New York
|
11-2708279
|
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
4 West Second Street, P.O. Box 9000, Riverhead, NY
|
11901
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock, par value $2.50 per share
|
New York Stock Exchange
|
Page
|
||
PART I
|
||
Item 1.
|
3
|
|
Item 1A.
|
7
|
|
Item 1B.
|
13
|
|
Item 2.
|
14
|
|
Item 3.
|
14
|
|
Item 4.
|
14
|
|
PART II
|
||
Item 5.
|
14
|
|
Item 6.
|
17
|
|
Item 7.
|
18
|
|
Item 7A.
|
34
|
|
Item 8.
|
37
|
|
Item 9.
|
76
|
|
Item 9A.
|
76
|
|
Item 9B.
|
78
|
|
PART III
|
||
Item 10.
|
78
|
|
Item 11.
|
81
|
|
Item 12.
|
99
|
|
Item 13.
|
100
|
|
Item 14.
|
101
|
|
PART IV
|
||
Item 15.
|
103
|
|
Item 16. | Form 10-K Summary | 103 |
104
|
· |
operating results that vary from the expectations of People’s United’s management or of securities analysts and investors;
|
· |
developments in People’s United’s business or in the financial services sector generally;
|
· |
regulatory or legislative changes affecting People’s United’s industry generally or its business and operations;
|
· |
operating and securities price performance of companies that investors consider to be comparable to People’s United;
|
· |
changes in estimates or recommendations by securities analysts or rating agencies;
|
· |
announcements of strategic developments, acquisitions, dispositions, financings and other material events by People’s United or its competitors; and
|
· |
changes in global financial markets and economies and general market conditions, such as interest or foreign exchange rates, stock, commodity, credit or asset valuations or volatility.
|
· |
the Company may be required, under certain circumstances, to pay People’s United a termination fee of $16 million under the merger agreement;
|
· |
the Company will be required to pay certain costs relating to the merger, whether or not the merger is completed, such as legal, accounting, financial advisor and printing fees;
|
· |
under the merger agreement, the Company is subject to certain restrictions on the conduct of its business prior to completing the merger, which may adversely affect its ability to execute certain of its business strategies; and
|
· |
matters relating to the merger may require substantial commitments of time and resources by Company management, which could otherwise have been devoted to other opportunities that may have been beneficial to the Company.
|
• |
the market price of People’s United’s common stock, upon which the consideration to be paid to the Company’s stockholders in the merger is based;
|
• |
actual or anticipated quarterly fluctuations in the Company’s operating and financial results;
|
• |
developments related to investigations, proceedings or litigation involving the Company;
|
• |
changes in financial estimates and recommendations by financial analysts;
|
• |
dispositions, acquisitions and financings;
|
• |
actions of the Company’s current stockholders, including sales of common stock by existing stockholders and the Company’s directors and executive officers;
|
• |
fluctuations in the stock price and operating results of the Company’s competitors;
|
• |
regulatory developments; and
|
• |
developments related to the financial services industry.
|
Location
|
Primary Use
|
Owned or Leased
|
4 West Second Street, Riverhead, NY
|
Corporate Headquarters
|
Owned
|
3880 Veterans Memorial Highway, Bohemia, NY
|
Branch Office
|
Owned
|
351 Pantigo Road, East Hampton, NY
|
Branch Office
|
Owned
|
168 West Montauk Highway, Hampton Bays, NY
|
Branch Office
|
Owned
|
746 Montauk Highway, Montauk, NY
|
Branch Office
|
Owned
|
135 West Broadway, Port Jefferson, NY
|
Branch Office
|
Owned
|
1201 Ostrander Avenue, Riverhead, NY
|
Branch Office
|
Owned
|
6 West Second Street, Riverhead, NY
|
Branch Office
|
Owned
|
17 Main Street, Sag Harbor, NY
|
Branch Office
|
Owned
|
295 North Sea Road, Southampton, NY
|
Branch Office
|
Owned
|
2065 Wading River-Manor Road, Wading River, NY
|
Branch Office
|
Owned
|
144 Sunset Avenue, Westhampton Beach, NY
|
Branch Office
|
Owned
|
206 Griffing Avenue, Riverhead, NY
|
Administrative Office
|
Owned
|
400 Merrick Road, Amityville, NY
|
Branch Office
|
Leased
|
502 Main Street, Center Moriches, NY
|
Branch Office
|
Leased
|
31525 Main Road, Cutchogue, NY
|
Branch Office
|
Leased
|
21 East Industry Court, Deer Park, NY
|
Branch Office
|
Leased
|
99 Newtown Lane, East Hampton, NY
|
Branch Office
|
Leased
|
110 Marcus Boulevard, Hauppauge, NY
|
Branch Office
|
Leased
|
2801 Route 112, Medford, NY
|
Branch Office
|
Leased
|
159 Route 25A, Miller Place, NY
|
Branch Office
|
Leased
|
228 East Main Street, Port Jefferson, NY
|
Branch Office
|
Leased
|
161 North Main Street, Sayville, NY
|
Branch Office
|
Leased
|
9926 Route 25A, Shoreham, NY
|
Branch Office
|
Leased
|
222 Middle Country Road, Smithtown, NY
|
Branch Office
|
Leased
|
955 Little East Neck Road, West Babylon, NY
|
Branch Office
|
Leased
|
1055 Franklin Avenue, Garden City, NY
|
Loan Production and Branch Office
|
Leased
|
290 Broad Hollow Road, Melville, NY
|
Loan Production and Branch Office
|
Leased
|
31-00 47th Avenue, Long Island City, NY
|
Loan Production and Branch Office
|
Leased
|
ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
2016
|
High Sale
|
Low Sale
|
||||||
1st Quarter
|
$
|
28.14
|
$
|
23.80
|
||||
2nd Quarter
|
31.36
|
22.88
|
||||||
3rd Quarter
|
35.80
|
30.45
|
||||||
4th Quarter
|
44.70
|
33.58
|
2015
|
High Sale
|
Low Sale
|
||||||
1st Quarter
|
$
|
23.89
|
$
|
20.66
|
||||
2nd Quarter
|
26.14
|
23.05
|
||||||
3rd Quarter
|
29.99
|
23.91
|
||||||
4th Quarter
|
31.75
|
25.97
|
Record Date
|
Dividend Payment Date
|
Cash Dividends Paid
Per Common Share
|
|||
November 9, 2016
|
November 23, 2016
|
$
|
0.10
|
||
August 10, 2016
|
August 24, 2016
|
0.10
|
|||
May 11, 2016
|
May 25, 2016
|
0.10
|
|||
February 10, 2016
|
February 24, 2016
|
0.10
|
|||
November 11, 2015
|
November 25, 2015
|
0.10
|
|||
August 12, 2015
|
August 26, 2015
|
0.10
|
|||
May 13, 2015
|
May 27, 2015
|
0.06
|
|||
February 11, 2015
|
February 25, 2015
|
0.06
|
Period Ending
|
|||||||||||||||||||||||||
Index
|
12/31/11
|
12/31/12
|
12/31/13
|
12/31/14
|
12/31/15
|
12/31/16
|
|||||||||||||||||||
Suffolk Bancorp
|
100.00
|
121.41
|
192.77
|
211.60
|
267.30
|
409.37
|
|||||||||||||||||||
SNL Bank $1B-$5B
|
100.00
|
123.31
|
179.31
|
187.48
|
209.86
|
301.92
|
|||||||||||||||||||
S&P 500 |
100.00
|
116.00
|
153.57
|
174.60
|
177.01
|
198.18
|
As of or for the year ended December 31,
|
2016
|
2015
|
2014
|
2013
|
2012
|
|||||||||||||||
OPERATING RESULTS:
|
||||||||||||||||||||
Interest income
|
$
|
77,719
|
$
|
72,780
|
$
|
65,053
|
$
|
59,678
|
$
|
60,447
|
||||||||||
Interest expense
|
3,929
|
3,247
|
2,519
|
2,930
|
3,719
|
|||||||||||||||
Net interest income
|
73,790
|
69,533
|
62,534
|
56,748
|
56,728
|
|||||||||||||||
(Credit) provision for loan losses
|
(500
|
)
|
600
|
1,000
|
1,250
|
8,500
|
||||||||||||||
Net interest income after (credit) provision
|
74,290
|
68,933
|
61,534
|
55,498
|
48,228
|
|||||||||||||||
Non-interest income
|
8,483
|
8,594
|
10,900
|
19,507
|
10,881
|
|||||||||||||||
Operating expenses
|
55,320
|
53,954
|
53,419
|
58,565
|
61,571
|
|||||||||||||||
Income (loss) before income taxes
|
27,453
|
23,573
|
19,015
|
16,440
|
(2,462
|
)
|
||||||||||||||
Provision (benefit) for income taxes
|
7,622
|
5,886
|
3,720
|
3,722
|
(714
|
)
|
||||||||||||||
Net income (loss)
|
$
|
19,831
|
$
|
17,687
|
$
|
15,295
|
$
|
12,718
|
$
|
(1,748
|
)
|
|||||||||
FINANCIAL CONDITION:
|
||||||||||||||||||||
Investment securities
|
$
|
198,022
|
$
|
308,408
|
$
|
360,940
|
$
|
412,446
|
$
|
410,388
|
||||||||||
Loans
|
1,676,564
|
1,666,447
|
1,355,427
|
1,068,848
|
780,780
|
|||||||||||||||
Total assets
|
2,092,291
|
2,168,592
|
1,895,283
|
1,699,816
|
1,622,464
|
|||||||||||||||
Total deposits
|
1,838,182
|
1,780,623
|
1,556,060
|
1,510,061
|
1,431,114
|
|||||||||||||||
Borrowings
|
15,000
|
165,000
|
130,000
|
-
|
-
|
|||||||||||||||
Stockholders' equity
|
215,028
|
197,258
|
182,733
|
167,198
|
163,985
|
|||||||||||||||
SELECTED FINANCIAL RATIOS:
|
||||||||||||||||||||
Performance:
|
||||||||||||||||||||
Return on average assets
|
0.90
|
%
|
0.89
|
%
|
0.87
|
%
|
0.76
|
%
|
(0.11
|
)%
|
||||||||||
Return on average stockholders' equity
|
9.54
|
9.27
|
8.57
|
7.78
|
(1.22
|
)
|
||||||||||||||
Net interest margin (taxable-equivalent)
|
3.77
|
3.98
|
4.07
|
3.91
|
4.19
|
|||||||||||||||
Efficiency ratio
|
64.49
|
65.64
|
68.41
|
73.64
|
86.22
|
|||||||||||||||
Average stockholders' equity to average assets
|
9.47
|
9.61
|
10.14
|
9.83
|
9.30
|
|||||||||||||||
Dividend payout ratio
|
24.10
|
21.48
|
9.16
|
-
|
-
|
|||||||||||||||
Asset quality:
|
||||||||||||||||||||
Non-performing loans to total loans (1)
|
0.33
|
0.33
|
0.96
|
1.42
|
2.10
|
|||||||||||||||
Non-performing assets to total assets
|
0.30
|
0.25
|
0.68
|
0.89
|
1.17
|
|||||||||||||||
Allowance for loan losses to non-performing loans (1)
|
362
|
374
|
148
|
114
|
108
|
|||||||||||||||
Allowance for loan losses to total loans (1)
|
1.20
|
1.24
|
1.42
|
1.62
|
2.28
|
|||||||||||||||
Net charge-offs (recoveries)/average loans
|
0.00
|
(0.06
|
)
|
(0.08
|
)
|
0.20
|
3.57
|
|||||||||||||
CAPITAL RATIOS:
|
||||||||||||||||||||
Tier 1 leverage ratio
|
10.31
|
%
|
9.77
|
%
|
10.04
|
%
|
9.81
|
%
|
9.79
|
%
|
||||||||||
Tier 1 risk-based capital ratio
|
13.50
|
11.68
|
12.10
|
13.77
|
16.89
|
|||||||||||||||
Total risk-based capital ratio
|
14.72
|
12.89
|
13.35
|
15.02
|
18.15
|
|||||||||||||||
Tangible common equity ratio
|
10.16
|
8.98
|
9.50
|
9.68
|
9.96
|
|||||||||||||||
COMMON SHARE DATA:
|
||||||||||||||||||||
Net income (loss) per share - fully diluted
|
$
|
1.66
|
$
|
1.49
|
$
|
1.31
|
$
|
1.10
|
$
|
(0.17
|
)
|
|||||||||
Cash dividends per share
|
0.40
|
0.32
|
0.12
|
-
|
-
|
|||||||||||||||
Book value per share
|
18.01
|
16.72
|
15.66
|
14.45
|
14.18
|
|||||||||||||||
Tangible book value per share
|
17.79
|
16.47
|
15.40
|
14.19
|
13.95
|
|||||||||||||||
Average common shares outstanding
|
11,882,647
|
11,756,451
|
11,626,354
|
11,570,731
|
10,248,751
|
|||||||||||||||
OTHER INFORMATION:
|
||||||||||||||||||||
Number of full-time-equivalent employees
|
296
|
337
|
333
|
350
|
373
|
|||||||||||||||
Number of branch offices
|
27
|
27
|
26
|
25
|
30
|
|||||||||||||||
Number of ATMs
|
24
|
24
|
24
|
25
|
30
|
(1)
|
Excluding loans held-for-sale.
|
(in thousands)
|
Years Ended December 31,
|
|||||||
2016
|
2015
|
|||||||
CORE NET INCOME:
|
||||||||
Net income, as reported
|
$
|
19,831
|
$
|
17,687
|
||||
Adjustments:
|
||||||||
Net non-accrual interest adjustment
|
(298
|
)
|
(1,248
|
)
|
||||
Merger costs
|
2,434
|
-
|
||||||
Nonrecurring project costs
|
-
|
1,443
|
||||||
OREO-related expenses
|
113
|
-
|
||||||
Total adjustments, before income taxes
|
2,249
|
195
|
||||||
Adjustment for reported effective income tax rate
|
624
|
49
|
||||||
Total adjustments, after income taxes
|
1,625
|
146
|
||||||
Core net income
|
$
|
21,456
|
$
|
17,833
|
(dollars in thousands)
|
Years Ended December 31,
|
|||||||
2016
|
2015
|
|||||||
Core operating expenses:
|
||||||||
Total operating expenses
|
$
|
55,320
|
$
|
53,954
|
||||
Adjust for merger costs
|
(2,434
|
)
|
-
|
|||||
Adjust for nonrecurring project costs
|
-
|
(1,443
|
)
|
|||||
Adjust for OREO-related expenses
|
(113
|
)
|
-
|
|||||
Core operating expenses
|
52,773
|
52,511
|
||||||
Core non-interest income:
|
||||||||
Total non-interest income
|
8,483
|
8,594
|
||||||
Adjustments
|
-
|
-
|
||||||
Core non-interest income
|
8,483
|
8,594
|
||||||
Adjust for tax-equivalent basis
|
898
|
833
|
||||||
Core FTE non-interest income
|
9,381
|
9,427
|
||||||
Core operating efficiency ratio:
|
||||||||
Core operating expenses
|
52,773
|
52,511
|
||||||
Core FTE net interest income
|
76,543
|
71,845
|
||||||
Core FTE non-interest income
|
9,381
|
9,427
|
||||||
Adjust for net gain on sale of securities available for sale
|
(617
|
)
|
(319
|
)
|
||||
Core total FTE revenue
|
85,307
|
80,953
|
||||||
Core operating expenses/core total FTE revenue
|
61.86
|
%
|
64.87
|
%
|
Years Ended December 31,
|
||||||||||||||||
($ in thousands)
|
2016
|
2015
|
||||||||||||||
CORE NET INTEREST INCOME/MARGIN:
|
||||||||||||||||
Net interest income/margin (FTE)
|
$
|
76,841
|
3.77
|
%
|
$
|
73,093
|
3.98
|
%
|
||||||||
Net non-accrual interest adjustment
|
(298
|
)
|
(0.06
|
%)
|
(1,248
|
)
|
(0.07
|
%)
|
||||||||
Core net interest income/margin (FTE)
|
$
|
76,543
|
3.71
|
%
|
$
|
71,845
|
3.91
|
%
|
For the Years Ended December 31,
|
2016
|
2015
|
2014
|
|||||||||||||||||||||||||||||||||
Average
Balance |
Interest
|
Average
Rate |
Average
Balance |
Interest
|
Average
Rate |
Average
Balance |
Interest
|
Average
Rate |
||||||||||||||||||||||||||||
Interest-earning assets
|
||||||||||||||||||||||||||||||||||||
Securities:
|
||||||||||||||||||||||||||||||||||||
Taxable
|
$
|
154,425
|
$
|
3,712
|
2.40
|
%
|
$
|
202,399
|
$
|
4,750
|
2.35
|
%
|
$
|
226,603
|
$
|
5,369
|
2.37
|
%
|
||||||||||||||||||
Tax-exempt
|
96,894
|
5,283
|
5.45
|
134,651
|
7,752
|
5.76
|
164,439
|
9,200
|
5.59
|
|||||||||||||||||||||||||||
Total securities
|
251,319
|
8,995
|
3.58
|
337,050
|
12,502
|
3.71
|
391,042
|
14,569
|
3.73
|
|||||||||||||||||||||||||||
Federal Reserve and Federal Home Loan Bank stock and other investments
|
6,488
|
332
|
5.12
|
6,505
|
280
|
4.30
|
3,511
|
152
|
4.33
|
|||||||||||||||||||||||||||
Federal funds sold, securities purchased under agreements to resell and interest-bearing deposits due from banks
|
74,443
|
354
|
0.48
|
18,649
|
62
|
0.33
|
45,436
|
150
|
0.33
|
|||||||||||||||||||||||||||
Loans and performing loans held for sale (including non-accrual loans):
|
||||||||||||||||||||||||||||||||||||
Taxable
|
1,660,020
|
68,642
|
4.14
|
1,448,851
|
62,023
|
4.28
|
1,167,719
|
52,766
|
4.52
|
|||||||||||||||||||||||||||
Tax-exempt
|
46,243
|
2,447
|
5.29
|
26,922
|
1,473
|
5.47
|
23,972
|
1,287
|
5.37
|
|||||||||||||||||||||||||||
Total loans
|
1,706,263
|
71,089
|
4.17
|
1,475,773
|
63,496
|
4.30
|
1,191,691
|
54,053
|
4.54
|
|||||||||||||||||||||||||||
Total interest-earning assets
|
2,038,513
|
$
|
80,770
|
3.96
|
%
|
1,837,977
|
$
|
76,340
|
4.15
|
%
|
1,631,680
|
$
|
68,924
|
4.23
|
%
|
|||||||||||||||||||||
Cash and due from banks
|
71,727
|
70,995
|
57,917
|
|||||||||||||||||||||||||||||||||
Other non-interest-earning assets
|
84,159
|
75,608
|
71,910
|
|||||||||||||||||||||||||||||||||
Total assets
|
$
|
2,194,399
|
$
|
1,984,580
|
$
|
1,761,507
|
||||||||||||||||||||||||||||||
Interest-bearing liabilities
|
||||||||||||||||||||||||||||||||||||
Savings, N.O.W. and money market deposits
|
$
|
846,543
|
$
|
2,084
|
0.25
|
%
|
$
|
721,989
|
$
|
1,383
|
0.19
|
%
|
$
|
665,626
|
$
|
1,162
|
0.17
|
%
|
||||||||||||||||||
Time deposits
|
221,695
|
1,305
|
0.59
|
230,546
|
1,422
|
0.62
|
226,998
|
1,309
|
0.58
|
|||||||||||||||||||||||||||
Total savings and time deposits
|
1,068,238
|
3,389
|
0.32
|
952,535
|
2,805
|
0.29
|
892,624
|
2,471
|
0.28
|
|||||||||||||||||||||||||||
Federal funds purchased
|
3
|
-
|
0.76
|
3
|
-
|
0.45
|
8
|
-
|
0.46
|
|||||||||||||||||||||||||||
Other borrowings
|
62,315
|
540
|
0.87
|
74,743
|
442
|
0.59
|
13,051
|
48
|
0.37
|
|||||||||||||||||||||||||||
Total interest-bearing liabilities
|
1,130,556
|
3,929
|
0.35
|
1,027,281
|
3,247
|
0.32
|
905,683
|
2,519
|
0.28
|
|||||||||||||||||||||||||||
Total cost of funds
|
0.20
|
0.18
|
0.16
|
|||||||||||||||||||||||||||||||||
Rate spread
|
3.61
|
3.83
|
3.95
|
|||||||||||||||||||||||||||||||||
Demand deposits
|
832,266
|
742,876
|
659,463
|
|||||||||||||||||||||||||||||||||
Other non-interest-bearing liabilities
|
23,684
|
23,638
|
17,812
|
|||||||||||||||||||||||||||||||||
Total liabilities
|
1,986,506
|
1,793,795
|
1,582,958
|
|||||||||||||||||||||||||||||||||
Stockholders' equity
|
207,893
|
190,785
|
178,549
|
|||||||||||||||||||||||||||||||||
Total liabilities and stockholders' equity
|
$
|
2,194,399
|
$
|
1,984,580
|
$
|
1,761,507
|
||||||||||||||||||||||||||||||
Net interest income (taxable- equivalent basis) and interest rate margin
|
76,841
|
3.77
|
%
|
73,093
|
3.98
|
%
|
66,405
|
4.07
|
%
|
|||||||||||||||||||||||||||
Less: taxable-equivalent basis adjustment
|
(3,051
|
)
|
(3,560
|
)
|
(3,871
|
)
|
||||||||||||||||||||||||||||||
Net interest income
|
$
|
73,790
|
$
|
69,533
|
$
|
62,534
|
In 2016 over 2015
Changes Due to
|
In 2015 over 2014
Changes Due to
|
|||||||||||||||||||||||
Volume
|
Rate
|
Net
Change |
Volume
|
Rate
|
Net
Change |
|||||||||||||||||||
Interest-earning assets
|
||||||||||||||||||||||||
Securities:
|
||||||||||||||||||||||||
Taxable
|
$
|
(1,145
|
)
|
$
|
107
|
$
|
(1,038
|
)
|
$
|
(568
|
)
|
$
|
(51
|
)
|
$
|
(619
|
)
|
|||||||
Tax-exempt
|
(2,074
|
)
|
(395
|
)
|
(2,469
|
)
|
(1,708
|
)
|
260
|
(1,448
|
)
|
|||||||||||||
Total securities
|
(3,219
|
)
|
(288
|
)
|
(3,507
|
)
|
(2,276
|
)
|
209
|
(2,067
|
)
|
|||||||||||||
Federal Reserve and Federal Home Loan Bank stock and other investments
|
(1
|
)
|
53
|
52
|
129
|
(1
|
)
|
128
|
||||||||||||||||
Federal funds sold, securities purchased under agreements to resell and interest-bearing deposits due from banks
|
255
|
37
|
292
|
(88
|
)
|
-
|
(88
|
)
|
||||||||||||||||
Loans and performing loans held for sale (including non-accrual loans):
|
||||||||||||||||||||||||
Taxable
|
8,778
|
(2,159
|
)
|
6,619
|
12,171
|
(2,914
|
)
|
9,257
|
||||||||||||||||
Tax-exempt
|
1,023
|
(49
|
)
|
974
|
161
|
25
|
186
|
|||||||||||||||||
Total loans
|
9,801
|
(2,208
|
)
|
7,593
|
12,332
|
(2,889
|
)
|
9,443
|
||||||||||||||||
Total interest-earning assets
|
6,836
|
(2,406
|
)
|
4,430
|
10,097
|
(2,681
|
)
|
7,416
|
||||||||||||||||
Interest-bearing liabilities
|
||||||||||||||||||||||||
Savings, N.O.W. and money market deposits
|
251
|
450
|
701
|
101
|
120
|
221
|
||||||||||||||||||
Time deposits
|
(47
|
)
|
(70
|
)
|
(117
|
)
|
28
|
85
|
113
|
|||||||||||||||
Total savings and time deposits
|
204
|
380
|
584
|
129
|
205
|
334
|
||||||||||||||||||
Federal funds purchased
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Other borrowings
|
(84
|
)
|
182
|
98
|
350
|
44
|
394
|
|||||||||||||||||
Total interest-bearing liabilities
|
120
|
562
|
682
|
479
|
249
|
728
|
||||||||||||||||||
Net change in net interest income (taxable-equivalent basis)
|
$
|
6,716
|
$
|
(2,968
|
)
|
$
|
3,748
|
$
|
9,618
|
$
|
(2,930
|
)
|
$
|
6,688
|
· |
Liquidity – the ease with which the security can be pledged or sold.
|
· |
Credit quality – the likelihood the security will perform according to its original terms with timely payments of principal and interest.
|
· |
Yield – the rate of return on the investment balanced against liquidity and credit quality.
|
· |
Market risk – can be defined as the sensitivity of the portfolio’s market value to changes in the level of interest rates. Generally, the market value of fixed-rate securities increases when interest rates fall and decreases when interest rates rise. The longer the duration of the security, the greater sensitivity to changes in interest rates.
|
· |
Income risk – is identified as the time period over which fixed payments associated with an investment security can be assured. Generally, the shorter the duration of the security, the greater this risk.
|
· |
Asset/liability management – seeks to limit the change in net interest income as a result of changing interest rates. In a rising rate environment when the maturities or the intervals between the repricing of investments are longer than those of the liabilities that fund them, net interest income will decline. This is referred to as a liability-sensitive position. Conversely, when investments mature or are repriced sooner than their funding sources, net interest income will increase as interest rates rise. This is known as an asset-sensitive position. Asset/liability management attempts to manage the duration of the loan and investment portfolios, as well as that of all funding, to minimize the risk to net interest income while maximizing returns. Security selection is governed by the Company’s investment policy and serves to supplement the Company’s asset/liability position.
|
For the Years Ended December 31,
|
2016
|
2015
|
||||||||||
Average Balance
|
Net Change
|
|||||||||||
U.S. Government agency securities
|
$
|
28,048
|
$
|
85,034
|
$
|
(56,986
|
)
|
|||||
Corporate bonds
|
14,347
|
8,460
|
5,887
|
|||||||||
Collateralized mortgage obligations
|
17,879
|
18,965
|
(1,086
|
)
|
||||||||
Mortgage-backed securities
|
94,151
|
89,940
|
4,211
|
|||||||||
Obligations of states and political subdivisions
|
96,894
|
134,651
|
(37,757
|
)
|
||||||||
Total investment securities
|
$
|
251,319
|
$
|
337,050
|
$
|
(85,731
|
)
|
At December 31,
|
2016
|
2015
|
||||||
Investment securities available for sale:
|
||||||||
U.S. Government agency securities
|
$
|
-
|
$
|
28,516
|
||||
Corporate bonds
|
8,535
|
5,910
|
||||||
Collateralized mortgage obligations
|
17,452
|
15,549
|
||||||
Mortgage-backed securities
|
87,961
|
92,442
|
||||||
Obligations of states and political subdivisions
|
65,294
|
104,682
|
||||||
Total investment securities available for sale
|
179,242
|
247,099
|
||||||
Investment securities held to maturity:
|
||||||||
U.S. Government agency securities
|
2,380
|
43,570
|
||||||
Corporate bonds
|
6,000
|
6,000
|
||||||
Obligations of states and political subdivisions
|
10,400
|
11,739
|
||||||
Total investment securities held to maturity
|
18,780
|
61,309
|
||||||
Total investment securities
|
$
|
198,022
|
$
|
308,408
|
Maturity (in years)
|
||||||||||||||||||||||||||||||||||||||||
Within 1
|
Yield
|
After 1 but
within 5
|
Yield
|
After 5 but
within 10
|
Yield
|
After 10
|
Yield
|
Total
|
Yield
|
|||||||||||||||||||||||||||||||
Investment securities available for sale:
|
||||||||||||||||||||||||||||||||||||||||
Corporate bonds
|
$
|
-
|
-
|
%
|
$
|
-
|
-
|
%
|
$
|
8,535
|
3.69
|
%
|
$
|
-
|
-
|
%
|
$
|
8,535
|
3.69
|
%
|
||||||||||||||||||||
Collateralized mortgage obligations (1)
|
-
|
-
|
17,452
|
1.89
|
-
|
-
|
-
|
-
|
17,452
|
1.89
|
||||||||||||||||||||||||||||||
Mortgage-backed securities (1)
|
6,221
|
1.52
|
70,226
|
2.01
|
11,514
|
2.45
|
-
|
-
|
87,961
|
2.03
|
||||||||||||||||||||||||||||||
Obligations of states and political subdivisions (2)
|
20,610
|
6.04
|
44,089
|
5.55
|
595
|
5.71
|
-
|
-
|
65,294
|
5.71
|
||||||||||||||||||||||||||||||
Total investment securities available for sale
|
26,831
|
4.99
|
131,767
|
3.18
|
20,644
|
3.06
|
-
|
-
|
179,242
|
3.44
|
||||||||||||||||||||||||||||||
Investment securities held to maturity:
|
||||||||||||||||||||||||||||||||||||||||
U.S. Government agency securities
|
-
|
-
|
-
|
-
|
2,380
|
2.30
|
-
|
-
|
2,380
|
2.30
|
||||||||||||||||||||||||||||||
Corporate bonds
|
-
|
-
|
-
|
-
|
6,000
|
5.50
|
-
|
-
|
6,000
|
5.50
|
||||||||||||||||||||||||||||||
Obligations of states and political subdivisions (2)
|
2,636
|
6.72
|
1,253
|
4.60
|
-
|
-
|
6,511
|
5.23
|
10,400
|
5.53
|
||||||||||||||||||||||||||||||
Total investment securities held to maturity
|
2,636
|
6.72
|
1,253
|
4.60
|
8,380
|
4.59
|
6,511
|
5.23
|
18,780
|
5.11
|
||||||||||||||||||||||||||||||
Total investment securities
|
$
|
29,467
|
5.15
|
%
|
$
|
133,020
|
3.19
|
%
|
$
|
29,024
|
3.50
|
%
|
$
|
6,511
|
5.23
|
%
|
$
|
198,022
|
3.59
|
%
|
(1)
|
Assumes maturity dates pursuant to average lives.
|
(2)
|
The yields on obligations of states and political subdivisions are on a fully taxable-equivalent basis.
|
At December 31,
|
2016
|
2015
|
2014
|
2013
|
2012
|
|||||||||||||||||||||||||||||||||||
Commercial and industrial
|
$
|
189,410
|
11.3
|
%
|
$
|
189,769
|
11.4
|
%
|
$
|
177,813
|
13.1
|
%
|
$
|
171,199
|
16.0
|
%
|
$
|
168,709
|
21.6
|
%
|
||||||||||||||||||||
Commercial real estate
|
731,986
|
43.7
|
696,787
|
41.8
|
560,524
|
41.4
|
464,560
|
43.5
|
359,211
|
46.0
|
||||||||||||||||||||||||||||||
Multifamily
|
402,935
|
24.0
|
426,549
|
25.6
|
309,666
|
22.8
|
184,624
|
17.3
|
9,261
|
1.2
|
||||||||||||||||||||||||||||||
Mixed use commercial
|
78,807
|
4.7
|
78,787
|
4.7
|
34,806
|
2.6
|
4,797
|
0.4
|
799
|
0.1
|
||||||||||||||||||||||||||||||
Real estate construction
|
41,028
|
2.5
|
37,233
|
2.2
|
26,206
|
1.9
|
6,565
|
0.6
|
15,469
|
2.0
|
||||||||||||||||||||||||||||||
Residential mortgages
|
185,112
|
11.0
|
186,313
|
11.2
|
187,828
|
13.9
|
169,552
|
15.9
|
146,575
|
18.8
|
||||||||||||||||||||||||||||||
Home equity
|
42,419
|
2.5
|
44,951
|
2.7
|
50,982
|
3.8
|
57,112
|
5.3
|
66,468
|
8.5
|
||||||||||||||||||||||||||||||
Consumer
|
4,867
|
0.3
|
6,058
|
0.4
|
7,602
|
0.5
|
10,439
|
1.0
|
14,288
|
1.8
|
||||||||||||||||||||||||||||||
Total loans
|
$
|
1,676,564
|
100.0
|
%
|
$
|
1,666,447
|
100.0
|
%
|
$
|
1,355,427
|
100.0
|
%
|
$
|
1,068,848
|
100.0
|
%
|
$
|
780,780
|
100.0
|
%
|
One Year or
Less
|
One Through
Five Years
|
Over Five
Years
|
Total
|
|||||||||||||
Commercial and industrial
|
$
|
98,059
|
$
|
72,106
|
$
|
19,245
|
$
|
189,410
|
||||||||
Real estate construction
|
33,205
|
428
|
7,395
|
41,028
|
||||||||||||
Total
|
$
|
131,264
|
$
|
72,534
|
$
|
26,640
|
$
|
230,438
|
||||||||
Loans maturing after one year with:
|
||||||||||||||||
Fixed interest rate
|
$
|
44,155
|
$
|
18,468
|
$
|
62,623
|
||||||||||
Variable interest rate
|
$
|
28,379
|
$
|
8,172
|
$
|
36,551
|
At December 31,
|
2016
|
2015
|
2014
|
2013
|
2012
|
|||||||||||||||
Non-accrual loans
|
$
|
5,560
|
$
|
5,528
|
$
|
12,981
|
$
|
15,183
|
$
|
16,435
|
||||||||||
Loans 90 days or more past due and still accruing
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
5,560
|
$
|
5,528
|
$
|
12,981
|
$
|
15,183
|
$
|
16,435
|
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||||||||
Balance, January 1
|
$
|
20,685
|
$
|
19,200
|
$
|
17,263
|
$
|
17,781
|
$
|
39,958
|
||||||||||
Charge-offs:
|
||||||||||||||||||||
Commercial and industrial
|
416
|
744
|
420
|
2,867
|
8,534
|
|||||||||||||||
Commercial real estate
|
103
|
-
|
-
|
383
|
15,794
|
|||||||||||||||
Real estate construction
|
-
|
-
|
-
|
-
|
3,671
|
|||||||||||||||
Residential mortgages
|
-
|
-
|
32
|
126
|
3,727
|
|||||||||||||||
Home equity
|
19
|
-
|
-
|
558
|
1,953
|
|||||||||||||||
Consumer
|
72
|
14
|
40
|
166
|
267
|
|||||||||||||||
Total charge-offs
|
610
|
758
|
492
|
4,100
|
33,946
|
|||||||||||||||
Recoveries:
|
||||||||||||||||||||
Commercial and industrial
|
264
|
1,524
|
797
|
2,077
|
2,456
|
|||||||||||||||
Commercial real estate
|
210
|
39
|
519
|
97
|
-
|
|||||||||||||||
Real estate construction
|
-
|
-
|
-
|
-
|
340
|
|||||||||||||||
Residential mortgages
|
42
|
32
|
16
|
5
|
115
|
|||||||||||||||
Home equity
|
13
|
22
|
50
|
32
|
246
|
|||||||||||||||
Consumer
|
13
|
26
|
47
|
121
|
112
|
|||||||||||||||
Total recoveries
|
542
|
1,643
|
1,429
|
2,332
|
3,269
|
|||||||||||||||
Net charge-offs (recoveries)
|
68
|
(885
|
)
|
(937
|
)
|
1,768
|
30,677
|
|||||||||||||
(Credit) provision for loan losses
|
(500
|
)
|
600
|
1,000
|
1,250
|
8,500
|
||||||||||||||
Balance, December 31
|
$
|
20,117
|
$
|
20,685
|
$
|
19,200
|
$
|
17,263
|
$
|
17,781
|
Year ended December 31,
|
2016
|
2015
|
2014
|
2013
|
2012
|
|||||||||||||||
Loans:
|
||||||||||||||||||||
Average
|
$
|
1,704,814
|
$
|
1,471,542
|
$
|
1,191,147
|
$
|
905,613
|
$
|
859,790
|
||||||||||
At end of period
|
1,676,564
|
1,666,447
|
1,355,427
|
1,068,848
|
780,780
|
|||||||||||||||
Non-performing loans/total loans (1)
|
0.33
|
%
|
0.33
|
%
|
0.96
|
%
|
1.42
|
%
|
2.10
|
%
|
||||||||||
Non-performing assets/total assets
|
0.30
|
0.25
|
0.68
|
0.89
|
1.17
|
|||||||||||||||
Net charge-offs (recoveries)/average loans
|
0.00
|
(0.06
|
)
|
(0.08
|
)
|
0.20
|
3.57
|
|||||||||||||
Allowance for loan losses/total loans (1)
|
1.20
|
1.24
|
1.42
|
1.62
|
2.28
|
|||||||||||||||
(1) Excluding loans held-for-sale. |
At December 31,
|
2016
|
% of
Total |
2015
|
% of
Total |
2014
|
% of
Total |
2013
|
% of
Total |
2012
|
% of
Total |
||||||||||||||||||||||||||||||
Commercial and industrial
|
$
|
2,132
|
10.6
|
%
|
$
|
1,875
|
9.1
|
%
|
$
|
1,560
|
8.1
|
%
|
$
|
2,615
|
15.1
|
%
|
$
|
6,181
|
34.8
|
%
|
||||||||||||||||||||
Commercial real estate
|
8,030
|
39.9
|
7,019
|
33.9
|
6,777
|
35.3
|
6,572
|
38.1
|
5,965
|
33.5
|
||||||||||||||||||||||||||||||
Multifamily
|
3,623
|
18.0
|
4,688
|
22.7
|
4,018
|
20.9
|
2,159
|
12.5
|
150
|
0.8
|
||||||||||||||||||||||||||||||
Mixed use commercial
|
730
|
3.6
|
766
|
3.7
|
261
|
1.4
|
54
|
0.3
|
34
|
0.2
|
||||||||||||||||||||||||||||||
Real estate construction
|
560
|
2.8
|
386
|
1.9
|
383
|
2.0
|
88
|
0.5
|
141
|
0.8
|
||||||||||||||||||||||||||||||
Residential mortgages
|
2,001
|
9.9
|
2,476
|
12.0
|
3,027
|
15.8
|
2,463
|
14.3
|
1,576
|
8.9
|
||||||||||||||||||||||||||||||
Home equity
|
515
|
2.6
|
639
|
3.1
|
709
|
3.7
|
745
|
4.3
|
907
|
5.1
|
||||||||||||||||||||||||||||||
Consumer
|
62
|
0.3
|
106
|
0.4
|
166
|
0.8
|
241
|
1.4
|
189
|
1.1
|
||||||||||||||||||||||||||||||
Unallocated
|
2,464
|
12.3
|
2,730
|
13.2
|
2,299
|
12.0
|
2,326
|
13.5
|
2,638
|
14.8
|
||||||||||||||||||||||||||||||
Total
|
$
|
20,117
|
100.0
|
%
|
$
|
20,685
|
100.0
|
%
|
$
|
19,200
|
100.0
|
%
|
$
|
17,263
|
100.0
|
%
|
$
|
17,781
|
100.0
|
%
|
2016
|
2015
|
2014
|
||||||||||||||||||||||
Average
|
Average
Rate Paid |
Average
|
Average
Rate Paid |
Average
|
Average
Rate Paid |
|||||||||||||||||||
Demand deposits
|
$
|
832,266
|
-
|
%
|
$
|
742,876
|
-
|
%
|
$
|
659,463
|
-
|
%
|
||||||||||||
Savings deposits
|
345,822
|
0.14
|
315,898
|
0.15
|
302,385
|
0.15
|
||||||||||||||||||
N.O.W. and money market deposits
|
500,721
|
0.32
|
406,091
|
0.22
|
363,241
|
0.20
|
||||||||||||||||||
Time certificates of $100,000 or more
|
164,511
|
0.60
|
171,394
|
0.62
|
165,389
|
0.55
|
||||||||||||||||||
Other time deposits
|
57,184
|
0.56
|
59,152
|
0.62
|
61,609
|
0.64
|
||||||||||||||||||
Total
|
$
|
1,900,504
|
0.18
|
%
|
$
|
1,695,411
|
0.17
|
%
|
$
|
1,552,087
|
0.16
|
%
|
3 months or less
|
$
|
100,127
|
||
Over 3 through 6 months
|
11,459
|
|||
Over 6 through 12 months
|
13,882
|
|||
Over 12 months
|
22,627
|
|||
Total
|
$
|
148,095
|
Federal Home Loan Bank Borrowings
|
Federal Funds Purchased
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Daily average outstanding
|
$
|
62,315
|
$
|
74,743
|
$
|
3
|
$
|
3
|
||||||||
Average interest rate paid
|
0.87
|
%
|
0.59
|
%
|
0.76
|
%
|
0.45
|
%
|
||||||||
Maximum amount outstanding at any month-end
|
$
|
175,000
|
$
|
165,000
|
$
|
-
|
$
|
-
|
||||||||
December 31 balance
|
15,000
|
165,000
|
-
|
-
|
||||||||||||
Weighted-average interest rate on balances outstanding
|
1.76
|
%
|
0.63
|
%
|
-
|
%
|
-
|
%
|
Contractual Obligations
|
Total
|
Less than 1 year
|
1 - 3 years
|
3 - 5 years
|
More than 5
years
|
|||||||||||||||
Time deposits
|
$
|
196,703
|
$
|
159,193
|
$
|
27,485
|
$
|
9,831
|
$
|
194
|
||||||||||
FHLB borrowings | 15,000 | - | - | 15,000 | - | |||||||||||||||
Operating lease obligations
|
7,391
|
1,679
|
2,578
|
1,502
|
1,632
|
|||||||||||||||
Capital lease obligations
|
5,748
|
341
|
701
|
737
|
3,969
|
|||||||||||||||
Performance and financial letters of credit
|
14,270
|
13,959
|
220
|
-
|
91
|
|||||||||||||||
Total
|
$
|
239,112
|
$
|
175,172
|
$
|
30,984
|
$
|
27,070
|
$
|
5,886
|
|
|
Ratios
|
|||||||||||||||
Total stockholders' equity
|
$
|
215,028
|
Total assets
|
$
|
2,092,291
|
10.28
|
%
|
(1)
|
|
||||||||
Less: intangible assets
|
(2,722
|
)
|
Less: intangible assets
|
(2,722
|
)
|
||||||||||||
Tangible common equity
|
$
|
212,306
|
Tangible assets
|
$
|
2,089,569
|
10.16
|
%
|
(2)
|
|
(1)
|
The ratio of total stockholders' equity to total assets is the most comparable U.S. GAAP measure to the non-GAAP tangible common equity ratio presented herein.
|
|
(2)
|
TCE ratio.
|
(dollars in thousands)
|
0 to 3
Months
|
4 to 6
Months
|
7 to 12
Months
|
1 to 3
Years
|
More Than
3 Years
|
Not Rate
Sensitive
|
Total
|
|||||||||||||||||||||
Interest-earning assets
|
||||||||||||||||||||||||||||
Loans and performing loans held for sale (1)
|
$
|
301,229
|
$
|
73,358
|
$
|
142,567
|
$
|
471,305
|
$
|
682,853
|
$
|
5,252
|
$
|
1,676,564
|
||||||||||||||
Federal Reserve and Federal Home Loan
|
||||||||||||||||||||||||||||
Bank stock and other investments (2)
|
-
|
-
|
-
|
-
|
-
|
4,524
|
4,524
|
|||||||||||||||||||||
Investment securities (3)
|
7,293
|
16,052
|
12,484
|
68,403
|
93,790
|
-
|
198,022
|
|||||||||||||||||||||
Interest-bearing deposits with banks and fed funds sold
|
87,282
|
-
|
-
|
-
|
-
|
-
|
87,282
|
|||||||||||||||||||||
Total interest-earning assets
|
$
|
395,804
|
$
|
89,410
|
$
|
155,051
|
$
|
539,708
|
$
|
776,643
|
$
|
9,776
|
$
|
1,966,392
|
||||||||||||||
Interest-bearing liabilities
|
||||||||||||||||||||||||||||
Savings, N.O.W. and money market deposits (4)
|
$
|
336,048
|
$
|
32,381
|
$
|
24,927
|
$
|
108,027
|
$
|
272,692
|
$
|
-
|
$
|
774,075
|
||||||||||||||
Time deposits (5)
|
115,483
|
19,816
|
23,894
|
27,485
|
10,025
|
-
|
196,703
|
|||||||||||||||||||||
Borrowings
|
-
|
-
|
-
|
-
|
15,000
|
-
|
15,000
|
|||||||||||||||||||||
Total interest-bearing liabilities
|
$
|
451,531
|
$
|
52,197
|
$
|
48,821
|
$
|
135,512
|
$
|
297,717
|
$
|
-
|
$
|
985,778
|
||||||||||||||
Gap
|
$
|
(55,727
|
)
|
$
|
37,213
|
$
|
106,230
|
$
|
404,196
|
$
|
478,926
|
$
|
9,776
|
$
|
980,614
|
|||||||||||||
Cumulative difference between interest earning assets and interest-bearing liabilities
|
$
|
(55,727
|
)
|
$
|
(18,514
|
)
|
$
|
87,716
|
$
|
491,912
|
$
|
970,838
|
$
|
980,614
|
||||||||||||||
Cumulative difference/total assets
|
(2.66
|
%)
|
(0.89
|
%)
|
4.19
|
%
|
23.52
|
%
|
46.42
|
%
|
46.89
|
%
|
(1)
|
Based on contractual maturity and instrument repricing date if applicable; projected prepayments and prepayments of principal based on experience.
|
(2) |
Federal Reserve and Federal Home Loan Bank stock and other investments is not considered rate sensitive.
|
(3)
|
Based on contractual maturity, instrument repricing dates if applicable and projected prepayments.
|
(4) |
Savings and N.O.W. deposits decay is calculated using an estimated weighted-average life of 6.4 years. Money market deposits are included in the 0 to 3 months category.
|
(5) |
Based on contractual maturity.
|
Estimated NII Sensitivity
at December 31, 2016
|
||||||||||||
Time Horizon
|
-100 basis point rate ramp
|
Base case
|
+200 basis point rate ramp
|
|||||||||
Year One
|
(1.8
|
%)
|
0.0
|
%
|
1.0
|
%
|
||||||
Year Two
|
(6.3
|
%)
|
0.1
|
%
|
6.1
|
%
|
Rate Change
|
Estimated EVE Sensitivity
at December 31, 2016
|
|||
+200 basis point shock
|
10.0
|
%
|
||
-100 basis point shock
|
(16.3
|
%)
|
December 31, 2016
|
December 31, 2015
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
||||||||
Cash and non-interest-bearing deposits due from banks
|
$
|
37,572
|
$
|
75,272
|
||||
Interest-bearing deposits due from banks
|
87,282
|
22,814
|
||||||
Total cash and cash equivalents
|
124,854
|
98,086
|
||||||
Federal Reserve and Federal Home Loan Bank stock and other investments
|
4,524
|
10,756
|
||||||
Investment securities:
|
||||||||
Available for sale, at fair value
|
179,242
|
247,099
|
||||||
Held to maturity (fair value of $19,259 and $63,272, respectively)
|
18,780
|
61,309
|
||||||
Total investment securities
|
198,022
|
308,408
|
||||||
Loans
|
1,676,564
|
1,666,447
|
||||||
Allowance for loan losses
|
20,117
|
20,685
|
||||||
Net loans
|
1,656,447
|
1,645,762
|
||||||
Loans held for sale
|
-
|
1,666
|
||||||
Premises and equipment, net
|
24,725
|
23,240
|
||||||
Bank-owned life insurance
|
53,756
|
52,383
|
||||||
Deferred tax assets, net
|
14,384
|
15,845
|
||||||
Accrued interest and loan fees receivable
|
5,742
|
5,859
|
||||||
Goodwill and other intangibles
|
2,722
|
2,864
|
||||||
Other real estate owned ("OREO")
|
650
|
-
|
||||||
Other assets
|
6,465
|
3,723
|
||||||
TOTAL ASSETS
|
$
|
2,092,291
|
$
|
2,168,592
|
||||
LIABILITIES & STOCKHOLDERS' EQUITY
|
||||||||
Demand deposits
|
$
|
867,404
|
$
|
787,944
|
||||
Savings, N.O.W. and money market deposits
|
774,075
|
768,036
|
||||||
Subtotal core deposits
|
1,641,479
|
1,555,980
|
||||||
Time deposits
|
196,703
|
224,643
|
||||||
Total deposits
|
1,838,182
|
1,780,623
|
||||||
Borrowings
|
15,000
|
165,000
|
||||||
Unfunded pension liability
|
7,997
|
6,428
|
||||||
Capital leases
|
4,261
|
4,395
|
||||||
Other liabilities
|
11,823
|
14,888
|
||||||
TOTAL LIABILITIES
|
1,877,263
|
1,971,334
|
||||||
COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDERS' EQUITY
|
||||||||
Common stock (par value $2.50; 15,000,000 shares authorized;issued 14,102,617 and 13,966,292, respectively;outstanding 11,936,879 and 11,800,554, respectively)
|
35,256
|
34,916
|
||||||
Surplus
|
49,532
|
46,239
|
||||||
Retained earnings
|
145,173
|
130,093
|
||||||
Treasury stock at par (2,165,738 shares)
|
(5,414
|
)
|
(5,414
|
)
|
||||
Accumulated other comprehensive loss, net of tax
|
(9,519
|
)
|
(8,576
|
)
|
||||
TOTAL STOCKHOLDERS' EQUITY
|
215,028
|
197,258
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
2,092,291
|
$
|
2,168,592
|
For the Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
INTEREST INCOME
|
||||||||||||
Loans and loan fees
|
$
|
70,128
|
$
|
62,914
|
$
|
53,570
|
||||||
U.S. Government agency obligations
|
676
|
2,079
|
2,320
|
|||||||||
Obligations of states and political subdivisions
|
3,400
|
4,774
|
5,812
|
|||||||||
Collateralized mortgage obligations
|
353
|
593
|
860
|
|||||||||
Mortgage-backed securities
|
1,846
|
1,767
|
1,936
|
|||||||||
Corporate bonds
|
630
|
311
|
253
|
|||||||||
Federal funds sold, securities purchased under agreements to resell and interest-bearing deposits due from banks
|
354
|
62
|
150
|
|||||||||
Dividends
|
332
|
280
|
152
|
|||||||||
Total interest income
|
77,719
|
72,780
|
65,053
|
|||||||||
INTEREST EXPENSE
|
||||||||||||
Savings, N.O.W. and money market deposits
|
2,084
|
1,383
|
1,162
|
|||||||||
Time deposits
|
1,305
|
1,422
|
1,309
|
|||||||||
Borrowings
|
540
|
442
|
48
|
|||||||||
Total interest expense
|
3,929
|
3,247
|
2,519
|
|||||||||
Net interest income
|
73,790
|
69,533
|
62,534
|
|||||||||
(Credit) provision for loan losses
|
(500
|
)
|
600
|
1,000
|
||||||||
Net interest income after (credit) provision for loan losses
|
74,290
|
68,933
|
61,534
|
|||||||||
NON-INTEREST INCOME
|
||||||||||||
Service charges on deposit accounts
|
2,449
|
3,042
|
3,681
|
|||||||||
Other service charges, commissions and fees
|
2,891
|
2,718
|
3,084
|
|||||||||
Fiduciary fees
|
-
|
-
|
1,023
|
|||||||||
Net gain on sale of securities available for sale
|
617
|
319
|
19
|
|||||||||
Net gain on sale of portfolio loans
|
457
|
568
|
217
|
|||||||||
Net gain on sale of mortgage loans originated for sale
|
292
|
356
|
283
|
|||||||||
Net gain on sale of premises and equipment
|
-
|
-
|
751
|
|||||||||
Income from bank-owned life insurance
|
1,373
|
1,274
|
1,355
|
|||||||||
Other operating income
|
404
|
317
|
487
|
|||||||||
Total non-interest income
|
8,483
|
8,594
|
10,900
|
|||||||||
OPERATING EXPENSES
|
||||||||||||
Employee compensation and benefits
|
35,029
|
33,446
|
34,560
|
|||||||||
Occupancy expense
|
5,476
|
5,675
|
5,535
|
|||||||||
Equipment expense
|
1,829
|
1,636
|
1,730
|
|||||||||
Consulting and professional services
|
2,128
|
2,159
|
2,626
|
|||||||||
FDIC assessment
|
953
|
1,082
|
1,031
|
|||||||||
Data processing
|
811
|
2,123
|
2,204
|
|||||||||
Merger costs
|
2,434
|
-
|
-
|
|||||||||
Nonrecurring project costs
|
-
|
1,443
|
-
|
|||||||||
Other operating expenses
|
6,660
|
6,390
|
5,733
|
|||||||||
Total operating expenses
|
55,320
|
53,954
|
53,419
|
|||||||||
Income before income tax expense
|
27,453
|
23,573
|
19,015
|
|||||||||
Income tax expense
|
7,622
|
5,886
|
3,720
|
|||||||||
NET INCOME
|
$
|
19,831
|
$
|
17,687
|
$
|
15,295
|
||||||
EARNINGS PER COMMON SHARE - BASIC
|
$
|
1.67
|
$
|
1.50
|
$
|
1.32
|
||||||
EARNINGS PER COMMON SHARE - DILUTED
|
$
|
1.66
|
$
|
1.49
|
$
|
1.31
|
||||||
WEIGHTED AVERAGE COMMON SHARES - BASIC
|
11,882,647
|
11,756,451
|
11,626,354
|
|||||||||
WEIGHTED AVERAGE COMMON SHARES - DILUTED
|
11,972,372
|
11,833,504
|
11,682,142
|
For the Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Net income
|
$
|
19,831
|
$
|
17,687
|
$
|
15,295
|
||||||
Other comprehensive income (loss), net of tax and reclassification adjustments:
|
||||||||||||
Net unrealized holding (loss) gain on securities available for sale arising during the period,net of tax of ($887), ($766) and $4,060, respectively
|
(1,334
|
)
|
(1,201
|
)
|
6,732
|
|||||||
Change in unrealized gain (loss) on securities transferred from available for sale to held to maturity, net of tax of $881, $250 and ($1,180), respectively
|
1,324
|
410
|
(1,805
|
)
|
||||||||
Net actuarial adjustment on pension and post-retirement plan benefit obligation,net of tax of ($648), ($628) and ($2,929), respectively
|
(933
|
)
|
(942
|
)
|
(4,481
|
)
|
||||||
Total other comprehensive (loss) income, net of tax
|
(943
|
)
|
(1,733
|
)
|
446
|
|||||||
Total comprehensive income
|
$
|
18,888
|
$
|
15,954
|
$
|
15,741
|
For the Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Common stock
|
||||||||||||
Balance, January 1
|
$
|
34,916
|
$
|
34,591
|
$
|
34,348
|
||||||
Dividend reinvestment (80,499, 33,566 and 6,671 shares issued, respectively)
|
201
|
85
|
16
|
|||||||||
Stock options exercised (11,300, 39,334 and 18,735 shares issued, respectively)
|
28
|
98
|
46
|
|||||||||
Stock-based compensation
|
111
|
142
|
181
|
|||||||||
Ending balance
|
35,256
|
34,916
|
34,591
|
|||||||||
Surplus
|
||||||||||||
Balance, January 1
|
46,239
|
44,230
|
43,280
|
|||||||||
Dividend reinvestment
|
2,100
|
761
|
120
|
|||||||||
Stock options exercised
|
173
|
441
|
200
|
|||||||||
Stock-based compensation
|
1,020
|
807
|
630
|
|||||||||
Ending balance
|
49,532
|
46,239
|
44,230
|
|||||||||
Retained earnings
|
||||||||||||
Balance, January 1
|
130,093
|
116,169
|
102,273
|
|||||||||
Net income
|
19,831
|
17,687
|
15,295
|
|||||||||
Cash dividends on common stock ($0.40, $0.32 and $0.12 per share, respectively)
|
(4,751
|
)
|
(3,763
|
)
|
(1,399
|
)
|
||||||
Ending balance
|
145,173
|
130,093
|
116,169
|
|||||||||
Treasury stock
|
||||||||||||
Balance, January 1
|
(5,414
|
)
|
(5,414
|
)
|
(5,414
|
)
|
||||||
Ending balance
|
(5,414
|
)
|
(5,414
|
)
|
(5,414
|
)
|
||||||
Accumulated other comprehensive loss, net of tax
|
||||||||||||
Balance, January 1
|
(8,576
|
)
|
(6,843
|
)
|
(7,289
|
)
|
||||||
Other comprehensive (loss) income
|
(943
|
)
|
(1,733
|
)
|
446
|
|||||||
Ending balance
|
(9,519
|
)
|
(8,576
|
)
|
(6,843
|
)
|
||||||
Total stockholders' equity
|
$
|
215,028
|
$
|
197,258
|
$
|
182,733
|
For the Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
NET INCOME
|
$
|
19,831
|
$
|
17,687
|
$
|
15,295
|
||||||
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
|
||||||||||||
(Credit) provision for loan losses
|
(500
|
)
|
600
|
1,000
|
||||||||
Depreciation and amortization
|
2,429
|
2,331
|
2,358
|
|||||||||
Stock-based compensation - net
|
1,131
|
949
|
811
|
|||||||||
Net amortization of premiums
|
1,155
|
1,136
|
1,188
|
|||||||||
Originations of mortgage loans held for sale
|
(37,198
|
)
|
(39,858
|
)
|
(16,582
|
)
|
||||||
Proceeds from sale of mortgage loans originated for sale
|
39,157
|
39,907
|
15,682
|
|||||||||
Gain on sale of mortgage loans originated for sale
|
(292
|
)
|
(356
|
)
|
(283
|
)
|
||||||
Gain on sale of portfolio loans
|
(457
|
)
|
(568
|
)
|
(217
|
)
|
||||||
Decrease (increase) in other intangibles
|
142
|
127
|
(13
|
)
|
||||||||
Deferred tax expense (benefit)
|
2,118
|
1,014
|
(1,711
|
)
|
||||||||
Decrease (increase) in accrued interest and loan fees receivable
|
117
|
(183
|
)
|
(235
|
)
|
|||||||
(Increase) decrease in other assets
|
(2,743
|
)
|
651
|
(366
|
)
|
|||||||
Adjustment to unfunded pension liability
|
(12
|
)
|
(1,445
|
)
|
(1,365
|
)
|
||||||
Decrease in other liabilities
|
(3,066
|
)
|
(789
|
)
|
(2,011
|
)
|
||||||
Income from bank-owned life insurance
|
(1,373
|
)
|
(1,274
|
)
|
(1,355
|
)
|
||||||
Gain on sale of premises and equipment
|
-
|
-
|
(751
|
)
|
||||||||
Net gain on sale of securities available for sale
|
(617
|
)
|
(319
|
)
|
(19
|
)
|
||||||
Net cash provided by operating activities
|
19,822
|
19,610
|
11,426
|
|||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Principal payments on investment securities - available for sale
|
8,238
|
14,431
|
11,055
|
|||||||||
Proceeds from sale of investment securities - available for sale
|
6,615
|
10,080
|
20,604
|
|||||||||
Maturities and calls of investment securities - available for sale
|
63,555
|
41,370
|
29,634
|
|||||||||
Purchases of investment securities - available for sale
|
(13,188
|
)
|
(16,975
|
)
|
(800
|
)
|
||||||
Maturities and calls of investment securities - held to maturity
|
44,611
|
7,502
|
1,084
|
|||||||||
Purchases of investment securities - held to maturity
|
-
|
(6,000
|
)
|
(3,434
|
)
|
|||||||
Decrease in interest-bearing time deposits in other banks
|
-
|
10,000
|
-
|
|||||||||
Decrease (increase) in Federal Reserve and Federal Home Loan Bank stock and other investments
|
6,232
|
(2,156
|
)
|
(5,737
|
)
|
|||||||
Proceeds from sale of portfolio loans
|
77,016
|
49,871
|
25,443
|
|||||||||
Loan originations - net
|
(87,395
|
)
|
(334,302
|
)
|
(336,005
|
)
|
||||||
Proceeds from sale of premises and equipment
|
-
|
-
|
1,064
|
|||||||||
Purchases of bank-owned life insurance
|
-
|
(6,000
|
)
|
(5,000
|
)
|
|||||||
Purchases of premises and equipment - net
|
(3,914
|
)
|
(1,930
|
)
|
(1,051
|
)
|
||||||
Net cash provided by (used in) investing activities
|
101,770
|
(234,109
|
)
|
(263,143
|
)
|
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Net increase in deposit accounts
|
57,559
|
224,563
|
45,999
|
|||||||||
Net (decrease) increase in short-term borrowings
|
(150,000
|
)
|
20,000
|
130,000
|
||||||||
Proceeds from long-term borrowings
|
-
|
15,000
|
-
|
|||||||||
Proceeds from stock options exercised
|
201
|
539
|
246
|
|||||||||
Cash dividends paid on common stock
|
(4,751
|
)
|
(3,763
|
)
|
(1,399
|
)
|
||||||
Proceeds from shares issued under the dividend reinvestment plan
|
2,301
|
846
|
136
|
|||||||||
Decrease in capital lease payable
|
(134
|
)
|
(116
|
)
|
(101
|
)
|
||||||
Net cash (used in) provided by financing activities
|
(94,824
|
)
|
257,069
|
174,881
|
||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
26,768
|
42,570
|
(76,836
|
)
|
||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
98,086
|
55,516
|
132,352
|
|||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
124,854
|
$
|
98,086
|
$
|
55,516
|
||||||
SUPPLEMENTAL DATA:
|
||||||||||||
Interest paid
|
$
|
3,999
|
$
|
3,185
|
$
|
2,543
|
||||||
Income taxes paid
|
$
|
5,813
|
$
|
4,443
|
$
|
6,314
|
||||||
Loans transferred to held-for-sale
|
$
|
76,810
|
$
|
24,164
|
$
|
50,363
|
||||||
Loans transferred to OREO
|
$
|
650
|
$
|
-
|
$
|
-
|
||||||
Investment securities transferred from available for sale to held to maturity
|
$
|
-
|
$
|
-
|
$
|
48,147
|
Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Weighted average common shares outstanding
|
11,766,912
|
11,649,240
|
11,582,807
|
|||||||||
Weighted average unvested restricted shares
|
115,735
|
107,211
|
43,547
|
|||||||||
Weighted average shares for basic earnings per share
|
11,882,647
|
11,756,451
|
11,626,354
|
|||||||||
Additional diluted shares:
|
||||||||||||
Stock options
|
89,725
|
77,053
|
55,788
|
|||||||||
Weighted average shares for diluted earnings per share
|
11,972,372
|
11,833,504
|
11,682,142
|
Year Ended December 31, 2016
|
Year Ended December 31, 2015
|
|||||||||||||||||||||||||||||||
Unrealized
Gains and
Losses on
Available for
Sale Securities
|
Unrealized Losses
on Securities
Transferred from
Available for Sale
to Held to
Maturity
|
Pension and
Post-
Retirement
Plan Items
|
Total
|
Unrealized
Gains and
Losses on
Available for
Sale Securities
|
Unrealized Losses
on Securities
Transferred from
Available for Sale
to Held to
Maturity
|
Pension and
Post-
Retirement
Plan Items
|
Total
|
|||||||||||||||||||||||||
Beginning balance
|
$
|
1,436
|
$
|
(1,395
|
)
|
$
|
(8,617
|
)
|
$
|
(8,576
|
)
|
$
|
2,637
|
$
|
(1,805
|
)
|
$
|
(7,675
|
)
|
$
|
(6,843
|
)
|
||||||||||
Other comprehensive loss before reclassifications
|
(970
|
)
|
-
|
(1,110
|
)
|
(2,080
|
)
|
(1,010
|
)
|
-
|
(1,091
|
)
|
(2,101
|
)
|
||||||||||||||||||
Amounts reclassified from AOCI
|
(364
|
)
|
1,324
|
177
|
1,137
|
(191
|
)
|
410
|
149
|
368
|
||||||||||||||||||||||
Net other comprehensive (loss) income
|
(1,334
|
)
|
1,324
|
(933
|
)
|
(943
|
)
|
(1,201
|
)
|
410
|
(942
|
)
|
(1,733
|
)
|
||||||||||||||||||
Ending balance
|
$
|
102
|
$
|
(71
|
)
|
$
|
(9,550
|
)
|
$
|
(9,519
|
)
|
$
|
1,436
|
$
|
(1,395
|
)
|
$
|
(8,617
|
)
|
$
|
(8,576
|
)
|
Amount Reclassified from AOCI
|
|||||||||||||
Years Ended December 31,
|
Affected Line Item in the Statement
|
||||||||||||
Details about AOCI Components
|
2016
|
2015
|
2014
|
Where Net Income is Presented
|
|||||||||
Unrealized gains and losses on available for sale securities
|
$
|
617
|
$
|
319
|
$
|
19
|
Net gain on sale of securities available for sale
|
||||||
Unrealized losses on securities transferred from available for sale to held to maturity
|
(2,205
|
)
|
(660
|
)
|
(218
|
)
|
Interest income - U.S. Government agency obligations
|
||||||
Pension and post-retirement plan items
|
(299
|
)
|
(249
|
)
|
(25
|
)
|
Employee compensation and benefits
|
||||||
Subtotal, pre-tax
|
(1,887
|
)
|
(590
|
)
|
(224
|
)
|
|||||||
Income tax effect
|
750
|
222
|
88
|
Income tax expense
|
|||||||||
Total, net of tax
|
$
|
(1,137
|
)
|
$
|
(368
|
)
|
$
|
(136
|
)
|
December 31, 2016
|
December 31, 2015
|
|||||||||||||||||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||||||||||||||
Available for sale:
|
||||||||||||||||||||||||||||||||
U.S. Government agency securities
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
28,977
|
$
|
2
|
$
|
(463
|
)
|
$
|
28,516
|
|||||||||||||||
Obligations of states and political subdivisions
|
63,447
|
1,847
|
-
|
65,294
|
100,215
|
4,467
|
-
|
104,682
|
||||||||||||||||||||||||
Collateralized mortgage obligations
|
17,854
|
-
|
(402
|
)
|
17,452
|
15,795
|
2
|
(248
|
)
|
15,549
|
||||||||||||||||||||||
Mortgage-backed securities
|
88,769
|
79
|
(887
|
)
|
87,961
|
93,719
|
39
|
(1,316
|
)
|
92,442
|
||||||||||||||||||||||
Corporate bonds
|
9,000
|
-
|
(465
|
)
|
8,535
|
6,000
|
-
|
(90
|
)
|
5,910
|
||||||||||||||||||||||
Total available for sale securities
|
179,070
|
1,926
|
(1,754
|
)
|
179,242
|
244,706
|
4,510
|
(2,117
|
)
|
247,099
|
||||||||||||||||||||||
Held to maturity:
|
||||||||||||||||||||||||||||||||
U.S. Government agency securities
|
2,380
|
88
|
-
|
2,468
|
43,570
|
1,450
|
-
|
45,020
|
||||||||||||||||||||||||
Obligations of states and political subdivisions
|
10,400
|
278
|
-
|
10,678
|
11,739
|
536
|
-
|
12,275
|
||||||||||||||||||||||||
Corporate bonds
|
6,000
|
113
|
-
|
6,113
|
6,000
|
7
|
(30
|
)
|
5,977
|
|||||||||||||||||||||||
Total held to maturity securities
|
18,780
|
479
|
-
|
19,259
|
61,309
|
1,993
|
(30
|
)
|
63,272
|
|||||||||||||||||||||||
Total investment securities
|
$
|
197,850
|
$
|
2,405
|
$
|
(1,754
|
)
|
$
|
198,501
|
$
|
306,015
|
$
|
6,503
|
$
|
(2,147
|
)
|
$
|
310,371
|
December 31, 2016
|
||||||||
Amortized
Cost
|
Fair
Value
|
|||||||
Securities available for sale:
|
||||||||
Due in one year or less
|
$
|
26,650
|
$
|
26,831
|
||||
Due from one to five years
|
131,177
|
131,767
|
||||||
Due from five to ten years
|
21,243
|
20,644
|
||||||
Total securities available for sale
|
179,070
|
179,242
|
||||||
Securities held to maturity:
|
||||||||
Due in one year or less
|
2,636
|
2,679
|
||||||
Due from one to five years
|
1,253
|
1,284
|
||||||
Due from five to ten years
|
8,380
|
8,580
|
||||||
Due after ten years
|
6,511
|
6,716
|
||||||
Total securities held to maturity
|
18,780
|
19,259
|
||||||
Total investment securities
|
$
|
197,850
|
$
|
198,501
|
Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Proceeds
|
$
|
6,615
|
$
|
10,080
|
$
|
20,604
|
||||||
Gross realized gains
|
$
|
617
|
$
|
334
|
$
|
271
|
||||||
Gross realized losses
|
-
|
(15
|
)
|
(252
|
)
|
|||||||
Net realized gains
|
$
|
617
|
$
|
319
|
$
|
19
|
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||
December 31, 2016
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
Collateralized mortgage obligations
|
$
|
15,716
|
$
|
(359
|
)
|
$
|
1,736
|
$
|
(43
|
)
|
$
|
17,452
|
$
|
(402
|
)
|
|||||||||
Mortgage-backed securities
|
73,091
|
(887
|
)
|
-
|
-
|
73,091
|
(887
|
)
|
||||||||||||||||
Corporate bonds
|
2,850
|
(150
|
)
|
5,685
|
(315
|
)
|
8,535
|
(465
|
)
|
|||||||||||||||
Total
|
$
|
91,657
|
$
|
(1,396
|
)
|
$
|
7,421
|
$
|
(358
|
)
|
$
|
99,078
|
$
|
(1,754
|
)
|
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||
December 31, 2015
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
U.S. Government agency securities
|
$
|
16,744
|
$
|
(233
|
)
|
$
|
9,770
|
$
|
(230
|
)
|
$
|
26,514
|
$
|
(463
|
)
|
|||||||||
Collateralized mortgage obligations
|
1,831
|
(4
|
)
|
8,200
|
(244
|
)
|
10,031
|
(248
|
)
|
|||||||||||||||
Mortgage-backed securities
|
66,804
|
(884
|
)
|
17,936
|
(432
|
)
|
84,740
|
(1,316
|
)
|
|||||||||||||||
Corporate bonds
|
8,880
|
(120
|
)
|
-
|
-
|
8,880
|
(120
|
)
|
||||||||||||||||
Total
|
$
|
94,259
|
$
|
(1,241
|
)
|
$
|
35,906
|
$
|
(906
|
)
|
$
|
130,165
|
$
|
(2,147
|
)
|
December 31, 2016
|
December 31, 2015
|
|||||||
Commercial and industrial
|
$
|
189,410
|
$
|
189,769
|
||||
Commercial real estate
|
731,986
|
696,787
|
||||||
Multifamily
|
402,935
|
426,549
|
||||||
Mixed use commercial
|
78,807
|
78,787
|
||||||
Real estate construction
|
41,028
|
37,233
|
||||||
Residential mortgages
|
185,112
|
186,313
|
||||||
Home equity
|
42,419
|
44,951
|
||||||
Consumer
|
4,867
|
6,058
|
||||||
Gross loans
|
1,676,564
|
1,666,447
|
||||||
Allowance for loan losses
|
(20,117
|
)
|
(20,685
|
)
|
||||
Net loans at end of period
|
$
|
1,656,447
|
$
|
1,645,762
|
Allowance for Loan Losses
|
Loan Balances
|
|||||||||||||||||||||||
December 31, 2016
|
Individually
evaluated for
impairment
|
Collectively
evaluated for
impairment
|
Ending
balance
|
Individually
evaluated for
impairment
|
Collectively
evaluated for
impairment
|
Ending
balance
|
||||||||||||||||||
Commercial and industrial
|
$
|
4
|
$
|
2,128
|
$
|
2,132
|
$
|
3,592
|
$
|
185,818
|
$
|
189,410
|
||||||||||||
Commercial real estate
|
-
|
8,030
|
8,030
|
3,371
|
728,615
|
731,986
|
||||||||||||||||||
Multifamily
|
-
|
3,623
|
3,623
|
-
|
402,935
|
402,935
|
||||||||||||||||||
Mixed use commercial
|
-
|
730
|
730
|
-
|
78,807
|
78,807
|
||||||||||||||||||
Real estate construction
|
-
|
560
|
560
|
-
|
41,028
|
41,028
|
||||||||||||||||||
Residential mortgages
|
305
|
1,696
|
2,001
|
4,981
|
180,131
|
185,112
|
||||||||||||||||||
Home equity
|
172
|
343
|
515
|
1,579
|
40,840
|
42,419
|
||||||||||||||||||
Consumer
|
26
|
36
|
62
|
210
|
4,657
|
4,867
|
||||||||||||||||||
Unallocated
|
-
|
2,464
|
2,464
|
-
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
507
|
$
|
19,610
|
$
|
20,117
|
$
|
13,733
|
$
|
1,662,831
|
$
|
1,676,564
|
Allowance for Loan Losses
|
Loan Balances
|
|||||||||||||||||||||||
December 31, 2015
|
Individually
evaluated for
impairment
|
Collectively
evaluated for
impairment
|
Ending
balance
|
Individually
evaluated for
impairment
|
Collectively
evaluated for
impairment
|
Ending
balance
|
||||||||||||||||||
Commercial and industrial
|
$
|
-
|
$
|
1,875
|
$
|
1,875
|
$
|
2,872
|
$
|
186,897
|
$
|
189,769
|
||||||||||||
Commercial real estate
|
-
|
7,019
|
7,019
|
4,334
|
692,453
|
696,787
|
||||||||||||||||||
Multifamily
|
-
|
4,688
|
4,688
|
-
|
426,549
|
426,549
|
||||||||||||||||||
Mixed use commercial
|
-
|
766
|
766
|
-
|
78,787
|
78,787
|
||||||||||||||||||
Real estate construction
|
-
|
386
|
386
|
-
|
37,233
|
37,233
|
||||||||||||||||||
Residential mortgages
|
559
|
1,917
|
2,476
|
5,817
|
180,496
|
186,313
|
||||||||||||||||||
Home equity
|
170
|
469
|
639
|
1,683
|
43,268
|
44,951
|
||||||||||||||||||
Consumer
|
48
|
58
|
106
|
379
|
5,679
|
6,058
|
||||||||||||||||||
Unallocated
|
-
|
2,730
|
2,730
|
-
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
777
|
$
|
19,908
|
$
|
20,685
|
$
|
15,085
|
$
|
1,651,362
|
$
|
1,666,447
|
Past Due
|
||||||||||||||||||||||||
December 31, 2016
|
30 - 59 days
|
60 - 89 days
|
90 days and over
|
Total
|
Current
|
Total
|
||||||||||||||||||
Commercial and industrial
|
$
|
28
|
$
|
-
|
$
|
3,288
|
$
|
3,316
|
$
|
186,094
|
$
|
189,410
|
||||||||||||
Commercial real estate
|
-
|
-
|
1,964
|
1,964
|
730,022
|
731,986
|
||||||||||||||||||
Multifamily
|
-
|
-
|
-
|
-
|
402,935
|
402,935
|
||||||||||||||||||
Mixed use commercial
|
-
|
-
|
-
|
-
|
78,807
|
78,807
|
||||||||||||||||||
Real estate construction
|
-
|
-
|
-
|
-
|
41,028
|
41,028
|
||||||||||||||||||
Residential mortgages
|
1,057
|
54
|
143
|
1,254
|
183,858
|
185,112
|
||||||||||||||||||
Home equity
|
-
|
-
|
164
|
164
|
42,255
|
42,419
|
||||||||||||||||||
Consumer
|
87
|
5
|
1
|
93
|
4,774
|
4,867
|
||||||||||||||||||
Total
|
$
|
1,172
|
$
|
59
|
$
|
5,560
|
$
|
6,791
|
$
|
1,669,773
|
$
|
1,676,564
|
||||||||||||
% of Total Loans
|
0.1
|
%
|
0.0
|
%
|
0.3
|
%
|
0.4
|
%
|
99.6
|
%
|
100.0
|
%
|
Past Due
|
||||||||||||||||||||||||
December 31, 2015
|
30 - 59 days
|
60 - 89 days
|
90 days and over
|
Total
|
Current
|
Total
|
||||||||||||||||||
Commercial and industrial
|
$
|
21
|
$
|
-
|
$
|
1,954
|
$
|
1,975
|
$
|
187,794
|
$
|
189,769
|
||||||||||||
Commercial real estate
|
-
|
-
|
1,733
|
1,733
|
695,054
|
696,787
|
||||||||||||||||||
Multifamily
|
-
|
-
|
-
|
-
|
426,549
|
426,549
|
||||||||||||||||||
Mixed use commercial
|
-
|
-
|
-
|
-
|
78,787
|
78,787
|
||||||||||||||||||
Real estate construction
|
-
|
-
|
-
|
-
|
37,233
|
37,233
|
||||||||||||||||||
Residential mortgages
|
512
|
175
|
1,358
|
2,045
|
184,268
|
186,313
|
||||||||||||||||||
Home equity
|
336
|
-
|
406
|
742
|
44,209
|
44,951
|
||||||||||||||||||
Consumer
|
2
|
-
|
77
|
79
|
5,979
|
6,058
|
||||||||||||||||||
Total
|
$
|
871
|
$
|
175
|
$
|
5,528
|
$
|
6,574
|
$
|
1,659,873
|
$
|
1,666,447
|
||||||||||||
% of Total Loans
|
0.1
|
%
|
0.0
|
%
|
0.3
|
%
|
0.4
|
%
|
99.6
|
%
|
100.0
|
%
|
December 31, 2016
|
December 31, 2015
|
|||||||||||||||||||||||
Unpaid
Principal
Balance
|
Recorded
Balance
|
Allowance
Allocated
|
Unpaid
Principal
Balance
|
Recorded
Balance
|
Allowance
Allocated
|
|||||||||||||||||||
With no allowance recorded:
|
||||||||||||||||||||||||
Commercial and industrial
|
$
|
3,588
|
$
|
3,588
|
$
|
-
|
$
|
2,869
|
$
|
2,869
|
$
|
-
|
||||||||||||
Commercial real estate
|
3,617
|
3,371
|
-
|
4,753
|
4,334
|
-
|
||||||||||||||||||
Residential mortgages
|
2,451
|
2,451
|
-
|
3,076
|
2,947
|
-
|
||||||||||||||||||
Home equity
|
1,176
|
1,176
|
-
|
1,233
|
1,233
|
-
|
||||||||||||||||||
Consumer
|
119
|
119
|
-
|
207
|
207
|
-
|
||||||||||||||||||
Subtotal
|
10,951
|
10,705
|
-
|
12,138
|
11,590
|
-
|
||||||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||||||
Commercial and industrial
|
4
|
4
|
4
|
3
|
3
|
-
|
||||||||||||||||||
Residential mortgages
|
2,659
|
2,530
|
305
|
2,870
|
2,870
|
559
|
||||||||||||||||||
Home equity
|
419
|
403
|
172
|
586
|
450
|
170
|
||||||||||||||||||
Consumer
|
91
|
91
|
26
|
172
|
172
|
48
|
||||||||||||||||||
Subtotal
|
3,173
|
3,028
|
507
|
3,631
|
3,495
|
777
|
||||||||||||||||||
Total
|
$
|
14,124
|
$
|
13,733
|
$
|
507
|
$
|
15,769
|
$
|
15,085
|
$
|
777
|
Years Ended December 31,
|
||||||||||||||||||||||||
2016
|
2015
|
2014
|
||||||||||||||||||||||
Average
recorded
investment
in impaired
loans
|
Interest
income
recognized
on impaired
loans
|
Average
recorded
investment
in impaired
loans
|
Interest
income
recognized
on impaired
loans
|
Average
recorded
investment
in impaired
loans
|
Interest
income
recognized
on impaired
loans
|
|||||||||||||||||||
Commercial and industrial
|
$
|
3,996
|
$
|
166
|
$
|
3,313
|
$
|
533
|
$
|
6,961
|
$
|
730
|
||||||||||||
Commercial real estate
|
3,969
|
194
|
7,710
|
688
|
10,823
|
251
|
||||||||||||||||||
Real estate construction
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Residential mortgages
|
5,171
|
200
|
5,645
|
297
|
5,094
|
207
|
||||||||||||||||||
Home equity
|
1,642
|
65
|
1,719
|
67
|
804
|
83
|
||||||||||||||||||
Consumer
|
256
|
12
|
376
|
16
|
248
|
18
|
||||||||||||||||||
Total
|
$
|
15,034
|
$
|
637
|
$
|
18,763
|
$
|
1,601
|
$
|
23,930
|
$
|
1,289
|
December 31, 2016
|
December 31, 2015
|
|||||||
Non-accrual loans
|
$
|
5,560
|
$
|
5,528
|
||||
Non-accrual loans held for sale
|
-
|
-
|
||||||
Loans 90 days or more past due and still accruing
|
-
|
-
|
||||||
OREO
|
650
|
-
|
||||||
Total non-performing assets
|
$
|
6,210
|
$
|
5,528
|
||||
TDRs accruing interest
|
$
|
7,991
|
$
|
9,239
|
||||
TDRs non-accruing
|
$
|
4,348
|
$
|
2,324
|
December 31, 2016
|
December 31, 2015
|
|||||||||||||||||||||||||||||||
Non-
accrual
loans
|
% of
Total
|
Total Loans
|
% of Total
Loans
|
Non-
accrual
loans
|
% of
Total
|
Total Loans
|
% of Total
Loans
|
|||||||||||||||||||||||||
Commercial and industrial
|
$
|
3,288
|
59.2
|
%
|
$
|
189,410
|
0.2
|
%
|
$
|
1,954
|
35.3
|
%
|
$
|
189,769
|
0.1
|
%
|
||||||||||||||||
Commercial real estate
|
1,964
|
35.3
|
731,986
|
0.1
|
1,733
|
31.4
|
696,787
|
0.1
|
||||||||||||||||||||||||
Multifamily
|
-
|
-
|
402,935
|
-
|
-
|
-
|
426,549
|
-
|
||||||||||||||||||||||||
Mixed use commercial
|
-
|
-
|
78,807
|
-
|
-
|
-
|
78,787
|
-
|
||||||||||||||||||||||||
Real estate construction
|
-
|
-
|
41,028
|
-
|
-
|
-
|
37,233
|
-
|
||||||||||||||||||||||||
Residential mortgages
|
143
|
2.6
|
185,112
|
-
|
1,358
|
24.6
|
186,313
|
0.1
|
||||||||||||||||||||||||
Home equity
|
164
|
2.9
|
42,419
|
-
|
406
|
7.3
|
44,951
|
-
|
||||||||||||||||||||||||
Consumer
|
1
|
-
|
4,867
|
-
|
77
|
1.4
|
6,058
|
-
|
||||||||||||||||||||||||
Total
|
$
|
5,560
|
100.0
|
%
|
$
|
1,676,564
|
0.3
|
%
|
$
|
5,528
|
100.0
|
%
|
$
|
1,666,447
|
0.3
|
%
|
Year Ended December 31, 2016
|
Year Ended December 31, 2015
|
|||||||||||||||||||||||||||||||||||||||
Balance at
beginning of
period
|
Charge-
offs
|
Recoveries
|
Provision
(credit) for
loan losses
|
Balance at
end of
period
|
Balance at
beginning of
period
|
Charge-
offs
|
Recoveries
|
(Credit)
provision
for loan
losses
|
Balance at
end of
period
|
|||||||||||||||||||||||||||||||
Commercial and industrial
|
$
|
1,875
|
$
|
(416
|
)
|
$
|
264
|
$
|
409
|
$
|
2,132
|
$
|
1,560
|
$
|
(744
|
)
|
$
|
1,524
|
$
|
(465
|
)
|
$
|
1,875
|
|||||||||||||||||
Commercial real estate
|
7,019
|
(103
|
)
|
210
|
904
|
8,030
|
6,777
|
-
|
39
|
203
|
7,019
|
|||||||||||||||||||||||||||||
Multifamily
|
4,688
|
-
|
-
|
(1,065
|
)
|
3,623
|
4,018
|
-
|
-
|
670
|
4,688
|
|||||||||||||||||||||||||||||
Mixed use commercial
|
766
|
-
|
-
|
(36
|
)
|
730
|
261
|
-
|
-
|
505
|
766
|
|||||||||||||||||||||||||||||
Real estate construction
|
386
|
-
|
-
|
174
|
560
|
383
|
-
|
-
|
3
|
386
|
||||||||||||||||||||||||||||||
Residential mortgages
|
2,476
|
-
|
42
|
(517
|
)
|
2,001
|
3,027
|
-
|
32
|
(583
|
)
|
2,476
|
||||||||||||||||||||||||||||
Home equity
|
639
|
(19
|
)
|
13
|
(118
|
)
|
515
|
709
|
-
|
22
|
(92
|
)
|
639
|
|||||||||||||||||||||||||||
Consumer
|
106
|
(72
|
)
|
13
|
15
|
62
|
166
|
(14
|
)
|
26
|
(72
|
)
|
106
|
|||||||||||||||||||||||||||
Unallocated
|
2,730
|
-
|
-
|
(266
|
)
|
2,464
|
2,299
|
-
|
-
|
431
|
2,730
|
|||||||||||||||||||||||||||||
Total
|
$
|
20,685
|
$
|
(610
|
)
|
$
|
542
|
$
|
(500
|
)
|
$
|
20,117
|
$
|
19,200
|
$
|
(758
|
)
|
$
|
1,643
|
$
|
600
|
$
|
20,685
|
Year Ended December 31, 2014
|
||||||||||||||||||||
Balance at
beginning of
period
|
Charge-
offs
|
Recoveries
|
(Credit)
provision
for loan
losses
|
Balance at
end of
period
|
||||||||||||||||
Commercial and industrial
|
$
|
2,615
|
$
|
(420
|
)
|
$
|
797
|
$
|
(1,432
|
)
|
$
|
1,560
|
||||||||
Commercial real estate
|
6,572
|
-
|
519
|
(314
|
)
|
6,777
|
||||||||||||||
Multifamily
|
2,159
|
-
|
-
|
1,859
|
4,018
|
|||||||||||||||
Mixed use commercial
|
54
|
-
|
-
|
207
|
261
|
|||||||||||||||
Real estate construction
|
88
|
-
|
-
|
295
|
383
|
|||||||||||||||
Residential mortgages
|
2,463
|
(32
|
)
|
16
|
580
|
3,027
|
||||||||||||||
Home equity
|
745
|
-
|
50
|
(86
|
)
|
709
|
||||||||||||||
Consumer
|
241
|
(40
|
)
|
47
|
(82
|
)
|
166
|
|||||||||||||
Unallocated
|
2,326
|
-
|
-
|
(27
|
)
|
2,299
|
||||||||||||||
Total
|
$
|
17,263
|
$
|
(492
|
)
|
$
|
1,429
|
$
|
1,000
|
$
|
19,200
|
· |
At inception, the loan was properly underwritten, did not possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory.
|
· |
At inception, the loan was secured with collateral possessing a loan value adequate to protect the Company from loss.
|
· |
The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance.
|
· |
During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants or the borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted.
|
· |
Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.
|
· |
Loans are inadequately protected by the current net worth and paying capacity of the obligor.
|
· |
The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.
|
· |
Loans have a distinct possibility that the Company will sustain some loss if deficiencies are not corrected.
|
· |
Unusual courses of action are needed to maintain a high probability of repayment.
|
· |
The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments.
|
· |
The lender is forced into a subordinated or unsecured position due to flaws in documentation.
|
· |
Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms.
|
· |
The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.
|
· |
There is a significant deterioration in market conditions to which the borrower is highly vulnerable.
|
· |
Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable.
|
· |
The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.
|
· |
The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.
|
December 31, 2016
|
December 31, 2015
|
|||||||||||||||||||||||||||||||
Grade
|
Grade
|
|||||||||||||||||||||||||||||||
Pass
|
Special
mention
|
Substandard
|
Total
|
Pass
|
Special
mention
|
Substandard
|
Total
|
|||||||||||||||||||||||||
Commercial and industrial
|
$
|
175,541
|
$
|
1,292
|
$
|
12,577
|
$
|
189,410
|
$
|
180,024
|
$
|
3,088
|
$
|
6,657
|
$
|
189,769
|
||||||||||||||||
Commercial real estate
|
719,688
|
2,300
|
9,998
|
731,986
|
687,210
|
6,109
|
3,468
|
696,787
|
||||||||||||||||||||||||
Multifamily
|
402,935
|
-
|
-
|
402,935
|
426,549
|
-
|
-
|
426,549
|
||||||||||||||||||||||||
Mixed use commercial
|
76,566
|
2,241
|
-
|
78,807
|
78,779
|
-
|
8
|
78,787
|
||||||||||||||||||||||||
Real estate construction
|
39,495
|
-
|
1,533
|
41,028
|
37,233
|
-
|
-
|
37,233
|
||||||||||||||||||||||||
Residential mortgages
|
184,800
|
-
|
312
|
185,112
|
184,781
|
-
|
1,532
|
186,313
|
||||||||||||||||||||||||
Home equity
|
42,255
|
-
|
164
|
42,419
|
44,545
|
-
|
406
|
44,951
|
||||||||||||||||||||||||
Consumer
|
4,867
|
-
|
-
|
4,867
|
5,939
|
-
|
119
|
6,058
|
||||||||||||||||||||||||
Total
|
$
|
1,646,147
|
$
|
5,833
|
$
|
24,584
|
$
|
1,676,564
|
$
|
1,645,060
|
$
|
9,197
|
$
|
12,190
|
$
|
1,666,447
|
||||||||||||||||
% of Total
|
98.2
|
%
|
0.3
|
%
|
1.5
|
%
|
100.0
|
%
|
98.7
|
%
|
0.6
|
%
|
0.7
|
%
|
100.0
|
%
|
December 31, 2016
|
December 31, 2015
|
|||||||||||||||
TDRs Outstanding
|
Number of
Loans
|
Outstanding
Recorded
Balance
|
Number of
Loans
|
Outstanding
Recorded
Balance
|
||||||||||||
Commercial and industrial
|
13
|
$
|
3,586
|
17
|
$
|
1,116
|
||||||||||
Commercial real estate
|
3
|
2,472
|
5
|
4,131
|
||||||||||||
Residential mortgages
|
22
|
4,716
|
22
|
4,653
|
||||||||||||
Home equity
|
5
|
1,355
|
5
|
1,362
|
||||||||||||
Consumer
|
6
|
210
|
8
|
301
|
||||||||||||
Total
|
49
|
$
|
12,339
|
57
|
$
|
11,563
|
Years Ended December 31,
|
||||||||||||||||||||||||
2016
|
2015
|
|||||||||||||||||||||||
New TDRs
|
Number
of
Loans
|
Pre-Modification
Outstanding
Recorded
Balance
|
Post-Modification
Outstanding
Recorded
Balance
|
Number
of
Loans
|
Pre-Modification
Outstanding
Recorded
Balance
|
Post-Modification
Outstanding
Recorded
Balance
|
||||||||||||||||||
Commercial and industrial
|
5
|
$
|
3,196
|
$
|
3,082
|
4
|
$
|
388
|
$
|
388
|
||||||||||||||
Residential mortgages
|
-
|
-
|
-
|
3
|
300
|
305
|
||||||||||||||||||
Home equity
|
-
|
-
|
-
|
1
|
192
|
192
|
||||||||||||||||||
Consumer
|
-
|
-
|
-
|
1
|
43
|
43
|
||||||||||||||||||
Total
|
5
|
$
|
3,196
|
$
|
3,082
|
9
|
$
|
923
|
$
|
928
|
Year Ended December 31,
|
||||||||||||
2014
|
||||||||||||
New TDRs
|
Number
of
Loans
|
Pre-Modification
Outstanding
Recorded
Balance
|
Post-Modification
Outstanding
Recorded
Balance
|
|||||||||
Commercial and industrial
|
10
|
$
|
1,877
|
$
|
1,877
|
|||||||
Commercial real estate
|
2
|
5,161
|
5,161
|
|||||||||
Residential mortgages
|
4
|
581
|
581
|
|||||||||
Home equity
|
5
|
1,219
|
1,219
|
|||||||||
Consumer
|
4
|
145
|
145
|
|||||||||
Total
|
25
|
$
|
8,983
|
$
|
8,983
|
Years Ended December 31,
|
||||||||||||||||||||||||
2016
|
2015
|
2014
|
||||||||||||||||||||||
Defaulted TDRs
|
Number
of Loans
|
Outstanding
Recorded
Balance
|
Number
of Loans
|
Outstanding
Recorded
Balance
|
Number
of Loans
|
Outstanding
Recorded
Balance
|
||||||||||||||||||
Commercial real estate
|
-
|
$
|
-
|
-
|
$
|
-
|
2
|
$
|
1,529
|
|||||||||||||||
Consumer
|
-
|
-
|
1
|
46
|
-
|
-
|
||||||||||||||||||
Total
|
-
|
$
|
-
|
1
|
$
|
46
|
2
|
$
|
1,529
|
Estimated
Useful Lives
|
2016
|
2015
|
|||||||
Land
|
Indefinite
|
$
|
3,014
|
$
|
3,015
|
||||
Premises
|
30 - 40 years
|
33,413
|
33,341
|
||||||
Furniture, fixtures & equipment
|
3 - 7 years
|
18,479
|
16,189
|
||||||
Leasehold improvements
|
2 - 25 years
|
3,991
|
3,937
|
||||||
58,897
|
56,482
|
||||||||
Accumulated depreciation and amortization
|
(34,172
|
)
|
(33,242
|
)
|
|||||
Balance at end of year
|
|
$
|
24,725
|
$
|
23,240
|
Year During Which Time Deposit Matures
|
Time Deposits
> $250,000
|
Other Time
Deposits
|
||||||
2017
|
$
|
98,723
|
$
|
60,470
|
||||
2018
|
10,573
|
14,391
|
||||||
2019
|
511
|
2,010
|
||||||
2020
|
461
|
3,519
|
||||||
2021 and thereafter
|
2,502
|
3,543
|
||||||
Total
|
$
|
112,770
|
$
|
83,933
|
As of or for the Year Ended
December 31, 2016
|
Federal Home Loan
Bank Borrowings
Short-Term
|
Federal Home Loan
Bank Borrowings
Long-Term
|
Federal Funds
Purchased
|
|||||||||
Daily average outstanding
|
$
|
47,315
|
$
|
15,000
|
$
|
3
|
||||||
Total interest cost
|
276
|
264
|
-
|
|||||||||
Average interest rate paid
|
0.58
|
%
|
1.76
|
%
|
0.76
|
%
|
||||||
Maximum amount outstanding at any month-end
|
$
|
160,000
|
$
|
15,000
|
$
|
-
|
||||||
Ending balance
|
-
|
15,000
|
-
|
|||||||||
Weighted-average interest rate on balances outstanding
|
-
|
%
|
1.76
|
%
|
-
|
%
|
As of or for the Year Ended
December 31, 2015
|
Federal Home Loan
Bank Borrowings
Short-Term
|
Federal Home Loan
Bank Borrowings
Long-Term
|
Federal Funds
Purchased
|
|||||||||
Daily average outstanding
|
$
|
63,935
|
$
|
10,808
|
$
|
3
|
||||||
Total interest cost
|
252
|
190
|
-
|
|||||||||
Average interest rate paid
|
0.39
|
%
|
1.76
|
%
|
0.45
|
%
|
||||||
Maximum amount outstanding at any month-end
|
$
|
155,000
|
$
|
15,000
|
$
|
-
|
||||||
Ending balance
|
150,000
|
15,000
|
-
|
|||||||||
Weighted-average interest rate on balances outstanding
|
0.52
|
%
|
1.76
|
%
|
-
|
%
|
Number
of Shares
|
Weighted-Average
Exercise Price
Per Share
|
|||||||
Outstanding, January 1, 2014
|
291,000
|
$
|
16.18
|
|||||
Granted
|
-
|
-
|
||||||
Exercised
|
(18,735
|
)
|
$
|
13.18
|
||||
Forfeited or expired
|
(21,165
|
)
|
$
|
16.95
|
||||
Outstanding, December 31, 2014
|
251,100
|
$
|
16.33
|
|||||
Granted
|
-
|
-
|
||||||
Exercised
|
(39,334
|
)
|
$
|
13.71
|
||||
Forfeited or expired
|
(26,666
|
)
|
$
|
24.39
|
||||
Outstanding, December 31, 2015
|
185,100
|
$
|
15.73
|
|||||
Granted
|
-
|
-
|
||||||
Exercised
|
(11,300
|
)
|
$
|
17.82
|
||||
Forfeited or expired
|
(3,000
|
)
|
$
|
34.95
|
||||
Outstanding, December 31, 2016
|
170,800
|
$
|
15.26
|
Outstanding
|
Exercisable
|
|||||||||||||||||||
Range of
Exercise Prices
|
Shares
|
Weighted-Average
Remaining
Contractual Life
|
Weighted-Average
Exercise Price
|
Shares
|
Weighted-Average
Remaining
Contractual Life
|
Weighted-Average
Exercise Price
|
||||||||||||||
$
|
10.00 - $14.00
|
81,700
|
5.1 years
|
$
|
11.53
|
81,700
|
5.1 years
|
$
|
11.53
|
|||||||||||
$
|
14.01 - $20.00
|
83,100
|
6.6 years
|
$
|
17.80
|
83,100
|
6.6 years
|
$
|
17.80
|
|||||||||||
$
|
20.01 - $30.00
|
2,000
|
2.1 years
|
$
|
28.30
|
2,000
|
2.1 years
|
$
|
28.30
|
|||||||||||
$
|
30.01 - $40.00
|
4,000
|
0.6 years
|
$
|
32.04
|
4,000
|
0.6 years
|
$
|
32.04
|
|||||||||||
170,800
|
5.7 years
|
$
|
15.26
|
170,800
|
5.7 years
|
$
|
15.26
|
Number
of Shares
|
Weighted-Average
Grant-Date
Fair Value
|
|||||||
Unvested, January 1, 2014
|
-
|
-
|
||||||
Granted
|
77,000
|
$
|
22.51
|
|||||
Vested
|
-
|
-
|
||||||
Forfeited or expired
|
(4,650
|
)
|
$
|
22.51
|
||||
Unvested, December 31, 2014
|
72,350
|
$
|
22.51
|
|||||
Granted
|
71,612
|
$
|
23.18
|
|||||
Vested
|
(25,948
|
)
|
$
|
22.55
|
||||
Forfeited or expired
|
(9,941
|
)
|
$
|
22.61
|
||||
Unvested, December 31, 2015
|
108,073
|
$
|
22.94
|
|||||
Granted
|
59,371
|
$
|
26.62
|
|||||
Vested
|
(48,899
|
)
|
$
|
22.98
|
||||
Forfeited or expired
|
(4,465
|
)
|
$
|
23.43
|
||||
Unvested, December 31, 2016
|
114,080
|
$
|
24.81
|
2016
|
2015
|
2014
|
|||||||||||
Current:
|
Federal
|
$
|
4,989
|
$
|
4,178
|
$
|
5,208
|
||||||
State and local
|
515
|
694
|
223
|
||||||||||
|
5,504
|
4,872
|
5,431
|
||||||||||
Deferred:
|
Federal
|
2,343
|
1,139
|
(885
|
)
|
||||||||
State and local
|
28
|
429
|
(747
|
)
|
|||||||||
2,371
|
1,568
|
(1,632
|
)
|
||||||||||
Valuation allowance
|
|
(253
|
)
|
(554
|
)
|
(79
|
)
|
||||||
Total
|
|
$
|
7,622
|
$
|
5,886
|
$
|
3,720
|
2016
|
2015
|
2014
|
||||||||||
Federal income tax expense at statutory rates
|
35
|
%
|
35
|
%
|
35
|
%
|
||||||
Surtax exemption
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
||||||
Tax-exempt income
|
(8
|
)
|
(10
|
)
|
(14
|
)
|
||||||
State and local income taxes, net of federal benefit
|
2
|
2
|
1
|
|||||||||
Deferred tax asset adjustment and change in rate
|
-
|
(1
|
)
|
(2
|
)
|
|||||||
Other
|
-
|
-
|
1
|
|||||||||
Total
|
28
|
%
|
25
|
%
|
20
|
%
|
2016
|
2015
|
2014
|
||||||||||
Deferred tax assets:
|
||||||||||||
Allowance for loan losses
|
$
|
8,244
|
$
|
8,392
|
$
|
7,576
|
||||||
Deferred compensation
|
1,560
|
1,624
|
1,652
|
|||||||||
Stock-based compensation
|
763
|
640
|
459
|
|||||||||
Realized losses on securities reclassed from available for sale to held to maturity
|
49
|
930
|
1,180
|
|||||||||
Unfunded pension obligation
|
3,277
|
2,529
|
2,496
|
|||||||||
Alternative minimum tax credit
|
-
|
2,427
|
3,925
|
|||||||||
Net operating loss carryforward
|
699
|
614
|
1,169
|
|||||||||
Other
|
1,170
|
1,104
|
992
|
|||||||||
Total deferred tax assets
|
15,762
|
18,260
|
19,449
|
|||||||||
Deferred tax liabilities:
|
||||||||||||
Unrealized gains on securities available for sale
|
(71
|
)
|
(957
|
)
|
(1,724
|
)
|
||||||
Other
|
(608
|
)
|
(844
|
)
|
(842
|
)
|
||||||
Total deferred tax liabilities
|
(679
|
)
|
(1,801
|
)
|
(2,566
|
)
|
||||||
Valuation allowance
|
(699
|
)
|
(614
|
)
|
(1,169
|
)
|
||||||
Net deferred tax assets
|
$
|
14,384
|
$
|
15,845
|
$
|
15,714
|
2016
|
2015
|
2014
|
||||||||||
Benefit obligation at beginning of year
|
$
|
47,431
|
$
|
49,734
|
$
|
41,713
|
||||||
Interest cost
|
2,185
|
2,099
|
2,158
|
|||||||||
Actuarial loss (gain)
|
1,895
|
(2,451
|
)
|
7,709
|
||||||||
Benefits paid
|
(2,133
|
)
|
(1,951
|
)
|
(1,846
|
)
|
||||||
Benefit obligation at end of year
|
$
|
49,378
|
$
|
47,431
|
$
|
49,734
|
2016
|
2015
|
2014
|
||||||||||
Fair value of plan assets at beginning of year
|
$
|
41,003
|
$
|
43,431
|
$
|
41,456
|
||||||
Actual return on plan assets
|
2,919
|
(1,227
|
)
|
2,992
|
||||||||
Employer contribution
|
-
|
1,000
|
1,000
|
|||||||||
Benefits paid and actual expenses
|
(2,541
|
)
|
(2,201
|
)
|
(2,017
|
)
|
||||||
Fair value of plan assets at end of year
|
$
|
41,381
|
$
|
41,003
|
$
|
43,431
|
2016
|
2015
|
|||||||
Underfunded status
|
$
|
(7,997
|
)
|
$
|
(6,428
|
)
|
||
Amount included in other liabilities
|
$
|
(7,997
|
)
|
$
|
(6,428
|
)
|
||
Accumulated benefit obligation
|
$
|
49,378
|
$
|
47,431
|
2017
|
$
|
2,322
|
||
2018
|
2,413
|
|||
2019
|
2,502
|
|||
2020
|
2,540
|
|||
2021
|
2,656
|
|||
2022-2026
|
14,120
|
2016
|
2015
|
2014
|
||||||||||
Interest cost on projected benefit obligation
|
$
|
2,185
|
$
|
2,099
|
$
|
2,158
|
||||||
Expected return on plan assets
|
(2,497
|
)
|
(2,792
|
)
|
(2,548
|
)
|
||||||
Amortization of net loss
|
299
|
249
|
25
|
|||||||||
Net periodic pension credit
|
(13
|
)
|
(444
|
)
|
(365
|
)
|
||||||
Other changes in plan assets and benefit obligation recognized in other comprehensive income:
|
||||||||||||
Net actuarial loss
|
1,880
|
1,819
|
7,435
|
|||||||||
Amortization of net loss
|
(299
|
)
|
(249
|
)
|
(25
|
)
|
||||||
Total recognized in other comprehensive income
|
1,581
|
1,570
|
7,410
|
|||||||||
Total recognized in net periodic pension credit and other comprehensive income
|
$
|
1,568
|
$
|
1,126
|
$
|
7,045
|
||||||
Weighted-average discount rate for the period
|
4.74
|
%
|
4.32
|
%
|
5.33
|
%
|
||||||
Expected long-term rate of return on assets
|
7.00
|
%
|
7.00
|
%
|
7.00
|
%
|
2016
|
2015
|
|||||||
Discount rate
|
4.58
|
%
|
4.74
|
%
|
||||
Rate of increase in future compensation
|
0.00
|
%
|
0.00
|
%
|
||||
Expected long-term rate of return on assets
|
N/A
|
N/A
|
Projected
2017
|
||||
Interest cost on projected benefit obligation
|
$
|
2,190
|
||
Expected return on plan assets
|
(2,373
|
)
|
||
Amortization of net loss
|
356
|
|||
Net periodic pension cost
|
$
|
173
|
||
Weighted-average discount rate for the period
|
4.58
|
%
|
||
Expected long-term rate of return on assets
|
7.00
|
%
|
At December 31,
|
||||||||
Asset category
|
2016
|
2015
|
||||||
Cash
|
-
|
%
|
1
|
%
|
||||
Equity securities
|
61
|
59
|
||||||
Debt securities
|
39
|
40
|
||||||
Total
|
100
|
%
|
100
|
%
|
Asset Category
|
Target
Allocation
2017
|
|||
Cash equivalents
|
0 - 5
|
%
|
||
Equity securities
|
54 - 64
|
%
|
||
Fixed income securities
|
36 - 41
|
%
|
Fair Value Measurements Using
|
||||||||||||
Description
|
Active Markets for
Identical Assets
Quoted Prices
(Level 1)
|
Significant
Other
Observable Inputs
(Level 2)
|
Total
|
|||||||||
Short-term investment funds
|
$
|
181
|
$
|
-
|
$
|
181
|
||||||
Common collective trusts:
|
||||||||||||
U.S. equity securities
|
-
|
9,698
|
9,698
|
|||||||||
Non - U.S. equity securities
|
-
|
15,382
|
15,382
|
|||||||||
U.S. fixed income securities
|
-
|
16,120
|
16,120
|
|||||||||
Total
|
$
|
181
|
$
|
41,200
|
$
|
41,381
|
Fair Value Measurements Using
|
||||||||||||
Description
|
Active Markets for
Identical Assets
Quoted Prices
(Level 1)
|
Significant
Other
Observable Inputs
(Level 2)
|
Total
|
|||||||||
Short-term investment funds
|
$
|
323
|
$
|
-
|
$
|
323
|
||||||
Common collective trusts:
|
||||||||||||
U.S. equity securities
|
-
|
9,200
|
9,200
|
|||||||||
Non - U.S. equity securities
|
-
|
15,000
|
15,000
|
|||||||||
U.S. fixed income securities
|
-
|
16,480
|
16,480
|
|||||||||
Total
|
$
|
323
|
$
|
40,680
|
$
|
41,003
|
Capital
Leases
|
Operating
Leases
|
|||||||
2017
|
$
|
341
|
$
|
1,679
|
||||
2018
|
347
|
1,359
|
||||||
2019
|
354
|
1,219
|
||||||
2020
|
360
|
801
|
||||||
2021
|
377
|
701
|
||||||
Thereafter
|
3,969
|
1,632
|
||||||
Total minimum lease payments
|
5,748
|
$
|
7,391
|
|||||
Less: amounts representing interest
|
1,487
|
|||||||
Present value of minimum lease payments
|
$
|
4,261
|
Actual capital ratios
|
Minimum
for capital
adequacy
|
Minimum to be Well
Capitalized under prompt
corrective action provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
December 31, 2016
|
||||||||||||||||||||||||
Total capital to risk-weighted assets
|
$
|
242,661
|
14.64
|
%
|
$
|
132,592
|
8.00
|
%
|
$
|
165,740
|
10.00
|
%
|
||||||||||||
Tier 1 capital to risk-weighted assets
|
222,304
|
13.41
|
%
|
99,444
|
6.00
|
%
|
132,592
|
8.00
|
%
|
|||||||||||||||
Common equity tier 1 capital to risk-weighted assets
|
222,304
|
13.41
|
%
|
74,583
|
4.50
|
%
|
107,731
|
6.50
|
%
|
|||||||||||||||
Tier 1 capital to adjusted average assets (leverage)
|
222,304
|
10.25
|
%
|
86,767
|
4.00
|
%
|
108,459
|
5.00
|
%
|
|||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||
Total capital to risk-weighted assets
|
$
|
219,562
|
12.66
|
%
|
$
|
138,716
|
8.00
|
%
|
$
|
173,395
|
10.00
|
%
|
||||||||||||
Tier 1 capital to risk-weighted assets
|
198,587
|
11.45
|
%
|
104,037
|
6.00
|
%
|
138,716
|
8.00
|
%
|
|||||||||||||||
Common equity tier 1 capital to risk-weighted assets
|
198,587
|
11.45
|
%
|
78,028
|
4.50
|
%
|
112,706
|
6.50
|
%
|
|||||||||||||||
Tier 1 capital to adjusted average assets (leverage)
|
198,587
|
9.58
|
%
|
82,905
|
4.00
|
%
|
103,632
|
5.00
|
%
|
At December 31,
|
2016
|
% of total
loans
|
% of total
assets
|
|||||||||
Commercial and industrial
|
$
|
189,410
|
11.3
|
%
|
9.1
|
%
|
||||||
Commercial real estate
|
731,986
|
43.7
|
35.0
|
|||||||||
Multifamily
|
402,935
|
24.0
|
19.3
|
|||||||||
Mixed use commercial
|
78,807
|
4.7
|
3.8
|
|||||||||
Real estate construction
|
41,028
|
2.4
|
2.0
|
|||||||||
Residential mortgages
|
185,112
|
11.1
|
8.8
|
|||||||||
Home equity
|
42,419
|
2.5
|
2.0
|
|||||||||
Consumer
|
4,867
|
0.3
|
0.2
|
|||||||||
Total loans
|
$
|
1,676,564
|
100.0
|
%
|
80.2
|
%
|
At December 31,
|
2016
|
% of total
investment
securities
|
% of total
assets
|
|||||||||
U.S. Government agency securities
|
$
|
2,380
|
1.2
|
%
|
0.1
|
%
|
||||||
Corporate bonds
|
14,535
|
7.4
|
0.7
|
|||||||||
Collateralized mortgage obligations
|
17,452
|
8.8
|
0.8
|
|||||||||
Mortgage-backed securities
|
87,961
|
44.4
|
4.2
|
|||||||||
Obligations of states and political subdivisions
|
75,694
|
38.2
|
3.6
|
|||||||||
Total investment securities
|
$
|
198,022
|
100.0
|
%
|
9.4
|
%
|
Level in
|
December 31, 2016
|
December 31, 2015
|
|||||||||||||||
Fair Value
Hierarchy
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||
Financial Assets:
|
|||||||||||||||||
Cash and due from banks
|
Level 1
|
$
|
124,854
|
$
|
124,854
|
$
|
98,086
|
$
|
98,086
|
||||||||
Federal Reserve and Federal Home Loan Bank stock and other investments
|
Level 2
|
4,524
|
4,524
|
10,756
|
10,756
|
||||||||||||
Investment securities held to maturity
|
Level 2
|
18,780
|
19,259
|
61,309
|
63,272
|
||||||||||||
Investment securities available for sale
|
Level 2
|
179,242
|
179,242
|
247,099
|
247,099
|
||||||||||||
Loans held for sale
|
Level 2
|
-
|
-
|
1,666
|
1,666
|
||||||||||||
Loans, net of allowance
|
Level 2, 3 (1)
|
1,656,447
|
1,623,380
|
1,645,762
|
1,628,169
|
||||||||||||
Accrued interest and loan fees receivable
|
Level 2
|
5,742
|
5,742
|
5,859
|
5,859
|
||||||||||||
Financial Liabilities:
|
|||||||||||||||||
Non-maturity deposits
|
Level 2
|
1,641,479
|
1,641,479
|
1,555,980
|
1,555,980
|
||||||||||||
Time deposits
|
Level 2
|
196,703
|
196,080
|
224,643
|
224,408
|
||||||||||||
Borrowings
|
Level 2
|
15,000
|
14,898
|
165,000
|
164,827
|
||||||||||||
Accrued interest payable
|
Level 2
|
128
|
128
|
198
|
198
|
||||||||||||
Derivatives
|
Level 3
|
752
|
752
|
752
|
752
|
(1)
|
|
Impaired loans are generally classified within Level 3 of the fair value hierarchy.
|
Assets:
|
December 31, 2016
|
Fair Value
Measurements Using
Significant Unobservable
Inputs (Level 3)
|
||||||
Impaired loans
|
$
|
2,521
|
$
|
2,521
|
||||
OREO
|
650
|
650
|
||||||
Total
|
$
|
3,171
|
$
|
3,171
|
Assets:
|
December 31, 2015
|
Fair Value
Measurements Using
Significant Unobservable
Inputs (Level 3)
|
||||||
Impaired loans
|
$
|
2,715
|
$
|
2,715
|
||||
Total
|
$
|
2,715
|
$
|
2,715
|
Fair Value at
|
||||||||||||||||||
Assets:
|
December 31,
2016
|
December 31,
2015
|
Valuation
Technique
|
Unobservable
Inputs
|
Discount
|
|||||||||||||
Impaired loans:
|
||||||||||||||||||
Residential mortgages
|
$
|
2,225
|
$
|
2,311
|
Third party appraisal
|
Discount to appraised value
|
25
|
%
|
(1
|
)
|
||||||||
Home equity
|
231
|
280
|
Third party appraisal
|
Discount to appraised value
|
25
|
%
|
(1
|
)
|
||||||||||
Consumer
|
65
|
124
|
Third party appraisal
|
Discount to appraised value
|
25
|
%
|
(2
|
)
|
||||||||||
Total
|
$
|
2,521
|
$
|
2,715
|
||||||||||||||
OREO
|
$
|
650
|
$
|
-
|
Third party appraisal
|
Estimated holding/selling costs
|
11
|
%
|
(1)
|
Of which estimated selling costs are approximately 9% - 15% of the total discount.
|
(2)
|
Of which estimated selling costs are approximately 10% - 12% of the total discount.
|
Fair Value Measurements Using
|
||||||||||||
Significant Other
Observable Inputs
|
Significant
Unobservable Inputs
|
|||||||||||
Assets:
|
December 31, 2016
|
(Level 2)
|
(Level 3)
|
|||||||||
Obligations of states and political subdivisions
|
$
|
65,294
|
$
|
65,294
|
$
|
-
|
||||||
Collateralized mortgage obligations
|
17,452
|
17,452
|
-
|
|||||||||
Mortgage-backed securities
|
87,961
|
87,961
|
-
|
|||||||||
Corporate bonds
|
8,535
|
8,535
|
-
|
|||||||||
Total
|
$
|
179,242
|
$
|
179,242
|
$
|
-
|
||||||
Liabilities:
|
||||||||||||
Derivatives
|
$
|
752
|
$
|
-
|
$
|
752
|
||||||
Total
|
$
|
752
|
$
|
-
|
$
|
752
|
Fair Value Measurements Using
|
||||||||||||
Significant Other
Observable Inputs
|
Significant
Unobservable Inputs
|
|||||||||||
Assets:
|
December 31, 2015
|
(Level 2)
|
(Level 3)
|
|||||||||
U.S. Government agency securities
|
$
|
28,516
|
$
|
28,516
|
$
|
-
|
||||||
Obligations of states and political subdivisions
|
104,682
|
104,682
|
-
|
|||||||||
Collateralized mortgage obligations
|
15,549
|
15,549
|
-
|
|||||||||
Mortgage-backed securities
|
92,442
|
92,442
|
-
|
|||||||||
Corporate bonds
|
5,910
|
5,910
|
-
|
|||||||||
Total
|
$
|
247,099
|
$
|
247,099
|
$
|
-
|
||||||
Liabilities:
|
||||||||||||
Derivatives
|
$
|
752
|
$
|
-
|
$
|
752
|
||||||
Total
|
$
|
752
|
$
|
-
|
$
|
752
|
Fair Value Measurements Using Significant Unobservable
Inputs (Level 3)
|
||||
Liabilities
Derivatives
|
||||
Balance at January 1, 2014
|
$
|
932
|
||
Net change
|
(180
|
)
|
||
Balance at December 31, 2014
|
752
|
|||
Net change
|
-
|
|||
Balance at December 31, 2015
|
752
|
|||
Net change
|
-
|
|||
Balance at December 31, 2016
|
$
|
752
|
Condensed Statements of Condition at December 31,
|
2016
|
2015
|
2014
|
|||||||||
Assets:
|
||||||||||||
Due from banks
|
$
|
89
|
$
|
2,988
|
$
|
1,322
|
||||||
Investment in the Bank
|
213,599
|
193,252
|
180,926
|
|||||||||
Other assets
|
1,340
|
1,018
|
674
|
|||||||||
Total Assets
|
$
|
215,028
|
$
|
197,258
|
$
|
182,922
|
||||||
Liabilities and Stockholders' Equity:
|
||||||||||||
Other liabilities
|
$
|
-
|
$
|
-
|
$
|
189
|
||||||
Stockholders' Equity
|
215,028
|
197,258
|
182,733
|
|||||||||
Total Liabilities and Stockholders' Equity
|
$
|
215,028
|
$
|
197,258
|
$
|
182,922
|
Condensed Statements of Income and Comprehensive Income for the Years
Ended December 31,
|
2016
|
2015
|
2014
|
|||||||||
Income:
|
||||||||||||
Dividends from the Bank
|
$
|
1,182
|
$
|
3,763
|
$
|
1,399
|
||||||
Other income
|
-
|
-
|
176
|
|||||||||
Expense:
|
||||||||||||
Other expense
|
41
|
92
|
837
|
|||||||||
Income before equity in undistributed net income of the Bank
|
1,141
|
3,671
|
738
|
|||||||||
Equity in undistributed earnings of the Bank
|
18,690
|
14,016
|
14,557
|
|||||||||
Net income
|
$
|
19,831
|
$
|
17,687
|
$
|
15,295
|
||||||
Total Comprehensive Income
|
$
|
18,888
|
$
|
15,954
|
$
|
15,741
|
Condensed Statements of Cash Flows for the Years Ended December 31,
|
2016
|
2015
|
2014
|
|||||||||
Cash Flows From Operating Activities:
|
||||||||||||
Net income
|
$
|
19,831
|
$
|
17,687
|
$
|
15,295
|
||||||
Less: equity in undistributed earnings of the Bank
|
(18,690
|
)
|
(14,016
|
)
|
(14,557
|
)
|
||||||
Stock-based compensation
|
1,131
|
949
|
811
|
|||||||||
Disqualifying dispositions on stock option exercises
|
-
|
(43
|
)
|
-
|
||||||||
Increase in other assets
|
(322
|
)
|
(344
|
)
|
(4
|
)
|
||||||
(Decrease) increase in other liabilities
|
-
|
(189
|
)
|
189
|
||||||||
Net cash provided by operating activities
|
1,950
|
4,044
|
1,734
|
|||||||||
Cash Flows From Investing Activities:
|
||||||||||||
Advances to the Bank
|
(2,600
|
)
|
-
|
-
|
||||||||
Net cash used in investing activities
|
(2,600
|
)
|
-
|
-
|
||||||||
Cash Flows From Financing Activities:
|
||||||||||||
Dividend reinvestment and stock option exercises
|
2,502
|
1,385
|
382
|
|||||||||
Dividends paid
|
(4,751
|
)
|
(3,763
|
)
|
(1,399
|
)
|
||||||
Net cash used in financing activities
|
(2,249
|
)
|
(2,378
|
)
|
(1,017
|
)
|
||||||
Net (Decrease) Increase in Cash and Cash Equivalents
|
(2,899
|
)
|
1,666
|
717
|
||||||||
Cash and Cash Equivalents, Beginning of Year
|
2,988
|
1,322
|
605
|
|||||||||
Cash and Cash Equivalents, End of Year
|
$
|
89
|
$
|
2,988
|
$
|
1,322
|
2016
|
2015
|
|||||||||||||||||||||||||||||||
4th
Quarter
|
3rd
Quarter
|
2nd
Quarter
|
1st
Quarter
|
4th
Quarter
|
3rd
Quarter
|
2nd
Quarter
|
1st
Quarter
|
|||||||||||||||||||||||||
Interest income
|
$
|
18,934
|
$
|
19,324
|
$
|
20,034
|
$
|
19,427
|
$
|
18,805
|
$
|
18,206
|
$
|
18,576
|
$
|
17,193
|
||||||||||||||||
Interest expense
|
878
|
936
|
1,012
|
1,103
|
988
|
828
|
755
|
676
|
||||||||||||||||||||||||
Net interest income
|
18,056
|
18,388
|
19,022
|
18,324
|
17,817
|
17,378
|
17,821
|
16,517
|
||||||||||||||||||||||||
(Credit) provision for loan losses
|
(400
|
)
|
(350
|
)
|
-
|
250
|
-
|
350
|
-
|
250
|
||||||||||||||||||||||
Net interest income after (credit) provision for loan losses
|
18,456
|
18,738
|
19,022
|
18,074
|
17,817
|
17,028
|
17,821
|
16,267
|
||||||||||||||||||||||||
Non-interest income
|
2,028
|
2,322
|
2,241
|
1,892
|
2,026
|
2,427
|
2,050
|
2,091
|
||||||||||||||||||||||||
Operating expenses (1)
|
15,382
|
13,467
|
13,319
|
13,152
|
15,004
|
12,668
|
13,174
|
13,108
|
||||||||||||||||||||||||
Income tax expense
|
1,369
|
2,118
|
2,159
|
1,976
|
1,202
|
1,864
|
1,579
|
1,241
|
||||||||||||||||||||||||
Net income
|
$
|
3,733
|
$
|
5,475
|
$
|
5,785
|
$
|
4,838
|
$
|
3,637
|
$
|
4,923
|
$
|
5,118
|
$
|
4,009
|
||||||||||||||||
Net income per common share - basic
|
$
|
0.31
|
$
|
0.46
|
$
|
0.49
|
$
|
0.41
|
$
|
0.31
|
$
|
0.42
|
$
|
0.44
|
$
|
0.34
|
||||||||||||||||
Net income per common share - diluted
|
$
|
0.31
|
$
|
0.46
|
$
|
0.48
|
$
|
0.41
|
$
|
0.31
|
$
|
0.42
|
$
|
0.43
|
$
|
0.34
|
||||||||||||||||
Cash dividends per common share
|
$
|
0.10
|
$
|
0.10
|
$
|
0.10
|
$
|
0.10
|
$
|
0.10
|
$
|
0.10
|
$
|
0.06
|
$
|
0.06
|
(1)
|
4th quarter 2016 amount included $1.8 million in merger costs; 4th quarter 2015 amount included $1.4 million in systems conversion expense.
|
DIRECTORS OF THE COMPANY AND THE BANK
|
||||
Name
|
Age at
March 23, 2017
|
Position and Offices
With Company
|
Served as Director
Since
|
Present Term
Expires (1)
|
Howard C. Bluver
|
60
|
Director, President & Chief
Executive Officer
|
2011
|
2017
|
James E. Danowski
|
61
|
Director
|
2002
|
2018
|
Brian K. Finneran
|
59
|
Director, Executive Vice
President & Chief Financial
Officer
|
2015
|
2018
|
Joseph A. Gaviola
|
61
|
Director, Chairman
|
2004
|
2017
|
Edgar F. Goodale
|
63
|
Director
|
1989
|
2019
|
David A. Kandell
|
63
|
Director
|
2003
|
2019
|
Terence X. Meyer
|
60
|
Director
|
1999
|
2018
|
Ramesh N. Shah
|
69
|
Director
|
2013
|
2019
|
John D. Stark, Jr.
|
54
|
Director
|
2007
|
2017
|
(1) The policy of the Board of Directors of Suffolk Bancorp is that directors shall retire at the end of the term of service during which they attain 72 years of age.
|
EXECUTIVE OFFICERS OF THE REGISTRANT
|
||||
Name
|
Age at March 23, 2017
|
Position (and Served Since)
|
||
Howard C. Bluver
|
60
|
President and Chief Executive Officer of the Company and the Bank since 2011.
|
||
Brian K. Finneran
|
59
|
Executive Vice President and Chief Financial Officer of the Company and the Bank since 2012.
|
||
Christopher J. Hilton
|
39
|
Executive Vice President and Chief Credit Officer of the Company and the Bank since March 2015; Senior Vice President and Deputy Chief Credit Officer of the Bank from June 2014 to March 2015.
|
||
Jeanne P. Kelley
|
56
|
Executive Vice President and Chief Risk Officer of the Company and the Bank since 2013; Senior Vice President and Risk Manager of the Company and the Bank from 2011 to 2013: Senior Vice President and Risk Manager of the Bank from 2002 to 2011; Senior Vice President, Consumer Loan Division of the Bank from 1996 to 2002; prior thereto various credit related positions in the Bank.
|
||
Anita J. Nigrel
|
55
|
Executive Vice President and Chief Retail Officer of the Company and the Bank since July 2015; Senior Vice President, Retail Operations of the Bank from 2003 to 2015; Regional Vice President of the Bank from 1998 to 2003; prior thereto held various branch management positions within the Bank's branch network from 1989 to 1998.
|
||
Michael R. Orsino
|
66
|
Executive Vice President and Chief Lending Officer of the Company and the Bank since 2012.
|
||
James R. Whitehouse
|
54
|
Executive Vice President, Retail Sales, Residential, Multi-Family and Mixed-Use Lending for the Company and the Bank since January 2015; Executive Vice President, Residential, Multi-Family and Mixed-Use Lending for the Company and the Bank since June 2014; Senior Vice President and Department Head of the Bank's Residential Mortgage and Multi-Family Lending Group from 2012 to 2014.
|
• |
Howard C. Bluver — Director, President and Chief Executive Officer
|
• |
Brian K. Finneran — Director, Executive Vice President and Chief Financial Officer
|
• |
Michael R. Orsino — Executive Vice President and Chief Lending Officer
|
• |
Jeanne P. Kelley — Executive Vice President and Chief Risk Officer
|
• |
Christopher J. Hilton — Executive Vice President and Chief Credit Officer
|
• |
Base Salary Adjustments. Our NEOs received merit-based base salary increases between 3.3% and 3.9% in February 2016.
|
• |
Annual Incentive Awards. The Compensation Committee awarded incentives to each of the NEOs in 2017 under the EIP reflecting our 2016 company performance, as well as individual performance achievements. For details regarding the EIP and the determination of payments under the EIP, see section “Annual Incentives” contained herein.
|
• |
Restricted Stock Awards. Messrs. Bluver, Finneran, Orsino, Hilton, and Ms. Kelley were awarded restricted stock in the amounts of 5,500, 4,000, 3,000, 1,000, and 1,500 shares of common stock of the Company, respectively. These restricted stock awards vest in equal installments annually over three years following the grant date. For details of the grants, see sections “2016 Long-Term Incentive Grants” and the “Grants of Plan-Based Awards” table contained herein. In addition, a portion of each NEOs’ EIP award for 2015 was awarded in the form of restricted stock in February 2016, see section “Grants of Plan-Based Awards” table contained herein.
|
• |
The Compensation Committee is comprised entirely of independent members, and the Compensation Committee engaged its own independent compensation consultant in 2016.
|
• |
The Company compares its compensation practices relative to a peer group selected by its independent compensation consultant and survey data to ensure that its programs are competitive and consistent with market practices.
|
• |
The Company does not pay tax gross-ups to our NEOs with respect to “golden parachute” excise taxes.
|
• |
The Company does not have a history of re-pricing equity incentive awards, and is not permitted to re-price equity incentive awards without shareholder approval under its equity incentive plan.
|
• |
The Company has a securities trading policy that discourages directors, officers and employees from purchasing Company securities on margin, short selling Company securities and buying derivatives on Company securities.
|
• |
The Company has established minimum stock ownership requirements for its NEOs.
|
• |
The Company has adopted claw-back policies with respect to its incentive compensation plans.
|
• |
The Company attempts to balance both short- and long-term incentives to effectively align our pay with annual operating results and long-term business success and mitigate excessive risk-taking.
|
• |
The Company does not maintain supplemental executive retirement plans for the exclusive benefit of the NEOs, and does not match or supplement deferrals under its nonqualified deferred compensation plan.
|
• |
Providing competitive pay opportunities, with actual pay outcomes highly dependent on individual and Company performance;
|
• |
Balancing fixed and variable compensation by providing a competitive salary and benefits package, while providing a majority of the NEOs’ total compensation opportunity in the form of variable cash and equity compensation; and
|
• |
Balancing short- and long-term compensation through performance-based annual bonuses awarded in cash and long-term incentive compensation in the form of restricted stock awards.
|
·
|
Arrow Financial Corporation
|
·
|
BCB Bancorp, Inc.
|
·
|
Berkshire Bancorp Inc.
|
·
|
Bridge Bancorp, Inc.
|
·
|
Bryn Mawr Bank Corporation
|
·
|
Center Bancorp, Inc.
|
·
|
Financial Institutions, Inc.
|
·
|
First of Long Island Corporation
|
·
|
Lakeland Bancorp, Inc.
|
·
|
Peapack-Gladstone Financial Corporation
|
·
|
Republic First Bancorp, Inc.
|
·
|
Sterling Bancorp
|
·
|
Sun Bancorp, Inc.
|
·
|
Unity Bancorp, Inc.
|
·
|
Univest Corporation of Pennsylvania
|
Element
|
Purpose
|
Performance Orientation
|
|||||
Base Salary
|
Provide competitive, fixed compensation to attract and retain qualified, talented executives.
|
Adjustments to base salary reflect the individual’s overall performance, as well as contribution to the Company.
|
|||||
Annual Bonus
(Executive Incentive Plan)
|
Encourage and reward annual financial, operational and strategic successes at the Company.
|
The entire award is subject to Company and individual performance criteria.
|
|||||
Restricted Stock
|
Foster an owner mentality and promote alignment between executives and shareholders.
|
The potential value of the award when it vests is contingent on the stock price at that time.
|
Named
Executive
Officer
|
Base
Salary
|
EIP Award
Cash
|
LTI Award
Restricted
Stock
|
Total
Direct Compensation
|
Total
Direct Compensation
(% Change vs. 2015)
|
|||||
Howard C. Bluver
|
$460,000
|
$405,159
|
$141,075
|
$1,006,234
|
1.3%
|
|||||
Brian K. Finneran
|
$322,000
|
$260,000
|
$102,600
|
$684,600
|
5.1%
|
|||||
Michael R. Orsino
|
$280,000
|
$210,000
|
$76,950
|
$566,950
|
0.5%
|
|||||
Jeanne P. Kelley
|
$217,500
|
$120,000
|
$38,475
|
$375,975
|
5.8%
|
|||||
Christopher J. Hilton
|
$237,500
|
$95,000
|
$25,650
|
$358,150
|
6.9%
|
Named
Executive
Officer
|
2015
Base
Salary
|
2016
Base
Salary
|
% Change
|
|||
Howard C. Bluver
|
$445,000
|
$460,000
|
3.4%
|
|||
Brian K. Finneran
|
$310,000
|
$322,000
|
3.9%
|
|||
Michael R. Orsino
|
$270,000
|
$280,000
|
3.7%
|
|||
Jeanne P. Kelley
|
$210,000
|
$217,500
|
3.6%
|
|||
Christopher J. Hilton
|
$230,000
|
$237,500
|
3.3%
|
• |
Reward performance that supports the Company’s short- and long-term performance results.
|
• |
Attract, retain and motivate executives with long-term business perspective.
|
• |
Encourage a strategic perspective and team orientation.
|
• |
Balance performance goals and incentives with appropriate risk management objectives.
|
2016 Net Income Performance
|
|||||||
Threshold Goal
|
Target Goal
|
Stretch Goal
|
Actual Performance
|
Actual Performance as a
% of Target Goal
|
|||
$15.1mm
|
$18.9mm
|
$22.6mm
|
$21.5mm
|
114
|
%
|
Performance Measure
|
Mostly Met
|
Met
|
Exceeded
|
Assessment
|
|
Credit quality
|
✓
|
Exceeded projections in measured credit metric such as asset quality, non-performing loans, and control of early delinquencies.
|
|||
Efficiency Ratio
|
✓
|
Excluding merger-related and other costs, the Company’s core operating efficiency ratio improved to 61.9% in 2016 vs. 64.9% in 2015.
|
|||
Loan Growth
|
✓
|
Loan growth slightly exceeded 2016 budget.
|
|||
Overall
|
✓
|
Performance Measure
|
Mostly Met
|
Met
|
Exceeded
|
Assessment
|
|
Efficiency Ratio
|
✓
|
Excluding merger-related and other costs, the Company’s core operating efficiency ratio improved to 61.9% in 2016 vs. 64.9% in 2015.
|
|||
Financial Metrics
|
✓
|
Identified and executed on corporate initiatives to improve 2016 key financial metrics such as net income, cost of borrowings, effective tax rate and earnings per share.
|
|||
Capital Management
|
✓
|
Managed capital efficiently and obtained an investment grade bond rating from outside party for a potential subordinated debt issuance.
|
|||
Overall
|
✓
|
Performance Measure
|
Mostly Met
|
Met
|
Exceeded
|
Assessment
|
|
Commercial Loan Growth
|
✓
|
Loan amounts finished above fiscal year 2015 balance.
|
|||
Commercial Portfolio Credit Metrics
|
✓
|
Improvement in non-performing loans and early delinquencies.
|
|||
Deposits and Fees
|
✓
|
Deposits increased in 2016.
|
|||
Overall
|
✓
|
Performance Measure
|
Mostly Met
|
Met
|
Exceeded
|
Assessment
|
|
Lending Strategies Support
|
✓
|
Enhanced framework related to lending strategies through detailed reporting and analysis.
|
|||
Compliance
|
✓
|
Successfully maintained a strong compliance posture for the Company; successfully assessed and implemented new regulations as required.
|
|||
Strategic and Capital Plans
|
✓
|
The Strategic Plan was updated for 2016-2018 in conjunction with the 2016-2018 Capital Plan and budget.
|
|||
Risk Management
|
✓
|
Successfully enhanced the Risk Management Program to reflect current operations in conjunction with regulatory requirements; successfully participated in the updates and monitoring of the annual Strategic and Capital Plans.
|
|||
Overall
|
✓
|
Performance Measure
|
Mostly Met
|
Met
|
Exceeded
|
Assessment
|
|
Non-performing Loans
|
✓
|
Company exceeded (i.e., achieved lower) non-performing loan target.
|
|||
Reduce Classified Loans
|
✓
|
Exceeded classified loan targets.
|
|||
Underwriting and Regulatory Enhancements
|
✓
|
Enhanced underwriting processes and procedures.
|
|||
Overall
|
✓
|
• |
Individual performance and future potential of the executive;
|
• |
Market data related to long-term incentives;
|
• |
The overall size of the equity grant pool and shares remaining available for grant under the 2009 Plan;
|
• |
Award value relative to other Company executives;
|
• |
The value of previous grants and amount of outstanding unvested equity awards; and
|
• |
The recommendations of the Chief Executive Officer, other than in connection with grants to the Chief Executive Officer.
|
• |
Our compensation program for executives includes a balance of fixed and variable, short- and long-term compensation;
|
• |
The Company has a defensible peer group which it uses as a reference to making compensation decisions;
|
• |
Written annual plan documents are made available to all incentive plan participants;
|
• |
Incentive plans contain a claw-back provision for restatement of earnings, fraud or misconduct;
|
• |
Incentive payouts are made after the year‐end compensation review process is completed;
|
• |
The Board of Directors has oversight of incentive plans via the Compensation Committee and, where appropriate, the full Board of Directors;
|
• |
The incentive bonus plans are subject to annual financial and Sarbanes‐Oxley audits for accuracy and completion;
|
• |
The Compensation Committee approves all cash incentive awards to executive officers; and
|
• |
The Compensation Committee approves all restricted stock or stock option grants to executive officers.
|
SUMMARY COMPENSATION TABLE
|
||||||||||||||||||||||||||
Name and Principal Position
|
Year
|
Salary(1)
|
Stock
Awards (2)
|
Non-Equity
Incentive Plan
Compensation
(3)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
(4)(5)(6)
|
Total
|
|||||||||||||||||||
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||||||
Howard C. Bluver
|
2016
|
458,269
|
239,962
|
405,159
|
-
|
27,507
|
1,130,897
|
|||||||||||||||||||
President &
|
2015
|
460,577
|
370,333
|
296,680
|
-
|
23,951
|
1,151,541
|
|||||||||||||||||||
Chief Executive Officer
|
2014
|
433,077
|
157,570
|
217,505
|
-
|
20,562
|
828,714
|
|||||||||||||||||||
Brian K. Finneran
|
2016
|
320,615
|
160,726
|
260,000
|
-
|
30,417
|
771,758
|
|||||||||||||||||||
Executive Vice President &
|
2015
|
320,385
|
174,787
|
174,378
|
-
|
18,945
|
688,495
|
|||||||||||||||||||
Chief Financial Officer
|
2014
|
298,846
|
112,550
|
196,883
|
-
|
16,435
|
624,714
|
|||||||||||||||||||
Michael R. Orsino
|
2016
|
278,846
|
129,246
|
210,000
|
-
|
36,912
|
655,003
|
|||||||||||||||||||
Executive Vice President &
|
2015
|
278,846
|
141,764
|
156,957
|
-
|
17,826
|
595,394
|
|||||||||||||||||||
Chief Lending Officer
|
2014
|
257,692
|
90,040
|
170,646
|
-
|
13,837
|
532,215
|
|||||||||||||||||||
Jeanne P. Kelley
|
2016
|
216,635
|
63,404
|
120,000
|
6,340
|
21,343
|
427,722
|
|||||||||||||||||||
Executive Vice President &
|
2015
|
216,538
|
45,520
|
74,823
|
4,752
|
11,131
|
352,764
|
|||||||||||||||||||
Chief Risk Officer
|
||||||||||||||||||||||||||
Christopher J. Hilton (7)
|
2016
|
236,635
|
45,628
|
95,000
|
8,622
|
385,885
|
||||||||||||||||||||
Executive Vice President &
|
2015
|
235,962
|
25,036
|
59,947
|
-
|
8,653
|
329,597
|
|||||||||||||||||||
Chief Credit Officer
|
|
||
(1) Base salary includes an extra payroll period in 2015 (27 payroll periods) given the start of the calendar year relative to the first payroll period.
|
||
(2) The amounts included in this column reflect the grant date fair value of restricted stock awards granted to our named executive officers in 2016. This includes (i) the annual award of long term incentives made in the form of restricted stock, provided in May 2016, and (ii) the portion of the EIP awarded as restricted stock with respect to 2015 performance, which was granted in February 2016,. The value is equal to the grant date fair value closing price of the Company’s stock (based on the closing price per share on the grant date of $25.65 for the May 2016 awards and $25.13 for the February 2016 awards) multiplied by the amount of restricted stock for each named executive officer.
|
||
(3) The amounts in this column are the dollar value of cash incentive awards earned under the EIP for 2016, 2015 and 2014.
|
||
(4) Includes company matching contributions to 401(k) plan for each named executive officer.
|
||
(5) Includes IRS calculated life insurance value, use of a Company car or car allowance for Messrs. Bluver, Finneran, and Orsino, and dividends paid on previously awarded restricted stock, with value of $6,511, $4,512, $3,638, $1,772, and $749 for Messrs. Bluver, Finneran, Orsino, Kelley and Hilton, respectively.
|
||
(6) The total value of perquisites and personal benefits exceeded $10,000 for Messrs. Bluver, Finneran and Orsino whose car allowance for 2016 was $9,600, $9,373 and $9,619, respectively, Company-paid term life insurance premium for 2016 was $2,322, $2,322 and $3,810, respectively, and costs associated with Company owned car use of $0, $789 and $1,971, respectively.
|
||
(7) Mr. Hilton assumed the role of Executive Vice President and Chief Credit Officer on March 25, 2015.
|
||
GRANTS OF PLAN-BASED AWARDS
|
||||||||||||||||||||||||
Name
|
Grant Date
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (1)
|
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
|
Grant Date
Fair Value of
Stock and
Option
Awards
|
||||||||||||||||||||
Threshold
|
Target
|
Maximum
|
||||||||||||||||||||||
($)
|
($)
|
($)
|
(#)
|
|
($)
|
|||||||||||||||||||
Howard C. Bluver
|
-
|
115,000
|
230,000
|
460,000
|
-
|
-
|
||||||||||||||||||
2/25/2016
|
-
|
-
|
-
|
3,935
|
98,887
|
|||||||||||||||||||
5/25/2016
|
-
|
-
|
-
|
5,500
|
141,075
|
|||||||||||||||||||
Brian K. Finneran
|
-
|
80,500
|
161,000
|
281,750
|
-
|
-
|
||||||||||||||||||
2/25/2016
|
-
|
-
|
-
|
2,313
|
58,126
|
|||||||||||||||||||
5/25/2016
|
-
|
-
|
-
|
4,000
|
102,600
|
|||||||||||||||||||
Michael R. Orsino
|
-
|
70,000
|
140,000
|
245,000
|
-
|
-
|
||||||||||||||||||
2/25/2016
|
-
|
-
|
-
|
2,081
|
52,296
|
|||||||||||||||||||
5/25/2016
|
-
|
-
|
-
|
3,000
|
76,950
|
|||||||||||||||||||
Jeanne P. Kelley
|
-
|
32,625
|
65,250
|
114,188
|
-
|
-
|
||||||||||||||||||
2/25/2016
|
992
|
24,929
|
||||||||||||||||||||||
5/25/2016
|
-
|
-
|
-
|
1,500
|
38,475
|
|||||||||||||||||||
Christopher J. Hilton
|
-
|
29,688
|
59,375
|
89,063
|
-
|
-
|
||||||||||||||||||
2/25/2016
|
795
|
19,978
|
||||||||||||||||||||||
5/25/2016
|
-
|
-
|
-
|
1,000
|
25,650
|
|||||||||||||||||||
(1) The amounts included in these columns are with respect to the EIP awarded for 2016.
|
||||||||||||||||||||||||
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
||||||||||||||||||||||||
OPTION AWARDS
|
STOCK AWARDS
|
|||||||||||||||||||||||
Number of
Securities
Underlying
Unexercised
Options
|
Number of
Securities
Underlying
Unexercised
Options
|
Option
Exercise
Price
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
|
|||||||||||||||||||
(#)
|
|
(#)
|
|
|||||||||||||||||||||
Name
|
Exercisable
|
Unexercisable
|
($)
|
(#)
|
|
($)
|
||||||||||||||||||
Howard C. Bluver
|
50,000
|
(1)
|
-
|
10.79
|
12/30/2021
|
n/a
|
n/a
|
|||||||||||||||||
20,000
|
(2)
|
-
|
18.14
|
8/6/2023
|
n/a
|
n/a
|
||||||||||||||||||
-
|
-
|
-
|
-
|
2,333
|
(3)
|
99,899
|
(3)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
4,200
|
(4)
|
179,844
|
(4)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
2,389
|
(5)
|
102,297
|
(5)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
5,500
|
(7)
|
235,510
|
(7)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
2,951
|
(6)
|
126,362
|
(6)
|
|||||||||||||||||
Brian K. Finneran
|
11,700
|
(8)
|
-
|
13.13
|
2/3/2022
|
n/a
|
n/a
|
|||||||||||||||||
5,000
|
(9)
|
14.03
|
2/4/2023
|
n/a
|
n/a
|
|||||||||||||||||||
-
|
-
|
-
|
-
|
1,666
|
(3)
|
71,338
|
(3)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
3,000
|
(4)
|
128,460
|
(4)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
720
|
(5)
|
30,830
|
(5)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
4000
|
(7)
|
171,280
|
(7)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
1,734
|
(6)
|
74,250
|
(6)
|
|||||||||||||||||
Michael R. Orsino
|
20,000
|
(10)
|
-
|
12.44
|
3/9/2022
|
n/a
|
n/a
|
|||||||||||||||||
5,000
|
(9)
|
-
|
14.03
|
2/4/2023
|
n/a
|
n/a
|
||||||||||||||||||
-
|
-
|
-
|
-
|
1,333
|
(3)
|
57,079
|
(3)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
2,333
|
(4)
|
99,899
|
(4)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
623
|
(5)
|
26,677
|
(5)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
3,000
|
(7)
|
128,460
|
(7)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
1,560
|
(6)
|
66,799
|
(6)
|
|||||||||||||||||
Jeanne. P. Kelley
|
4,600
|
(11)
|
-
|
16.56
|
6/26/2023
|
-
|
-
|
|||||||||||||||||
-
|
-
|
-
|
1,000
|
(3)
|
42,820
|
(3)
|
||||||||||||||||||
-
|
-
|
-
|
1,333
|
(5)
|
57,079
|
(5)
|
||||||||||||||||||
-
|
-
|
-
|
1,500
|
(7)
|
62,230
|
(7)
|
||||||||||||||||||
-
|
-
|
-
|
-
|
744
|
(6)
|
31,858
|
(6)
|
|||||||||||||||||
Christopher J. Hilton
|
-
|
-
|
-
|
-
|
733
|
(5)
|
31,387
|
(5)
|
||||||||||||||||
-
|
-
|
-
|
-
|
1,000
|
(7)
|
42,820
|
(7)
|
|||||||||||||||||
-
|
-
|
-
|
-
|
596
|
(6)
|
25,521
|
(6)
|
(1) Represents a grant on December 30, 2011 of stock options to acquire 50,000 shares of common stock of the Company. 16,667 options vested on December 30, 2014; 16,667 options vested on December 30, 2015; and the remaining 16,666 options vested on December 30, 2016.
|
|
(2) Represents a grant on August 6, 2013 of stock options to acquire 20,000 shares of common stock of the Company. 6,667 options vested on August 6, 2014; 6,667 options vested on August 6, 2015; and the remaining 6,666 options vested on August 6, 2016.
|
|
(3) Represents the unvested portion of grants on June 2, 2014 of restricted stock awards in respect of 7,000, 5,000, 4,000, and 3,000 shares of common stock of the Company to Messrs. Bluver, Finneran, Orsino, and Ms. Kelley respectively. Restricted stock vests in three equal annual installments on each of the first, second and third anniversaries of the grant date.
|
|
(4) Represents the unvested portion of grants on June 2, 2015 of restricted stock awards in respect of 6,300, 4,500, and 3,500 shares of common stock of the Company to Messrs. Bluver, Finneran, and Orsino, respectively. Restricted stock vests in three equal annual installments on each of the first, second and third anniversaries of the grant date.
|
|
(5) Represents the unvested portion of grants on February 25, 2015 of restricted stock awards in respect of 9,556, 2,883 and 2,498, shares of common stock of the Company to Messrs. Bluver, Finneran, and Orsino, respectively. The restricted stock awards, which were granted in respect of the EIP, vests every six months, over two years, starting with the first six month anniversary of the date of grant. For Ms. Kelley and Mr. Hilton, this amount represents the unvested portion of grants on February 25, 2015 of restricted stock awards in respect of 2,000 and 1,100 shares of common stock of the Company, respectively, vesting in three equal annual installments on each of the first, second and third anniversaries of the grant date.
|
(6) Represents the grants on February 25, 2016 of restricted stock awards. The restricted stock awards vest every six months, over two years, starting with the first six month anniversary of the date of grant.
|
|
(7) Represents the annual long-term incentive award of restricted stock awarded on May 25, 2016, vesting in three equal annual installments on each of the first, second and third anniversaries of the grant date.
|
|
(8) Represents a grant on March 9, 2012 of stock options to acquire 20,000 shares of common stock of the Company. 6,667 options vested on March 9, 2013, 6,667 vested on March 9, 2014, and 6,666 vested on March 9, 2015.
|
|
(9) Represents a grant on February 4, 2013 of stock options to acquire 5,000 shares of common stock of the Company, 1,667 options vested on February 4, 2014, 1,667 vested on February 4, 2015, and the remaining 1,666 vested on February 4, 2016.
|
|
(10) Represents a grant on March 9, 2012 of stock options to acquire 20,000 shares of common stock of the Company, 6,667 options vested on March 9, 2013, 6,667 options vested on March 9, 2014, and 6,666 options vested on March 9, 2015.
|
|
(11) Represents a portion of a grant on June 26, 2013 of stock options to acquire 5,000 shares of common stock of the Company. 1,667 options vested on June 26, 2014; 1,667 options vested on June 26, 2015, and the remaining 1,666 options vested on June 26, 2016.
|
OPTION EXERCISES AND STOCK VESTED
|
||||
OPTION AWARDS
|
STOCK AWARDS
|
|||
Name
|
Acquired on Exercise
|
Exercise
|
Acquired on Vesting
|
Vesting
|
(#) |
($)
|
(#)
|
($)
|
|
Howard C. Bluver
|
-
|
-
|
10,195
|
289,258
|
Brian K. Finneran
|
8,300
|
231,381
|
5,188
|
143,582
|
Michael R. Orsino
|
-
|
-
|
4,271
|
118,880
|
Jeanne P. Kelley
|
3,000
|
29,959
|
1,915
|
50,770
|
Christopher J. Hilton
|
-
|
-
|
566
|
16,090
|
PENSION BENEFITS
|
|||||||||||||
Name
|
Plan Name
|
|
Number of
Years
Credited
Service
|
Present
Value of
Accumulated
Benefit (1)
|
|
Payments
During Last
Fiscal Year
|
|||||||
(#)
|
|
($) |
($)
|
||||||||||
Jeanne P. Kelley
|
The Suffolk County National Bank Pension Plan
|
24.83
|
527,241
|
-
|
|||||||||
(1) The present value of accumulated benefits was determined using the same assumptions used for financial reporting purposes under GAAP for 2016. Pension benefits are discussed in Note 10 of the 10-K disclosure.
|
1) |
The acquisition by any individual, entity or group of beneficial ownership of 20 percent or more of outstanding shares of common stock of the Company, subject to customary exceptions;
|
2) |
Individuals who constitute the Board of Directors cease for any reason to constitute at least a majority of the Board of Directors;
|
3) |
Consummation of a reorganization, merger or consolidation or similar transaction involving the Company or any of its subsidiaries or sale or other disposition of all or substantially all of the assets of the Company, subject to customary exceptions; or
|
4) |
Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
|
POTENTIAL COST OF CHANGE OF CONTROL AGREEMENTS
|
||||||||||||||||||||||||
Name
|
Cash Severance
Value (1)
|
Pro-rata Bonus
(2)
|
Benefits
Continuation (3)
|
Equity
Acceleration (4)
|
280G
Scaleback(5)
(If applicable)
|
Total
|
||||||||||||||||||
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||||
Howard C. Bluver
|
2,070,000
|
230,000
|
-
|
743,912
|
(208,778)
|
2,835,134
|
||||||||||||||||||
Brian K. Finneran
|
1,449,000
|
161,000
|
51,801
|
476,158
|
(262,113)
|
1,875,846
|
||||||||||||||||||
Michael R. Orsino
|
840,000
|
140,000
|
33,564
|
378,914
|
-
|
1,392,478
|
||||||||||||||||||
Jeanne P. Kelley
|
565,500
|
65,250
|
33,604
|
195,987
|
-
|
860,341
|
||||||||||||||||||
Christopher J. Hilton
|
593,750
|
59,375
|
-
|
99,728
|
-
|
752,853
|
||||||||||||||||||
(1) Multiple of base salary and target bonus, payable in a lump sum
|
|
(2) Pro-rated target bonus for 2016; value reflects a full year.
|
|
(3) Reflects the annual cost to the Company for three years of continued medical and dental benefits for Mr. Finneran; and two years for Mr. Orsino and Ms. Kelley.
|
|
(4) In the event of a change in control of the Company, all outstanding, unvested stock options and restricted stock immediately vest and become exercisable under the terms of the Company’s equity compensation plans. Executives would receive an additional year to exercise outstanding stock options upon termination due to a change in control; however, for purposes of the calculation, we assume a cash out of all outstanding stock options at the time of the termination. Calculation uses closing common stock of the Company price on December 31, 2016 of $42.82 per share.
|
|
(5) The New York state supplemental withholding tax rate (9.62%) was used when calculating the potential 280G impact.
|
· |
The Chairman of the Board of Directors received an annual retainer of $125,000, payable in cash monthly.
|
· |
Members of the Board of Directors other than the Chairman received an annual retainer of $55,000, payable in cash monthly. Members are expected to attend 11 regular meetings of the Board of Directors, one organizational meeting of the Board of Directors, the annual meeting of shareholders, all other committee meetings as assigned, and any special meetings that the Board of Directors deems necessary.
|
· |
Members of the Audit Committee received an additional annual retainer of $4,000, payable in cash monthly.
|
· |
The Chairman of the Audit Committee received an additional annual retainer of $15,000, payable in cash monthly.
|
· |
Members of the Loan Committee received an annual retainer of $4,000, payable in cash monthly.
|
· |
Members of the Compensation Committee received an annual retainer of $4,000, payable in cash monthly.
|
DIRECTORS' COMPENSATION
|
||||||||||||||||
Name
|
Fees Earned
or Paid in Cash
|
Stock Awards (1)
|
All Other
Compensation (2)
|
Total
|
||||||||||||
($)
|
($)
|
($)
|
($)
|
|||||||||||||
James E. Danowski (3)
|
59,000
|
19,238
|
29
|
78,226
|
||||||||||||
Joseph A. Gaviola (4)
|
135,000
|
19,238
|
29
|
154,267
|
||||||||||||
Edgar F. Goodale (3)(5)
|
63,000
|
19,238
|
29
|
82,266
|
||||||||||||
David A. Kandell (3)
|
70,000
|
19,238
|
29
|
89,266
|
||||||||||||
Terence X. Meyer (5)(6)
|
63,000
|
19,238
|
29
|
82,266
|
||||||||||||
Ramesh N. Shah (6)
|
59,000
|
19,238
|
29
|
78,266
|
||||||||||||
John D. Stark, Jr. (6)
|
59,000
|
19,238
|
29
|
78,266
|
||||||||||||
(1) The amounts included in this column reflect the grant date fair value of restricted stock awards granted to our directors based on the closing price per share on the date of grant of $25.65. As of December 31, 2016 Messrs. Danowski, Gaviola, Goodale, Kandell, Meyer, Shah and Stark had 5,000 options outstanding and 1,583 restricted stock outstanding.
|
|
(2) Includes life insurance of $25,000 per independent director at a premium of $29 per annum.
|
|
(3) Messrs. Danowski and Goodale were assigned additional duties as a member of the Audit Committee for an additional annual retainer of $4,000, payable monthly, and Mr. Kandell was assigned additional duties as Chairman of the Audit Committee for an additional annual retainer of $15,000 payable monthly.
|
|
(4) In lieu of all other director fees, Mr. Gaviola receives an annual retainer of $125,000 and a $10,000 annual travel allowance.
|
|
(5) Messrs. Goodale and Meyer received an annual retainer of $4,000, payable monthly, for service on the Loan Committee.
|
|
(6) Messrs. Meyer, Shah and Stark received an annual retainer of $4,000, payable monthly, for service on the Compensation Committee.
|
|
ITEM 12. |
SECURITY OWNERSHIP
|
|||||||
Name of Beneficial Owner
|
Amount and Nature of
Beneficial Ownership (1)
|
Percent of Class (7)
|
|||||
Directors:
|
|||||||
Howard C. Bluver (1)
|
133,795
|
*
|
|||||
James E. Danowski (1) (2)
|
45,715
|
*
|
|||||
Brian K. Finneran (1) (3)
|
70,442
|
*
|
|||||
Joseph A. Gaviola (1)
|
10,854
|
*
|
|||||
Edgar F. Goodale (1) (4)
|
94,563
|
*
|
|||||
David A. Kandell (1)
|
32,844
|
*
|
|||||
Terence X. Meyer (1)
|
19,930
|
*
|
|||||
Ramesh N. Shah (1)
|
15,304
|
*
|
|||||
John D. Stark, Jr. (1)
|
38,494
|
*
|
|||||
Current named executive officers who are not directors:
|
|||||||
Christopher J. Hilton (1) (5)
|
6,144
|
*
|
|||||
Jeanne P. Kelley (1) (6)
|
17,451
|
*
|
|||||
Michael R. Orsino (1)
|
45,778
|
*
|
|||||
Directors and executive officers as a group (15 people) (1)
|
558,842
|
4.68%
|
* less than 1%
|
|
(1) Includes the following number of shares issuable upon the exercise of stock options by the person named to purchase Common Stock which are exercisable within 60 days of March 23, 2017: Mr. Bluver, 70,000 shares; Mr. Danowski, 5,000 shares; Mr. Finneran, 16,700 shares; Mr. Gaviola, 5,000 shares; Mr. Goodale, 5,000 shares; Mr. Kandell, 5,000 shares; Mr. Meyer, 5,000 shares; Mr. Shah, 5,000 shares; Mr. Stark, 5,000 shares; Ms. Kelley, 4,600 shares; and Mr. Orsino, 25,000 shares.
|
|
(2) Includes 19,222 shares to which Mr. Danowski shares voting and investment power.
|
|
(3) Includes 14,241 shares to which Mr. Finneran shares voting and investment power.
|
|
(4) Includes 85,316 shares to which Mr. Goodale shares voting and investment power.
|
|
(5) Includes 10 shares to which Mr. Hilton shares voting and investment power.
|
|
(6) Includes 3,787 shares to which Ms. Kelley shares voting and investment power.
|
|
(7) There were 11,935,752 shares of Common Stock outstanding as of March 23, 2017. The "Percent of Class" for each of the directors and named executive officers and for the directors and executive officers as a group was calculated using the amount of ownership as the numerator and the total shares outstanding as of March 23, 2017 plus the amount of shares which such persons can acquire upon the exercise of stock options within 60 days of March 23, 2017 as the denominator.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
|
||||||
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
|
Percent of Class (1)
|
||||
The Banc Funds Company, L.L.C.
|
932,743 (2)
|
7.80%
|
||||
20 North Wacker Drive, Suite 3300
|
||||||
Chicago, IL 60606
|
||||||
BlackRock Inc.
|
854,556 (3)
|
7.20%
|
||||
55 East 52nd Street
|
||||||
New York, NY 10022
|
(1) There were 11,935,752 shares of Common Stock outstanding as of March 23, 2017. The "Percent of Class" for each of the shareholders in the table was calculated by using the disclosed number of beneficially owned shares of Common Stock as the numerator and the number of the Company's outstanding shares of Common Stock as of March 23, 2017 as the denominator.
|
|
(2) Based on Schedule 13G filed with the Securities and Exchange Commission on February 14, 2017. Schedule 13G was filed jointly by Banc Fund VI L.P., Banc Fund VII L.P., Banc Fund VIII L.P. and Banc Fund IX L.P. Banc Fund VII L.P. has sole voting and sole dispositive power with respect to 291,500 shares of Common Stock, Banc Fund VIII L.P. has sole voting and sole dispositive power with respect to 604,723 shares of Common Stock and Banc Fund IX L.P. has sole voting and sole dispositive power with respect to 36,520 shares of Common Stock. Banc Fund VI L.P. claims no beneficial ownership.
|
|
(3) Based on Schedule 13G filed with the Securities and Exchange Commission on January 27, 2017. Beneficial owner has sole voting power with respect to 828,895 and sole dispositive power with respect to 854,556 shares of Common Stock.
|
At December 31, 2016
|
||||||||||||
Number of securities
to be issued upon exercise of
outstanding options,
warrants and rights
|
Weighted-average
exercise price of
outstanding options,
warrants and rights ($)
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
|
||||||||||
Plan category
|
(a)
|
(b)
|
(c)
|
|||||||||
Equity compensation plans approved by security holders
|
140,800
|
16.21
|
118,404
|
|||||||||
Equity compensation plans not approved by security holders
|
30,000
|
10.79
|
-
|
|||||||||
Total
|
170,800
|
15.26
|
118,404
|
COMMITTEE MEMBERSHIP
|
||
Audit
|
Nominating and Governance
|
Compensation
|
David A. Kandell, Chairman
|
Edgar F. Goodale, Chairman
|
Joseph A. Gaviola, Chairman
|
James E. Danowski
|
James E. Danowski
|
Terence X. Meyer
|
Joseph A. Gaviola
|
David A. Kandell
|
Ramesh N. Shah
|
Edgar F. Goodale
|
John D. Stark, Jr.
|
Submitted by: |
David A. Kandell, Chairman of the Committee; James E. Danowski; Joseph A. Gaviola; Edgar F. Goodale.
|
AUDIT FEES
|
||||||||
2016
|
2015
|
|||||||
Audit fees (1)
|
$
|
506,903
|
$
|
405,895
|
||||
Audit-related fees (2)
|
35,625
|
31,610
|
||||||
Tax fees
|
-
|
-
|
||||||
All other fees
|
-
|
-
|
||||||
$
|
542,528
|
$
|
437,505
|
(1) Consists of fees for professional services rendered for the audit of Suffolk’s annual financial statements and review of interim financial statements, and services that are normally provided by Suffolk’s registered independent public accounting firm in connection with statutory and regulatory filings or engagements, work related to section 404 of SOX, consents and audits of subsidiary companies.
|
|
(2) Consists of fees billed for the audit of the Suffolk County National Bank 401(k) Savings and Protection Plan and the Suffolk County National Bank Employees' Retirement Plan. In 2015, all of the fees, except what is noted above, were paid directly out of those plans.
|
2.1
|
Agreement and Plan of Merger, by and between Suffolk Bancorp and People’s United Financial, Inc., dated as of June 26, 2016 (incorporated by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed June 28, 2016)
|
3.1
|
Certificate of Incorporation of Suffolk Bancorp (incorporated by reference from Exhibit 3.(i) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999, filed March 10, 2000)
|
3.2
|
Bylaws of Suffolk Bancorp (incorporated by reference from Exhibit 3.(ii) to the Company’s Form 10-K for the fiscal year ended December 31, 1999, filed March 10, 2000)
|
3.3
|
Amendment to Bylaws of Suffolk Bancorp (incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed June 28, 2016)
|
10.1*
|
Suffolk Bancorp 2009 Stock Incentive Plan (incorporated by reference from Exhibit C to the Company’s Form 10-K for the fiscal year ended December 31, 2008, filed March 13, 2009)
|
10.2*
|
Suffolk Bancorp Form of Change-of-Control Employment Contract (incorporated by reference from Exhibit D to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed March 13, 2009)
|
10.3*
|
Suffolk Bancorp Form of Change-of-Control Employment Contract (incorporated by reference from Exhibit 10.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2011, filed March 30, 2012)
|
10.4*
|
Suffolk Bancorp Form of Option Agreement (incorporated by reference from Exhibit 10.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 2011, filed March 30, 2012)
|
10.5*
|
Suffolk Bancorp Severance Agreement (incorporated by reference from Exhibit 99.1 to the Company’s report on Form 10-Q for the quarterly period ended June 30, 2011, filed December 20, 2011)
|
10.6*
|
Suffolk Bancorp Letter Agreement (incorporated by reference from Exhibit 10.1 to the Company’s report on Form 8-K, filed January 3, 2012)
|
21.1
|
Subsidiaries of the Registrant (incorporated by reference from Exhibit 21.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2013, filed March 4, 2014)
|
Consent of Independent Registered Public Accounting Firm (filed herein)
|
|
Certification of principal executive officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herein)
|
|
Certification of principal financial officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herein)
|
|
Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herein)
|
|
Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herein)
|
|
101.INS
|
XBRL Instance Document (filed herein)
|
101.SCH
|
XBRL Taxonomy Extension Schema Document (filed herein)
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document (filed herein)
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document (filed herein)
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document (filed herein)
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document (filed herein)
|
*
|
Denotes management contract or compensatory plan or arrangement.
|
Suffolk Bancorp
|
|
Registrant
|
|
/s/ Howard C. Bluver
|
|
Howard C. Bluver
|
|
President & Chief Executive Officer
|
|
(principal executive officer)
|
|
/s/ Brian K. Finneran
|
|
Brian K. Finneran
|
|
Executive Vice President & Chief Financial Officer
|
|
(principal financial and accounting officer)
|
By:
|
/s/ JOSEPH A. GAVIOLA
|
|
Joseph A. Gaviola
|
||
Chairman of the Board & Director
|
||
By:
|
/s/ HOWARD C. BLUVER
|
|
Howard C. Bluver
|
||
President, Chief Executive Officer & Director
|
||
By:
|
/s/ BRIAN K. FINNERAN
|
|
Brian K. Finneran
|
||
Executive Vice President, Chief Financial Officer & Director
|
||
By:
|
/s/ JAMES E. DANOWSKI
|
|
James E. Danowski
|
||
Director
|
||
By:
|
/s/ EDGAR F. GOODALE
|
|
Edgar F. Goodale
|
||
Director
|
||
By:
|
/s/ DAVID A. KANDELL
|
|
David A. Kandell
|
||
Director
|
||
By:
|
/s/ TERENCE X. MEYER
|
|
Terence X. Meyer
|
||
Director
|
||
By:
|
/s/ RAMESH N. SHAH
|
|
Ramesh N. Shah
|
||
Director
|
||
By:
|
/s/ JOHN D. STARK, JR.
|
|
John D. Stark, Jr.
|
||
Director
|
1.
|
I have reviewed this Annual Report on Form 10-K of Suffolk Bancorp;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1. |
I have reviewed this Annual Report on Form 10-K of Suffolk Bancorp;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
\*EIM
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MU?2;F1K>R
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Feb. 10, 2017 |
Jun. 30, 2016 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | SUFFOLK BANCORP | ||
Entity Central Index Key | 0000754673 | ||
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 Common Stock, Shares Outstanding | 11,943,789 | ||
Entity Public Float | $ 359 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 |
CONSOLIDATED STATEMENTS OF CONDITION (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Investment securities: | ||
Held to maturity, fair value | $ 19,259 | $ 63,272 |
STOCKHOLDERS' EQUITY | ||
Common stock, par value (in dollars per share) | $ 2.50 | $ 2.50 |
Common stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, shares, issued (in shares) | 14,102,617 | 13,966,292 |
Common stock, shares outstanding (in shares) | 11,936,879 | 11,800,554 |
Treasury stock, shares (in shares) | 2,165,738 | 2,165,738 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | |||
Net income | $ 19,831 | $ 17,687 | $ 15,295 |
Other comprehensive income (loss), net of tax and reclassification adjustments: | |||
Net unrealized holding (loss) gain on securities available for sale arising during the period, net of tax of ($887), ($766) and $4,060, respectively | (1,334) | (1,201) | 6,732 |
Change in unrealized gain (loss) on securities transferred from available for sale to held to maturity, net of tax of $881, $250 and ($1,180), respectively | 1,324 | 410 | (1,805) |
Net actuarial adjustment on pension and post-retirement plan benefit obligation, net of tax of ($648), ($628) and ($2,929), respectively | (933) | (942) | (4,481) |
Total other comprehensive (loss) income, net of tax | (943) | (1,733) | 446 |
Total comprehensive income | $ 18,888 | $ 15,954 | $ 15,741 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | |||
Change in unrealized gain (loss) on securities available for sale, tax | $ (887) | $ (766) | $ 4,060 |
Change in unrealized gain on securities transferred, tax | 881 | 250 | (1,180) |
Net actuarial loss adjustment on pension and post-retirement plan benefit obligation, tax | $ (648) | $ (628) | $ (2,929) |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands |
Common Stock [Member] |
Surplus [Member] |
Retained Earnings [Member] |
Treasury Stock [Member] |
Accumulated Other Comprehensive Loss, Net of Tax [Member] |
Total |
---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2013 | $ 34,348 | $ 43,280 | $ 102,273 | $ (5,414) | $ (7,289) | |
Net income | 15,295 | $ 15,295 | ||||
Dividend reinvestment | 16 | 120 | ||||
Stock options exercised | 46 | 200 | ||||
Stock-based compensation | 181 | 630 | ||||
Other comprehensive (loss) income | 446 | 446 | ||||
Cash dividends on common stock | (1,399) | |||||
Ending Balance at Dec. 31, 2014 | 34,591 | 44,230 | 116,169 | (5,414) | (6,843) | 182,733 |
Net income | 17,687 | 17,687 | ||||
Dividend reinvestment | 85 | 761 | ||||
Stock options exercised | 98 | 441 | ||||
Stock-based compensation | 142 | 807 | ||||
Other comprehensive (loss) income | (1,733) | (1,733) | ||||
Cash dividends on common stock | (3,763) | |||||
Ending Balance at Dec. 31, 2015 | 34,916 | 46,239 | 130,093 | (5,414) | (8,576) | 197,258 |
Net income | 19,831 | 19,831 | ||||
Dividend reinvestment | 201 | 2,100 | ||||
Stock options exercised | 28 | 173 | ||||
Stock-based compensation | 111 | 1,020 | ||||
Other comprehensive (loss) income | (943) | (943) | ||||
Cash dividends on common stock | (4,751) | |||||
Ending Balance at Dec. 31, 2016 | $ 35,256 | $ 49,532 | $ 145,173 | $ (5,414) | $ (9,519) | $ 215,028 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Common Stock [Member] | |||
Dividend reinvestment (in shares) | 80,499 | 33,566 | 6,671 |
Stock options exercised (in shares) | 11,300 | 39,334 | 18,735 |
Retained Earnings [Member] | |||
Cash dividend on common stock (in dollars per share) | $ 0.40 | $ 0.32 | $ 0.12 |
Dividend reinvestment (in shares) | 80,499 | 33,566 | 6,671 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations — Suffolk Bancorp (the “Company”) was incorporated in 1985 as a bank holding company. The Company currently owns all of the outstanding capital stock of Suffolk County National Bank (the “Bank”). The Bank was organized under the national banking laws of the United States in 1890. The Bank formed Suffolk Greenway, Inc. (the “REIT”), a real estate investment trust, and owns 100% of an insurance agency and two corporations used to acquire foreclosed real estate. The insurance agency and the two corporations used to acquire foreclosed real estate are immaterial to the Company’s operations. The consolidated financial statements include the accounts of the Company and the Bank and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Unless the context otherwise requires, references herein to the Company include the Company and the Bank and subsidiaries on a consolidated basis. On June 26, 2016, the Company entered into an Agreement and Plan of Merger (the “merger agreement”) with People’s United Financial, Inc. (“People’s United”) pursuant to which the Company will merge into People’s United (the “merger”). People’s United will be the surviving corporation in the merger. Subject to the terms and conditions of the merger agreement, the Company’s shareholders will have the right to receive 2.225 shares of People’s United common stock in exchange for each share of Company common stock. The merger agreement was adopted by the Company’s shareholders and both the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System have approved the merger. The merger remains subject to other customary conditions to closing. The accounting and reporting policies of the Company conform to the accounting principles generally accepted in the United States of America (“U.S. GAAP”) and general practices within the banking industry. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates. The following describe the most significant of these policies. Cash and Cash Equivalents — For purposes of the consolidated statements of cash flows, cash and due from banks and federal funds sold are considered to be cash equivalents. Generally, federal funds are sold for one-day periods. Investment Securities — The Company reports investment securities in one of the following categories: (i) held to maturity (management has the intent and ability to hold to maturity), which are reported at amortized cost; (ii) trading (held for current resale), which are reported at fair value, with unrealized gains and losses included in earnings; and (iii) available for sale, which are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity. The Company has classified all of its holdings of investment securities as either held to maturity or available for sale. At the time a security is purchased, a determination is made as to the appropriate classification. Premiums and discounts on investment securities are amortized as expense and accreted as income over the estimated life of the respective security using a method that generally approximates the level-yield method. Gains and losses on the sales of investment securities are recognized upon realization, using the specific identification method and shown separately in the consolidated statements of income. Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management 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 the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt 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 statement of income and 2) OTTI related to other factors, which is recognized in other comprehensive income (loss). 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. For equity securities, the entire amount of impairment is recognized through earnings. Loans and Loan Interest Income Recognition — Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned discounts, deferred loan fees and costs. Unearned discounts on installment loans are credited to income using methods that result in a level yield. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income over the respective term of the loan without anticipating prepayments. Interest income is accrued on the unpaid loan principal balance. Recognition of interest income is discontinued when reasonable doubt exists as to whether principal or interest due can be collected. Loans of all classes will generally no longer accrue interest when over 90 days past due unless the loan is well-secured and in process of collection. When a loan is placed on non-accrual status, all interest previously accrued, but not collected, is reversed against current-year interest income. Interest received on such loans is applied against principal or interest, according to management’s judgment as to the collectability of the principal, until qualifying for return to accrual status. Loans may start accruing interest again when they become current as to principal and interest for at least six months, and when, after a well-documented analysis by management, it has been determined that the loans can be collected in full. For all classes of loans, an impaired loan is defined as a loan for which it is probable that the lender will not collect all amounts due under the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties are considered troubled debt restructurings (“TDRs”) and are classified as impaired. Generally, TDRs are initially classified as non-accrual until sufficient time has passed to assess whether the restructured loan will continue to perform. For impaired, accruing loans, interest income is recognized on an accrual basis with cash offsetting the recorded accruals upon receipt. Allowance for Loan Losses - The allowance for loan losses is a valuation allowance for probable incurred losses, increased by the provision for loan losses and recoveries, and decreased by loan charge-offs. For all classes of loans, when a loan, in full or in part, is deemed uncollectible, it is charged against the allowance for loan losses. This happens when the loan is past due and the borrower has not shown the ability or intent to make the loan current, or the borrower does not have sufficient assets to pay the debt, or the value of the collateral is less than the balance of the loan and is not considered likely to improve soon. The allowance for loan losses is determined by a quarterly analysis of the loan portfolio. Such analysis includes changes in the size and composition of the portfolio, the Company’s own historical loan losses, industry-wide losses, current and anticipated economic trends, and details about individual loans. It also includes estimates of the actual value of collateral, other possible sources of repayment and estimates that are susceptible to significant changes due to changes in appraisal values of collateral, national and regional economic conditions and other relevant factors. All non-accrual loans over $250 thousand in the commercial and industrial, commercial real estate, multifamily, mixed use commercial, real estate construction and residential mortgages loan classes and all TDRs are evaluated individually for impairment. All other loans are generally evaluated as homogeneous pools with similar risk characteristics. In assessing the adequacy of the allowance for loan losses, management reviews the loan portfolio by separate classes that have similar risk and collateral characteristics. These classes are commercial and industrial, commercial real estate, multifamily, mixed use commercial, real estate construction, residential mortgages, home equity and consumer loans. The allowance for loan losses consists of specific and general components, as well as an unallocated component. The specific component relates to loans that are individually classified as impaired. Specific reserves are established based on an analysis of the most probable sources of repayment or liquidation of collateral. Impaired loans that are collateral dependent are reviewed based on the fair market value of collateral and the estimated time required to recover the Company’s investment in the loans, as well as the cost of doing so, and the estimate of the recovery. Non-collateral dependent impaired loans are reviewed based on the present value of estimated future cash flows, including balloon payments, if any, using the loan’s effective interest rate. While every impaired loan is evaluated individually, not every loan requires a specific reserve. Specific reserves fluctuate based on changes in the underlying loans, anticipated sources of repayment, and charge-offs. The general component covers non-impaired loans and is based on historical loss experience for each loan class from a rolling twelve quarter period and modifying those percentages, if necessary, after adjusting for current qualitative and environmental factors that reflect changes in the estimated collectability of the loan class not captured by historical loss data. These factors augment actual loss experience and help estimate the probability of loss within the loan portfolio based on emerging or inherent risk trends. These qualitative factors include consideration of the following: levels and trends in various risk rating categories; levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability, and depth of lending management and other relevant staff; local, regional and national economic trends and conditions; industry conditions; and effects of changes in credit concentrations. These qualitative factors are applied as an adjustment to historical loss rates and require judgments that cannot be subjected to exact mathematical calculation. These adjustments reflect management’s overall estimate of the extent to which current losses on a pool of loans will differ from historical loss experience. These adjustments are subjective estimates and management reviews them on a quarterly basis. TDRs are also considered impaired with impairment generally measured at the present value of estimated future cash flows using the loan’s effective interest rate at inception or using the fair value of collateral, less estimated costs to sell, if repayment is expected solely from the collateral. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. Transfers of Financial Instruments - Transfers of financial assets for which the Bank has surrendered control of the financial assets are accounted for as sales to the extent that consideration other than beneficial interests in the transferred assets is received in exchange. Retained interests in a sale or securitization of financial assets are initially measured at fair value and subsequently amortized over the estimated servicing period. The fair values of retained servicing rights and any other retained interests are determined based on the present value of expected future cash flows associated with those interests and by reference to market prices for similar assets. There were no transfers of financial assets to related or affiliated parties for any of the reported periods. The Bank services residential mortgage loans for others which are not included in the accompanying consolidated statements of condition. At December 31, 2016 and 2015, the outstanding principal balance of such loans approximated $189 million and $179 million, respectively. The carrying value, approximating the estimated fair value, of mortgage servicing rights was $2 million as of December 31, 2016 and 2015, and is recorded in goodwill and other intangibles in the Company’s consolidated statements of condition. Loans Held For Sale – Loans held for sale are carried at the lower of aggregate cost or fair value, based on observable inputs in the secondary market. Changes in fair value of loans held for sale are recognized in earnings. Other Real Estate Owned (“OREO”) — Property acquired through foreclosure, or OREO, is initially stated at the lower of cost or fair value less estimated selling costs. Losses arising at the time of the acquisition of property are charged against the allowance for loan losses. Any additional write-downs to the carrying value of these assets that may be required, as well as the cost of maintaining and operating these foreclosed properties, are charged to expense. The Company held OREO amounting to $650 thousand at December 31, 2016 resulting from the addition of one residential property during the first quarter of 2016. The Company held no OREO at December 31, 2015. Premises and Equipment — Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is calculated by the declining-balance or straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the term of the lease or the estimated life of the asset, whichever is shorter. The Company periodically evaluates impairment of long-lived assets to be held and used or to be disposed of by sale. There was no impairment of long-lived assets at any of the reported periods. Bank-Owned Life Insurance – Bank-owned life insurance is recorded at the lower of the cash surrender value or the amount that can be realized under the insurance policy and is included as an asset in the consolidated statements of condition. Changes in the cash surrender value and insurance benefit payments are recorded in non-interest income in the consolidated statements of income. Goodwill — Goodwill resulting from business combinations represents the excess of the purchase price over the fair value of the net assets of the acquired business and was approximately $814 thousand at each of the Company’s reported periods. Goodwill is not amortized but tested for impairment at least annually or when there is a circumstance that would indicate the need to evaluate between annual tests. Based on these tests, there was no impairment of goodwill as of December 31, 2016 and 2015. Allowance for Off-Balance Sheet Credit Risk — The balance of the allowance for off-balance sheet credit risk is determined by management’s estimate of the amount of financial risk in outstanding loan commitments and contingent liabilities such as performance and financial letters of credit. The allowance for off-balance sheet credit risk was $240 thousand and $290 thousand at December 31, 2016 and 2015, respectively, and is recorded in other liabilities in the Company’s consolidated statements of condition. The Company has financial and performance letters of credit. Financial letters of credit require the Company to make payment if the customer’s financial condition deteriorates, as defined in the agreements. Performance letters of credit require the Company to make payments if the customer fails to perform certain non-financial contractual obligations. Income Taxes — Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities, computed using enacted tax rates. Deferred tax assets are recognized if it is more likely than not that a future benefit will be realized. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. The realization of deferred tax assets (net of a recorded valuation allowance) is largely dependent upon future taxable income, future reversals of existing taxable temporary differences and the ability to carryback losses to available tax years. In assessing the need for a valuation allowance, the Company considers all relevant positive and negative evidence, including taxable income in carryback years, scheduled reversals of deferred tax liabilities, expected future taxable income and available tax planning strategies. Summary of Retirement Benefits Accounting — The Company’s retirement plan is noncontributory and covers substantially all eligible employees. The plan conforms to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and the Pension Protection Act of 2006, which requires certain funding rules for defined benefit plans. The Company’s policy is to accrue for all pension costs and to fund the maximum amount allowable for tax purposes. Actuarial gains and losses that arise from changes in assumptions concerning future events are amortized over a period that reflects the long-term nature of pension expense used in estimating pension costs. In accordance with U.S. GAAP the Company recognizes the funded status of a benefit plan in its consolidated statement of financial condition; recognizes as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost; measures defined benefit plan assets and obligation as of the date of fiscal year-end; and discloses in the notes to financial statements additional information about certain effects of net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset and obligation. Plan assets and benefit obligations shall be measured as of the date of its statement of financial position and in determining the amount of net periodic benefit cost. An employer is required to use the same date for the measurement of plan assets as for the statement of condition. The Company accrues for post-retirement benefits other than pensions by accruing the cost of providing those benefits to an employee during the years that the employee serves. Stock-Based Compensation — The Company recognizes compensation expense for the fair value of stock options and restricted stock on a straight line basis over the requisite service period of the grants. Treasury Stock — The balance of treasury stock is computed at par value. Under the par value method, the acquisition cost of treasury shares is compared with the amount received at the time of their original issue. The treasury stock account is debited for the par value (or stated value) of the shares and a pro rata amount of any excess over par (or stated value) on original issuance is charged to the surplus account. Any excess of the acquisition cost over the original issue price is charged to retained earnings. If, however, the original issue price exceeds the acquisition price of the treasury stock, this difference is credited to surplus. Earnings Per Share — Basic earnings per share is computed based on the weighted average number of common shares and unvested restricted shares outstanding for each period. The Company’s unvested restricted shares are considered participating securities as they contain rights to non-forfeitable dividends and thus they are included in the basic earnings per share computation. Diluted earnings per share include the dilutive effect of additional potential common shares issuable under stock options. In the event a net loss is reported, restricted shares and stock options are excluded from earnings per share computations. The reconciliation of basic and diluted weighted average number of common shares outstanding for the years ended December 31, 2016, 2015 and 2014 follows.
Comprehensive Income — Comprehensive income includes net income and all other changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income includes revenues, expenses, gains and losses that under U.S. GAAP are included in comprehensive income but excluded from net income. Comprehensive income and accumulated other comprehensive income (“AOCI”) are reported net of related income taxes. AOCI for the Company consists of unrealized holding gains or losses on securities available for sale, unrealized holding losses on securities transferred from available for sale to held to maturity and gains or losses on the unfunded projected benefit obligation of the pension plan. Derivatives - Derivatives are contracts between counterparties that specify conditions under which settlements are to be made. The only derivatives held by the Company are swap contracts with the purchaser of its Visa Class B shares. The Company records its derivatives on the consolidated statements of condition at fair value. The Company’s derivatives do not qualify for hedge accounting. As a result, changes in fair value are recognized in earnings in the period in which they occur. (See also Note 3. Investment Securities contained herein.) Segment Reporting — U.S. GAAP requires that public companies report certain information about operating segments. It also requires that public companies report certain information about their products and services, the geographic areas in which they operate and their major customers. The Company is a community bank which offers a wide array of products and services to its customers. Pursuant to its banking strategy, emphasis is placed on building relationships with its customers and operations are managed and financial performance is evaluated on a Company-wide basis. As a result, the Company, the only reportable segment, is not organized around discernible lines of business and prefers to work as an integrated unit to customize solutions for its customers, with business line emphasis and product offerings changing over time as needs and demands change. Recent Accounting Guidance – In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230), “Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 clarifies whether the following items should be categorized as operating, investing or financing in the statement of cash flows: (i) debt prepayments and extinguishment costs, (ii) settlement of zero-coupon debt, (iii) settlement of contingent consideration, (iv) insurance proceeds, (v) settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies, (vi) distributions from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) receipts and payments with aspects of more than one class of cash flows. For public business entities that are U.S. Securities and Exchange Commission filers, like the Company, the amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Being disclosure-related only, the Company believes adoption of this ASU in 2018 will not have a material effect on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model and provides for recording credit losses on available-for-sale debt securities through an allowance account. The ASU also requires certain incremental disclosures. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for all entities beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of the pending adoption of the ASU on its consolidated financial statements; however, the materiality of any such impact is not reasonably determinable at this time. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718), “Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 introduces targeted amendments intended to simplify the accounting for stock compensation. Specifically, the ASU requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether the benefit reduces taxes payable in the current period. The ASU also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows. In addition, the ASU elevates the statutory tax withholding threshold to qualify for equity classification up to the maximum statutory tax rates in the applicable jurisdiction(s). The ASU also clarifies that cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. The ASU provides an optional accounting policy election (with limited exceptions), to be applied on an entity-wide basis, to either estimate the number of awards that are expected to vest (consistent with existing U.S. GAAP) or account for forfeitures when they occur. The amendments were effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption was permitted. The Company’s adoption of ASU 2016-09 on January 1, 2017 did not have a material effect on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The ASU establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has not yet evaluated this ASU, thus the impact of its pending adoption on the Company’s consolidated financial statements is not currently known or reasonably estimable. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), “Recognition and Measurement of Financial Assets and Financial Liabilities” which requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available for sale debt securities in combination with other deferred tax assets. This ASU provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes and also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. For public entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Generally, early adoption of the amendments in this ASU is not permitted. The Company believes that adoption in 2018 will not have a material effect on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), “Revenue from Contracts with Customers,” which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the ASU is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The ASU defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The FASB subsequently issued ASU 2016-08 which updates the new standard by clarifying the principal versus agent implementation guidance, ASU 2016-10 which clarifies identifying performance obligations and the licensing implementation guidance, ASU 2016-12 which clarifies the guidance on assessing collectability, presenting sales taxes, measuring noncash consideration and certain transition matters and ASU 2016-20 which addresses technical corrections and improvements, but these do not change the core principle of the new standard. The FASB also subsequently issued ASU 2015-14 to defer the effective date of the new standard by one year. As such, it now takes effect for public entities in fiscal years beginning after December 15, 2017, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the ASU recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is permitted for any entity that chooses to adopt the new standard as of the original effective date. The Company has not yet determined the method by which it will adopt ASU 2014-09 in 2018 and does not believe that the adoption will have a material effect on the Company’s consolidated financial statements. Reclassifications — Certain reclassifications have been made to prior period information in order to conform to the current period’s presentation. Such reclassifications had no impact on the Company’s consolidated results of operations or financial condition. |
ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS ("AOCI") |
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ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS ("AOCI") [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS ("AOCI") | 2. ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS (“AOCI”) The changes in the Company’s AOCI by component, net of tax, for the years ended December 31, 2016 and 2015 follow (in thousands).
Reclassifications out of AOCI for the years ended December 31, 2016, 2015 and 2014 follow (in thousands).
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INVESTMENT SECURITIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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INVESTMENT SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES | 3. INVESTMENT SECURITIES At the time of purchase of a security, the Company designates the security as either available for sale, trading or held to maturity, depending upon investment objectives, liquidity needs and intent. In 2014, investment securities with a fair value of $48 million and an unrealized loss of $3.2 million were transferred from available for sale to held to maturity. In accordance with U.S. GAAP, the securities were transferred at fair value, which became the amortized cost. The discount, equal to the unrealized holding losses at the date of transfer, is being accreted to interest income over the remaining life of the securities. The unrealized holding losses at the date of transfer remained in AOCI and are being amortized simultaneously against interest income. Those amounts offset or mitigate each other. The amortized cost, fair value and gross unrealized gains and losses of the Company’s investment securities available for sale and held to maturity at December 31, 2016 and 2015 were as follows (in thousands):
The amortized cost, contractual maturities and fair value of the Company’s investment securities at December 31, 2016 (in thousands) are presented in the table below. Collateralized mortgage obligations (“CMOs”) and mortgage-backed securities (“MBS”) assume maturity dates pursuant to average lives.
As a member of the Federal Reserve Bank (“FRB”) and the Federal Home Loan Bank (“FHLB”), the Bank owned FRB and FHLB stock with book values of $1.4 million and $2.8 million, respectively, at December 31, 2016. At December 31, 2015, the Bank owned FRB and FHLB stock with a book value of $1.4 million and $9.2 million, respectively. There is no public market for these shares. The last dividends paid were 6.00% on FRB stock in December 2016 and 5.00% on FHLB stock in November 2016. At December 31, 2016 and 2015, investment securities carried at $144 million and $261 million, respectively, were pledged primarily for public funds on deposit and as collateral for the Company’s derivative swap contracts. The proceeds from sales of securities available for sale and the associated realized gains and losses are shown below (in thousands) for the years indicated. Realized gains are also inclusive of gains on called securities.
Information pertaining to securities with unrealized losses at December 31, 2016 and 2015, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows (in thousands):
The CMOs with unrealized losses for twelve months or longer at December 31, 2016 are issued or guaranteed by U.S. Government agencies or sponsored enterprises. The corporate bonds with unrealized losses for twelve months or longer at December 31, 2016 carry investment grade ratings by all major credit rating agencies including Moody’s and Standard & Poor’s. In all cases, the unrealized losses on these bonds were a result of overall market conditions including the current interest rate environment and general market liquidity. The losses were not related to a deterioration of the quality of the issuer or any company-specific adverse events. The Company does not intend to sell and it is not more likely than not that the Company will be required to sell these securities prior to their recovery to a level equal to or greater than amortized cost. Management has determined that no OTTI was present at December 31, 2016. The Bank was a member of the Visa USA payment network and was issued Class B shares upon Visa’s initial public offering in March 2008. The Visa Class B shares are transferable only under limited circumstances until they can be converted into shares of the publicly traded class of stock. This conversion cannot happen until the settlement of certain litigation, which is indemnified by Visa members. Since its initial public offering, Visa has funded a litigation reserve based upon a change in the conversion ratio of Visa Class B shares into Visa Class A shares. At its discretion, Visa may continue to increase the conversion rate in connection with any settlements in excess of amounts then in escrow for that purpose and reduce the conversion rate to the extent that it adds any funds to the escrow in the future. Based on the existing transfer restriction and the uncertainty of the litigation, the Company has recorded its Visa Class B shares on its balance sheet at zero value. In conjunction with the sale of Visa Class B shares in 2013, the Company entered into derivative swap contracts with the purchaser of these Visa Class B shares which provide for settlements between the purchaser and the Company based upon a change in the conversion ratio of Visa Class B shares into Visa Class A shares. The Company’s recorded liability representing the fair value of the derivative was $752 thousand at December 31, 2016 and 2015. The present value of estimated future fees to be paid to the derivative counterparty, or carrying costs, calculated by reference to the market price of the Visa Class A shares at a fixed rate of interest are expensed as incurred. For the years ended December 31, 2016, 2015 and 2014, $324 thousand, $294 thousand and $239 thousand, respectively, in such carrying costs was expensed. At December 31, 2016, the Company has pledged mortgage-backed securities of U.S. Government-sponsored enterprises held in its available for sale portfolio, with a market value of approximately $3 million, as collateral for the derivative swap contracts. At December 31, 2015, the Company pledged U.S. Government agency securities held in its available for sale portfolio, with a market value of approximately $3 million, as collateral for such contracts. Subjectivity has been used in estimating the fair value of both the derivative liability and the associated fees, but management believes that these fair value estimates are adequate based on available information. However, future developments in the litigation could require potentially significant changes to these estimates. At December 31, 2016 and 2015, the Company still owned 38,638 Visa Class B shares subsequent to the sales described here. Upon termination of the existing transfer restriction and settlement of the litigation, and to the extent that the Company continues to own such Visa Class B shares in the future, the Company expects to record its Visa Class B shares at fair value. |
LOANS |
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LOANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS | 4. LOANS At December 31, 2016 and 2015, net loans disaggregated by class consisted of the following (in thousands):
The Bank’s real estate loans and loan commitments are primarily for properties located throughout Long Island and New York City. Repayment of these loans is dependent in part upon the overall economic health of the Company’s market area and current real estate values. The Bank considers the credit circumstances, the nature of the project and loan to value ratios for all real estate loans. The Bank makes loans to its directors and executive officers, and other related parties, in the ordinary course of its business. Loans made to directors and executive officers, either directly or indirectly, totaled $21 million and $18 million at December 31, 2016 and 2015, respectively. New loans and advances totaling $85 million and $81 million were extended and payments of $82 million and $74 million were received during 2016 and 2015, respectively, on these loans. The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes a loan, in full or in part, is uncollectible. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered TDRs and classified as impaired. Generally, TDRs are initially classified as non-accrual until sufficient time has passed to assess whether the restructured loan will continue to perform. Generally, the Company returns a TDR to accrual status upon six months of performance under the new terms. All non-accrual loans over $250 thousand in the commercial and industrial, commercial real estate, multifamily, mixed use commercial, real estate construction and residential mortgages loan classes and all TDRs are evaluated individually for impairment. All other loans are generally evaluated as homogeneous pools with similar risk characteristics. If a loan is impaired, a specific reserve may be recorded so that the loan is reported, net, at the present value of estimated future cash flows including balloon payments, if any, using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of homogeneous loans with smaller individual balances, such as consumer loans, are generally evaluated collectively for impairment, and accordingly, are not separately identified for impairment disclosures. TDRs are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a TDR is considered to be collateral-dependent, the loan is reported at the fair value of the collateral net of estimated costs to sell. For TDRs that subsequently default, the Company determines the allowance amount in accordance with its accounting policy for the allowance for loan losses. The general component of the allowance covers non-impaired loans and is based on historical loss experience, adjusted for qualitative factors. The historical loss experience is determined by loan class, and is based on the actual loss history experienced by the Company over a rolling twelve quarter period. This actual loss experience is supplemented with other qualitative factors based on the risks present for each loan class. These qualitative factors include consideration of the following: levels and trends in various risk rating categories; levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability, and depth of lending management and other relevant staff; local, regional and national economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following loan classes have been identified: commercial and industrial, commercial real estate, multifamily, mixed use commercial, real estate construction, residential mortgages, home equity and consumer loans. The qualitative factors utilized by the Company in computing its allowance for loan losses are determined based on the various risk characteristics of each loan class. Relevant risk characteristics are as follows: Commercial and industrial loans – Loans in this class are typically made to businesses. Generally these loans are secured by assets of the business and repayment is expected from the cash flows of the business. A weakened economy and resultant decreased consumer and/or business spending will have an effect on the credit quality in this loan class. Commercial real estate loans – Loans in this class include income‑producing investment properties and owner-occupied real estate used for business purposes. The underlying properties are located largely in the Company’s primary market area. The cash flows of the income producing investment properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on credit quality. Generally, management seeks to obtain annual financial information for borrowers with loans in excess of $750 thousand in this category. In the case of owner-occupied real estate used for business purposes, a weakened economy and resultant decreased consumer and/or business spending will have an adverse effect on credit quality. Generally, management seeks to obtain annual financial information for borrowers with loans in excess of $750 thousand in this category. Multifamily loans – Loans in this class are primarily concentrated in the five boroughs of New York City and target buildings with stabilized rent flows. It has been well-established that the incidence of loss in multifamily loan transactions is lower than almost all other loan categories as their performance over time has shown limited defaults. The property value for these buildings is directly attributable to the cash flow from rents and the rate of return investors need on their invested capital. Rental rates are a function of demand for apartments and the vacancy rates in New York City have been at historical lows. Mixed use commercial loans – Loans in this class are defined as multifamily dwellings with a commercial rents component greater than 50% of total rents. Areas of concentration for loans in this class include the five boroughs of New York City, Nassau County and Suffolk County. As with multifamily loans, there is an extremely low incidence of loan loss in the event of default. Loan to value ratios utilized during the underwriting process offer protection for the lender. In addition, buildings rarely experience significant depreciation in market value as property valuations are derived from capitalization rates based on required investment returns and cash flow. Real estate construction loans – Loans in this class primarily include land loans to local individuals, contractors and developers for developing the land for sale or for the purpose of making improvements thereon. Repayment is derived from sale of the lots/units including any pre-sold units. Credit risk is affected by market conditions, time to sell at an adequate price and cost overruns. This also includes commercial development projects the Company finances, which in most cases require interest only during construction, and then convert to permanent financing. Credit risk is affected by construction delays, cost overruns, market conditions and the availability of permanent financing, to the extent such permanent financing is not being provided by the Company. Residential mortgages and home equity loans – Loans in these classes are made to and secured by residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this loan class. The Company generally does not originate loans with a loan-to-value ratio greater than 80% and does not grant sub-prime loans. Consumer loans – Loans in this class may be either secured or unsecured and repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan (such as automobiles and manufactured homes). Therefore, the overall health of the economy, including unemployment rates and housing prices, will have a significant effect on the credit quality in this loan class. At December 31, 2016 and 2015, the ending balance in the allowance for loan losses disaggregated by class and impairment methodology is as follows (in thousands). Also in the tables below are total loans at December 31, 2016 and 2015 disaggregated by class and impairment methodology (in thousands).
At December 31, 2016 and 2015, past due loans disaggregated by class were as follows (in thousands).
The following table presents the Company’s impaired loans disaggregated by class at December 31, 2016 and 2015 (in thousands).
The following table presents the Company’s average recorded investment in impaired loans and the related interest income recognized disaggregated by class for the years ended December 31, 2016, 2015 and 2014 (in thousands). No interest income was recognized on a cash basis on impaired loans for any of the periods presented. The interest income recognized on accruing impaired loans is shown in the following table.
The following table presents a summary of non-performing assets for each period (in thousands):
At December 31, 2016 and 2015, non-accrual loans disaggregated by class were as follows (dollars in thousands):
Additional interest income of approximately $365 thousand, $297 thousand and $953 thousand would have been recorded during the years ended December 31, 2016, 2015 and 2014, respectively, if non-accrual loans had performed in accordance with their original terms. The following summarizes the activity in the allowance for loan losses disaggregated by class for the periods indicated (in thousands).
The Company utilizes an eight-grade risk-rating system for loans. Loans in risk grades 1- 4 are considered pass loans. The Company’s risk grades are as follows: Risk Grade 1, Excellent - Loans secured by liquid collateral such as certificates of deposit, reputable bank letters of credit, or other cash equivalents; loans that are guaranteed or otherwise backed by the full faith and credit of the United States government or an agency thereof, such as the Small Business Administration; or loans to any publicly held company with a current long-term debt rating of A or better. Risk Grade 2, Good - Loans to businesses that have strong financial statements containing an unqualified opinion from a CPA firm and at least three consecutive years of profits; loans supported by un-audited financial statements containing strong balance sheets, five consecutive years of profits, a five-year satisfactory relationship with the Company, and key balance sheet and income statement trends that are either stable or positive; loans secured by publicly traded marketable securities where there is no impediment to liquidation; loans to individuals backed by liquid personal assets, established credit history, and unquestionable character; or loans to publicly held companies with current long-term debt ratings of Baa or better. Risk Grade 3, Satisfactory - Loans supported by financial statements (audited or un-audited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered. Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply:
Risk Grade 4, Satisfactory/Monitored - Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than satisfactory loans due to weak balance sheets, marginal earnings or cash flow, or other uncertainties. These loans warrant a higher than average level of monitoring to ensure that weaknesses do not advance. The level of risk in a Satisfactory/Monitored loan is within acceptable underwriting guidelines so long as the loan is given the proper level of management supervision. Risk Grade 5, Special Mention - Loans in this category possess potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) weaknesses are considered potential not defined impairments to the primary source of repayment. Risk Grade 6, Substandard - One or more of the following characteristics may be exhibited in loans classified Substandard:
Risk Grade 7, Doubtful - One or more of the following characteristics may be present in loans classified Doubtful:
Risk Grade 8, Loss - Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future. The Company annually reviews the ratings on all loans greater than $750 thousand. Annually, the Company engages an independent third-party to review a significant portion of loans within the commercial and industrial, commercial real estate, multifamily, mixed use commercial and real estate construction loan classes. Management uses the results of these reviews as part of its ongoing review process. The following presents the Company’s loan portfolio credit risk profile by internally assigned grade disaggregated by class of loan at December 31, 2016 and 2015 (in thousands).
TDRs are modifications or renewals where the Company has granted a concession to a borrower in financial distress. The Company reviews all modifications and renewals for determination of TDR status. The Company allocated $340 thousand and $534 thousand of specific reserves to customers whose loan terms have been modified as TDRs as of December 31, 2016 and 2015, respectively. These loans involved the restructuring of terms to allow customers to mitigate the risk of default by meeting a lower payment requirement based upon their current cash flow. These may also include loans that renewed at existing contractual rates, but below market rates for comparable credit. A total of $45 thousand was committed to be advanced in connection with TDRs as of each year end December 31, 2016 and 2015, representing the amount the Company is legally required to advance under existing loan agreements. These loans are not in default under the terms of the loan agreements and are accruing interest. It is the Company’s policy to evaluate advances on such loans on a case-by-case basis. Absent a legal obligation to advance pursuant to the terms of the loan agreement, the Company generally will not advance funds for which it has outstanding commitments, but may do so in certain circumstances. Outstanding TDRs, disaggregated by class, at December 31, 2016 and 2015 are as follows (dollars in thousands):
The following presents, disaggregated by class, information regarding TDRs executed during the years ended December 31, 2016, 2015 and 2014 (dollars in thousands):
Presented below and disaggregated by class is information regarding loans modified as TDRs that had payment defaults of 90 days or more within twelve months of restructuring during the years ended December 31, 2016, 2015 and 2014 (dollars in thousands).
Not all loan modifications are TDRs. In some cases, the Company might provide a concession, such as a reduction in interest rate, but the borrower is not experiencing financial distress. This could be the case if the Company is matching a competitor’s interest rate. |
PREMISES AND EQUIPMENT |
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PREMISES AND EQUIPMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREMISES AND EQUIPMENT | 5. PREMISES AND EQUIPMENT At December 31, 2016 and 2015, premises and equipment consisted of the following (in thousands):
Premises and accumulated depreciation and amortization include amounts related to property under capital leases of approximately $3 million and $4 million at December 31, 2016 and 2015, respectively. Depreciation and amortization charged to operations amounted to $2.4 million, $2.3 million and $2.4 million during 2016, 2015 and 2014, respectively. Depreciation and amortization charged to operations includes amounts related to property under capital leases of $243 thousand, $242 thousand and $243 thousand in 2016, 2015 and 2014, respectively. |
DEPOSITS |
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DEPOSITS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS | 6. DEPOSITS Scheduled maturities of certificates of deposit are as follows (in thousands):
At December 31, 2016 and 2015, the Bank had $1 million in deposits gathered through the Certificate of Deposit Account Registry Service (“CDARS”) which are considered for regulatory purposes to be brokered deposits. |
BORROWINGS |
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BORROWINGS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BORROWINGS | 7. BORROWINGS The following summarizes borrowed funds at December 31, 2016 and 2015 (dollars in thousands):
Assets pledged as collateral to the FHLB, consisting of eligible loans and investment securities, at December 31, 2016 and 2015 resulted in a maximum borrowing potential of $662 million and $746 million, respectively. The Company had $15 million and $165 million in FHLB borrowings at December 31, 2016 and 2015, respectively. Of the total borrowings outstanding at December 31, 2016, no required payments are due in 2017 and $15 million will be made in 2020. At both December 31, 2016 and 2015, approximately $60 million and $10 million in unsecured and secured lines of credit, respectively, extended by correspondent banks were also available to be utilized, if needed, for short-term funding purposes. At both December 31, 2016 and 2015, no borrowings were outstanding under lines of credit with correspondent banks. |
STOCKHOLDERS' EQUITY |
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STOCKHOLDERS' EQUITY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | 8. STOCKHOLDERS’ EQUITY The Company has a Dividend Reinvestment Plan to provide stockholders of record with a convenient method of investing cash dividends and optional cash payments in additional shares of the Company’s common stock without payment of any brokerage commission or service charges. At the Company’s discretion, such additional shares may be purchased directly from the Company using either originally issued shares or treasury shares at a 3% discount from market value, or the shares may be purchased in negotiated transactions or on any securities exchange where such shares may be traded at 100% of cost. There were 80,499, 33,566 and 6,671 shares issued in 2016, 2015 and 2014, respectively. Stock Options Under the terms of the Company’s stock option plans adopted in 1999 and 2009, options have been granted to key employees and directors to purchase shares of the Company’s stock. Options are awarded by the Compensation Committee of the Board of Directors. Both plans provide that the option price shall not be less than the fair value of the common stock on the date the option is granted. No options have been granted since 2013. Options granted in 2013 and 2012 were exercisable commencing one year from the date of grant at a rate of one-third per year. Options granted prior to 2012 were generally 100% exercisable commencing one year from the date of grant. All options are exercisable for a period of ten years or less. The total intrinsic value of options exercised in 2016, 2015 and 2014 was $261 thousand, $438 thousand and $145 thousand, respectively. The total cash received from such option exercises was $201 thousand, $539 thousand and $246 thousand, respectively, excluding the tax benefit realized. In exercising those options, 11,300 shares, 39,334 shares and 18,735 shares, respectively, of the Company’s common stock were issued. A summary of stock option activity follows:
The following summarizes shares subject to purchase from stock options outstanding and exercisable as of December 31, 2016:
Restricted Stock Awards Under the Company’s Amended and Restated 2009 Stock Incentive Plan (the “2009 Plan”), the Company can award options, stock appreciation rights (“SARs”) and restricted stock. During 2016, 2015 and 2014, the Company awarded 59,371, 71,612 and 77,000 shares of restricted stock to certain key employees and directors. Generally, the restricted stock awards vest over a three-year period commencing one year from the date of grant at a rate of one-third per year. The fair value at grant date of the 48,899 and 25,948 restricted shares that vested in 2016 and 2015, respectively, was $1.1 million and $585 thousand, respectively. Of the vested shares, 10,380 and 4,787, respectively, were withheld to pay taxes due upon vesting. A summary of restricted stock activity follows:
The Company recognizes compensation expense for the fair value of stock options and restricted stock on a straight line basis over the requisite service period of the grants. Compensation expense related to stock-based compensation amounted to $1.1 million, $949 thousand and $811 thousand for the years ended December 31, 2016, 2015 and 2014, respectively. The remaining unrecognized compensation cost of approximately $1.7 million at December 31, 2016 related to restricted stock will be expensed over the remaining weighted average vesting period of approximately 1.7 years. At December 31, 2016, there was no remaining unrecognized compensation cost related to stock options. Under the 2009 Plan, a total of 500,000 shares of the Company’s common stock were reserved for issuance, of which 118,404 shares remained for possible issuance at December 31, 2016. There are no remaining shares reserved for issuance under the 1999 Stock Option Plan. |
INCOME TAXES |
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INCOME TAXES | 9. INCOME TAXES The following table presents the expense for income taxes in the consolidated statements of income which is comprised of the following (in thousands):
The total tax expense was different from the amounts computed by applying the federal income tax rate because of the following:
The effects of temporary differences between tax and financial accounting that create significant deferred tax assets and liabilities and the recognition of income and expense for purposes of tax and financial reporting are presented below (in thousands):
The deferred tax assets and liabilities are netted and presented in a single amount which is included in deferred taxes in the accompanying consolidated statements of condition. The realization of deferred tax assets (“DTAs”) (net of a recorded valuation allowance) is largely dependent upon future taxable income, future reversals of existing taxable temporary differences and the ability to carry back losses to available tax years. In assessing the need for a valuation allowance, the Company considers positive and negative evidence, including taxable income in carryback years, scheduled reversals of deferred tax liabilities, expected future taxable income and tax planning strategies. At December 31, 2016, the Company had net operating loss carryforwards of approximately $14.4 million for New York State (“NYS”) income tax purposes, which may be applied against future taxable income. The Company has a full valuation allowance of $699 thousand, tax effected, on the NYS net operating loss carryforward due to the Company’s significant tax-exempt investment income. The valuation allowance may be reversed to income in future periods to the extent that the related DTAs are realized or when the Company returns to consistent, taxable earnings in NYS. The NYS unused net operating loss carryforwards are expected to expire in varying amounts through the year 2032. The Company had no unrecognized tax benefits at December 31, 2016 and 2015 as compared to $34 thousand at December 31, 2014. The Company files income tax returns in the U.S. federal jurisdiction and in New York State. Federal returns are subject to audits by tax authorities. The Company’s Federal tax returns were audited for the tax years 2010 through 2013; there was no change in income taxes as a result of these audits. It is not anticipated that the unrecognized tax benefits will significantly change over the next 12 months. |
EMPLOYEE BENEFITS |
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EMPLOYEE BENEFITS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFITS | 10. EMPLOYEE BENEFITS Retirement Plan The Company’s retirement plan is noncontributory and covers substantially all eligible employees. The plan conforms to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and the Pension Protection Act of 2006, which requires certain funding rules for defined benefit plans. The Company’s policy is to accrue for all pension costs and to fund the maximum amount allowable for tax purposes. Actuarial gains and losses that arise from changes in assumptions concerning future events are amortized over a period that reflects the long-term nature of pension expense used in estimating pension costs. Certain provisions of the Company’s retirement plan were amended in 2012. These amendments froze the plan such that no additional pension benefits would accumulate. The tables below set forth the status of the Company’s retirement plan at December 31 for the years presented, the time at which the annual valuation of the plan is made. The following table sets forth the plan’s change in benefit obligation (in thousands):
The following table sets forth the plan’s change in plan assets (in thousands):
The following table presents the plan’s funded status and amounts recognized in the consolidated statements of condition (in thousands):
In December 2015, the Company made an optional contribution of $1 million for the plan year ended September 30, 2016. In December 2014, the Company made an optional contribution of $1 million for the plan year ended September 30, 2015. No minimum contributions were required for either period. The Company did not contribute to its retirement plan in 2016. The Company does not presently expect to contribute to its retirement plan in 2017. The following table presents estimated benefits to be paid during the years indicated (in thousands):
The following table summarizes the net periodic pension credit (in thousands):
The assumptions used in the measurement of the Company’s pension obligation at December 31, 2016 and 2015 were:
The following table summarizes the net periodic pension cost expected for the year ended December 31, 2017. This amount is subject to change if a significant plan-related event should occur before the end of fiscal 2017 (in thousands):
To determine the expected return on plan assets, certain variables were considered, such as the long-term historical return information on plan assets, the mix of investments that comprise plan assets and the historical returns on indices comparable to the fund classes in which the plan invests. During 2013, all of the assets of the Company’s retirement plan were transferred to State Street Bank & Trust from the New York State Bankers Retirement System. An investment manager, Mercer Investment Management, is responsible for the implementation of the plan’s investment policies and for appointing and terminating sub-advisors to manage the plan’s assets which are invested in common collective trust funds. The plan’s overall investment strategy is to invest in a mix of growth assets (primarily equities) with the objective of achieving long-term growth and hedging assets (primarily fixed income) with the objective of matching the plan’s liabilities. The Company’s pension plan weighted-average asset allocations at December 31, 2016 and 2015, by asset category were as follows:
The following table presents target investment allocations for 2017 by asset category:
The following table summarizes the fair value measurements of the Company’s pension plan assets on a recurring basis as of December 31, 2016 (in thousands):
The following table summarizes the fair value measurements of the Company’s pension plan assets on a recurring basis as of December 31, 2015 (in thousands):
The following is a description of the valuation methodologies used for pension assets measured at fair value: Level 1 – Valuations based on quoted prices in active markets for identical investments. Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 2 inputs include: (i) quoted prices for similar investments in active markets, (ii) quoted prices for identical investments traded in non-active markets (i.e., dealer or broker markets) and (iii) inputs other than quoted prices that are observable or inputs derived from or corroborated by market data for substantially the full term of the investment. Level 3 – Valuations based on inputs that are unobservable, supported by little or no market activity, and significant to the overall fair value measurement. Deferred Compensation In 1999, the Board approved a non-qualified deferred compensation plan. Under this plan, certain employees and Directors of the Company may elect to defer some or all of their compensation in exchange for a future payment of the compensation deferred, with accrued interest, at retirement. Participants deferred compensation totaling $47 thousand, $58 thousand and $132 thousand during 2016, 2015 and 2014, respectively. Expense recognized under this plan totaled $41 thousand, $79 thousand and $84 thousand in 2016, 2015 and 2014, respectively. Post-Retirement Benefits Other Than Pension The Company formerly provided life insurance benefits to employees meeting eligibility requirements. Employees hired after December 31, 1997 were not eligible for retiree life insurance. No other welfare benefits were provided. In the second quarter of 2013, the Company terminated all post-retirement life insurance benefits and recorded a non-recurring gain of $1.7 million as a credit to employee compensation and benefits expense in the Company’s consolidated statements of income. 401(k) Retirement Plan The Bank has a 401(k) Retirement Plan and Trust (“401(k) Plan”). Employees who have attained the age of 21 and have completed one-half month of service and 40 hours worked have the option to participate. Employees may currently elect to contribute up to $18,000. The Bank may match up to one-half of the employee’s contribution up to a maximum of 6% of the employee’s annual gross compensation subject to IRS limits. Employees are fully vested immediately in their own contributions and the Bank’s matching contributions. Bank contributions under the 401(k) Plan amounted to $569 thousand, $563 thousand and $515 thousand during 2016, 2015 and 2014, respectively. The Bank funds all amounts when due. Contributions to the 401(k) Plan may be invested in various bond, equity, money market or diversified funds as directed by each employee. The 401(k) Plan does not allow for investment in the Company’s common stock. |
COMMITMENTS AND CONTINGENT LIABILITIES |
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COMMITMENTS AND CONTINGENT LIABILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | 11. COMMITMENTS AND CONTINGENT LIABILITIES The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and documentary letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated financial statements. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The Company was contingently liable under standby letters of credit in the amount of $14 million and $15 million at December 31, 2016 and 2015, respectively. Of the outstanding letters of credit at December 31, 2016, $13.9 million expires in 2017, $163 thousand expires in 2018, $57 thousand expires in 2019 and $91 thousand expires in 2025. Amounts due under these letters of credit would be reduced by any proceeds that the Company would be able to obtain in liquidating the collateral for the loans, which varies depending on the customer. At both December 31, 2016 and 2015, commitments to originate loans and commitments under unused lines of credit for which the Company is obligated amounted to $126 million. The Bank is required to maintain balances with the FRB to satisfy reserve requirements. In addition, the FRB continues to offer higher interest rates on overnight deposits compared to correspondent banks. The average balance maintained at the FRB during 2016 was $53 million compared to $12 million in 2015. At December 31, 2016, the Company was obligated under a number of non-cancelable leases for land and buildings used for bank purposes. Minimum annual rentals, exclusive of taxes and other charges under non-cancelable operating leases, are as follows (in thousands):
Total rental expense for the years ended December 31, 2016, 2015 and 2014 amounted to $1.8 million, $1.5 million and $1.1 million, respectively. The Company and the Bank are subject to legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability, if any, with respect to such ordinary course matters will not materially affect future operations and will not have a material impact on the Company’s consolidated financial statements. However, the outcome of litigation and other legal and regulatory matters is inherently uncertain, and it is possible that one or more of such matters currently pending or threatened could have an unanticipated material adverse effect on our liquidity, consolidated financial position, results of operations, and/or our business as a whole, in the future. |
REGULATORY MATTERS |
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REGULATORY MATTERS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY MATTERS | 12. 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 business, results of operations and financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital requirements that involve quantitative measures of the Company’s and the Bank’s assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and the Bank’s classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total, tier 1 and common equity tier 1 capital, as defined in the federal banking regulations, to risk-weighted assets and of tier 1 capital to adjusted average assets (leverage). The Office of the Comptroller of the Currency (“OCC”), the Company’s primary bank regulator, established higher capital requirements for the Bank than those set forth in its capital regulations that require the Bank to maintain a tier 1 leverage ratio of at least 9%, a tier 1 risk-based capital ratio of at least 11% and a total risk-based capital ratio of at least 12%. At December 31, 2016, the Bank satisfied the OCC’s regulatory capital requirements as well as these individual minimum capital ratios, although there is no guarantee that the Bank will be able to maintain compliance with these heightened capital ratios. In July 2013, the OCC approved new rules on regulatory capital applicable to national banks, implementing Basel III. Most banking organizations were required to apply the new capital rules on January 1, 2015. The final rules set a new common equity tier 1 requirement and higher minimum tier 1 requirements for all banking organizations. The rules revise the prompt corrective action framework to incorporate the new regulatory capital minimums. They also enhance risk sensitivity and address weaknesses identified over recent years with the measure of risk-weighted assets, including through new measures of creditworthiness to replace references to credit ratings, consistent with section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Company’s implementation of the new rules on January 1, 2015 did not have a material impact on its capital needs. The final capital rules also place limits on capital distributions and certain discretionary bonus payments if a banking organization does not maintain a buffer of common equity tier 1 capital above minimum capital requirements. The capital buffer requirement is being phased in beginning January 1, 2016 at 0.625% per year until it becomes 2.50% in 2019 and thereafter. At December 31, 2016, the Company’s and the Bank’s capital buffers were in excess of both the current and fully phased-in requirements. The Bank’s capital amounts (in thousands) and ratios are as follows:
The Company’s tier 1 leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios were 10.31%, 13.50%, 13.50% and 14.72%, respectively, at December 31, 2016. The Company’s tier 1 leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios were 9.77%, 11.68%, 11.68% and 12.89%, respectively, at December 31, 2015. The ability of the Bank to pay dividends to the Company is subject to certain regulatory restrictions. Generally, dividends declared in a given year by a national bank are limited to its net profit, as defined by regulatory agencies, for that year, combined with its retained net income for the preceding two years, less any required transfer to surplus or to fund for the retirement of any preferred stock. In addition, a national bank may not pay dividends in an amount greater than its undivided profits or declare any dividends if such declaration would leave the bank inadequately capitalized. At December 31, 2016, $47.3 million was available for dividends from the Bank to the Company. |
CONCENTRATIONS |
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CONCENTRATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONCENTRATIONS | 13. CONCENTRATIONS Loans The following table presents the Company’s loan portfolio disaggregated by class of loan at December 31, 2016 and each class’s percentage of total loans and total assets (dollars in thousands):
Commercial and industrial loans, unsecured or secured by collateral other than real estate, present significantly greater risk than other types of loans. The Company obtains, whenever possible, both the personal guarantees of the principal and cross-guarantees among the principal’s business enterprises. Commercial real estate loans (inclusive of multifamily and mixed use commercial loans) present greater risk than residential mortgages. The Company has attempted to minimize the risks of these loans by considering several factors, including the creditworthiness of the borrower, location, condition, value and the business prospects for the security property. Investment Securities The following presents the Company’s investment portfolio disaggregated by category of security at December 31, 2016 and each category’s percentage of total investment securities and total assets (dollars in thousands):
Obligations of states and political subdivisions present slightly greater risk than securities backed by the U.S. Government, but significantly less risk than loans as they are backed by the full faith and taxing power of the issuer, most of which are located in the state of New York. MBS and CMOs are both backed by pools of mortgages. However, CMOs may provide more predictable cash flows since payments are assigned to specific tranches of securities in the order in which they are received. |
FAIR VALUE |
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FAIR VALUE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | 14. FAIR VALUE Fair value measurement is determined based on the assumptions that market participants would use in pricing the asset or liability in an exchange. The definition of fair value includes the exchange price which is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the principal market for the asset or liability. Market participant assumptions include assumptions about risk, the risk inherent in a particular valuation technique used to measure fair value and/or the risk inherent in the inputs to the valuation technique, as well as the effect of credit risk on the fair value of liabilities. The Company uses three levels of the fair value inputs to measure assets, as described below. Basis of Fair Value Measurement: Level 1 – Valuations based on quoted prices in active markets for identical investments. Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 2 inputs include: (i) quoted prices for similar investments in active markets, (ii) quoted prices for identical investments traded in non-active markets (i.e., dealer or broker markets) and (iii) inputs other than quoted prices that are observable or inputs derived from or corroborated by market data for substantially the full term of the investment. Level 3 – Valuations based on inputs that are unobservable, supported by little or no market activity, and significant to the overall fair value measurement. The types of instruments valued based on quoted market prices in active markets include most U.S. Treasury securities. Such instruments are generally classified within Level 1 and Level 2 of the fair value hierarchy. The Company does not adjust the quoted price for such instruments. The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency include U.S. Government agency securities, state and municipal obligations, MBS, CMOs and corporate bonds. Such instruments are generally classified within Level 2 of the fair value hierarchy. The types of instruments valued based on significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability are generally classified within Level 3 of the fair value hierarchy. The following table presents the carrying amounts and fair values of the Company’s financial instruments (in thousands).
Fair value estimates are made at a specific point in time and may be based on judgments regarding losses expected in the future, risk, and other factors that are subjective in nature. The methods and assumptions used to produce the fair value estimates follow. For securities held to maturity and securities available for sale, the fair value equals quoted market price if available. If a quoted market price is not available, fair value is estimated using a quoted market price for similar securities. For cash and due from banks, federal funds sold, accrued interest and loan fees receivable, non-maturity deposits and accrued interest payable, the carrying amount is a reasonable estimate of fair value due to the short term nature of these instruments. Determining the fair value of Federal Reserve and Federal Home Loan Bank stock and other investments is not practicable due to restrictions placed on its transferability; thus, carrying amount is a reasonable estimate of fair value. Time deposits and borrowings are valued using a replacement cost of funds approach. Fair values are estimated for portfolios of loans with similar characteristics. The fair value of performing loans was calculated by discounting projected cash flows through their estimated maturity using market discount rates that reflect the general credit and interest rate characteristics of the loan category. The maturity horizon is based on the Company’s history of repayments for each type of loan and an estimate of the effect of current economic conditions. Assumptions regarding credit risk, cash flows, and discount rates are made using available market information and specific borrower information. Loans identified as impaired are measured using one of three methods: the fair value of collateral less estimated costs to sell, the present value of expected future cash flows or the loan’s observable market price. Those measured using the fair value of collateral or the loan’s observable market price are recorded at fair value. For each period presented, no impaired loans were measured using the loan’s observable market price. If an impaired loan has had a charge-off or if the fair value of the collateral is less than the recorded investment in the loan, the Company establishes a specific reserve and reports the loan as non-recurring Level 3. The fair value of collateral of impaired loans is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. For the periods presented, loans held for sale were performing and carried at cost. The carrying cost is a reasonable estimate of fair value due to their short-term nature. Fair values of OREO are generally based on third party appraisals or realtor evaluations of the property. These appraisals and evaluations may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification. In conjunction with the sale of Visa Class B shares in 2013, the Company entered into derivative swap contracts with the purchaser of its Visa Class B shares. The fair value of these derivatives is measured using an internal model that includes the use of probability weighted scenarios for estimates of Visa’s aggregate exposure to the litigation matters, with consideration of amounts funded by Visa into its escrow account for this litigation. At December 31, 2016, the Company estimates a fair value for these derivatives at approximately 10% of the net proceeds from the Company’s sale of the related Visa Class B shares. Since this estimation process requires application of judgment in developing significant unobservable inputs used to determine the possible outcomes and the probability weighting assigned to each scenario, these derivatives have been classified as Level 3 within the valuation hierarchy. (See also Note 3. Investment Securities contained herein.) The fair value of commitments to extend credit is estimated by either discounting cash flows or using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the current creditworthiness of the counter-parties. The estimated fair value of written financial guarantees and letters of credit is based on fees currently charged for similar agreements. The fees charged for the commitments were not material in amount. Assets measured at fair value on a non-recurring basis are as follows (in thousands):
The Company had no liabilities measured at fair value on a non-recurring basis at December 31, 2016 and 2015. The following presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis (dollars in thousands):
The following presents fair value measurements on a recurring basis at December 31, 2016 and 2015 (in thousands):
Reconciliations for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) follow (in thousands).
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SUFFOLK BANCORP (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS |
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SUFFOLK BANCORP (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUFFOLK BANCORP (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS | 15. SUFFOLK BANCORP (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS (in thousands)
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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) |
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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (dollars in thousands, except per share data)
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LEGAL PROCEEDINGS |
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LEGAL PROCEEDINGS [Abstract] | |
LEGAL PROCEEDINGS | 17. LEGAL PROCEEDINGS Certain lawsuits and claims arising in the ordinary course of business may be filed or pending against us or our affiliates from time to time. In accordance with applicable accounting guidance, we establish accruals for all lawsuits, claims and expected settlements when we believe it is probable that a loss has been incurred and the amount of the loss is reasonably estimable. When a loss contingency is not both probable and estimable, we do not establish an accrual. Any such loss estimates are inherently uncertain, based on currently available information and are subject to management’s judgment and various assumptions. Due to the inherent subjectivity of these estimates and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate resolution of such matters. To the extent we believe any potential loss relating to such lawsuits and claims may have a material impact on our liquidity, consolidated financial position, results of operations, and/or our business as a whole and is reasonably possible but not probable, we disclose information relating to any such potential loss, whether in excess of any established accruals or where there is no established accrual. We also disclose information relating to any material potential loss that is probable but not reasonably estimable. Where reasonably practicable, we will provide an estimate of loss or range of potential loss. No disclosures are generally made for any loss contingencies that are deemed to be remote. On July 1, 2016, July 13, 2016 and August 4, 2016, respectively, actions captioned Thaler/Howell Foundation v. Suffolk Bancorp et al., Index No. 609834/2016 (Sup. Ct., Suffolk Cnty.), Levy v. Suffolk Bancorp et al., Index No. 610475/2016 (Sup. Ct., Suffolk Cnty.), and Parshall v. Suffolk Bancorp, et al., Case No. 2:16-cv-04367 (E.D.N.Y.) were filed on behalf of a putative class of the Company’s shareholders against the Company, its current directors and People’s United (collectively, the “Merger-Related Actions”). An amended complaint in the Thaler/Howell Foundation action was filed on July 29, 2016. The Thaler/Howell Foundation and Levy complaints collectively allege that the Company’s board of directors breached its fiduciary duties by agreeing to the merger and certain terms of the merger agreement, as well as in the case of the Thaler/Howell Foundation complaint by issuing a materially deficient registration statement, and that People’s United aided and abetted those alleged fiduciary breaches. The Parshall complaint alleges violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended. The Merger-Related Actions seek, among other things, to enjoin the defendants from completing the merger on the agreed-upon terms, and rescission of the merger and/or awarding of damages to the extent the merger is completed. On September 27, 2016, the Company, People’s United and the individual defendants in the Merger-Related Actions entered into a memorandum of understanding (the “MOU”) with the plaintiffs in the Merger-Related Actions regarding the settlement of the Merger-Related Actions, which the Company previously reported on a Current Report on Form 8-K filed on September 28, 2016. The Company, People’s United and the other defendants in the Merger-Related Actions deny all of the allegations in the Merger-Related Actions. Nevertheless, the Company, People’s United and the other defendants have agreed to settle the Merger-Related Actions in order to avoid the costs, disruption and distraction of further litigation. The MOU contemplates that the parties thereto would enter into a stipulation of settlement with respect to the Merger-Related Actions, which would be subject to customary conditions, including court approval following notice to the Company’s shareholders. The MOU also contemplates that in the event that the parties enter into such a stipulation of settlement, a hearing would be scheduled at which a court overseeing the Merger-Related Actions would consider the fairness, reasonableness and adequacy of the settlement. If the settlement is finally approved by the court, it would resolve and release all claims that were brought or could have been brought in the Merger-Related Actions, including claims challenging any disclosure made in connection with the merger. In addition, in connection with the settlement, the MOU contemplates that counsel for the plaintiffs in the Merger-Related Actions will file a petition for an award of attorneys’ fees and expenses in an amount not to exceed $300,000 to be paid by the Company or its successor. If the court approves the settlement contemplated by the MOU, the Merger-Related Actions will be dismissed with prejudice. Based upon information available to us and our review of lawsuits and claims filed or pending against us to date, we have not recognized a material accrual liability for these matters. However, the outcome of litigation and other legal and regulatory matters is inherently uncertain, and it is possible that one or more of such matters currently pending or threatened could have an unanticipated material adverse effect on our liquidity, consolidated financial position, results of operations, and/or our business as a whole, in the future. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Nature of Operations | Organization and Nature of Operations — Suffolk Bancorp (the “Company”) was incorporated in 1985 as a bank holding company. The Company currently owns all of the outstanding capital stock of Suffolk County National Bank (the “Bank”). The Bank was organized under the national banking laws of the United States in 1890. The Bank formed Suffolk Greenway, Inc. (the “REIT”), a real estate investment trust, and owns 100% of an insurance agency and two corporations used to acquire foreclosed real estate. The insurance agency and the two corporations used to acquire foreclosed real estate are immaterial to the Company’s operations. The consolidated financial statements include the accounts of the Company and the Bank and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Unless the context otherwise requires, references herein to the Company include the Company and the Bank and subsidiaries on a consolidated basis. On June 26, 2016, the Company entered into an Agreement and Plan of Merger (the “merger agreement”) with People’s United Financial, Inc. (“People’s United”) pursuant to which the Company will merge into People’s United (the “merger”). People’s United will be the surviving corporation in the merger. Subject to the terms and conditions of the merger agreement, the Company’s shareholders will have the right to receive 2.225 shares of People’s United common stock in exchange for each share of Company common stock. The merger agreement was adopted by the Company’s shareholders and both the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System have approved the merger. The merger remains subject to other customary conditions to closing. The accounting and reporting policies of the Company conform to the accounting principles generally accepted in the United States of America (“U.S. GAAP”) and general practices within the banking industry. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates. The following describe the most significant of these policies. |
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Cash and Cash Equivalents | Cash and Cash Equivalents — For purposes of the consolidated statements of cash flows, cash and due from banks and federal funds sold are considered to be cash equivalents. Generally, federal funds are sold for one-day periods. |
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Investment Securities | Investment Securities — The Company reports investment securities in one of the following categories: (i) held to maturity (management has the intent and ability to hold to maturity), which are reported at amortized cost; (ii) trading (held for current resale), which are reported at fair value, with unrealized gains and losses included in earnings; and (iii) available for sale, which are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity. The Company has classified all of its holdings of investment securities as either held to maturity or available for sale. At the time a security is purchased, a determination is made as to the appropriate classification. Premiums and discounts on investment securities are amortized as expense and accreted as income over the estimated life of the respective security using a method that generally approximates the level-yield method. Gains and losses on the sales of investment securities are recognized upon realization, using the specific identification method and shown separately in the consolidated statements of income. Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management 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 the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt 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 statement of income and 2) OTTI related to other factors, which is recognized in other comprehensive income (loss). 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. For equity securities, the entire amount of impairment is recognized through earnings. |
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Loans and Loan Interest Income Recognition | Loans and Loan Interest Income Recognition — Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned discounts, deferred loan fees and costs. Unearned discounts on installment loans are credited to income using methods that result in a level yield. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income over the respective term of the loan without anticipating prepayments. Interest income is accrued on the unpaid loan principal balance. Recognition of interest income is discontinued when reasonable doubt exists as to whether principal or interest due can be collected. Loans of all classes will generally no longer accrue interest when over 90 days past due unless the loan is well-secured and in process of collection. When a loan is placed on non-accrual status, all interest previously accrued, but not collected, is reversed against current-year interest income. Interest received on such loans is applied against principal or interest, according to management’s judgment as to the collectability of the principal, until qualifying for return to accrual status. Loans may start accruing interest again when they become current as to principal and interest for at least six months, and when, after a well-documented analysis by management, it has been determined that the loans can be collected in full. For all classes of loans, an impaired loan is defined as a loan for which it is probable that the lender will not collect all amounts due under the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties are considered troubled debt restructurings (“TDRs”) and are classified as impaired. Generally, TDRs are initially classified as non-accrual until sufficient time has passed to assess whether the restructured loan will continue to perform. For impaired, accruing loans, interest income is recognized on an accrual basis with cash offsetting the recorded accruals upon receipt. |
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Allowance for Loan Losses | Allowance for Loan Losses - The allowance for loan losses is a valuation allowance for probable incurred losses, increased by the provision for loan losses and recoveries, and decreased by loan charge-offs. For all classes of loans, when a loan, in full or in part, is deemed uncollectible, it is charged against the allowance for loan losses. This happens when the loan is past due and the borrower has not shown the ability or intent to make the loan current, or the borrower does not have sufficient assets to pay the debt, or the value of the collateral is less than the balance of the loan and is not considered likely to improve soon. The allowance for loan losses is determined by a quarterly analysis of the loan portfolio. Such analysis includes changes in the size and composition of the portfolio, the Company’s own historical loan losses, industry-wide losses, current and anticipated economic trends, and details about individual loans. It also includes estimates of the actual value of collateral, other possible sources of repayment and estimates that are susceptible to significant changes due to changes in appraisal values of collateral, national and regional economic conditions and other relevant factors. All non-accrual loans over $250 thousand in the commercial and industrial, commercial real estate, multifamily, mixed use commercial, real estate construction and residential mortgages loan classes and all TDRs are evaluated individually for impairment. All other loans are generally evaluated as homogeneous pools with similar risk characteristics. In assessing the adequacy of the allowance for loan losses, management reviews the loan portfolio by separate classes that have similar risk and collateral characteristics. These classes are commercial and industrial, commercial real estate, multifamily, mixed use commercial, real estate construction, residential mortgages, home equity and consumer loans. The allowance for loan losses consists of specific and general components, as well as an unallocated component. The specific component relates to loans that are individually classified as impaired. Specific reserves are established based on an analysis of the most probable sources of repayment or liquidation of collateral. Impaired loans that are collateral dependent are reviewed based on the fair market value of collateral and the estimated time required to recover the Company’s investment in the loans, as well as the cost of doing so, and the estimate of the recovery. Non-collateral dependent impaired loans are reviewed based on the present value of estimated future cash flows, including balloon payments, if any, using the loan’s effective interest rate. While every impaired loan is evaluated individually, not every loan requires a specific reserve. Specific reserves fluctuate based on changes in the underlying loans, anticipated sources of repayment, and charge-offs. The general component covers non-impaired loans and is based on historical loss experience for each loan class from a rolling twelve quarter period and modifying those percentages, if necessary, after adjusting for current qualitative and environmental factors that reflect changes in the estimated collectability of the loan class not captured by historical loss data. These factors augment actual loss experience and help estimate the probability of loss within the loan portfolio based on emerging or inherent risk trends. These qualitative factors include consideration of the following: levels and trends in various risk rating categories; levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability, and depth of lending management and other relevant staff; local, regional and national economic trends and conditions; industry conditions; and effects of changes in credit concentrations. These qualitative factors are applied as an adjustment to historical loss rates and require judgments that cannot be subjected to exact mathematical calculation. These adjustments reflect management’s overall estimate of the extent to which current losses on a pool of loans will differ from historical loss experience. These adjustments are subjective estimates and management reviews them on a quarterly basis. TDRs are also considered impaired with impairment generally measured at the present value of estimated future cash flows using the loan’s effective interest rate at inception or using the fair value of collateral, less estimated costs to sell, if repayment is expected solely from the collateral. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. |
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Transfers of Financial Instruments | Transfers of Financial Instruments - Transfers of financial assets for which the Bank has surrendered control of the financial assets are accounted for as sales to the extent that consideration other than beneficial interests in the transferred assets is received in exchange. Retained interests in a sale or securitization of financial assets are initially measured at fair value and subsequently amortized over the estimated servicing period. The fair values of retained servicing rights and any other retained interests are determined based on the present value of expected future cash flows associated with those interests and by reference to market prices for similar assets. There were no transfers of financial assets to related or affiliated parties for any of the reported periods. The Bank services residential mortgage loans for others which are not included in the accompanying consolidated statements of condition. At December 31, 2016 and 2015, the outstanding principal balance of such loans approximated $189 million and $179 million, respectively. The carrying value, approximating the estimated fair value, of mortgage servicing rights was $2 million as of December 31, 2016 and 2015, and is recorded in goodwill and other intangibles in the Company’s consolidated statements of condition. |
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Loans Held-For-Sale | Loans Held For Sale – Loans held for sale are carried at the lower of aggregate cost or fair value, based on observable inputs in the secondary market. Changes in fair value of loans held for sale are recognized in earnings. |
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Other Real Estate Owned ("OREO") | Other Real Estate Owned (“OREO”) — Property acquired through foreclosure, or OREO, is initially stated at the lower of cost or fair value less estimated selling costs. Losses arising at the time of the acquisition of property are charged against the allowance for loan losses. Any additional write-downs to the carrying value of these assets that may be required, as well as the cost of maintaining and operating these foreclosed properties, are charged to expense. The Company held OREO amounting to $650 thousand at December 31, 2016 resulting from the addition of one residential property during the first quarter of 2016. The Company held no OREO at December 31, 2015. |
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Premises and Equipment | Premises and Equipment — Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is calculated by the declining-balance or straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the term of the lease or the estimated life of the asset, whichever is shorter. The Company periodically evaluates impairment of long-lived assets to be held and used or to be disposed of by sale. There was no impairment of long-lived assets at any of the reported periods. |
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Bank-Owned Life Insurance | Bank-Owned Life Insurance – Bank-owned life insurance is recorded at the lower of the cash surrender value or the amount that can be realized under the insurance policy and is included as an asset in the consolidated statements of condition. Changes in the cash surrender value and insurance benefit payments are recorded in non-interest income in the consolidated statements of income. |
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Goodwill | Goodwill — Goodwill resulting from business combinations represents the excess of the purchase price over the fair value of the net assets of the acquired business and was approximately $814 thousand at each of the Company’s reported periods. Goodwill is not amortized but tested for impairment at least annually or when there is a circumstance that would indicate the need to evaluate between annual tests. Based on these tests, there was no impairment of goodwill as of December 31, 2016 and 2015. |
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Allowance for Off-Balance Sheet Credit Risk | Allowance for Off-Balance Sheet Credit Risk — The balance of the allowance for off-balance sheet credit risk is determined by management’s estimate of the amount of financial risk in outstanding loan commitments and contingent liabilities such as performance and financial letters of credit. The allowance for off-balance sheet credit risk was $240 thousand and $290 thousand at December 31, 2016 and 2015, respectively, and is recorded in other liabilities in the Company’s consolidated statements of condition. The Company has financial and performance letters of credit. Financial letters of credit require the Company to make payment if the customer’s financial condition deteriorates, as defined in the agreements. Performance letters of credit require the Company to make payments if the customer fails to perform certain non-financial contractual obligations. |
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Income Taxes | Income Taxes — Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities, computed using enacted tax rates. Deferred tax assets are recognized if it is more likely than not that a future benefit will be realized. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. The realization of deferred tax assets (net of a recorded valuation allowance) is largely dependent upon future taxable income, future reversals of existing taxable temporary differences and the ability to carryback losses to available tax years. In assessing the need for a valuation allowance, the Company considers all relevant positive and negative evidence, including taxable income in carryback years, scheduled reversals of deferred tax liabilities, expected future taxable income and available tax planning strategies. |
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Summary of Retirement Benefits Accounting | Summary of Retirement Benefits Accounting — The Company’s retirement plan is noncontributory and covers substantially all eligible employees. The plan conforms to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and the Pension Protection Act of 2006, which requires certain funding rules for defined benefit plans. The Company’s policy is to accrue for all pension costs and to fund the maximum amount allowable for tax purposes. Actuarial gains and losses that arise from changes in assumptions concerning future events are amortized over a period that reflects the long-term nature of pension expense used in estimating pension costs. In accordance with U.S. GAAP the Company recognizes the funded status of a benefit plan in its consolidated statement of financial condition; recognizes as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost; measures defined benefit plan assets and obligation as of the date of fiscal year-end; and discloses in the notes to financial statements additional information about certain effects of net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset and obligation. Plan assets and benefit obligations shall be measured as of the date of its statement of financial position and in determining the amount of net periodic benefit cost. An employer is required to use the same date for the measurement of plan assets as for the statement of condition. The Company accrues for post-retirement benefits other than pensions by accruing the cost of providing those benefits to an employee during the years that the employee serves. |
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Stock-Based Compensation | Stock-Based Compensation — The Company recognizes compensation expense for the fair value of stock options and restricted stock on a straight line basis over the requisite service period of the grants. |
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Treasury Stock | Treasury Stock — The balance of treasury stock is computed at par value. Under the par value method, the acquisition cost of treasury shares is compared with the amount received at the time of their original issue. The treasury stock account is debited for the par value (or stated value) of the shares and a pro rata amount of any excess over par (or stated value) on original issuance is charged to the surplus account. Any excess of the acquisition cost over the original issue price is charged to retained earnings. If, however, the original issue price exceeds the acquisition price of the treasury stock, this difference is credited to surplus. |
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Earnings Per Share | Earnings Per Share — Basic earnings per share is computed based on the weighted average number of common shares and unvested restricted shares outstanding for each period. The Company’s unvested restricted shares are considered participating securities as they contain rights to non-forfeitable dividends and thus they are included in the basic earnings per share computation. Diluted earnings per share include the dilutive effect of additional potential common shares issuable under stock options. In the event a net loss is reported, restricted shares and stock options are excluded from earnings per share computations. The reconciliation of basic and diluted weighted average number of common shares outstanding for the years ended December 31, 2016, 2015 and 2014 follows.
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Comprehensive Income | Comprehensive Income — Comprehensive income includes net income and all other changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income includes revenues, expenses, gains and losses that under U.S. GAAP are included in comprehensive income but excluded from net income. Comprehensive income and accumulated other comprehensive income (“AOCI”) are reported net of related income taxes. AOCI for the Company consists of unrealized holding gains or losses on securities available for sale, unrealized holding losses on securities transferred from available for sale to held to maturity and gains or losses on the unfunded projected benefit obligation of the pension plan. |
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Derivatives | Derivatives - Derivatives are contracts between counterparties that specify conditions under which settlements are to be made. The only derivatives held by the Company are swap contracts with the purchaser of its Visa Class B shares. The Company records its derivatives on the consolidated statements of condition at fair value. The Company’s derivatives do not qualify for hedge accounting. As a result, changes in fair value are recognized in earnings in the period in which they occur. (See also Note 3. Investment Securities contained herein.) |
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Segment Reporting | Segment Reporting — U.S. GAAP requires that public companies report certain information about operating segments. It also requires that public companies report certain information about their products and services, the geographic areas in which they operate and their major customers. The Company is a community bank which offers a wide array of products and services to its customers. Pursuant to its banking strategy, emphasis is placed on building relationships with its customers and operations are managed and financial performance is evaluated on a Company-wide basis. As a result, the Company, the only reportable segment, is not organized around discernible lines of business and prefers to work as an integrated unit to customize solutions for its customers, with business line emphasis and product offerings changing over time as needs and demands change. |
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Recent Accounting Guidance | Recent Accounting Guidance – In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230), “Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 clarifies whether the following items should be categorized as operating, investing or financing in the statement of cash flows: (i) debt prepayments and extinguishment costs, (ii) settlement of zero-coupon debt, (iii) settlement of contingent consideration, (iv) insurance proceeds, (v) settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies, (vi) distributions from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) receipts and payments with aspects of more than one class of cash flows. For public business entities that are U.S. Securities and Exchange Commission filers, like the Company, the amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Being disclosure-related only, the Company believes adoption of this ASU in 2018 will not have a material effect on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model and provides for recording credit losses on available-for-sale debt securities through an allowance account. The ASU also requires certain incremental disclosures. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for all entities beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of the pending adoption of the ASU on its consolidated financial statements; however, the materiality of any such impact is not reasonably determinable at this time. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718), “Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 introduces targeted amendments intended to simplify the accounting for stock compensation. Specifically, the ASU requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether the benefit reduces taxes payable in the current period. The ASU also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows. In addition, the ASU elevates the statutory tax withholding threshold to qualify for equity classification up to the maximum statutory tax rates in the applicable jurisdiction(s). The ASU also clarifies that cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. The ASU provides an optional accounting policy election (with limited exceptions), to be applied on an entity-wide basis, to either estimate the number of awards that are expected to vest (consistent with existing U.S. GAAP) or account for forfeitures when they occur. The amendments were effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption was permitted. The Company’s adoption of ASU 2016-09 on January 1, 2017 did not have a material effect on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The ASU establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has not yet evaluated this ASU, thus the impact of its pending adoption on the Company’s consolidated financial statements is not currently known or reasonably estimable. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), “Recognition and Measurement of Financial Assets and Financial Liabilities” which requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available for sale debt securities in combination with other deferred tax assets. This ASU provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes and also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. For public entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Generally, early adoption of the amendments in this ASU is not permitted. The Company believes that adoption in 2018 will not have a material effect on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), “Revenue from Contracts with Customers,” which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the ASU is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The ASU defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The FASB subsequently issued ASU 2016-08 which updates the new standard by clarifying the principal versus agent implementation guidance, ASU 2016-10 which clarifies identifying performance obligations and the licensing implementation guidance, ASU 2016-12 which clarifies the guidance on assessing collectability, presenting sales taxes, measuring noncash consideration and certain transition matters and ASU 2016-20 which addresses technical corrections and improvements, but these do not change the core principle of the new standard. The FASB also subsequently issued ASU 2015-14 to defer the effective date of the new standard by one year. As such, it now takes effect for public entities in fiscal years beginning after December 15, 2017, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the ASU recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is permitted for any entity that chooses to adopt the new standard as of the original effective date. The Company has not yet determined the method by which it will adopt ASU 2014-09 in 2018 and does not believe that the adoption will have a material effect on the Company’s consolidated financial statements. |
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Reclassifications | Reclassifications — Certain reclassifications have been made to prior period information in order to conform to the current period’s presentation. Such reclassifications had no impact on the Company’s consolidated results of operations or financial condition. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of basic and diluted weighted average number of common shares outstanding | The reconciliation of basic and diluted weighted average number of common shares outstanding for the years ended December 31, 2016, 2015 and 2014 follows.
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ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS ("AOCI") (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS ("AOCI") [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in AOCI by component, net of tax | The changes in the Company’s AOCI by component, net of tax, for the years ended December 31, 2016 and 2015 follow (in thousands).
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Reclassifications out of AOCI | Reclassifications out of AOCI for the years ended December 31, 2016, 2015 and 2014 follow (in thousands).
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INVESTMENT SECURITIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost, estimated fair values, and gross unrealized gains and losses of securities available for sale and held to maturity | The amortized cost, fair value and gross unrealized gains and losses of the Company’s investment securities available for sale and held to maturity at December 31, 2016 and 2015 were as follows (in thousands):
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Investment securities amortized cost, maturities, and approximate fair value | The amortized cost, contractual maturities and fair value of the Company’s investment securities at December 31, 2016 (in thousands) are presented in the table below. Collateralized mortgage obligations (“CMOs”) and mortgage-backed securities (“MBS”) assume maturity dates pursuant to average lives.
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Proceeds from sales of securities available for sale and the associated realized securities gains and losses | The proceeds from sales of securities available for sale and the associated realized gains and losses are shown below (in thousands) for the years indicated. Realized gains are also inclusive of gains on called securities.
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Length of time individual securities for held-to-maturity and available-for-sale held in a continuous unrealized loss position | Information pertaining to securities with unrealized losses at December 31, 2016 and 2015, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows (in thousands):
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LOANS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Categorizes total loans | At December 31, 2016 and 2015, net loans disaggregated by class consisted of the following (in thousands):
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Summary of changes in the allowance for loan losses | At December 31, 2016 and 2015, the ending balance in the allowance for loan losses disaggregated by class and impairment methodology is as follows (in thousands). Also in the tables below are total loans at December 31, 2016 and 2015 disaggregated by class and impairment methodology (in thousands).
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Summary of current and past due loans | At December 31, 2016 and 2015, past due loans disaggregated by class were as follows (in thousands).
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Summary of impaired loans | The following table presents the Company’s impaired loans disaggregated by class at December 31, 2016 and 2015 (in thousands).
The following table presents the Company’s average recorded investment in impaired loans and the related interest income recognized disaggregated by class for the years ended December 31, 2016, 2015 and 2014 (in thousands). No interest income was recognized on a cash basis on impaired loans for any of the periods presented. The interest income recognized on accruing impaired loans is shown in the following table.
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Summary of impaired and non-accrual loans | The following table presents a summary of non-performing assets for each period (in thousands):
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Summarizes non-accrual loans by loan class | At December 31, 2016 and 2015, non-accrual loans disaggregated by class were as follows (dollars in thousands):
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Summary of the activity in the allowance for loan losses by loan class | The following summarizes the activity in the allowance for loan losses disaggregated by class for the periods indicated (in thousands).
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Credit risk profile by internally assigned grade | The following presents the Company’s loan portfolio credit risk profile by internally assigned grade disaggregated by class of loan at December 31, 2016 and 2015 (in thousands).
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Troubled debt restructurings | Outstanding TDRs, disaggregated by class, at December 31, 2016 and 2015 are as follows (dollars in thousands):
The following presents, disaggregated by class, information regarding TDRs executed during the years ended December 31, 2016, 2015 and 2014 (dollars in thousands):
Presented below and disaggregated by class is information regarding loans modified as TDRs that had payment defaults of 90 days or more within twelve months of restructuring during the years ended December 31, 2016, 2015 and 2014 (dollars in thousands).
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PREMISES AND EQUIPMENT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREMISES AND EQUIPMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premises and equipment | At December 31, 2016 and 2015, premises and equipment consisted of the following (in thousands):
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DEPOSITS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual maturities of time deposits | Scheduled maturities of certificates of deposit are as follows (in thousands):
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BORROWINGS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BORROWINGS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of short- and long-term interest-bearing liabilities | The following summarizes borrowed funds at December 31, 2016 and 2015 (dollars in thousands):
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STOCKHOLDERS' EQUITY (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Options granted, exercised, or expired | A summary of stock option activity follows:
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Summary of options outstanding and exercisable | The following summarizes shares subject to purchase from stock options outstanding and exercisable as of December 31, 2016:
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Summary of restricted stock activity | A summary of restricted stock activity follows:
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INCOME TAXES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of income tax provision | The following table presents the expense for income taxes in the consolidated statements of income which is comprised of the following (in thousands):
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Effective income tax rate reconciliation | The total tax expense was different from the amounts computed by applying the federal income tax rate because of the following:
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Deferred tax assets and liabilities | The effects of temporary differences between tax and financial accounting that create significant deferred tax assets and liabilities and the recognition of income and expense for purposes of tax and financial reporting are presented below (in thousands):
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EMPLOYEE BENEFITS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFITS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in benefit obligation | The following table sets forth the plan’s change in benefit obligation (in thousands):
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Changes in fair value of plan assets | The following table sets forth the plan’s change in plan assets (in thousands):
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Funded status and amounts recognized in Consolidated Statements Of Condition | The following table presents the plan’s funded status and amounts recognized in the consolidated statements of condition (in thousands):
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Estimated benefits payments | The following table presents estimated benefits to be paid during the years indicated (in thousands):
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Net periodic pension credit | The following table summarizes the net periodic pension credit (in thousands):
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Assumptions used in the measurement of the Company's pension obligation | The assumptions used in the measurement of the Company’s pension obligation at December 31, 2016 and 2015 were:
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Expected net periodic pension cost in next fiscal year | The following table summarizes the net periodic pension cost expected for the year ended December 31, 2017. This amount is subject to change if a significant plan-related event should occur before the end of fiscal 2017 (in thousands):
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Pension plan weighted-average asset allocations | The Company’s pension plan weighted-average asset allocations at December 31, 2016 and 2015, by asset category were as follows:
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Pension plan target asset allocations | The following table presents target investment allocations for 2017 by asset category:
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Fair value measurements of pension plan assets on a recurring basis | The following table summarizes the fair value measurements of the Company’s pension plan assets on a recurring basis as of December 31, 2016 (in thousands):
The following table summarizes the fair value measurements of the Company’s pension plan assets on a recurring basis as of December 31, 2015 (in thousands):
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COMMITMENTS AND CONTINGENT LIABILITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum annual rentals, exclusive of taxes and other charges under non-cancelable operating leases | Minimum annual rentals, exclusive of taxes and other charges under non-cancelable operating leases, are as follows (in thousands):
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REGULATORY MATTERS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY MATTERS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Bank's actual capital amounts and ratios | The Bank’s capital amounts (in thousands) and ratios are as follows:
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CONCENTRATIONS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONCENTRATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of loan portfolio disaggregated by class of loan and investment portfolio disaggregated by category of security | The following table presents the Company’s loan portfolio disaggregated by class of loan at December 31, 2016 and each class’s percentage of total loans and total assets (dollars in thousands):
The following presents the Company’s investment portfolio disaggregated by category of security at December 31, 2016 and each category’s percentage of total investment securities and total assets (dollars in thousands):
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FAIR VALUE (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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FAIR VALUE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying amounts and fair values of financial instruments | The following table presents the carrying amounts and fair values of the Company’s financial instruments (in thousands).
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Assets measured at fair value on a non-recurring basis | Assets measured at fair value on a non-recurring basis are as follows (in thousands):
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Fair Value Inputs, Liabilities, Quantitative Information | The following presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis (dollars in thousands):
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Valuation of financial instruments measured at fair value on recurring basis | The following presents fair value measurements on a recurring basis at December 31, 2016 and 2015 (in thousands):
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Changes in Level 3 assets and liabilities measured at fair value on a recurring basis | Reconciliations for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) follow (in thousands).
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SUFFOLK BANCORP (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS (Tables) |
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SUFFOLK BANCORP (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed financial statements |
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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) |
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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected quarterly financial data |
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LOANS, Summary of Non-Performing Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Summary of non-performing assets [Abstract] | ||
Non-accrual loans | $ 5,560 | $ 5,528 |
Non-accrual loans held for sale | 0 | 0 |
Loans 90 days or more past due and still accruing | 0 | 0 |
OREO | 650 | 0 |
Total non-performing assets | 6,210 | 5,528 |
TDRs accruing interest | 7,991 | 9,239 |
TDRs non-accruing | $ 4,348 | $ 2,324 |
DEPOSITS (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Contractual maturities of time deposits [Abstract] | ||
Total | $ 196,703 | $ 224,643 |
Time Deposits > $250,000 [Member] | ||
Contractual maturities of time deposits [Abstract] | ||
2017 | 98,723 | |
2018 | 10,573 | |
2019 | 511 | |
2020 | 461 | |
2021 and thereafter | 2,502 | |
Total | 112,770 | |
Other Time Deposits [Member] | ||
Contractual maturities of time deposits [Abstract] | ||
2017 | 60,470 | |
2018 | 14,391 | |
2019 | 2,010 | |
2020 | 3,519 | |
2021 and thereafter | 3,543 | |
Total | 83,933 | |
Time Deposits [Abstract] | ||
Brokered deposits for regulatory purposes | $ 1,000 | $ 1,000 |
EMPLOYEE BENEFITS, Deferred Compensation (Details) - 1999 Plan [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Participants deferred compensation | $ 47 | $ 58 | $ 132 |
Participants deferred compensation expense | $ 41 | $ 79 | $ 84 |
EMPLOYEE BENEFITS, Post-Retirement Benefits Other Than Pension and 401 (k) Retirement Plan (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Post-Retirement Benefits Other Than Pension and 401 (k) Retirement Plan [Abstract] | ||||
Non recurring gain | $ 1,700,000 | |||
Minimum age of employee to participate in 401(k) retirement plan | 21 years | |||
Minimum hours worked to participate in 401K retirement plan | 40 hours | |||
Employee contribution limit for 401K Plan | $ 18,000 | |||
Percentage of employee annual gross compensation for employer matching contribution for 401(k) Plan, maximum | 6.00% | |||
Contributions under the 401(k) Plan | $ 569,000 | $ 563,000 | $ 515,000 |
FAIR VALUE, Non-recurring Basis (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Assets measured at fair value on a non-recurring basis [Abstract] | ||
Impaired loans | $ 2,521 | $ 2,715 |
OREO | 650 | |
Total | 3,171 | 2,715 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Assets measured at fair value on a non-recurring basis [Abstract] | ||
Impaired loans | 2,521 | 2,715 |
OREO | 650 | |
Total | $ 3,171 | $ 2,715 |
FAIR VALUE, Non-recurring Basis, Quantitative Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||||
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Dec. 31, 2016 |
Dec. 31, 2015 |
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Level 3 [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Total | $ 2,521 | $ 2,715 | |||||
Third Party Appraisal [Member] | Residential Mortgages [Member] | Minimum [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Estimated selling costs | 9.00% | ||||||
Third Party Appraisal [Member] | Residential Mortgages [Member] | Maximum [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Estimated selling costs | 15.00% | ||||||
Third Party Appraisal [Member] | Home Equity [Member] | Minimum [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Estimated selling costs | 9.00% | ||||||
Third Party Appraisal [Member] | Home Equity [Member] | Maximum [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Estimated selling costs | 15.00% | ||||||
Third Party Appraisal [Member] | Consumer [Member] | Minimum [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Estimated selling costs | 10.00% | ||||||
Third Party Appraisal [Member] | Consumer [Member] | Maximum [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Estimated selling costs | 12.00% | ||||||
Third Party Appraisal [Member] | Level 3 [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
OREO | $ 650 | 0 | |||||
Discount to appraised value | 11.00% | ||||||
Third Party Appraisal [Member] | Level 3 [Member] | Residential Mortgages [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Total | $ 2,225 | 2,311 | |||||
Discount to appraised value | [1] | 25.00% | |||||
Third Party Appraisal [Member] | Level 3 [Member] | Home Equity [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Total | $ 231 | 280 | |||||
Discount to appraised value | [1] | 25.00% | |||||
Third Party Appraisal [Member] | Level 3 [Member] | Consumer [Member] | |||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||||||
Total | $ 65 | $ 124 | |||||
Discount to appraised value | [2] | 25.00% | |||||
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FAIR VALUE, Recurring Basis (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Assets [Abstract] | ||
Total securities available for sale | $ 179,242 | $ 247,099 |
Fair Value, Measurements, Recurring [Member] | ||
Assets [Abstract] | ||
U.S. Government agency securities | 28,516 | |
Obligations of states and political subdivisions | 65,294 | 104,682 |
Collateralized mortgage obligations | 17,452 | 15,549 |
Mortgage-backed securities | 87,961 | 92,442 |
Corporate bonds | 8,535 | 5,910 |
Total securities available for sale | 179,242 | 247,099 |
Liabilities [Abstract] | ||
Derivatives | 752 | 752 |
Total | 752 | 752 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Assets [Abstract] | ||
U.S. Government agency securities | 28,516 | |
Obligations of states and political subdivisions | 65,294 | 104,682 |
Collateralized mortgage obligations | 17,452 | 15,549 |
Mortgage-backed securities | 87,961 | 92,442 |
Corporate bonds | 8,535 | 5,910 |
Total securities available for sale | 179,242 | 247,099 |
Liabilities [Abstract] | ||
Derivatives | 0 | 0 |
Total | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Assets [Abstract] | ||
U.S. Government agency securities | 0 | |
Obligations of states and political subdivisions | 0 | 0 |
Collateralized mortgage obligations | 0 | 0 |
Mortgage-backed securities | 0 | 0 |
Corporate bonds | 0 | 0 |
Total securities available for sale | 0 | 0 |
Liabilities [Abstract] | ||
Derivatives | 752 | 752 |
Total | $ 752 | $ 752 |
FAIR VALUE, Reconciliations for Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) (Details) - Liabilities Derivatives [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Roll Forward] | |||
Beginning balance | $ 752 | $ 752 | $ 932 |
Net change | 0 | 0 | (180) |
Ending balance | $ 752 | $ 752 | $ 752 |
SUFFOLK BANCORP (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Assets [Abstract] | |||||||||||
Other assets | $ 6,465 | $ 3,723 | $ 6,465 | $ 3,723 | |||||||
TOTAL ASSETS | 2,092,291 | 2,168,592 | 2,092,291 | 2,168,592 | |||||||
Liabilities and Stockholders' Equity [Abstract] | |||||||||||
Other liabilities | 11,823 | 14,888 | 11,823 | 14,888 | |||||||
Stockholders' Equity | 215,028 | 197,258 | 215,028 | 197,258 | $ 182,733 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 2,092,291 | 2,168,592 | 2,092,291 | 2,168,592 | |||||||
Expense [Abstract] | |||||||||||
Other expense | 6,660 | 6,390 | 5,733 | ||||||||
Income before income tax expense | 27,453 | 23,573 | 19,015 | ||||||||
NET INCOME | 3,733 | $ 5,475 | $ 5,785 | $ 4,838 | 3,637 | $ 4,923 | $ 5,118 | $ 4,009 | 19,831 | 17,687 | 15,295 |
Total Comprehensive Income | 18,888 | 15,954 | 15,741 | ||||||||
Cash Flows From Operating Activities [Abstract] | |||||||||||
Net income | 3,733 | $ 5,475 | $ 5,785 | 4,838 | 3,637 | $ 4,923 | $ 5,118 | 4,009 | 19,831 | 17,687 | 15,295 |
Stock-based compensation | 1,131 | 949 | 811 | ||||||||
Increase in other assets | 2,743 | (651) | 366 | ||||||||
Net cash provided by operating activities | 19,822 | 19,610 | 11,426 | ||||||||
Cash Flows From Investing Activities [Abstract] | |||||||||||
Net cash provided by (used in) investing activities | 101,770 | (234,109) | (263,143) | ||||||||
Cash Flows From Financing Activities [Abstract] | |||||||||||
Dividend reinvestment and stock option exercises | 201 | 539 | 246 | ||||||||
Net cash (used in) provided by financing activities | (94,824) | 257,069 | 174,881 | ||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 26,768 | 42,570 | (76,836) | ||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 98,086 | 55,516 | 98,086 | 55,516 | 132,352 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | 124,854 | 98,086 | 124,854 | 98,086 | 55,516 | ||||||
Parent Company [Member] | |||||||||||
Assets [Abstract] | |||||||||||
Due from banks | 89 | 2,988 | 89 | 2,988 | 1,322 | ||||||
Investment in the Bank | 213,599 | 193,252 | 213,599 | 193,252 | 180,926 | ||||||
Other assets | 1,340 | 1,018 | 1,340 | 1,018 | 674 | ||||||
TOTAL ASSETS | 215,028 | 197,258 | 215,028 | 197,258 | 182,922 | ||||||
Liabilities and Stockholders' Equity [Abstract] | |||||||||||
Other liabilities | 0 | 0 | 0 | 0 | 189 | ||||||
Stockholders' Equity | 215,028 | 197,258 | 215,028 | 197,258 | 182,733 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 215,028 | 197,258 | 215,028 | 197,258 | 182,922 | ||||||
Income [Abstract] | |||||||||||
Dividends from the Bank | 1,182 | 3,763 | 1,399 | ||||||||
Other income | 0 | 0 | 176 | ||||||||
Expense [Abstract] | |||||||||||
Other expense | 41 | 92 | 837 | ||||||||
Income before income tax expense | 1,141 | 3,671 | 738 | ||||||||
Equity in undistributed earnings of the Bank | 18,690 | 14,016 | 14,557 | ||||||||
NET INCOME | 19,831 | 17,687 | 15,295 | ||||||||
Total Comprehensive Income | 18,888 | 15,954 | 15,741 | ||||||||
Cash Flows From Operating Activities [Abstract] | |||||||||||
Net income | 19,831 | 17,687 | 15,295 | ||||||||
Less: equity in undistributed earnings of the Bank | (18,690) | (14,016) | (14,557) | ||||||||
Stock-based compensation | 1,131 | 949 | 811 | ||||||||
Disqualifying dispositions on stock option exercises | 0 | (43) | 0 | ||||||||
Increase in other assets | (322) | (344) | (4) | ||||||||
(Decrease) increase in other liabilities | 0 | (189) | 189 | ||||||||
Net cash provided by operating activities | 1,950 | 4,044 | 1,734 | ||||||||
Cash Flows From Investing Activities [Abstract] | |||||||||||
Advances to the Bank | (2,600) | 0 | 0 | ||||||||
Net cash provided by (used in) investing activities | (2,600) | 0 | 0 | ||||||||
Cash Flows From Financing Activities [Abstract] | |||||||||||
Dividend reinvestment and stock option exercises | 2,502 | 1,385 | 382 | ||||||||
Dividends paid | (4,751) | (3,763) | (1,399) | ||||||||
Net cash (used in) provided by financing activities | (2,249) | (2,378) | (1,017) | ||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (2,899) | 1,666 | 717 | ||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | $ 2,988 | $ 1,322 | 2,988 | 1,322 | 605 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 89 | $ 2,988 | $ 89 | $ 2,988 | $ 1,322 |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|||||||||||
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||||||||||||
Interest income | $ 18,934 | $ 19,324 | $ 20,034 | $ 19,427 | $ 18,805 | $ 18,206 | $ 18,576 | $ 17,193 | $ 77,719 | $ 72,780 | $ 65,053 | ||||||||||
Interest expense | 878 | 936 | 1,012 | 1,103 | 988 | 828 | 755 | 676 | 3,929 | 3,247 | 2,519 | ||||||||||
Net interest income | 18,056 | 18,388 | 19,022 | 18,324 | 17,817 | 17,378 | 17,821 | 16,517 | 73,790 | 69,533 | 62,534 | ||||||||||
(Credit) provision for loan losses | (400) | (350) | 0 | 250 | 0 | 350 | 0 | 250 | (500) | 600 | 1,000 | ||||||||||
Net interest income after (credit) provision for loan losses | 18,456 | 18,738 | 19,022 | 18,074 | 17,817 | 17,028 | 17,821 | 16,267 | 74,290 | 68,933 | 61,534 | ||||||||||
Non-interest income | 2,028 | 2,322 | 2,241 | 1,892 | 2,026 | 2,427 | 2,050 | 2,091 | 8,483 | 8,594 | 10,900 | ||||||||||
Operating expenses | 15,382 | [1] | 13,467 | [1] | 13,319 | [1] | 13,152 | [1] | 15,004 | [1] | 12,668 | [1] | 13,174 | [1] | 13,108 | [1] | 55,320 | 53,954 | 53,419 | ||
Income tax expense | 1,369 | 2,118 | 2,159 | 1,976 | 1,202 | 1,864 | 1,579 | 1,241 | 7,622 | 5,886 | 3,720 | ||||||||||
NET INCOME | $ 3,733 | $ 5,475 | $ 5,785 | $ 4,838 | $ 3,637 | $ 4,923 | $ 5,118 | $ 4,009 | $ 19,831 | $ 17,687 | $ 15,295 | ||||||||||
Net income per common share - basic (in dollars per share) | $ 0.31 | $ 0.46 | $ 0.49 | $ 0.41 | $ 0.31 | $ 0.42 | $ 0.44 | $ 0.34 | $ 1.67 | $ 1.50 | $ 1.32 | ||||||||||
EARNINGS PER COMMON SHARE - DILUTED (in dollars per share) | 0.31 | 0.46 | 0.48 | 0.41 | 0.31 | 0.42 | 0.43 | 0.34 | $ 1.66 | $ 1.49 | $ 1.31 | ||||||||||
Cash dividends per common share (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.06 | $ 0.06 | |||||||||||||
Merger costs | $ 1,800 | $ 2,434 | $ 0 | $ 0 | |||||||||||||||||
System conversion expense | $ 1,400 | ||||||||||||||||||||
|
LEGAL PROCEEDINGS (Details) |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Maximum [Member] | |
Loss Contingencies [Line Items] | |
Attorneys fees and expenses | $ 300,000 |
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