125,970 | ||||||||||
Commercial real estate
|
353,977 | 21,214 | 13,013 | — | 388,204 | |||||||||||||||
Construction
|
33,947 | — | 5,659 | — | 39,606 | |||||||||||||||
Residential mortgage
|
159,972 | — | 7,632 | — | 167,604 | |||||||||||||||
Installment
|
224 | — | — | — | 224 | |||||||||||||||
Total loans
|
$ | 670,454 | $ | 23,395 | $ | 27,759 | $ | — | $ | 721,608 |
Credit Quality Indicators
|
||||||||||||||||||||
December 31, 2010
|
||||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||
Pass
|
Special Mention
|
Substandard
|
Doubtful
|
Total
|
||||||||||||||||
Commercial and industrial
|
$ | 116,741 | $ | 1,929 | $ | 2,364 | $ | — | $ | 121,034 | ||||||||||
Commercial real estate
|
345,096 | 15,383 | 11,522 | — | 372,001 | |||||||||||||||
Construction
|
43,879 | — | 3,588 | 2,277 | 49,744 | |||||||||||||||
Residential mortgage
|
161,558 | — | 3,596 | — | 165,154 | |||||||||||||||
Installment
|
511 | — | — | — | 511 | |||||||||||||||
Total loans
|
$ | 667,785 | $ | 17,312 | $ | 21,070 | $ | 2,277 | $ | 708,444 |
Impaired Loans
|
||||||||||||
September 30, 2011
|
||||||||||||
(Dollars in Thousands)
|
||||||||||||
Recorded Investment
|
Unpaid Principal Balance
|
Related
Allowance |
||||||||||
No related allowance recorded:
|
||||||||||||
Commercial real estate
|
$ | 1,671 | $ | 1,992 | $ | — | ||||||
Construction
|
5,234 | 8,642 | — | |||||||||
Total
|
$ | 6,905 | $ | 10,634 | $ | — | ||||||
With An Allowance Recorded
|
||||||||||||
Commercial real estate
|
$ | 7,680 | $ | 8,600 | $ | 935 | ||||||
Construction
|
426 | 426 | 221 | |||||||||
Residential mortgage
|
4,604 | 4,604 | 262 | |||||||||
Total
|
$ | 12,710 | $ | 13,630 | $ | 1,418 | ||||||
Total
|
||||||||||||
Commercial real estate
|
9,351 | 10,592 | 935 | |||||||||
Construction
|
5,660 | 9,068 | 221 | |||||||||
Residential mortgage
|
4,604 | 4,604 | 262 | |||||||||
Total
|
$ | 19,615 | $ | 24,264 | $ | 1,418 |
Impaired Loans
|
||||||||||||
December 31, 2010
|
||||||||||||
(Dollars in Thousands)
|
||||||||||||
Recorded Investment
|
Unpaid Principal Balance
|
Related
Allowance |
||||||||||
No related allowance recorded:
|
||||||||||||
Commercial and industrial
|
$ | 1,364 | $ | 1,908 | $ | — | ||||||
Commercial real estate
|
3,984 | 4,625 | — | |||||||||
Construction
|
5,865 | 8,642 | — | |||||||||
Residential mortgage
|
1,462 | 1,765 | — | |||||||||
Total
|
$ | 12,675 | $ | 16,940 | $ | — | ||||||
With An Allowance Recorded
|
||||||||||||
Commercial real estate
|
$ | 4,180 | $ | 4,180 | $ | 618 | ||||||
Residential mortgage
|
1,354 | 1,354 | 21 | |||||||||
Total
|
$ | 5,534 | $ | 5,534 | $ | 639 | ||||||
Total
|
||||||||||||
Commercial and industrial
|
$ | 1,364 | $ | 1,908 | $ | — | ||||||
Commercial real estate
|
8,164 | 8,805 | 618 | |||||||||
Construction
|
5,865 | 8,642 | — | |||||||||
Residential mortgage
|
2,816 | 3,119 | 21 | |||||||||
Total
|
$ | 18,209 | $ | 22,474 | $ | 639 |
Three Months Ended
September 30, 2011
|
Nine Months Ended
September 30, 2011
|
For the Year Ended
December 31, 2010
|
||||||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest Income
Recognized
|
Average Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||||||
Impaired loans with no related allowance recorded:
|
||||||||||||||||||||||||
Commercial and industrial
|
$ | — | $ | — | $ | 466 | $ | 11 | $ | 1,933 | $ | 87 | ||||||||||||
Commercial real estate
|
1,444 | 64 | 3,027 | 148 | 4,274 | 78 | ||||||||||||||||||
Construction
|
5,234 | — | 3,395 | — | 6,855 | 112 | ||||||||||||||||||
Residential mortgage
|
— | — | — | — | 1,711 | 27 | ||||||||||||||||||
Total
|
$ | 6,678 | $ | 64 | $ | 6,888 | $ | 159 | $ | 14,773 | $ | 304 | ||||||||||||
Impaired loans with an allowance recorded:
|
||||||||||||||||||||||||
Commercial real estate
|
$ | 5,039 | $ | 156 | $ | 4,715 | $ | 224 | $ | 4,181 | $ | 204 | ||||||||||||
Construction
|
437 | — | 2,276 | — | — | — | ||||||||||||||||||
Residential mortgage
|
3,675 | 46 | 3,364 | 76 | 1,356 | 76 | ||||||||||||||||||
Total
|
$ | 9,151 | $ | 202 | $ | 10,355 | $ | 300 | $ | 5,537 | $ | 280 | ||||||||||||
Total impaired loans:
|
||||||||||||||||||||||||
Commercial and industrial
|
$ | — | $ | — | $ | 466 | $ | 11 | $ | 1,933 | $ | 87 | ||||||||||||
Commercial real estate
|
6,483 | 220 | 7,742 | 372 | 8,455 | 282 | ||||||||||||||||||
Construction
|
5,671 | — | 5,671 | — | 6,855 | 112 | ||||||||||||||||||
Residential mortgage
|
3,675 | 46 | 3,364 | 76 | 3,067 | 103 | ||||||||||||||||||
Total
|
$ | 15,829 | $ | 266 | $ | 17,243 | $ | 459 | $ | 20,310 | $ | 584 |
Aging Analysis
|
||||||||||||||||||||||||||||
September 30, 2011
|
||||||||||||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||||||
30-59 Days
Past Due
|
60-89 Days
Past Due
|
Greater Than
90 Days
|
Total Past
Due |
Current
|
Total Loans
Receivable
|
Loans
Receivable > 90
Days And
Accruing
|
||||||||||||||||||||||
Commercial and Industrial
|
$ | 1,055 | $ | 121 | $ | 100 | $ | 1,276 | $ | 124,694 | $ | 125,970 | $ | — | ||||||||||||||
Commercial Real Estate
|
1,013 | — | 4,305 | 5,318 | 382,886 | 388,204 | 451 | |||||||||||||||||||||
Construction
|
— | — | 5,660 | 5,660 | 33,946 | 39,606 | — | |||||||||||||||||||||
Residential Mortgage
|
222 | 116 | 4,469 | 4,807 | 162,797 | 167,604 | — | |||||||||||||||||||||
Installment
|
3 | — | — | 3 | 221 | 224 | — | |||||||||||||||||||||
Total
|
$ | 2,293 | $ | 237 | $ | 14,534 | $ | 17,064 | $ | 704,544 | $ | 721,608 | $ | 451 |
December 31, 2010
|
||||||||||||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||||||
30-59 Days
Past Due
|
60-89 Days
Past Due
|
Greater Than
90 Days
|
Total Past
Due
|
Current
|
Total Loans
Receivable
|
Loans
Receivable > 90
Days And
Accruing
|
||||||||||||||||||||||
Commercial and Industrial
|
$ | 1,509 | $ | 476 | $ | 456 | $ | 2,441 | $ | 118,593 | $ | 121,034 | $ | — | ||||||||||||||
Commercial Real Estate
|
4,290 | 2,229 | 3,563 | 10,082 | 361,919 | 372,001 | — | |||||||||||||||||||||
Construction
|
170 | 449 | 5,865 | 6,484 | 43,260 | 49,744 | — | |||||||||||||||||||||
Residential Mortgage
|
1,814 | 309 | 2,004 | 4,127 | 161,027 | 165,154 | 714 | |||||||||||||||||||||
Installment
|
9 | — | — | 9 | 502 | 511 | — | |||||||||||||||||||||
Total
|
$ | 7,792 | $ | 3,463 | $ | 11,888 | $ | 23,143 | $ | 685,301 | $ | 708,444 | $ | 714 |
Allowance for loan and lease losses
|
||||||||||||||||||||||||||||
September 30, 2011
|
||||||||||||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||||||
C & I
|
Comm R/E
|
Construction
|
Res Mtge
|
Installment
|
Unallocated
|
Total
|
||||||||||||||||||||||
Allowance for loan and lease losses:
|
||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | — | $ | 935 | $ | 221 | $ | 262 | $ | — | $ | — | $ | 1,418 | ||||||||||||||
Collectively evaluated for impairment
|
1,376 | 4,947 | 484 | 976 | 48 | 287 | 8,118 | |||||||||||||||||||||
Total
|
$ | 1,376 | $ | 5,882 | $ | 705 | $ | 1,238 | $ | 48 | $ | 287 | $ | 9,536 | ||||||||||||||
Loans Receivable
|
||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | 1,052 | $ | 13,187 | $ | 5,660 | $ | 4,604 | $ | — | $ | — | $ | 24,503 | ||||||||||||||
Collectively evaluated for impairment
|
124,918 | 375,017 | 33,946 | 163,000 | 224 | — | 697,105 | |||||||||||||||||||||
Total
|
$ | 125,970 | $ | 388,204 | $ | 39,606 | $ | 167,604 | $ | 224 | $ | — | $ | 721,608 |
Allowance for loan and lease losses
|
||||||||||||||||||||||||||||
December 31, 2010
|
||||||||||||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||||||
C & I
|
Comm R/E
|
Construction
|
Res Mtge
|
Installment
|
Unallocated
|
Total
|
||||||||||||||||||||||
Allowance for loan and lease losses:
|
||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | — | $ | 618 | $ | — | $ | 21 | $ | — | $ | — | $ | 639 | ||||||||||||||
Collectively evaluated for impairment
|
1,272 | 5,097 | 551 | 1,017 | 52 | 239 | 8,228 | |||||||||||||||||||||
Total
|
$ | 1,272 | $ | 5,715 | $ | 551 | $ | 1,038 | $ | 52 | $ | 239 | $ | 8,867 | ||||||||||||||
Loans Receivable
|
||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | 2,748 | $ | 11,960 | $ | 5,865 | $ | 1,354 | $ | — | $ | — | $ | 21,927 | ||||||||||||||
Collectively evaluated for impairment
|
118,286 | 360,041 | 43,879 | 163,800 | 511 | — | 686,517 | |||||||||||||||||||||
Total
|
$ | 121,034 | $ | 372,001 | $ | 49,744 | $ | 165,154 | $ | 511 | $ | — | $ | 708,444 |
Three Months Ended September 30, 2011
(Dollars in Thousands)
|
||||||||||||||||||||||||||||
C & I
|
Comm R/E
|
Construction
|
Res Mtge
|
Installment
|
Unallocated
|
Total
|
||||||||||||||||||||||
Balance at July 1,
|
$ | 1,376 | $ | 6,155 | $ | 1,130 | $ | 1,005 | $ | 56 | $ | 114 | $ | 9,836 | ||||||||||||||
Charge offs
|
— | (940 | ) | (631 | ) | — | (7 | ) | — | (1,578 | ) | |||||||||||||||||
Recoveries
|
205 | — | — | 51 | 2 | — | 258 | |||||||||||||||||||||
Provision
|
(205 | ) | 667 | 206 | 182 | (3 | ) | 173 | 1,020 | |||||||||||||||||||
Balance at September 30,
|
$ | 1,376 | $ | 5,882 | $ | 705 | $ | 1,238 | $ | 48 | $ | 287 | $ | 9,536 |
Nine Months Ended September 30, 2011
(Dollars in thousands)
|
||||||||||||||||||||||||||||
C & I
|
Comm R/E
|
Construction
|
Res Mtg
|
Installment
|
Unallocated
|
Total
|
||||||||||||||||||||||
Balance at January 1,
|
$ | 1,272 | $ | 5,715 | $ | 551 | $ | 1,038 | $ | 52 | $ | 239 | $ | 8,867 | ||||||||||||||
Charge offs
|
(185 | ) | (940 | ) | (631 | ) | (23 | ) | (14 | ) | — | (1,793 | ) | |||||||||||||||
Recoveries
|
240 | 15 | — | 53 | 6 | — | 314 | |||||||||||||||||||||
Provision
|
49 | 1,092 | 785 | 170 | 4 | 48 | 2,148 | |||||||||||||||||||||
Balance at September 30,
|
$ | 1,376 | $ | 5,882 | $ | 705 | $ | 1,238 | $ | 48 | $ | 287 | $ | 9,536 |
Three and Nine Months Ended September 30, 2011 and 2010
(Dollars in Thousands)
|
||||||||||||||||
3 months
|
3 months
|
9 months
|
9 months
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Balance at Beginning of Period,
|
$ | 9,836 | $ | 8,595 | $ | 8,867 | $ | 8,711 | ||||||||
Charge offs
|
(1,578 | ) | (1,135 | ) | (1,793 | ) | (2,985 | ) | ||||||||
Recoveries
|
258 | 3 | 314 | 16 | ||||||||||||
Provision
|
1,020 | 1,307 | 2,148 | 3,028 | ||||||||||||
Balance at September 30,
|
$ | 9,536 | $ | 8,770 | $ | 9,536 | $ | 8,770 |
Three Months Ended September 30, 2011
|
Nine Months Ended September 30, 2011
|
|||||||||||||||||||||||
Number
of
Loans
|
Pre-restructuring
Outstanding
Recorded
Investment
|
Post-restructuring
Outstanding
Recorded
Investment
|
Number
of
Loans
|
Pre-restructuring
Outstanding
Recorded
Investment
|
Post-restructuring
Outstanding
Recorded
Investment
|
|||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||
Troubled debt restructurings:
|
||||||||||||||||||||||||
Commercial Real Estate
|
— | — | — | 1 | 1,719 | 1,318 | ||||||||||||||||||
Residential Mortgage
|
1 | 340 | 340 | 4 | 1,545 | 1,496 | ||||||||||||||||||
Total
|
1 | $ | 340 | $ | 340 | 5 | $ | 3,264 | $ | 2,814 |
Nine Months Ended
September 30,
|
||||||||
2011
|
2010
|
|||||||
(in Thousands)
|
||||||||
Reclassification adjustment of OTTI losses included in income
|
$ | 303 | $ | 8,495 | ||||
Unrealized gains on available-for-sale securities
|
8,051 | 5,246 | ||||||
Reclassification adjustment for net gains arising during this period
|
(3,120 | ) | (3,464 | ) | ||||
Net unrealized gains on available-for-sale securities
|
5,234 | 10,277 | ||||||
Unrealized holding gains on securities transferred from available-for-sale to held-to-maturity
|
261 | — | ||||||
Net unrealized gain on securities
|
5,495 | 10,277 | ||||||
Tax effect
|
(2,300 | ) | (4,074 | ) | ||||
Net of tax amount
|
3,195 | 6,203 | ||||||
Change in minimum pension liability
|
(142 | ) | — | |||||
Tax effect
|
57 | — | ||||||
Net of tax amount
|
(85 | ) | — | |||||
Other comprehensive income, net of tax
|
$ | 3,110 | $ | 6,203 |
September 30,
2011 |
December 31,
2010
|
|||||||
|
(in Thousands)
|
|||||||
Investment securities available-for-sale, net of tax
|
$ | (2,299 | ) | $ | (5,327 | ) | ||
Unamortized component from transfer of securities from available-for-sale to held-to-maturity, net of tax
|
167 | — | ||||||
Defined benefit pension and post-retirement plans, net of tax
|
(2,433 | ) | (2,348 | ) | ||||
Total accumulated other comprehensive loss
|
$ | (4,565 | ) | $ | (7,675 | ) |
September 30, 2011
|
||||||||||||||||
(in thousands)
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
Investment Securities Available-for-Sale:
|
|
|
|
|
||||||||||||
Federal agency obligations
|
$ | 18,431 | $ | 181 | $ | (13 | ) | $ | 18,599 | |||||||
Residential mortgage backed securities
|
118,604 | 2,008 | — | 120,612 | ||||||||||||
Obligations of U.S. states and political subdivisions
|
50,722 | 1,885 | (24 | ) | 52,583 | |||||||||||
Trust preferred securities
|
24,244 | 58 | (4,341 | ) | 19,961 | |||||||||||
Corporate bonds and notes
|
171,498 | 1,077 | (2,892 | ) | 169,683 | |||||||||||
Collateralized mortgage obligations
|
3,291 | — | (1,221 | ) | 2,070 | |||||||||||
Equity securities
|
5,622 | 34 | (306 | ) | 5,350 | |||||||||||
Total
|
$ | 392,412 | $ | 5,243 | $ | (8,797 | ) | $ | 388,858 |
Investment Securities Held-to-Maturity:
|
||||||||||||||||
Federal agency obligations
|
$ | 32,407 | $ | 130 | $ | (13 | ) | $ | 32,524 | |||||||
Obligations of U.S. states and political subdivisions
|
37,735 | 2,112 | — | 39,847 | ||||||||||||
Total
|
$ | 70,142 | $ | 2,242 | $ | (13 | ) | $ | 72,371 | |||||||
Total investment securities
|
$ | 462,554 | $ | 7,485 | $ | (8,810 | ) | $ | 461,229 |
December 31, 2010
|
||||||||||||||||
(in Thousands)
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
Investment Securities Available-for-Sale:
|
|
|
|
|
||||||||||||
U.S. Treasury and agency securities
|
$ | 7,123 | $ | — | $ | (128 | ) | $ | 6,995 | |||||||
Federal agency obligations
|
68,051 | 1,071 | (641 | ) | 68,481 | |||||||||||
Residential mortgage backed securities
|
180,037 | 115 | (2,419 | ) | 177,733 | |||||||||||
Obligations of U.S. states and political subdivisions
|
38,312 | 1 | (1,088 | ) | 37,225 | |||||||||||
Trust preferred securities
|
21,222 | 26 | (2,517 | ) | 18,731 | |||||||||||
Corporate bonds and notes
|
63,047 | — | (l,613 | ) | 61,434 | |||||||||||
Collateralized mortgage obligations
|
3,941 | — | (1,213 | ) | 2,728 | |||||||||||
Equity securities
|
5,135 | — | (382 | ) | 4,753 | |||||||||||
Total
|
$ | 386,868 | $ | 1,213 | $ | (10,001 | ) | $ | 378,080 |
September 30, 2011
|
||||||||
Amortized
Cost
|
Fair Value
|
|||||||
Investment Securities Available-for-Sale:
|
(in thousands)
|
|||||||
Due in one year or less
|
$ | — | $ | — | ||||
Due after one year through five years
|
75,097 | 74,544 | ||||||
Due after five years through ten years
|
105,628 | 104,820 | ||||||
Due after ten years
|
87,461 | 83,532 | ||||||
Residential mortgage-backed securities (1)
|
118,604 | 120,612 | ||||||
Equity securities
|
5,622 | 5,350 | ||||||
Total
|
$ | 392,412 | $ | 388,858 | ||||
Investment Securities Held-to-Maturity:
|
||||||||
Due in one year or less
|
$ | — | $ | — | ||||
Due after one year through five years
|
— | — | ||||||
Due after five years through ten years
|
985 | 1,039 | ||||||
Due after ten years
|
69,157 | 71,332 | ||||||
Total
|
$ | 70,142 | $ | 72,371 | ||||
Total investment securities
|
$ | 462,554 | $ | 461,229 |
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Other than temporary impairment charges
|
||||||||
1 variable rate private label CMO
|
$ | 18 | $ | 332 | ||||
1 Trust Preferred security
|
— | 3,000 | ||||||
2 Pooled trust preferred securities
|
— | 1,786 | ||||||
Principal losses on a variable rate CMO
|
285 | — | ||||||
Total other-than-temporary impairment charges
|
$ | 303 | $ | 5,118 |
Deal Name
|
Single
Issuer
or
Pooled
|
Class/
Tranche
|
Adjusted
Cost Basis |
Fair
Value
|
Gross
Unrealized
Gain (Loss)
|
Lowest
Credit
Rating
Assigned
|
Number of
Banks
Currently
Performing
|
Deferrals
and
Defaults
as % of
Original
Collateral
|
Expected
Deferrals/Defaults
as % of
Remaining
Performing
Collateral
|
|||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||
Countrywide Capital IV
|
Single
|
— | $ | 1,770 | $ | 1,366 | $ | (404 | ) |
BB+
|
1 |
None
|
None
|
|||||||||||||
Countrywide Capital V
|
Single
|
— | 2,747 | 2,110 | (637 | ) |
BB+
|
1 |
None
|
None
|
||||||||||||||||
Countrywide Capital V
|
Single
|
— | 250 | 192 | (58 | ) |
BB+
|
1 |
None
|
None
|
||||||||||||||||
NPB Capital Trust II
|
Single
|
— | 868 | 871 | 3 |
NR
|
1 |
None
|
None
|
|||||||||||||||||
Citigroup Cap IX
|
Single
|
— | 991 | 867 | (124 | ) |
BB+
|
1 |
None
|
None
|
||||||||||||||||
Citigroup Cap IX
|
Single
|
— | 1,903 | 1,674 | (229 | ) |
BB+
|
1 |
None
|
None
|
||||||||||||||||
Citigroup Cap XI
|
Single
|
— | 245 | 217 | (28 | ) |
BB+
|
1 |
None
|
None
|
||||||||||||||||
BAC Capital Trust X
|
Single
|
— | 2,500 | 1,935 | (565 | ) |
BB+
|
1 |
None
|
None
|
||||||||||||||||
NationsBank Cap Trust III
|
Single
|
— | 1,570 | 983 | (587 | ) |
BB+
|
1 |
None
|
None
|
||||||||||||||||
Morgan Stanley Cap Trust IV
|
Single
|
— | 2,500 | 2,073 | (427 | ) |
BB+
|
1 |
None
|
None
|
||||||||||||||||
Morgan Stanley Cap Trust IV
|
Single
|
— | 1,741 | 1,450 | (291 | ) |
BB+
|
1 |
None
|
None
|
||||||||||||||||
Saturns-GS 2004-06
|
Single
|
— | 242 | 231 | (11 | ) |
BBB-
|
1 |
None
|
None
|
||||||||||||||||
Saturns-GS 2004-06
|
Single
|
— | 312 | 298 | (14 | ) |
BBB-
|
1 |
None
|
None
|
||||||||||||||||
Saturns-GS 2004-04
|
Single
|
— | 779 | 722 | (57 | ) |
BBB-
|
1 |
None
|
None
|
||||||||||||||||
Saturns-GS 2004-04
|
Single
|
— | 22 | 20 | (2 | ) |
BBB-
|
1 |
None
|
None
|
||||||||||||||||
Goldman Sachs
|
Single
|
— | 999 | 859 | (140 | ) |
BBB-
|
1 |
None
|
None
|
||||||||||||||||
ALESCO Preferred Funding VI
|
Pooled
|
C2 | 274 | 211 | (63 | ) |
Ca
|
43 of 65
|
(1) |
33.4 %
|
29.9 %
|
|||||||||||||||
ALESCO Preferred Funding VII
|
Pooled
|
C1 | 820 | 116 | (704 | ) |
Ca
|
57 of 78
|
(1) |
33.2 %
|
28.1 %
|
|||||||||||||||
Total
|
20,533 | 16,195 | (4,338 | ) |
|
(1)
|
Includes banks and insurance companies.
|
Three
Months
Ended
September
30, 2011
|
Nine Months
Ended
September 30,
2011
|
Year
Ended
December
31, 2010
|
||||||||||
(in thousands)
|
||||||||||||
Balance of credit-related OTTI at January 1,
|
$ | 6,434 | $ | 6,197 | $ | 3,621 | ||||||
Addition:
|
||||||||||||
Credit losses on investment securities for which other-than-temporary impairment was not previously recognized
|
66 | 303 | 5,576 | |||||||||
Reduction:
|
||||||||||||
Credit losses on investment securities sold during the period
|
— | — | (3,000 | ) | ||||||||
Balance of credit-related OTTI at period end
|
$ | 6,500 | $ | 6,500 | $ | 6,197 |
September 30, 2011
|
||||||||||||||||||||||||
|
Total
|
Less Than 12 Months
|
12 Months or Longer
|
|||||||||||||||||||||
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Investment Securities Available-for-Sale:
|
||||||||||||||||||||||||
Federal agency obligations
|
$ | 10,838 | $ | (13 | ) | $ | 10,838 | $ | (13 | ) | $ | — | $ | — | ||||||||||
Obligations of U.S. states and political subdivisions
|
3,370 | (24 | ) | 3,370 | (24 | ) | — | — | ||||||||||||||||
Trust preferred securities
|
15,326 | (4,341 | ) | 14,016 | (2,986 | ) | 1,310 | (1,355 | ) | |||||||||||||||
Corporate bonds and notes
|
107,850 | (2,892 | ) | 104,685 | (2,621 | ) | 3,165 | (271 | ) | |||||||||||||||
Collateralized mortgage obligations
|
2,070 | (1,221 | ) | — | — | 2,070 | (1,221 | ) | ||||||||||||||||
Equity securities
|
1,229 | (306 | ) | — | — | 1,229 | (306 | ) | ||||||||||||||||
Total
|
$ | 140,683 | $ | (8,797 | ) | $ | 132,909 | $ | (5,644 | ) | $ | 7,774 | $ | (3,153 | ) | |||||||||
Obligations of U.S. states and political subdivisions
|
7,440 | (13 | ) | 7,440 | (13 | ) | — | — | ||||||||||||||||
Total
|
$ | 7,440 | $ | (13 | ) | $ | 7,440 | $ | (13 | ) | $ | — | $ | — | ||||||||||
Total temporarily impaired investment securities
|
$ | 148,123 | $ | (8,810 | ) | $ | 140,349 | $ | (5,657 | ) | $ | 7,774 | $ | (3,153 | ) |
December 31, 2010
|
||||||||||||||||||||||||
Total
|
Less Than 12 Months
|
12 Months or Longer
|
||||||||||||||||||||||
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Investment Securities Available-for-Sale:
|
||||||||||||||||||||||||
U.S. Treasury and agency securities
|
$ | 6,995 | $ | (128 | ) | $ | 6,995 | $ | (128 | ) | $ | — | $ | — | ||||||||||
Federal agency obligations
|
35,799 | (641 | ) | 32,113 | (622 | ) | 3,686 | (19 | ) | |||||||||||||||
Residential mortgage backed securities
|
166,820 | (2,419 | ) | 166,820 | (2,419 | ) | — | — | ||||||||||||||||
Obligations of U.S. states and political subdivisions
|
19,699 | (1,088 | ) | 19,699 | (1,088 | ) | — | — | ||||||||||||||||
Trust preferred securities
|
16,058 | (2,517 | ) | — | — | 16,058 | (2,517 | ) | ||||||||||||||||
Corporate bonds and notes
|
61,434 | (1,613 | ) | 52,985 | (1,175 | ) | 8,449 | (438 | ) | |||||||||||||||
Collateralized mortgage obligations
|
2,728 | (1,213 | ) | — | — | 2,728 | (1,213 | ) | ||||||||||||||||
Equity securities
|
4,653 | (382 | ) | 3,427 | (73 | ) | 1,226 | (309 | ) | |||||||||||||||
Total temporarily impaired investment securities
|
$ | 314,186 | $ | (10,001 | ) | $ | 282,039 | $ | (5,505 | ) | $ | 32,147 | $ | (4,496 | ) |
|
·
|
Level 1: Unadjusted exchange quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
·
|
Level 2: Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
|
·
|
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (for example, supported with little or no market activity).
|
Fair Value Measurements at
Reporting Date Using
|
||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis
|
September 30,
2011
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
(in thousands)
|
||||||||||||||||
Federal agency obligations
|
$ | 18,599 | $ | 999 | $ | 17,600 | $ | — | ||||||||
Residential mortgage backed securities
|
120,612 | — | 120,612 | — | ||||||||||||
Obligations of U.S. states and political subdivisions
|
52,583 | 2,340 | 50,243 | — | ||||||||||||
Trust preferred securities
|
19,961 | — | 19,635 | 326 | ||||||||||||
Collateralized mortgage obligations
|
2,070 | — | — | 2,070 | ||||||||||||
Corporate bonds and notes
|
169,683 | — | 169,683 | — | ||||||||||||
Equity securities
|
5,350 | 5,350 | — | — | ||||||||||||
Investment securities available-for-sale
|
$ | 388,858 | $ | 8,689 | $ | 377,773 | $ | 2,396 |
Fair Value Measurements at
Reporting Date Using
|
||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis
|
December 31,
2010
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
(in thousands)
|
||||||||||||||||
U.S. Treasury & agency securities
|
$ | 6,995 | $ | 6,995 | $ | — | $ | — | ||||||||
Federal agency obligations
|
68,481 | — | 68,481 | — | ||||||||||||
Residential mortgage backed securities
|
177,733 | — | 177,733 | — | ||||||||||||
Obligations of U.S. states and political subdivisions
|
37,225 | 16,936 | 20,289 | — | ||||||||||||
Trust preferred securities
|
18,731 | — | 18,589 | 142 | ||||||||||||
Collateralized mortgage obligations
|
2,728 | — | — | 2,728 | ||||||||||||
Corporate bonds and notes
|
61,434 | — | 61,434 | — | ||||||||||||
Equity securities
|
4,753 | 4,753 | — | — | ||||||||||||
Investment securities available-for-sale
|
$ | 378,080 | $ | 28,684 | $ | 346,526 | $ | 2,870 |
Three Months Ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
(in Thousands)
|
||||||||
Balance at July 1,
|
$ | 2,695 | $ | 3,275 | ||||
Principal interest deferrals
|
29 | 34 | ||||||
Principal repayments
|
(179 | ) | (285 | ) | ||||
Total net losses included in net income
|
— | — | ||||||
Total net unrealized gains (loss)
|
(149 | ) | 361 | |||||
Balance at period end,
|
$ | 2,396 | $ | 3,385 |
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
(in Thousands)
|
||||||||
Balance at January 1,
|
$ | 2,870 | $ | 2,349 | ||||
Transfers into Level 3
|
— | 8,197 | ||||||
Transfers out of Level 3
|
— | (5,174 | ) | |||||
Principal interest deferrals
|
88 | 90 | ||||||
Principal repayments
|
(631 | ) | (599 | ) | ||||
Total net losses included in net income
|
— | (3,000 | ) | |||||
Total net unrealized gains
|
69 | 1,522 | ||||||
Balance at period end,
|
$ | 2,396 | $ | 3,385 |
Fair Value Measurements at Reporting Date
Using
|
||||||||||||||||
Assets Measured at Fair Value on a Non-Recurring Basis
|
September 30,
2011
|
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
(In Thousands)
|
||||||||||||||||
Impaired loans
|
$ | 11,292 | $ | — | $ | — | $ | 11,292 |
Fair Value Measurements at Reporting Date
Using
|
||||||||||||||||
Assets Measured at Fair Value on a Non-Recurring Basis
|
December 31,
2010 |
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
(In Thousands)
|
||||||||||||||||
Impaired loans
|
$ | 4,895 | $ | — | $ | — | $ | 4,895 |
September 30, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying
Amount |
Fair
Value
|
Carrying
Amount |
Fair
Value
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Financial assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 113,080 | $ | 113,080 | $ | 37,497 | $ | 37,497 | ||||||||
Investment securities available-for-sale
|
388,858 | 388,858 | 378,080 | 378,080 | ||||||||||||
Investment securities held-to-maturity
|
70,142 | 72,371 | — | — | ||||||||||||
Net loans
|
712,072 | 715,087 | 699,577 | 706,309 | ||||||||||||
Restricted investment in bank stocks
|
9,194 | 9,194 | 9,596 | 9,596 | ||||||||||||
Accrued interest receivable
|
5,616 | 5,616 | 4,134 | 4,134 | ||||||||||||
Financial liabilities:
|
||||||||||||||||
Non interest-bearing deposits
|
$ | 161,340 | $ | 161,340 | $ | 144,210 | $ | 144,210 | ||||||||
Interest-bearing deposits
|
898,682 | 899,469 | 716,122 | 716,887 | ||||||||||||
Short-term borrowings
|
— | — | 41,855 | 41,855 | ||||||||||||
Long-term borrowings
|
161,000 | 170,104 | 171,000 | 179,570 | ||||||||||||
Subordinated debentures
|
5,155 | 5,249 | 5,155 | 5,157 | ||||||||||||
Accrued interest payable
|
925 | 925 | 1,041 | 1,041 |
For years ending December 31,
|
(in thousands)
|
|||
2011
|
$ | 39 | ||
2012
|
166 | |||
2013
|
216 | |||
2014
|
216 | |||
2015
|
224 | |||
Thereafter
|
2,876 | |||
Total minimum future lease receipts
|
$ | 3,737 |
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
(in thousands)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Interest cost
|
$ | 147 | $ | 150 | $ | 441 | $ | 450 | ||||||||
Net amortization and deferral
|
(51 | ) | (71 | ) | (151 | ) | (212 | ) | ||||||||
Net periodic pension cost
|
$ | 96 | $ | 79 | $ | 290 | $ | 238 |
|
September 30,
2011
|
|||
(dollars in thousands)
|
||||
Average interest rate:
|
|
|||
At quarter end
|
—
|
%
|
||
For the quarter
|
0.25
|
%
|
||
Average amount outstanding during the quarter
|
$
|
33,592
|
||
Maximum amount outstanding at any month end in the quarter
|
$
|
34,506
|
||
Amount outstanding at quarter end
|
$
|
—
|
|
September 30,
2011
|
|||
(in thousands)
|
||||
2013
|
$
|
5,000
|
||
2015
|
10,000
|
|||
Thereafter
|
146,000
|
|||
Total
|
$
|
161,000
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||||||||||||||||||
Increase
|
Percent
|
Increase
|
Percent
|
|||||||||||||||||||||||||||||
(dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
Change
|
2011
|
2010
|
(Decrease)
|
Change
|
||||||||||||||||||||||||
Interest income:
|
||||||||||||||||||||||||||||||||
Investment securities AFS
|
$ | 3,327 | $ | 2,539 | $ | 788 | 31.0 | % | $ | 10,530 | $ | 8,728 | $ | 1,802 | 20.6 | % | ||||||||||||||||
Investment securities HTM
|
806 | — | 806 | — | 1,155 | — | 1,155 | — | ||||||||||||||||||||||||
Loans, including net costs
|
8,956 | 9,378 | (422 | ) | (4.5 | ) | 27,123 | 28,165 | (1,042 | ) | (3.7 | ) | ||||||||||||||||||||
Restricted investment in bank stocks, at cost
|
110 | 129 | (19 | ) | (14.7 | ) | 362 | 402 | (40 | ) | (10.0 | ) | ||||||||||||||||||||
Total interest income
|
13,199 | 12,046 | 1,153 | 9.6 | 39,170 | 37,295 | 1,875 | 5.0 | ||||||||||||||||||||||||
Interest expense:
|
||||||||||||||||||||||||||||||||
Time deposits $100 or more
|
332 | 282 | 50 | 17.7 | 945 | 1,036 | (91 | ) | (8.8 | ) | ||||||||||||||||||||||
All other deposits
|
1,059 | 1,213 | (154 | ) | (12.7 | ) | 3,133 | 3,712 | (579 | ) | (15.6 | ) | ||||||||||||||||||||
Borrowings
|
1,678 | 2,158 | (480 | ) | (22.2 | ) | 4,998 | 6,899 | (1,901 | ) | (27.6 | ) | ||||||||||||||||||||
Total interest expense
|
3,069 | 3,653 | (584 | ) | (16.0 | ) | 9,076 | 11,647 | (2,571 | ) | (22.1 | ) | ||||||||||||||||||||
Net interest income on a fully tax-equivalent basis
|
10,130 | 8,393 | 1,737 | 20.7 | 30,094 | 25,648 | 4,446 | 17.3 | ||||||||||||||||||||||||
Tax-equivalent adjustment (1)
|
(280 | ) | (11 | ) | (269 | ) | (2,445.5 | ) | (506 | ) | (100 | ) | (406 | ) | 406.0 | |||||||||||||||||
Net interest income
|
$ | 9,850 | $ | 8,382 | $ | 1,468 | 17.5 | % | $ | 29,588 | $ | 25,548 | $ | 4,040 | 15.8 | % |
Three Months Ended
September 30, 2011 and 2010
Increase (Decrease) Due to Change In:
|
Nine Months Ended
September 30, 2011 and 2010
Increase (Decrease) Due to Change In:
|
|||||||||||||||||||||||
(tax-equivalent basis, in thousands)
|
Average
Volume
|
Average
Rate
|
Net
Change
|
Average
Volume
|
Average
Rate
|
Net
Change
|
||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Investment securities:
|
||||||||||||||||||||||||
Available for sale
|
||||||||||||||||||||||||
Taxable
|
$ | 333 | $ | 71 | $ | 404 | $ | 1,998 | $ | (715 | ) | $ | 1,283 | |||||||||||
Tax-exempt
|
386 | (2 | ) | 384 | 522 | (3 | ) | 519 | ||||||||||||||||
Held to maturity
|
||||||||||||||||||||||||
Taxable
|
399 | — | 399 | 479 | — | 479 | ||||||||||||||||||
Tax-exempt
|
407 | — | 407 | 676 | — | 676 | ||||||||||||||||||
Total investment securities
|
1,525 | 69 | 1,594 | 3,675 | (718 | ) | 2,957 | |||||||||||||||||
Loans
|
(103 | ) | (319 | ) | (422 | ) | (37 | ) | (1,005 | ) | (1,042 | ) | ||||||||||||
Restricted investment in bank stocks
|
(15 | ) | (4 | ) | (19 | ) | (54 | ) | 14 | (40 | ) | |||||||||||||
Total interest-earning assets
|
1,407 | (254 | ) | 1,153 | 3,584 | (1,709 | ) | 1,875 | ||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Money market deposits
|
113 | (91 | ) | 22 | 288 | (290 | ) | (2 | ) | |||||||||||||||
Savings deposits
|
15 | (112 | ) | (97 | ) | 72 | (301 | ) | (229 | ) | ||||||||||||||
Time deposits
|
80 | (108 | ) | (28 | ) | 133 | (564 | ) | (431 | ) | ||||||||||||||
Other interest-bearing deposits
|
46 | (47 | ) | (1 | ) | 181 | (189 | ) | (8 | ) | ||||||||||||||
Total interest-bearing deposits
|
254 | (358 | ) | (104 | ) | 674 | (1,344 | ) | (670 | ) | ||||||||||||||
Borrowings and subordinated debentures
|
(332 | ) | (148 | ) | (480 | ) | (1,250 | ) | (651 | ) | (1,901 | ) | ||||||||||||
Total interest-bearing liabilities
|
(78 | ) | (506 | ) | (584 | ) | (576 | ) | (1,995 | ) | (2,571 | ) | ||||||||||||
Change in net interest income
|
$ | 1,485 | $ | 252 | $ | 1,737 | $ | 4,160 | $ | 286 | $ | 4,446 |
Three Months Ended September 30,
|
||||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||||
(tax-equivalent basis)
|
Average
Balance
|
Interest
Income/
Expense
|
Average
Rate
|
Average
Balance
|
Interest
Income/
Expense
|
Average
Rate
|
||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Investment securities (1):
|
||||||||||||||||||||||||
Available for sale
|
||||||||||||||||||||||||
Taxable
|
$ | 326,139 | $ | 2,911 | 3.57 | % | $ | 288,695 | $ | 2,507 | 3.47 | % | ||||||||||||
Tax-exempt
|
30,089 | 416 | 5.53 | 2,242 | 32 | 5.71 | ||||||||||||||||||
Held to maturity
|
||||||||||||||||||||||||
Taxable
|
43,593 | 399 | 3.66 | — | — | — | ||||||||||||||||||
Tax-exempt
|
28,195 | 407 | 5.77 | — | — | — | ||||||||||||||||||
Total investment securities
|
428,016 | 4,133 | 3.86 | 290,937 | 2,539 | 3.49 | ||||||||||||||||||
Loans (2)
|
707,935 | 8,956 | 5.06 | 715,850 | 9,378 | 5.24 | ||||||||||||||||||
Restricted investment in bank stocks
|
9,194 | 110 | 4.79 | 10,378 | 129 | 4.97 | ||||||||||||||||||
Total interest-earning assets
|
1,145,145 | 13,199 | 4.61 | 1,017,165 | 12,046 | 4.74 | ||||||||||||||||||
Non interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
127,959 | 101,933 | ||||||||||||||||||||||
Bank-owned life insurance
|
28,533 | 27,316 | ||||||||||||||||||||||
Intangible assets
|
16,922 | 16,984 | ||||||||||||||||||||||
Other assets
|
33,444 | 34,741 | ||||||||||||||||||||||
Allowance for loan losses
|
(10,383 | ) | (8,738 | ) | ||||||||||||||||||||
Total non interest-earning assets
|
196,475 | 172,236 | ||||||||||||||||||||||
Total assets
|
$ | 1,341,620 | $ | 1,189,401 | ||||||||||||||||||||
Liabilities and Stockholders’ Equity
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Money market deposits
|
$ | 204,102 | $ | 261 | 0.51 | % | $ | 127,922 | $ | 239 | 0.75 | % | ||||||||||||
Savings deposits
|
181,857 | 228 | 0.50 | 173,642 | 325 | 0.75 | ||||||||||||||||||
Time deposits
|
241,123 | 595 | 0.99 | 202,159 | 623 | 1.23 | ||||||||||||||||||
Other interest-bearing deposits
|
211,425 | 307 | 0.58 | 182,106 | 308 | 0.68 | ||||||||||||||||||
Total interest-bearing deposits
|
838,507 | 1,391 | 0.66 | 685,829 | 1,495 | 0.87 | ||||||||||||||||||
Short-term and long-term borrowings
|
194,592 | 1,638 | 3.37 | 233,111 | 2,116 | 3.63 | ||||||||||||||||||
Subordinated debentures
|
5,155 | 40 | 3.10 | 5,155 | 42 | 3.26 | ||||||||||||||||||
Total interest-bearing liabilities
|
1,038,254 | 3,069 | 1.18 | 924,095 | 3,653 | 1.58 | ||||||||||||||||||
Non interest-bearing liabilities:
|
||||||||||||||||||||||||
Demand deposits
|
161,744 | 142,829 | ||||||||||||||||||||||
Other liabilities
|
8,471 | 11,933 | ||||||||||||||||||||||
Total non interest-bearing liabilities
|
170,215 | 154,762 | ||||||||||||||||||||||
Stockholders’ equity
|
133,151 | 110,544 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$ | 1,341,620 | $ | 1,189,401 | ||||||||||||||||||||
Net interest income (tax-equivalent basis)
|
10,130 | 8,393 | ||||||||||||||||||||||
Net interest spread
|
3.43 | % | 3.16 | % | ||||||||||||||||||||
Net interest margin (3)
|
3.54 | % | 3.30 | % | ||||||||||||||||||||
Tax-equivalent adjustment (4)
|
(280 | ) | (11 | ) | ||||||||||||||||||||
Net interest income
|
$ | 9,850 | $ | 8,382 |
(1)
|
Average balances are based on amortized cost.
|
(2)
|
Average balances include loans on non-accrual status.
|
(3)
|
Represents net interest income as a percentage of total average interest-earning assets.
|
(4)
|
Computed using a federal income tax rate of 34 percent.
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||||
(tax-equivalent basis)
|
Average
Balance
|
Interest
Income/
Expense
|
Average
Rate
|
Average
Balance
|
Interest
Income/
Expense
|
Average
Rate
|
||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
|
|
|
|
||||||||||||||||||||
Interest-earning assets:
|
|
|
|
|
||||||||||||||||||||
Investment securities (1):
|
|
|
|
|
||||||||||||||||||||
Available for sale
|
|
|
|
|
||||||||||||||||||||
Taxable
|
$ | 364,465 | $ | 9,717 | 3.55 | % | $ | 291,062 | $ | 8,434 | 3.86 | % | ||||||||||||
Tax-exempt
|
19,403 | 813 | 5.59 | 6,935 | 294 | 5.65 | ||||||||||||||||||
Held to maturity
|
||||||||||||||||||||||||
Taxable
|
16,845 | 479 | 3.79 | — | — | — | ||||||||||||||||||
Tax-exempt
|
15,739 | 676 | 5.73 | — | — | — | ||||||||||||||||||
Total investment securities
|
416,452 | 11,685 | 3.74 | 297,997 | 8,728 | 3.91 | ||||||||||||||||||
Loans (2)
|
708,489 | 27,123 | 5.10 | 713,904 | 28,165 | 5.26 | ||||||||||||||||||
Restricted investment in bank stocks
|
9,181 | 362 | 5.26 | 10,551 | 402 | 5.08 | ||||||||||||||||||
Total interest-earning assets
|
1,134,122 | 39,170 | 4.61 | 1,022,452 | 37,295 | 4.86 | ||||||||||||||||||
Non interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
88,623 | 84,489 | ||||||||||||||||||||||
Bank-owned life insurance
|
28,274 | 26,806 | ||||||||||||||||||||||
Intangible assets
|
16,937 | 17,001 | ||||||||||||||||||||||
Other assets
|
32,946 | 38,641 | ||||||||||||||||||||||
Allowance for loan losses
|
(9,712 | ) | (8,490 | ) | ||||||||||||||||||||
Total non interest-earning assets
|
157,068 | 158,447 | ||||||||||||||||||||||
Total assets
|
$ | 1,291,190 | $ | 1,180,899 | ||||||||||||||||||||
Liabilities and Stockholders’ Equity
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Money market deposits
|
$ | 183,952 | $ | 730 | 0.53 | % | $ | 123,420 | $ | 732 | 0.79 | % | ||||||||||||
Savings deposits
|
179,140 | 728 | 0.54 | 165,807 | 957 | 0.77 | ||||||||||||||||||
Time deposits
|
229,099 | 1,737 | 1.01 | 215,145 | 2,168 | 1.34 | ||||||||||||||||||
Other interest-bearing deposits
|
201,999 | 883 | 0.58 | 164,675 | 891 | 0.72 | ||||||||||||||||||
Total interest-bearing deposits
|
794,190 | 4,078 | 0.68 | 669,047 | 4,748 | 0.95 | ||||||||||||||||||
Short-term and long-term borrowings
|
200,232 | 4,879 | 3.25 | 249,365 | 6,778 | 3.62 | ||||||||||||||||||
Subordinated debentures
|
5,155 | 119 | 3.08 | 5,155 | 121 | 3.13 | ||||||||||||||||||
Total interest-bearing liabilities
|
999,577 | 9,076 | 1.21 | 923,567 | 11,647 | 1.68 | ||||||||||||||||||
Non interest-bearing liabilities:
|
||||||||||||||||||||||||
Demand deposits
|
156,976 | 139,407 | ||||||||||||||||||||||
Other liabilities
|
6,587 | 10,861 | ||||||||||||||||||||||
Total non interest-bearing liabilities
|
163,563 | 150,268 | ||||||||||||||||||||||
Stockholders’ equity
|
128,050 | 107,064 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$ | 1,291,190 | $ | 1,180,899 | ||||||||||||||||||||
Net interest income (tax-equivalent basis)
|
30,094 | 25,648 | ||||||||||||||||||||||
Net interest spread
|
3.40 | % | 3.18 | % | ||||||||||||||||||||
Net interest margin (3)
|
3.54 | % | 3.34 | % | ||||||||||||||||||||
Tax-equivalent adjustment (4)
|
(506 | ) | (100 | ) | ||||||||||||||||||||
Net interest income
|
$ | 29,588 | $ | 25,548 |
(1)
|
Average balances are based on amortized cost.
|
(2)
|
Average balances include loans on non-accrual status.
|
(3)
|
Represents net interest income as a percentage of total average interest-earning assets.
|
(4)
|
Computed using a federal income tax rate of 34 percent.
|
Nine Months Ended
September 30,
|
||||||||
2011
|
2010
|
|||||||
(In Thousands)
|
||||||||
Average loans for the period
|
$ | 708,489 | $ | 713,904 | ||||
Total loans at end of period
|
721,608 | 701,936 | ||||||
Analysis of the Allowance for Loan Losses:
|
||||||||
Balance—beginning of year
|
$ | 8,867 | $ | 8,711 | ||||
Charge-offs:
|
||||||||
Commercial and industrial loans
|
(185 | ) | — | |||||
Commercial real estate
|
(940 | ) | — | |||||
Construction
|
(631 | ) | (1,678 | ) | ||||
Residential mortgage loans
|
(23 | ) | (1,271 | ) | ||||
Installment loans
|
(14 | ) | (36 | ) | ||||
Total charge-offs
|
(1,793 | ) | (2,985 | ) | ||||
Recoveries:
|
||||||||
Commercial and industrial loans
|
240 | 10 | ||||||
Commercial real estate loans
|
15 | — | ||||||
Residential mortgage loans
|
53 | 1 | ||||||
Installment loans
|
6 | 5 | ||||||
Total recoveries
|
314 | 16 | ||||||
Net charge-offs
|
(1,479 | ) | (2,969 | ) | ||||
Provision for loan losses
|
2,148 | 3,028 | ||||||
Balance—end of period
|
$ | 9,536 | $ | 8,770 | ||||
Ratio of net charge-offs during the period to average loans during the period (1)
|
0.28 | % | 0.55 | % | ||||
Allowance for loan losses as a percentage of total loans
|
1.32 | % | 1.25 | % |
(1)
|
Annualized.
|
September 30,
2011
|
December 31,
2010
|
|||||||
(in thousands)
|
||||||||
Non-accrual loans
|
$ | 14,083 | $ | 11,174 | ||||
Accruing loans past due 90 days or more
|
451 | 714 | ||||||
Total non-performing loans
|
14,534 | 11,888 | ||||||
Other non-performing assets
|
327 | — | ||||||
Total non-performing assets
|
$ | 14,861 | $ | 11,888 | ||||
Troubled debt restructured loans
|
$ | 8,898 | $ | 7,035 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||||||||||||||||||
Increase
|
Percent
|
Increase
|
Percent
|
|||||||||||||||||||||||||||||
(dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
Change
|
2011
|
2010
|
(Decrease)
|
Change
|
||||||||||||||||||||||||
Service charges, commissions and fees
|
$ | 505 | $ | 535 | $ | (30 | ) | (5.8 | )% | $ | 1,415 | $ | 1,424 | $ | (9 | ) | (0.6 | )% | ||||||||||||||
Annuities and insurance
|
42 | 3 | 39 | 1,300.0 | 81 | 119 | (38 | ) | (31.9 | ) | ||||||||||||||||||||||
Bank-owned life insurance
|
259 | 429 | (170 | ) | (39.6 | ) | 780 | 957 | (177 | ) | (18.5 | ) | ||||||||||||||||||||
Net investment securities gains (losses)
|
1,250 | 1,033 | 217 | 21.0 | 2,817 | (1,654 | ) | 4,471 | 270.3 | |||||||||||||||||||||||
All other
|
227 | 135 | 92 | 68.1 | 519 | 322 | 197 | 61.2 | ||||||||||||||||||||||||
Total other income
|
$ | 2,283 | $ | 2,135 | $ | 148 | 6.9 | % | $ | 5,612 | $ | 1,168 | $ | 4,444 | 380.5 | % |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||||||||||||||||||
Increase
|
Percent
|
Increase
|
Percent
|
||||||||||||||||||||||||||||
(dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
Change
|
2011
|
2010
|
(Decrease)
|
Change
|
|||||||||||||||||||||||
Salaries and employee benefits
|
$ | 2,848 | $ | 2,721 | $ | 127 | 4.7 | % | $ | 8,618 | $ | 8,106 | $ | 512 | 6.3 | % | |||||||||||||||
Occupancy and equipment
|
713 | 754 | (41 | ) | (5.4 | ) | 2,246 | 2,377 | (131 | ) | (5.5 | ) | |||||||||||||||||||
FDIC insurance
|
328 | 510 | (182 | ) | (35.7 | ) | 1,384 | 1,586 | (202 | ) | (12.7 | ) | |||||||||||||||||||
Professional and consulting
|
319 | 153 | 166 | 108.5 | 805 | 849 | (44 | ) | (5.2 | ) | |||||||||||||||||||||
Stationery and printing
|
73 | 68 | 5 | 7.4 | 273 | 242 | 31 | 12.8 | |||||||||||||||||||||||
Marketing and advertising
|
30 | 36 | (6 | ) | (16.7 | ) | 116 | 234 | (118 | ) | (50.4 | ) | |||||||||||||||||||
Computer expense
|
300 | 320 | (20 | ) | (6.3 | ) | 989 | 1,001 | (12 | ) | (1.2 | ) | |||||||||||||||||||
Other real estate owned expense
|
— | 20 | (20 | ) | 100.0 | (1 | ) | 63 | (64 | ) | (101.6 | ) | |||||||||||||||||||
All other
|
918 | 860 | 58 | 6.7 | 2,791 | 3,643 | (852 | ) | (23.4 | ) | |||||||||||||||||||||
Total other expense
|
$ | 5,529 | $ | 5,442 | $ | 87 | 1.6 | % | $ | 17,221 | $ | 18,101 | $ | (880 | ) | (4.9 | )% |
September 30, 2011
|
December 31, 2010
|
Dollar
Change
|
||||||||||||||||||
Amount
|
Percentage
|
Amount
|
Percentage
|
2011 vs. 2010
|
||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
Non interest-bearing demand
|
$ | 161,340 | 28.2 | % | $ | 144,210 | 30.4 | % | $ | 17,130 | ||||||||||
Interest-bearing demand
|
261,225 | 45.6 | 186,509 | 39.2 | 74,716 | |||||||||||||||
Regular savings
|
108,287 | 18.9 | 112,305 | 23.6 | (4,018 | ) | ||||||||||||||
Money market deposits under $100
|
41,543 | 7.3 | 32,105 | 6.8 | 9,438 | |||||||||||||||
Total core deposits
|
$ | 572,395 | 100.0 | % | $ | 475,129 | 100.0 | % | $ | 97,266 | ||||||||||
Total deposits
|
$ | 1,060,022 | $ | 860,332 | $ | 199,690 | ||||||||||||||
Core deposits to total deposits
|
54.0 | % | 55.2 | % |
|
September 30,
2011
|
|||
(dollars in thousands)
|
||||
Average interest rate:
|
|
|||
At quarter end
|
—
|
%
|
||
For the quarter
|
0.25
|
%
|
||
Average amount outstanding during the quarter
|
$
|
33,592
|
||
Maximum amount outstanding at any month end in the quarter
|
$
|
34,506
|
||
Amount outstanding at quarter end
|
$
|
—
|
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(in thousands, except for share data)
|
||||||||
Stockholders’ equity
|
$ | 133,808 | $ | 120,957 | ||||
Less: Preferred stock
|
11,012 | 9,700 | ||||||
Less: Goodwill and other intangible assets
|
16,915 | 16,959 | ||||||
Tangible common stockholders’ equity
|
$ | 105,881 | $ | 94,298 | ||||
Book value per common share
|
$ | 7.54 | $ | 6.83 | ||||
Less: Goodwill and other intangible assets
|
1.04 | 1.04 | ||||||
Tangible book value per common share
|
$ | 6.50 | $ | 5.79 |
Center Bancorp, Inc.
|
For Capital Adequacy
Purposes
|
To Be Well-Capitalized Under
Prompt Corrective Action
Provisions
|
||||||||||||||||||||||
At September 30, 2011
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Tier 1 leverage capital
|
$ | 126,433 | 9.54 | % | $ | 53,012 | 4.00 | % | N/A | N/A | ||||||||||||||
Tier 1 risk-based capital
|
126,433 | 12.50 | % | 40,459 | 4.00 | % | N/A | N/A | ||||||||||||||||
Total risk-based capital
|
135,969 | 13.45 | % | 80,874 | 8.00 | % | N/A | N/A |
Union Center
National Bank
|
For Capital Adequacy
Purposes
|
To Be Well-Capitalized Under
Prompt Corrective Action
Provisions
|
||||||||||||||||||||||
At September 30, 2011
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Tier 1 leverage capital
|
$ | 124,166 | 9.38 | % | $ | 52,949 | 4.00 | % | $ | 66,187 | 5.00 | % | ||||||||||||
Tier 1 risk-based capital
|
124,166 | 12.28 | % | 40,445 | 4.00 | % | 60,667 | 6.00 | % | |||||||||||||||
Total risk-based capital
|
133,702 | 13.22 | % | 80,909 | 8.00 | % | 101,136 | 10.00 | % |
|
•
|
A minimum ratio of common equity to risk-weighted assets reaching 4.5%, plus an additional 2.5% as a capital conservation buffer, by 2019 after a phase-in period.
|
|
•
|
A minimum ratio of Tier 1 capital to risk-weighted assets reaching 6.0% by 2019 after a phase-in period.
|
|
•
|
A minimum ratio of total capital to risk-weighted assets, plus the additional 2.5% capital conservation buffer, reaching 10.5% by 2019 after a phase-in period.
|
|
•
|
An additional countercyclical capital buffer to be imposed by applicable national banking regulators periodically at their discretion, with advance notice.
|
|
•
|
Restrictions on capital distributions and discretionary bonuses applicable when capital ratios fall within the buffer zone.
|
|
•
|
Deduction from common equity of deferred tax assets that depend on future profitability to be realized.
|
|
•
|
Increased capital requirements for counterparty credit risk relating to OTC derivatives, repos and securities financing activities.
|
|
•
|
For capital instruments issued on or after January 13, 2013 (other than common equity), a loss-absorbency requirement such that the instrument must be written off or converted to common equity if a trigger event occurs, either pursuant to applicable law or at the direction of the banking regulator. A trigger event is an event under which the banking entity would become nonviable without the write-off or conversion, or without an injection of capital from the public sector. The issuer must maintain authorization to issue the requisite shares of common equity if conversion were required.
|
Exhibit No.
|
Description
|
|
31.1
|
|
Certification of the Chief Executive Officer of the Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of the Chief Financial Officer of the Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1*
|
Certification of the Chief Executive Officer of the Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2*
|
Certification of the Chief Financial Officer of the Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS**
|
XBRL Instance Document
|
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF**
|
Definition Taxonomy Extension Linkbase Document
|
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
By:
|
/s/ Anthony C. Weagley
|
By:
|
/s/ Vincent N. Tozzi
|
|
Anthony C. Weagley
|
Vincent N. Tozzi
|
|||
President and Chief Executive Officer
|
Vice President, Treasurer and Chief Financial Officer
|
|||
Date: November 9, 2011
|
Date: November 9, 2011
|
Date: November 9, 2011
|
/s/ Anthony C. Weagley
|
Anthony C. Weagley
|
|
President and Chief Executive Officer
|
Date: November 9, 2011
|
/s/ Vincent N. Tozzi
|
Vincent N. Tozzi
|
|
Vice President, Treasurer and Chief Financial Officer
|
Date: November 9, 2011
|
/s/ Anthony C. Weagley
|
Anthony C. Weagley
|
|
President and Chief Executive Officer
|
Date: November 9, 2011
|
/s/ Vincent N. Tozzi
|
Vincent N. Tozzi
|
|
Vice President, Treasurer and Chief Financial Officer
|
Consolidated Statements of Condition (Parenthetical) (USD $) In Thousands, except Share data | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Held-to-maturity Securities, Fair Value | $ 72,371 | $ 0 |
Preferred Stock, Liquidation Preference Per Share | $ 1,000 | $ 1,000 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Common Stock, No Par Value | ||
Common Stock, Shares Authorized | 25,000,000 | 25,000,000 |
Common Stock, Shares, Issued | 18,477,412 | 18,477,412 |
Common Stock, Shares, Outstanding | 16,290,700 | 16,289,832 |
Treasury Stock, Shares | 2,186,712 | 2,187,580 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Shares Issued | 10,000 | |
Series B Preferred Stock [Member] | ||
Preferred Stock, Shares Issued | 11,250 |
Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Oct. 31, 2011 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 | |
Entity Registrant Name | CENTER BANCORP INC | |
Document Fiscal Period Focus | Q3 | |
Entity Filer Category | Accelerated Filer | |
Entity Central Index Key | 0000712771 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2011 | |
Entity Common Stock, Shares Outstanding | 16,290,700 |
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Loans and the Allowance for Loan Losses | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Loans and the Allowance for Loan Losses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and the Allowance for Loan Losses | Note 5. Loans and the Allowance for Loan Losses
Loans are stated at their principal amounts inclusive of net deferred loan origination fees. Interest income is credited as earned except when a loan becomes past due 90 days or more and doubt exists as to the ultimate collection of interest or principal; in those cases the recognition of income is discontinued. Loans that are past due 90 days or more that are both well secured and in the process of collection will remain on an accruing basis. When a loan is placed on non-accrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current income.
In July 2010, the FASB issued ASU No. 2010-20, "Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses," which requires that the Corporation provide a greater level of disaggregated information about the credit quality of the Corporation's loans and leases and the allowance for loan and lease losses (the "Allowance"). This ASU also requires the Corporation to disclose on a prospective basis, additional information related to credit quality indicators, non-accrual loans and leases, and past due information. The Corporation adopted the provisions of this ASU in preparing the Consolidated Financial Statements as of and for the year ended December 31, 2010. As this ASU amends only the disclosure requirements for loans and leases and the Allowance, the adoption of this ASU for the quarter and nine month period ended September 30, 2011 and the year ended December 31, 2010, respectively, had no impact on the Corporation's statements of income and condition. The required disclosures are presented in the following tables and related discussion later in this Note.
Portfolio segments are defined as the level at which an entity develops and documents a systematic methodology to determine its Allowance. Management has determined that the Corporation has two portfolio segments of loans and leases (commercial and consumer) in determining the Allowance. Both quantitative and qualitative factors are used by management at the portfolio segment level in determining the adequacy of the Allowance for the Corporation. Classes of loans and leases are a disaggregation of a Corporation's portfolio segments. Classes are defined as a group of loans and leases which share similar initial measurement attributes, risk characteristics, and methods for monitoring and assessing credit risk. Management has determined that the Corporation has five classes of loans and leases Commercial and industrial (including lease financing), Commercial – real estate, Construction, Residential mortgage (including home equity) and Installment.
Generally, all classes of commercial and consumer loans and leases are placed on non-accrual status upon becoming contractually past due 90 days or more as to principal or interest (unless loans and leases are adequately secured by collateral, are in the process of collection, and are reasonably expected to result in repayment), when terms are renegotiated below market levels, or where substantial doubt about full repayment of principal or interest is evident. For certain installment loans the entire outstanding balance on the loan is charged-off when the loan becomes 60 days past due.
Payments received on non-accrual loans are applied against principal. A loan may only be restored to an accruing basis when it again becomes well secured and in the process of collection or all past due amounts have been collected and six months of payments to demonstrate that the borrower can continue to meet the loan terms. Loan origination fees and certain direct loan origination costs are deferred and recognized over the life of the loan as an adjustment to the loan's yield using the level yield method. Impaired Loans The Corporation accounts for impaired loans in accordance with FASB ASC 310-10-35 (previously SFAS No. 114, "Accounting by Creditors for Impairment of a Loan" as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan — Income Recognition and Disclosures"). The value of impaired loans is based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or at the fair value of the collateral if the loan is collateral dependent.
The Corporation has defined its population of impaired loans to include all non-accrual and troubled debt restructuring loans. As part of the evaluation of the value of impaired loans, the Corporation reviews all non-homogeneous loans in each instance above an established dollar threshold of $200,000 for impairment internally classified as substandard or below. Smaller impaired non-homogeneous loans and impaired homogeneous loans are not measured for specific reserves and are covered under the Corporation's general reserve.
A loan is considered impaired when, based on current information and events, it is probable that the Corporation will not be able to collect all amounts due from the borrower in accordance with the contractual terms of the loan, including scheduled interest payments. Impaired loans include all classes of commercial and consumer non-accruing loans and all loans modified in a troubled debt restructuring ("TDR").
When a loan has been identified as being impaired, the amount of impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral-dependent. If the measurement of the impaired loan is less than the recorded investment in the loan (including accrued interest, net of deferred loan fees or costs and unamortized premiums or discounts), an impairment is recognized by creating or adjusting an existing allocation of the Allowance, or by recording a partial charge-off of the loan to its fair value. Interest payments made on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest income may be accrued or recognized on a cash basis.
Loans Modified in a Troubled Debt Restructuring Loans are considered to have been modified in a TDR when due to a borrower's financial difficulties, the Corporation makes certain concessions to the borrower that it would not otherwise consider. Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Generally, a non-accrual loan that has been modified in a TDR remains on non-accrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the modified loan. However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period. If the borrower's ability to meet the revised payment schedule is uncertain, the loan remains on non-accrual status.
Reserve for Credit Losses The Corporation's reserve for credit losses is comprised of two components, the Allowance and the reserve for unfunded commitments (the "Unfunded Commitments").
Allowance for Loan Losses The allowance for loan losses is maintained at a level determined adequate to provide for probable loan losses. The allowance is increased by provisions charged to operations and reduced by loan charge-offs, net of recoveries. The allowance is based on management's evaluation of the loan portfolio considering economic conditions, the volume and nature of the loan portfolio, historical loan loss experience and individual credit situations.
Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, management obtains independent appraisals for significant properties.
The ultimate collectability of a substantial portion of the Bank's loan portfolio is susceptible to changes in the real estate market and economic conditions in the State of New Jersey and the impact of such conditions on the creditworthiness of the borrowers. Management believes that the allowance for loan losses is adequate. Management uses available information to recognize loan losses; however, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance for loan losses. Such agencies may require the Bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examinations.
Reserve for Unfunded Commitments The reserve for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to unfunded credit facilities and is included in other liabilities in the consolidated statements of condition. The determination of the adequacy of the reserve is based upon an evaluation of the unfunded credit facilities, including an assessment of historical commitment utilization experience, and credit risk. Net adjustments to the reserve for unfunded commitments are included in other expense.
Composition of Loan Portfolio The following table sets forth the composition of the Corporation's loan portfolio, including net deferred fees and costs, at September 30, 2011 and December 31, 2010:
Included in the loan balances above are net deferred loan costs of $45,000 and $258,000 at September 30, 2011 and December 31, 2010, respectively.
At September 30, 2011 and December 31, 2010, loans to executive officers and directors aggregated approximately $2,790,000 and $5,456,000, respectively. During the period ended September 30, 2011, the Corporation made no new loans to executive officers and directors; payments by such persons during 2011 aggregated $2,666,000.
Management is of the opinion that the above loans were made on the same terms and conditions as those prevailing for comparable transactions with non-related borrowers.
At September 30, 2011 and December 31, 2010, loan balances of approximately $322.5 million and $435.9 million, respectively, were pledged to secure short term borrowings from the Federal Reserve Bank of New York and Federal Home Loan Bank Advances.
The following table presents information about loan receivables on non-accrual status at September 30, 2011 and December 31, 2010:
The Corporation continuously monitors the credit quality of its loans receivable. In addition to the internal staff, the Corporation utilizes the services of a third party loan review firm to rate the credit quality of its loans receivable. Credit quality is monitored by reviewing certain credit quality indicators. Assets classified "Pass" are deemed to possess average to superior credit quality, requiring no more than normal attention. Assets classified as "Special Mention" have generally acceptable credit quality yet possess higher risk characteristics/circumstances than satisfactory assets. Such conditions include strained liquidity, slow pay, stale financial statements, or other conditions that require more stringent attention from the lending staff. These conditions, if not corrected, may weaken the loan quality or inadequately protect the Corporation's credit position at some future date. Assets are classified "Substandard" if the asset has a well defined weakness that requires management's attention to a greater degree than for loans classified special mention. Such weakness, if left uncorrected, could possibly result in the compromised ability of the loan to perform to contractual requirements. An asset is classified as "Doubtful" if it is inadequately protected by the net worth and/or paying capacity of the obligor or of the collateral, if any, that secures the obligation. Assets classified as doubtful include assets for which there is a "distinct possibility" that a degree of loss will occur if the inadequacies are not corrected. All loans past due 90 days or more and all impaired loans are included in the appropriate category below. The following table presents information, including deferred fees and costs, about the loan credit quality at September 30, 2011 and December 31, 2010:
The following table provides an analysis of the impaired loans at September 30, 2011 and December 31, 2010:
The Corporation defines an impaired loan as a loan for which it is probable, based on information available at the determination date, that the Corporation will not collect all amounts due under the contractual terms of the loan. At September 30, 2011 impaired loans were primarily collateral dependent, and totaled $19.6 million. Specific allowance for loan loss of $1.4 million was assigned to impaired loans of $12.7 million. Loans in the amount of $6.9 million had no specific allowance allocation.
Loans are considered to have been modified in a troubled debt restructuring when due to a borrower's financial difficulties, the Corporation makes certain concessions to the borrower that it would not otherwise consider. Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Generally, a non-accrual loan that has been modified in a troubled debt restructuring remains on non-accrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the modified loan. However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period. If the borrower's ability to meet the revised payment schedule is uncertain, the loan remains on non-accrual status. Included in impaired loans at September 30, 2011 are loans that are deemed troubled debt restructurings. Of these loans, $8.9 million, 87% of which are included in the tables above, are performing under the restructured terms and are accruing interest.
The following table provides an analysis of the aging of loans, including deferred fees and costs that are past due at September 30, 2011 and December 31, 2010:
The following table details the amount of loans receivable that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for loan loss that is allocated to each loan portfolio segment:
The Corporation's allowance for loan losses is analyzed quarterly. Many factors are considered, including growth in the portfolio, delinquencies, nonaccrual loan levels, and other factors inherent in the extension of credit. There have been no material changes to the allowance for loan loss methodology as disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2010.
A summary of the activity in the allowance for loan losses is as follows:
The amount of interest income that would have been recorded on non-accrual loans during the nine months ended September 30, 2011 and the year ended December 31, 2010, had payments remained in accordance with the original contractual terms, was $534,000 and $598,000, respectively.
At September 30, 2011, there were no commitments to lend additional funds to borrowers whose loans were on non-accrual status or were contractually past due in excess of 90 days and still accruing interest.
The policy of the Corporation is to generally grant commercial, mortgage and installment loans to New Jersey residents and businesses within its market area. The borrowers' abilities to repay their obligations are dependent upon various factors, including the borrowers' income and net worth, cash flows generated by the borrowers' underlying collateral, value of the underlying collateral, and priority of the lender's lien on the property. Such factors are dependent upon various economic conditions and individual circumstances beyond the control of the Corporation. The Corporation is therefore subject to risk of loss. The Corporation believes its lending policies and procedures adequately minimize the potential exposure to such risks and that adequate provisions for loan losses are provided for all known and inherent risks. Collateral and/or personal guarantees are required for virtually all loans.
The following table presents information about the troubled debt restructurings (TDRs) by class for the periods indicated:
The Corporation charged off $477,000 in connection with loan modifications at the time of the modification.
The Corporation had no loan modified as a TDR within the previous twelve months that subsequently defaulted during the three and nine months ended September 30, 2011.
The Corporation adopted ASU No. 2011-02 on July 1, 2011 which provides additional guidance to creditors for evaluating whether a modification or restructuring of a receivable is a troubled debt restructuring. In general, a modification or restructuring of a loan constitutes a TDR if the Corporation grants a concession to a borrower experiencing financial difficulty. Loans modified in TDRs are placed on non-accrual status until the Corporation determines that future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate performance according to the restructured terms for a period of at least six months. However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period. If the borrower's ability to meet the revised payment schedule is uncertain, the loan remains on non-accrual status.
Loans modified in a troubled debt restructuring totaled $12.4 million at September 30, 2011 of which $3.5 million were on non-accrual status. The remaining loans modified were current at the time of the restructuring and have complied with the terms of their restructure agreement. At December 31, 2010, loans modified in a troubled debt restructuring totaled $13.1 million of which $6.1 million were on non-accrual status. The remaining loans modified were current at the time of the restructuring and have complied with the terms of their restructure agreement.
In an effort to proactively manage delinquent loans, the Corporation has selectively extended to certain borrowers concessions such as rate reductions, extension of maturity dates, principal or interest forgiveness, adjusted repayment terms, forbearance agreements, or combinations of two or more of these concessions. As of September 30, 2011, loans on which concessions were made with respect to adjusted repayment terms amounted to $2.3 million. Loans on which combinations of two or more concessions were made amounted to $10.1 million. The concessions granted included principal concessions, rate reduction, adjusted repayment, extended maturity and payment deferral. |
Components of Net Periodic Pension Cost | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Components of Net Periodic Pension Cost | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Pension Cost |
The Corporation maintained a non-contributory pension plan for substantially all of its employees until September 30, 2007, at which time the Corporation froze its defined benefit pension plan. The following table sets forth the net periodic pension cost of the Corporation's pension plan for the periods indicated.
Contributions
The Corporation presently estimates it will contribute $500,000 to its Pension Trust in 2011.
The Preservation of Access to Care for Medical Beneficiaries and Pension Relief Act of 2010, signed into law on June 25, 2010, permits single employer and multiple employer defined benefit plan sponsors to elect to extend the plan's amortization period of a Shortfall Amortization Base over either a nine year period or a fifteen year period, rather than the seven year period required under the Pension Protection Act of 2006.
The Bank has elected to apply the Pension Relief Act Fifteen Year amortization of the Shortfall Amortization Base for its 2011 minimum funding requirement. The minimum amount to be funded is $500,000, as noted above, by December 31, 2011 with the understanding that fully funding the plan earlier than this date will lower this amount and that funding the plan after this date will increase this amount. As noted, this amount is the minimum required funding amount. The Corporation does have the option of funding above this amount but has contributed the minimum historically. |
Basis of Presentation | 9 Months Ended |
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Sep. 30, 2011 | |
Basis of Presentation | |
Basis of Presentation | Note 1. Basis of Presentation
The consolidated financial statements of Center Bancorp, Inc. (the "Parent Corporation") are prepared on the accrual basis and include the accounts of the Parent Corporation and its wholly-owned subsidiary, Union Center National Bank (the "Bank" and, collectively with the Parent Corporation and the Parent Corporation's other direct and indirect subsidiaries, the "Corporation"). All significant intercompany accounts and transactions have been eliminated from the accompanying consolidated financial statements.
In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of condition and that affect the results of operations for the periods presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to change in the near term relate to the determination of the allowance for loan losses, other-than-temporary impairment evaluation of securities, the evaluation of the impairment of goodwill and the valuation of deferred tax assets.
The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"). |
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Investment Securities | Note 7. Investment Securities
The Corporation's investment securities are classified as available-for-sale and held-to-maturity at September 30, 2011 and available-for-sale at December 31, 2010. Investment securities available-for-sale are reported at fair value with unrealized gains or losses included in equity, net of tax. Accordingly, the carrying value of such securities reflects their fair value at the balance sheet date. Fair value is based upon either quoted market prices, or in certain cases where there is limited activity in the market for a particular instrument, assumptions are made to determine their fair value. See Note 8 of the Notes to Consolidated Financial Statements for a further discussion.
Transfers of debt securities from the available-for-sale category to the held-to-maturity category are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer remains in accumulated other comprehensive income and in the carrying value of the held-to-maturity investment security. Premiums or discounts on investment securities are amortized or accreted using the effective interest method over the life of the security as an adjustment of yield. Unrealized holding gains or losses that remain in accumulated other comprehensive income are amortized or accreted over the remaining life of the security as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount.
The following tables present information related to the Corporation's investment securities at September 30, 2011 and December 31, 2010.
During the nine months ended September 30, 2011, the Corporation reclassified at fair value approximately $66.8 million in available-for-sale investment securities to the held-to-maturity category. The related after-tax gains of approximately $185,000 (on a pre-tax basis of $292,000) remained in accumulated other comprehensive income and will be amortized over the remaining life of the securities as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount on the transferred securities. No gains or losses were recognized at the time of reclassification. During the three months ended September 30, 2011, the Corporation reclassified at fair value approximately $30.8 million in available-for-sale investment securities to the held-to-maturity category. The related after-tax losses of approximately $33,000 (on a pre-tax basis of $47,000) remained in accumulated other comprehensive income and will be amortized over the remaining life of the securities. Management considers the held-to-maturity classification of these investment securities to be appropriate as the Corporation has the positive intent and ability to hold these securities to maturity.
The following table presents information for investment securities available-for-sale at September 30, 2011, based on scheduled maturities. Actual maturities can be expected to differ from scheduled maturities due to prepayment or early call options of the issuer.
For the nine months ended September 30, 2011, proceeds of available for sale investment securities sold amounted to approximately $236.4 million. Gross realized gains on investment securities sold amounted to approximately $3.2 million, while gross realized losses on investment securities sold amounted to approximately $69,000 for the period. For the nine months ended September 30, 2010, proceeds of investment securities sold amounted to approximately $547.7 million. Gross realized gains on investment securities sold amounted to approximately $4.3 million, while gross realized losses on investment securities sold amounted to approximately $804,000 for the period.
For the nine months ended September 30, 2011, the Corporation recorded other-than temporary impairment ("OTTI") charges of approximately $18,000 and principal losses of $285,000 on a variable rate private label collateralized mortgage obligation ("CMO"). For the nine months ended September 30, 2010, the Corporation recorded OTTI charges of $1,786,000 on two pooled trust preferred securities, $332,000 on one variable rate private label CMO, and $3,000,000 on one trust preferred security.
The following summarizes OTTI charges for the periods indicated.
The Corporation performs regular analysis on all its investment securities to determine whether a decline in fair value indicates that an investment is other-than-temporarily impaired in accordance with FASB ASC 320-10. FASB ASC 320-10 requires companies to record OTTI charges, through earnings, if they have the intent to sell, or if it is more likely than not that they will be required to sell, an impaired debt security before recovery of its amortized cost basis. If the Corporation intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current period credit loss, the OTTI is recognized in earnings equal to the entire difference between the investment's amortized cost basis and its estimated fair value at the balance sheet date. If the Corporation does not intend to sell the security and it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current period loss, and as such, it determines that a decline in fair value is other than temporary, the OTTI is separated into the amount representing the credit loss and the amount related to all other factors. The amount of the OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.
The Corporation's assessment of whether an impairment is other than temporary includes factors such as whether the issuer has defaulted on scheduled payments, announced a restructuring and/or filed for bankruptcy, has disclosed severe liquidity problems that cannot be resolved, disclosed a deteriorating financial condition or sustained significant losses. The Corporation maintains a watch list for the identification and monitoring of securities experiencing problems that require a heightened level of review. This could result from credit rating downgrades.
The following table presents detailed information for each trust preferred security held by the Corporation at September 30, 2011 which has at least one rating below investment grade.
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Borrowed Funds | Note 12. Borrowed Funds
Short-Term Borrowings
Short-term borrowings, which consist primarily of securities sold under agreements to repurchase, Federal Home Loan Bank ("FHLB") advances and federal funds purchased, generally have maturities of less than one year. The details of these short-term borrowings are presented in the following table.
Long-Term Borrowings
Long-term borrowings, which consist primarily of FHLB advances and securities sold under agreements to repurchase, totaled $161.0 million and mature within one to eight years. The FHLB advances are secured by pledges of FHLB stock, 1-4 family mortgages and U.S. Government and Federal agency obligations.
At September 30, 2011, FHLB advances and securities sold under agreements to repurchase had weighted average interest rates of 3.46 percent and 5.31 percent, respectively.
At September 30, 2011, FHLB advances and securities sold under agreements to repurchase are contractually scheduled for repayment as follows:
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Fair Value Measurements and Fair Value of Financial Instruments | Note 8. Fair Value Measurements and Fair Value of Financial Instruments
Fair Value Measurements
Management uses its best judgment in estimating the fair value of the Corporation's financial and non-financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial and non-financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Corporation could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of the respective period-end dates indicated herein and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial and non-financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each year-end.
U.S. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
An asset's or liability's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation's assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation's disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Corporation's assets measured at fair value on a recurring basis at September 30, 2011 and December 31, 2010.
Investment Securities Available-for-Sale
Where quoted prices are available in an active market, investment securities are classified in Level 1 of the valuation hierarchy. Level 1 inputs include investment securities that have quoted prices in active markets for identical assets. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of instruments, which would generally be classified within Level 2 of the valuation hierarchy, include municipal bonds and certain agency collateralized mortgage obligations. In certain cases where there is limited activity in the market for a particular instrument, assumptions must be made to determine their fair value and are classified as Level 3. Due to the inactive condition of the markets amidst the financial crisis, the Corporation treated certain investment securities as Level 3 assets in order to provide more appropriate valuations. For assets in an inactive market, the infrequent trades that do occur are not a true indication of fair value. When measuring fair value, the valuation techniques available under the market approach, income approach and/or cost approach are used. The Corporation's evaluations are based on market data and the Corporation employs combinations of these approaches for its valuation methods depending on the asset class. In certain cases where there were limited or less transparent information provided by the Corporation's third-party pricing service, fair value was estimated by the use of secondary pricing services or through the use of non-binding third-party broker quotes.
On a quarterly basis, management reviews the pricing information received from the Corporation's third-party pricing service. This review process includes a comparison to non-binding third-party broker quotes, as well as a review of market-related conditions impacting the information provided by the Corporation's third-party pricing service.
Management primarily identifies investment securities which may have traded in illiquid or inactive markets by identifying instances of a significant decrease in the volume and frequency of trades, relative to historical levels, as well as instances of a significant widening of the bid-ask spread in the brokered markets. Investment securities that are deemed to have been trading in illiquid or inactive markets may require the use of significant unobservable inputs. For example, management may use quoted prices for similar investment securities in the absence of a liquid and active market for the securities being valued. As of September 30, 2011, management made adjustments to prices provided by the third-party pricing service as a result of illiquid or inactive markets.
At September 30, 2011, the Corporation's two pooled trust preferred securities and a variable rate CMO were classified as Level 3. Market pricing for these Level 3 securities varied widely from one pricing service to another based on the lack of trading. As such, these securities were not considered to have readily observable market data that was accurate to support a fair value as prescribed by FASB ASC 820-10-05. The Corporation determined that significant adjustments using unobservable inputs are required to determine fair value at the measurement date.
The Corporation determined that an income approach valuation technique (present value technique) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs will be equally or more representative of fair value than the market approach valuation technique used at the prior measurement dates. As a result, the Corporation used the discount rate adjustment technique to determine fair value.
The fair value as of September 30, 2011 was determined by discounting the expected cash flows over the life of the security. The discount rate was determined by deriving a discount rate when the markets were considered more active for this type of security. To this estimated discount rate, additions were made for more liquid markets and increased credit risk as well as assessing the risks in the security, such as default risk and severity risk. However, during the quarter ended September 30, 2011 the private label CMO had interruptions of its scheduled principal payments and the Corporation recorded principal loss of $66,000. For the nine month ended September 30, 2011, principal loss amounted to $285,000.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2011 and December 31, 2010 are as follows:
The following tables present the changes in investment securities available-for-sale with significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2011 and 2010.
For the nine months ended September 30, 2011, there were no transfers of investment securities available-for-sale into or out of Level 1, Level 2, or Level 3 assets.
Assets Measured at Fair Value on a Non-Recurring Basis
For assets measured at fair value on a non-recurring basis, the fair value measurements used at September 30, 2011 and December 31, 2010 were as follows:
The following methods and assumptions were used to estimate the fair values of the Corporation's assets measured at fair value on a non-recurring basis at September 30, 2011 and December 31, 2010.
Impaired Loans. The value of an impaired loan is measured based upon the present value of expected future cash flows discounted at the loan's effective interest rate, or the fair value of the collateral if the loan is collateral dependent. Smaller balance homogeneous loans that are collectively evaluated for impairment, such as residential mortgage loans and installment loans, are specifically excluded from the impaired loan portfolio. The Corporation's impaired loans are primarily collateral dependent. Impaired loans are individually assessed to determine that each loan's carrying value is not in excess of the fair value of the related collateral or the present value of the expected future cash flows. Impaired loans at September 30, 2011 were $12,710,000 with a specific reserve of $1,418,000 compared to $5,534,000 with a specific reserve of $639,000 at December 31, 2010.
Other Real Estate Owned. Other real estate owned ("OREO") is measured at fair value less costs to sell. The Corporation believes that the fair value component in its valuation follows the provisions of FASB ASC 820-10-05. The fair value of OREO is determined by sales agreements or appraisals by qualified licensed appraisers approved and hired by the Corporation. Costs to sell associated with OREO is based on estimation per the terms and conditions of the sales agreements or appraisals. At September 30, 2011 and December 31, 2010 the Corporation held no OREO.
A $3.5 million participation loan secured by an office property in Union County, New Jersey went non-accrual on September 30, 2011after the borrower informed the lead bank that it had no intention of making any additional loan payments. Subsequently the bank group received a deed in lieu of foreclosure on October 5, 2011. The Corporation has taken its pro rata share into OREO on that date at a fair value, less cost to sell, of $3.4 million, net of a $100,000 charge-off. The property is a 42,000 square foot two story office building. In October 2011 the property was listed for sale with a well known commercial brokerage firm and although no assurances can be made as to the disposition of the property, the Corporation feels confident that the property will be sold over the next six months. In the interim, this partially tenanted property does have cash flow that is expected to contribute significantly to defraying the building's normal operating expenses.
Fair Value of Financial Instruments
FASB ASC 825-10 requires all entities to disclose the estimated fair value of their financial instrument assets and liabilities. For the Corporation, as for most financial institutions, the majority of its assets and liabilities are considered financial instruments as defined in FASB ASC 825-10. Many of the Corporation's financial instruments, however, lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. It is also the Corporation's general practice and intent to hold its financial instruments to maturity and to not engage in trading or sales activities except for loans held-for-sale and investment securities available-for-sale. Therefore, significant estimations and assumptions, as well as present value calculations, were used by the Corporation for the purposes of this disclosure.
Estimated fair values have been determined using the best available data and an estimation methodology suitable for each category of financial instruments. For those loans and deposits with floating interest rates, it is presumed that estimated fair values generally approximate the recorded book balances. The estimation methodologies used, the estimated fair values, and the recorded book balances at September 30, 2011 and December 31, 2010, were as follows:
Financial instruments actively traded in a secondary market have been valued using quoted available market prices. Cash and due from banks, interest-bearing time deposits in other banks, federal funds sold, loans held-for-sale and interest receivable are valued at book value, which approximates fair value. Financial liability instruments with stated maturities have been valued using a present value discounted cash flow analysis with a discount rate approximating current market for similar liabilities. Interest payable is valued at book value, which approximates fair value. Financial liability instruments with no stated maturities have an estimated fair value equal to both the amount payable on demand and the recorded book balance.
The fair value of the Corporation's investment securities held-to-maturity was primarily measured using information from a third-party pricing service. Quoted prices in active markets were used whenever available. If quoted prices were not available, fair values were measured using pricing models or other valuation techniques such as the present value of future cash flows, adjusted for credit loss assumptions.
Loans held for sale are required to be measured at the lower of cost or fair value. Under FASB ASC 820-10-05, market value is to represent fair value. Management obtains quotes or bids on all or part of these loans directly from the purchasing financial institutions. There was $200,000 in loans held for sale at September 30, 2011 and none at December 31, 2010.
The net loan portfolio has been valued using a present value discounted cash flow. The discount rate used in these calculations is the current rate at which similar loans would be made to borrowers with similar credit ratings, same remaining maturities, and assumed prepayment risk.
The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.
Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values.
The Corporation's remaining assets and liabilities, which are not considered financial instruments, have not been valued differently than has been customary with historical cost accounting. No disclosure of the relationship value of the Corporation's core deposit base is required by FASB ASC 825-10.
Fair value estimates are based on existing balance sheet financial instruments, without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets or liabilities include the deferred taxes, premises and equipment and goodwill. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
Management believes that reasonable comparability between financial institutions may not be likely, due to the wide range of permitted valuation techniques and numerous estimates which must be made, given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. |
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Comprehensive Income | Note 6. Comprehensive Income
Total comprehensive income includes all changes in equity during a period arising from transactions and other events and circumstances from non-owner sources. The Corporation's other comprehensive income is comprised of unrealized holding gains and losses on investment securities available-for-sale, and actuarial losses of defined benefit plans, net of taxes.
Disclosure of comprehensive income for the nine months ended September 30, 2011, and 2010 is presented in the Consolidated Statements of Changes in Stockholders' Equity. The table below provides a reconciliation of the components of other comprehensive income (loss) to the data provided in the Consolidated Statements of Changes in Stockholders' Equity.
The components of other comprehensive income (loss), net of tax, were as follows for the periods indicated:
Accumulated other comprehensive loss at September 30, 2011 and December 31, 2010 consisted of the following:
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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (USD $) | 9 Months Ended | |
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Sep. 30, 2011 | Sep. 30, 2010 | |
Consolidated Statements of Changes in Stockholders' Equity | ||
Common Stock, Dividends, Per Share, Declared | $ 0.09 | $ 0.09 |
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 2,083 | |
Stock Issued During Period, Shares, Other | 868 | |
Stock Issued During Period, Shares, New Issues | 1,715,000 |
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Earnings per Common Share | Note 2. Earnings per Common Share
Basic earnings per common share ("EPS") is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding. Diluted EPS includes any additional common shares as if all potentially dilutive common shares were issued (e.g., stock options). The Corporation's weighted- average common shares outstanding for diluted EPS include the effect of stock options and warrants outstanding using the Treasury Stock Method, which are not included in the calculation of basic EPS.
Earnings per common share have been computed based on the following:
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Stock-Based Compensation | Note 3. Stock-Based Compensation
The Corporation maintains two stock-based compensation plans from which new grants could be issued. The Corporation's stock option plans permit Parent Corporation common stock to be issued to key employees and directors of the Corporation and its subsidiaries. The options granted under the plans are intended to be either incentive stock options or non-qualified options. Under the 2009 Equity Incentive Plan, a total of 394,417 shares are available for issuance. Under the 2003 Non-Employee Director Stock Option Plan, a total of 431,003 shares remain available for grant under the plan as of September 30, 2011 and are authorized for issuance. Such shares may be treasury shares, newly issued shares or a combination thereof.
Options have been granted to purchase common stock principally at the fair market value of the stock at the date of grant. Options are exercisable over a three year vesting period starting one year after the date of grant and generally expire ten years from the date of grant.
Stock-based compensation expense for all share-based payment awards granted after December 31, 2005 is based on the grant date fair value estimated in accordance with the provisions of FASB ASC 718-10-10 "Stock Based Compensation". The Corporation recognizes these compensation costs net of a forfeiture rate and recognizes the compensation costs for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the option vesting term of 3 years. The Corporation estimated the forfeiture rate based on its historical experience during the preceding seven fiscal years.
For the nine months ended September 30, 2011, the Corporation's income before income taxes and net income were reduced by $27,000 and $16,000, respectively, as a result of the compensation expense related to stock options. For the nine months ended September 30, 2010, the Corporation's income before income taxes and net income were reduced by $39,000 and $23,000, respectively, as a result of the compensation expense related to stock options.
Under the principal option plans, the Corporation may also grant restricted stock awards to certain employees. Restricted stock awards are non-vested stock awards. Restricted stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the release of the restrictions. Such awards generally vest within 30 days to five years from the date of grant. During that period, ownership of the shares cannot be transferred. Restricted stock has the same cash dividend and voting rights as other common stock and is considered to be currently issued and outstanding. The Corporation expenses the cost of restricted stock awards, which is determined to be the fair market value of the shares at the date of grant, ratably over the period during which the restrictions lapse. There were no restricted stock awards outstanding at September 30, 2011 or December 31, 2010.
There were 30,564 and 38,203 shares of common stock underlying granted options for the nine months ended September 30, 2011 and 2010, respectively. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values at the time the grants were awarded:
Activity under the principal option plans as of September 30, 2011 and changes during the nine months ended September 30, 2011 were as follows:
The aggregate intrinsic value of options above represents the total pre-tax intrinsic value (the difference between the Corporation's closing stock price on the last trading day of the third quarter of 2011 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2011. This amount changes based on the fair value of the Corporation's stock.
As of September 30, 2011, there was approximately $67,000 of total unrecognized compensation expense relating to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.0 years. |
Income Taxes | 9 Months Ended |
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Sep. 30, 2011 | |
Income Taxes | |
Income Taxes | Note 11. Income Taxes
For the nine months ended September 30, 2011, the Corporation recorded income tax expense of $5.5 million, compared with a $1.2 million income tax expense for the nine months ended September 30, 2010. The effective tax rates for the nine month periods ended September 30, 2011 and 2010 were 34.9 percent and 20.6 percent, respectively. The atypical effective tax rate for the nine months ended September 30, 2010 was due to the pre-tax loss for the first quarter of 2010 and the recognition of a tax benefit of $1.1 million pertaining to prior uncertain tax positions for 2006 and 2007.
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Recent Accounting Pronouncements | 9 Months Ended |
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Sep. 30, 2011 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 4. Recent Accounting Pronouncements
In January 2011, the FASB issued ASU No. 2011-01, "Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20." The provisions of ASU No. 2010-20 required the disclosure of more granular information on the nature and extent of troubled debt restructurings and their effect on the Allowance for the period ended September 30, 2011. The amendments in this ASU defer the effective date related to these disclosures, enabling creditors to provide those disclosures after the FASB completes its project clarifying the guidance for determining what constitutes a troubled debt restructuring. As the provisions of this ASU only defer the effective date of disclosure requirements related to troubled debt restructurings, the adoption of this ASU will have no impact on the Corporation's statements of income and condition.
In April 2011, the FASB issued ASU No. 2011-02, "A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring." The provisions of ASU No. 2011-02 provide additional guidance related to determining whether a creditor has granted a concession, include factors and examples for creditors to consider in evaluating whether a restructuring results in a delay in payment that is insignificant, prohibit creditors from using the borrower's effective rate test to evaluate whether a concession has been granted to the borrower, and add factors for creditors to use in determining whether a borrower is experiencing financial difficulties. A provision in ASU No. 2011-02 also ends the FASB's deferral of the additional disclosures about trouble debt restructuring as required by ASU No. 2010-20. The provisions of ASU No. 2011-02 are effective for the Corporation's reporting period ending September 30, 2011. The adoption of ASU No. 2011-02 is not expected to have a material impact on the Company's statements of income and condition.
In April 2011, the FASB issued ASU No. 2011-03, "Reconsideration of Effective Control for Repurchase Agreements." ASU No. 2011-03 modifies the criteria for determining when repurchase agreements would be accounted for as a secured borrowing rather than as a sale. Currently, an entity that maintains effective control over transferred financial assets must account for the transfer as a secured borrowing rather than as a sale. The provisions of ASU No. 2011-03 removes from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee. The FASB believes that contractual rights and obligations determine effective control and that there does not need to be a requirement to assess the ability to exercise those rights. ASU No. 2011-03 does not change the other existing criteria used in the assessment of effective control. The provisions of ASU No. 2011-03 are effective prospectively for transactions, or modifications of existing transactions, that occur on or after January 1, 2012. As the Corporation accounts for all of its repurchase agreements as collateralized financing arrangements, the adoption of this ASU is not expected to have a material impact on the Corporation's statements of income and condition.
In May 2011, the FASB issued ASU No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs." ASU No. 2011-04 results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and International Financial Reporting Standards ("IFRS"). The changes to U.S. GAAP as a result of ASU No. 2011-04 are as follows: (1) The concepts of highest and best use and valuation premise are only relevant when measuring the fair value of nonfinancial assets (that is, it does not apply to financial assets or any liabilities); (2) U.S. GAAP currently prohibits application of a blockage factor in valuing financial instruments with quoted prices in active markets; ASU No. 2011-04 extends that prohibition to all fair value measurements; (3) An exception is provided to the basic fair value measurement principles for an entity that holds a group of financial assets and financial liabilities with offsetting positions in market risks or counterparty credit risk that are managed on the basis of the entity's net exposure to either of those risks; this exception allows the entity, if certain criteria are met, to measure the fair value of the net asset or liability position in a manner consistent with how market participants would price the net risk position; (4) Aligns the fair value measurement of instruments classified within an entity's shareholders' equity with the guidance for liabilities; and (5) Disclosure requirements have been enhanced for recurring Level 3 fair value measurements to disclose quantitative information about unobservable inputs and assumptions used, to describe the valuation processes used by the entity, and to describe the sensitivity of fair value measurements to changes in unobservable inputs and interrelationships between those inputs. In addition, entities must report the level in the fair value hierarchy of items that are not measured at fair value in the statement of condition but whose fair value must be disclosed. The provisions of ASU No. 2011-04 are effective for the Corporation's interim reporting period beginning on or after December 15, 2011. The adoption of ASU No. 2011-04 is not expected to have a material impact on the Corporation's statements of income or statements of condition.
In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income." The provisions of ASU No. 2011-05 allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The statement(s) are required to be presented with equal prominence as the other primary financial statements. ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders' equity but does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The provisions of ASU No. 2011-05 are effective for the Corporation's interim reporting period beginning on or after December 15, 2011, with retrospective application required. The adoption of ASU No. 2011-05 is expected to result in presentation changes to the Corporation's statements of income and the addition of a statement of comprehensive income. The adoption of ASU No. 2011-05 will have no impact on the Corporation's statements of condition.
In September 2011, the FASB issued ASU No. 2011-08, "Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment", which permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further impairment testing is required. The provisions of ASU No. 2011-08 are effective for the Corporation's interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, provided that the entity has not yet performed its annual impairment test for goodwill. The Corporation performs its annual impairment test for goodwill in the fourth quarter of each year. The adoption of ASU No. 2011-08 is not expected to have a material impact on the Corporation's statements of income and statements of condition.
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Stockholders' Equity | 9 Months Ended |
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Sep. 30, 2011 | |
Stockholders' Equity | |
Stockholders' Equity | Note 14. Stockholders' Equity
On January 12, 2009, the Corporation issued $10 million in nonvoting senior preferred stock to the U.S. Department of Treasury ("Treasury") under its Capital Purchase Program. As part of the transaction, the Corporation also issued warrants to the Treasury to purchase 173,410 shares of common stock of the Corporation at an exercise price of $8.65 per share. As previously announced, the Corporation's voluntary participation in the Capital Purchase Program represented approximately 50 percent of the dollar amount that the Corporation qualified to receive under the Treasury program. The Corporation believed that its participation in this program strengthened its capital position. The funding was used to support future loan growth.
The Corporation's senior preferred stock and the warrants issued under the Capital Purchase Program qualified and were accounted for as equity on the consolidated statements of condition. Of the $10 million in issuance proceeds, $9.5 million and $0.5 million were allocated to the senior preferred shares and the warrants, respectively, based upon their estimated relative fair values as of January 12, 2009. The discount of the $0.5 million recorded for the senior preferred shares was being amortized to retained earnings over a five year estimated life of the securities based on the likelihood of their redemption by the Corporation within that timeframe.
On September 15, 2011, the Corporation issued $11.25 million in nonvoting senior preferred stock to the Treasury under the Small Business Lending Fund Program ("SBLF Program"). Under the Securities Purchase Agreement, the Corporation issued to the Treasury a total of 11,250 shares of the Corporation's Senior Non-Cumulative Perpetual Preferred Stock, Series B, having a liquidation value of $1,000 per share. Simultaneously, using the proceeds from the issuance of the SBLF Preferred Stock, the Corporation redeemed from the Treasury, all 10,000 outstanding shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, liquidation amount $1,000 per share, for a redemption price of $10,041,667, including accrued but unpaid dividends up to the date of redemption. The investment in the SBLF program provides the Corporation with approximately $1.25 million additional Tier 1 capital. The capital received under the program will allow the Corporation to continue to serve its small business clients through the commercial lending program. As a result of the successful completion of the rights offering in October 2009, the number of shares underlying the warrants held by the Treasury under the Capital Purchase Program was reduced to 86,705 shares, or 50 percent of the original 173,410 shares. The warrant is still outstanding at September 30, 2011.
In September 2010, the Corporation sold an aggregate of 1,715,000 shares of its common stock under its previously filed shelf registration statement which was declared effective by the Securities and Exchange Commission on May 5, 2010. The Corporation sold 1,430,000 shares of common stock at a price of $7.00 per share, with underwriting discounts and commissions of $0.39 per share, for gross proceeds from this offering of $10,010,000. The Corporation also sold 285,000 shares of common stock directly to certain of its directors at a price of $7.50 per share, for gross proceeds from this offering of $2,137,500. After underwriting discounts and commissions of $557,700 and offering expenses of approximately $200,000 which consisted primarily of legal and accounting fees, net proceeds from both offerings totaled $11,389,800.
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Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
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Balance at Dec. 31, 2009 | $ 9,619 | $ 97,908 | $ 5,650 | $ 17,068 | $ (17,720) | $ (10,776) | $ 101,749 |
Comprehensive income: | |||||||
Net income | 4,434 | 4,434 | |||||
Other comprehensive income, net of tax | 6,203 | 6,203 | |||||
Total comprehensive income | 10,637 | ||||||
Accretion of discount on preferred stock | 61 | (61) | 0 | ||||
Issuance cost of common stock | (4) | (4) | |||||
Proceeds from common stock offering (1,715,000 shares) | 12,148 | (758) | 11,390 | ||||
Cash dividends on preferred stock | (375) | (375) | |||||
Cash dividends declared on common stock ($0.09 per share) | (1,312) | (1,312) | |||||
Restricted stock awarded (2,083 shares) | 3 | 22 | 25 | ||||
Taxes related to stock-based compensation | 8 | 8 | |||||
Stock-based compensation expense | 39 | 39 | |||||
Balance at Sep. 30, 2010 | 9,680 | 110,056 | 4,942 | 19,750 | (17,698) | (4,573) | 122,157 |
Balance at Dec. 31, 2010 | 9,700 | 110,056 | 4,941 | 21,633 | (17,698) | (7,675) | 120,957 |
Comprehensive income: | |||||||
Net income | 10,304 | 10,304 | |||||
Other comprehensive income, net of tax | 3,110 | 3,110 | |||||
Total comprehensive income | 13,414 | ||||||
Accretion of discount on preferred stock | 62 | (62) | 0 | ||||
Redemption of preferred stock series A | (10,000) | (10,000) | |||||
Proceeds from issuance of series B perferred stock | 11,250 | 11,250 | |||||
Accrual of dividend on series B preferred stock | (23) | (23) | |||||
Issuance cost of common stock | (4) | (4) | |||||
Cash dividends on preferred stock | (354) | (354) | |||||
Cash dividends declared on common stock ($0.09 per share) | (1,466) | (1,466) | |||||
Stock issued for options exercise (868 shares) | 7 | 7 | |||||
Stock-based compensation expense | 27 | 27 | |||||
Balance at Sep. 30, 2011 | $ 11,012 | $ 110,056 | $ 4,968 | $ 30,028 | $ (17,691) | $ (4,565) | $ 133,808 |
Consolidated Statements of Cash Flows (USD $) In Thousands | 9 Months Ended | |
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Sep. 30, 2011 | Sep. 30, 2010 | |
Cash flows from operating activities: | ||
Net income | $ 10,304 | $ 4,434 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of premiums and accretion of discounts on invetment securities, net | 2,983 | 1,400 |
Depreciation and amortization | 725 | 874 |
Stock-based compensation | 27 | 39 |
Provision for loan losses | 2,148 | 3,028 |
Provision for deferred taxes | 249 | 193 |
Net other-than-temporary impairment losses on investment securities | 303 | 5,118 |
Gains on sales of investment securities, net | (3,120) | (3,464) |
Net Loans originated for resale | (200) | |
Net loss on sales and dispositions of premises and equipment | 427 | |
(Increase) decrease in accrued interest receivable | (1,482) | (58) |
Decrease in prepaid FDIC insurance assessments | 1,534 | 1,332 |
Increase in cash surrender value of bank-owned life insurance | (780) | (957) |
(Increase) decrease in other assets | (3,104) | 1,949 |
Increase in other liabilities | 5,492 | 10 |
Net cash provided by operating activities | 15,079 | 14,325 |
Cash flows from investing activities: | ||
Investment securities available-for-sale: Purchases | (341,429) | (620,693) |
Investment securities available-for-sale: Sales | 236,388 | 547,733 |
Investment securities available-for-sale: Maturities, calls and principal repayments | 35,979 | 37,605 |
Investment securities held-to-maturity: Purchases | (5,843) | |
Investment securities held-to-maturity: Maturities and principal repayments | 2,375 | |
Net redemption of restricted investment in bank stocks | 402 | 417 |
Net decrease (increase) in loans | (14,443) | 16,474 |
Purchases of premises and equipment | (130) | (266) |
Redemption of bank-owned life insurance | 5,610 | |
Purchase of bank-owned life insurance | (6,000) | |
Proceeds from life insurance death benefit | 15 | |
Proceeds from sale of premises and equipment | 1 | |
Net cash used in investing activities | (86,701) | (19,104) |
Cash flows from financing activities: | ||
Net increase in deposits | 199,690 | 23,197 |
Net decrease in short-term borrowings | (41,855) | (9,723) |
Repayments of long-term borrowings | (10,000) | (32,117) |
Cash dividends on preferred stock | (417) | (375) |
Cash dividends on common stock | (1,466) | (1,312) |
Proceeds from issuance of SBLF preferred stock | 11,250 | |
Redemption of preferred stock | (10,000) | |
Proceeds from insurance of common stock from common stock offerings | 12,148 | |
Issuance cost of common stock from common stock offerings | (758) | |
Issuance cost of common stock | (4) | (4) |
Issuance cost of restricted stock award | 25 | |
Proceeds from exercise of stock options | 7 | |
Taxes related to stock based awards | 8 | |
Net cash provided by (used in) financing activities | 147,205 | (8,911) |
Net change in cash and cash equivalents | 75,583 | (13,690) |
Cash and cash equivalents at beginning of period | 37,497 | 89,168 |
Cash and cash equivalents at end of period | 113,080 | 75,478 |
Supplemental disclosures of cash flow information: | ||
Cash payments for: Interest paid on deposits and borrowings | 9,192 | 12,193 |
Cash payments for: Income taxes | 3,529 | 433 |
Supplemental disclosures of non-cash investing activities: | ||
Trade date accounting settlements for investments, net | 2,999 | 22,195 |
Transfer of loan to other real estate owned | 1,927 | |
Net investment in direct financing lease | 3,700 | |
Transfer from investment securities available-for-sale to investment securities Held-to-Maturity | $ 66,833 |
Net Investment in Direct Financing Lease | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||
Net Investment in Direct Financing Lease | |||||||||||||||||||||||||||||||||||||||||
Net Investment in Direct Financing Lease | Note 9. Net Investment in Direct Financing Lease
During the second quarter of 2010, the Corporation entered into a lease of its former operations facility under a direct financing lease. The lease has a 15 year term with no renewal options. According to the terms of the lease, the lessee has an obligation to purchase the property underlying the lease in either year seven (7), ten (10) or fifteen (15) at predetermined prices for those years as provided in the lease. The structure of the minimum lease payments and the purchase prices as provided in the lease provide an inducement to the lessee to purchase the property in year seven (7).
At September 30, 2011, the net investment in direct financing lease consists of a minimum lease receivable of $4,909,000 and unearned interest income of $1,172,000, for a net investment in direct financing lease of $3,737,000. The net investment in direct financing lease is carried as a component of loans in the Corporation's consolidated statements of condition.
Minimum future lease receipts of the direct financing lease are as follows:
|
Subordinated Debentures | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Subordinated Debentures | |
Subordinated Debentures | Note 13. Subordinated Debentures
During 2003, the Corporation formed a statutory business trust, which exists for the exclusive purpose of (i) issuing Trust Securities representing undivided beneficial interests in the assets of the Trust; (ii) investing the gross proceeds of the Trust securities in junior subordinated deferrable interest debentures (subordinated debentures) of the Corporation; and (iii) engaging in only those activities necessary or incidental thereto. These subordinated debentures and the related income effects are not eliminated in the consolidated financial statements as the statutory business trust is not consolidated in accordance with FASB ASC 810-10. Distributions on the subordinated debentures owned by the subsidiary trusts below have been classified as interest expense in the Consolidated Statements of Income.
The characteristics of the business trusts and capital securities have not changed with the deconsolidation of the trusts. The capital securities provide an attractive source of funds since they constitute Tier 1 capital for regulatory purposes and have the same tax advantages as debt for Federal income tax purposes.
The subordinated debentures are redeemable in whole or part prior to maturity on January 23, 2034. The floating interest rate on the subordinated debentures is three-month LIBOR plus 2.85 percent and reprices quarterly. The rate at September 30, 2011 was 3.10 percent.
|
Consolidated Statements of Condition (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
ASSETS | ||
Cash and due from banks | $ 113,080 | $ 37,497 |
Investment securities: | ||
Available for sale | 388,858 | 378,080 |
Held to maturity (fair value of $72,371 in 2011 and $0 in 2010) | 70,142 | |
Loans | 721,608 | 708,444 |
Less: Allowance for loan losses | 9,536 | 8,867 |
Net loans | 712,072 | 699,577 |
Restricted investment in bank stocks, at cost | 9,194 | 9,596 |
Premises and equipment, net | 12,386 | 12,937 |
Accrued interest receivable | 5,616 | 4,134 |
Bank-owned life insurance | 28,685 | 27,905 |
Goodwill and other intangible assets | 16,915 | 16,959 |
Prepaid FDIC assesments | 2,048 | 3,582 |
Other assets | 17,521 | 17,118 |
Total assets | 1,376,517 | 1,207,385 |
LIABILITIES | ||
Deposits: Non interest-bearing | 161,340 | 144,210 |
Interest bearing deposits: Time deposits $100 and over | 141,421 | 119,651 |
Interest bearing deposits: Interest-bearing transaction, savings and time deposits $100 and less | 757,261 | 596,471 |
Total deposits | 1,060,022 | 860,332 |
Short-term borrowings | 41,855 | |
Long-term borrowings | 161,000 | 171,000 |
Subordinated debentures | 5,155 | 5,155 |
Accounts payable and accrued liabilities | 16,532 | 8,086 |
Total liabilities | 1,242,709 | 1,086,428 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $1,000 liquidation value per share, authorized 5,000,000 shares; issued and outstanding 11,250 shares of Series B Preferred Stock at September 30, 2011 and 0 at December 31, 2010; and issued and outstanding 0 shares of Series A Preferred Stock at September 30, 2011 and 10,000 shares at December 31, 2010 | 11,012 | 9,700 |
Common stock, no par value, authorized 25,000,000 shares; issued 18,477,412, outstanding 16,290,700 shares at September 30, 2011 and 16,289,832 shares at December 31, 2010 | 110,056 | 110,056 |
Additional paid-in capital | 4,968 | 4,941 |
Retained earnings | 30,028 | 21,633 |
Treasury stock, at cost (2,186,712 common shares at September 30, 2011 and 2,187,580 common shares at December 31, 2010) | (17,691) | (17,698) |
Accumulated other comprehensive loss | (4,565) | (7,675) |
Total stockholders' equity | 133,808 | 120,957 |
Total liabilities and stockholders' equity | $ 1,376,517 | $ 1,207,385 |