NEW YORK | 13-3148745 | |
(State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
Outstanding at |
||
November 1, |
||
Class | 2011 | |
Common stock, par value $0.20 per share
|
17,696,625 |
1
Item 1. | Condensed Financial Statements |
Three Months Ended |
||||||||
Sep 30, | ||||||||
2011 | 2010 | |||||||
Interest Income:
|
||||||||
Loans, including fees
|
$ | 28,641 | $ | 26,557 | ||||
Securities:
|
||||||||
Taxable
|
2,778 | 3,354 | ||||||
Exempt from Federal income taxes
|
989 | 1,321 | ||||||
Federal funds sold
|
24 | 45 | ||||||
Deposits in banks
|
154 | 260 | ||||||
Total interest income
|
32,586 | 31,537 | ||||||
Interest Expense:
|
||||||||
Deposits
|
2,226 | 3,025 | ||||||
Securities sold under repurchase agreements and other short-term
borrowings
|
68 | 69 | ||||||
Other borrowings
|
254 | 1,190 | ||||||
Total interest expense
|
2,548 | 4,284 | ||||||
Net Interest Income
|
30,038 | 27,253 | ||||||
Provision for loan losses
|
2,536 | 6,572 | ||||||
Net interest income after provision for loan losses
|
27,502 | 20,681 | ||||||
Non Interest Income:
|
||||||||
Service charges
|
1,671 | 1,604 | ||||||
Investment advisory fees
|
2,639 | 2,162 | ||||||
Recognized impairment charge on securities available for sale
(includes $361 of total losses and$172 of total gains in 2011
and 2010, respectively, less $242 of losses and $247 of gains on
securities available for sale, recognized in other comprehensive
income in 2011 and 2010, respectively)
|
(119 | ) | (75 | ) | ||||
Realized gains on securities available for sale, net
|
8 | 75 | ||||||
Gains (losses) on sales and revaluation of loans held for sale
and other real estate owned, net
|
946 | (550 | ) | |||||
Other income
|
569 | 627 | ||||||
Total non interest income
|
5,714 | 3,843 | ||||||
Non Interest Expense:
|
||||||||
Salaries and employee benefits
|
11,296 | 9,483 | ||||||
Occupancy
|
2,217 | 2,108 | ||||||
Professional services
|
1,700 | 1,239 | ||||||
Equipment
|
1,101 | 1,005 | ||||||
Business development
|
452 | 480 | ||||||
FDIC assessment
|
553 | 1,246 | ||||||
Other operating expenses
|
2,771 | 2,861 | ||||||
Total non interest expense
|
20,090 | 18,422 | ||||||
Income Before Income Taxes
|
13,126 | 6,102 | ||||||
Income Taxes
|
4,618 | 2,031 | ||||||
Net Income
|
$ | 8,508 | $ | 4,071 | ||||
Basic Earnings Per Common Share
|
$ | 0.48 | $ | 0.23 | ||||
Diluted Earnings Per Common Share
|
$ | 0.48 | $ | 0.23 |
2
Nine Months Ended |
||||||||
Sep 30, | ||||||||
2011 | 2010 | |||||||
Interest Income:
|
||||||||
Loans, including fees
|
$ | 82,914 | $ | 81,248 | ||||
Securities:
|
||||||||
Taxable
|
8,875 | 10,601 | ||||||
Exempt from Federal income taxes
|
3,300 | 4,652 | ||||||
Federal funds sold
|
73 | 123 | ||||||
Deposits in banks
|
519 | 519 | ||||||
Total interest income
|
95,681 | 97,143 | ||||||
Interest Expense:
|
||||||||
Deposits
|
6,790 | 9,679 | ||||||
Securities sold under repurchase agreements and other short-term
borrowings
|
172 | 217 | ||||||
Other borrowings
|
1,599 | 4,128 | ||||||
Total interest expense
|
8,561 | 14,024 | ||||||
Net Interest Income
|
87,120 | 83,119 | ||||||
Provision for loan losses
|
9,533 | 40,702 | ||||||
Net interest income after provision for loan losses
|
77,587 | 42,417 | ||||||
Non Interest Income:
|
||||||||
Service charges
|
5,263 | 5,019 | ||||||
Investment advisory fees
|
7,998 | 6,676 | ||||||
Recognized impairment charge on securities available for sale
(includes $1,318 and $2,841 of total losses in 2011 and 2010,
respectively, less $995 and $483 of losses on securities
available for sale, recognized in other comprehensive income in
2011 and 2010, respectively)
|
(323 | ) | (2,358 | ) | ||||
Realized gains on securities available for sale, net
|
8 | 150 | ||||||
Gains (losses) on sales and revaluation of loans held for sale
and other real estate owned, net
|
73 | (1,974 | ) | |||||
Other income
|
1,745 | 1,807 | ||||||
Total non interest income
|
14,764 | 9,320 | ||||||
Non Interest Expense:
|
||||||||
Salaries and employee benefits
|
33,377 | 28,863 | ||||||
Occupancy
|
6,764 | 6,204 | ||||||
Professional services
|
4,902 | 4,103 | ||||||
Equipment
|
3,218 | 2,940 | ||||||
Business development
|
1,548 | 1,590 | ||||||
FDIC assessment
|
2,350 | 3,521 | ||||||
Other operating expenses
|
9,029 | 7,793 | ||||||
Total non interest expense
|
61,188 | 55,014 | ||||||
Income (Loss) Before Income Taxes
|
31,163 | (3,277 | ) | |||||
Income Taxes (Benefit)
|
10,399 | (1,248 | ) | |||||
Net Income (Loss)
|
$ | 20,764 | $ | (2,029 | ) | |||
Basic Earnings Per Common Share
|
$ | 1.17 | ($ | 0.12 | ) | |||
Diluted Earnings Per Common Share
|
$ | 1.17 | ($ | 0.12 | ) |
3
Three Months Ended |
Nine Months Ended |
|||||||||||||||
Sep 30, | Sep 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Income (Loss)
|
$ | 8,508 | $ | 4,071 | $ | 20,764 | $ | (2,029 | ) | |||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||||||
Net change in unrealized gains (losses):
|
||||||||||||||||
Other-than-temporarily
impaired securities available for sale:
|
||||||||||||||||
Total gains (losses)
|
(361 | ) | 172 | (1,318 | ) | (2,841 | ) | |||||||||
Losses recognized in earnings
|
119 | 75 | 323 | 2,358 | ||||||||||||
Gains (losses) recognized in comprehensive income
|
(242 | ) | 247 | (995 | ) | (483 | ) | |||||||||
Income tax effect
|
99 | (101 | ) | 408 | 198 | |||||||||||
Unrealized holding gains (losses) on
other-than-temporarily
impaired securities available for sale, net of tax
|
(143 | ) | 146 | (587 | ) | (285 | ) | |||||||||
Securities available for sale not
other-than-temporarily
impaired:
|
||||||||||||||||
Gains arising during the year
|
4,735 | 3,955 | 2,535 | 7,871 | ||||||||||||
Income tax effect
|
(1,777 | ) | (1,485 | ) | (907 | ) | (3,020 | ) | ||||||||
2,958 | 2,470 | 1,628 | 4,851 | |||||||||||||
Gains recognized in earnings
|
(8 | ) | (75 | ) | (8 | ) | (150 | ) | ||||||||
Income tax effect
|
3 | 30 | 3 | 60 | ||||||||||||
(5 | ) | (45 | ) | (5 | ) | (90 | ) | |||||||||
Unrealized holding gains on securities available for sale not
other-than-temporarily-impaired
, net of tax
|
2,953 | 2,425 | 1,623 | 4,761 | ||||||||||||
Unrealized holding gain on securities, net
|
2,810 | 2,571 | 1,036 | 4,476 | ||||||||||||
Minimum pension liability adjustment
|
(78 | ) | 103 | 77 | 307 | |||||||||||
Income tax effect
|
31 | (41 | ) | (31 | ) | (123 | ) | |||||||||
(47 | ) | 62 | 46 | 184 | ||||||||||||
Other comprehensive income
|
2,763 | 2,633 | 1,082 | 4,660 | ||||||||||||
Comprehensive Income
|
$ | 11,271 | $ | 6,704 | $ | 21,846 | $ | 2,631 | ||||||||
4
Sep 30, |
Dec 31, |
|||||||
2011 | 2010 | |||||||
ASSETS
|
||||||||
Cash and non interest earning due from banks
|
$ | 51,704 | $ | 25,876 | ||||
Interest earning deposits in banks
|
202,472 | 258,280 | ||||||
Federal funds sold
|
36,400 | 72,071 | ||||||
Securities available for sale, at estimated fair value
(amortized cost of $481,731 in 2011 and $440,792 in 2010)
|
486,138 | 443,667 | ||||||
Securities held to maturity, at amortized cost (estimated fair
value of $14,627 in 2011 and $17,272 in 2010)
|
13,673 | 16,267 | ||||||
Federal Home Loan Bank of New York (FHLB) stock
|
3,832 | 7,010 | ||||||
Loans (net of allowance for loan losses of $42,150 in 2011 and
$38,949 in 2010)
|
1,993,658 | 1,689,187 | ||||||
Loans held for sale
|
2,244 | 7,811 | ||||||
Accrued interest and other receivables
|
13,287 | 16,396 | ||||||
Premises and equipment, net
|
26,510 | 28,611 | ||||||
Other real estate owned
|
924 | 11,028 | ||||||
Deferred income tax, net
|
25,826 | 25,043 | ||||||
Bank owned life insurance
|
27,169 | 25,976 | ||||||
Goodwill
|
23,842 | 23,842 | ||||||
Other intangible assets
|
1,838 | 2,454 | ||||||
Other assets
|
12,740 | 15,514 | ||||||
TOTAL ASSETS
|
$ | 2,922,257 | $ | 2,669,033 | ||||
LIABILITIES
|
||||||||
Deposits:
|
||||||||
Non interest bearing
|
$ | 884,306 | $ | 756,917 | ||||
Interest-bearing
|
1,645,362 | 1,477,495 | ||||||
Total deposits
|
2,529,668 | 2,234,412 | ||||||
Securities sold under repurchase agreements and other short-term
borrowings
|
46,611 | 36,594 | ||||||
Other borrowings
|
16,475 | 87,751 | ||||||
Accrued interest and other liabilities
|
25,992 | 20,359 | ||||||
TOTAL LIABILITIES
|
2,618,746 | 2,379,116 | ||||||
STOCKHOLDERS EQUITY
|
||||||||
Preferred Stock, $0.01 par value; authorized
15,000,000 shares; no shares outstanding in 2011 and 2010,
respectively
|
| | ||||||
Common stock, $0.20 par value; authorized
25,000,000 shares: outstanding 17,694,297 and
17,665,908 shares in 2011 and 2010, respectively
|
3,799 | 3,793 | ||||||
Additional paid-in capital
|
347,337 | 346,750 | ||||||
Retained earnings (deficit)
|
7,931 | (3,989 | ) | |||||
Accumulated other comprehensive income
|
2,008 | 927 | ||||||
Treasury stock, at cost; 1,299,414 shares in 2011 and 2010
|
(57,564 | ) | (57,564 | ) | ||||
Total stockholders equity
|
303,511 | 289,917 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
$ | 2,922,257 | $ | 2,669,033 | ||||
5
Accumulated |
||||||||||||||||||||||||||||
Other |
||||||||||||||||||||||||||||
Number of |
Additional |
Comprehensive |
||||||||||||||||||||||||||
Shares |
Common |
Treasury |
Paid-in |
Retained |
Income |
|||||||||||||||||||||||
Outstanding | Stock | Stock | Capital | Earnings | (Loss) | Total | ||||||||||||||||||||||
Balance at January 1, 2011
|
17,665,908 | $ | 3,793 | $ | (57,564 | ) | $ | 346,750 | $ | (3,989 | ) | $ | 927 | $ | 289,917 | |||||||||||||
Net income
|
20,764 | 20,764 | ||||||||||||||||||||||||||
Stock option expense and exercises of stock options, net of tax
|
28,389 | 6 | 587 | 593 | ||||||||||||||||||||||||
Cash dividends ($0.50 per share)
|
(8,844 | ) | (8,844 | ) | ||||||||||||||||||||||||
Accrued benefit liability adjustment
|
46 | 46 | ||||||||||||||||||||||||||
Net unrealized gain on securities available for sale:
|
||||||||||||||||||||||||||||
Not
other-than-temporarily
impaired
|
1,622 | 1,622 | ||||||||||||||||||||||||||
Other-than-temporarily
impaired (includes $1,318 of total losses less $323 of losses
recognized in earnings, net of $408 tax)
|
(587 | ) | (587 | ) | ||||||||||||||||||||||||
Balance at September 30, 2011
|
17,694,297 | $ | 3,799 | $ | (57,564 | ) | $ | 347,337 | $ | 7,931 | $ | 2,008 | $ | 303,511 | ||||||||||||||
Accumulated |
||||||||||||||||||||||||||||
Other |
||||||||||||||||||||||||||||
Number of |
Additional |
Comprehensive |
||||||||||||||||||||||||||
Shares |
Common |
Treasury |
Paid-in |
Retained |
Income |
|||||||||||||||||||||||
Outstanding | Stock | Stock | Capital | Earnings | (Loss) | Total | ||||||||||||||||||||||
Balance at January 1, 2010
|
16,016,738 | $ | 3,463 | $ | (57,564 | ) | $ | 346,297 | $ | 2,294 | $ | (812 | ) | $ | 293,678 | |||||||||||||
Net loss
|
(2,029 | ) | (2,029 | ) | ||||||||||||||||||||||||
Grants and exercises of stock options, net of tax
|
12,426 | 2 | 317 | 319 | ||||||||||||||||||||||||
Cash dividends ($0.51 per share)
|
(8,976 | ) | (8,976 | ) | ||||||||||||||||||||||||
Accrued benefit liability adjustment
|
184 | 184 | ||||||||||||||||||||||||||
Net unrealized gain on securities available for sale:
|
||||||||||||||||||||||||||||
Not
other-than-temporarily
impaired
|
4,761 | 4,761 | ||||||||||||||||||||||||||
Other-than-temporarily
impaired (includes $2,841 of total losses less $2,358 of losses
recognized in earnings, net of $198 tax)
|
(285 | ) | (285 | ) | ||||||||||||||||||||||||
Balance at September 30, 2010
|
16,029,164 | $ | 3,465 | $ | (57,564 | ) | $ | 346,614 | $ | (8,711 | ) | $ | 3,848 | $ | 287,652 | |||||||||||||
6
For the Nine Months |
||||||||
Ended Sept 30, | ||||||||
2011 | 2010 | |||||||
Operating Activities:
|
||||||||
Net Income (loss)
|
$ | 20,764 | $ | (2,029 | ) | |||
Adjustments to reconcile net income to net cash provided by
operating activities:
|
||||||||
Provision for loan losses
|
9,533 | 40,702 | ||||||
Depreciation and amortization
|
2,969 | 2,944 | ||||||
Recognized impairment charge on securities available for sale
|
323 | 2,358 | ||||||
Realized gain on security transactions, net
|
(8 | ) | (150 | ) | ||||
Amortization of premiums on securities, net
|
2,468 | 1,571 | ||||||
(Gain) loss and valuation on other real estate owned
|
(82 | ) | 1,974 | |||||
Loss and valuation on loans held for sale
|
8 | | ||||||
Increase in cash value of bank owned life insurance
|
(869 | ) | (869 | ) | ||||
Amortization of other intangible assets
|
616 | 617 | ||||||
Stock option expense and related tax benefits
|
107 | 146 | ||||||
Deferred taxes (benefit)
|
(1,313 | ) | (5,608 | ) | ||||
Increase in deferred loan fees, net
|
(82 | ) | (1,106 | ) | ||||
Decrease (increase) in accrued interest and other receivables
|
3,109 | (2,225 | ) | |||||
Decrease (increase) in other assets
|
(487 | ) | (206 | ) | ||||
Excess tax benefits from share-based payment arrangements
|
(7 | ) | (6 | ) | ||||
Increase (decrease) in accrued interest and other liabilities
|
5,633 | (127 | ) | |||||
Decrease in accrued pension liability adjustment
|
46 | 185 | ||||||
Net cash provided by operating activities
|
42,728 | 38,171 | ||||||
Investing Activities:
|
||||||||
Net decrease (increase) in federal funds sold
|
35,671 | (19,017 | ) | |||||
Decrease in FHLB stock
|
3,178 | 785 | ||||||
Proceeds from maturities and paydowns of securities available
for sale
|
164,096 | 197,565 | ||||||
Proceeds from maturities and paydowns of securities held to
maturity
|
2,596 | 4,184 | ||||||
Proceeds from sales of securities available for sale
|
1,284 | 21,906 | ||||||
Purchases of securities available for sale
|
(209,072 | ) | (189,636 | ) | ||||
Net (increase) decrease in loans
|
(309,204 | ) | 35,089 | |||||
Proceeds from sales of other real estate owned
|
11,036 | 2,209 | ||||||
Proceeds from sales of loans held for sale
|
3,253 | | ||||||
Premiums paid on bank owned life insurance
|
(324 | ) | (324 | ) | ||||
Net purchases of premises and equipment
|
(868 | ) | (1,769 | ) | ||||
Net cash (used in) provided by Investing Activities
|
(298,354 | ) | 50,992 | |||||
Financing Activities:
|
||||||||
Proceeds from exercise of stock options
|
486 | 173 | ||||||
Excess tax benefits from share-based payment arrangements
|
7 | 6 | ||||||
Net increase in deposits
|
295,256 | 201,464 | ||||||
Cash dividends paid
|
(8,844 | ) | (8,976 | ) | ||||
Repayment of other borrowings
|
(71,276 | ) | (21,023 | ) | ||||
Net decrease in securities sold under repurchase agreements and
short-term borrowings
|
10,017 | (9,785 | ) | |||||
Net cash provided by Financing Activities
|
225,646 | 161,859 | ||||||
Increase (decrease) in Cash and Due from Banks
|
(29,980 | ) | 251,022 | |||||
Cash and Due from Banks, beginning of period
|
284,156 | 166,980 | ||||||
Cash and Due from Banks, end of period
|
$ | 254,176 | $ | 418,002 | ||||
Supplemental Disclosures:
|
||||||||
Interest paid
|
$ | 9,142 | $ | 14,215 | ||||
Income tax payments
|
7,262 | 6,801 | ||||||
Transfer from loans held for sale back to loan portfolio
|
2,305 | 0 | ||||||
Transfer to loans held for sale
|
| 21,864 | ||||||
Transfers to other real estate owned
|
850 | 4,365 |
7
1. | Description of Operations |
2. | Basis of Presentation |
8
9
10
11
3. | Securities |
Gross Unrealized |
Estimated Fair |
|||||||||||||||
Amortized Cost | Gains | Losses | Value | |||||||||||||
Classified as Available for Sale
|
||||||||||||||||
U.S. Treasury and government agencies
|
$ | 3,000 | $ | 3 | | $ | 3,003 | |||||||||
Mortgage-backed securities
|
359,227 | 8,704 | $ | 256 | 367,675 | |||||||||||
Obligations of states and political subdivisions
|
97,268 | 4,434 | | 101,702 | ||||||||||||
Other debt securities
|
12,165 | 1 | 8,992 | 3,174 | ||||||||||||
Total debt securities
|
471,660 | 13,142 | 9,248 | 475,554 | ||||||||||||
Mutual funds and other equity securities
|
10,071 | 660 | 147 | 10,584 | ||||||||||||
Total
|
$ | 481,731 | $ | 13,802 | $ | 9,395 | $ | 486,138 | ||||||||
12
Gross Unrecognized |
Estimated Fair |
|||||||||||||||
Amortized Cost | Gains | Losses | Value | |||||||||||||
Classified as Held To Maturity
|
||||||||||||||||
Mortgage-backed securities
|
$ | 8,536 | $ | 629 | | $ | 9,165 | |||||||||
Obligations of states and political subdivisions
|
5,137 | 325 | | 5,462 | ||||||||||||
Total
|
$ | 13,673 | $ | 954 | | $ | 14,627 | |||||||||
Gross Unrealized |
Estimated Fair |
|||||||||||||||
Amortized Cost | Gains | Losses | Value | |||||||||||||
Classified as Available for Sale
|
||||||||||||||||
U.S. Treasury and government agencies
|
$ | 3,001 | $ | 11 | | $ | 3,012 | |||||||||
Mortgage-backed securities
|
303,479 | 6,648 | $ | 587 | 309,540 | |||||||||||
Obligations of states and political subdivisions
|
111,912 | 4,170 | 1 | 116,081 | ||||||||||||
Other debt securities
|
12,329 | | 7,956 | 4,373 | ||||||||||||
Total debt securities
|
430,721 | 10,829 | 8,544 | 433,006 | ||||||||||||
Mutual funds and other equity securities
|
10,071 | 706 | 116 | 10,661 | ||||||||||||
Total
|
$ | 440,792 | $ | 11,535 | $ | 8,660 | $ | 443,667 | ||||||||
Gross Unrecognized |
Estimated Fair |
|||||||||||||||
Amortized Cost | Gains | Losses | Value | |||||||||||||
Classified as Held To Maturity
|
||||||||||||||||
Mortgage-backed securities
|
$ | 11,131 | $ | 700 | $ | 1 | $ | 11,830 | ||||||||
Obligations of states and political subdivisions
|
5,136 | 306 | | 5,442 | ||||||||||||
Total
|
$ | 16,267 | $ | 1,006 | $ | 1 | $ | 17,272 | ||||||||
13
Annual Prepayment
|
1.00% | |
Projected specific defaults/deferrals
|
33.1% - 73.6% | |
Projected severity of loss on specific defaults/deferrals
|
50.0% - 87.1% | |
Projected additional defaults:
|
||
Year 1
|
2.00% | |
Year 2
|
1.00% | |
Thereafter
|
0.25% | |
Projected severity of loss on additional defaults
|
85.00% | |
Present value discount rates
|
3m LIBOR + 1.60% - 2.25% |
2011 | 2010 | |||||||
Balance at beginning of period:
|
||||||||
Total OTTI credit related impairment charges beginning of period
|
$ | 9,110 | $ | 6,557 | ||||
Increase to the amount related to the credit loss for which
other-than-temporary
impairment was previously recognized
|
323 | 2,125 | ||||||
Credit related impairment not previously recognized
|
| 158 | ||||||
Balance at end of period:
|
$ | 9,433 | $ | 8,840 | ||||
Duration of Unrealized Loss | ||||||||||||||||||||||||
Less Than 12 Months | Greater than 12 Months | Total | ||||||||||||||||||||||
Gross |
Gross |
Gross |
||||||||||||||||||||||
Fair |
Unrealized |
Fair |
Unrealized |
Fair |
Unrealized |
|||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
Classified as Available for Sale
|
||||||||||||||||||||||||
U.S. Treasuries and government agencies
|
| | | | | | ||||||||||||||||||
Mortgage-backed securities residential
|
$ | 38,648 | $ | 256 | | | $ | 38,648 | $ | 256 | ||||||||||||||
Obligations of states and political subdivisions
|
| | | | | | ||||||||||||||||||
Other debt securities
|
| | $ | 3,118 | $ | 8,992 | 3,118 | 8,992 | ||||||||||||||||
Total debt securities
|
38,648 | 256 | 3,118 | 8,992 | 41,766 | 9,248 | ||||||||||||||||||
Mutual funds and other equity securities
|
20 | 2 | 80 | 145 | 100 | 147 | ||||||||||||||||||
Total temporarily impaired securities
|
$ | 38,668 | $ | 258 | $ | 3,198 | $ | 9,137 | $ | 41,866 | $ | 9,395 | ||||||||||||
14
Duration of Unrealized Loss | ||||||||||||||||||||||||
Greater than 12 |
||||||||||||||||||||||||
Less Than 12 Months | Months | Total | ||||||||||||||||||||||
Gross |
Gross |
Gross |
||||||||||||||||||||||
Fair |
Unrealized |
Fair |
Unrealized |
Fair |
Unrealized |
|||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
Classified as Available for Sale
|
||||||||||||||||||||||||
U.S. Treasuries and government agencies
|
| | | | | | ||||||||||||||||||
Mortgage-backed securities residential
|
$ | 72,105 | $ | 587 | | | $ | 72,105 | $ | 587 | ||||||||||||||
Obligations of states and political subdivisions
|
461 | 1 | | | 461 | 1 | ||||||||||||||||||
Other debt securities
|
| | $ | 4,193 | $ | 7,956 | 4,193 | 7,956 | ||||||||||||||||
Total debt securities
|
72,566 | 588 | 4,193 | 7,956 | 76,759 | 8,544 | ||||||||||||||||||
Mutual funds and other equity securities
|
| | 118 | 116 | 118 | 116 | ||||||||||||||||||
Total temporarily impaired securities
|
$ | 72,566 | $ | 588 | $ | 4,311 | $ | 8,072 | $ | 76,877 | $ | 8,660 | ||||||||||||
Classified as Held to Maturity
|
||||||||||||||||||||||||
Mortgage-backed securities residential
|
$ | 400 | $ | 1 | | | $ | 400 | $ | 1 | ||||||||||||||
Total temporarily impaired securities
|
$ | 400 | $ | 1 | | | $ | 400 | $ | 1 | ||||||||||||||
Available for Sale | Held to Maturity | |||||||||||||||
Amortized |
Fair |
Amortized |
Fair |
|||||||||||||
Cost | Value | Cost | Value | |||||||||||||
(000s) | ||||||||||||||||
Contractual Maturity
|
||||||||||||||||
Within 1 year
|
$ | 11,110 | $ | 11,122 | | | ||||||||||
After 1 year but within 5 years
|
40,462 | 42,363 | $ | 5,137 | $ | 5,462 | ||||||||||
After 5 year but within 10 years
|
48,751 | 51,276 | | | ||||||||||||
After 10 years
|
12,110 | 3,118 | | | ||||||||||||
Mortgage-backed securities residential
|
359,227 | 367,675 | 8,536 | 9,165 | ||||||||||||
Total
|
$ | 471,660 | $ | 475,554 | $ | 13,673 | $ | 14,627 | ||||||||
15
4. | Loans |
September 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
Real Estate:
|
||||||||
Commercial
|
$ | 817,998 | $ | 796,253 | ||||
Construction
|
145,682 | 174,369 | ||||||
Residential
|
812,203 | 467,326 | ||||||
Commercial & Industrial
|
221,208 | 245,263 | ||||||
Individuals & lease financing
|
42,750 | 49,040 | ||||||
Total loans
|
2,039,841 | 1,732,251 | ||||||
Deferred loan fees
|
(4,033 | ) | (4,115 | ) | ||||
Allowance for loan losses
|
(42,150 | ) | (38,949 | ) | ||||
Loans, net
|
$ | 1,993,658 | $ | 1,689,187 | ||||
Three Months Ended September 30, 2011 | ||||||||||||||||||||||||
Lease |
||||||||||||||||||||||||
Commercial |
Residential |
Commercial & |
Financing |
|||||||||||||||||||||
Total | Real Estate | Construction | Real Estate | Industrial | & Other | |||||||||||||||||||
Balance at beginning of period
|
$ | 41,889 | $ | 17,112 | $ | 6,440 | $ | 13,161 | $ | 4,246 | $ | 930 | ||||||||||||
Charge-offs
|
(2,802 | ) | (69 | ) | (11 | ) | (2,263 | ) | (453 | ) | (6 | ) | ||||||||||||
Recoveries
|
527 | 44 | 28 | 336 | 112 | 7 | ||||||||||||||||||
Net Charge-offs
|
(2,275 | ) | (25 | ) | 17 | (1,927 | ) | (341 | ) | 1 | ||||||||||||||
Provision for loan losses
|
2,536 | (716 | ) | (231 | ) | 3,115 | 387 | (19 | ) | |||||||||||||||
Net change during the period
|
261 | (741 | ) | (214 | ) | 1,188 | 46 | (18 | ) | |||||||||||||||
Balance at end of period
|
$ | 42,150 | $ | 16,371 | $ | 6,226 | $ | 14,349 | $ | 4,292 | $ | 912 | ||||||||||||
Nine Months Ended September 30, 2011 | ||||||||||||||||||||||||
Lease |
||||||||||||||||||||||||
Commercial |
Residential |
Commercial & |
Financing |
|||||||||||||||||||||
Total | Real Estate | Construction | Real Estate | Industrial | & Other | |||||||||||||||||||
Balance at beginning of period
|
$ | 38,949 | $ | 16,736 | $ | 7,140 | $ | 9,851 | $ | 4,290 | $ | 932 | ||||||||||||
Charge-offs
|
(9,429 | ) | (225 | ) | (867 | ) | (5,276 | ) | (2,997 | ) | (64 | ) | ||||||||||||
Recoveries
|
3,097 | 730 | 603 | 1,355 | 388 | 21 | ||||||||||||||||||
Net Charge-offs
|
(6,332 | ) | 505 | (264 | ) | (3,921 | ) | (2,609 | ) | (43 | ) | |||||||||||||
Provision for loan losses
|
9,533 | (870 | ) | (650 | ) | 8,419 | 2,611 | 23 | ||||||||||||||||
Net change during the period
|
3,201 | (365 | ) | (914 | ) | 4,498 | 2 | (20 | ) | |||||||||||||||
Balance at end of period
|
$ | 42,150 | $ | 16,371 | $ | 6,226 | $ | 14,349 | $ | 4,292 | $ | 912 | ||||||||||||
16
Three Months Ended September 30, 2010 | ||||||||||||||||||||||||
Lease |
||||||||||||||||||||||||
Commercial |
Residential |
Commercial & |
Financing |
|||||||||||||||||||||
Total | Real Estate | Construction | Real Estate | Industrial | & Other | |||||||||||||||||||
Balance at beginning of period
|
$ | 47,127 | $ | 20,491 | $ | 8,406 | $ | 11,388 | $ | 6,648 | $ | 194 | ||||||||||||
Charge-offs
|
(17,434 | ) | (5,708 | ) | (6,838 | ) | (3,233 | ) | (1,645 | ) | (10 | ) | ||||||||||||
Recoveries
|
621 | 54 | | 469 | 98 | | ||||||||||||||||||
Net Charge-offs
|
(16,813 | ) | (5,654 | ) | (6,838 | ) | (2,764 | ) | (1,547 | ) | (10 | ) | ||||||||||||
Provision for loan losses
|
6,572 | 1,366 | 4,403 | 871 | (117 | ) | 49 | |||||||||||||||||
Net change during the period
|
(10,241 | ) | (4,288 | ) | (2,435 | ) | (1,893 | ) | (1,664 | ) | 39 | |||||||||||||
Balance at end of period
|
$ | 36,886 | $ | 16,203 | $ | 5,971 | $ | 9,495 | $ | 4,984 | $ | 233 | ||||||||||||
Nine Months Ended September 30, 2010 | ||||||||||||||||||||||||
Lease |
||||||||||||||||||||||||
Commercial |
Residential |
Commercial & |
Financing |
|||||||||||||||||||||
Total | Real Estate | Construction | Real Estate | Industrial | & Other | |||||||||||||||||||
Balance at beginning of period
|
$ | 38,645 | $ | 15,273 | $ | 5,802 | $ | 9,706 | $ | 7,326 | $ | 538 | ||||||||||||
Charge-offs
|
(43,404 | ) | (12,394 | ) | (14,311 | ) | (13,310 | ) | (3,345 | ) | (44 | ) | ||||||||||||
Recoveries
|
943 | 54 | 11 | 478 | 400 | | ||||||||||||||||||
Net Charge-offs
|
(42,461 | ) | (12,340 | ) | (14,300 | ) | (12,832 | ) | (2,945 | ) | (44 | ) | ||||||||||||
Provision for loan losses
|
40,702 | 13,270 | 14,469 | 12,621 | 603 | (261 | ) | |||||||||||||||||
Net change during the period
|
(1,759 | ) | 930 | 169 | (211 | ) | (2,342 | ) | (305 | ) | ||||||||||||||
Balance at end of period
|
$ | 36,886 | $ | 16,203 | $ | 5,971 | $ | 9,495 | $ | 4,984 | $ | 233 | ||||||||||||
September 30, 2011 | December 31, 2010 | |||||||||||||||||||||||
Unpaid |
Allowance for |
Unpaid |
Allowance for |
|||||||||||||||||||||
Principal |
Recorded |
Loan Losses |
Principal |
Recorded |
Loan Losses |
|||||||||||||||||||
Balance | Investment | Allocated | Balance | Investment | Allocated | |||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||||||
Commercial
|
$ | 44,895 | $ | 43,510 | | $ | 22,714 | $ | 21,166 | | ||||||||||||||
Construction
|
13,619 | 12,507 | | 16,985 | 11,868 | | ||||||||||||||||||
Residential
|
18,066 | 13,405 | | 11,476 | 7,223 | | ||||||||||||||||||
Commercial & industrial
|
9,876 | 8,171 | | 5,543 | 4,538 | | ||||||||||||||||||
Lease financing & other
|
499 | 241 | | 651 | 393 | | ||||||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||||||
Commercial
|
| | | | | | ||||||||||||||||||
Construction
|
5,310 | 5,310 | $ | 863 | 3,821 | 3,821 | $ | 850 | ||||||||||||||||
Residential
|
| | | 521 | 521 | 17 | ||||||||||||||||||
Commercial & industrial
|
25 | 25 | 25 | 25 | 25 | 25 | ||||||||||||||||||
Lease financing & other
|
| | | | | | ||||||||||||||||||
Total loans
|
$ | 92,290 | $ | 83,169 | $ | 888 | $ | 61,736 | $ | 49,555 | $ | 892 | ||||||||||||
17
September 30, 2011 | ||||||||||||||||||||||||
Lease |
||||||||||||||||||||||||
Commercial |
Residential |
Commercial & |
Financing |
|||||||||||||||||||||
Total | Real Estate | Construction | Real Estate | Industrial | & Other | |||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||
Ending balance attributed to loans:
|
||||||||||||||||||||||||
Collectively evaluated for impairment
|
$ | 41,262 | $ | 16,371 | $ | 5,363 | $ | 14,349 | $ | 4,267 | $ | 912 | ||||||||||||
Individually evaluated for impairment
|
888 | | 863 | | 25 | | ||||||||||||||||||
Total ending balance of allowance
|
$ | 42,150 | $ | 16,371 | $ | 6,226 | $ | 14,349 | $ | 4,292 | $ | 912 | ||||||||||||
Total loans:
|
||||||||||||||||||||||||
Ending balance of loans:
|
||||||||||||||||||||||||
Collectively evaluated for impairment
|
$ | 1,956,672 | $ | 774,487 | $ | 127,866 | $ | 798,798 | $ | 213,012 | $ | 42,509 | ||||||||||||
Individually evaluated for impairment
|
83,169 | 43,511 | 17,816 | 13,405 | 8,196 | 241 | ||||||||||||||||||
Total ending balance of loans
|
$ | 2,039,841 | $ | 817,998 | $ | 145,682 | $ | 812,203 | $ | 221,208 | $ | 42,750 | ||||||||||||
December 31, 2010 | ||||||||||||||||||||||||
Lease |
||||||||||||||||||||||||
Commercial |
Residential |
Commercial & |
Financing |
|||||||||||||||||||||
Total | Real Estate | Construction | Real Estate | Industrial | & Other | |||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||
Ending balance attributed to loans:
|
||||||||||||||||||||||||
Collectively evaluated for impairment
|
$ | 38,057 | $ | 16,736 | $ | 6,290 | $ | 9,834 | $ | 4,265 | $ | 932 | ||||||||||||
Individually evaluated for impairment
|
892 | | 850 | 17 | 25 | | ||||||||||||||||||
Total ending balance of allowance
|
$ | 38,949 | $ | 16,736 | $ | 7,140 | $ | 9,851 | $ | 4,290 | $ | 932 | ||||||||||||
Total loans:
|
||||||||||||||||||||||||
Ending balance of loans:
|
||||||||||||||||||||||||
Collectively evaluated for impairment
|
$ | 1,682,696 | $ | 775,087 | $ | 158,680 | $ | 459,582 | $ | 240,700 | $ | 48,647 | ||||||||||||
Individually evaluated for impairment
|
49,555 | 21,166 | 15,689 | 7,744 | 4,563 | $ | 393 | |||||||||||||||||
Total ending balance of loans
|
$ | 1,732,251 | $ | 796,253 | $ | 174,369 | $ | 467,326 | $ | 245,263 | $ | 49,040 | ||||||||||||
18
September 30, 2011 | December 31, 2010 | |||||||||||||||
Past Due |
Past Due |
|||||||||||||||
90 Days and |
90 Days and |
|||||||||||||||
Non-Accrual | Still Accruing | Non-Accrual | Still Accruing | |||||||||||||
Loans:
|
||||||||||||||||
Commercial Real Estate:
|
||||||||||||||||
Owner occupied
|
$ | 5,814 | | $ | 1,942 | $ | 292 | |||||||||
Non owner occupied
|
14,800 | | 13,353 | | ||||||||||||
Construction:
|
||||||||||||||||
Commercial
|
7,237 | | 4,477 | 1,323 | ||||||||||||
Residential
|
10,000 | | 11,212 | | ||||||||||||
Residential:
|
||||||||||||||||
Multifamily
|
3,924 | | 1,437 | | ||||||||||||
1-4 family
|
4,705 | | 4,649 | | ||||||||||||
Home equity
|
3,619 | | 1,658 | 10 | ||||||||||||
Commercial & industrial
|
8,196 | | 4,563 | | ||||||||||||
Other:
|
||||||||||||||||
Lease financing and other
|
241 | | 393 | | ||||||||||||
Overdrafts
|
| | 0 | | ||||||||||||
Total
|
$ | 58,536 | | $ | 43,684 | $ | 1,625 | |||||||||
September 30, 2011 | ||||||||||||||||||||||||
90 Days |
||||||||||||||||||||||||
31-59 Days |
60-89 Days |
Or More |
Total |
|||||||||||||||||||||
Total | Past Due | Past Due | Past Due | Past Due | Current | |||||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
Owner occupied
|
$ | 317,584 | | $ | 394 | $ | 5,814 | $ | 6,208 | $ | 311,376 | |||||||||||||
Non owner occupied
|
500,414 | | 2,546 | 14,800 | 17,346 | 483,068 | ||||||||||||||||||
Construction:
|
||||||||||||||||||||||||
Commercial
|
83,361 | | 3,481 | 7,236 | 10,717 | 72,644 | ||||||||||||||||||
Residential
|
62,321 | | | 10,000 | 10,000 | 52,321 | ||||||||||||||||||
Residential:
|
||||||||||||||||||||||||
Multifamily
|
507,145 | | | 3,924 | 3,924 | 503,221 | ||||||||||||||||||
1-4 family
|
186,872 | $ | 120 | 583 | 4,705 | 5,408 | 181,464 | |||||||||||||||||
Home equity
|
118,186 | 363 | 944 | 3,619 | 4,926 | 113,260 | ||||||||||||||||||
Commercial & industrial
|
221,208 | | 4,178 | 4,264 | 8,442 | 212,766 | ||||||||||||||||||
Other:
|
||||||||||||||||||||||||
Lease financing and other
|
41,171 | 1 | 59 | 241 | 301 | 40,870 | ||||||||||||||||||
Overdrafts
|
1,579 | | | | | 1,579 | ||||||||||||||||||
Total
|
$ | 2,039,841 | $ | 484 | $ | 12,185 | $ | 54,603 | $ | 67,272 | $ | 1,972,569 | ||||||||||||
19
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||
September 30, 2011 | September 30, 2011 | |||||||||||||||||||||||
Pre-Modification |
Post-Modification |
Pre-Modification |
Post-Modification |
|||||||||||||||||||||
Outstanding |
Outstanding |
Outstanding |
Outstanding |
|||||||||||||||||||||
Number |
Recorded |
Recorded |
Number |
Recorded |
Recorded |
|||||||||||||||||||
of Loans | Investment | Investment | of Loans | Investment | Investment | |||||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
Owner occupied
|
3 | $ | 10,701 | $ | 10,701 | 3 | $ | 10,701 | $ | 10,701 | ||||||||||||||
Non owner occupied
|
2 | 6,328 | 6,328 | 5 | 8,640 | 8,640 | ||||||||||||||||||
Construction:
|
||||||||||||||||||||||||
Commercial
|
1 | 579 | 579 | 1 | 579 | 579 | ||||||||||||||||||
Residential
|
| | | | | | ||||||||||||||||||
Residential:
|
||||||||||||||||||||||||
Multifamily
|
| | | 3 | 1,132 | 1,132 | ||||||||||||||||||
1-4 family
|
2 | 1,223 | 909 | 2 | 1,223 | 909 | ||||||||||||||||||
Home equity
|
| | | | | | ||||||||||||||||||
Commercial & industrial
|
2 | 1,832 | 1,832 | 4 | 3,970 | 3,970 | ||||||||||||||||||
Other:
|
||||||||||||||||||||||||
Lease financing and other
|
| | | | | | ||||||||||||||||||
Overdrafts
|
| | | | | | ||||||||||||||||||
Total
|
10 | $ | 20,663 | $ | 20,349 | 18 | $ | 26,245 | $ | 25,931 | ||||||||||||||
20
September 30, 2011 | ||||||||||||||||||||
Special |
||||||||||||||||||||
Total | Pass | Mention | Substandard | Doubtful | ||||||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||
Owner occupied
|
$ | 317,584 | $ | 235,430 | $ | 30,019 | $ | 52,135 | | |||||||||||
Non owner occupied
|
500,414 | 421,506 | 31,337 | 47,571 | | |||||||||||||||
Construction:
|
||||||||||||||||||||
Commercial
|
83,361 | 53,664 | 15,485 | 14,212 | | |||||||||||||||
Residential
|
62,321 | 41,131 | 1,273 | 19,917 | | |||||||||||||||
Residential:
|
||||||||||||||||||||
Multifamily
|
507,145 | 497,307 | 4,201 | 5,637 | | |||||||||||||||
1-4 family
|
101,153 | 79,782 | 7,329 | 14,042 | | |||||||||||||||
Home equity
|
9,970 | | | 9,970 | | |||||||||||||||
Commercial & Industrial
|
221,208 | 201,390 | 5,308 | 14,510 | | |||||||||||||||
Other:
|
||||||||||||||||||||
Lease Financing & Other
|
39,677 | 38,790 | 244 | 643 | | |||||||||||||||
Total loans
|
$ | 1,842,833 | $ | 1,569,000 | $ | 95,196 | $ | 178,637 | | |||||||||||
21
December 31, 2010 | ||||||||||||||||||||
Special |
||||||||||||||||||||
Total | Pass | Mention | Substandard | Doubtful | ||||||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||
Owner occupied
|
$ | 317,926 | $ | 247,210 | $ | 25,164 | $ | 45,552 | | |||||||||||
Non owner occupied
|
478,327 | 406,949 | 42,552 | 25,826 | $ | 3,000 | ||||||||||||||
Construction:
|
||||||||||||||||||||
Commercial
|
104,466 | 79,861 | 5,426 | 19,179 | | |||||||||||||||
Residential
|
69,903 | 48,777 | | 21,126 | | |||||||||||||||
Residential:
|
||||||||||||||||||||
Multifamily
|
152,295 | 139,725 | 2,620 | 9,950 | | |||||||||||||||
1-4 family
|
91,761 | 67,401 | 12,342 | 12,018 | | |||||||||||||||
Home equity
|
12,135 | 6,715 | 249 | 5,171 | | |||||||||||||||
Commercial & Industrial
|
245,262 | 218,088 | 11,559 | 15,615 | | |||||||||||||||
Other:
|
||||||||||||||||||||
Lease Financing & Other
|
43,570 | 41,502 | 332 | 1,736 | | |||||||||||||||
Total loans
|
$ | 1,515,645 | $ | 1,256,228 | $ | 100,244 | $ | 156,173 | $ | 3,000 | ||||||||||
September 30, 2011 | ||||||||||||||||||||||||
90 Days |
||||||||||||||||||||||||
31-59 Days |
60-89 Days |
Or More |
Total |
|||||||||||||||||||||
Total | Past Due | Past Due | Past Due | Past Due | Current | |||||||||||||||||||
Residential:
|
||||||||||||||||||||||||
1-4 family
|
$ | 85,719 | $ | 133 | $ | 115 | | $ | 248 | $ | 85,471 | |||||||||||||
Home equity
|
108,216 | 363 | | | 363 | 107,853 | ||||||||||||||||||
Other:
|
||||||||||||||||||||||||
Other loans
|
1,494 | 1 | | | 1 | 1,493 | ||||||||||||||||||
Overdrafts
|
1,579 | | | | | 1,579 | ||||||||||||||||||
Total loans
|
$ | 197,008 | $ | 497 | $ | 115 | | $ | 612 | $ | 196,396 | |||||||||||||
December 31, 2010 | ||||||||||||||||||||||||
90 Days |
||||||||||||||||||||||||
31-59 Days |
60-89 Days |
Or More |
Total |
|||||||||||||||||||||
Total | Past Due | Past Due | Past Due | Past Due | Current | |||||||||||||||||||
Residential:
|
||||||||||||||||||||||||
1-4 family
|
$ | 95,968 | $ | 1,090 | $ | 413 | | $ | 1,503 | $ | 94,465 | |||||||||||||
Home equity
|
115,167 | 342 | | | 342 | 114,825 | ||||||||||||||||||
Other:
|
||||||||||||||||||||||||
Other loans
|
1,527 | | | | | 1,527 | ||||||||||||||||||
Overdrafts
|
3,944 | | | | | 3,944 | ||||||||||||||||||
Total loans
|
$ | 216,606 | $ | 1,432 | $ | 413 | | $ | 1,845 | $ | 214,761 | |||||||||||||
22
Lease |
||||||||||||||||||||||||
Commercial |
Residential |
Commercial & |
Financing |
|||||||||||||||||||||
Total | Real Estate | Construction | Real Estate | Industrial | & Other | |||||||||||||||||||
Three months ended September 30, 2011:
|
||||||||||||||||||||||||
Average recorded investment in impaired loans
|
$ | 81,776 | $ | 43,526 | $ | 15,802 | $ | 13,580 | $ | 8,623 | $ | 245 | ||||||||||||
Interest Income recognized during impairment
|
$ | 271 | $ | 239 | $ | | $ | 32 | $ | | $ | | ||||||||||||
Three months ended September 30, 2010:
|
||||||||||||||||||||||||
Average recorded investment in impaired loans
|
$ | 68,902 | $ | 27,644 | $ | 23,012 | $ | 15,003 | $ | 1,504 | $ | 1,739 | ||||||||||||
Interest Income recognized during impairment
|
$ | 60 | $ | 60 | $ | | $ | | $ | | $ | | ||||||||||||
Nine months ended September 30, 2011:
|
||||||||||||||||||||||||
Average recorded investment in impaired loans
|
$ | 69,017 | $ | 33,645 | $ | 15,281 | $ | 12,692 | $ | 7,081 | $ | 318 | ||||||||||||
Interest Income recognized during impairment
|
$ | 389 | $ | 357 | $ | | $ | 32 | $ | | $ | | ||||||||||||
Nine months ended September 30, 2010:
|
||||||||||||||||||||||||
Average recorded investment in impaired loans
|
$ | 69,630 | $ | 28,596 | $ | 20,439 | $ | 16,851 | $ | 1,985 | $ | 1,759 | ||||||||||||
Interest Income recognized during impairment
|
$ | 141 | $ | 141 | $ | | $ | | $ | | $ | | ||||||||||||
23
5. | Earnings Per Share |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(000s except share data) | ||||||||||||||||
Numerator:
|
||||||||||||||||
Net income (loss) available to common shareholders for basic and
diluted earnings per share
|
$ | 8,508 | $ | 4,071 | $ | 20,764 | $ | (2,029 | ) | |||||||
Denominator:
|
||||||||||||||||
Denominator for basic earnings per common share
weighted average shares
|
17,692,870 | 17,632,081 | 17,686,866 | 17,629,107 | ||||||||||||
Effect of diluted securities:
|
||||||||||||||||
Stock options
|
14,702 | 67,897 | 46,060 | 0 | ||||||||||||
Denominator for diluted earnings per common share
adjusted weighted average shares
|
17,707,572 | 17,699,978 | 17,732,926 | 17,629,107 | ||||||||||||
Basic earnings per common share
|
$ | 0.48 | $ | 0.23 | $ | 1.17 | $ | (0.12 | ) | |||||||
Diluted earnings per common share
|
$ | 0.48 | $ | 0.23 | $ | 1.17 | $ | (0.12 | ) | |||||||
Dividends declared per share
|
$ | 0.20 | $ | 0.09 | $ | 0.50 | $ | 0.51 |
6. | Benefit Plans |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
Sep 30, | Sep 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Service cost
|
$ | 103 | $ | 75 | $ | 294 | $ | 204 | ||||||||
Interest cost
|
155 | 148 | 449 | 431 | ||||||||||||
Amortization of prior service cost
|
(58 | ) | (47 | ) | (174 | ) | (143 | ) | ||||||||
Amortization of net loss
|
139 | 149 | 418 | 448 | ||||||||||||
Net periodic pension cost
|
$ | 339 | $ | 325 | $ | 987 | $ | 940 | ||||||||
24
7. | Stock-Based Compensation |
Weighted Average |
||||||||||||||||
Weighted Average |
Aggregate Intrinsic |
Remaining Contractual |
||||||||||||||
Shares | Exercise Price | Value (1) ($000s) | Term | |||||||||||||
Outstanding at December 31, 2010
|
700,070 | $ | 23.93 | |||||||||||||
Granted
|
| | ||||||||||||||
Exercised
|
(28,389 | ) | 17.12 | |||||||||||||
Cancelled or Expired
|
(45,429 | ) | 23.96 | |||||||||||||
Outstanding at September 30, 2011
|
626,252 | 24.23 | $ | 409 | 2.6 | |||||||||||
Exercisable at September 30, 2011
|
598,119 | 23.53 | $ | 409 | 2.6 | |||||||||||
Available for future grant
|
1,210,000 | |||||||||||||||
1) | The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current fair value of the underlying stock exceeds the exercise price of the option) 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 changes in the fair value of the Companys stock. |
8. | Fair Value |
25
26
Fair Value Measurements at September 30, 2011 | ||||||||||||||||
Quoted Prices in |
Significant |
Significant |
||||||||||||||
Active Markets |
Other |
Unobservable |
||||||||||||||
for Identical |
Observable Inputs |
Inputs |
||||||||||||||
Assets (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
(000s) | ||||||||||||||||
Measured on a recurring basis:
|
||||||||||||||||
Available for sale securities:
|
||||||||||||||||
U.S. Treasury and government agencies
|
| $ | 3,003 | | $ | 3,003 | ||||||||||
Mortgage-backed securities residential
|
| 367,675 | | 367,675 | ||||||||||||
Obligations of states and political subdivisions
|
| 101,702 | | 101,702 | ||||||||||||
Other debt securities
|
| 520 | $ | 2,654 | 3,174 | |||||||||||
Mutual funds and other equity securities
|
| 10,584 | | 10,584 | ||||||||||||
Total assets at fair value
|
| $ | 483,484 | $ | 2,654 | $ | 486,138 | |||||||||
Measured on a non-recurring basis:
|
||||||||||||||||
Impaired loans:(1)
|
||||||||||||||||
Commercial real estate
|
| | $ | 2,007 | $ | 2,007 | ||||||||||
Construction
|
| | 8,539 | 8,539 | ||||||||||||
Residential
|
| | 6,493 | 6,493 | ||||||||||||
Commercial & Industrial
|
| | 1,969 | 1,969 | ||||||||||||
Other
|
| | 179 | 179 | ||||||||||||
Total impaired loans
|
| | 19,187 | 19,187 | ||||||||||||
Loans held for sale(2)
|
| | 2,244 | 2,244 | ||||||||||||
Other real estate owned(3)
|
| | 924 | 924 | ||||||||||||
Total assets at fair value
|
| | $ | 22,355 | $ | 22,355 | ||||||||||
(1) | Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 2 and Level 3 inputs which include independent appraisals and internally customized discounting criteria. The recorded investment in impaired loans subject to fair value reporting on September 30, 2011 was $20,075 for which a specific allowance of $888 has been established within the allowance for loan losses. The fair values were based on internally customized discounting criteria of the collateral and thus classified as Level 3 fair values. | |
(2) | Loans held for sale are reported at lower of cost or fair value. Fair value is based on average bid indicators received from third parties expected to participate in the loan sales. | |
(3) | Other real estate owned is reported at lower of cost or fair value less anticipated costs to sell. Fair value is based on third party or internally developed appraisals which, considering the assumptions in the valuation, are considered Level 2 or Level 3 inputs. The fair value of other real estate owned at September 30, 2011 was derived by management from appraisals which used various assumptions and were discounted as necessary, resulting in a Level 3 classification. |
27
Fair Value Measurements at December 31, 2010 | ||||||||||||||||
Quoted Prices in |
Significant |
Significant |
||||||||||||||
Active Markets |
Other |
Unobservable |
||||||||||||||
for Identical |
Observable Inputs |
Inputs |
||||||||||||||
Assets (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
(000s) | ||||||||||||||||
Measured on a recurring basis:
|
||||||||||||||||
Available for sale securities:
|
||||||||||||||||
U.S. Treasury and government agencies
|
| $ | 3,012 | | $ | 3,012 | ||||||||||
Mortgage-backed securities residential
|
| 309,540 | | 309,540 | ||||||||||||
Obligations of states and political subdivisions
|
| 116,081 | | 116,081 | ||||||||||||
Other debt securities
|
| 686 | $ | 3,687 | 4,373 | |||||||||||
Mutual funds and other equity securities
|
| 10,661 | | 10,661 | ||||||||||||
Total assets at fair value
|
| $ | 439,980 | $ | 3,687 | $ | 443,667 | |||||||||
Measured on a non-recurring basis:
|
||||||||||||||||
Impaired loans:(1)
|
||||||||||||||||
Commercial real estate
|
| | $ | 2,805 | $ | 2,805 | ||||||||||
Construction
|
| | 10,806 | 10,806 | ||||||||||||
Residential
|
| | 3,373 | 3,373 | ||||||||||||
Commercial & Industrial
|
| | 1,420 | 1,420 | ||||||||||||
Other
|
| | 190 | 190 | ||||||||||||
Total impaired loans
|
| | 18,594 | 18,594 | ||||||||||||
Loans held for sale(2)
|
| | 7,811 | 7,811 | ||||||||||||
Other real estate owned(3)
|
| | 11,028 | 11,028 | ||||||||||||
Total assets at fair value
|
| $ | | $ | 37,433 | $ | 37,433 | |||||||||
(1) | Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 2 and Level 3 inputs which include independent appraisals and internally customized discounting criteria. The recorded investment in impaired loans subject to fair value reporting on December 31, 2010 was $19,486 for which a specific allowance of $892 has been established within the allowance for loan losses. The fair values were based on internally customized discounting criteria of the collateral and thus classified as Level 3 fair values. | |
(2) | Loans held for sale are reported at lower of cost or fair value. Fair value is based on average bid indicators received from third parties expected to participate in the loan sales. | |
(3) | Other real estate owned is reported at lower of cost or fair value less anticipated costs to sell. Fair value is based on third party or internally developed appraisals which, considering the assumptions in the valuation, are considered Level 2 or Level 3 inputs. The fair value of other real estate owned at December 31, 2010 was derived by management from appraisals which used various assumptions and were discounted as necessary, resulting in a Level 3 classification. |
28
Level 3 Assets Measured on a Recurring Basis | ||||||||||||||||
For the three months |
For the nine months |
|||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(000s) | (000s) | |||||||||||||||
Balance at beginning of period
|
$ | 2,923 | $ | 2,629 | $ | 3,687 | $ | 3,938 | ||||||||
Transfers into (out of) Level 3
|
93 | 87 | 289 | 256 | ||||||||||||
Net unrealized gain (loss) included in other comprehensive income
|
(242 | ) | 245 | (995 | ) | 1,050 | ||||||||||
Principal payments
|
| | (3 | ) | | |||||||||||
Recognized impairment charge included in the statement of income
|
(119 | ) | (75 | ) | (323 | ) | (2,358 | ) | ||||||||
Balance at end of period
|
$ | 2,655 | $ | 2,886 | $ | 2,655 | $ | 2,886 | ||||||||
9. | Fair Value of Financial Instruments |
September 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying |
Estimated |
Carrying |
Estimated |
|||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
(In millions) | ||||||||||||||||
Assets:
|
||||||||||||||||
Financial assets for which carrying value approximates fair value
|
$ | 290.6 | $ | 290.6 | $ | 356.2 | $ | 356.2 | ||||||||
Held to maturity securities and accrued interest
|
13.8 | 14.7 | 16.3 | 17.3 | ||||||||||||
FHLB Stock
|
3.8 | N/A | 7.0 | N/A | ||||||||||||
Loan and accrued interest
|
2,025.1 | 2,079.7 | 1,717.8 | 1,759.8 | ||||||||||||
Liabilities:
|
||||||||||||||||
Deposits with no stated maturity and accrued interest
|
2,373.0 | 2,373.0 | 2,047.4 | 2,047.4 | ||||||||||||
Time deposits and accrued interest
|
158.0 | 158.5 | 188.5 | 188.9 | ||||||||||||
Securities sold under repurchase agreements and other short-term
borrowing and accrued interest
|
46.6 | 46.6 | 36.6 | 36.6 | ||||||||||||
Other borrowings and accrued interest
|
16.6 | 14.0 | 88.2 | 85.6 |
29
10. | Recent Accounting Pronouncements |
30
31
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
32
33
34
Three Months Ended September 30, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average |
Yield/ |
Average |
Yield/ |
|||||||||||||||||||||
Balance | Interest(3) | Rate | Balance | Interest(3) | Rate | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest earning assets:
|
||||||||||||||||||||||||
Deposits in Banks
|
$ | 234,589 | $ | 154 | 0.26 | % | $ | 373,553 | $ | 260 | 0.28 | % | ||||||||||||
Federal funds sold
|
39,971 | 24 | 0.24 | 84,112 | 45 | 0.21 | ||||||||||||||||||
Securities:(1)
|
||||||||||||||||||||||||
Taxable
|
378,157 | 2,778 | 2.94 | 365,119 | 3,354 | 3.67 | ||||||||||||||||||
Exempt from federal income taxes
|
103,638 | 1,522 | 5.87 | 142,292 | 2,032 | 5.71 | ||||||||||||||||||
Loans, net(2)
|
1,928,888 | 28,641 | 5.94 | 1,693,859 | 26,557 | 6.27 | ||||||||||||||||||
Total interest earning assets
|
2,685,243 | 33,119 | 4.93 | 2,658,935 | 32,248 | 4.85 | ||||||||||||||||||
Non interest earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
48,290 | 46,877 | ||||||||||||||||||||||
Other assets
|
135,965 | 135,884 | ||||||||||||||||||||||
Total non interest earning assets
|
184,255 | 182,761 | ||||||||||||||||||||||
Total assets
|
$ | 2,869,498 | $ | 2,841,696 | ||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||||||||||||||
Interest bearing liabilities:
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Money market
|
$ | 999,130 | $ | 1,557 | 0.62 | % | $ | 955,296 | $ | 2,050 | 0.86 | % | ||||||||||||
Savings
|
111,358 | 116 | 0.42 | 118,399 | 143 | 0.48 | ||||||||||||||||||
Time
|
163,830 | 357 | 0.87 | 202,934 | 609 | 1.20 | ||||||||||||||||||
Checking with interest
|
309,694 | 196 | 0.25 | 337,006 | 223 | 0.26 | ||||||||||||||||||
Securities sold under repo & other s/t borrowings
|
53,100 | 68 | 0.51 | 56,109 | 69 | 0.49 | ||||||||||||||||||
Other borrowings
|
23,652 | 254 | 4.30 | 102,760 | 1,190 | 4.63 | ||||||||||||||||||
Total interest bearing liabilities
|
1,660,764 | 2,548 | 0.61 | 1,772,504 | 4,284 | 0.97 | ||||||||||||||||||
Non interest bearing liabilities:
|
||||||||||||||||||||||||
Demand deposits
|
884,347 | 772,954 | ||||||||||||||||||||||
Other liabilities
|
25,770 | 13,148 | ||||||||||||||||||||||
Total non interest bearing liabilities
|
910,117 | 786,102 | ||||||||||||||||||||||
Stockholders equity(1)
|
298,617 | 283,090 | ||||||||||||||||||||||
Total liabilities and stockholders equity
|
$ | 2,869,498 | $ | 2,841,696 | ||||||||||||||||||||
Net interest earnings
|
$ | 30,571 | $ | 27,964 | ||||||||||||||||||||
Net yield on interest earning assets
|
4.55 | % | 4.21 | % |
35
Nine Months Ended September 30, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average |
Yield/ |
Average |
Yield/ |
|||||||||||||||||||||
Balance | Interest(3) | Rate | Balance | Interest(3) | Rate | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest earning assets:
|
||||||||||||||||||||||||
Deposits in Banks
|
$ | 253,829 | $ | 519 | 0.27 | % | $ | 291,067 | $ | 519 | 0.24 | % | ||||||||||||
Federal funds sold
|
42,190 | 73 | 0.23 | 78,095 | 123 | 0.21 | ||||||||||||||||||
Securities:(1)
|
||||||||||||||||||||||||
Taxable
|
359,008 | 8,875 | 3.30 | 371,305 | 10,601 | 3.81 | ||||||||||||||||||
Exempt from federal income taxes
|
109,837 | 5,077 | 6.16 | 159,258 | 7,157 | 5.99 | ||||||||||||||||||
Loans, net(2)
|
1,832,866 | 82,914 | 6.03 | 1,727,807 | 81,248 | 6.27 | ||||||||||||||||||
Total interest earning assets
|
2,597,730 | 97,458 | 5.00 | 2,627,532 | 99,648 | 5.06 | ||||||||||||||||||
Non interest earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
46,501 | 45,898 | ||||||||||||||||||||||
Other assets
|
143,107 | 138,609 | ||||||||||||||||||||||
Total non interest earning assets
|
189,608 | 184,507 | ||||||||||||||||||||||
Total assets
|
$ | 2,787,338 | $ | 2,812,039 | ||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||||||||||||||
Interest bearing liabilities:
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Money market
|
$ | 946,616 | $ | 4,699 | 0.66 | % | $ | 935,851 | $ | 6,397 | 0.91 | % | ||||||||||||
Savings
|
112,907 | 358 | 0.42 | 114,520 | 404 | 0.47 | ||||||||||||||||||
Time
|
172,634 | 1,176 | 0.91 | 206,351 | 1,948 | 1.26 | ||||||||||||||||||
Checking with interest
|
293,660 | 557 | 0.25 | 342,335 | 930 | 0.36 | ||||||||||||||||||
Securities sold under repo & other s/t borrowings
|
46,102 | 172 | 0.50 | 60,995 | 217 | 0.47 | ||||||||||||||||||
Other borrowings
|
48,176 | 1,599 | 4.43 | 114,924 | 4,128 | 4.79 | ||||||||||||||||||
Total interest bearing liabilities
|
1,620,095 | 8,561 | 0.70 | 1,774,976 | 14,024 | 1.05 | ||||||||||||||||||
Non interest bearing liabilities:
|
||||||||||||||||||||||||
Demand deposits
|
848,834 | 728,005 | ||||||||||||||||||||||
Other liabilities
|
24,106 | 18,442 | ||||||||||||||||||||||
Total non interest bearing liabilities
|
872,940 | 746,447 | ||||||||||||||||||||||
Stockholders equity(1)
|
294,303 | 290,616 | ||||||||||||||||||||||
Total liabilities and stockholders equity
|
$ | 2,787,338 | $ | 2,812,039 | ||||||||||||||||||||
Net interest earnings
|
$ | 88,897 | $ | 85,624 | ||||||||||||||||||||
Net yield on interest earning assets
|
4.56 | % | 4.34 | % |
(1) | Excludes unrealized gains (losses) on securities available for sale. Management believes that this presentation more closely reflects actual performance, as it is more consistent with the Companys stated asset/liability management strategies, which have not resulted in significant realization of temporary market gains or losses on securities available for sale which were primarily related to changes in interest rates. Effects of these adjustments are presented in the table below. | |
(2) | Includes loans classified as non-accrual. | |
(3) | The data contained in the tables has been adjusted to a tax equivalent basis, based on the Companys federal statutory rate of 35 percent. Management believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. Effects of these adjustments are presented in the table below. |
36
Three Months Ended |
Nine Months Ended |
|||||||||||||||
Sep 30, | Sep 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(000s) | (000s) | |||||||||||||||
Total interest earning assets:
|
||||||||||||||||
As reported
|
$ | 2,687,904 | $ | 2,664,979 | $ | 2,598,798 | $ | 2,632,076 | ||||||||
Unrealized gain on securities available for sale(1)
|
2,661 | 6,044 | 1,068 | 4,544 | ||||||||||||
Adjusted total interest earning assets
|
$ | 2,685,243 | $ | 2,658,935 | $ | 2,597,730 | $ | 2,627,532 | ||||||||
Net interest earnings:
|
||||||||||||||||
As reported
|
$ | 30,038 | $ | 27,253 | $ | 87,120 | $ | 83,119 | ||||||||
Adjustment to tax equivalency basis(2)
|
533 | 711 | 1,777 | 2,505 | ||||||||||||
Adjusted net interest earnings
|
$ | 30,571 | $ | 27,964 | $ | 88,897 | $ | 85,624 | ||||||||
Net yield on interest earning assets:
|
||||||||||||||||
As reported
|
4.47 | % | 4.09 | % | 4.47 | % | 4.21 | % | ||||||||
Effects of(1) and(2) above
|
0.08 | % | 0.12 | % | 0.09 | % | 0.13 | % | ||||||||
Adjusted net yield on interest earning assets
|
4.55 | % | 4.21 | % | 4.56 | % | 4.34 | % | ||||||||
Average stockholders equity:
|
||||||||||||||||
As reported
|
$ | 300,338 | $ | 286,849 | $ | 295,084 | $ | 293,454 | ||||||||
Effects of(1) and(2) above
|
1,721 | 3,759 | 781 | 2,838 | ||||||||||||
Adjusted average stockholders equity
|
$ | 298,617 | $ | 283,090 | $ | 294,303 | $ | 290,616 | ||||||||
(000s) | (000s) | |||||||||||||||||||||||
Three Month Period Increase |
Nine Month Period Increase |
|||||||||||||||||||||||
(Decrease) Due to Change in | (Decrease) Due to Change in | |||||||||||||||||||||||
Volume | Rate | Total(1) | Volume | Rate | Total(1) | |||||||||||||||||||
Interest income:
|
||||||||||||||||||||||||
Deposits in Banks
|
$ | (97 | ) | $ | (9 | ) | $ | (106 | ) | $ | (66 | ) | $ | 66 | $ | | ||||||||
Federal funds sold
|
(24 | ) | 3 | (21 | ) | (57 | ) | 7 | (50 | ) | ||||||||||||||
Securities:
|
||||||||||||||||||||||||
Taxable
|
120 | (696 | ) | (576 | ) | (351 | ) | (1,375 | ) | (1,726 | ) | |||||||||||||
Exempt from federal income taxes
|
(552 | ) | 42 | (510 | ) | (2,221 | ) | 141 | (2,080 | ) | ||||||||||||||
Loans, net
|
3,685 | (1,601 | ) | 2,084 | 4,940 | (3,274 | ) | 1,666 | ||||||||||||||||
Total interest income
|
3,132 | (2,261 | ) | 871 | 2,245 | (4,435 | ) | (2,190 | ) | |||||||||||||||
Interest expense:
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Money market
|
94 | (587 | ) | (493 | ) | 74 | (1,772 | ) | (1,698 | ) | ||||||||||||||
Savings
|
(9 | ) | (18 | ) | (27 | ) | (6 | ) | (40 | ) | (46 | ) | ||||||||||||
Time
|
(117 | ) | (135 | ) | (252 | ) | (318 | ) | (454 | ) | (772 | ) | ||||||||||||
Checking with interest
|
(18 | ) | (9 | ) | (27 | ) | (132 | ) | (241 | ) | (373 | ) | ||||||||||||
Securities sold under repo & other s\t borrowings
|
(4 | ) | 3 | (1 | ) | (53 | ) | 8 | (45 | ) | ||||||||||||||
Other borrowings
|
(916 | ) | (20 | ) | (936 | ) | (2,398 | ) | (131 | ) | (2,529 | ) | ||||||||||||
Total interest expense
|
(970 | ) | (766 | ) | (1,736 | ) | (2,833 | ) | (2,630 | ) | (5,463 | ) | ||||||||||||
Increase (decrease) in interest differential
|
$ | 4,102 | $ | (1,495 | ) | $ | 2,607 | $ | 5,078 | $ | (1,805 | ) | $ | 3,273 | ||||||||||
(1) | Changes attributable to both rate and volume are allocated between the rate and volume variances based upon their absolute relative weight to the total change. |
37
(2) | Equivalent yields on securities exempt from federal income taxes are based on a federal statutory rate of 35 percent in 2011 and 2010. |
38
39
Three Months Ended |
Nine Months Ended |
|||||||||||||||
Sep 30, | Sep 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Average interest rate on:
|
||||||||||||||||
Total average interest earning assets
|
4.93 | % | 4.85 | % | 5.00 | % | 5.06 | % | ||||||||
Total average interest bearing liabilities
|
0.61 | % | 0.97 | % | 0.70 | % | 1.05 | % | ||||||||
Total interest rate spread
|
4.32 | % | 3.88 | % | 4.30 | % | 4.01 | % |
40
| Decrease of $54,000 (36.4%) and increase of $189,000 (174.9%), respectively, in other insurance expense, resulting from reductions in the estimates of the net cost of certain life insurance policies due partially offset by an increase in blanket bond insurance costs, | |
| Decrease of $13,000 (11.6%) and increase of $43,000 (14.7%), respectively, in stationary and printing costs, due to consumption levels, | |
| Increases of $40,000 (20.8%) and $103,000 (17.2%) in courier costs, due to increased utilization in 2011, | |
| Increases of $1,000 (0.5%) and $28,000 (2.8%) in other loan expenses, primarily due to costs associated with properties held as other real estate owned and asset recovery costs, | |
| Increases of $331,000 (84.5%) and $629,000 (48.9%) in outside services, due to outsourcing of several data processing functions, | |
| Increases of $31,000 (166.7%) and $94,000 (166.7%) in meetings and seminars, due to reflecting reduced participation in such events in 2010. |
41
42
September 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
Real Estate:
|
||||||||
Commercial
|
$ | 817,998 | $ | 796,253 | ||||
Construction
|
145,682 | 174,369 | ||||||
Residential
|
812,203 | 467,326 | ||||||
Commercial & Industrial
|
221,208 | 245,263 | ||||||
Individuals & lease financing
|
42,750 | 49,040 | ||||||
Total loans
|
2,039,841 | 1,732,251 | ||||||
Deferred loan fees
|
(4,033 | ) | (4,115 | ) | ||||
Allowance for loan losses
|
(42,150 | ) | (38,949 | ) | ||||
Loans, net
|
$ | 1,993,658 | $ | 1,689,187 | ||||
43
Sep 30, |
Jun 30, |
Mar 31, |
Dec 31, |
Sep 30, |
||||||||||||||||
2011 | 2011 | 2011 | 2010 | 2010 | ||||||||||||||||
Loans Past Due 90 Days or More and Still Accruing:
|
||||||||||||||||||||
Real Estate:
|
||||||||||||||||||||
Commercial
|
| | | $ | 292 | | ||||||||||||||
Construction
|
| | | 1,323 | | |||||||||||||||
Residential
|
| | | | $ | 197 | ||||||||||||||
Total Real Estate
|
| | | 1,615 | 197 | |||||||||||||||
Commercial & Industrial
|
| | | 10 | | |||||||||||||||
Lease Financing and Individuals
|
| | | | | |||||||||||||||
Total Loans Past Due 90 Days or More and Still Accruing
|
| | | 1,625 | 197 | |||||||||||||||
Non-Accrual Loans:
|
||||||||||||||||||||
Real Estate:
|
||||||||||||||||||||
Commercial
|
$ | 20,614 | $ | 20,778 | $ | 19,184 | 15,295 | 14,672 | ||||||||||||
Construction
|
17,237 | 13,785 | 15,305 | 15,689 | 14,405 | |||||||||||||||
Residential
|
12,248 | 13,755 | 13,745 | 7,744 | 10,038 | |||||||||||||||
Total Real Estate
|
50,099 | 48,318 | 48,234 | 38,728 | 39,115 | |||||||||||||||
Commercial & Industrial
|
8,196 | 9,050 | 5,546 | 4,563 | 2,410 | |||||||||||||||
Lease Financing and Individuals
|
241 | 249 | 653 | 393 | 393 | |||||||||||||||
Total Non-Accrual Loans
|
58,536 | 57,617 | 54,433 | 43,684 | 41,918 | |||||||||||||||
Other Real Estate Owned
|
924 | 2,370 | 4,810 | 11,028 | 9,393 | |||||||||||||||
Nonperforming Assets excluding loans held for sale
|
59,460 | 59,987 | 59,243 | 56,337 | 51,508 | |||||||||||||||
Nonperforming loans held for sale
|
2,244 | 4,506 | 5,506 | 7,811 | 21,864 | |||||||||||||||
Total Nonperforming Assets including loans held for sale
|
$ | 61,704 | $ | 64,493 | $ | 64,749 | $ | 64,148 | $ | 73,372 | ||||||||||
Net (recoveries) charge-offs during quarter
|
$ | 2,276 | $ | (56 | ) | $ | 4,113 | $ | 3,763 | $ | 16,813 | |||||||||
Nonperforming assets to total assets:
|
||||||||||||||||||||
Excluding loans held for sale
|
2.03 | % | 2.13 | % | 2.23 | % | 2.11 | % | 1.82 | % | ||||||||||
Including loans held for sale
|
2.11 | % | 2.29 | % | 2.44 | % | 2.40 | % | 2.59 | % |
44
| Non-accrual commercial real estate loans increased $5.3 million resulting from the transfer of nineteen loans totaling $11.1 million, which was partially offset by the charge-off of three loan totaling $0.2 million, payoffs of eleven loans totaling $5.5 million and principal payments of $0.2 million. | |
| Non-accrual construction loans increased $1.5 million, resulting from the payoff of six loans totaling $4.6 million, full or partial charge-offs taken on eight loans totaling $0.9 million and the transfer of one loan totaling $0.9 million to other real estate owned which was offset by the transfer of six loans totaling $7.9 million. | |
| Non-accrual residential loans increased $4.5 million resulting from the transfer of 23 loans totaling $12.5 million which was partially offset by full or partial charge-offs taken on thirteen loans totaling $5.2 million, principal payments of $1.4 million, three loans for $1.1 million returning to accrual status and the transfer of one loan totaling $0.3 million to non-performing TDR status. | |
| Non-accrual commercial and industrial loans increased $3.6 million resulting from the transfer of 21 loans totaling $6.8 million which was partially offset by full or partial charge offs of nineteen loans totaling $3.0 million, the payoff of two loans totaling $0.9 million, principal payments of $1.0 million and the transfer of six loans totaling $0.9 million from non-performing TDR status. | |
| Non-accrual loans to individuals decreased $0.2 million resulting from the transfer of six loans totaling $0.5 million, which was offset by charge-offs of $0.1 million and the transfer of four loans totaling $0.6 million to non-performing TDR status. | |
| Other real estate owned decreased $10.1 million resulting from the sale of four properties totaling $10.7 million and valuation adjustments of $0.2 million taken on two properties which was partially offset by the addition of one property totaling $0.9 million. |
45
(000s) | ||||||||||||
Change |
||||||||||||
September 30, |
During |
December 31, |
||||||||||
2011 | 2011 | 2010 | ||||||||||
Components
|
||||||||||||
Specific:
|
||||||||||||
Real Estate:
|
||||||||||||
Commercial
|
| | | |||||||||
Construction
|
$ | 863 | $ | 13 | $ | 850 | ||||||
Residential
|
| (17 | ) | 17 | ||||||||
Commercial and Industrial
|
25 | | 25 | |||||||||
Lease Financing and other
|
| | | |||||||||
Total Specific Component
|
888 | (4 | ) | 892 | ||||||||
Formula:
|
||||||||||||
Real Estate:
|
||||||||||||
Commercial
|
16,371 | (365 | ) | 16,736 | ||||||||
Construction
|
5,363 | (927 | ) | 6,290 | ||||||||
Residential
|
14,349 | 4,515 | 9,834 | |||||||||
Commercial and Industrial
|
4,267 | 2 | 4,265 | |||||||||
Lease Financing and other
|
912 | (20 | ) | 932 | ||||||||
Total Formula Component
|
41,262 | 3,205 | 38,057 | |||||||||
Total Allowance
|
$ | 42,150 | $ | 38,949 | ||||||||
Net Change
|
3,201 | |||||||||||
Net Charge-offs
|
6,332 | |||||||||||
Provision for loan losses
|
$ | 9,533 | ||||||||||
46
(000s) | ||||||||||||
Change |
||||||||||||
September 30, |
During |
December 31, |
||||||||||
2010 | 2010 | 2009 | ||||||||||
Components
|
||||||||||||
Specific:
|
||||||||||||
Real Estate:
|
||||||||||||
Commercial
|
| | | |||||||||
Construction
|
$ | 236 | $ | 111 | $ | 125 | ||||||
Residential
|
357 | (2,121 | ) | 2,478 | ||||||||
Commercial and Industrial
|
25 | (471 | ) | 496 | ||||||||
Lease Financing and other
|
198 | (277 | ) | 475 | ||||||||
Total Specific Component
|
816 | (2,758 | ) | 3,574 | ||||||||
Formula:
|
||||||||||||
Real Estate:
|
||||||||||||
Commercial
|
16,271 | 998 | 15,273 | |||||||||
Construction
|
5,715 | 38 | 5,677 | |||||||||
Residential
|
9,106 | 1,878 | 7,228 | |||||||||
Commercial and Industrial
|
4,943 | (1,887 | ) | 6,830 | ||||||||
Lease Financing and other
|
35 | (28 | ) | 63 | ||||||||
Total Formula Component
|
36,070 | 999 | 35,071 | |||||||||
Total Allowance
|
$ | 36,886 | $ | 38,645 | ||||||||
Net Change
|
(1,759 | ) | ||||||||||
Net Charge-offs
|
42,461 | |||||||||||
Provision for loan losses
|
$ | 40,702 | ||||||||||
47
| Economic and business conditions Although current indicators clearly show that the economy has begun to turn around, recovery is still expected to be a slow process. There is continued volatility in real estate values, particularly in the Companys market areas, and the availability of mortgage financing is still limited and nonperforming loans have increased. As a result Company has continued to include additional factors for adverse economic and business conditions in the determination of the formula component of the allowance. | |
| Concentration The primary collateral for the Companys loans is real estate, particularly commercial real estate. The economic downturn has had a severe negative effect on activity and values throughout the real estate industry, which has heightened risk associated with this concentration. Therefore, consideration of the changes in levels of risk associated with concentrations resulting from adverse conditions in the marketplace is part of the determination of the formula component of the allowance. As a result of charge-offs, paydowns and reduced production of new loans, concentrations in construction loans have been significantly reduced, concentrations in commercial real estate loans have grown slightly, In addition, the Company has significantly increased its portfolio of local-area multifamily loans. Changes in these concentrations were considered in the determination of the formula component of the allowance. | |
| Collateral Values Activity in commercial and residential real estate continues to be extremely soft, and there has been little improvement in collateral values in the Companys primary market areas. As a result, additional collateral value factors both for Real Estate and for all other parts of the portfolio continue to be included in the determination of the formula component of the allowance. | |
| Asset quality Changes in the amount of nonperforming loans, classified loans, delinquencies, and the results of the Companys periodic loan review process are also considered in the process of determining the formula component. During 2011, the lagging effects of the economic downturn within the economy and our local market area have continued, however the levels of charge-offs have reduced substantially from 2010 levels. Changes in asset quality are considered in the determination of the formula component of the allowance. |
48
(000s) | ||||||||||||
September 30, |
December 31, |
|||||||||||
2011 | 2010 | Increase (Decrease) | ||||||||||
Demand deposits
|
$ | 884,306 | $ | 756,917 | $ | 127,389 | ||||||
Money market accounts
|
1,040,354 | 862,450 | 177,904 | |||||||||
Savings accounts
|
112,667 | 120,238 | (7,571 | ) | ||||||||
Time deposits of $100,000 or more
|
116,416 | 144,497 | (28,289 | ) | ||||||||
Time deposits of less than $100,000
|
41,470 | 43,851 | (2,173 | ) | ||||||||
Checking with interest
|
334,455 | 306,459 | 27,996 | |||||||||
Total Deposits
|
$ | 2,529,668 | $ | 2,234,412 | $ | 295,256 | ||||||
Minimum to be |
Enhanced Capital Requirements |
|||||||||||||||
September 30, |
December 31, |
Considered |
Effective |
|||||||||||||
2011 | 2010 | Well Capitalized | as of December 31, 2009 | |||||||||||||
Leverage ratio:
|
||||||||||||||||
Company
|
9.7 | % | 9.6 | % | 5.0 | % | N/A | |||||||||
HVB
|
9.2 | 8.8 | 5.0 | 8.0 | % | |||||||||||
Tier 1 capital:
|
||||||||||||||||
Company
|
12.7 | % | 13.9 | % | 6.0 | % | N/A | |||||||||
HVB
|
12.1 | 12.8 | 6.0 | 10.0 | % | |||||||||||
Total capital:
|
||||||||||||||||
Company
|
14.0 | % | 15.2 | % | 10.0 | % | N/A | |||||||||
HVB
|
13.4 | 14.0 | 10.0 | 12.0 | % |
49
50
| further increases in our non-performing loans and allowance for loan losses; | |
| ineffectiveness in managing our commercial real estate portfolio; | |
| lower than expected future performance of our investment portfolio; | |
| a lack of opportunities for growth, plans for expansion (including opening new branches) and increased or unexpected competition in attracting and retaining customers; | |
| continued poor economic conditions generally and in our market area in particular, which may adversely affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans; | |
| lower than expected demand for our products and services; | |
| possible impairment of our goodwill and other intangible assets; | |
| other-than-temporary impairment charges on our investment securities; | |
| our inability to manage interest rate risk; | |
| increased expense and burdens resulting from the regulatory environment in which we operate and our ability to comply with existing and future regulatory requirements; | |
| our inability to maintain regulatory capital above the levels required by the Office of the Comptroller of the Currency, or the OCC, for Hudson Valley Bank and the levels required for us to be well-capitalized, or such higher capital levels as may be required; | |
| proposed legislative and regulatory action may adversely affect us and the financial services industry; | |
| legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations) may subject us to additional regulatory oversight which may result in increased compliance costs and/or require us to change our business model; |
51
| potential increases or changes in competition among financial institutions and potential increases in interest expense resulting from the FRBs recent repeal of Regulation Q, which will permit banks to offer interest-bearing demand deposit accounts to commercial customers; | |
| future increased Federal Deposit Insurance Corporation, or FDIC, special assessments or changes to regular assessments; | |
| our inability to raise additional capital in the future; | |
| potential liabilities under federal and state environmental laws; and | |
| limitations on dividends payable by Hudson Valley or Hudson Valley Bank. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
52
Percentage Change |
||||||||
in Estimated |
||||||||
Net Interest |
||||||||
Income from |
||||||||
September 30, |
||||||||
Gradual Change in Interest Rates | 2011 | Policy Limit | ||||||
+200 basis points
|
0.0 | % | (5.0 | )% | ||||
−100 basis points
|
(1.2 | )% | (5.0 | )% |
Item 4. | Controls and Procedures |
53
Item 1A. | Risk Factors |
Item 6. | Exhibits |
3 | .1 | Restated Certificate of Incorporation of Hudson Valley Holding Corp.(1) | ||
3 | .2 | Amended and Restated By-Laws of Hudson Valley Holding Corp.(2) | ||
31 | .1 | Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | ||
31 | .2 | Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | ||
32 | .1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). | ||
32 | .2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). | ||
101 | .INS | XBRL Instance Document(3) | ||
101 | .SCH | XBRL Taxonomy Extension Schema(3) | ||
101 | .CAL | XBRL Taxonomy Extension Calculation Linkbase(3) | ||
101 | .LAB | XBRL Taxonomy Extension Label Linkbase(3) | ||
101 | .PRE | XBRL Taxonomy Extension Presentation Linkbase(3) | ||
101 | .DEF | XBRL Taxonomy Extension Definition Linkbase(3) |
(1) | Incorporated herein by reference in this document to the Form 10-Q filed on October 20, 2009. | |
(2) | Incorporated herein by reference in this document to the Form 8-K filed on April 28, 2010. | |
(3) | Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or section 34(b) of the Investment Company Act of 1940, as amended, and otherwise is not subject to liability under these sections. |
54
By: |
/s/ Stephen
R. Brown
|
55
Consolidated Statements of Income (Unaudited) (Parenthetical) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Non Interest Income: | ||||
Recognized impairment charge on securities available for sale less losses on securities | $ 361 | $ 172 | $ 1,318 | $ 2,841 |
Recognized impairment charge on securities available for sale | $ 242 | $ 247 | $ 995 | $ 483 |
Document and Entity Information (USD $) | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Nov. 01, 2011 | Jun. 30, 2010 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | HUDSON VALLEY HOLDING CORP | ||
Entity Central Index Key | 0000722256 | ||
Document Type | 10-Q | ||
Document Period End Date | Sep. 30, 2011 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 268,028,000 | ||
Entity Common Stock, Shares Outstanding | 17,696,625 |
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Securities | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities |
The following tables set forth the amortized cost, gross
unrealized gains and losses and the estimated fair value of
securities classified as available for sale and held to maturity
at September 30, 2011 and December 31, 2010 (in
thousands):
September 30,
2011
December 31,
2010
Included in other debt securities are investments in six pooled
trust preferred securities with amortized costs and estimated
fair values of $11,600 and $2,654, respectively, at
September 30, 2011. These investments represent trust
preferred obligations of banking industry companies. The value
of these investments has been severely negatively affected by
the recent downturn in the economy and increased investor
concerns about recent and potential future losses in the
financial services industry. These investments are rated below
investment grade by Moody’s Investor Services at
September 30, 2011 with ratings ranging from Caa1 to C. In
light of these conditions, these investments were reviewed for
other-than-temporary
impairment.
In estimating OTTI losses, the Company considers: (1) the
length of time and extent that fair value has been less than
cost, (2) the financial condition and near term prospects
of the issuers, (3) whether the Company intends to sell or
whether it is more likely than not that the Company would be
required to sell the investments prior to recovery of cost and
(4) evaluation of cash flows to determine if they have been
adversely affected.
The Company uses a discounted cash flow (“DCF”)
analysis to provide an estimate of an OTTI loss. Inputs to the
discount model included known defaults and interest deferrals,
projected additional default rates, projected additional
deferrals of interest, over-collateralization tests, interest
coverage tests and other factors. Expected default and deferral
rates were weighted toward the near future to reflect the
current adverse economic environment affecting the banking
industry. The discount rate was based upon the yield expected
from the related securities.
Significant inputs to the cash flow models used in determining
credit related
other-than-temporary
impairment losses on pooled trust preferred securities as of
September 30, 2011 included the following:
The following table summarizes the change in pretax OTTI credit
related losses on securities available for sale for the nine
month period ended September 30, 2011 and 2010 (in
thousands):
During the nine month period ended September 30, 2011,
pretax OTTI losses of $161, $72, $39, $50 and $1, respectively,
were recognized on five pooled trust preferred securities which
prior to the 2011 charges had book values of $2,208, $5,583,
$949, $2,180 and $656, respectively. These OTTI losses resulted
from adverse changes in the expected cash flows of these
securities which indicated that the Company may not recover the
entire cost basis of these investments. Continuation or
worsening of current adverse economic conditions may result in
further impairment charges in the future.
The following tables reflect the Company’s
investment’s fair value and gross unrealized loss,
aggregated by investment category and length of time the
individual securities have been in a continuous unrealized loss
position, as of September 30, 2011 and December 31,
2010 (in thousands):
September 30,
2011
There were no securities classified as held to maturity in an
unrealized loss position at September 30, 2011.
December 31,
2010
The total number of securities in the Company’s portfolio
that were in an unrealized loss position was 77 and 90,
respectively, at September 30, 2011 and December 31,
2010. The Company has determined that it does not intend to
sell, or it is more likely than not that it will be required to
sell, its securities that are in an unrealized loss position
prior to the recovery of its amortized cost basis. With the
exception of the investment in pooled trust preferred securities
discussed above, the Company believes that its securities
continue to have satisfactory ratings, are readily marketable
and that current unrealized losses are primarily a result of
changes in interest rates. Therefore, management does not
consider these investments to be
other-than-temporarily
impaired at September 30, 2011. With regard to the
investments in pooled trust preferred securities, the Company
has decided to hold these securities as it believes that current
market quotes for these securities are not necessarily
indicative of their value. The Company has recognized impairment
charges on five of the pooled trust preferred securities.
Management believes that the remaining impairment in the value
of these securities to be primarily related to illiquidity in
the market and therefore not credit related at
September 30, 2011.
At September 30, 2011 and December 31, 2010,
securities having a stated value of approximately $385,000 and
$310,000, respectively, were pledged to secure public deposits,
securities sold under agreements to repurchase and for other
purposes as required or permitted by law.
The contractual maturity of all debt securities held at
September 30, 2011 is shown below. Actual maturities may
differ from contractual maturities because some issuers have the
right to call or prepay obligations with or without call or
prepayment penalties.
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Fair Value | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value |
The Company follows the “Fair Value Measurement and
Disclosures” topic of the FASB Accounting Standards
Codification which requires additional disclosures about the
Company’s assets and liabilities that are measured at fair
value and establishes a fair value hierarchy which requires an
entity to maximize the use of
observable inputs and minimize the use of unobservable inputs
when measuring fair value. The standard describes three levels
of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) for
identical assets or liabilities in active markets that the
entity has the ability to access as of the measurement date.
Level 2: Significant other observable
inputs other than Level 1 prices such as quoted prices for
similar assets or liabilities; quoted prices in markets that are
not active; or other inputs that are observable or can be
corroborated by observable market data.
Level 3: Significant unobservable inputs
that reflect a reporting entity’s own assumptions about the
assumptions that market participants would use in pricing an
asset or liability.
A description of the valuation methodologies used for assets and
liabilities measured at fair value, as well as the general
classification of such instruments pursuant to the valuation
hierarchy, is set forth below. While management believes the
Company’s valuation methodologies are appropriate and
consistent with other financial institutions, the use of
different methodologies or assumptions to determine the fair
value of certain financial instruments could result in a
different estimate of fair value at the reporting date.
The fair values of securities available for sale are determined
by obtaining quoted prices on nationally recognized securities
exchanges, which is a Level 1 input, or matrix pricing,
which is a mathematical technique widely used in the industry to
value debt securities without relying exclusively on quoted
prices for the specific securities but rather by relying on the
securities’ relationship to other benchmark quoted
securities, which is a Level 2 input.
The Company’s available for sale securities at
September 30, 2011 and December 31, 2010 include
several pooled trust preferred instruments. The recent severe
downturn in the overall economy and, in particular, in the
financial services industry has created a situation where
significant observable inputs (Level 2) are not
readily available. As an alternative, the Company combined
Level 2 input of market yield requirements of similar
instruments together with certain Level 3 assumptions
addressing the impact of current market illiquidity to estimate
the fair value of these instruments — See Note 3
“Securities” for further discussion of pooled trust
preferred securities.
Assets and liabilities measured at fair value are summarized
below:
The table below presents a reconciliation and income statement
classification of gains and losses for securities available for
sale measured at fair value on a recurring basis using
significant unobservable inputs (Level 3) for the
three and nine month periods ended September 30, 2011 and
2010:
|
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | |
Cash dividends per share | 0.50 | 0.51 |
Total losses on other-than-temporarily impaired | $ 1,318 | $ 2,841 |
Losses recognized in earnings | 323 | 2,358 |
Income tax effect | 408 | 198 |
Retained Earnings | ||
Cash dividends per share | 0.50 | 0.51 |
Accumulated Other Comprehensive Income (Loss) | ||
Total losses on other-than-temporarily impaired | 1,318 | 2,841 |
Losses recognized in earnings | 323 | 2,358 |
Income tax effect | $ 408 | $ 198 |
Earnings Per Share | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
The following table sets forth the computation of basic and
diluted earnings per common share for each of the periods
indicated:
In November 2010, the Company declared a 10% stock dividend.
Share and per share amounts for 2010 have been retroactively
restated to reflect the issuance of the additional shares. For
the nine months ended September 30, 2010, the effects of
outstanding stock options were not included in the diluted
earnings per share calculation as they would have been anti
dilutive due to the Company’s net loss for the respective
periods. At September 30, 2011, the Company had 259,271
anti dilutive options with an average exercise price of $32.04.
|
Recent Accounting Pronouncements | 9 Months Ended | ||||
---|---|---|---|---|---|
Sep. 30, 2011 | |||||
Recent Accounting Pronouncements [Abstract] | |||||
Recent Accounting Pronouncements |
In April 2011, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”)
No. 2011-02,
“A Creditor’s Determination of Whether a
Restructuring is a Troubled Debt Restructuring.” The
provisions of ASU
No. 2011-02
amend and clarify GAAP related to the accounting for debt
restructurings. Specifically, ASU
No. 2011-02
requires that, when evaluating whether a restructuring
constitutes a troubled debt restructuring, a creditor must
separately conclude that both (i) the restructuring
constitutes a concession and (ii) the debtor is
experiencing financial difficulties. In evaluating whether a
concession has been granted, a creditor must evaluate whether
(i) a debtor has access to funds at a market rate for debt
with similar risk characteristics as the restructured debt in
order to determine if the restructuring would be considered to
be at a below-market rate, indicating that the creditor has
granted a concession, (ii) a temporary or permanent
increase in the contractual interest rate as a result of a
restructuring may be considered a concession because the new
contractual interest rate on the restructured debt is still
below the market interest rate for new debt with similar risk
characteristics, and (iii) a restructuring that results in
a delay in payment is either significant and is a concession or
is insignificant and is not a concession. In evaluating whether
a debtor is experiencing financial difficulties, a creditor may
conclude that a debtor is experiencing financial difficulties,
even though the debtor is not currently in payment default. A
creditor should evaluate whether it is probable that the debtor
would be in payment default on any of its debt in the
foreseeable future without a modification of the debt. The
provisions of ASU
No. 2011-02
became effective for the first interim or annual period
beginning on or after June 15, 2011 and should be applied
retroactively to the beginning of the annual period of adoption.
The adoption of this ASU by the Company did not have a material
effect on the Company’s financial condition or results of
operations.
In May 2011, the FASB issued ASU
No. 2011-04,
“Fair Value Measurement (Topic 820) —
Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and IFRSs”
which represents the convergence of the FASB’s and the
IASB’s guidance on fair value measurement. ASU
2011-04
reflects the common requirements under U.S. GAAP and IFRS
for measuring fair value and for disclosing information about
fair value measurements, including a consistent meaning for the
term “fair value.” The new guidance does not extend
the use of fair value but, rather, provides guidance about how
fair value should be applied where it is already required or
permitted under IFRS or U.S. GAAP. For U.S. GAAP, most
of the changes are clarifications of existing guidance or
wording changes to align with IFRS 13. A public company is
required to apply the ASU prospectively for interim and annual
periods beginning after December 15, 2011. Early adoption
is not permitted for a public company. The adoption of this ASU
is not expected to have a material impact on the Company’s
financial condition or results of operations.
In June 2011, the FASB issued ASU
No. 2011-05,
“Comprehensive Income (Topic 220) —
Presentation of Comprehensive Income” the provisions of
which 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. Under both options, 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. ASU
2011-05
eliminates the option to present the components of other
comprehensive income as part of the statement of changes in
stockholders’ equity. ASU
2011-05 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. ASU
2011-05
should be applied retrospectively and is effective for public
companies for fiscal years, and interim periods within those
years, beginning after December 15, 2011. The adoption of
this ASU is not expected to have a material impact on the
Company’s financial condition or results of operations.
In September 2011, the FASB issued ASU
No. 2011-08,
“Intangibles — Goodwill and Other (Topic
350) — Testing Goodwill for Impairment” the
provisions of which allow an entity to first assess qualitative
factors to determine whether it is necessary to perform the
two-step quantitative goodwill impairment test. Under these
amendments, an entity would not be required to calculate the
fair value of a reporting unit unless the entity determines,
based on a qualitative assessment, that it is more likely than
not that its fair value is less than its carrying amount. The
amendments include a number of events and circumstances for an
entity to consider in conducting the qualitative assessment. The
provisions for ASU
2011-08
become effective for annual and interim goodwill impairment
tests performed for fiscal years beginning after
December 15, 2011. Early adoption is permitted, including
for annual and interim goodwill impairment tests performed as of
a date before September 15, 2011, if an entity’s
financial statements for the most recent annual or interim
period have not yet been issued. The adoption of this ASU is not
expected to have a material impact on the Company’s
financial condition or results of operation.
Other — Certain 2010 amounts have been
reclassified to conform to the 2011 presentation.
|
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Benefit Plans |
In addition to defined contribution pension and savings plans
which cover substantially all employees, the Company provides
additional retirement benefits to certain officers and directors
pursuant to unfunded supplemental defined benefit plans. The
following table summarizes the components of the net periodic
pension cost of the defined benefit plans (in thousands).
The Company makes contributions to the unfunded defined benefit
plans only as benefit payments become due. The Company disclosed
in its 2010 Annual Report on
Form 10-K
that it expected to contribute $612 to the unfunded defined
benefit plans during 2011. For the three and nine month periods
ended September 30, 2011, the Company contributed $153 and
$459, respectively, to these plans.
|
Loans | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Loans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans |
The loan portfolio is comprised of the following:
The following table presents the allowance for loan losses and
the recorded investment in loans by portfolio segment for the
three and nine month periods ended September 30, 2011 and
2010 (in thousands):
Impaired loans as of September 30, 2011 and
December 31, 2010 were as follows (in thousands):
The Company classifies all loans considered to be troubled debt
restructurings (“TDRs”) as impaired. Impaired loans as
of September 30, 2011 and December 31, 2010 included
$40.9 million and $17.2 million, respectively, of
loans considered to be TDR’s. The carrying value of
impaired loans was determined using either the fair value of the
underlying collateral of the loan or by an analysis of the
expected cash flows related to the loan.
The following tables present the allowance for loan losses and
the recorded investment in loans by portfolio segment based on
impairment method as of September 30, 2011 and
December 31, 2010 (in thousands):
The following table presents the recorded investment in
non-accrual loans and loans past due 90 days and still
accruing by class of loans as of September 30, 2011 and
December 31, 2010 (in thousands):
The following table presents the aging of the recorded
investment in loans (including past due and non-accrual loans)
as of September 30, 2011 and December 31, 2010 by
class of loans (in thousands):
The Company had no allocation of specific reserves for the three
month period ended September 30, 2011 and allocated
$0.8 million of specific reserves to customers whose loan
terms have been modified in troubled debt restructurings for the
nine month period ended September 30, 2011. The Company has
not committed to lend any additional amounts for the three and
nine month periods ended September 30, 2011 to customers
with outstanding loans that are classified as troubled debt
restructurings.
During the period ending September 30, 2011, the terms of
certain loans were modified as troubled debt restructurings. The
modification of the terms of such loans included one or a
combination of the following: a reduction of the stated interest
rate of the loan; an extension of the maturity date at a stated
rate of interest lower than the current market rate for new debt
with similar risk; or a permanent reduction of the recorded
investment in the loan.
Modifications involving a reduction of the stated interest rate
of the loan were for periods ranging from 6 months to
15 years. Modifications involving an extension of the
maturity date were for periods ranging from 6 months to
3 years.
The following table presents loans by class modified as troubled
debt restructurings that occurred during the three and nine
month periods ended September 30, 2011:
For both the three and nine month periods ended
September 30, 2011, seven TDR’s with carrying amounts
of $18.1 million were on accrual status and performing in
accordance with their modified terms. All other TDR’s for
the three and nine month periods ended September 30, 2011
were on nonaccrual status. The troubled debt restructurings
described above resulted in no charge offs for the three period
ended September 30, 2011 and $0.2 million during the
nine month period ended September 30, 2011.
For the three and nine month periods ended September 30,
2011, there were no troubled debt restructurings in which there
were payment defaults within twelve months following the
modification. The Company’s policy states that a loan is
considered to be in payment default once it is 45 days
contractually past due under the modified terms.
The Company categorizes loans into risk categories based on
relevant information about the ability of the borrowers to
service their debt such as; value of underlying collateral,
current financial information, historical payment experience,
credit documentation, public information, and current economic
trends, among other factors. The Company analyzes
non-homogeneous loans individually and classifies them as to
credit risk. This analysis is performed on a quarterly basis.
The Company uses the following definitions for risk ratings:
Special Mention — Loans classified as special
mention have potential weaknesses that deserve management’s
close attention. If left uncorrected, these potential weaknesses
may result in deterioration of repayment prospects for the asset
or in the institution’s credit position at some future date.
Substandard — Loans classified as substandard
asset are inadequately protected by the current net worth and
paying capacity of the obligor or of the collateral pledged, if
any. Loans so classified must have a well-defined weakness, or
weaknesses, that jeopardize the liquidation of the debt. They
are characterized by the distinct possibility that the bank will
sustain some loss if the deficiencies are not corrected.
Doubtful — Loans classified as doubtful have
all the weaknesses inherent in one classified as substandard
with the added characteristic that the weaknesses make
collection or liquidation in full, on the basis of currently
known facts, conditions and values, highly questionable and
improbable.
Loans not meeting the above criteria that are analyzed
individually as part of the above described process are
considered to be pass rated loans.
The following table presents the risk category by class of loans
as of September 30, 2011 and December 31, 2010 of
non-homogeneous loans individually classified as to credit risk
as of the most recent analysis performed (in thousands):
Loans not individually rated, primarily consisting of certain
1-4 family residential mortgages and home equity lines of
credit, are evaluated for risk in groups of homogeneous loans.
The primary risk characteristic evaluated on these pools is
delinquency.
The following table presents the delinquency categories by class
of loans as of September 30, 2011 and December 31,
2010 for loans evaluated for risk in groups of homogeneous loans
(in thousands):
The following table presents the average recorded investment in
impaired loans by portfolio segment and interest recognized on
impaired loans for the three and nine month periods ended
September 30, 2011 and 2010 (in thousands):
Gross interest income that would have been recorded if these
borrowers had been current in accordance with their original
loan terms was $2,466 and $1,710, respectively, for the nine
month periods ended September 30, 2011 and 2010.
|
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
ASSETS | ||
Securities available for sale at estimated fair value | $ 481,731 | $ 440,792 |
Securities held to maturity at amortized cost | 14,627 | 17,272 |
Loans, net of allowance for loan losses | $ 42,150 | $ 38,949 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.20 | $ 0.20 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares outstanding | 17,694,297 | 17,665,908 |
Treasury stock, at cost | 1,299,414 | 1,299,414 |
Description of Operations | 9 Months Ended | ||||
---|---|---|---|---|---|
Sep. 30, 2011 | |||||
Description of Operations and Basis of Presentation [Abstract] | |||||
Description of Operations |
Hudson Valley Holding Corp. (the “Company”) is a New
York corporation founded in 1982. The Company is registered as a
bank holding company under the Bank Holding Company Act of 1956.
The Company provides financial services through its wholly-owned
subsidiary, Hudson Valley Bank, N.A. (“HVB” or
“the Bank”), a national banking association
established in 1972, with operational headquarters in
Westchester County, New York. The Bank has 18 branch offices in
Westchester County, New York, 10 in New York City, New York, 1
in Rockland County, New York, 5 in Fairfield County, Connecticut
and 1 in New Haven County, Connecticut. In September 2011, the
Bank received approval from the Office of the Comptroller of the
Currency (“OCC”) to open a full-service branch at 4
Executive Boulevard, Suffern, New York. The Bank expects to open
this branch in the first quarter of 2012.
The Company provides investment management services through a
wholly-owned subsidiary of HVB, A.R. Schmeidler & Co.,
Inc. (“ARS”), a Manhattan, New York based money
management firm.
We derive substantially all of our revenue and income from
providing banking and related services to businesses,
professionals, municipalities,
not-for-profit
organizations and individuals within our market area, primarily
Westchester County and Rockland County, New York, portions of
New York City, Fairfield County and New Haven County,
Connecticut.
Our principal executive offices are located at 21 Scarsdale
Road, Yonkers, New York 10707.
Our principal customers are businesses, professionals,
municipalities,
not-for-profit
organizations and individuals. We are dedicated to providing
personalized service to customers and focusing on products and
services for selected segments of the market. We believe that
our ability to attract and retain customers is due primarily to
our focused approach to our markets, our personalized and
professional services, our product offerings, our experienced
staff, our knowledge of our local markets and our ability to
provide responsive solutions to customer needs. We provide these
products and services to a diverse range of customers and do not
rely on a single large depositor for a significant percentage of
deposits. We anticipate that we will continue to expand in our
current market and surrounding area through various means which
include acquiring other banks and related businesses, adding
staff, opening loan production offices and continuing to open
new branch offices.
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Fair Value of Financial Instruments |
The Company follows the “Financial Instruments” topic
of the FASB Accounting Standards Codification which requires the
disclosure of the estimated fair value of certain financial
instruments. These estimated fair values as of
September 30, 2011 and December 31, 2010 have been
determined using available market information and appropriate
valuation methodologies. Considerable judgment is required to
interpret market data to develop estimates of fair value. The
estimates presented are not necessarily indicative of amounts
the Company could realize in a current market exchange. The use
of alternative market assumptions and estimation methodologies
could have had a material effect on these estimates of fair
value.
Carrying amount and estimated fair value of financial
instruments, not previously presented, at September 30,
2011 and December 31, 2010 were as follows:
The estimated fair value of the indicated items was determined
as follows:
Financial assets for which carrying value approximates fair
value — The estimated fair value approximates
carrying amount because of the immediate availability of these
funds or based on the short maturities and current rates for
similar deposits. Cash and due from banks as well as Federal
funds sold are reported in this line item.
Held to maturity securities and accrued
interest — The fair value of securities held to
maturity was estimated based on quoted market prices or dealer
quotations. Accrued interest is stated at its carrying amounts
which approximates fair value.
FHLB Stock — It is not practicable to determine
its fair value due to restrictions placed on its transferability.
Loans and accrued interest — The fair value of
loans was estimated by discounting projected cash flows at the
reporting date using current rates for similar loans. Accrued
interest is stated at its carrying amount which approximates
fair value.
Deposits with no stated maturity and accrued
interest — The estimated fair value of deposits
with no stated maturity and accrued interest, as applicable, are
considered to be equal to their carrying amounts.
Time deposits and accrued interest — The fair
value of time deposits has been estimated by discounting
projected cash flows at the reporting date using current rates
for similar deposits. Accrued interest is stated at its carrying
amount which approximates fair value.
Securities sold under repurchase agreements and other
short-term borrowings and accrued interest — The
estimated fair value of these instruments approximate carrying
amount because of their short maturities and variable rates.
Accrued interest is stated at its carrying amount which
approximates fair value.
Other borrowings and accrued interest — The
fair value of callable FHLB advances was estimated by
discounting projected cash flows at the reporting date using the
rate applicable to the projected call date option. Accrued
interest is stated at its carrying amount which approximates
fair value.
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Basis of Presentation | 9 Months Ended | ||||
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Sep. 30, 2011 | |||||
Description of Operations and Basis of Presentation [Abstract] | |||||
Basis of Presentation |
In the opinion of management, the accompanying unaudited
condensed consolidated financial statements include all
adjustments (comprising only normal recurring adjustments)
necessary to present fairly the financial position of the
Company at September 30, 2011 and December 31, 2010
and the results of its operations, comprehensive income for the
three and nine month periods ended September 30, 2011 and
2010 and cash flows and changes in stockholders’ equity for
the nine month periods ended September 30, 2011 and 2010.
The results of operations for the three and nine month periods
ended September 30, 2011 are not necessarily indicative of
the results of operations to be expected for the remainder of
the year.
The unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) and
predominant practices used within the banking industry. Certain
information and note disclosures normally included in annual
financial statements have been omitted.
In preparing such financial statements, management is required
to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the dates of the
consolidated balance sheets and statements of income for the
periods reported. Actual results could differ significantly from
those estimates.
Estimates that are particularly susceptible to significant
change in the near term relate to the determination of the
allowance for loan losses, the determination of the fair value
of securities available for sale, the determination of
other-than-temporary
impairment of investments and the carrying amounts of goodwill
and deferred tax assets. In
connection with the determination of the allowance for loan
losses, management utilizes the work of professional appraisers
for significant properties.
Intercompany items and transactions have been eliminated in
consolidation. Certain prior period amounts have been
reclassified to conform to the current period’s
presentation.
These unaudited condensed consolidated financial statements
should be read in conjunction with our audited consolidated
financial statements as of and for the year ended
December 31, 2010 and notes thereto.
Securities — Securities are classified as
either available for sale, representing securities the Company
may sell in the ordinary course of business, or as held to
maturity, representing securities that the Company has
determined that it is more likely than not that it would not be
required to sell prior to maturity or recovery of cost.
Securities available for sale are reported at fair value with
unrealized gains and losses (net of tax) excluded from
operations and reported in other comprehensive income.
Securities held to maturity are stated at amortized cost.
Interest income includes amortization of purchase premium and
accretion of purchase discount. The amortization of premiums and
accretion of discounts is determined by using the level yield
method. Securities are not acquired for purposes of engaging in
trading activities. Realized gains and losses from sales of
securities are determined using the specific identification
method. The Company regularly reviews declines in the fair value
of securities below their costs for purposes of determining
whether such declines are
other-than-temporary
in nature. In estimating
other-than-temporary
impairment (“OTTI”), management considers adverse
changes in expected cash flows, the length of time and extent
that fair value has been less than cost and the financial
condition and near term prospects of the issuer. The Company
also assesses whether it intends to sell, or it is more likely
than not that it will be required to sell, a security in an
unrealized loss position before recovery of its amortized cost
basis. If either of these criteria is met, the entire difference
between amortized cost and fair value is recognized as
impairment through earnings. For securities that do not meet the
aforementioned criteria, the amount of impairment is split into
two components as follows: 1) OTTI related to credit loss,
which must be recognized in the income statement and
2) OTTI related to other factors, which is recognized in
other comprehensive income. The credit loss is defined as the
difference between the present value of the cash flows expected
to be collected and the amortized cost basis.
Loans — Loans are reported at their outstanding
principal balance, net of the allowance for loan losses, and
deferred loan origination fees and costs. Loan origination fees
and certain direct loan origination costs are deferred and
recognized over the life of the related loan or commitment as an
adjustment to yield, or taken directly into income when the
related loan is sold or commitment expires.
Allowance for Loan Losses — The Company
maintains an allowance for loan losses to absorb probable losses
incurred in the loan portfolio based on ongoing quarterly
assessments of the estimated losses. The Company’s
methodology for assessing the appropriateness of the allowance
consists of a specific component for identified problem loans,
and a formula component which addresses historical loan loss
experience together with other relevant risk factors affecting
the portfolio. This methodology applies to all loan classes.
Risk characteristics of the Company’s portfolio classes
include the following:
Commercial Real Estate Loans — In underwriting
commercial real estate loans, the Company evaluates both the
prospective borrower’s ability to make timely payments on
the loan and the value of the property securing the loan.
Repayment of such loans may be negatively impacted should the
borrower default or should there be a substantial decline in the
value of the property securing the loan, or a decline in general
economic conditions. Where the owner occupies the property, the
Company also evaluates the business’s ability to repay the
loan on a timely basis. In addition, the Company may require
personal guarantees, lease assignments
and/or the
guarantee of the operating company when the property is owner
occupied. These types of loans may involve greater risks than
other types of lending, because payments on such loans are often
dependent upon the successful operation of the business
involved, therefore, repayment of such loans may be negatively
impacted by adverse changes in economic conditions affecting the
borrowers’ business.
Construction Loans — Construction loans are
short-term loans (generally up to 18 months) secured by
land for both residential and commercial development. The loans
are generally made for acquisition and improvements. Funds are
disbursed as phases of construction are completed. Most
non-residential construction loans require pre-approved
permanent financing or pre-leasing by the company or another
bank providing the permanent financing. The Company funds
construction of single family homes and commercial real estate,
when no contract of sale exists, based upon the experience of
the builder, the financial strength of the owner, the type and
location of the property and other factors. Construction loans
are generally personally guaranteed by the principal(s).
Repayment of such loans may be negatively impacted by the
builders’ inability to complete construction, by a downturn
in the new construction market, by a significant increase in
interest rates or by a decline in general economic conditions.
Residential Real Estate Loans — Various loans
secured by residential real estate properties are offered by the
Company, including 1-4 family residential mortgages,
multi-family residential loans and a variety of home equity line
of credit products. Repayment of such loans may be negatively
impacted should the borrower default, should there be a
significant decline in the value of the property securing the
loan or should there be a decline in general economic conditions.
Commercial and Industrial Loans — The
Company’s commercial and industrial loan portfolio consists
primarily of commercial business loans and lines of credit to
businesses and professionals. These loans are usually made to
finance the purchase of inventory, new or used equipment or
other short or long-term working capital purposes. These loans
are generally secured by corporate assets, often with real
estate as secondary collateral, but are also offered on an
unsecured basis. In granting this type of loan, the Company
primarily looks to the borrower’s cash flow as the source
of repayment with collateral and personal guarantees, where
obtained, as a secondary source. Commercial loans are often
larger and may involve greater risks than other types of loans
offered by the Company. Payments on such loans are often
dependent upon the successful operation of the underlying
business involved and, therefore, repayment of such loans may be
negatively impacted by adverse changes in economic conditions,
management’s inability to effectively manage the business,
claims of others against the borrower’s assets which may
take priority over the Company’s claims against assets,
death or disability of the borrower or loss of market for the
borrower’s products or services.
Lease Financing and Other Loans — The Company
originates lease financing transactions which are primarily
conducted with businesses, professionals and
not-for-profit
organizations and provide financing principally for office
equipment, telephone systems, computer systems, energy saving
improvements and other special use equipment. Payments on such
loans are often dependent upon the successful operation of the
underlying business involved and, therefore, repayment of such
loans may be negatively impacted by adverse changes in economic
conditions and management’s inability to effectively manage
the business. The Company also offers installment loans and
reserve lines of credit to individuals. Repayment of such loans
are often dependent on the personal income of the borrower which
may be negatively impacted by adverse changes in economic
conditions. The Company does not place an emphasis on
originating these types of loans.
The specific component incorporates the results of measuring
impaired loans as required by the “Receivables” topic
of the FASB Accounting Standards Codification. These accounting
standards prescribe the measurement methods, income recognition
and disclosures related to impaired loans. A loan is recognized
as impaired when it is probable that principal
and/or
interest are not collectible in accordance with the loan’s
contractual terms. In addition, a loan which has been
renegotiated with a borrower experiencing financial difficulties
for which the terms of the loan have been modified with a
concession that the Company would not otherwise have granted are
considered troubled debt restructurings and are also recognized
as impaired. A loan is not deemed to be impaired if there is a
short delay in receipt of payment or if, during a longer period
of delay, the Company expects to collect all amounts due
including interest accrued at the contractual rate during the
period of delay. Measurement of impairment can be 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 fair value of the collateral, if the loan is
collateral dependent. This evaluation is inherently subjective
as it requires material estimates that may be susceptible to
significant change. If the fair value of an impaired loan is
less than the related recorded amount, a specific valuation
component is established within the allowance for loan losses
or, if the impairment is considered to be permanent, a partial
charge-off is recorded against the allowance for loan losses.
Individual measurement of impairment does not apply to large
groups of smaller balance homogenous loans that are collectively
evaluated for impairment such as portions of the Company’s
portfolios of home equity loans, real estate mortgages,
installment and other loans.
The formula component is calculated by first applying historical
loss experience factors to outstanding loans by type. The
Company uses a three year average loss experience as the
starting base for the formula component. This component is then
adjusted to reflect additional risk factors not addressed by
historical loss experience. These factors include the evaluation
of then-existing economic and business conditions affecting the
key lending areas of the Company and other conditions, such as
new loan products, credit quality trends (including trends in
nonperforming loans expected to result from existing
conditions), collateral values, loan volumes and concentrations,
recent charge-off and delinquency experience, specific industry
conditions within portfolio segments that existed as of the
balance sheet date and the impact that such conditions were
believed to have had on the collectibility of the loan
portfolio. Senior management reviews these conditions quarterly.
Management’s evaluation of the loss related to each of
these conditions is quantified by loan type and reflected in the
formula component. The evaluations of the inherent loss with
respect to these conditions is subject to a higher degree of
uncertainty due to the subjective nature of such evaluations and
because they are not identified with specific problem credits.
Actual losses can vary significantly from the estimated amounts.
The Company’s methodology permits adjustments to the
allowance in the event that, in management’s judgment,
significant factors which affect the collectibility of the loan
portfolio as of the evaluation date have changed.
Management believes the allowance for loan losses is the best
estimate of probable losses which have been incurred as of
September 30, 2011. There is no assurance that the Company
will not be required to make future adjustments to the allowance
in response to changing economic conditions, particularly in the
Company’s service area, since the majority of the
Company’s loans are collateralized by real estate. In
addition, various regulatory agencies, as an integral part of
their examination process, periodically review the
Company’s allowance for loan losses. Such agencies may
require the Company to recognize additions to the allowance
based on their judgments at the time of their examinations.
Income Recognition on Loans — Interest on loans
is accrued monthly. Net loan origination and commitment fees are
deferred and recognized as an adjustment of yield over the lives
of the related loans. Loans, including impaired loans, are
placed on a non-accrual status when management believes that
interest or principal on such loans may not be collected in the
normal course of business. When a loan is placed on non-accrual
status, all interest previously accrued, but not collected, is
reversed against interest income. Interest received on
non-accrual loans generally is either applied against principal
or reported as interest income, in accordance with
management’s judgment as to the collectibility of
principal. Loans can be returned to accruing status when they
become current as to principal and interest, demonstrate a
period of performance under the contractual terms, and when, in
management’s opinion, they are estimated to be fully
collectible.
Premises and Equipment — Premises and equipment
are stated at cost less accumulated depreciation and
amortization. Depreciation is computed using the straight-line
method over the estimated useful lives of the related assets,
generally 3 to 5 years for furniture, fixtures and
equipment and 31.5 years for buildings. Leasehold
improvements are amortized over the lesser of the term of the
lease or the estimated useful life of the asset.
Other Real Estate Owned (“OREO”) —
Real estate properties acquired through loan foreclosure are
recorded at estimated fair value, net of estimated selling
costs, at time of foreclosure establishing a new cost basis.
Credit losses arising at the time of foreclosure are charged
against the allowance for loan losses. Subsequent valuations are
periodically performed by management and the carrying value is
adjusted by a charge to expense to reflect any subsequent
declines in the estimated fair value. Routine holding costs are
charged to expense as incurred.
Goodwill and Other Intangible Assets — Goodwill
and identified intangible assets with indefinite useful lives
are not subject to amortization. Identified intangible assets
that have finite useful lives are amortized over those lives by
a method which reflects the pattern in which the economic
benefits of the intangible asset are used up. All goodwill and
identified intangible assets are subject to impairment testing
on an annual basis, or more often if events or circumstances
indicate that impairment may exist. If such testing indicates
impairment in the values
and/or
remaining amortization periods of the intangible assets,
adjustments are made to reflect such impairment.
Income Taxes — Income tax expense is the total
of the current year income tax due or refundable and the change
in deferred tax assets and liabilities. Deferred tax assets and
liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period the change is enacted.
Stock-Based Compensation — On May 27,
2010, at the Company’s Annual Meeting of Shareholders, the
Hudson Valley Holding Corp. 2010 Omnibus Incentive Plan was
approved. The purpose of the 2010 Plan is to provide additional
incentive to directors, officers, key employees, consultants and
advisors of the Company and its subsidiaries. Included in the
provisions of the 2010 Plan, the Company may grant eligible
employees, including directors, consultants and advisors,
incentive stock options, non-qualified stock options, restricted
stock awards, restricted stock units, stock appreciation rights,
performance awards and other types of awards. The 2010 Plan
provides for the issuance of up to 1,210,000 shares of the
Company’s common stock. Prior to the adoption of the 2010
Plan, the Company had stock option plans that provided for the
granting of options to directors, officers, eligible employees,
and certain advisors, based upon eligibility as determined by
the Compensation Committee. Under the prior plans options were
granted for the purchase of shares of the Company’s common
stock at an exercise price not less than the market value of the
stock on the date of grant, vested over various periods ranging
from immediate to five years from date of grant, and had
expiration dates of up to ten years from the date of grant.
Compensation costs relating to share-based payment transactions
are recognized in the financial statements with measurement
based upon the fair value of the equity or liability instruments
issued. Compensation costs related to share based payment
transactions are expensed over their respective vesting periods.
The fair value (present value of the estimated future benefit to
the option holder) of each option grant is estimated on the date
of grant using the Black-Scholes option pricing model. See
Note 7 “Stock-Based Compensation” herein for
additional discussion.
Earnings per Common Share — The “Earnings
per Share,” topic of the FASB Accounting Standards
Codification establishes standards for computing and presenting
earnings per share. The statement requires disclosure of basic
earnings per common share (i.e. common stock equivalents are not
considered) and diluted earnings per common share (i.e. common
stock equivalents are considered using the treasury stock
method) on the face of the statement of income, along with a
reconciliation of the numerator and denominator of basic and
diluted earnings per share. Basic earnings per common share are
computed by dividing net income by the weighted average number
of common shares outstanding during the period. The computation
of diluted earnings per common share is similar to the
computation of basic earnings per share except that the
denominator is increased to include the number of additional
common shares that would have been outstanding if the dilutive
potential common shares, consisting of stock options, had been
issued.
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Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation |
In accordance with the provisions of the Hudson Valley Holding
Corp. 2010 Omnibus Incentive Plan, approved by the
Company’s shareholders on May 27, 2010, the Company
may grant eligible employees, including directors, consultants
and advisors, incentive stock options, non-qualified stock
options, restricted stock awards, restricted stock units, stock
appreciation rights, performance awards and other types of
awards. The 2010 Plan provides for the issuance of up to
1,210,000 shares of the Company’s common stock. Prior
to the 2010 Plan, the Company had stock option plans that
provided for the granting of options to directors, officers,
eligible employees, and certain advisors, based upon eligibility
as determined by the Compensation Committee. Under the prior
plans, options were granted for the purchase of shares of the
Company’s common stock at an exercise price not less than
the market value of the stock on the date of grant, vested over
various periods ranging from immediate to five years from date
of grant, and had expiration dates up to ten years from the date
of grant.
Compensation costs relating to stock-based payment transactions
are recognized in the financial statements with measurement
based upon the fair value of the equity or liability instruments
issued. Stock options are expensed over their respective vesting
periods. There were no stock-based compensation awards granted
under either the 2010 Plan or the prior plans during the nine
month period ended September 30, 2011.
The following table summarizes stock option activity for the
nine month period ended September 30, 2011:
The fair value (present value of the estimated future benefit to
the option holder) of each option grant is estimated on the date
of grant using the Black-Scholes option pricing model. There
were no stock options granted in the nine month period ended
September 30, 2011 or the year ended December 31, 2010.
Net compensation expense of $31 and $100 related to the
Company’s stock option plans was included in net income for
the three and nine month periods ended September 30, 2011,
respectively. The total tax effect related thereto was $2 and
$4, respectively. Unrecognized compensation expense related to
non-vested share-based compensation granted under the
Company’s stock option plans totaled $102 at
September 30, 2011. This expense is expected to be
recognized over a remaining weighted average period of
0.9 years.
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