x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2011
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to | |
Commission file number 001-13695 |
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(Exact name of registrant as specified in its charter)
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Delaware | 16-1213679 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
5790 Widewaters Parkway, DeWitt, New York | 13214-1883 | |
(Address of principal executive offices) | (Zip Code) | |
(315) 445-2282
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Registrant's telephone number, including area code
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Securities registered pursuant of Section 12(b) of the Act:
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Title of each class | Name of each exchange on which registered | |
Common Stock, Par Value $1.00 | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None | |||
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o.
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x .
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o.
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K. o.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o. |
(Do not check if a smaller reporting company) | |||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o. No x .
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The aggregate market value of the common stock, $1.00 par value, held by non-affiliates of the registrant computed by reference to the closing price as of the close of business on June 30, 2011 (the registrant’s most recently completed second fiscal quarter): $858,986,069.
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The number of shares of the common stock, $1.00 par value, outstanding as of the close of business on January 31, 2012: 39,196,328 shares
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2.1 Agreement and Plan of Merger, dated August 2, 2006, by and among Community Bank System, Inc., Seneca Acquisition Corp. and ONB Corporation. Incorporated by reference to Exhibit 2.2 to the Quarterly Report on Form 10-Q filed on November 8, 2006 (Registration No. 001-13695).
2.2 Agreement and Plan of Merger dated April 20, 2006, by and among Community Bank System, Inc., ESL Acquisition Corp., and ES&L Bancorp, Inc. Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on April 25, 2006 (Registration No. 001-13695).
2.3 Purchase and Assumption Agreement, dated June 24, 2008, by and among RBS Citizens, NA., Community Bank System, Inc., and Community Bank, N.A. Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on June 26, 2008 (Registration No. 001-13695).
2.4 Agreement and Plan of Merger, dated October 22, 2010, by and among Community Bank System, Inc. and The Wilber Corporation. Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on October 25, 2010 (Registration No. 001-13695).
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3.1 Certificate of Incorporation of Community Bank System, Inc., as amended. Incorporated by reference to Exhibit No. 3.1 to the Registration Statement on Form S-4 filed on October 20, 2000 (Registration No. 333-48374).
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3.2 Certificate of Amendment of Certificate of Incorporation of Community Bank System, Inc. Incorporated by reference to Exhibit No. 3.1 to the Quarterly Report on Form 10-Q filed on May 5, 2004 (Registration No. 001-13695).
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3.3 Bylaws of Community Bank System, Inc., amended July 18, 2007. Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on July 24, 2007. (Registration No. 001-13695).
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4.1 Form of Common Stock Certificate. Incorporated by reference to Exhibit No. 4.1 to the Amendment No. 1 to the Registration Statement on Form S-3 filed on September 29, 2008 (Registration No. 333-153403).
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10.1 Supplemental Retirement Plan Agreement, effective as of December 31, 2008, by and among Community Bank, N.A., Community Bank System, Inc. and Mark E. Tryniski. Incorporated by reference to Exhibit No. 10.2 to the Current Report on Form 8-K filed on March 19, 2009 (Registration No. 001-13695).**
10.2 Indenture dated as of December 8, 2006, between Community Bank System, Inc. and Wilmington Trust Company, as trustee. Incorporated by reference to Exhibit No. 4.1 to the Current Report on Form 8-K filed on December 12, 2006 (Registration No. 001-13695).
10.3 Amended and Restated Declaration of Trust dated as of December 8, 2006, among Community Bank System, Inc., as sponsor, Wilmington Trust Company, as Delaware trustee, Wilmington Trust Company, as institutional trustee, and Mark E. Tryniski, Scott A. Kingsley, and Joseph J. Lemchak as administrators. Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December 12, 2006 (Registration No. 001-13695).
10.4 Guarantee Agreement dated as of December 8, 2006, between Community Bank System, Inc., as guarantor, and Wilmington Trust Company, as guarantee trustee. Incorporated by reference to Exhibit 10.1 to the Form 8-K filed on December 12, 2006 (Registration No. 001-13695).
10.5 Employment Agreement, effective January 1, 2012, by and between Community Bank System, Inc., Community Bank, N.A. and Mark E. Tryniski. Incorporated by reference to Exhibit No. 10.1 to the Current Report on Form 8-K filed on December 30, 2011 (Registration No. 001-13695). **
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10.6 Post-2004 Supplemental Retirement Agreement, effective January 1, 2005, by and between Community Bank System, Inc., Community Bank, N.A. and Sanford Belden. Incorporated by reference to Exhibit No. 10.2 to the Annual Report on Form 10-K filed on March 15, 2005 (Registration No. 001-13695). **
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10.7 Pre-2005 Supplemental Retirement Agreement, effective December 31, 2004, by and between Community Bank System, Inc., Community Bank, N.A. and Sanford Belden. Incorporated by reference to Exhibit No. 10.3 to the Annual Report on Form 10-K filed on March 15, 2005 (Registration No. 001-13695).**
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10.8 Supplemental Retirement Plan Agreement, effective September 29, 2009, by and between Community Bank System Inc., Community Bank, N.A., and Scott A. Kingsley. Incorporated by reference to Exhibit No. 10.1 to the Current Report on Form 8-K filed on October 1, 2009 (Registration No. 001-13695). **
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10.9 Employment Agreement, effective January 29, 2010, by and between Community Bank System, Inc., Community Bank N.A. and Brian D. Donahue. Incorporated by reference to Exhibit No. 10.1 to the Current Report on Form 8-K filed on February 3, 2010 (Registration No. 001-13695). **
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10.10 Supplemental Retirement Plan Agreement, effective March 26, 2003, by and between Community Bank System Inc. and Thomas McCullough. Incorporated by reference to Exhibit No. 10.11 to the Annual Report on Form 10-K filed on March 12, 2004 (Registration No. 001-13695). **
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10.11 2004 Long-Term Incentive Compensation Program, as to be amended. Incorporated by reference to Exhibit No. 10.1 to the Current Report on Form 8-K filed on May 12, 2011 (Registration No. 001-13695). **
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10.12 Stock Balance Plan for Directors, as amended. Incorporated by reference to Annex I to the Definitive Proxy Statement on Schedule 14A filed on March 31, 1998 (Registration No. 001-13695). **
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10.13 Deferred Compensation Plan for Directors, as amended. Incorporated by reference to Annex I to the Definitive Proxy Statement on Schedule 14A filed on March 31, 1998 (Registration No. 001-13695). **
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10.14 Community Bank System, Inc. Pension Plan Amended and Restated as of January 1, 2004. Incorporated by reference to Exhibit No. 10.27 to the Annual Report on Form 10-K filed on March 15, 2005 (Registration No. 001-13695). **
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10.15 Amendment #1 to the Community Bank System, Inc. Pension Plan, as amended and restated as of January 1, 2004 (“Plan”). Incorporated by reference to Exhibit No. 10.27 to the Annual Report on Form 10-K filed on March 15, 2005 (Registration No. 001-13695). **
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10.16 Amendment #1 to the Deferred Compensation Plan For Certain Executive Employees of Community Bank System, Inc., as amended and restated as of January 1, 2002. Incorporated by reference to Exhibit No. 10.33 to the Annual Report on Form 10-K filed on March 15, 2005 (Registration No. 001-13695). **
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10.17 Employment Agreement, dated January 3, 2011, by and among Community Bank System, Inc., Community Bank N.A. and George J. Getman. Incorporated by reference to Exhibit No. 10.2 to the Current Report on Form 8-K filed on January 6, 2011 (Registration No. 001-13695). **
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10.18 Employment Agreement, dated January 3, 2011, by and among Community Bank System, Inc., Community Bank N.A. and Scott Kingsley. Incorporated by reference to Exhibit No. 10.1 to the Current Report on Form 8-K filed on January 6, 2011 (Registration No. 001-13695). **
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10.19 Supplemental Retirement Plan Agreement, effective April 9, 2009, by and among Community Bank System, Inc., Community Bank, N.A. and George J. Getman. Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 14, 2009 (Registration No. 001-13695). **
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14.1 Community Bank System, Inc., Code of Ethics. Incorporated by reference to Exhibit No. 1 to the Annual Report on Form 10-K filed on March 15, 2005 (Registration No. 001-13695).
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21.1 Subsidiaries of Registrant. *
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23.1 Consent of PricewaterhouseCoopers LLP. *
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31.1 Certification of Mark E. Tryniski, President and Chief Executive Officer of the Registrant, pursuant to Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
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31.2 Certification of Scott Kingsley, Treasurer and Chief Financial Officer of the Registrant, pursuant to
Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. *
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32.1 Certification of Mark E. Tryniski, President and Chief Executive Officer of the Registrant, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ***
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32.2 Certification of Scott Kingsley, Treasurer and Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ***
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101.INS XBRL Instance Document. ****
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101.SCH XBRL Taxonomy Extension Schema Document. ****
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101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. ****
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101.DEF XBRL Taxonomy Extension Definition Linkbase Document. ****
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101.LAB XBRL Taxonomy Extension Label Linkbase Document. ****
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101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. ****
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BENEFIT PLANS (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2011
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Funded status of the plans reconciled with amounts reported in consolidated statement of condition. | Using a measurement date of December 31, the following table shows the funded status of the Company's plans reconciled with amounts reported in the Company's consolidated statements of condition:
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After tax amounts recognized in accumulated other comprehensive income (loss) | Amounts recognized in accumulated other comprehensive income, net of tax, for the year ended December 31, are as follows:
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Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year | The estimated costs, net of tax, that will be amortized from accumulated other comprehensive (income) loss into net periodic (income) cost over the next fiscal year are as follows:
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Weighted-average assumptions used to determine benefit obligations | The weighted-average assumptions used to determine the benefit obligations as of December 31 are as follows:
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Net periodic benefit cost | The net periodic benefit cost as of December 31 is as follows:
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Weighted Average Assumptions Used To Determine Net Periodic Pension Cost | The weighted-average assumptions used to determine the net periodic pension cost for the years ended December 31 are as follows:
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Amount of expected benefit payments | The amount of benefit payments that are expected to be paid over the next ten years are as follows:
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Fair value of defined benefit plan assets | The fair values of the Company's defined benefit pension plan assets at December 31, 2011 by asset category are as follows:
The fair values of the Company's defined benefit pension plan assets at December 31, 2010 by asset category are as follows:
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SEGMENT INFORMATION (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2011
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SEGMENT INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information by Segment | Information about reportable segments and reconciliation of the information to the consolidated financial statements follows:
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DEPOSITS (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2011
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Dec. 31, 2010
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DEPOSITS [Abstract] | ||
Noninterest checking | $ 894,464 | $ 741,166 |
Interest checking | 918,716 | 721,391 |
Savings | 660,981 | 546,649 |
Money market | 1,196,835 | 1,003,973 |
Time | 1,124,249 | 920,866 |
Total deposits | 4,795,245 | 3,934,045 |
Time certificates of deposit in denominations of $100,000 and greater | 288,386 | 187,600 |
Contractual Maturities, Time Deposits, $100,000 or More [Abstract] | ||
2012 | 193,223 | |
2013 | 44,992 | |
2014 | 26,746 | |
2015 | 9,610 | |
2016 | 10,648 | |
Thereafter | 3,167 | |
Total | $ 288,386 | $ 187,600 |
FAIR VALUE (Tables)
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Dec. 31, 2011
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FAIR VALUE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of fair value measured on a recurring basis | There were no transfers between Level 1 and Level 2 for any of the periods presented.
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Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis | The changes in Level 3 assets measured at fair value on a recurring basis are summarized in the following tables:
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Assets and Liabilities Measured on a Non-Recurring Basis |
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Carrying Amounts and Estimated Fair Values of Other Financial Instruments | The carrying amounts and estimated fair values of the Company's other financial instruments at December 31, 2011 and 2010 are as follows:
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LOANS (Tables)
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Dec. 31, 2011
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LOANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of loans receivable, net | Loans at December 31 are summarized as follows:
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Summary of aggregate amounts loaned to related parties of the company | Certain directors and executive officers of the Company, as well as associates of such persons, are loan customers. Loans to these individuals were made in the ordinary course of business under normal credit terms and do not have more than a normal risk of collection. Following is a summary of the aggregate amount of such loans during 2011 and 2010.
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Aged analysis of the company's past due loans by class | The following is an aged analysis of the Company's past due loans, by class as of December 31, 2011: Legacy Loans (excludes loans acquired after January 1, 2009)
Acquired Loans (includes loans acquired after January 1, 2009)
The following is an aged analysis of the Company's past due loans by class as of December 31, 2010:
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Schedule of business lending loans by credit quality category | The following table shows the amount of business lending loans by credit quality category:
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Schedule of loans by credit quality indicator | Legacy loans (excludes loans acquired after January 1, 2009)
Acquired loans (includes loans acquired after January 1, 2009
The following table details the balances in all other loan categories at December 31, 2010:
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Summary of non-business impaired loans | All loan classes are collectively evaluated for impairment except business lending, as described in Note A. A summary of impaired loans, excluding purchased impaired, as of December 31, 2011 and 2010 are summarized as follows:
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Schedule of allowance for loan losses by class | The allowance for loan losses is general in nature and is available to absorb losses from any loan type despite the analysis below. The following presents by class the activity in the allowance for loan losses:
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Schedule of accretable discount related to credit impaired acquired loans | The changes in the accretable discount related to the credit impaired acquired loans are as follows:
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REGULATORY MATTERS
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Dec. 31, 2011
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REGULATORY MATTERS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY MATTERS | NOTE P: REGULATORY MATTERS The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company's and the Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum total core capital to risk-weighted assets of 8%, and Tier I capital to risk-weighted assets and Tier I capital to average assets of 4%. Management believes, as of December 31, 2011, that the Company and Bank meet all capital adequacy requirements to which they are subject. As of December 31, 2011 and 2010, the most recent notification from the Office of the Comptroller of the Currency (“OCC”) categorized the Company and Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Company and Bank must maintain minimum total core capital to risk-weighted assets of 10%, Tier I capital to risk-weighted assets of 6% and Tier I capital to average assets of 5%. There are no conditions or events since that notification that management believes have changed the institution's category. Except in connection with the regulatory approval of the Citizens branch acquisition in November 2008 by the OCC, there were no significant capital requirements imposed or agreed to during the regulatory approval process of any of our acquisitions. In connection with the Citizens acquisition, the Bank agreed to an approval condition to maintain capital at the “well-capitalized” level. The capital ratios and amounts of the Company and the Bank as of December 31 are presented below:
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COMMITMENTS, CONTINGENT LIABILITIES AND RESTRICTIONS (Tables)
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Dec. 31, 2011
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COMMITMENTS, CONTINGENT LIABILITIES AND RESTRICTIONS [Abstract] | |||||||||||||
Off-Balance-Sheet Financial instruments contract amount | The fair value of the standby letters of credit is immaterial for disclosure. The contract amount of commitment and contingencies is as follows:
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BORROWINGS (Tables)
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Dec. 31, 2011
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BORROWINGS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding borrowings | Outstanding borrowings at December 31 are as follows:
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Borrowings by maturity date | Borrowings at December 31, 2011 have contractual maturity dates as follows:
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Preferred securities | The Company sponsors two business trusts, Community Statutory Trust III and Community Capital Trust IV, of which 100% of the common stock is owned by the Company. The trusts were formed for the purpose of issuing company-obligated mandatorily redeemable preferred securities to third-party investors and investing the proceeds solely in junior subordinated debt securities of the Company. The debentures held by each trust are the sole assets of that trust. Distributions on the preferred securities issued by each trust are payable quarterly at a rate per annum equal to the interest rate being earned by the trust on the debentures held by that trust. The preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the debentures. The Company has entered into agreements which, taken collectively, fully and unconditionally guarantee the preferred securities subject to the terms of each of the guarantees. The terms of the preferred securities of each trust are as follows:
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DERIVATIVE INSTRUMENTS (Details) (USD $)
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12 Months Ended |
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Dec. 31, 2011
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Derivative Instruments, Gain (Loss) [Line Items] | |
Gain/(loss) recognized in the Statement of Income | $ (3,626,000) |
Amount of gain recognized in other comprehensive income relating to interest rate swap | 1,980,000 |
Interest Rate Swap [Member] | Interest on Subordinated Debt Held by Unconsolidated Subsidiary Trusts [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |
Gain/(loss) recognized in the Statement of Income | (3,246,000) |
Loan Origination Commitments [Member] | Fees And Commissions Mortgage Banking And Services [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |
Gain/(loss) recognized in the Statement of Income | (322,000) |
Interest Rate Lock Commitments [Member] | Fees And Commissions Mortgage Banking And Services [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |
Gain/(loss) recognized in the Statement of Income | $ (58,000) |
DERIVATIVE INSTRUMENTS (Tables)
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Dec. 31, 2011
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DERIVATIVE INSTRUMENTS [Abstract] | |||||||||||||||||||||||||||||||||
Derivative Financial Instruments and Location of Net Gain or Loss In Statement of Income | The following table presents the Company's derivative financial instruments and the location of the net gain or loss recognized in the statement of income for the year ended December 31, 2011:
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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | ||
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Dec. 31, 2011
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Dec. 31, 2010
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Dec. 31, 2009
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Statement of Cash Flows [Abstract] | |||
Cash acquired in acquisition | $ 26,901 | $ 0 | $ 0 |
Payments made on borrowings | $ 25,938 | $ 26,318 | $ 5,779 |