0001144204-18-042835.txt : 20180808 0001144204-18-042835.hdr.sgml : 20180808 20180808162650 ACCESSION NUMBER: 0001144204-18-042835 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 94 CONFORMED PERIOD OF REPORT: 20180630 FILED AS OF DATE: 20180808 DATE AS OF CHANGE: 20180808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRIDGE BANCORP INC CENTRAL INDEX KEY: 0000846617 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 112934195 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34096 FILM NUMBER: 181001749 BUSINESS ADDRESS: STREET 1: 2200 MONTAUK HGWAY CITY: BRIDGEHAMPTON STATE: NY ZIP: 11932 BUSINESS PHONE: 6315371000 MAIL ADDRESS: STREET 1: PO BOX 3005 CITY: BRIDGEHAMPTON STATE: NY ZIP: 11932 10-Q 1 tv499707_10q.htm FORM 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

 

 

 

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2018

 

Commission file number 001-34096

 

 

 

BRIDGE BANCORP, INC.

(Exact name of registrant as specified in its charter)

  

 

 

NEW YORK 11-2934195
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
   
2200 MONTAUK HIGHWAY, BRIDGEHAMPTON, NEW YORK 11932
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (631) 537-1000

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨ Accelerated filer x
   
Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨
   
  Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

There were 19,785,248 shares of common stock outstanding as of July 31, 2018.

 

 

 

 

 

BRIDGE BANCORP, INC.

 

PART I FINANCIAL INFORMATION  
     
Item 1. Financial Statements (unaudited) 3
     
  Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017 3
     
  Consolidated Statements of Income for the Three and Six Months Ended June 30, 2018 and 2017 4
     
  Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2018 and 2017 5
     
  Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30, 2018 and 2017 6
     
  Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 7
     
  Condensed Notes to the Consolidated Financial Statements 8
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 52
     
Item 4. Controls and Procedures 53
     
PART II OTHER INFORMATION  
     
Item 1. Legal Proceedings 54
     
Item 1A. Risk Factors 54
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 54
     
Item 3. Defaults Upon Senior Securities 54
     
Item 4. Mine Safety Disclosures 54
     
Item 5. Other Information 54
     
Item 6. Exhibits 55
     
Signatures   55

 

 2 

 

  

Item 1. Financial Statements

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

   June 30,   December 31, 
   2018   2017 
   (unaudited)     
Assets          
Cash and due from banks  $74,255   $76,614 
Interest earning deposits with banks   31,636    18,133 
Total cash and cash equivalents   105,891    94,747 
           
Securities available for sale, at fair value   659,076    759,916 
Securities held to maturity (fair value of $165,606 and $179,885, respectively)   169,717    180,866 
Total securities   828,793    940,782 
           
Securities, restricted   26,747    35,349 
           
Loans held for sale   6,338    - 
           
Loans held for investment   3,180,676    3,102,752 
Allowance for loan losses   (31,652)   (31,707)
Loans, net   3,149,024    3,071,045 
           
Premises and equipment, net   36,043    33,505 
Accrued interest receivable   11,625    11,652 
Goodwill   105,950    105,950 
Other intangible assets   4,866    5,214 
Prepaid pension   10,141    9,936 
Bank owned life insurance   88,594    87,493 
Other real estate owned   175    - 
Other assets   40,598    34,329 
Total assets  $4,414,785   $4,430,002 
           
Liabilities          
Demand deposits  $1,307,325   $1,338,701 
Savings, NOW and money market deposits   1,919,653    1,773,478 
Certificates of deposit of $100,000 or more   119,774    158,584 
Other time deposits   206,445    63,780 
Total deposits   3,553,197    3,334,543 
           
Federal funds purchased   -    50,000 
Repurchase agreements   1,437    877 
Federal Home Loan Bank advances   300,863    501,374 
Subordinated debentures, net   78,711    78,641 
Other liabilities and accrued expenses   40,822    35,367 
Total liabilities   3,975,030    4,000,802 
           
Commitments and contingencies   -    - 
           
Stockholders' equity          
Preferred stock, par value $.01 per share (2,000,000 shares authorized; none issued)   -    - 
Common stock, par value $.01 per share (40,000,000 shares authorized; 19,798,989 and 19,719,575 shares issued, respectively; and 19,785,889 and 19,709,360 shares outstanding, respectively)   198    197 
Surplus   349,538    347,691 
Retained earnings   106,206    96,547 
Treasury stock at cost, 13,100 and 10,215 shares, respectively   (441)   (296)
    455,501    444,139 
Accumulated other comprehensive loss, net of income taxes   (15,746)   (14,939)
Total stockholders' equity   439,755    429,200 
Total liabilities and stockholders' equity  $4,414,785   $4,430,002 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

 3 

 

  

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (unaudited)

(In thousands, except per share amounts)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2018   2017   2018   2017 
Interest income:                    
Loans (including fee income)  $35,770   $30,252   $71,383   $59,635 
Mortgage-backed securities, CMOs and other asset-backed securities   3,825    3,898    7,549    7,715 
U.S. GSE securities   243    301    522    601 
State and municipal obligations   747    1,010    1,559    2,005 
Corporate bonds   358    293    713    583 
Deposits with banks   106    71    196    117 
Other interest and dividend income   502    409    993    795 
Total interest income   41,551    36,234    82,915    71,451 
                     
Interest expense:                    
Savings, NOW and money market deposits   3,438    1,812    5,952    3,363 
Certificates of deposit of $100,000 or more   582    431    1,099    810 
Other time deposits   493    179    688    357 
Federal funds purchased and repurchase agreements   57    355    1,172    671 
Federal Home Loan Bank advances   1,917    1,529    3,266    2,678 
Subordinated debentures   1,135    1,135    2,270    2,270 
Junior subordinated debentures   -    -    -    48 
Total interest expense   7,622    5,441    14,447    10,197 
                     
Net interest income   33,929    30,793    68,468    61,254 
Provision for loan losses   400    950    1,200    1,750 
Net interest income after provision for loan losses   33,529    29,843    67,268    59,504 
                     
Non-interest (loss) income:                    
Service charges and other fees   2,562    2,220    4,725    4,270 
Net securities losses   (7,921)   -    (7,921)   - 
Title fee income   450    541    955    1,091 
Gain on sale of loans   322    -    322    - 
Gain on sale of Small Business Administration loans   691    799    1,062    1,342 
BOLI income   555    567    1,101    1,127 
Other operating income   763    382    1,291    801 
Total non-interest (loss) income   (2,578)   4,509    1,535    8,631 
                     
Non-interest expense:                    
Salaries and employee benefits   13,055    11,592    25,867    23,092 
Occupancy and equipment   3,205    3,439    6,448    6,837 
Technology and communications   1,568    1,390    3,211    2,725 
Marketing and advertising   1,240    1,577    2,202    2,488 
Professional services   881    642    2,093    1,423 
FDIC assessments   436    332    900    643 
Amortization of other intangible assets   242    274    488    553 
Other operating expenses   1,880    1,760    3,896    3,541 
Total non-interest expense   22,507    21,006    45,105    41,302 
                     
Income before income taxes   8,444    13,346    23,698    26,833 
Income tax expense   1,701    4,505    4,882    8,821 
Net income  $6,743   $8,841   $18,816   $18,012 
Basic earnings per share  $0.34   $0.45   $0.95   $0.91 
Diluted earnings per share  $0.34   $0.45   $0.95   $0.91 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 4 

 

  

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (unaudited)

(In thousands)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2018   2017   2018   2017 
Net income  $6,743   $8,841   $18,816   $18,012 
Other comprehensive income (loss):                    
Change in unrealized net gains (losses) on securities available for sale, net of reclassifications and deferred income taxes   2,616    1,533    (3,472)   2,543 
Adjustment to pension liability, net of reclassifications and deferred income taxes   68    66    135    163 
Unrealized gains (losses) on cash flow hedges, net of reclassifications and deferred income taxes   479    (547)   2,530    (373)
Total other comprehensive income (loss)   3,163    1,052    (807)   2,333 
Comprehensive income  $9,906   $9,893   $18,009   $20,345 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

 5 

 

  

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (unaudited)

(In thousands, except share and per share amounts)

 

   Common
Stock
   Surplus   Retained
Earnings
   Treasury
Stock
   Accumulated
Other
Comprehensive
Loss
   Total 
Balance at January 1, 2018  $197   $347,691   $96,547   $(296)  $(14,939)  $429,200 
Net income             18,816              18,816 
Shares issued under the dividend reinvestment plan        468                   468 
Stock awards granted and distributed   1    (523)        522         - 
Stock awards forfeited        115         (115)        - 
Repurchase of surrendered stock from vesting of restricted stock awards                  (552)        (552)
Share based compensation expense        1,787                   1,787 
Cash dividend declared, $0.46 per share             (9,157)             (9,157)
Other comprehensive loss, net of deferred income taxes                       (807)   (807)
Balance at June 30, 2018  $198   $349,538   $106,206   $(441)  $(15,746)  $439,755 

 

   Common
Stock
   Surplus   Retained
Earnings
   Treasury
Stock
   Accumulated
Other
Comprehensive
Loss
   Total 
Balance at January 1, 2017  $191   $329,427   $91,594   $(161)  $(13,064)  $407,987 
Net income             18,012              18,012 
Shares issued under the dividend reinvestment plan        469                   469 
Shares issued for trust preferred securities conversions (529,292 shares)   5    14,944                   14,949 
Stock awards granted and distributed   1    (416)        415         - 
Stock awards forfeited        20         (20)        - 
Repurchase of surrendered stock from vesting of restricted stock awards                  (264)        (264)
Share based compensation expense        1,324                   1,324 
Cash dividend declared, $0.46 per share             (9,103)             (9,103)
Other comprehensive income, net of deferred income taxes                       2,333    2,333 
Balance at June 30, 2017  $197   $345,768   $100,503   $(30)  $(10,731)  $435,707 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 6 

 

  

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

 

   Six Months Ended 
   June 30, 
   2018   2017 
Cash flows from operating activities:          
Net income  $18,816   $18,012 
Adjustments to reconcile net income to net cash provided by operating activities:          
Provision for loan losses   1,200    1,750 
Depreciation and amortization of premises and equipment   1,897    1,900 
Net (accretion) and other amortization   (1,444)   (3,949)
Net amortization on securities   2,507    3,291 
Increase in cash surrender value of bank owned life insurance   (1,101)   (1,127)
Amortization of intangible assets   488    553 
Share based compensation expense   1,787    1,324 
Net securities losses   7,921    - 
Decrease in accrued interest receivable   27    504 
Small Business Administration ("SBA") loans originated for sale   (19,446)   (14,483)
Proceeds from sale of the guaranteed portion of SBA loans   14,417    16,123 
Gain on sale of the guaranteed portion of SBA loans   (1,062)   (1,342)
Gain on sale of loans   (322)   - 
Decrease (increase) in other assets   279    (2,203)
Increase in accrued expenses and other liabilities   2,929    3,636 
Net cash provided by operating activities   28,893    23,989 
           
Cash flows from investing activities:          
Purchases of securities available for sale   (194,835)   (73,916)
Purchases of securities, restricted   (481,422)   (303,890)
Purchases of securities held to maturity   (1,000)   (2,031)
Proceeds from sales of securities available for sale   230,372    - 
Redemption of securities, restricted   490,024    299,814 
Maturities, calls and principal payments of securities available for sale   50,431    59,170 
Maturities, calls and principal payments of securities held to maturity   11,696    20,756 
Net increase in loans   (118,281)   (192,825)
Proceeds from loan sale   40,133    - 
Purchase of premises and equipment   (4,435)   (1,685)
Net cash provided by (used in) investing activities   22,683    (194,607)
           
Cash flows from financing activities:          
Net increase in deposits   218,676    133,646 
Net decrease in federal funds purchased   (50,000)   (50,000)
Net (decrease) increase in Federal Home Loan Bank advances   (200,427)   67,479 
Repayment of junior subordinated debentures   -    (352)
Net increase in repurchase agreements   560    57 
Net proceeds from issuance of common stock   468    469 
Repurchase of surrendered stock from vesting of restricted stock awards   (552)   (264)
Cash dividends paid   (9,157)   (9,103)
Net cash (used in) provided by financing activities   (40,432)   141,932 
           
Net increase (decrease) in cash and cash equivalents   11,144    (28,686)
Cash and cash equivalents at beginning of period   94,747    113,838 
Cash and cash equivalents at end of period  $105,891   $85,152 
           
Supplemental disclosure of cash flow information:          
Cash paid for:          
Interest  $14,382   $10,498 
Income taxes  $2,471   $165 
           
Non-cash investing and financing activities:          
Conversion of junior subordinated debentures  $-   $15,350 
Transfers from portfolio loans to other real estate owned  $175   $- 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

 7 

 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. BASIS OF PRESENTATION

 

Bridge Bancorp, Inc. (the “Registrant” or “Company”), is a registered bank holding company for BNB Bank (the “Bank”), which was formerly known as The Bridgehampton National Bank prior to the Bank’s conversion to a New York chartered commercial bank in December 2017. The Registrant was incorporated under the laws of the State of New York in 1988, at the direction of the Board of Directors of the Bank for the purpose of becoming a bank holding company pursuant to a plan of reorganization under which the former shareholders of the Bank became the shareholders of the Company. Since commencing business in March 1989, after the reorganization, the Registrant has functioned primarily as the holder of all of the Bank’s common stock. In May 1999, the Bank established a real estate investment trust subsidiary, Bridgehampton Community, Inc. (“BCI”), as an operating subsidiary. The assets transferred to BCI are viewed by the bank regulators as part of the Bank’s assets in consolidation. The operations of the Bank also include Bridge Abstract LLC (“Bridge Abstract”), a wholly owned subsidiary of the Bank, which is a broker of title insurance services and Bridge Financial Services LLC (“Bridge Financial Services”), an investment services subsidiary that was formed in March 2014. The Company formed Bridge Statutory Capital Trust II (the “Trust”) as a subsidiary in 2009, which sold $16.0 million of 8.5% cumulative convertible Trust Preferred Securities (the “Trust Preferred Securities”) in a private placement to accredited investors. The Trust Preferred Securities were redeemed effective January 18, 2017 and the Trust was cancelled effective April 24, 2017.

 

The accompanying Unaudited Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiary, the Bank, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The Unaudited Consolidated Financial Statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders’ equity. The Unaudited Consolidated Financial Statements should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

 

2. EARNINGS PER SHARE

 

Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) No. 260-10-45 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”).  The restricted stock awards and certain restricted stock units granted by the Company contain non-forfeitable rights to dividends and therefore are considered participating securities.  The two-class method for calculating basic EPS excludes dividends paid to participating securities and any undistributed earnings attributable to participating securities.

 

 8 

 

  

The following table presents the computation of EPS for the three and six months ended June 30, 2018 and 2017:

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
(In thousands, except per share data)  2018   2017   2018   2017 
Net income  $6,743   $8,841   $18,816   $18,012 
Dividends paid on and earnings allocated to participating securities   (148)   (182)   (405)   (360)
Income attributable to common stock  $6,595   $8,659   $18,411   $17,652 
                     
Weighted average common shares outstanding, including participating securities   19,884    19,781    19,859    19,725 
Weighted average participating securities   (445)   (410)   (433)   (401)
Weighted average common shares outstanding   19,439    19,371    19,426    19,324 
Basic earnings per common share  $0.34   $0.45   $0.95   $0.91 
                     
Income attributable to common stock  $6,595   $8,659   $18,411   $17,652 
Impact of assumed conversions - interest on 8.5% trust preferred securities   -    -    -    32 
Income attributable to common stock including assumed conversions  $6,595   $8,659   $18,411   $17,684 
                     
Weighted average common shares outstanding   19,439    19,371    19,426    19,324 
Incremental shares from assumed conversions of options and restricted stock units   29    23    27    20 
Incremental shares from assumed conversions of 8.5% trust preferred securities   -    -    -    35 
Weighted average common and equivalent shares outstanding   19,468    19,394    19,453    19,379 
Diluted earnings per common share  $0.34   $0.45   $0.95   $0.91 

 

There were 47,393 stock options outstanding at June 30, 2018 that were not included in the computation of diluted earnings per share for the three and six months ended June 30, 2018 because the options’ exercise prices were greater than the average market price of common stock and were, therefore, antidilutive. There were no stock options outstanding at June 30, 2017.

 

There were no restricted stock units that were antidilutive for the three months ended June 30, 2018 and 2017. There were zero and 20,084 restricted stock units that were antidilutive for the six months ended June 30, 2018 and 2017, respectively.

 

The $15.7 million in trust preferred securities outstanding at December 31, 2016 were redeemed effective January 18, 2017 and therefore were not included in the computation of diluted earnings per share for the three months ended June 30, 2017, but were dilutive for the six months ended June 30, 2017 and therefore were included in the computation of diluted earnings per share for that period.

 

3. STOCK BASED COMPENSATION PLANS

 

The Bridge Bancorp, Inc. 2012 Stock-Based Incentive Plan (“2012 SBIP”) provides for the grant of stock-based and other incentive awards to officers, employees and directors of the Company. The 2012 SBIP superseded the Bridge Bancorp, Inc. 2006 Equity Incentive Plan. The number of shares of common stock of Bridge Bancorp, Inc. available for stock-based awards under the 2012 SBIP is 525,000 plus 278,385 shares that were remaining under the 2006 Equity Incentive Plan. Of the total 803,385 shares of common stock approved for issuance under the 2012 SBIP, 273,585 shares remain available for issuance at June 30, 2018, including shares that may be granted in the form of stock options, restricted stock awards (“RSAs”), or restricted stock units (“RSUs”).

 

The Compensation Committee of the Board of Directors determines awards under the 2012 SBIP. The Company accounts for the 2012 SBIP under FASB ASC No. 718.

 

Stock Options

 

Stock options may be either incentive stock options, which bestow certain tax benefits on the optionee, or non-qualified stock options, not qualifying for such benefits. All options have an exercise price that is not less than the market value of the Company’s common stock on the date of the grant.

 

The fair value of each option granted is estimated on the date of the grant using the Black-Scholes option-pricing model. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of the Company’s common stock as of the exercise or reporting date.

 

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During the six months ended June 30, 2018, in accordance with the Long Term Incentive Plan (“LTI Plan”) for Named Executive Officers (“NEOs”), the Company granted 47,393 stock options. All of the stock options granted vest ratably over three years. The estimated weighted-average grant-date fair value of all stock options granted in the six months ended June 30, 2018 was $6.52 per stock option, using the Black-Scholes option-pricing model with assumptions as follows: dividend yield of 2.80%; expected volatility rate of 27.53%; risk-free interest rate of 2.67%; and expected option life of 6.5 years. There were no stock options granted during the six months ended June 30, 2017.

 

Compensation expense attributable to stock options was $26 thousand and $39 thousand for the three and six months ended June 30, 2018, respectively. There was no compensation expense attributable to stock options for the six months ended June 30, 2017 because there were no stock options outstanding as of June 30, 2017 and December 31, 2016. As of June 30, 2018, there was $270 thousand of total unrecognized compensation cost related to unvested stock options. The cost is expected to be recognized over a weighted-average period of 2.6 years.

 

The following table summarizes the status of the Company’s stock options as of and for the six months ended June 30, 2018:

 

           Weighted     
       Weighted   Average     
   Number   Average   Remaining   Aggregate 
   of   Exercise   Contractual   Intrinsic 
(Dollars in thousands, except per share amounts)  Options   Price   Life   Value 
Outstanding, January 1,  2018   -   $-           
Granted   47,393    36.19           
Outstanding, June 30, 2018   47,393   $36.19    9.6 years   $- 
Vested and Exercisable, June 30, 2018   -   $-   $-   $- 

 

    Number of    Weighted
Average
 
Range of Exercise Prices   Options    Exercise Price 
$ 36.19    47,393    $36.19 
    47,393    $36.19 

 

Restricted Stock Awards

 

The Company’s RSAs are shares of the Company’s common stock that are forfeitable and are subject to restrictions on transfer prior to the vesting date. RSAs are forfeited if the award holder departs the Company before vesting. RSAs carry dividend and voting rights from the date of grant. The vesting of time-vested RSAs depends upon the award holder continuing to render services to the Company. The Company’s performance-based RSAs vest subject to the achievement of the Company’s 2018 corporate goals.

 

The following table summarizes the unvested RSA activity for the six months ended June 30, 2018:

 

       Weighted 
       Average Grant-Date 
   Shares   Fair Value 
Unvested, January 1, 2018   317,692   $27.16 
Granted   82,982    33.00 
Vested   (58,233)   23.90 
Forfeited   (3,766)   30.48 
Unvested, June 30, 2018   338,675   $29.12 

 

During the six months ended June 30, 2018, the Company granted a total of 82,982 RSAs. Of the 82,982 RSAs granted, 44,750 time-vested RSAs vest ratably over five years, 13,115 time-vested RSAs vest ratably over three years, and 25,117 performance-based RSAs vest ratably over two years, subject to the achievement of the Company’s 2018 corporate goals. As of June 30, 2018, there were 338,675 unvested RSAs consisting of 314,175 time-vested RSAs and 24,500 performance-based RSAs.

 

Compensation expense attributable to RSAs was $717 thousand and $1.3 million for the three and six months ended June 30, 2018, respectively, and $503 thousand and $916 thousand for the three and six months ended June 30, 2017, respectively. As of June 30, 2018, 

 

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there was $6.4 million of total unrecognized compensation cost related to non-vested RSAs. The cost is expected to be recognized over a weighted-average period of 3.5 years.

 

Restricted Stock Units

 

Long Term Incentive Plan

 

An RSU is an award that is denominated in shares of the Company’s common stock on the date of grant and is similar to an RSA award, except no shares of the Company’s common stock are actually issued to the award recipient on the date of grant of an RSU. RSUs are subject to a time-based vesting schedule or the satisfaction of performance conditions, and are settled in shares of the Company’s common stock. RSUs do not provide voting rights and RSUs may provide dividend equivalent rights from the date of grant.

 

During the six months ended June 30, 2018, in accordance with the LTI Plan for NEOs, the Company granted 21,693 RSUs. Of the 21,693 RSUs granted, 12,522 time-vested RSUs vest ratably over five years and 9,171 performance-based RSUs vest subject to the achievement of the Company’s three-year corporate goal for the years 2018, 2019 and 2020.

 

The following table summarizes the unvested NEO RSU activity for the six months ended June 30, 2018:

 

       Weighted 
       Average Grant-Date 
   Shares   Fair Value 
Unvested, January 1, 2018   68,776   $24.46 
Granted   21,693    33.23 
Reinvested dividends   987    26.01 
Forfeited   (13,333)   21.85 
Unvested, June 30, 2018   78,123   $27.36 

 

Compensation expense attributable to LTI Plan RSUs was $119 thousand and $220 thousand for the three and six months ended June 30, 2018, respectively, and $79 thousand and $148 thousand in connection with these awards for the three and six months ended June 30, 2017, respectively. As of June 30, 2018, there was $1.5 million of total unrecognized compensation cost related to non-vested RSUs. The cost is expected to be recognized over a weighted-average period of 3.5 years.

 

Directors Plan

 

In April 2009, the Company adopted a Directors Deferred Compensation Plan (“Directors Plan”). Under the Directors Plan, independent directors may elect to defer all or a portion of their annual retainer fee in the form of RSUs. In addition, directors receive a non-election retainer in the form of RSUs. These RSUs vest ratably over one year and have dividend rights but no voting rights. In connection with the Directors Plan, the Company recorded expense of $140 thousand and $275 thousand in connection with these RSUs for the three and six months ended June 30, 2018, respectively, and $132 thousand and $260 thousand for the three and six months ended June 30, 2017, respectively.

 

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4. SECURITIES

 

The following tables summarize the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio at June 30, 2018 and December 31, 2017 and the corresponding amounts of unrealized gains and losses therein:

 

   June 30, 2018 
       Gross   Gross   Estimated 
   Amortized   Unrealized   Unrealized   Fair 
(In thousands)  Cost   Gains   Losses   Value 
Available for sale:                    
U.S. GSE securities  $29,996   $-   $(1,258)  $28,738 
State and municipal obligations   38,423    50    (525)   37,948 
U.S. GSE residential mortgage-backed securities   101,884    -    (3,688)   98,196 
U.S. GSE residential collateralized mortgage obligations   340,978    6    (8,937)   332,047 
U.S. GSE commercial mortgage-backed securities   3,584    -    (67)   3,517 
U.S. GSE commercial collateralized mortgage obligations   94,845    -    (2,438)   92,407 
Other asset backed securities   24,250    -    (727)   23,523 
Corporate bonds   46,000    -    (3,300)   42,700 
Total available for sale   679,960    56    (20,940)   659,076 
                     
Held to maturity:                    
State and municipal obligations   57,350    497    (481)   57,366 
U.S. GSE residential mortgage-backed securities   10,441    -    (451)   9,990 
U.S. GSE residential collateralized mortgage obligations   51,026    81    (1,318)   49,789 
U.S. GSE commercial mortgage-backed securities   20,626    -    (897)   19,729 
U.S. GSE commercial collateralized mortgage obligations   30,274    -    (1,542)   28,732 
Total held to maturity   169,717    578    (4,689)   165,606 
Total securities  $849,677   $634   $(25,629)  $824,682 

 

   December 31, 2017 
       Gross   Gross   Estimated 
   Amortized   Unrealized   Unrealized   Fair 
(In thousands)  Cost   Gains   Losses   Value 
Available for sale:                    
U.S. GSE securities  $57,994   $-   $(1,180)  $56,814 
State and municipal obligations   87,582    259    (819)   87,022 
U.S. GSE residential mortgage-backed securities   189,705    29    (2,833)   186,901 
U.S. GSE residential collateralized mortgage obligations   314,390    16    (7,016)   307,390 
U.S. GSE commercial mortgage-backed securities   6,017    2    (40)   5,979 
U.S. GSE commercial collateralized mortgage obligations   49,965    -    (1,249)   48,716 
Other asset backed securities   24,250    -    (849)   23,401 
Corporate bonds   46,000    -    (2,307)   43,693 
Total available for sale   775,903    306    (16,293)   759,916 
                     
Held to maturity:                    
State and municipal obligations   60,762    972    (64)   61,670 
U.S. GSE residential mortgage-backed securities   11,424    -    (261)   11,163 
U.S. GSE residential collateralized mortgage obligations   54,250    244    (666)   53,828 
U.S. GSE commercial mortgage-backed securities   22,953    77    (438)   22,592 
U.S. GSE commercial collateralized mortgage obligations   31,477    -    (845)   30,632 
Total held to maturity   180,866    1,293    (2,274)   179,885 
Total securities  $956,769   $1,599   $(18,567)  $939,801 

 

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The following table summarizes the amortized cost and estimated fair value by contractual maturity of the available for sale and held to maturity investment securities portfolio at June 30, 2018. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

   June 30, 2018 
       Estimated 
(In thousands)  Amortized Cost   Fair Value 
Maturity          
Available for sale:          
Within one year  $8,029   $8,016 
One to five years   24,616    24,104 
Five to ten years   90,038    85,462 
Beyond ten years   557,277    541,494 
Total  $679,960   $659,076 
           
Held to maturity:          
Within one year  $3,377   $3,376 
One to five years   30,563    30,374 
Five to ten years   51,321    50,491 
Beyond ten years   84,456    81,365 
Total  $169,717   $165,606 

 

The following tables summarize securities with gross unrealized losses at June 30, 2018 and December 31, 2017, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:

 

   June 30, 2018 
   Less than 12 months   Greater than 12 months 
   Estimated   Gross   Estimated   Gross 
   Fair   Unrealized   Fair   Unrealized 
(In thousands)  Value   Losses   Value   Losses 
Available for sale:                    
U.S. GSE securities  $-   $-   $28,739   $(1,258)
State and municipal obligations   22,612    (318)   10,404    (207)
U.S. GSE residential mortgage-backed securities   39,156    (1,267)   59,040    (2,421)
U.S. GSE residential collateralized mortgage obligations   189,200    (2,329)   132,871    (6,608)
U.S. GSE commercial mortgage-backed securities   3,518    (67)   -    - 
U.S. GSE commercial collateralized mortgage obligations   47,103    (326)   45,304    (2,112)
Other asset backed securities   -    -    23,523    (727)
Corporate bonds   12,930    (1,069)   29,769    (2,231)
 Total available for sale   314,519    (5,376)   329,650    (15,564)
                     
Held to maturity:                    
State and municipal obligations   28,822    (437)   2,396    (44)
U.S. GSE residential mortgage-backed securities   1,205    (35)   8,784    (416)
U.S. GSE residential collateralized mortgage obligations   23,685    (492)   19,392    (826)
U.S. GSE commercial mortgage-backed securities   11,857    (388)   7,871    (509)
U.S. GSE commercial collateralized mortgage obligations   9,489    (400)   19,244    (1,142)
Total held to maturity  $75,058   $(1,752)  $57,687   $(2,937)

 

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   December 31, 2017 
   Less than 12 months   Greater than 12 months 
   Estimated   Gross   Estimated   Gross 
   Fair   Unrealized   Fair   Unrealized 
(In thousands)  Value   Losses   Value   Losses 
Available for sale:                    
U.S. GSE securities  $-   $-   $56,815   $(1,180)
State and municipal obligations   35,350    (301)   28,165    (518)
U.S. GSE residential mortgage-backed securities   107,408    (1,153)   69,571    (1,680)
U.S. GSE residential collateralized mortgage obligations   77,705    (759)   224,932    (6,257)
U.S. GSE commercial mortgage-backed securities   2,345    (40)   -    - 
U.S. GSE commercial collateralized mortgage obligations   452    (1)   48,264    (1,248)
Other asset backed securities   -    -    23,401    (849)
Corporate bonds   13,588    (412)   30,105    (1,895)
 Total available for sale   236,848    (2,666)   481,253    (13,627)
                     
Held to maturity:                    
State and municipal obligations   7,709    (57)   1,009    (7)
U.S. GSE residential mortgage-backed securities   1,359    (16)   9,804    (245)
U.S. GSE residential collateralized mortgage obligations   21,329    (94)   21,112    (572)
U.S. GSE commercial mortgage-backed securities   8,789    (121)   8,303    (317)
U.S. GSE commercial collateralized mortgage obligations   10,341    (116)   20,290    (729)
Total held to maturity  $49,527   $(404)  $60,518   $(1,870)

 

Other-Than-Temporary Impairment

 

Management evaluates securities for other-than-temporary impairment (“OTTI”) quarterly and more frequently when economic or market conditions warrant. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held to maturity are generally evaluated for OTTI under FASB ASC 320, “Accounting for Certain Investments in Debt and Equity Securities”. In determining OTTI under the FASB ASC 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. 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 these criteria, the amount of impairment is split into two components: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

 

At June 30, 2018, substantially all of the securities in an unrealized loss position had a fixed interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. Other asset backed securities are comprised of student loan backed bonds which are guaranteed by the U.S. Department of Education for 97% to 100% of principal. Additionally, the bonds have credit support of 3% to 5% and have maintained their Aa3 Moody’s rating during the time the Bank has owned them.  The corporate bonds within the portfolio have all maintained an investment grade rating by either Moody’s or Standard and Poor’s. None of the unrealized losses is related to credit losses. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2018.

 

Sales and Calls of Securities

 

There were $230.4 million of proceeds from sales of securities with gross losses of $7.9 million realized for the three and six months ended June 30, 2018. There were no proceeds from sales of securities for the three and six months ended June 30, 2017. There were $0.9 million and $1.9 million of proceeds from calls of securities for the three and six months ended June 30, 2018, respectively. There were no proceeds from calls of securities for the three and six months ended June 30, 2017.

 

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Pledged Securities

 

Securities having a fair value of $366.4 million and $513.5 million at June 30, 2018 and December 31, 2017, respectively, were pledged to secure public deposits and Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) overnight borrowings.

 

Trading Securities

 

The Company did not hold any trading securities during the six months ended June 30, 2018 or the year ended December 31, 2017.

 

Restricted Securities

 

The Bank is a member of the FHLB of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. The Bank is a member of the Atlantic Central Banker’s Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the FRB system and required to own FRB stock. FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. The Bank owned $26.7 million and $35.3 million in FHLB, ACBB and FRB stock at June 30, 2018 and December 31, 2017, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.

 

5. FAIR VALUE

 

As described in Note 14. Recent Accounting Pronouncements, during the first quarter of 2018, the Company adopted ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The Company adopted the amended guidance that requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

 

FASB ASC No. 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

 

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

 

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

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The following tables summarize assets and liabilities measured at fair value on a recurring basis:

 

   June 30, 2018 
       Fair Value Measurements Using: 
           Significant     
       Quoted Prices In   Other   Significant 
       Active Markets for   Observable   Unobservable 
   Carrying   Identical Assets   Inputs   Inputs 
(In thousands)  Value   (Level 1)   (Level 2)   (Level 3) 
Financial assets:                    
Available for sale securities:                    
U.S. GSE securities  $28,738       $28,738     
State and municipal obligations   37,948         37,948      
U.S. GSE residential mortgage-backed securities   98,196         98,196      
U.S. GSE residential collateralized mortgage obligations   332,047         332,047      
U.S. GSE commercial mortgage-backed securities   3,517         3,517      
U.S. GSE commercial collateralized mortgage obligations   92,407         92,407      
Other asset backed securities   23,523         23,523      
Corporate bonds   42,700         42,700      
Total available for sale securities  $659,076        $659,076      
Derivatives  $8,743        $8,743      
                     
Financial liabilities:                    
Derivatives  $2,451        $2,451      

 

   December 31, 2017 
       Fair Value Measurements Using: 
           Significant     
       Quoted Prices In   Other   Significant 
       Active Markets for   Observable   Unobservable 
   Carrying   Identical Assets   Inputs   Inputs 
(In thousands)  Value   (Level 1)   (Level 2)   (Level 3) 
Financial assets:                    
Available for sale securities:                    
U.S. GSE securities  $56,814       $56,814      
State and municipal obligations   87,022         87,022      
U.S. GSE residential mortgage-backed securities   186,901         186,901      
U.S. GSE residential collateralized mortgage obligations   307,390         307,390      
U.S. GSE commercial mortgage-backed securities   5,979         5,979      
U.S. GSE commercial collateralized mortgage obligations   48,716         48,716      
Other asset backed securities   23,401         23,401      
Corporate bonds   43,693         43,693      
Total available for sale securities  $759,916        $759,916      
Derivatives  $4,546        $4,546      
                     
Financial liabilities:                    
Derivatives  $1,823        $1,823      

 

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The following tables summarize assets measured at fair value on a non-recurring basis:

 

   June 30, 2018 
       Fair Value Measurements Using: 
           Significant     
       Quoted Prices In   Other   Significant 
       Active Markets for   Observable   Unobservable 
   Carrying   Identical Assets   Inputs   Inputs 
(In thousands)  Value   (Level 1)   (Level 2)   (Level 3) 
Impaired loans  $-           $- 
Other real estate owned  $175             $175 

 

   December 31, 2017 
       Fair Value Measurements Using: 
           Significant     
       Quoted Prices In   Other   Significant 
       Active Markets for   Observable   Unobservable 
   Carrying   Identical Assets   Inputs   Inputs 
(In thousands)  Value   (Level 1)   (Level 2)   (Level 3) 
Impaired loans  $-           $- 
Other real estate owned  $-           $- 

 

There were no impaired loans with an allocated allowance for loan losses at June 30, 2018. Impaired loans with an allocated allowance for loan losses at December 31, 2017 had a carrying amount of zero, which is made up of the outstanding balance of $1.7 million, net of a valuation allowance of $1.7 million. This resulted in an additional provision for loan losses of $1.7 million that is included in the amount reported on the Consolidated Statements of Income for the year ended December 31, 2017.

 

Other real estate owned at June 30, 2018 had a carrying amount of $0.2 million with no valuation allowance recorded. Accordingly, there was no additional provision for loan losses included in the amount reported on the Consolidated Statements of Income. There was no other real estate owned at December 31, 2017.

 

The Company used the following methods and assumptions in estimating the fair value of its financial instruments:

 

Cash and Due from Banks and Interest Earning Deposits with Banks: Carrying amounts approximate fair value, since these instruments are either payable on demand or have short-term maturities and as such are classified as Level 1.

 

Securities Available for Sale and Held to Maturity: If available, the estimated fair values are based on independent dealer quotations on nationally recognized securities exchanges and are classified as Level 1. For securities where quoted prices are not available, fair value is based on matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities resulting in a Level 2 classification.

 

Derivatives: Represents interest rate swaps for which the estimated fair values are based on valuation models using observable market data as of the measurement date resulting in a Level 2 classification.

 

Impaired Loans and Other Real Estate Owned: For impaired loans, the Company evaluates the fair value of the loan in accordance with current accounting guidance.  For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of other real estate owned is also evaluated in accordance with current accounting guidance and determined based on recent appraised values less the estimated cost to sell. 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 independent appraisers to adjust for differences between the comparable sales and income data available. Adjustments may relate to location, square footage, condition, amenities, market rate of leases as well as timing of comparable sales. All appraisals undergo a second review process to insure that the methodology employed and the values derived are reasonable. The fair value of the loan is compared to the carrying value to determine if any write-down or specific reserve is required. Impaired loans are evaluated quarterly for additional impairment and adjusted accordingly.

 

Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.

 

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Once received, the Credit Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On a quarterly basis, the Company compares the actual sale price of collateral that has been sold to the most recent appraised value to determine what additional adjustments should be made to appraisal values to arrive at fair value. Management also considers the appraisal values for commercial properties associated with current loan origination activity. Collectively, this information is reviewed to help assess current trends in commercial property values. For each collateral dependent impaired loan, management considers information that relates to the type of commercial property to determine if such properties may have appreciated or depreciated in value since the date of the most recent appraisal. Adjustments to fair value are made only when the analysis indicates a probable decline in collateral values. Adjustments made in the appraisal process are not deemed material to the overall consolidated financial statements given the level of impaired loans measured at fair value on a nonrecurring basis.

 

Deposits: The estimated fair values of certificates of deposit are based on discounted cash flow calculations that use a replacement cost of funds approach to establishing discount rates for certificate of deposit maturities resulting in a Level 2 classification. Stated value is fair value for all other deposits resulting in a Level 1 classification.

 

Borrowed Funds: Represents federal funds purchased, repurchase agreements and FHLB advances for which the estimated fair values are based on discounted cash flow calculations that use a replacement cost of funds approach to establishing discount rates for funding maturities resulting in a Level 1 classification for overnight federal funds purchased, repurchase agreements and FHLB advances and a Level 2 classification for all other maturity terms.

 

Accrued Interest Receivable and Payable: For these short-term instruments, the carrying amount is a reasonable estimate of the fair value resulting in a Level 1, 2 or 3 classification consistent with the underlying asset or liability the interest is associated with.

 

Off-Balance-Sheet Liabilities: The fair value of off-balance-sheet commitments to extend credit is estimated using fees currently charged to enter into similar agreements. The fair value is immaterial as of June 30, 2018 and December 31, 2017.

 

Fair value estimates are made at specific points in time and are based on existing on-and off-balance sheet financial instruments. These estimates are subjective in nature and dependent on a number of significant assumptions associated with each financial instrument or group of financial instruments, including estimates of discount rates, risks associated with specific financial instruments, estimates of future cash flows, and relevant available market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do not reflect the value of anticipated future business, premiums or discounts that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, or the tax consequences of realizing gains or losses on the sale of financial instruments.

 

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The following tables summarize the estimated fair values and recorded carrying amounts of the Company’s financial instruments at June 30, 2018 and December 31, 2017:

 

   June 30, 2018 
       Fair Value Measurements Using:     
           Significant         
       Quoted Prices In   Other   Significant     
       Active Markets for   Observable   Unobservable   Total 
   Carrying   Identical Assets   Inputs   Inputs   Fair 
(In thousands)  Amount   (Level 1)   (Level 2)   (Level 3)   Value 
Financial assets:                         
Cash and due from banks  $74,255   $74,255   $   $   $74,255 
Interest earning deposits with banks   31,636    31,636            31,636 
Securities available for sale   659,076        659,076        659,076 
Securities restricted   26,747    n/a    n/a    n/a    n/a 
Securities held to maturity   169,717        165,606        165,606 
Loans held for sale   6,338        6,852        6,852 
Loans, net   3,149,024            3,129,139    3,129,139 
Derivatives   8,743        8,743        8,743 
Accrued interest receivable   11,625        2,881    8,744    11,625 
                          
Financial liabilities:                         
Certificates of deposit   326,219        323,551        323,551 
Demand and other deposits   3,226,978    3,226,978            3,226,978 
Federal Home Loan Bank advances   300,863    10,000    284,531        294,531 
Repurchase agreements   1,437        1,437        1,437 
Subordinated debentures   78,711        74,913        74,913 
Derivatives   2,451        2,451        2,451 
Accrued interest payable   1,639        1,639        1,639 

 

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   December 31, 2017 
       Fair Value Measurements Using:     
           Significant         
       Quoted Prices In   Other   Significant     
       Active Markets for   Observable   Unobservable   Total 
   Carrying   Identical Assets   Inputs   Inputs   Fair 
(In thousands)  Amount   (Level 1)   (Level 2)   (Level 3)   Value 
Financial assets:                         
Cash and due from banks  $76,614   $76,614   $-   $-   $76,614 
Interest earning deposits with banks   18,133    18,133    -    -    18,133 
Securities available for sale   759,916    -    759,916    -    759,916 
Securities restricted   35,349     n/a      n/a      n/a     n/a 
Securities held to maturity   180,866    -    179,885    -    179,885 
Loans, net   3,071,045    -    -    3,010,023    3,010,023 
Derivatives   4,546    -    4,546    -    4,546 
Accrued interest receivable   11,652    -    3,211    8,441    11,652 
                          
Financial liabilities:                         
Certificates of deposit   222,364    -    220,775    -    220,775 
Demand and other deposits   3,112,179    3,112,179    -    -    3,112,179 
Federal funds purchased   50,000    50,000    -    -    50,000 
Federal Home Loan Bank advances   501,374    185,000    313,558    -    498,558 
Repurchase agreements   877    -    877    -    877 
Subordinated debentures   78,641    -    77,933    -    77,933 
Derivatives   1,823    -    1,823    -    1,823 
Accrued interest payable   1,574    -    1,574    -    1,574 

 

6. LOANS

 

The following table sets forth the major classifications of loans:

 

(In thousands)  June 30, 2018   December 31, 2017 
Commercial real estate mortgage loans  $1,327,947   $1,293,906 
Multi-family mortgage loans   570,670    595,280 
Residential real estate mortgage loans   510,303    464,264 
Commercial, industrial and agricultural loans   629,906    616,003 
Real estate construction and land loans   116,899    107,759 
Installment/consumer loans   20,051    21,041 
Total loans   3,175,776    3,098,253 
Net deferred loan costs and fees   4,900    4,499 
Total loans held for investment   3,180,676    3,102,752 
Allowance for loan losses   (31,652)   (31,707)
Loans, net  $3,149,024   $3,071,045 

 

In June 2015, the Company completed the acquisition of Community National Bank (“CNB”) resulting in the addition of $729.4 million of acquired loans recorded at their fair value. There were approximately $303.8 million and $359.4 million of acquired CNB loans remaining as of June 30, 2018 and December 31, 2017, respectively.

 

In February 2014, the Company completed the acquisition of FNBNY Bancorp, Inc. and its wholly owned subsidiary First National Bank of New York (collectively “FNBNY”) resulting in the addition of $89.7 million of acquired loans recorded at their fair value. There were approximately $13.2 million and $15.4 million of acquired FNBNY loans remaining as of June 30, 2018 and December 31, 2017, respectively.

 

Lending Risk

 

The principal business of the Bank is lending in commercial real estate mortgage loans, multi-family mortgage loans, residential real estate mortgage loans, construction loans, home equity loans, commercial, industrial and agricultural loans, land loans and consumer loans. The Bank considers its primary lending area to be Nassau and Suffolk Counties located on Long Island and the New York City

 

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boroughs. A substantial portion of the Bank’s loans is secured by real estate in these areas. Accordingly, the ultimate collectability of the loan portfolio is susceptible to changes in market and economic conditions in this region.

 

Commercial Real Estate Mortgages

 

Loans in this classification include income producing investment properties and owner occupied real estate used for business purposes. The underlying properties are located largely in the Bank’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 $250,000 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.

 

Multi-Family Mortgages

 

Loans in this classification include income producing residential investment properties of five or more families. The loans are usually made in areas with limited single-family residences generating high demand for these facilities.  Loans are made to established owners with a proven and demonstrable record of strong performance. Loans are secured by a first mortgage lien on the subject property with a loan to value ratio generally not exceeding 75%. Repayment is derived generally from the rental income generated from the property and may be supplemented by the owners’ personal cash flow. Credit risk arises with an increase in vacancy rates, property mismanagement and the predominance of non-recourse loans that are customary in the industry. 

 

Residential Real Estate Mortgages and Home Equity Loans

 

Loans in these classifications are generally secured by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, can have an effect on the credit quality in this loan class. The Bank generally does not originate loans with a loan-to-value ratio greater than 80% and does not grant subprime loans.

 

Commercial, Industrial and Agricultural Loans

 

Loans in this classification are made to businesses and include term loans, lines of credit, senior secured loans to corporations, equipment financing and taxi medallion loans. 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.

 

Real Estate Construction and Land Loans

 

Loans in this classification 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 primarily 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. To a lesser extent, this class includes commercial development projects that the Company finances, which in most cases require interest only during construction, and then convert to permanent financing. Construction delays, cost overruns, market conditions and the availability of permanent financing, to the extent such permanent financing is not being provided by the Bank, all affect the credit risk in this loan class.

 

Installment and Consumer Loans

 

Loans in this classification may be either secured or unsecured. Repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan, such as automobiles. Therefore, the overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this loan class.

 

Credit Quality Indicators

 

The Company categorizes loans into risk categories of pass, special mention, substandard and doubtful based on relevant information about the ability of borrowers to service their debt including repayment patterns, probable incurred losses, past loss experience, current economic conditions, and various types of concentrations of credit. Assigned risk rating grades are continuously updated as new information is obtained. Loans risk rated special mention; substandard and doubtful are reviewed on a quarterly basis. The Company uses the following definitions for risk rating grades:

 

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Pass: Loans classified as pass include current loans performing in accordance with contractual terms, pools of homogenous residential real estate and installment/consumer loans that are not individually risk rated and loans which do not exhibit certain risk factors that require greater than usual monitoring by management.

 

Special mention: Loans classified as special mention, while generally not delinquent, have 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 Bank's credit position at some future date.

 

Substandard: Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

 

Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard loan, and may also be in delinquency status and have defined weaknesses based on currently existing facts, conditions and values making collection or liquidation in full highly questionable and improbable.

 

The following tables represent loans categorized by class and internally assigned risk grades as of June 30, 2018 and December 31, 2017:

 

   June 30, 2018 
(In thousands)  Pass   Special Mention   Substandard   Doubtful   Total 
Commercial real estate:                         
Owner occupied  $464,708   $835   $18,109   $-   $483,652 
Non-owner occupied   841,338    -    2,957    -    844,295 
Multi-family   570,670    -    -    -    570,670 
Residential real estate:                         
Residential mortgage   432,515    8,558    861    -    441,934 
Home equity   66,433    1,235    701    -    68,369 
Commercial and industrial:                         
Secured   95,758    10,386    13,309    -    119,453 
Unsecured   491,851    12,422    6,180    -    510,453 
Real estate construction and land loans   116,588    -    311    -    116,899 
Installment/consumer loans   20,039    12    -         20,051 
Total loans  $3,099,900   $33,448   $42,428   $-   $3,175,776 

 

At June 30, 2018, there were $0.4 million and $0.8 million of acquired CNB loans included in the special mention and substandard grades, respectively, and $0.2 million and $0.3 million of acquired FNBNY loans included in the special mention and substandard grades, respectively.

 

   December 31, 2017 
(In thousands)  Pass   Special Mention   Substandard   Doubtful   Total 
Commercial real estate:                         
Owner occupied  $451,264   $1,796   $19,589   $-   $472,649 
Non-owner occupied   808,612    8,056    4,589    -    821,257 
Multi-family   595,280    -    -    -    595,280 
Residential real estate:                         
Residential mortgage   393,029    4,854    290    -    398,173 
Home equity   64,601    698    792    -    66,091 
Commercial and industrial:                         
Secured   86,116    12,637    13,560    -    112,313 
Unsecured   485,598    14,553    3,539    -    503,690 
Real estate construction and land loans   107,440    -    319    -    107,759 
Installment/consumer loans   21,020    16    5    -    21,041 
Total loans  $3,012,960   $42,610   $42,683   $-   $3,098,253 

 

At December 31, 2017, there were $0.4 million and $1.6 million of acquired CNB loans included in the special mention and substandard grades, respectively, and $0.2 million and $0.3 million of acquired FNBNY loans included in the special mention and substandard grades, respectively.

 

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Past Due and Nonaccrual Loans

 

The following tables represent the aging of the recorded investment in past due loans as of June 30, 2018 and December 31, 2017 by class of loans, as defined by FASB ASC 310-10:

 

   June 30, 2018 
(In thousands)  30-59
Days
Past
Due
   60-89
Days
Past
Due
   ≥90 Days
Past Due
and
Accruing
   Nonaccrual
Including 90
Days or
More
Past Due
   Total Past
Due and
Nonaccrual
   Current   Total Loans 
Commercial real estate:                                   
Owner occupied  $532   $-   $-   $382   $914   $482,738   $483,652 
Non-owner occupied   415    -    -    -    415    843,880    844,295 
Multi-family   -    -    -    -    -    570,670    570,670 
Residential real estate:                                   
Residential mortgages   1,231    -    619    41    1,891    440,043    441,934 
Home equity   458    557    289    161    1,465    66,904    68,369 
Commercial and industrial:                                   
Secured   141    41    26    573    781    118,672    119,453 
Unsecured   990    -    -    274    1,264    509,189    510,453 
Real estate construction and land loans   -    -    -    152    152    116,747    116,899 
Installment/consumer loans   1    25    -    16    42    20,009    20,051 
Total loans  $3,768   $623   $934   $1,599   $6,924   $3,168,852   $3,175,776 

 

   December 31, 2017 
(In thousands)  30-59
Days
Past Due
   60-89
Days Past
Due
   ≥90 Days
Past Due
and
Accruing
   Nonaccrual
Including 90
Days or More
Past Due
   Total Past
Due and
Nonaccrual
   Current   Total Loans 
Commercial real estate:                                   
Owner occupied  $284   $-   $175   $2,205   $2,664   $469,985   $472,649 
Non-owner occupied   -    -    1,163    -    1,163    820,094    821,257 
Multi-family   -    -    -    -    -    595,280    595,280 
Residential real estate:                                   
Residential mortgages   2,074    398    -    401    2,873    395,300    398,173 
Home equity   329    -    271    161    761    65,330    66,091 
Commercial and industrial:                                   
Secured   113    41    225    570    949    111,364    112,313 
Unsecured   18    35    -    3,618    3,671    500,019    503,690 
Real estate construction and land loans   -    281    -    -    281    107,478    107,759 
Installment/consumer loans   36    5    -    -    41    21,000    21,041 
Total loans  $2,854   $760   $1,834   $6,955   $12,403   $3,085,850   $3,098,253 

 

There were $1.3 million and $2.4 million of acquired loans that were 30-89 days past due at June 30, 2018 and December 31, 2017, respectively.

 

Impaired Loans

 

At June 30, 2018 and December 31, 2017, the Company had individually impaired loans as defined by FASB ASC No. 310, “Receivables” of $15.3 million and $22.5 million, respectively. The decrease in impaired loans was attributable to the payoff of certain troubled debt restructurings ("TDRs”), partially offset by new TDRs during the six months ended June 30, 2018, coupled with a decrease in non-accrual loans due to the charge-off of one loan and sales and payoffs. During the six months ended June 30, 2018, the Bank modified certain commercial and industrial TDRs totaling $6.8 million. For a loan to be considered impaired, management determines after review whether it is probable that the Bank will not be able to collect all amounts due according to the contractual terms of the loan agreement. Management applies its normal loan review procedures in making these judgments. Impaired loans include individually classified nonaccrual loans and TDRs. For impaired loans, the Bank evaluates the impairment of the loan in accordance with FASB ASC 310-10-35-22. Impairment is determined based on the present value of expected future cash flows discounted at the loan’s effective interest rate. For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of the collateral or present value of expected cash flows is compared to the carrying value to determine if any write-down or specific loan loss allowance allocation is required.

 

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The following tables set forth the recorded investment, unpaid principal balance and related allowance by class of loans at June 30, 2018 and December 31, 2017 for individually impaired loans. The tables also set forth the average recorded investment of individually impaired loans and interest income recognized while the loans were impaired during the three and six months ended June 30, 2018 and 2017:

 

   June 30, 2018   Three Months Ended
June 30, 2018
   Six Months Ended
June 30, 2018
 
(In thousands)  Recorded 
Investment
   Unpaid 
Principal Balance
   Related
Allocated
Allowance
   Average
Recorded
Investment
   Interest
Income
Recognized
   Average
Recorded
Investment
   Interest
Income
Recognized
 
With no related allowance recorded:                                   
Commercial real estate:                                   
Owner occupied  $287   $289   $-   $184   $-   $92   $- 
Non-owner occupied   1,162    1,162    -    1,163    7    1,168    8 
Residential real estate:                                   
Residential mortgages   -    -    -    -    -    -    - 
Home equity   -    -    -    -    -    -    - 
Commercial and industrial:                                   
Secured   8,685    9,332    -    8,702    58    8,723    114 
Unsecured   5,166    5,166    -    5,178    39    5,055    76 
Total with no related allowance recorded  $15,300   $15,949   $-   $15,227   $104   $15,038   $198 
                                    
With an allowance recorded:                                   
Commercial real estate:                                   
Owner occupied  $-   $-   $-   $-   $-   $-   $- 
Non-owner occupied   -    -    -    -    -    -    - 
Residential real estate:                                   
Residential mortgages   -    -    -    -    -    -    - 
Home equity   -    -    -    -    -    -    - 
Commercial and industrial:                                   
Secured   -    -    -    -    -    -    - 
Unsecured   -    -    -    -    -    -    - 
Total with an allowance recorded  $-   $-   $-   $-   $-   $-   $- 
                                    
Total:                                   
Commercial real estate:                                   
Owner occupied  $287   $289   $-   $184   $-   $92   $- 
Non-owner occupied   1,162    1,162    -    1,163    7    1,168    8 
Residential real estate:                                   
Residential mortgages   -    -    -    -    -    -    - 
Home equity   -    -    -    -    -    -    - 
Commercial and industrial:                                   
Secured   8,685    9,332    -    8,702    58    8,723    114 
Unsecured   5,166    5,166    -    5,178    39    5,055    76 
Total  $15,300   $15,949   $-   $15,227   $104   $15,038   $198 

 

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   December 31, 2017   Three Months Ended
June 30, 2017
   Six Months Ended
 June 30, 2017
 
(In thousands)  Recorded
Investment
   Unpaid
Principal
Balance
   Related
Allocated
Allowance
   Average
Recorded
Investment
   Interest
Income
Recognized
   Average
Recorded
Investment
   Interest
Income
Recognized
 
With no related allowance recorded:                                   
Commercial real estate:                                   
Owner occupied  $2,073   $2,073   $-   $302   $3   $309   $5 
Non-owner occupied   9,089    9,089    -    8,944    101    5,075    198 
Residential real estate:                                   
Residential mortgages   -    -    -    535    -    498    - 
Home equity   100    100    -    260    3    261    3 
Commercial and industrial:                                   
Secured   7,368    8,013    -    1,491    53    1,015    61 
Unsecured   2,154    2,408    -    400    3    396    8 
Total with no related allowance recorded  $20,784   $21,683   $-   $11,932   $163   $7,554   $275 
                                    
With an allowance recorded:                                   
Commercial real estate:                                   
Owner occupied  $-   $-   $-   $-   $-   $-   $- 
Non-owner occupied   -    -    -    -    -    -    - 
Residential real estate:                                   
Residential mortgages   -    -    -    -    -    -    - 
Home equity   -    -    -    -    -    -    - 
Commercial and industrial:                                   
Secured   -    -    -    405    -    203    - 
Unsecured   1,708    3,235    1,708    58    -    29    1 
Total with an allowance recorded  $1,708   $3,235   $1,708   $463   $-   $232   $1 
                                    
Total:                                   
Commercial real estate:                                   
Owner occupied  $2,073   $2,073   $-   $302   $3   $309   $5 
Non-owner occupied   9,089    9,089    -    8,944    101    5,075    198 
Residential real estate:                                   
Residential mortgages   -    -    -    535    -    498    - 
Home equity   100    100    -    260    3    261    3 
Commercial and industrial:                                   
Secured   7,368    8,013    -    1,896    53    1,218    61 
Unsecured   3,862    5,643    1,708    458    3    425    9 
Total  $22,492   $24,918   $1,708   $12,395   $163   $7,786   $276 

 

The Bank had one other real estate owned, consisting of $0.2 million at June 30, 2018 compared to none at December 31, 2017.

 

Troubled Debt Restructurings

 

The terms of certain loans were modified and are considered TDRs. The modification of the terms of such loans generally includes one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. The modification of these loans involved loans to borrowers who were experiencing financial difficulties.

 

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed to determine if that borrower is currently in payment default under any of its obligations or whether there is a probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.

 

During the six months ended June 30, 2018, the Bank modified eight commercial and industrial loans totaling $6.8 million as TDRs compared to two commercial real estate mortgage loans totaling $7.8 million and certain taxi medallion loans totaling $2.8 million as TDR’s for the six months ended June 30, 2017. These modifications did not result in a change to the recorded investment of the loans

 

 25 

 

 

and did not increase the allowance for loan losses for those periods. During the six months ended June 30, 2018, there were no charge-offs relating to TDRs and there were no loans modified as TDRs for which there was a payment default within twelve months following the modification. During the six months ended June 30, 2017, there were no charge-offs relating to TDRs and there were two loans modified as TDRs for which there was a payment default within twelve months following the modification. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

 

As of June 30, 2018 and December 31, 2017, the Company had $70 thousand and $5 thousand, respectively, of nonaccrual TDRs and $15.5 million and $16.7 million, respectively, of performing TDRs. At June 30, 2018 and December 31, 2017, nonaccrual TDRs were unsecured. The Bank has no commitment to lend additional funds to these debtors.

 

The terms of certain other loans were modified during the six months ended June 30, 2018 that did not meet the definition of a TDR. These loans have a total recorded investment at June 30, 2018 of $25.3 million. These loans were to borrowers who were not experiencing financial difficulties.

 

Purchased Credit Impaired Loans

 

Loans acquired in a business combination are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan losses is not recorded at the acquisition date.

 

At the acquisition date, the purchased credit impaired (“PCI”) loans acquired as part of the FNBNY acquisition had contractually required principal and interest payments receivable of $40.3 million, expected cash flows of $28.4 million, and a fair value (initial carrying amount) of $21.8 million. The difference between the contractually required principal and interest payments receivable and the expected cash flows of $11.9 million represented the non-accretable difference. The difference between the expected cash flows and fair value of $6.6 million represented the initial accretable yield. At June 30, 2018, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $2.6 million and $1.4 million, respectively, with a remaining non-accretable difference of $0.6 million. At December 31, 2017, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $4.0 million and $2.4 million, respectively, with a remaining non-accretable difference of $0.7 million.

 

At the acquisition date, the PCI loans acquired as part of the CNB acquisition had contractually required principal and interest payments receivable of $23.4 million, expected cash flows of $10.1 million, and a fair value (initial carrying amount) of $8.7 million. The difference between the contractually required principal and interest payments receivable and the expected cash flows of $13.3 million represented the non-accretable difference. The difference between the expected cash flows and fair value of $1.4 million represented the initial accretable yield. At June 30, 2018, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $1.4 million and $0.1 million, respectively, with a remaining non-accretable difference of $0.8 million. At December 31, 2017, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $7.6 million and $1.0 million, respectively, with a remaining non-accretable difference of $5.3 million.

 

The following table summarizes the activity in the accretable yield for the PCI loans:

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
(In thousands)  2018   2017   2018   2017 
Balance at beginning of period  $957   $5,333   $2,151   $6,915 
Accretion   (269)   (1,046)   (1,302)   (2,903)
Reclassification from (to) nonaccretable difference during the period   424    (321)   263    (46)
Accretable discount at end of period  $1,112   $3,966   $1,112   $3,966 

 

 26 

 

  

7. ALLOWANCE FOR LOAN LOSSES

 

The following tables represent the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment, as defined under FASB ASC 310-10, and based on impairment method as of June 30, 2018 and December 31, 2017. The tables include loans acquired from CNB and FNBNY.

 

   June 30, 2018 
(In thousands)  Commercial
Real Estate
Mortgage
Loans
   Multi-
Family
Loans
   Residential
Real Estate
Mortgage
Loans
   Commercial,
Industrial
and
Agricultural
Loans
   Real Estate
Construction
and Land
Loans
   Installment/
Consumer
Loans
   Total 
Allowance for loan losses:                                   
Individually  evaluated for impairment  $-   $-   $-   $-   $-   $-   $- 
Collectively  evaluated for impairment   11,206    2,466    4,237    12,358    1,263    122    31,652 
Loans acquired with deteriorated credit quality   -    -    -    -    -    -    - 
Total allowance for loan losses  $11,206   $2,466   $4,237   $12,358   $1,263   $122   $31,652 
                                    
Loans:                                   
Individually evaluated for impairment  $1,449   $-   $-   $13,851   $-   $-   $15,300 
Collectively evaluated for impairment   1,326,498    570,067    509,693    615,808    116,899    20,051    3,159,016 
Loans acquired with deteriorated credit quality   -    603    610    247    -    -    1,460 
Total loans  $1,327,947   $570,670   $510,303   $629,906   $116,899   $20,051   $3,175,776 

 

   December 31, 2017 
(In thousands)  Commercial
Real Estate
Mortgage
Loans
   Multi-
Family

Loans
   Residential
Real Estate
Mortgage
Loans
   Commercial,
Industrial 
and
Agricultural
Loans
   Real Estate
Construction
and Land
Loans
   Installment/
Consumer
Loans
   Total 
Allowance for loan losses:                                   
Individually  evaluated for impairment  $-   $-   $-   $1,708   $-   $-   $1,708 
Collectively  evaluated for impairment   11,048    4,521    2,438    11,130    740    122    29,999 
Loans acquired with deteriorated credit quality   -    -    -    -    -    -    - 
Total allowance for loan losses  $11,048   $4,521   $2,438   $12,838   $740   $122   $31,707 
                                    
Loans:                                   
Individually evaluated for impairment  $11,162   $-   $100   $11,230   $-   $-   $22,492 
Collectively evaluated for impairment   1,281,837    593,645    463,575    604,329    107,759    21,041    3,072,186 
Loans acquired with deteriorated credit quality   907    1,635    589    444    -    -    3,575 
Total loans  $1,293,906   $595,280   $464,264   $616,003   $107,759   $21,041   $3,098,253 

  

 27 

 

 

The following tables represent the changes in the allowance for loan losses for the three and six months ended June 30, 2018, and 2017, by portfolio segment, as defined under FASB ASC 310-10. The portfolio segments represent the categories that the Bank uses to determine its allowance for loan losses.

 

   Three Months Ended June 30, 2018 
               Commercial,             
   Commercial       Residential   Industrial   Real Estate         
   Real Estate   Multi-   Real Estate   and   Construction   Installment/     
   Mortgage   Family   Mortgage   Agricultural   and Land   Consumer     
(In thousands)  Loans   Loans   Loans   Loans   Loans   Loans   Total 
Allowance for loan losses:                                   
Beginning balance  $11,334   $3,002   $3,495   $14,055   $821   $105   $32,812 
Charge-offs   -    -    (24)   (1,708)   -    -    (1,732)
Recoveries   -    -    -    171    -    1    172 
Provision   (128)   (536)   766    (160)   442    16    400 
Ending balance  $11,206   $2,466   $4,237   $12,358   $1,263   $122   $31,652 

 

   Three Months Ended June 30, 2017 
               Commercial,             
   Commercial       Residential   Industrial   Real Estate         
   Real Estate   Multi-   Real Estate   and   Construction   Installment/     
   Mortgage   Family   Mortgage   Agricultural   and Land   Consumer     
(In thousands)  Loans   Loans   Loans   Loans   Loans   Loans   Total 
Allowance for loan losses:                                   
Beginning balance  $8,357   $6,480   $1,415   $9,198   $1,058   $110   $26,618 
Charge-offs   -    -    -    (33)   -    -    (33)
Recoveries   -    -    1    8    -    -    9 
Provision   2,222    (1,634)   70    797    (481)   (24)   950 
Ending balance  $10,579   $4,846   $1,486   $9,970   $577   $86   $27,544 

 

   Six Months Ended June 30, 2018 
               Commercial,             
   Commercial       Residential   Industrial   Real Estate         
   Real Estate   Multi-   Real Estate   and   Construction   Installment/     
   Mortgage   Family   Mortgage   Agricultural   and Land   Consumer     
(In thousands)  Loans   Loans   Loans   Loans   Loans   Loans   Total 
Allowance for loan losses:                                   
Beginning balance  $11,048   $4,521   $2,438   $12,838   $740   $122   $31,707 
Charge-offs   -    -    (24)   (1,708)   -    -    (1,732)
Recoveries   -    -    1    475    -    1    477 
Provision   158    (2,055)   1,822    753    523    (1)   1,200 
Ending balance  $11,206   $2,466   $4,237   $12,358   $1,263   $122   $31,652 

 

   Six Months Ended June 30, 2017 
               Commercial,             
   Commercial       Residential   Industrial   Real Estate         
   Real Estate   Multi-   Real Estate   and   Construction   Installment/     
   Mortgage   Family   Mortgage   Agricultural   and Land   Consumer     
(In thousands)  Loans   Loans   Loans   Loans   Loans   Loans   Total 
Allowance for loan losses:                                   
Beginning balance  $9,225   $6,264   $1,495   $7,837   $955   $128   $25,904 
Charge-offs   -    -    -    (128)   -    -    (128)
Recoveries   -    -    2    15    -    1    18 
Provision   1,354    (1,418)   (11)   2,246    (378)   (43)   1,750 
Ending balance  $10,579   $4,846   $1,486   $9,970   $577   $86   $27,544 

 

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8. PENSION AND POSTRETIREMENT PLANS

 

The Bank maintains a noncontributory pension plan covering all eligible employees. The Bank uses a December 31 measurement date for this plan in accordance with FASB ASC 715-30 “Compensation – Retirement Benefits – Defined Benefit Plans – Pension.” During 2012, the Company amended the pension plan by revising the formula for determining benefits effective January 1, 2013, except for certain grandfathered employees. Additionally, new employees hired on or after October 1, 2012 are not eligible for the pension plan.

 

During 2001, the Bank adopted the Bridgehampton National Bank Supplemental Executive Retirement Plan (“SERP”). As recommended by the Compensation Committee of the Board of Directors and approved by the full Board of Directors, the SERP provides benefits to certain employees, whose benefits under the pension plan are limited by the applicable provisions of the Internal Revenue Code. The benefit under the SERP is equal to the additional amount the employee would be entitled to under the Pension Plan and the 401(k) Plan in the absence of such Internal Revenue Code limitations. The assets of the SERP are held in a rabbi trust to maintain the tax-deferred status of the plan and are subject to the general, unsecured creditors of the Company. As a result, the assets of the rabbi trust are reflected on the Consolidated Balance Sheets of the Company.

 

There were no contributions to the pension plan during the six months ended June 30, 2018 and $2.2 million of contributions to the pension plan during the six months ended June 30, 2017. There were no contributions to the SERP during the six months ended June 30, 2018 and 2017, respectively. In accordance with the SERP, a retired executive received a distribution from the plan totaling $56 thousand during the six months ended June 30, 2018 and 2017, respectively.

 

The Company’s funding policy with respect to its benefit plans is to contribute at least the minimum amounts required by applicable laws and regulations.

 

As described in Note 14. Recent Accounting Pronouncements, during the first quarter of 2018, the Company adopted ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The Company adopted the guidance in the first quarter of 2018 using the practical expedient that permits an employer to use the amounts disclosed in its pension and postretirement benefit plan note for prior comparative periods as the estimation basis for applying retrospective presentation adjustments. The adoption of this Update resulted in the reclassification of $195 thousand and $391 thousand of net periodic benefit credit components other than service cost from salaries and employee benefits expense to other operating expense for the three and six months ended June 30, 2017, respectively. The Company’s service cost component is reported in the Company’s income statement in salaries and employee benefits, which is the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. All other components of net periodic benefit credit are reported in the other operating expenses income statement line. The change in presentation did not impact the Company’s operating results or financial condition.

 

The following table sets forth the components of net periodic benefit (credit) cost:

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   Pension Benefits   SERP Benefits   Pension Benefits   SERP Benefits 
(In thousands)  2018   2017   2018   2017   2018   2017   2018   2017 
Service cost  $325   $292   $72   $52   $650   $585   $145   $105 
Interest cost   198    186    31    26    395    370    63    52 
Expected return on plan assets   (625)   (520)   -    -    (1,250)   (1,040)   -    - 
Amortization of net loss   82    112    31    13    165    225    61    26 
Amortization of prior service credit   (19)   (19)   -    -    (38)   (38)   -    - 
Amortization of transition obligation   -    -    1    7    -    -    2    14 
Net periodic benefit (credit) cost  $(39)  $51   $135   $98   $(78)  $102   $271   $197 

 

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9. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

 

Securities sold under agreements to repurchase totaled $1.4 million at June 30, 2018 and $0.9 million at December 31, 2017. The repurchase agreements were collateralized by investment securities, of which 18% were U.S. GSE residential collateralized mortgage obligations and 82% were U.S. GSE residential mortgage-backed securities with a carrying amount of $2.4 million at June 30, 2018 and 52% were U.S. GSE residential collateralized mortgage obligations and 48% were U.S. GSE residential mortgage-backed securities with a carrying amount of $1.8 million at December 31, 2017.

 

Securities sold under agreements to repurchase are financing arrangements with $1.4 million maturing during the third quarter of 2018. At maturity, the securities underlying the agreements are returned to the Company. The primary risk associated with these secured borrowings is the requirement to pledge a market value based balance of collateral in excess of the borrowed amount. The excess collateral pledged represents an unsecured exposure to the lending counterparty. As the market value of the collateral changes, both through changes in discount rates and spreads as well as related cash flows, additional collateral may need to be pledged. In accordance with the Company’s policies, eligible counterparties are defined and monitored to minimize exposure.

 

10. FEDERAL HOME LOAN BANK ADVANCES

 

The following tables set forth the contractual maturities and weighted average interest rates of FHLB advances over the next two years at June 30, 2018 and December 31, 2017:

 

   June 30, 2018 
(Dollars in thousands)
Contractual Maturity
  Amount   Weighted
Average Rate
 
Overnight  $10,000    2.08%
           
2018   290,000    2.22%
2019   863    0.81%
    290,863    2.22%
Total FHLB advances  $300,863    2.21%

 

   December 31, 2017 

(Dollars in thousands)

Contractual Maturity

  Amount   Weighted
Average Rate
 
Overnight  $185,000    1.53%
           
2018   315,083    1.59%
2019   1,291    0.94%
    316,374    1.59%
Total FHLB advances  $501,374    1.57%

 

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. The advances were collateralized by $1.3 billion and $1.2 billion of residential and commercial mortgage loans under a blanket lien arrangement at June 30, 2018 and December 31, 2017, respectively. Based on this collateral and the Company’s holdings of FHLB stock, the Company is eligible to borrow up to a total of $1.3 billion at June 30, 2018.

 

11. BORROWED FUNDS

 

Subordinated Debentures

 

In September 2015, the Company issued $80.0 million in aggregate principal amount of fixed-to-floating rate subordinated debentures. $40.0 million of the subordinated debentures are callable at par after five years, have a stated maturity of September 30, 2025 and bear interest at a fixed annual rate of 5.25% per year, from and including September 21, 2015 until but excluding September 30, 2020. From and including September 30, 2020 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 360 basis points. The remaining $40.0 million of the subordinated debentures are callable at par after ten years, have a stated maturity of September 30, 2030 and bear interest at a fixed annual rate of 5.75% per year, from and including September 21, 2015 until but excluding September 30, 2025. From and including September 30, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 345 basis points. The subordinated debentures totaled $78.7 million and $78.6 million at June 30, 2018 and December 31, 2017, respectively.

 

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The subordinated debentures are included in tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

 

Junior Subordinated Debentures

 

In December 2009, the Company completed the private placement of $16.0 million in aggregate liquidation amount of 8.50% cumulative convertible trust preferred securities (“TPS”), through its subsidiary, Bridge Statutory Capital Trust II (the “Trust”). The TPS had a liquidation amount of $1,000 per security, were convertible into the Company’s common stock, at a modified effective conversion price of $29 per share, matured in 2039 and were callable by the Company at par after September 30, 2014.

 

The Company issued $16.0 million of junior subordinated debentures (the “Debentures”) to the Trust in exchange for ownership of all of the common securities of the Trust and the proceeds of the TPS sold by the Trust. In accordance with accounting guidance, the Trust was not consolidated in the Company’s financial statements, but rather the Debentures were shown as a liability. The Debentures had the same interest rate, maturity and prepayment provisions as the TPS.

 

On December 15, 2016, the Company notified holders of the $15.8 million in outstanding TPS of the full redemption of the TPS on January 18, 2017. The redemption price equaled the liquidation amount, plus accrued but unpaid interest until but not including the redemption date. TPS not converted into shares of the Company’s common stock on or prior to January 17, 2017 were redeemed as of January 18, 2017. 15,450 shares of TPS with a liquidation amount of $15.5 million were converted into 532,740 shares of the Company’s common stock, which includes 100 shares of TPS with a liquidation amount of $100,000 which were converted into 3,448 shares of the Company’s common stock on December 28, 2016. The remaining 350 shares of TPS with a liquidation amount of $350,000 were redeemed on January 18, 2017. The Trust was cancelled effective April 24, 2017.

 

12. DERIVATIVES

 

Cash Flow Hedges of Interest Rate Risk

 

As part of its asset liability management, the Company utilizes interest rate swap agreements to help manage its interest rate risk position. The notional amount of the interest rate swap does not represent the amount exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

 

Interest rate swaps with notional amounts totaling $290.0 million at June 30, 2018 and December 31, 2017, were designated as cash flow hedges of certain FHLB advances. The swaps were determined to be fully effective during the periods presented and therefore no amount of ineffectiveness has been included in net income. The aggregate fair value of the swaps is recorded in other assets/ (other liabilities), with changes in fair value recorded in other comprehensive income (loss). The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining term of the swaps.

 

The following table summarizes information about the interest rate swaps designated as cash flow hedges at June 30, 2018 and December 31, 2017:

 

(Dollars in thousands)  June 30, 2018   December 31, 2017 
Notional amounts  $290,000   $290,000 
Weighted average pay rates   1.78%   1.78%
Weighted average receive rates   2.33%   1.61%
Weighted average maturity   2.14 years    2.64 years 

 

Interest income recorded on these swap transactions totaled $344 thousand and $279 thousand for the three and six months ended June 30, 2018 and interest expense recorded on these swap transactions totaled $459 thousand and $734 thousand for the three and six months ended June 30, 2017, respectively, and is reported as a component of interest expense on FHLB advances. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income/expense as interest payments are made/received on the Company’s variable-rate assets/liabilities. During the six months ended June 30, 2018, the Company had $279 thousand of reclassifications as a reduction to interest expense. During the next twelve months, the Company estimates that $1.9 million will be reclassified as a decrease in interest expense.

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The following table presents the net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income relating to the cash flow derivative instruments for the three and six months ended June 30, 2018 and 2017:

 

           Amount of loss 
   Amount of gain (loss)   Amount of gain (loss)   recognized in other 
(In thousands)  recognized in OCI   reclassified from OCI   non-interest income 
Interest rate contracts  (Effective Portion)   to interest expense   (Ineffective Portion) 
Three months ended June 30, 2018  $1,020   $344   $- 
Six months ended June 30, 2018  $3,847   $279   $- 
Three months ended June 30, 2017  $(1,385)  $(459)  $- 
Six months ended June 30, 2017  $(1,360)  $(734)  $- 

 

The following table reflects the cash flow hedges included in the Consolidated Balance Sheets at the dates indicated:

 

   June 30, 2018   December 31, 2017 
       Fair   Fair       Fair   Fair 
(In thousands)  Notional   Value   Value   Notional   Value   Value 
Included in other assets/(liabilities):  Amount   Asset   Liability   Amount   Asset   Liability 
Interest rate swaps related to FHLB advances  $290,000   $6,324   $(32)  $290,000   $3,133   $(410)

 

Non-Designated Hedges

 

Derivatives not designated as hedges may be used to manage the Company’s exposure to interest rate movements or to provide service to customers but do not meet the requirements for hedge accounting under U.S. GAAP. The Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Company executes with a third party in order to minimize the net risk exposure resulting from such transactions. These interest-rate swap agreements do not qualify for hedge accounting treatment, and therefore changes in fair value are reported in current period earnings.

 

The following table presents summary information about these interest rate swaps at June 30, 2018 and December 31, 2017:

 

(Dollars in thousands)  June 30, 2018   December 31, 2017 
Notional amounts  $174,997   $147,967 
Weighted average pay rates   4.32%   3.96%
Weighted average receive rates   4.32%   3.96%
Weighted average maturity   11.92 years    12.37 years 
Fair value of combined interest rate swaps  $-   $- 

 

Credit-Risk-Related Contingent Features

 

As of June 30, 2018, the termination value of derivatives in a net asset position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $8.5 million, while there were no derivatives in a net liability position. The Company has minimum collateral posting thresholds with certain of its derivative counterparties. If the termination value of derivatives is a net asset position, the counterparty is required to post collateral against its obligations to the Company under the agreements. However, if the termination value of derivatives is a net liability position, the Company is required to post collateral to the counterparty. At June 30, 2018, the Company received collateral of $8.3 million from its counterparties under the agreements in a net asset position and did not post collateral. If the Company had breached any of these provisions at June 30, 2018, it could have been required to settle its obligations under the agreements at the termination value.

 

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13. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

 

The following table summarizes the components of other comprehensive (loss) income and related income tax effects:

 

   Three Months Ended   Six Months Ended 
(In thousands)  June 30, 2018   June 30, 2017   June 30, 2018   June 30, 2017 
Unrealized holding (losses) gains on available for sale securities  $(4,231)  $2,595   $(12,818)  $4,211 
Reclassification adjustment for losses realized in income   7,921    -    7,921    - 
Income tax effect   (1,074)   (1,062)   1,425    (1,668)
Net change in unrealized gains (losses) on available for sale securities   2,616    1,533    (3,472)   2,543 
                     
Reclassification adjustment for amortization realized in income   95    113    190    227 
Income tax effect   (27)   (47)   (55)   (64)
Net change in post-retirement obligation   68    66    135    163 
                     
Change in fair value of derivatives used for cash flow hedges   1,020    (1,385)   3,847    (1,360)
Reclassification adjustment for (gains) losses realized in income   (344)   459    (279)   734 
Income tax effect   (197)   379    (1,038)   253 
Net change in unrealized gain (loss) on cash flow hedges   479    (547)   2,530    (373)
                     
Other comprehensive income (loss)  $3,163   $1,052   $(807)  $2,333 

 

The following is a summary of the accumulated other comprehensive loss balances, net of income taxes, at the dates indicated:

 

       Other Comprehensive     
(In thousands)  December 31, 2017   Income   June 30, 2018 
Unrealized losses on available for sale securities  $(11,337)  $(3,472)  $(14,809)
Unrealized (losses) gain on pension benefits   (5,533)   135    (5,398)
Unrealized gains on cash flow hedges   1,931    2,530    4,461 
Accumulated other comprehensive loss, net of income taxes  $(14,939)  $(807)  $(15,746)

 

The following represents the reclassifications out of accumulated other comprehensive (loss) income for the three and six months ended June 30, 2018 and 2017:

 

   Three Months Ended   Six Months Ended   Affected Line Item
   June 30,   June 30,   June 30,   June 30,   in the Consolidated
(In thousands)  2018   2017   2018   2017   Statements of Income
Realized losses on sale of available for sale securities  $(7,921)  $-   $(7,921)  $-   Net securities losses
Amortization of defined benefit pension plan and defined benefit plan component of the SERP:                       
Prior service credit   19    19    38    38   Other operating expenses
Transition obligation   (1)   (7)   (2)   (14)  Other operating expenses
Actuarial losses   (113)   (125)   (226)   (251)  Other operating expenses
Realized gains (losses) on cash flow hedges   344    (459)   279    (734)  Interest expense
Total reclassifications, before income tax  $(7,672)  $(572)  $(7,832)  $(961)   
Income tax benefit   2,231    234    2,278    393   Income tax expense
Total reclassifications, net of income tax  $(5,441)  $(338)  $(5,554)  $(568)   

 

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14. RECENT ACCOUNTING PRONOUNCEMENTS

 

Adoption of Accounting Standards Effective in 2018

 

Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606)

On January 1, 2018, the Company adopted ASU 2014-09 and all subsequent amendments to the ASU (collectively, Accounting Standards Codification 606 (“ASC 606”), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as other real estate owned. These amendments are effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The majority of the Company’s revenues come from interest income and other sources that are outside the scope of ASC 606. The Company’s services that fall within the scope of ASC 606 are presented in services charges and other fees within non-interest income and are recognized as revenue as the Company satisfies its obligations to its customers.

 

The Company adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts continue to be reported in accordance with legacy GAAP. The adoption of ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment to retained earnings was recorded at January 1, 2018.

 

The Company evaluated its customer contracts, which are typically day-to-day contracts where each day represents a renewal of the contract. The Company’s revenue streams accounted for under ASC 606 primarily consist of service charges on deposit accounts and fees for other customer services. The Company’s revenues from transaction-based fees, such as overdraft fees, ATM use fees, stop payment charges, and ACH fees are recognized at the time the transaction is executed, which is the point in time the Company fulfills the customer’s request and satisfies the performance obligation. Account maintenance fees, which relate primarily to monthly service charges, are earned over the course of the month, representing the same period over which the Company satisfies the performance obligation. The Company earns revenues from interchange fees from debit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions are recognized daily, concurrently with the services provided to the cardholder. As a result of the Company’s assessment ASC 606, there is no change in the amount and timing of revenue recognized in the six months ended June 30, 2018.

 

ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB amended existing guidance that requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendments require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). ASU 2016-01 eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These amendments are effective for public business entities for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years. The adoption of this standard did not have a material effect on the Company’s operating results or financial condition; however, it did impact the fair value disclosures included in Note 5.

 

ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB amended existing guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit costs are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The line item used in the income statement to present the other components of net benefit cost must be disclosed. Additionally, only the service cost component of net benefit cost is eligible for capitalization, if applicable. For public business entities, like the Company, ASU 2017-07 was effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The amendment requires disclosure that the practical expedient was used. The Company adopted the guidance in the first quarter of 2018 using the practical expedient for prior comparative periods. The change in presentation did not impact the Company’s operating results

 

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or financial condition. Refer to Note 8. Pension and Postretirement Plans for further details of the components of net periodic benefit cost.

 

ASU 2017-09, Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting

In May 2017, the FASB provided guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in ASU 2017-09. The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The amendments should be applied prospectively to an award modified on or after the adoption date. The adoption of ASU 2017-09 did not impact the Company’s Consolidated Financial Statements.

 

Standards Effective in 2019

 

ASU 2016-02, Leases (Topic 842)

In February 2016, the FASB amended existing guidance that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, the lessor accounting model and Topic 606, Revenue from Contracts with Customers. ASU 2016-02 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently evaluating the impact of ASU 2016-02 on the consolidated financial statements. Based on leases outstanding at June 30, 2018, the Company does not expect the updates to have a material impact on the income statement, but does anticipate the adoption of ASU 2016-02 will result in an increase in the Company’s Consolidated Balance Sheets as a result of recognizing right-of-use assets and lease liabilities.

 

ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments also simplify the application of the hedge accounting guidance. The amendments in the Update better align an entity’s risk management activities and financial reporting for hedging relationships through changes in both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. While the Company continues to assess all potential impacts of the standard, ASU 2017-12 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

 

Standards Effective in 2020

 

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326)

In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held-to maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. For public business entities that meet the definition of an SEC filer, like the Company, the standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may early adopt for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company plans to adopt ASU 2016-13 in the first quarter of 2020 using the required modified retrospective method with a cumulative effect adjustment as of the beginning of the reporting period. The Company has created a cross-functional committee responsible for evaluating the impact of adopting ASU 2016-13, assessing data and system needs, and implementing required changes to loss estimation methods under the CECL model. The Company cannot yet determine the overall impact this guidance will have on the Company’s Consolidated Financial Statements.

 

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ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

In January 2017, the FASB amended existing guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments are effective for public business entities that are an SEC filer, like the Company, for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments should be applied prospectively. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments. The adoption of ASU 2017-04 is not expected to have a material effect on the Company’s Consolidated Financial Statements.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Private Securities Litigation Reform Act Safe Harbor Statement

 

This report may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements, in addition to historical information, which involve risk and uncertainties, are based on the beliefs, assumptions and expectations of management of the Company. Words such as “expects,” “believes,” “should,” “plans,” “anticipates,” “will,” “potential,” “could,” “intend,” “may,” “outlook,” “predict,” “project,” “would,” “estimated,” “assumes,” “likely,” and variations of such similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements include, but are not limited to, possible or assumed estimates with respect to the financial condition, expected or anticipated revenue, and results of operations and business of the Company, including earnings growth; revenue growth in retail banking, lending and other areas; origination volume in the consumer, commercial and other lending businesses; current and future capital management programs; non-interest income levels, including fees from the title insurance subsidiary and banking services as well as product sales; tangible capital generation; market share; expense levels; and other business operations and strategies. The Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

 

Factors that could cause future results to vary from current management expectations include, but are not limited to, changing economic conditions; legislative and regulatory changes, including increases in FDIC insurance rates; monetary and fiscal policies of the federal government; changes in tax policies; rates and regulations of federal, state and local tax authorities; changes in interest rates; deposit flows; the cost of funds; demand for loan products; demand for financial services; competition; the Company’s ability to successfully integrate acquired entities; changes in the quality and composition of the Bank’s loan and investment portfolios; changes in management’s business strategies; changes in accounting principles, policies or guidelines; changes in real estate values; expanded regulatory requirements as a result of the Dodd-Frank Act, which could adversely affect operating results; and the “Risk Factors” discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The forward-looking statements are made as of the date of this report, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

 

Overview

 

Who The Company Is and How It Generates Income

 

Bridge Bancorp, Inc., a New York corporation, is a bank holding company formed in 1989. On a parent-only basis, the Company has had minimal results of operations. The Company is dependent on dividends from its wholly owned subsidiary, BNB Bank, its own earnings, additional capital raised, and borrowings as sources of funds. The information in this report reflects principally the financial condition and results of operations of the Bank. The Bank’s results of operations are primarily dependent on its net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowings. The Bank also generates non-interest income, such as fee income on deposit accounts and merchant credit and debit card processing programs, investment services, income from its title insurance subsidiary, and net gains on sales of securities and loans. The level of its non-interest expenses, such as salaries and benefits, occupancy and equipment costs, other general and administrative expenses, expenses from its title insurance subsidiary, and income tax expense, further affects the Bank’s net income. Certain reclassifications have been made to prior year amounts and the related discussion and analysis to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders’ equity.

 

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Principal Products and Services and Locations of Operations

 

The Bank was established in 1910 and is headquartered in Bridgehampton, New York. During 2017, the Bank conducted a branch rationalization study analyzing branch performance and market opportunities. As a result of the study, and in an effort to increase efficiency and remove branch redundancy, the Bank closed six locations in the first quarter of 2018. The branches closed in Suffolk County, New York are located in Cutchogue, Center Moriches, and Melville, and the branches closed in Nassau County, New York are located in Massapequa, New Hyde Park and Hewlett. The Bank now operates thirty-eight branches in its primary market areas of Suffolk and Nassau Counties on Long Island and the New York City boroughs, including thirty-five in Suffolk and Nassau Counties, two in Queens and one in Manhattan. For over a century, the Bank has maintained its focus on building customer relationships in its market area. The mission of the Bank is to grow through the provision of exceptional service to its customers, its employees, and the community. The Bank strives to achieve excellence in financial performance and build long-term shareholder value. The Bank engages in full service commercial and consumer banking business, including accepting time, savings and demand deposits from the consumers, businesses and local municipalities in its market area. These deposits, together with funds generated from operations and borrowings, are invested primarily in: (1) commercial real estate loans; (2) multi-family mortgage loans; (3) residential mortgage loans; (4) secured and unsecured commercial and consumer loans; (5) home equity loans; (6) construction loans; (7) FHLB, FNMA, GNMA and FHLMC mortgage-backed securities, collateralized mortgage obligations and other asset backed securities; (8) New York State and local municipal obligations; and (9) U.S. government sponsored entity (“U.S. GSE”) securities. The Bank also offers the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) programs, providing multi-millions of dollars of Federal Deposit Insurance Corporation (“FDIC”) insurance on deposits to its customers. In addition, the Bank offers merchant credit and debit card processing, automated teller machines, cash management services, lockbox processing, online banking services, remote deposit capture, safe deposit boxes, and individual retirement accounts as well as investment services through Bridge Financial Services, which offers a full range of investment products and services through a third party broker dealer. Through its title insurance abstract subsidiary, the Bank acts as a broker for title insurance services. The Bank’s customer base is comprised principally of small businesses, municipal relationships and consumer relationships.

 

Significant Recent Events

 

Balance Sheet Restructure

 

In the second quarter 2018, the Company undertook an initiative to improve corporate performance along many metrics including yield, liquidity, and capital. The Company evaluated the structure and composition of its assets and liabilities and decided it was prudent to execute a restructuring strategy. The Company restructured $190 million of its investment portfolio, selling lower yielding bonds and recognizing losses already reflected in capital through other comprehensive income, and reinvested the proceeds in bonds with yields 150 basis points higher, but with the same duration. The Company expects this will have a positive impact on its net interest margin and earnings per share going forward. The Company estimates that the time to recover the loss to be just over three years. In connection with the balance sheet restructuring, the Company reduced the investment portfolio by $40 million and paid down its higher cost borrowings. Additionally, the Company continued to actively manage its loan portfolio and commercial real estate concentrations by selling $39.8 million of commercial real estate and multi-family loans at a gain of $0.3 million in the second quarter 2018.

 

Quarterly Highlights

 

·Net income for the second quarter of 2018 was $6.7 million, or $0.34 per diluted share, inclusive of pre-tax net securities losses of $7.9 million, or $0.31 per diluted share after tax, related to the Company’s balance sheet restructure.

 

·Net interest income increased to $33.9 million for the second quarter of 2018 compared to $30.8 million in 2017.

 

·Net interest margin was 3.30% the second quarter of 2018 compared to 3.25% for the 2017 period.

 

·Loans held for investment at June 30, 2018 totaled $3.2 billion, an increase of $77.9 million, or 2.5%, from December 31, 2017 and an increase of $384.4 million, or 13.7%, over June 30, 2017.

 

·Total assets of $4.4 billion at June 30, 2018, decreased $15.2 million compared to December 31, 2017 and increased $193.3 million compared to June 30, 2017.

 

·Deposits of $3.6 billion at June 30, 2018, increased $218.7 million over December 31, 2017 and increased $493.6 million compared to June 30, 2017.

 

·Allowance for loan losses was 1.00% of loans at June 30, 2018 compared to 1.02% at December 31, 2017.

 

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·A cash dividend of $0.23 per share was declared in July 2018 for the second quarter.

 

Challenges and Opportunities

 

In June 2018, in view of realized and expected labor market conditions and inflation, the Federal Open Market Committee (“FOMC”) decided to raise the target range for the federal funds rate to 1.75 to 2.00 percent. The FOMC’s stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to two percent inflation. In determining the timing and size of future adjustments to the target range for the federal funds rate, the FOMC will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric two percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

 

Interest rates have been at or near historic lows for an extended period of time. Growth and service strategies have the potential to offset the compression on the net interest margin with volume as the customer base grows through expanding the Bank’s footprint, while maintaining and developing existing relationships. Since 2010, the Bank has opened fourteen branches, including one in September 2017 in Astoria, New York, two in April 2017 in Riverhead and East Moriches, New York, and one in March 2017 in Sag Harbor, New York. The Bank has also grown through acquisitions including the June 2015 acquisition of Community National Bank (“CNB”), the February 2014 acquisition of First National Bank of New York (“FNBNY”), and the May 2011 acquisition of Hamptons State Bank (“HSB”). Management will continue to seek opportunities to expand its reach into other contiguous markets by network expansion, or through the addition of professionals with established customer relationships. Recent and pending acquisitions of local competitors may also provide additional growth opportunities.

 

The Bank continues to face challenges associated with ever-increasing regulations and the current low interest rate environment. Over time, additional rate increases should provide some relief to net interest margin compression as new loans are funded and securities are reinvested at higher rates. However, in the short term, the fair value of available for sale securities declines when rates increase, resulting in net unrealized losses and a reduction in stockholders’ equity. Strategies for managing higher rates have a cost. Extending liability maturities or shortening the term of assets increases interest expense and reduces interest income. An additional method for managing in a higher rate environment is to grow stable core deposits, requiring continued investment in people, technology and branches. Over time, the costs of these strategies should provide long-term benefits.

 

The key to delivering on the Company’s mission is combining its expanding branch network, improving technology, and experienced professionals with the critical element of local decision-making. The successful expansion of the franchise’s geographic reach continues to deliver the desired results: increasing deposits and loans, and generating higher levels of revenue and income.

 

Corporate objectives include: leveraging the Bank’s branch network to build customer relationships and grow loans and deposits; focusing on opportunities and processes that continue to enhance the customer experience at the Bank; improving operational efficiencies and prudent management of non-interest expense; and maximizing non-interest income. Management believes there remain opportunities to grow its franchise and that continued investments to generate core funding, quality loans and new sources of revenue remain keys to continue creating long-term shareholder value. The ability to attract, retain, train and cultivate employees at all levels of the Company remains significant to meeting corporate objectives. The Company has made great progress toward the achievement of these objectives, and avoided many of the problems facing other financial institutions. This is a result of maintaining discipline in its underwriting, expansion strategies, investing and general business practices. The Company has capitalized on opportunities presented by the market and diligently seeks opportunities to grow and strengthen the franchise. The Company recognizes the potential risks of the current economic environment and will monitor the impact of market events as management evaluates loans and investments and considers growth initiatives. Management and the Board have built a solid foundation for growth and the Company is positioned to adapt to anticipated changes in the industry resulting from new regulations and legislative initiatives.

 

Critical Accounting Policies

 

Allowance for Loan Losses

 

Management considers the accounting policy on the allowance for loan losses to be the most critical and requires complex management judgment. The judgments made regarding the allowance for loan losses can have a material effect on the results of operations of the Company.

 

The allowance for loan losses is established and maintained through a provision for loan losses based on probable incurred losses in the Bank’s loan portfolio. Management evaluates the adequacy of the allowance on a quarterly basis. The allowance is comprised of both

 

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individual valuation allowances and loan pool valuation allowances. The Bank monitors its entire loan portfolio on a regular basis, with consideration given to detailed analysis of classified loans, repayment patterns, probable incurred losses, past loss experience, current economic conditions, and various types of concentrations of credit. Additions to the allowance are charged to expense and realized losses, net of recoveries, are charged to the allowance.

 

Individual valuation allowances are established in connection with specific loan reviews and the asset classification process including the procedures for impairment testing under FASB ASC No. 310, “Receivables”. Such valuation, which includes a review of loans for which full collectability in accordance with contractual terms is not reasonably assured, considers the estimated fair value of the underlying collateral less the costs to sell, if any, or the present value of expected future cash flows, or the loan’s observable market value. Any shortfall that exists from this analysis results in a specific allowance for the loan. Pursuant to the Company’s policy, loan losses must be charged-off in the period the loans, or portions thereof, are deemed uncollectible. Assumptions and judgments by management, in conjunction with outside sources, are used to determine whether full collectability of a loan is not reasonably assured. These assumptions and judgments are also used to determine the estimates of the fair value of the underlying collateral or the present value of expected future cash flows or the loan’s observable market value. Individual valuation allowances could differ materially as a result of changes in these assumptions and judgments. Individual loan analyses are periodically performed on specific loans considered impaired. The results of the individual valuation allowances are aggregated and included in the overall allowance for loan losses.

 

Loan pool valuation allowances represent loss allowances that have been established to recognize the inherent risks associated with the Bank’s lending activities, but which, unlike individual allowances, have not been allocated to particular problem assets. Pool evaluations are broken down into loans with homogenous characteristics by loan type and include commercial real estate mortgages, owner and non-owner occupied; multi-family mortgage loans; residential real estate mortgages; home equity loans; commercial, industrial and agricultural loans, secured and unsecured; real estate construction and land loans; and consumer loans. Management considers a variety of factors in determining the adequacy of the valuation allowance and has developed a range of valuation allowances necessary to adequately provide for probable incurred losses in each pool of loans. Management considers the Bank’s charge-off history along with the growth in the portfolio as well as the Bank’s credit administration and asset management philosophies and procedures when determining the allowances for each pool. In addition, management evaluates and considers the credit’s risk rating, which includes management’s evaluation of: cash flow, collateral, guarantor support, financial disclosures, industry trends and strength of borrowers’ management, the impact that economic and market conditions may have on the portfolio as well as known and inherent risks in the portfolio. Finally, management evaluates and considers the allowance ratios and coverage percentages of both peer group and regulatory agency data. These evaluations are inherently subjective because, even though they are based on objective data, it is management’s interpretation of that data that determines the amount of the appropriate allowance. If the evaluations prove to be incorrect, the allowance for loan losses may not be sufficient to cover losses inherent in the loan portfolio, resulting in additions to the allowance for loan losses.

 

For PCI loans, a valuation allowance is established when it is probable that the Bank will be unable to collect all the cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimate after acquisition. A specific allowance is established when subsequent evaluations of expected cash flows from PCI loans reflect a decrease in those estimates. The allowance established represents the excess of the recorded investment in those loans over the present value of the currently estimated future cash flow, discounted at the last effective accounting yield.

 

The Bank uses assumptions and methodologies that are relevant to estimating the level of impairment and probable losses in the loan portfolio. To the extent that the data supporting such assumptions has limitations, management's judgment and experience play a key role in recording the allowance estimates. Additions to the allowance for loan losses are made by provisions charged to earnings. Furthermore, an improvement in the expected cash flows related to PCI loans would result in a reduction of the required specific allowance with a corresponding credit to the provision.

 

The Credit Risk Management Committee (“CRMC”) is comprised of Bank management. The adequacy of the allowance is analyzed quarterly, with any adjustment to a level deemed appropriate by the CRMC, based on its risk assessment of the entire portfolio. Each quarter, members of the CRMC meet with the Credit Risk Committee of the Board to review credit risk trends and the adequacy of the allowance for loan losses. Based on the CRMC’s review of the classified loans, delinquency charge-off trends, and the overall allowance levels as they relate to the entire loan portfolio at June 30, 2018 and December 31, 2017, management believes the allowance for loan losses has been established at levels sufficient to cover the probable incurred losses in the Bank’s loan portfolio. Future additions or reductions to the allowance may be necessary based on changes in economic, market or other conditions. Changes in estimates could result in a material change in the allowance. In addition, various regulatory agencies, as an integral part of the examination process, periodically review the allowance for loan losses. Such agencies may require the Bank to recognize adjustments to the allowance based on their judgments of the information available to them at the time of their examination.

 

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Net Income

 

Net income for the three months ended June 30, 2018 was $6.7 million and $0.34 per diluted share as compared to $8.8 million and $0.45 per diluted share for the same period in 2017.   Changes in net income for the three months ended June 30, 2018 compared to June 30, 2017 include: (i) a $3.1 million, or 10.2%, increase in net interest income; (ii) a $7.1 million decrease in non-interest income (loss); (iii) a $1.5 million, or 7.1%, increase in non-interest expense; and (iv) a $2.8 million, or 62.2%, decrease in income tax expense.

 

Net income for the six months ended June 30, 2018 was $18.8 million and $0.95 per diluted share as compared to $18.0 million and $0.91 per diluted share for the same period in 2017.   Changes in net income for the six months ended June 30, 2018 compared to June 30, 2017 include: (i) a $7.2 million, or 11.8%, increase in net interest income; (ii) a $7.1 million decrease in non-interest income (loss); (iii) a $3.8 million, or 9.2%, increase in non-interest expense; and (iv) a $3.9 million, or 44.7%, decrease in income tax expense.

 

Analysis of Net Interest Income

 

Net interest income, the primary contributor to earnings, represents the difference between income on interest earning assets and expenses on interest bearing liabilities. Net interest income depends on the volume of interest earning assets and interest bearing liabilities and the interest rates earned or paid on them.

 

The following table sets forth certain information relating to the Company’s average consolidated balance sheets and its consolidated statements of income for the periods indicated and reflects the average yield on assets and average cost of liabilities for those periods on a tax equivalent basis based on the U.S. federal statutory tax rate. The Tax Act lowered the U.S. federal statutory tax rate from 35% to 21% effective as of January 1, 2018. The Company’s tax equivalent adjustment to interest income decreased for the six months ended June 30, 2018 as a result of the lower federal statutory tax rate in 2018. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from daily average balances and include nonaccrual loans. The yields and costs include fees and costs, which are considered adjustments to yields. Interest on nonaccrual loans has been included only to the extent reflected in the consolidated statements of income. For purposes of this table, the average balances for investments in debt and equity securities exclude unrealized appreciation/depreciation due to the application of FASB ASC 320, “Investments - Debt and Equity Securities.”

 

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   Three Months Ended June 30, 
   2018   2017 
           Average           Average 
   Average       Yield/   Average       Yield/ 
(Dollars in thousands)  Balance   Interest   Cost   Balance   Interest   Cost 
Interest earning assets:                              
Loans, net (1)(2)  $3,179,632   $35,817    4.52%  $2,702,605   $30,348    4.50%
Mortgage-backed securities, CMOs and other asset-backed securities   672,108    3,825    2.28    750,593    3,899    2.08 
Taxable securities   182,375    1,445    3.18    228,454    1,544    2.71 
Tax exempt securities (2)   70,496    514    2.92    93,760    720    3.08 
Deposits with banks   25,206    106    1.69    28,904    71    0.99 
Total interest earning assets (2)   4,129,817    41,707    4.05    3,804,316    36,582    3.86 
Non interest earning assets:                              
Cash and due from banks   80,637              70,409           
Other assets   284,401              285,025           
Total assets  $4,494,855             $4,159,750           
                               
Interest bearing liabilities:                              
Savings, NOW and money market deposits  $1,910,249   $3,438    0.72%  $1,714,594   $1,812    0.42%
Certificates of deposit of $100,000 or more   167,782    582    1.39    143,124    431    1.21 
Other time deposits   118,587    493    1.67    74,224    179    0.97 
Federal funds purchased and repurchase agreements   122,463    567    1.86    125,231    355    1.14 
Federal Home Loan Bank advances   337,615    1,407    1.67    401,458    1,529    1.53 
Subordinated debentures   78,688    1,135    5.79    78,549    1,135    5.80 
Total interest bearing liabilities   2,735,384    7,622    1.12    2,537,180    5,441    0.86 
Non-interest bearing liabilities:                              
Demand deposits   1,265,370              1,151,288           
Other liabilities   40,633              31,745           
Total liabilities   4,041,387              3,720,213           
Stockholders' equity   453,468              439,537           
Total liabilities and stockholders' equity  $4,494,855             $4,159,750           
                               
Net interest income/interest rate spread (2)(3)        34,085    2.93%        31,141    3.00%
                               
Net interest earning assets/net interest margin (2)(4)  $1,394,433         3.31%  $1,267,136         3.28%
                               
Tax equivalent adjustment        (156)   (0.01)        (348)   (0.03)
                               
Net interest income/net interest margin (4)       $33,929    3.30%       $30,793    3.25%
                               
Ratio of interest earning assets to interest bearing liabilities             150.98%             149.94%

 

(1) Amounts are net of deferred origination costs/(fees) and the allowance for loan losses.

(2) Presented on a tax equivalent basis based on the U.S. statutory rate of 21% and 35% for the three months ended June 30, 2018 and 2017, respectively.

(3) Net interest rate spread represents the difference between the yield on average interest earning assets and the cost of average interest bearing liabilities.

(4) Net interest margin represents net interest income divided by average interest earning assets.

 

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   Six Months Ended June 30, 
   2018   2017 
           Average           Average 
   Average       Yield/   Average       Yield/ 
(Dollars in thousands)  Balance   Interest   Cost   Balance   Interest   Cost 
Interest earning assets:                              
Loans, net (1)(2)  $3,153,909   $71,477    4.57%  $2,645,618   $59,826    4.56%
Mortgage-backed securities, CMOs and other asset-backed securities   679,283    7,549    2.24    750,060    7,716    2.07 
Taxable securities   190,984    2,937    3.10    227,998    3,043    2.69 
Tax exempt securities (2)   76,746    1,078    2.83    94,114    1,444    3.09 
Deposits with banks   24,163    196    1.64    25,178    117    0.94 
Total interest earning assets (2)   4,125,085    83,237    4.07    3,742,968    72,146    3.89 
Non-interest earning assets:                              
Cash and due from banks   73,966              68,374           
Other assets   286,027              282,781           
Total assets  $4,485,078             $4,094,123           
                               
Interest bearing liabilities:                              
Savings, NOW and money market deposits  $1,876,823   $5,952    0.64%  $1,674,831   $3,363    0.40%
Certificates of deposit of $100,000 or more   161,749    1,099    1.37    135,625    810    1.20 
Other time deposits   92,623    688    1.50    76,765    357    0.94 
Federal funds purchased and repurchase agreements   136,974    1,173    1.73    134,347    671    1.01 
Federal Home Loan Bank advances   382,681    3,265    1.72    402,847    2,678    1.34 
Subordinated debentures   78,671    2,270    5.82    78,531    2,270    5.83 
Junior subordinated debentures   -    -    -    1,348    48    7.18 
Total interest bearing liabilities   2,729,521    14,447    1.07    2,504,294    10,197    0.82 
Non-interest bearing liabilities:                              
Demand deposits   1,264,186              1,123,193           
Other liabilities   39,242              31,109           
Total liabilities   4,032,949              3,658,596           
Stockholders' equity   452,129              435,527           
Total liabilities and stockholders' equity  $4,485,078             $4,094,123           
                               
Net interest income/interest rate spread (2)(3)        68,790    3.00%        61,949    3.07%
                               
Net interest earning assets/net interest margin (2)(4)  $1,395,564         3.36%  $1,238,674         3.34%
                               
Tax equivalent adjustment        (322)   (0.01)        (695)   (0.04)
                               
Net interest income/net interest margin (4)       $68,468    3.35%       $61,254    3.30%
                               
Ratio of interest earning assets to interest bearing liabilities             151.13%             149.46%

 

(1) Amounts are net of deferred origination costs/(fees) and the allowance for loan losses.

(2) Presented on a tax equivalent basis based on the U.S. statutory rate of 21% and 35% for the six months ended June 30, 2018 and 2017, respectively.

(3) Net interest rate spread represents the difference between the yield on average interest earning assets and the cost of average interest bearing liabilities.

(4) Net interest margin represents net interest income divided by average interest earning assets.

 

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Rate/Volume Analysis

 

Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The following table illustrates the extent to which changes in interest rates and in the volume of average interest earning assets and interest bearing liabilities have affected the Bank’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) changes attributable to changes in rates (changes in rates multiplied by prior volume); and (iii) the net changes. For purposes of this table, changes that are not due solely to volume or rate changes have been allocated to these categories based on the respective percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes between volume and rate. In addition, average earning assets include nonaccrual loans.

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2018 Over 2017   2018 Over 2017 
   Changes Due To   Changes Due To 
(In thousands)  Volume   Rate   Net
Change
   Volume   Rate   Net
Change
 
Interest income on interest earning assets:                              
Loans, net (1)(2)  $5,335   $134   $5,469   $11,519   $132   $11,651 
Mortgage-backed securities, CMOs and other asset-backed securities   (1,603)   1,529    (74)   (1,440)   1,273    (167)
Taxable securities   (1,208)   1,109    (99)   (1,019)   913    (106)
Tax exempt securities (2)   (170)   (36)   (206)   (251)   (115)   (366)
Deposits with banks   (57)   92    35    (14)   93    79 
    Total interest income on interest earning assets (2)       2,297    2,828    5,125    8,795    2,296    11,091 
                               
Interest expense on interest bearing liabilities:                              
Savings, NOW and money market deposits   224    1,402    1,626    446    2,143    2,589 
Certificates of deposit of $100,000 or more   81    70    151    169    120    289 
Other time deposits   142    172    314    85    246    331 
Federal funds purchased and repurchase agreements   (54)   266    212    13    489    502 
Federal Home Loan Bank advances   (791)   669    (122)   (371)   958    587 
Subordinated debentures   8    (8)   -    8    (8)   - 
Junior subordinated debentures   -    -    -    (48)   -    (48)
    Total interest expense on interest bearing liabilities   (390)   2,571    2,181    302    3,948    4,250 
Net interest income (2)  $2,687   $257   $2,944   $8,493   $(1,652)  $6,841 

 

(1)Amounts are net of deferred origination costs/(fees) and the allowance for loan losses.
(2)Presented on a tax equivalent basis based on the U.S. statutory rate of 21% for the three and six months ended June 30, 2018, and 35% for the three and six months ended June 30, 2017.

 

Analysis of Net Interest Income for the Three Months Ended June 30, 2018 and 2017

 

Net interest income was $33.9 million for the three months ended June 30, 2018 compared to $30.8 million for the three months ended June 30, 2017. Average net interest earning assets increased $127.3 million to $1.4 billion for the three months ended June 30, 2018 compared to $1.3 billion for the three months ended June 30, 2017. The increase in average net interest earning assets reflects organic growth in loans, partially offset by an increase in average deposits and a decrease in average investment securities. The net interest margin increased to 3.30% for the three months ended June 30, 2018 compared to 3.25% for the three months ended June 30, 2017. The increase in the net interest margin for 2018 compared to 2017 reflects the higher average yield on interest earning assets primarily due to loan portfolio growth, partially offset by higher overall funding costs due in part to the Fed Funds rate increases in the six months ended June 30, 2018 and year ended December 31, 2017.

 

Interest income increased $5.3 million, or 14.7%, to $41.5 million for the three months ended June 30, 2018 from $36.2 million for the same period in 2017, as average interest earning assets increased $325.5 million, or 8.6%, to $4.1 billion for the three months ended June 30, 2018 compared to $3.8 billion for the same period in 2017. The increase in average interest earning assets for the three months ended June 30, 2018 compared to 2017 reflects organic growth in loans, partially offset by a decrease in average investment securities. The tax adjusted average yield on interest earning assets was 4.05% for the quarter ended June 30, 2018 compared to 3.86% for the quarter ended June 30, 2017.

 

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Interest income on loans increased $5.5 million to $35.8 million for the three months ended June 30, 2018 over 2017, primarily due to growth in the loan portfolio. For the three months ended June 30, 2018, average loans grew by $477.0 million, or 17.7%, to $3.2 billion as compared to $2.7 billion for the same period in 2017. The increase in average loans was the result of organic growth in commercial real estate mortgage loans, residential mortgage loans, commercial and industrial loans, multi-family mortgage loans, and real estate construction and land loans. The tax adjusted yield on average loans was 4.52% for the second quarter of 2018 and 4.50% for the same period in 2017. The Bank remains committed to growing loans with prudent underwriting, sensible pricing, and limited credit and extension risk.

 

Interest income on investment securities was $5.7 million for the three months ended June 30, 2018 compared to $5.9 million for the same period in 2017. Interest income on securities included net amortization of premiums on securities of $1.2 million for the three months ended June 30, 2018 compared to $1.6 million for the same period in 2017. For the three months ended June 30, 2018, average total investments decreased by $147.8 million, or 13.8%, to $925.0 million as compared to $1.1 billion for the same period in 2017. The tax adjusted average yield on total securities was 2.51% for the three months ended June 30, 2018 and 2.30% for the three months ended June 30, 2017.

 

Total interest expense increased to $7.6 million for the three months ended June 30, 2018 as compared to $5.4 million for the same period in 2017. The increase in interest expense for the three months ended June 30, 2018 is a result of the increase in the cost of average interest bearing liabilities coupled with an increase in average interest bearing liabilities. The cost of average interest bearing liabilities was 1.12% for the three months ended June 30, 2018 and 0.86% for the three months ended June 30, 2017. The increase in the cost of average interest bearing liabilities is primarily due to higher overall funding costs due in part to the Fed Funds rate increases in the six months ended June 30, 2018 and the year ended December 31, 2017. Since the Company’s interest bearing liabilities generally reprice or mature more quickly than its interest earning assets, in a rising rate environment the cost of funds increases faster than the yields on assets. The Company began extending the terms of certain matured borrowings at the end of the 2017 first quarter in anticipation of further Fed Funds rate increases. Additionally, the large percentages of deposits in money market accounts reprice at short-term market rates, making the balance sheet more liability sensitive. The Bank continues its prudent management of deposit pricing. Average total interest bearing liabilities increased $198.2 million, or 7.8%, to $2.7 billion for the three months ended June 30, 2018 compared to $2.5 billion for the same period in 2017 due to an increase in average deposits, partially offset by a decrease in average borrowings.

 

For the three months ended June 30, 2018, average total deposits increased by $378.8 million to $3.5 billion as compared to average total deposits of $3.1 billion for the three months ended June 30, 2017 due to increases in average savings, NOW and money market accounts, average demand deposits, and average certificates of deposit. The average balance of savings, NOW and money market accounts increased $195.7 million, or 11.4%, to $1.9 billion for the three months ended June 30, 2018 compared to $1.7 billion for the three months ended June 30, 2017. The cost of average savings, NOW and money market deposits was 0.72% for the 2018 second quarter compared to 0.42% for the 2017 second quarter. Average demand deposits increased $114.1 million, or 9.9%, to $1.3 billion for the three months ended June 30, 2018 as compared to $1.2 billion for the same period in 2017. Average balances in certificates of deposit increased $69.1 million, or 31.8%, to $286.4 million for the three months ended June 30, 2018 compared to $217.3 million for the three months ended June 30, 2017. The cost of average certificates of deposit increased to 1.51% for the three months ended June 30, 2018 compared to 1.13% for the same period in 2017. Average public fund deposits comprised 16.7% of total average deposits during the 2018 second quarter and 18.0% for the 2017 second quarter.

 

Average federal funds purchased and repurchase agreements decreased $2.8 million, or 2.2%, to $122.5 million for the three months ended June 30, 2018 compared to $125.2 million for the same period in 2017. The cost of average federal funds purchased and repurchase agreements was 1.86% for the 2018 second quarter compared to 1.14% for the 2017 second quarter. Average FHLB advances decreased $63.9 million, or 15.9%, to $337.6 million for the three months ended June 30, 2018 compared to $401.5 million for the three months ended June 30, 2017.

 

Analysis of Net Interest Income for the Six Months Ended June 30, 2018 and 2017

 

Net interest income was $68.5 million for the six months ended June 30, 2018 compared to $61.3 million for the six months ended June 30, 2017. Average net interest earning assets increased $156.9 million to $1.4 billion for the six months ended June 30, 2018 compared to $1.2 billion for the six months ended June 30, 2017. The increase in average net interest earning assets reflects organic growth in loans, partially offset by an increase in average deposits and a decrease in average investment securities. The net interest margin increased to 3.35% for the six months ended June 30, 2018 compared to 3.30% for the six months ended June 30, 2017. The increase in the net interest margin for 2018 compared to 2017 reflects the higher average yield on interest earning assets primarily due to loan portfolio growth, partially offset by higher overall funding costs due in part to the Fed Funds rate increases in the six months ended June 30, 2018 and year ended December 31, 2017.

 

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Interest income increased $11.5 million, or 16.0%, to $82.9 million for the six months ended June 30, 2018 from $71.4 million for the same period in 2017, as average interest earning assets increased $382.1 million, or 10.2%, to $4.1 billion for the six months ended June 30, 2018 compared to $3.7 billion for the same period in 2017. The increase in average interest earning assets for the six months ended June 30, 2018 compared to 2017 reflects organic growth in loans, partially offset by a decrease in average investment securities. The tax adjusted average yield on interest earning assets was 4.07% for the six months ended June 30, 2018 compared to 3.89% for the six months ended June 30, 2017.

 

Interest income on loans increased $11.8 million to $71.4 million for the six months ended June 30, 2018 over 2017, primarily due to growth in the loan portfolio. For the six months ended June 30, 2018, average loans grew by $508.3 million, or 19.2%, to $3.2 billion as compared to $2.6 billion for the same period in 2017. The increase in average loans was the result of organic growth in commercial real estate mortgage loans, residential mortgage loans, commercial and industrial loans, multi-family mortgage loans, and real estate construction and land loans. The tax adjusted yield on average loans was 4.57% for the six months ended June 30, 2018 and 4.56% for the same period in 2017. The Bank remains committed to growing loans with prudent underwriting, sensible pricing, and limited credit and extension risk.

 

Interest income on investment securities was $11.3 million for the six months ended June 30, 2018 and $11.7 million for the same period in 2017. Interest income on securities included net amortization of premiums on securities of $2.5 million for the six months ended June 30, 2018 compared to $3.3 million for the same period in 2017. For the six months ended June 30, 2018, average total investments decreased by $125.2 million, or 11.7%, to $947.0 million as compared to $1.1 billion for the same period in 2017. The tax adjusted average yield on total securities was 2.46% for the six months ended June 30, 2018 and 2.30% for the six months ended June 30, 2017.

 

Total interest expense increased to $14.4 million for the six months ended June 30, 2018 as compared to $10.2 million for the same period in 2017. The increase in interest expense for the six months ended June 30, 2018 is a result of the increase in the cost of average interest bearing liabilities coupled with an increase in average interest bearing liabilities. The cost of average interest bearing liabilities was 1.07% for the six months ended June 30, 2018 and 0.82% for the six months ended June 30, 2017. The increase in the cost of average interest bearing liabilities is primarily due to higher overall funding costs, due in part to the Fed Funds rate increases in the six months ended June 30, 2018 and the year ended December 31, 2017. Since the Company’s interest bearing liabilities generally reprice or mature more quickly than its interest earning assets, in a rising rate environment the cost of funds increases faster than the yields on assets. The Company began extending the terms of certain matured borrowings at the end of the 2017 first quarter in anticipation of further Fed Funds rate increases. Additionally, the large percentages of deposits in money market accounts reprice at short-term market rates, making the balance sheet more liability sensitive. The Bank continues its prudent management of deposit pricing. Average total interest bearing liabilities increased $225.2 million, or 9.0%, to $2.7 billion for the six months ended June 30, 2018 compared to $2.5 billion for the same period in 2017 due to an increase in average deposits, partially offset by a decrease in average borrowings.

 

For the six months ended June 30, 2018, average total deposits increased by $385.0 million to $3.4 billion as compared to average total deposits of $3.0 billion for the six months ended June 30, 2017 due to increases in average savings, NOW and money market accounts, average demand deposits, and average certificates of deposit. The average balance of savings, NOW and money market accounts increased $202.0 million, or 12.1%, to $1.9 billion for the six months ended June 30, 2018 compared to $1.7 billion for the six months ended June 30, 2017. The cost of average savings, NOW and money market deposits was 0.64% for the six months ended June 30, 2018 compared to 0.40% for the six months ended June 30, 2017. Average demand deposits increased $141.0 million, or 12.6%, to $1.3 billion for the six months ended June 30, 2018 as compared to $1.1 billion for the same period in 2017. Average balances in certificates of deposit increased $42.0 million, or 19.8%, to $254.4 million for the six months ended June 30, 2018 compared to $212.4 million for the six months ended June 30, 2017. The cost of average certificates of deposit increased to 1.42% for the six months ended June 30, 2018 compared to 1.11% for the same period in 2017. Average public fund deposits comprised 17.3% of total average deposits during the six months ended June 30, 2018 and 18.2% for the six months ended June 30, 2017.

 

Average federal funds purchased and repurchase agreements increased $2.6 million, or 2.0%, to $137.0 million for the six months ended June 30, 2018 compared to $134.3 million for the same period in 2017. The cost of average federal funds purchased and repurchase agreements was 1.73% for the six months ended June 30, 2018 compared to 1.01% for the six months ended June 30, 2017. Average FHLB advances decreased $20.2 million, or 5.0%, to $382.7 million for the six months ended June 30, 2018 compared to $402.8 million for the six months ended June 30, 2017. Average junior subordinated debentures for the six months ended June 30, 2018 was zero compared to $1.3 million for the same period in 2017. The junior subordinated debentures were redeemed in January 2017.

 

Provision and Allowance for Loan Losses

 

The Bank’s loan portfolio consists primarily of real estate loans secured by commercial, multi-family and residential real estate properties located in the Bank’s principal lending areas of Nassau and Suffolk Counties on Long Island and the New York City boroughs. The interest rates charged by the Bank on loans are affected primarily by the demand for such loans, the supply of money available for

 

 45 

 

 

lending purposes, the rates offered by its competitors, the Bank’s relationship with the customer, and the related credit risks of the transaction. These factors are affected by general and economic conditions including, but not limited to, monetary policies of the federal government, including the Federal Reserve Board, legislative policies and governmental budgetary matters.

 

Based on the Company’s continuing review of the overall loan portfolio, the current asset quality of the portfolio, the growth in the loan portfolio and the net charge-offs, a provision for loan losses of $0.4 million and $1.2 million was recorded during the three and six months ended June 30, 2018, respectively, compared to a provision for loan losses of $1.0 million and $1.8 million, respectively, during the same periods in 2017. Net charge-offs were $1.6 million for the quarter ended June 30, 2018 compared to net charge-offs of $24 thousand for the quarter ended June 30, 2017. Net charge-offs were $1.3 million for the six months ended June 30, 2018 compared to $0.1 million for the six months ended June 30, 2017. The increase in net charge-offs during the 2018 second quarter relates to the charge-off of one loan that was fully reserved. The ratio of the allowance for loan losses to nonaccrual loans was 1,979%, 456% and 1,030%, at June 30, 2018, December 31, 2017, and June 30, 2017, respectively. The allowance for loan losses totaled $31.7 million at June 30, 2018 as compared to $31.7 million at December 31, 2017 and $27.5 million at June 30, 2017. The allowance as a percentage of total loans was 1.00% at June 30, 2018, compared to 1.02% at December 31, 2017 and 0.99% at June 30, 2017. The increase in the allowance for loan losses from June 30, 2017 reflects portfolio growth, coupled with the impact of the significant increase in charge-offs experienced during the 2017 fourth quarter. Management continues to carefully monitor the loan portfolio as well as real estate trends in Nassau and Suffolk Counties and the New York City boroughs.

 

Loans totaling $75.9 million, or 2.4%, of total loans at June 30, 2018 were categorized as classified loans compared to $85.3 million, or 2.8%, at December 31, 2017 and $103.9 million, or 3.7%, at June 30, 2017. Classified loans include loans with credit quality indicators with the internally assigned grades of special mention, substandard and doubtful. These loans are categorized as classified loans because management has information that indicates the borrower may not be able to comply with the present repayment terms. These loans are subject to increased management attention and their classification is reviewed at least quarterly.

 

At June 30, 2018, $21.9 million of classified loans were commercial real estate (“CRE”) loans. Of the $21.9 million of CRE loans, $21.2 million were current and $0.7 million were past due. At June 30, 2018, $11.4 million of classified loans were residential real estate loans, with $9.8 million current and $1.6 million past due. Commercial, industrial, and agricultural loans represented $42.3 million of classified loans, with $41.2 million current and $1.1 million past due. Taxi medallion loans represented $21.9 million of the classified commercial, industrial and agricultural loans at June 30, 2018. All of the Bank’s taxi medallion loans are collateralized by New York City – Manhattan medallions and have personal guarantees. All taxi medallion loans were current as of June 30, 2018 except one which was nonaccrual.  No new originations of taxi medallion loans are currently planned and management expects these balances to decline through amortization and pay-offs. During the 2018 second quarter, four taxi loans totaling $2.4 million were paid off in full. There was $0.3 million of classified real estate construction and land loans, all of which are current.

 

CRE loans, including multi-family loans, represented $1.9 billion, or 59.8%, of the total loan portfolio at June 30, 2018 compared to $1.9 billion, or 61.0%, at December 31, 2017 and $1.7 billion, or 62.3%, at June 30, 2017. The Bank’s underwriting standards for CRE loans require an evaluation of the cash flow of the property, the overall cash flow of the borrower and related guarantors as well as the value of the real estate securing the loan. In addition, the Bank’s underwriting standards for CRE loans are consistent with regulatory requirements with original loan to value ratios generally less than or equal to 75%. The Bank considers charge-off history, delinquency trends, cash flow analysis, and the impact of the local economy on commercial real estate values when evaluating the appropriate level of the allowance for loan losses.

 

As of June 30, 2018 and December 31, 2017, the Company had individually impaired loans as defined by FASB ASC No. 310, “Receivables” of $15.3 million and $22.5 million, respectively. For a loan to be considered impaired, management determines after review whether it is probable that the Bank will not be able to collect all amounts due according to the contractual terms of the loan agreement. Management applies its normal loan review procedures in making these judgments. Impaired loans include individually classified nonaccrual loans and TDRs. For impaired loans, the Bank evaluates the impairment of the loan in accordance with FASB ASC 310-10-35-22. Impairment is determined based on the present value of expected future cash flows discounted at the loan’s effective interest rate. For loans that are collateral dependent, the fair value of the collateral less costs to sell is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of the collateral less costs to sell or present value of expected cash flows is compared to the carrying value to determine if any write-down or specific loan loss allowance allocation is required. The decrease in impaired loans from December 31, 2017 was attributable to the payoff of certain TDRs, partially offset by new TDRs during the six months ended June 30, 2018, coupled with a decrease in nonaccrual loans due to the charge-off of one loan and sales and payoffs. During the six months ended June 30, 2018, the Bank modified certain commercial and industrial loans as TDRs totaling $6.8 million. These TDR loans are current at June 30, 2018.

 

Nonaccrual loans were $1.6 million, or 0.05%, of total loans at June 30, 2018, and $7.0 million, or 0.22%, of total loans at December 31, 2017. TDRs represent $70 thousand of the nonaccrual loans at June 30, 2018 compared to $5 thousand at December 31, 2017.

 

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The Bank’s other real estate owned at June 30, 2018 was $0.2 million, consisting of one property, compared to none at December 31, 2017.

 

The following table sets forth changes in the allowance for loan losses for the periods indicated:

 

   Six Months Ended 
(In thousands)  June 30, 2018   June 30, 2017 
Beginning balance  $31,707   $25,904 
Charge-offs:          
Residential real estate mortgage loans   (24)   - 
Commercial, industrial and agricultural loans   (1,708)   (128)
Total   (1,732)   (128)
Recoveries:          
Residential real estate mortgage loans   1    2 
Commercial, industrial and agricultural loans   475    15 
Installment/consumer loans   1    1 
Total   477    18 
Net charge-offs   (1,255)   (110)
Provision for loan losses charged to operations   1,200    1,750 
Ending balance  $31,652   $27,544 

 

Allocation of Allowance for Loan Losses

 

The following table sets forth the allocation of the total allowance for loan losses by loan classification at the dates indicated:

 

   June 30, 2018   December 31, 2017 
       Percentage of Loans       Percentage of Loans 
(Dollars in thousands)  Amount   to Total Loans   Amount   to Total Loans 
Commercial real estate mortgage loans  $11,206    41.8%  $11,048    41.7%
Multi-family mortgage loans   2,466    18.0    4,521    19.2 
Residential real estate mortgage loans   4,237    16.1    2,438    15.0 
Commercial, industrial & agricultural loans   12,358    19.8    12,838    19.9 
Real estate construction and land loans   1,263    3.7    740    3.5 
Installment/consumer loans   122    0.6    122    0.7 
Total  $31,652    100.0%  $31,707    100.0%

 

Non-Interest Income (Loss)

 

Total non-interest income (loss) decreased $7.1 million to $(2.6) million during the three months ended June 30, 2018 compared to $4.5 million for the three months ended June 30, 2017, driven primarily by a $7.9 million net securities loss related to the balance sheet restructure, partially offset by a $0.4 million increase in other operating income, a $0.3 million increase in service charges and other fees, and a $0.3 million gain on sale of loans.

 

Total non-interest income decreased $7.1 million to $1.5 million during the six months ended June 30, 2018 compared to $8.6 million for the six months ended June 30, 2017, driven primarily by a $7.9 million net securities loss related to the balance sheet restructure, partially offset by a $0.5 million increase in other operating income, a $0.5 million increase in service charges and other fees, and a $0.3 million gain on sale of loans.

 

Non-Interest Expense

 

Total non-interest expense increased $1.5 million to $22.5 million during the three months ended June 30, 2018 compared to $21.0 million over the same period in 2017. The increase was primarily due to higher salaries and benefits, professional services, technology and communications, other operating expenses, and FDIC assessments, partially offset by lower marketing and advertising, occupancy and equipment, and amortization of other intangible assets.  

 

Total non-interest expense increased $3.8 million to $45.1 million during the six months ended June 30, 2018 compared to $41.3 million over the same period in 2017. The increase was primarily due to higher salaries and benefits, professional services, technology and

 

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communications, other operating expenses, and FDIC assessments, partially offset by lower occupancy and equipment, marketing and advertising, and amortization of other intangible assets.  

 

Salaries and benefits increased $1.5 million to $13.1 million for the three months ended June 30, 2018 compared to $11.6 million for the same period in 2017. The increase in salaries and benefits in the second quarter of 2018 versus the second quarter of 2017 is primarily due to additional staff related to business development and risk management. Professional services increased $0.2 million to $0.9 million for the three months ended June 30, 2018, compared to the same period in 2017. Technology and communications increased $0.2 million to $1.6 million for the three months ended June 30, 2018 compared to $1.4 million for the same period in the prior year. Other operating expenses increased $0.1 million to $1.9 million for the three months ended June 30, 2018 compared to $1.8 million for the same period in 2017. FDIC assessments increased to $0.4 million for the three months ended June 30, 2018 from $0.3 million for the same period in 2017. Occupancy and equipment decreased $0.2 million to $3.2 million for the three months ended June 30, 2018 compared to $3.4 million for the same period in 2017. The decrease in occupancy and equipment expense in the second quarter of 2018 versus the second quarter of 2017 reflects the cost savings related to the execution of the Company’s branch rationalization strategy. Marketing and advertising were $1.2 million for the three months ended June 30, 2018 compared to $1.6 million for the same period in 2017. Amortization of other intangible assets was $0.2 million compared to $0.3 million for the same period in 2017.

 

Salaries and benefits increased $2.8 million to $25.9 million for the six months ended June 30, 2018 compared to $23.1 million for the same period in 2017. The increase in salaries and benefits for the six months ended June 30, 2018 versus the same period in 2017 is primarily due to additional staff related to business development and risk management. FDIC assessments increased to $0.9 million for the six months ended June 30, 2018 from $0.6 million for the same period in 2017. Professional services increased $0.7 million to $2.1 million for the six months ended June 30, 2018, compared to $1.4 million for the same period in 2017. Technology and communications increased $0.5 million to $3.2 million for the six months ended June 30, 2018 compared to $2.7 million for the same period in the prior year. Other operating expenses increased $0.4 million to $3.9 million for the six months ended June 30, 2018 compared to $3.5 million for the same period in 2017. Occupancy and equipment decreased $0.4 million to $6.4 million for the six months ended June 30, 2018 compared to $6.8 million for the same period in 2017. The decrease in occupancy and equipment expense for the six months ended June 30, 2018 compared to the same period in 2017 reflects the cost savings related to the execution of the Company’s branch rationalization strategy. Marketing and advertising were $2.2 million for the six months ended June 30, 2018 compared to $2.5 million for the same period in 2017. Amortization of other intangible assets was $0.5 million compared to $0.6 million for the same period in 2017.

 

Income Taxes

 

Income tax expense was $1.7 million for the three months ended June 30, 2018 compared to $4.5 million for the three months ended June 30, 2017. The decrease reflects lower income before income taxes and a lower effective tax rate in 2018 due to the enactment of the Tax Act in the fourth quarter of 2017. The effective tax rate for the three months ended June 30, 2018 was 20.1% compared to 33.8% for the same period last year.

 

Income tax expense was $4.9 million for the six months ended June 30, 2018 compared to $8.8 million for the six months ended June 30, 2017. The decrease reflects lower income before income taxes and a lower effective tax rate in 2018 due to the enactment of the Tax Act in the fourth quarter of 2017. The effective tax rate for the six months ended June 30, 2018 was 20.6% compared to 32.9% for the same period last year.

 

Financial Condition

 

Total assets decreased $15.2 million, or 0.3%, to $4.4 billion at June 30, 2018 compared to December 31, 2017. Cash and cash equivalents increased $11.1 million, or 11.8%, to $105.9 million at June 30, 2018 compared to December 31, 2017. Total securities decreased $120.6 million, or 12.4%, to $855.5 million at June 30, 2018 compared to December 31, 2017, which includes the Company’s sale of $238.3 million of securities in the three months ended June 30, 2018. Total loans held for investment, net, increased $78.0 million, or 2.5%, to $3.1 billion at June 30, 2018 compared to December 31, 2017, which includes the Company’s sale of $39.8 million of commercial real estate and multi-family loans in the three months ended June 30, 2018. The ability to grow the loan portfolio, while minimizing interest rate risk sensitivity and maintaining credit quality, remains a strong focus of management.

 

Total liabilities decreased $25.8 million, or 0.6%, to $4.0 billion at June 30, 2018 compared to December 31, 2017. Total deposits increased $218.7 million, or 6.6%, to $3.6 billion at June 30, 2018, compared to December 31, 2017. Savings, NOW and money market deposits increased $146.2 million, or 8.2%, to $1.9 billion at June 30, 2018 compared to December 31, 2017. Certificates of deposit increased $103.8 million, or 46.7%, to $326.2 million at June 30, 2018 compared to December 31, 2017. Demand deposits decreased $31.4 million, or 2.3%, to $1.3 billion at June 30, 2018 compared to December 31, 2017. Federal funds purchased were zero at June 30, 2018 compared to $50.0 million at December 31, 2017. Federal Home Loan Bank advances decreased $200.5 million to $300.9

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million at June 30, 2018 compared to December 31, 2017. The decrease in wholesale borrowings in 2018 reflects the Company’s strategy to pay down its higher cost borrowings.

 

Stockholders’ equity was $439.8 million at June 30, 2018, an increase of $10.6 million, or 2.5%, from December 31, 2017, primarily due to net income of $18.8 million, share based compensation of $1.8 million, and proceeds from the issuance of shares of common stock under the dividend reinvestment plan of $0.5 million, partially offset by $9.2 million in dividends and an increase in accumulated other comprehensive loss, net of deferred income taxes, of $0.8 million. In July 2018, the Company declared a quarterly dividend of $0.23 per share and continues its long-term trend of uninterrupted dividends.

 

Liquidity

 

The objective of liquidity management is to ensure the sufficiency of funds available to respond to the needs of depositors and borrowers, and to take advantage of unanticipated opportunities for Company growth or earnings enhancement. Liquidity management addresses the ability of the Company to meet financial obligations that arise in the normal course of business. Liquidity is primarily needed to meet customer borrowing commitments and deposit withdrawals, either on demand or on contractual maturity, to repay borrowings as they mature, to fund current and planned expenditures and to make new loans and investments as opportunities arise.

 

The Company’s principal sources of liquidity included cash and cash equivalents of $6.9 million as of June 30, 2018, and dividend capabilities from the Bank. Cash available for distribution of dividends to shareholders of the Company is primarily derived from dividends paid by the Bank to the Company. For the six months ended June 30, 2018, the Bank paid $10.0 million in cash dividends to the Company. Prior regulatory approval is required if the total of all dividends declared by the Bank in any calendar year exceeds the total of the Bank’s net income of that year combined with its retained net income of the preceding two years. As of June 30, 2018, the Bank has $46.0 million of retained net income available for dividends to the Company. In the event that the Company subsequently expands its current operations, in addition to dividends from the Bank, it will need to rely on its own earnings, additional capital raised and other borrowings to meet liquidity needs. The Company did not make any capital contributions to the Bank during the six months ended June 30, 2018.

 

The Bank’s most liquid assets are cash and cash equivalents, securities available for sale and securities held to maturity due within one year. The levels of these assets are dependent on the Bank’s operating, financing, lending and investing activities during any given period. Other sources of liquidity include loan and investment securities principal repayments and maturities, lines of credit with other financial institutions including the FHLB and FRB, growth in core deposits and sources of wholesale funding such as brokered deposits. While scheduled loan amortization, maturing securities and short-term investments are a relatively predictable source of funds, deposit flows and loan and mortgage-backed securities prepayments are greatly influenced by general interest rates, economic conditions and competition. The Bank adjusts its liquidity levels as appropriate to meet funding needs such as seasonal deposit outflows, loans, and asset and liability management objectives. Historically, the Bank has relied on its deposit base, drawn through its full-service branches that serve its market area and local municipal deposits, as its principal source of funding. The Bank seeks to retain existing deposits and loans and maintain customer relationships by offering quality service and competitive interest rates to its customers, while managing the overall cost of funds needed to finance its strategies.

 

The Bank’s Asset/Liability and Funds Management Policy allows for wholesale borrowings of up to 25% of total assets. At June 30, 2018, the Bank had aggregate lines of credit of $380.0 million with unaffiliated correspondent banks to provide short-term credit for liquidity requirements. Of these aggregate lines of credit, $360.0 million is available on an unsecured basis. As of June 30, 2018, the Bank had no overnight borrowings outstanding under these lines. The Bank also has the ability, as a member of the FHLB system, to borrow against unencumbered residential and commercial mortgages owned by the Bank. The Bank also has a master repurchase agreement with the FHLB, which increases its borrowing capacity. As of June 30, 2018, the Bank had $10.0 million outstanding in FHLB overnight borrowings and $290.9 million outstanding in FHLB term borrowings. As of December 31, 2017, the Bank had $185.0 million outstanding in FHLB overnight borrowings and $316.4 million outstanding in FHLB term borrowings. The Bank had $1.4 million and $0.9 million at June 30, 2018 and December 31, 2017, respectively, of securities sold under agreements to repurchase outstanding with customers and nothing outstanding with brokers. In addition, the Bank has approved broker relationships for the purpose of issuing brokered deposits. As of June 30, 2018, the Bank had $116.4 million outstanding in brokered certificates of deposit and $197.8 million outstanding in brokered money market accounts. As of December 31, 2017, the Bank had $44.9 million outstanding in brokered certificates of deposit and $163.2 million outstanding in brokered money market accounts.

 

Liquidity policies are established by senior management and reviewed and approved by the full Board of Directors at least annually. Management continually monitors the liquidity position and believes that sufficient liquidity exists to meet all of the Company’s operating requirements. The Bank’s liquidity levels are affected by the use of short term and wholesale borrowings and the amount of public funds in the deposit mix. Excess short-term liquidity is invested in overnight federal funds sold or in an interest earning account at the FRB.

 

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Capital Resources

 

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 result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. 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 Bank’s assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classifications also are subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

 

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total, tier 1 and common equity tier 1 capital to risk weighted assets and of tier 1 capital to average assets. Tier 1 capital, risk weighted assets and average assets are as defined by regulation. The required minimums for the Company and Bank are set forth in the tables that follow. The Company and the Bank met all capital adequacy requirements at June 30, 2018 and December 31, 2017.

 

On January 1, 2015, the Basel III Capital Rules became effective and include transition provisions through January 1, 2019. These rules provide for the following minimum capital to risk-weighted assets ratios as of January 1, 2015: a) 4.5% based on common equity tier 1 capital ("CET1"); b) 6.0% based on tier 1 capital; and c) 8.0% based on total regulatory capital. A minimum leverage ratio (tier 1 capital as a percentage of total average assets) of 4.0% is also required under the Basel III Capital Rules. When fully phased in, the Basel III Capital Rules will additionally require institutions to retain a capital conservation buffer, composed of CET1, of 2.5% above these required minimum capital ratio levels. The capital conservation buffer requirement is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing by 0.625% each subsequent January 1, until it reaches 2.5% on January 1, 2019. When the capital conservation buffer is fully phased in on January 1, 2019, the Company and the Bank will effectively have the following minimum capital to risk-weighted assets ratios: a) 7.0% based on CET1; b) 8.5% based on tier 1 capital; and c) 10.5% based on total regulatory capital.

 

The Company and the Bank made the one-time, permanent election to continue to exclude the effects of accumulated other comprehensive income or loss items included in stockholders' equity for the purposes of determining the regulatory capital ratios.

 

As of June 30, 2018, the most recent notification from the FDIC categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Bank must maintain minimum total risk-based, tier 1 risk-based, common equity tier 1 risk-based and tier 1 leverage ratios as set forth in the tables below. Since that notification, there are no conditions or events that management believes have changed the institution’s category.

 

In accordance with the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new Community Bank Leverage Ratio at not less than 8% and not more than 10%, and a financial institution will be able to elect to be subject to this new definition.

 

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The following tables present actual capital levels and minimum required levels for the Company and the Bank under Basel III rules at June 30, 2018 and December 31, 2017:

 

   June 30, 2018 
               Minimum To Be Well 
           Minimum Capital   Capitalized Under Prompt 
       Minimum Capital   Adequacy Requirement with   Corrective Action 
   Actual Capital   Adequacy Requirement   Capital Conservation Buffer   Provisions 
(Dollars in thousands)  Amount   Ratio   Amount   Ratio   Amount   Ratio   Amount   Ratio 
Common equity tier 1 capital to risk weighted assets:                                        
Consolidated  $346,944    10.2%  $152,437    4.5%  $215,953    6.375%   n/a    n/a 
Bank   419,695    12.4    152,430    4.5    215,943    6.375   $220,177    6.5%
Total capital to risk weighted assets:                                        
Consolidated   458,872    13.5    271,000    8.0    334,515    9.875    n/a    n/a 
Bank   451,623    13.3    270,987    8.0    334,500    9.875    338,734    10.0 
Tier 1 capital to risk weighted assets:                                        
Consolidated   346,944    10.2    203,250    6.0    266,765    7.875    n/a    n/a 
Bank   419,695    12.4    203,240    6.0    266,753    7.875    270,987    8.0 
Tier 1 capital to average assets:                                        
Consolidated   346,944    7.9    175,641    4.0    n/a    n/a    n/a    n/a 
Bank   419,695    9.6    175,647    4.0    n/a    n/a    219,559    5.0 

 

   December 31, 2017 
                   Minimum To Be Well 
               Minimum Capital   Capitalized Under Prompt 
           Minimum Capital   Adequacy Requirement with   Corrective Action 
   Actual Capital   Adequacy Requirement   Capital Conservation Buffer   Provisions 
(Dollars in thousands)  Amount   Ratio   Amount   Ratio   Amount   Ratio   Amount   Ratio 
Common equity tier 1 capital to risk weighted assets:                                        
Consolidated  $336,393    10.0%  $152,011    4.5%  $194,237    5.75%    n/a      n/a  
Bank   408,089    12.1    152,002    4.5    194,224    5.75   $219,558    6.5%
Total capital to risk weighted assets:                                        
Consolidated   448,376    13.3    270,242    8.0    312,468    9.25     n/a      n/a  
Bank   440,072    13.0    270,225    8.0    312,448    9.25    337,781    10.0 
Tier 1 capital to risk weighted assets:                                        
Consolidated   336,393    10.0    202,682    6.0    244,907    7.25     n/a      n/a  
Bank   408,089    12.1    202,669    6.0    244,892    7.25    270,225    8.0 
Tier 1 capital to average assets:                                        
Consolidated   336,393    7.9    170,440    4.0     n/a      n/a      n/a      n/a  
Bank   408,089    9.6    170,441    4.0     n/a      n/a     213,051    5.0 

 

Recent Regulatory and Accounting Developments

 

Refer to Note 14. “Recent Accounting Pronouncements” in the Condensed Notes to the Consolidated Financial Statements in Part I, Item 1 “Financial Statements” for details related to recent regulatory and accounting developments.

 

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Asset/Liability Management

 

Management considers interest rate risk to be the most significant market risk for the Company. Market risk is the risk of loss from adverse changes in market prices and rates. Interest rate risk is the exposure to adverse changes in the net income of the Company as a result of changes in interest rates.

 

The Company’s primary earnings source is net interest income, which is affected by changes in the level of interest rates, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of deposits and liabilities, and the credit quality of earning assets. The Company’s objectives in its asset and liability management are to maintain a strong, stable net interest margin, to utilize its capital effectively without taking undue risks, to maintain adequate liquidity, and to reduce vulnerability of its operations to changes in interest rates.

 

The Company’s Asset and Liability Committee evaluates periodically, but at least four times a year, the impact of changes in market interest rates on assets and liabilities, net interest margin, capital and liquidity. Risk assessments are governed by policies and limits established by senior management, which are reviewed and approved by the full Board of Directors at least annually. The economic environment continually presents uncertainties as to future interest rate trends. The Asset and Liability Committee regularly utilizes a model that projects net interest income based on increasing or decreasing interest rates, in order to be better able to respond to changes in interest rates.

 

At June 30, 2018, $725.9 million, or 87.6%, of the Company’s available for sale and held to maturity securities had fixed interest rates. At June 30, 2018, $2.4 billion, or 75.7%, of the Company’s loan portfolio had adjustable or floating interest rates. Changes in interest rates affect the value of the Company’s interest earning assets and in particular its securities portfolio. Generally, the value of securities fluctuates inversely with changes in interest rates. Increases in interest rates could result in decreases in the market value of interest earning assets, which could adversely affect the Company’s stockholders’ equity and its results of operations if sold. The Company is also subject to reinvestment risk associated with changes in interest rates. Changes in market interest rates also could affect the type (fixed-rate or adjustable-rate) and amount of loans originated by the Company and the average life of loans and securities, which can impact the yields earned on the Company’s loans and securities. In periods of decreasing interest rates, the average life of loans and securities held by the Company may be shortened to the extent increased prepayment activity occurs during such periods which, in turn, may result in the investment of funds from such prepayments in lower yielding assets. Under these circumstances, the Company is subject to reinvestment risk to the extent that it is unable to reinvest the cash received from such prepayments at rates that are comparable to the rates on existing loans and securities. Additionally, increases in interest rates may result in decreasing loan prepayments with respect to fixed rate loans (and therefore an increase in the average life of such loans), may result in a decrease in loan demand, and may make it more difficult for borrowers to repay adjustable rate loans.

 

The Company utilizes the results of a detailed and dynamic simulation model to quantify the estimated exposure of net interest income to sustained interest rate changes. Management routinely monitors simulated net interest income sensitivity over a rolling two-year horizon. The simulation model captures the impact of changing interest rates on the interest income received and the interest expense paid on all assets and liabilities reflected on the Company’s consolidated balance sheet. This sensitivity analysis is compared to the asset and liability policy limits that specify a maximum tolerance level for net interest income exposure over a one-year horizon given 100 and 200 basis point upward shifts in interest rates and a 100 basis point downward shift in interest rates. A parallel and pro-rata shift in rates over a twelve-month period is assumed.

 

In addition to the above scenarios, the Company considers other, non-parallel rate shifts that would also exert pressure on earnings. The current low interest rate environment presents the possibility for a flattening of the yield curve. This could happen if the FOMC began to raise short-term interest rates without there being a corresponding rise in long-term rates. This would have the effect of raising short-term borrowing costs without allowing longer-term assets to reprice higher.

 

 52 

 

 

The following reflects the Company’s net interest income sensitivity analysis at June 30, 2018 and December 31, 2017:

 

  

June 30, 2018

 
   Potential Change 
Change in Interest  in Future Net 
Rates in Basis Points  Interest Income 
(Dollars in thousands)  Year 1   Year 2 
   $ Change   % Change   $ Change   % Change 
200  $(3,220)   (2.42)%  $6,751    5.07%
100  $(1,527)   (1.15)%  $6,019    4.52%
Static   -    -    -    - 
-100  $297    0.22%  $2,652    1.99%
                     

   December 31, 2017 

  Potential Change 
Change in Interest  in Future Net 
Rates in Basis Points  Interest Income 
(Dollars in thousands)  Year 1   Year 2 
   $ Change   % Change   $ Change   % Change 
200  $(4,548)   (3.45)%  $3,217    2.44%
100  $(2,262)   (1.71)%  $2,937    2.23%
Static   -    -    -    - 
-100  $918    0.70%  $1,090    0.83%

 

As noted in the table above, a 200 basis point increase in interest rates is projected to decrease net interest income by 2.42 percent in year 1 and increase net interest income by 5.07 percent in year 2. The Company’s balance sheet sensitivity to such a move in interest rates at June 30, 2018 decreased as compared to December 31, 2017 (which was a decrease of 3.45 percent in net interest income over a twelve-month period). This decrease is the result of a higher proportion of the Company’s assets repricing to market rates, coupled with a large increase in demand deposits and the Company’s ability to hold the costs of interest bearing deposits to below market rates. The lower projected interest rate sensitivity trend can be attributed to the strategic balance sheet restructuring of the Company’s investment portfolio, as well as the increase in non-public, non-brokered deposits in the second quarter of 2018. Overall, the strategy for the Bank remains focused on reducing its exposure to rising rates. Over the intervening year, the effective duration (a measure of price sensitivity to interest rates) of the bond portfolio increased from 3.23 at December 31, 2017 to 3.55 at June 30, 2018. Additionally, the Bank has increased its use of swaps to extend liabilities. The Company believes that its strong core funding profile also provides protection from rising rates due to the ability of the Bank to lag increases in the rates paid to on these accounts to market rates.

 

The preceding sensitivity analysis does not represent a Company forecast and should not be relied on as being indicative of expected operating results. These hypothetical estimates are based on numerous assumptions including, but not limited to, the nature and timing of interest rate levels and yield curve shapes, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, and reinvestment and replacement of asset and liability cash flows. While assumptions are developed based on perceived current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences may change. Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to prepayment and refinancing levels likely deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals, prepayment penalties and product preference changes and other internal and external variables. Furthermore, the sensitivity analysis does not reflect actions that management might take in responding to, or anticipating, changes in interest rates and market conditions.

 

Item 4. Controls and Procedures

 

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2018. Based on that evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report. There has been no change in the Company’s internal control over financial reporting during the quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 53 

 

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company and its subsidiaries are subject to certain pending and threatened legal actions that arise out of the normal course of business. In the opinion of management, the resolution of any such pending or threatened litigation is not expected to have a material adverse effect on the Company’s consolidated financial statements.

 

Item 1A. Risk Factors

 

There have been no material changes to the risk factors disclosed in Item 1A., Risk Factors, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

(c)Stock Repurchases.

 

The following table sets forth information in connection with repurchases of our shares of common stock during the three months ended June 30, 2018:

 

   Total Number of
Shares
Purchased (1)
   Average Price
Paid per Share
   Total Number of
Shares Purchased
as Part of
Publicly
Announced Plans
or Programs
   Maximum Number
of Shares That May
Yet Be Purchased
Under the Plans or
Programs (2)
 
April 1, 2018 through April 30, 2018   -   $-    -    167,041 
May 1, 2018 through May 31, 2018   339   $34.33    -    167,041 
June 1, 2018 through June 30, 2018   3,157   $36.10    -    167,041 
Total   3,496   $35.93    -    167,041 

 

(1)Represents shares withheld by the Company to pay the taxes associated with the vesting of restricted stock awards.
(2)The Board of Directors approved a stock repurchase program on March 27, 2006 that authorized the repurchase of 309,000 shares. No shares were purchased under this program during the quarter ended June 30, 2018. There is no expiration date for the stock repurchase plan. There is no stock repurchase plan that has expired or that has been terminated during the period ended June 30, 2018.

 

Item 3. Defaults upon Senior Securities

 

Not applicable.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

Not applicable.

 

 54 

 

 

Item 6. Exhibits

 

31.1   Certification of Principal Executive Officer pursuant to Rule 13a-14(a)
31.2   Certification of Principal Financial Officer pursuant to Rule 13a-14(a)
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350
101   The following financial statements from Bridge Bancorp, Inc.'s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2018, filed on August 8, 2018, formatted in XBRL: (i) Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017, (ii) Consolidated Statements of Income for the Three and Six Months Ended June 30, 2018 and 2017, (iii) Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2018 and 2017, (iv) Consolidated Statements of Stockholders' Equity for the Six Months Ended June 30, 2018 and 2017, (v) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017, and (vi) the Condensed Notes to Consolidated Financial Statements.
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB   XBRL Taxonomy Extension Labels Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definitions Linkbase Document

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    BRIDGE BANCORP, INC.
    Registrant
     
August 8, 2018   /s/ Kevin M. O’Connor
    Kevin M. O’Connor
    President and Chief Executive Officer
     
August 8, 2018   /s/ John M. McCaffery
    John M. McCaffery
    Executive Vice President and Chief Financial Officer

 

 55 

EX-31.1 2 tv499707_ex31-1.htm EXHIBIT 31.1

 

EXHIBIT 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)

 

I, Kevin M. O’Connor, certify that:

 

1)I have reviewed this quarterly report on Form 10-Q of Bridge Bancorp, Inc.;

 

2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4)The registrant’s other certifying officer 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 15(d)-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 quarterly 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 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 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 registrant’s board of directors:

 

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.

 

Date: August 8, 2018    
     
/s/ Kevin M. O’Connor    
Kevin M. O’Connor    
President and Chief Executive Officer    

 

 

EX-31.2 3 tv499707_ex31-2.htm EXHIBIT 31.2

 

EXHIBIT 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a)

 

I, John M. McCaffery, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of Bridge Bancorp, Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer 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 15(d)-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 quarterly 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 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 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 registrant’s board of directors:

 

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.

 

Date: August 8, 2018    
     
/s/ John M. McCaffery    
John M. McCaffery    
Executive Vice President and Chief Financial Officer    

 

 

EX-32.1 4 tv499707_ex32-1.htm EXHIBIT 32.1

 

This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO RULE 13a-14(b) 18 U.S.C. SECTION 1350,

 

As adopted pursuant to

 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Bridge Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission, (the “Report”), we, Kevin M. O’Connor, President and Chief Executive Officer of the Company and, John M. McCaffery, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: August 8, 2018 /s/ Kevin M. O’Connor
  Kevin M. O’Connor
  President and Chief Executive Officer
   
  /s/ John M. McCaffery
  John M. McCaffery
  Executive Vice President and Chief Financial Officer

 

 

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(the &#8220;Registrant&#8221; or &#8220;Company&#8221;), is a registered bank holding company for BNB Bank (the &#8220;Bank&#8221;), which was formerly known as The Bridgehampton National Bank prior to the Bank&#8217;s conversion to a New York chartered commercial bank in December 2017. The Registrant was incorporated under the laws of the State of New York in 1988, at the direction of the Board of Directors of the Bank for the purpose of becoming a bank holding company pursuant to a plan of reorganization under which the former shareholders of the Bank became the shareholders of the Company. Since commencing business in March 1989, after the reorganization, the Registrant has functioned primarily as the holder of all of the Bank&#8217;s common stock. In May 1999, the Bank established a real estate investment trust subsidiary, Bridgehampton Community, Inc. (&#8220;BCI&#8221;), as an operating subsidiary. The assets transferred to BCI are viewed by the bank regulators as part of the Bank&#8217;s assets in consolidation. The operations of the Bank also include Bridge Abstract LLC (&#8220;Bridge Abstract&#8221;), a wholly owned subsidiary of the Bank, which is a broker of title insurance services and Bridge Financial Services LLC (&#8220;Bridge Financial Services&#8221;), an investment services subsidiary that was formed in March 2014. The Company formed&#160;<font style="color: black;">Bridge Statutory Capital Trust II (the &#8220;Trust&#8221;) as a subsidiary in 2009, which sold $16.0 million of 8.5% cumulative convertible Trust Preferred Securities (the &#8220;Trust Preferred Securities&#8221;) in a private placement to accredited investors. 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The Unaudited Consolidated Financial Statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the &#8220;SEC&#8221;). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders&#8217; equity. 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Under the Directors Plan, independent directors may elect to defer all or a portion of their annual retainer fee in the form of RSUs. In addition, directors receive a non-election retainer in the form of RSUs. These RSUs vest ratably over one year and have dividend rights but no voting rights. 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The Bank considers its primary lending area to be Nassau and Suffolk Counties located on Long Island and the New York City boroughs. A substantial portion of the Bank&#8217;s loans is secured by real estate in these areas. 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Repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan, such as automobiles. 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Assigned risk rating grades are continuously updated as new information is obtained. Loans risk rated special mention; substandard and doubtful are reviewed on a quarterly basis. 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font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: left; font-weight: bold;">&#160;</td> <td style="text-align: right; font-weight: bold;">-</td> <td style="text-align: left; font-weight: bold;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Commercial and industrial:</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #cceeff; 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padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: bold;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; font-weight: bold;">-</td> <td style="text-align: left; padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: bold;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; font-weight: bold;">-</td> <td style="text-align: left; padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: bold;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; font-weight: bold;">-</td> <td style="text-align: left; padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="padding-bottom: 1pt; 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ASU 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendments require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). ASU 2016-01 eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These amendments are effective for public business entities for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years. 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The amendments should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The amendment requires disclosure that the practical expedient was used. The Company adopted the guidance in the first quarter of 2018 using the practical expedient for prior comparative periods. The change in presentation did not impact the Company&#8217;s operating results or financial condition. Refer to Note 8. 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The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in ASU 2017-09. The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The amendments should be applied prospectively to an award modified on or after the adoption date. 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The Company is currently evaluating the impact of ASU 2016-02 on the consolidated financial statements. 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The amendments also simplify the application of the hedge accounting guidance. The amendments in the Update better align an entity&#8217;s risk management activities and financial reporting for hedging relationships through changes in both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. While the Company continues to assess all potential impacts of the standard, ASU 2017-12 is not expected to have a material impact on the Company&#8217;s Consolidated Financial Statements.</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><b><i><u>Standards Effective in 2020</u></i></b></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>ASU 2016-13,&#160;<i>Financial Instruments &#8211; Credit Losses (Topic 326)</i></u></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (&#8220;CECL&#8221;) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held-to maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. For public business entities that meet the definition of an SEC filer, like the Company, the standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may early adopt for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company plans to adopt ASU 2016-13 in the first quarter of 2020 using the required modified retrospective method with a cumulative effect adjustment as of the beginning of the reporting period. The Company has created a cross-functional committee responsible for evaluating the impact of adopting ASU 2016-13, assessing data and system needs, and implementing required changes to loss estimation methods under the CECL model. The Company cannot yet determine the overall impact this guidance will have on the Company&#8217;s Consolidated Financial Statements.</p> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>ASU 2017-04<i>, Intangibles &#8211; Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment</i></u></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">In January 2017, the FASB amended existing guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments are effective for public business entities that are an SEC filer, like the Company, for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments should be applied prospectively. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments. The adoption of ASU 2017-04 is not expected to have a material effect on the Company&#8217;s Consolidated Financial Statements.</p> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><b>BASIS OF PRESENTATION</b></p> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Bridge Bancorp, Inc. (the &#8220;Registrant&#8221; or &#8220;Company&#8221;), is a registered bank holding company for BNB Bank (the &#8220;Bank&#8221;), which was formerly known as The Bridgehampton National Bank prior to the Bank&#8217;s conversion to a New York chartered commercial bank in December 2017. The Registrant was incorporated under the laws of the State of New York in 1988, at the direction of the Board of Directors of the Bank for the purpose of becoming a bank holding company pursuant to a plan of reorganization under which the former shareholders of the Bank became the shareholders of the Company. Since commencing business in March 1989, after the reorganization, the Registrant has functioned primarily as the holder of all of the Bank&#8217;s common stock. In May 1999, the Bank established a real estate investment trust subsidiary, Bridgehampton Community, Inc. (&#8220;BCI&#8221;), as an operating subsidiary. The assets transferred to BCI are viewed by the bank regulators as part of the Bank&#8217;s assets in consolidation. The operations of the Bank also include Bridge Abstract LLC (&#8220;Bridge Abstract&#8221;), a wholly owned subsidiary of the Bank, which is a broker of title insurance services and Bridge Financial Services LLC (&#8220;Bridge Financial Services&#8221;), an investment services subsidiary that was formed in March 2014. The Company formed&#160;<font style="color: black;">Bridge Statutory Capital Trust II (the &#8220;Trust&#8221;) as a subsidiary in 2009, which sold $16.0 million of 8.5% cumulative convertible Trust Preferred Securities (the &#8220;Trust Preferred Securities&#8221;) in a private placement to accredited investors. The Trust Preferred Securities were redeemed effective January 18, 2017</font>&#160;and the Trust was cancelled effective April 24, 2017<font style="color: black;">.</font></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The accompanying Unaudited Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiary, the Bank, have been prepared in accordance with U.S. generally accepted accounting principles (&#8220;GAAP&#8221;) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The Unaudited Consolidated Financial Statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the &#8220;SEC&#8221;). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders&#8217; equity. The Unaudited Consolidated Financial Statements should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company&#8217;s Annual Report on Form 10-K for the year ended December 31, 2017.</p> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: bold 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><b>RECENT ACCOUNTING PRONOUNCEMENTS</b></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><b><i><u>Adoption of Accounting Standards Effective in 2018</u></i></b></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>Accounting Standards Update (&#8220;ASU&#8221;) 2014-09,&#160;<i>Revenue from Contracts with Customers</i>&#160;(Topic 606)</u></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">On January 1, 2018, the Company adopted ASU 2014-09 and all subsequent amendments to the ASU (collectively, Accounting Standards Codification 606 (&#8220;ASC 606&#8221;), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as other real estate owned. These amendments are effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The majority of the Company&#8217;s revenues come from interest income and other sources that are outside the scope of ASC 606. The Company&#8217;s services that fall within the scope of ASC 606 are presented in services charges and other fees within non-interest income and are recognized as revenue as the Company satisfies its obligations to its customers.</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The Company adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts continue to be reported in accordance with legacy GAAP. The adoption of ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment to retained earnings was recorded at January 1, 2018.</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The Company evaluated its customer contracts, which are typically day-to-day contracts where each day represents a renewal of the contract. The Company&#8217;s revenue streams accounted for under ASC 606 primarily consist of service charges on deposit accounts and fees for other customer services. The Company&#8217;s revenues from transaction-based fees, such as overdraft fees, ATM use fees, stop payment charges, and ACH fees are recognized at the time the transaction is executed, which is the point in time the Company fulfills the customer&#8217;s request and satisfies the performance obligation. Account maintenance fees, which relate primarily to monthly service charges, are earned over the course of the month, representing the same period over which the Company satisfies the performance obligation. The Company earns revenues from interchange fees from debit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions are recognized daily, concurrently with the services provided to the cardholder. As a result of the Company&#8217;s assessment ASC 606, there is no change in the amount and timing of revenue recognized in the six months ended June 30, 2018.</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>ASU 2016-01,&#160;<i>Financial Instruments &#8211; Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities</i></u></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">In January 2016, the FASB amended existing guidance that requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendments require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). ASU 2016-01 eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These amendments are effective for public business entities for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years. The adoption of this standard did not have a material effect on the Company&#8217;s operating results or financial condition; however, it did impact the fair value disclosures included in Note 5.</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>ASU 2017-07,&#160;<i>Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost</i></u></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">In March 2017, the FASB amended existing guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit costs are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The line item used in the income statement to present the other components of net benefit cost must be disclosed. Additionally, only the service cost component of net benefit cost is eligible for capitalization, if applicable. For public business entities, like the Company, ASU 2017-07 was effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The amendment requires disclosure that the practical expedient was used. The Company adopted the guidance in the first quarter of 2018 using the practical expedient for prior comparative periods. The change in presentation did not impact the Company&#8217;s operating results or financial condition. Refer to Note 8. Pension and Postretirement Plans for further details of the components of net periodic benefit cost.</p> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>ASU 2017-09,&#160;<i>Compensation &#8211; Stock Compensation (Topic 718) &#8211; Scope of Modification Accounting</i></u></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">In May 2017, the FASB provided guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in ASU 2017-09. The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The amendments should be applied prospectively to an award modified on or after the adoption date. The adoption of ASU 2017-09 did not impact the Company&#8217;s Consolidated Financial Statements.</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><b><i>&#160;</i></b></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><b><i><u>Standards Effective in 2019</u></i></b></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>ASU 2016-02,&#160;<i>Leases</i>&#160;(Topic 842)</u></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">In February 2016, the FASB amended existing guidance that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) A lease liability, which is a lessee&#8217;s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee&#8217;s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, the lessor accounting model and Topic 606,&#160;<i>Revenue from Contracts with Customers</i>. ASU 2016-02 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently evaluating the impact of ASU 2016-02 on the consolidated financial statements. Based on leases outstanding at June 30, 2018, the Company does not expect the updates to have a material impact on the income statement, but does anticipate the adoption of ASU 2016-02 will result in an increase in the Company&#8217;s Consolidated Balance Sheets as a result of recognizing right-of-use assets and lease liabilities.</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>ASU 2017-12,&#160;<i>Derivatives and Hedging</i>&#160;(Topic 815):&#160;<i>Targeted Improvements to Accounting for Hedging Activities</i></u></p> <p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">In August 2017, the FASB provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity&#8217;s risk management activities in its financial statements. 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ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. 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style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: 8pt;">Residential mortgages</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: left; font-weight: bold;">&#160;</td> <td style="text-align: right; font-weight: bold;">-</td> <td style="text-align: left; font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: left; font-weight: bold;">&#160;</td> <td style="text-align: right; font-weight: bold;">-</td> <td 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style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; 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Document and Entity Information - shares
6 Months Ended
Jun. 30, 2018
Jul. 31, 2018
Document And Entity Information [Abstract]    
Entity Registrant Name BRIDGE BANCORP INC  
Entity Central Index Key 0000846617  
Trading Symbol bdge  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Common Stock, Shares Outstanding   19,785,248
Document Type 10-Q  
Document Period End Date Jun. 30, 2018  
Amendment Flag false  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q2  
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Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Assets    
Cash and due from banks $ 74,255 $ 76,614
Interest earning deposits with banks 31,636 18,133
Total cash and cash equivalents 105,891 94,747
Securities available for sale, at fair value 659,076 759,916
Securities held to maturity (fair value of $165,606 and $179,885, respectively) 169,717 180,866
Total securities 828,793 940,782
Securities, restricted 26,747 35,349
Loans held for sale 6,338  
Loans held for investment 3,180,676 3,102,752
Allowance for loan losses (31,652) (31,707)
Loans, net 3,149,024 3,071,045
Premises and equipment, net 36,043 33,505
Accrued interest receivable 11,625 11,652
Goodwill 105,950 105,950
Other intangible assets 4,866 5,214
Prepaid pension 10,141 9,936
Bank owned life insurance 88,594 87,493
Other real estate owned 175  
Other assets 40,598 34,329
Total assets 4,414,785 4,430,002
Liabilities    
Demand deposits 1,307,325 1,338,701
Savings, NOW and money market deposits 1,919,653 1,773,478
Certificates of deposit of $100,000 or more 119,774 158,584
Other time deposits 206,445 63,780
Total deposits 3,553,197 3,334,543
Federal funds purchased   50,000
Repurchase agreements 1,437 877
Federal Home Loan Bank advances 300,863 501,374
Subordinated debentures, net 78,711 78,641
Other liabilities and accrued expenses 40,822 35,367
Total liabilities 3,975,030 4,000,802
Commitments and contingencies
Stockholders' equity    
Preferred stock, par value $.01 per share (2,000,000 shares authorized; none issued)
Common stock, par value $.01 per share (40,000,000 shares authorized; 19,798,989 and 19,719,575 shares issued, respectively; and 19,785,889 and 19,709,360 shares outstanding, respectively) 198 197
Surplus 349,538 347,691
Retained earnings 106,206 96,547
Treasury stock at cost, 13,100 and 10,215 shares, respectively (441) (296)
Total stockholders' equity before accumulated other comprehensive income (loss) 455,501 444,139
Accumulated other comprehensive loss, net of income taxes (15,746) (14,939)
Total stockholders' equity 439,755 429,200
Total liabilities and stockholders' equity $ 4,414,785 $ 4,430,002
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Consolidated Balance Sheets (Parentheticals) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Consolidated Balance Sheets    
Securities held to maturity, fair value (in dollars) $ 165,606 $ 179,885
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 2,000,000 2,000,000
Preferred stock, shares issued 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 40,000,000 40,000,000
Common stock, shares issued 19,798,989 19,719,575
Common stock, shares outstanding 19,785,889 19,709,360
Treasury Stock, shares 13,100 10,215
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Consolidated Statements of Income (unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Interest income:        
Loans (including fee income) $ 35,770 $ 30,252 $ 71,383 $ 59,635
Mortgage-backed securities, CMOs and other asset-backed securities 3,825 3,898 7,549 7,715
U.S. GSE securities 243 301 522 601
State and municipal obligations 747 1,010 1,559 2,005
Corporate bonds 358 293 713 583
Deposits with banks 106 71 196 117
Other interest and dividend income 502 409 993 795
Total interest income 41,551 36,234 82,915 71,451
Interest expense:        
Savings, NOW and money market deposits 3,438 1,812 5,952 3,363
Certificates of deposit of $100,000 or more 582 431 1,099 810
Other time deposits 493 179 688 357
Federal funds purchased and repurchase agreements 57 355 1,172 671
Federal Home Loan Bank advances 1,917 1,529 3,266 2,678
Subordinated debentures 1,135 1,135 2,270 2,270
Junior subordinated debentures       48
Total interest expense 7,622 5,441 14,447 10,197
Net interest income 33,929 30,793 68,468 61,254
Provision for loan losses 400 950 1,200 1,750
Net interest income after provision for loan losses 33,529 29,843 67,268 59,504
Non-interest (loss) income:        
Service charges and other fees $ 2,562 $ 2,220 $ 4,725 $ 4,270
Type of Revenue [Extensible List] us-gaap:DepositAccountMember us-gaap:DepositAccountMember us-gaap:DepositAccountMember us-gaap:DepositAccountMember
Net securities losses $ (7,921)   $ (7,921)  
Title fee income 450 $ 541 955 $ 1,091
Gain on sale of loans 322   322  
Gain on sale of Small Business Administration loans 691 799 1,062 1,342
BOLI income 555 567 1,101 1,127
Other operating income 763 382 1,291 801
Total non-interest (loss) income (2,578) 4,509 1,535 8,631
Non-interest expense:        
Salaries and employee benefits 13,055 11,592 25,867 23,092
Occupancy and equipment 3,205 3,439 6,448 6,837
Technology and communications 1,568 1,390 3,211 2,725
Marketing and advertising 1,240 1,577 2,202 2,488
Professional services 881 642 2,093 1,423
FDIC assessments 436 332 900 643
Amortization of other intangible assets 242 274 488 553
Other operating expenses 1,880 1,760 3,896 3,541
Total non-interest expense 22,507 21,006 45,105 41,302
Income before income taxes 8,444 13,346 23,698 26,833
Income tax expense 1,701 4,505 4,882 8,821
Net income $ 6,743 $ 8,841 $ 18,816 $ 18,012
Basic earnings per share (in dollars per share) $ 0.34 $ 0.45 $ 0.95 $ 0.91
Diluted earnings per share (in dollars per share) $ 0.34 $ 0.45 $ 0.95 $ 0.91
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.10.0.1
Consolidated Statements of Comprehensive Income (unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Consolidated Statements of Comprehensive Income        
Net income $ 6,743 $ 8,841 $ 18,816 $ 18,012
Other comprehensive income (loss):        
Change in unrealized net gains (losses) on securities available for sale, net of reclassifications and deferred income taxes 2,616 1,533 (3,472) 2,543
Adjustment to pension liability, net of reclassifications and deferred income taxes 68 66 135 163
Unrealized gains (losses) on cash flow hedges, net of reclassifications and deferred income taxes 479 (547) 2,530 (373)
Total other comprehensive income (loss) 3,163 1,052 (807) 2,333
Comprehensive income $ 9,906 $ 9,893 $ 18,009 $ 20,345
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.10.0.1
Consolidated Statements of Stockholders' Equity (unaudited) - USD ($)
$ in Thousands
Common Stock
Surplus
Retained Earnings
Treasury Stock
Accumulated Other Comprehensive Loss
Total
Balance at Dec. 31, 2016 $ 191 $ 329,427 $ 91,594 $ (161) $ (13,064) $ 407,987
Increase (Decrease) in Stockholders' Equity            
Net income     18,012     18,012
Shares issued under the dividend reinvestment plan   469       469
Shares issued for trust preferred securities conversions (529,292 shares) 5 14,944       14,949
Stock awards granted and distributed 1 (416)   415    
Stock awards forfeited   20   (20)    
Repurchase of surrendered stock from vesting of restricted stock awards       (264)   (264)
Share based compensation expense   1,324       1,324
Cash dividend declared, $0.46 per share     (9,103)     (9,103)
Other comprehensive income (loss), net of deferred income taxes         2,333 2,333
Balance at Jun. 30, 2017 197 345,768 100,503 (30) (10,731) 435,707
Balance at Dec. 31, 2017 197 347,691 96,547 (296) (14,939) 429,200
Increase (Decrease) in Stockholders' Equity            
Net income     18,816     18,816
Shares issued under the dividend reinvestment plan   468       468
Stock awards granted and distributed 1 (523)   522    
Stock awards forfeited   115   (115)    
Repurchase of surrendered stock from vesting of restricted stock awards       (552)   (552)
Share based compensation expense   1,787       1,787
Cash dividend declared, $0.46 per share     (9,157)     (9,157)
Other comprehensive income (loss), net of deferred income taxes         (807) (807)
Balance at Jun. 30, 2018 $ 198 $ 349,538 $ 106,206 $ (441) $ (15,746) $ 439,755
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
Consolidated Statements of Stockholders' Equity (Parentheticals) (unaudited) - $ / shares
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Consolidated Statements of Stockholders' Equity    
Number of shares issued for trust preferred securities conversions   529,292
Cash dividend declared (in dollars per share) $ 0.46 $ 0.46
XML 18 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
Consolidated Statements of Cash Flows (unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Cash flows from operating activities:    
Net income $ 18,816 $ 18,012
Adjustments to reconcile net income to net cash provided by operating activities:    
Provision for loan losses 1,200 1,750
Depreciation and amortization of premises and equipment 1,897 1,900
Net (accretion) and other amortization (1,444) (3,949)
Net amortization on securities 2,507 3,291
Increase in cash surrender value of bank owned life insurance (1,101) (1,127)
Amortization of intangible assets 488 553
Share based compensation expense 1,787 1,324
Net securities losses 7,921  
Decrease in accrued interest receivable 27 504
Small Business Administration ("SBA") loans originated for sale (19,446) (14,483)
Proceeds from sale of the guaranteed portion of SBA loans 14,417 16,123
Gain on sale of the guaranteed portion of SBA loans (1,062) (1,342)
Gain on sale of loans (322)  
Decrease (increase) in other assets 279 (2,203)
Increase in accrued expenses and other liabilities 2,929 3,636
Net cash provided by operating activities 28,893 23,989
Cash flows from investing activities:    
Purchases of securities available for sale (194,835) (73,916)
Purchases of securities, restricted (481,422) (303,890)
Purchases of securities held to maturity (1,000) (2,031)
Proceeds from sales of securities available for sale 230,372  
Redemption of securities, restricted 490,024 299,814
Maturities, calls and principal payments of securities available for sale 50,431 59,170
Maturities, calls and principal payments of securities held to maturity 11,696 20,756
Net increase in loans (118,281) (192,825)
Proceeds from loan sale 40,133  
Purchase of premises and equipment (4,435) (1,685)
Net cash provided by (used in) investing activities 22,683 (194,607)
Cash flows from financing activities:    
Net increase in deposits 218,676 133,646
Net decrease in federal funds purchased (50,000) (50,000)
Net (decrease) increase in Federal Home Loan Bank advances (200,427) 67,479
Repayment of junior subordinated debentures   (352)
Net increase in repurchase agreements 560 57
Net proceeds from issuance of common stock 468 469
Repurchase of surrendered stock from vesting of restricted stock awards (552) (264)
Cash dividends paid (9,157) (9,103)
Net cash (used in) provided by financing activities (40,432) 141,932
Net increase (decrease) in cash and cash equivalents 11,144 (28,686)
Cash and cash equivalents at beginning of period 94,747 113,838
Cash and cash equivalents at end of period 105,891 85,152
Cash paid for:    
Interest 14,382 10,498
Income taxes 2,471 165
Non-cash investing and financing activities:    
Conversion of junior subordinated debentures   $ 15,350
Transfers from portfolio loans to other real estate owned $ 175  
XML 19 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
BASIS OF PRESENTATION
6 Months Ended
Jun. 30, 2018
BASIS OF PRESENTATION  
BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

 

Bridge Bancorp, Inc. (the “Registrant” or “Company”), is a registered bank holding company for BNB Bank (the “Bank”), which was formerly known as The Bridgehampton National Bank prior to the Bank’s conversion to a New York chartered commercial bank in December 2017. The Registrant was incorporated under the laws of the State of New York in 1988, at the direction of the Board of Directors of the Bank for the purpose of becoming a bank holding company pursuant to a plan of reorganization under which the former shareholders of the Bank became the shareholders of the Company. Since commencing business in March 1989, after the reorganization, the Registrant has functioned primarily as the holder of all of the Bank’s common stock. In May 1999, the Bank established a real estate investment trust subsidiary, Bridgehampton Community, Inc. (“BCI”), as an operating subsidiary. The assets transferred to BCI are viewed by the bank regulators as part of the Bank’s assets in consolidation. The operations of the Bank also include Bridge Abstract LLC (“Bridge Abstract”), a wholly owned subsidiary of the Bank, which is a broker of title insurance services and Bridge Financial Services LLC (“Bridge Financial Services”), an investment services subsidiary that was formed in March 2014. The Company formed Bridge Statutory Capital Trust II (the “Trust”) as a subsidiary in 2009, which sold $16.0 million of 8.5% cumulative convertible Trust Preferred Securities (the “Trust Preferred Securities”) in a private placement to accredited investors. The Trust Preferred Securities were redeemed effective January 18, 2017 and the Trust was cancelled effective April 24, 2017.

 

The accompanying Unaudited Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiary, the Bank, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The Unaudited Consolidated Financial Statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders’ equity. The Unaudited Consolidated Financial Statements should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.10.0.1
EARNINGS PER SHARE
6 Months Ended
Jun. 30, 2018
EARNINGS PER SHARE  
EARNINGS PER SHARE

2. EARNINGS PER SHARE

 

Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) No. 260-10-45 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”).  The restricted stock awards and certain restricted stock units granted by the Company contain non-forfeitable rights to dividends and therefore are considered participating securities.  The two-class method for calculating basic EPS excludes dividends paid to participating securities and any undistributed earnings attributable to participating securities.

  

The following table presents the computation of EPS for the three and six months ended June 30, 2018 and 2017:

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(In thousands, except per share data)   2018     2017     2018     2017  
Net income   $ 6,743     $ 8,841     $ 18,816     $ 18,012  
Dividends paid on and earnings allocated to participating securities     (148 )     (182 )     (405 )     (360 )
Income attributable to common stock   $ 6,595     $ 8,659     $ 18,411     $ 17,652  
                                 
Weighted average common shares outstanding, including participating securities     19,884       19,781       19,859       19,725  
Weighted average participating securities     (445 )     (410 )     (433 )     (401 )
Weighted average common shares outstanding     19,439       19,371       19,426       19,324  
Basic earnings per common share   $ 0.34     $ 0.45     $ 0.95     $ 0.91  
                                 
Income attributable to common stock   $ 6,595     $ 8,659     $ 18,411     $ 17,652  
Impact of assumed conversions - interest on 8.5% trust preferred securities     -       -       -       32  
Income attributable to common stock including assumed conversions   $ 6,595     $ 8,659     $ 18,411     $ 17,684  
                                 
Weighted average common shares outstanding     19,439       19,371       19,426       19,324  
Incremental shares from assumed conversions of options and restricted stock units     29       23       27       20  
Incremental shares from assumed conversions of 8.5% trust preferred securities     -       -       -       35  
Weighted average common and equivalent shares outstanding     19,468       19,394       19,453       19,379  
Diluted earnings per common share   $ 0.34     $ 0.45     $ 0.95     $ 0.91  

 

There were 47,393 stock options outstanding at June 30, 2018 that were not included in the computation of diluted earnings per share for the three and six months ended June 30, 2018 because the options’ exercise prices were greater than the average market price of common stock and were, therefore, antidilutive. There were no stock options outstanding at June 30, 2017.

 

There were no restricted stock units that were antidilutive for the three months ended June 30, 2018 and 2017. There were zero and 20,084 restricted stock units that were antidilutive for the six months ended June 30, 2018 and 2017, respectively.

 

The $15.7 million in trust preferred securities outstanding at December 31, 2016 were redeemed effective January 18, 2017 and therefore were not included in the computation of diluted earnings per share for the three months ended June 30, 2017, but were dilutive for the six months ended June 30, 2017 and therefore were included in the computation of diluted earnings per share for that period.

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCK BASED COMPENSATION PLANS
6 Months Ended
Jun. 30, 2018
STOCK BASED COMPENSATION PLANS  
STOCK BASED COMPENSATION PLANS

3. STOCK BASED COMPENSATION PLANS

 

The Bridge Bancorp, Inc. 2012 Stock-Based Incentive Plan (“2012 SBIP”) provides for the grant of stock-based and other incentive awards to officers, employees and directors of the Company. The 2012 SBIP superseded the Bridge Bancorp, Inc. 2006 Equity Incentive Plan. The number of shares of common stock of Bridge Bancorp, Inc. available for stock-based awards under the 2012 SBIP is 525,000 plus 278,385 shares that were remaining under the 2006 Equity Incentive Plan. Of the total 803,385 shares of common stock approved for issuance under the 2012 SBIP, 273,585 shares remain available for issuance at June 30, 2018, including shares that may be granted in the form of stock options, restricted stock awards (“RSAs”), or restricted stock units (“RSUs”).

 

The Compensation Committee of the Board of Directors determines awards under the 2012 SBIP. The Company accounts for the 2012 SBIP under FASB ASC No. 718.

 

Stock Options

 

Stock options may be either incentive stock options, which bestow certain tax benefits on the optionee, or non-qualified stock options, not qualifying for such benefits. All options have an exercise price that is not less than the market value of the Company’s common stock on the date of the grant.

  

The fair value of each option granted is estimated on the date of the grant using the Black-Scholes option-pricing model. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of the Company’s common stock as of the exercise or reporting date.

 

During the six months ended June 30, 2018, in accordance with the Long Term Incentive Plan (“LTI Plan”) for Named Executive Officers (“NEOs”), the Company granted 47,393 stock options. All of the stock options granted vest ratably over three years. The estimated weighted-average grant-date fair value of all stock options granted in the six months ended June 30, 2018 was $6.52 per stock option, using the Black-Scholes option-pricing model with assumptions as follows: dividend yield of 2.80%; expected volatility rate of 27.53%; risk-free interest rate of 2.67%; and expected option life of 6.5 years. There were no stock options granted during the six months ended June 30, 2017.

 

Compensation expense attributable to stock options was $26 thousand and $39 thousand for the three and six months ended June 30, 2018, respectively. There was no compensation expense attributable to stock options for the six months ended June 30, 2017 because there were no stock options outstanding as of June 30, 2017 and December 31, 2016. As of June 30, 2018, there was $270 thousand of total unrecognized compensation cost related to unvested stock options. The cost is expected to be recognized over a weighted-average period of 2.6 years.

 

The following table summarizes the status of the Company’s stock options as of and for the six months ended June 30, 2018:

 

                Weighted        
          Weighted     Average        
    Number     Average     Remaining     Aggregate  
    of     Exercise     Contractual     Intrinsic  
(Dollars in thousands, except per share amounts)   Options     Price     Life     Value  
Outstanding, January 1,  2018     -     $ -                  
Granted     47,393       36.19                  
Outstanding, June 30, 2018     47,393     $ 36.19       9.6 years     $ -  
Vested and Exercisable, June 30, 2018     -     $ -     $ -     $ -  

 

    Number of     Weighted
Average
 
Range of Exercise Prices   Options     Exercise Price  
$36.19     47,393     $ 36.19  
      47,393     $ 36.19  

 

Restricted Stock Awards

 

The Company’s RSAs are shares of the Company’s common stock that are forfeitable and are subject to restrictions on transfer prior to the vesting date. RSAs are forfeited if the award holder departs the Company before vesting. RSAs carry dividend and voting rights from the date of grant. The vesting of time-vested RSAs depends upon the award holder continuing to render services to the Company. The Company’s performance-based RSAs vest subject to the achievement of the Company’s 2018 corporate goals.

 

The following table summarizes the unvested RSA activity for the six months ended June 30, 2018:

 

          Weighted  
          Average Grant-Date  
    Shares     Fair Value  
Unvested, January 1, 2018     317,692     $ 27.16  
Granted     82,982       33.00  
Vested     (58,233 )     23.90  
Forfeited     (3,766 )     30.48  
Unvested, June 30, 2018     338,675     $ 29.12  

 

During the six months ended June 30, 2018, the Company granted a total of 82,982 RSAs. Of the 82,982 RSAs granted, 44,750 time-vested RSAs vest ratably over five years, 13,115 time-vested RSAs vest ratably over three years, and 25,117 performance-based RSAs vest ratably over two years, subject to the achievement of the Company’s 2018 corporate goals. As of June 30, 2018, there were 338,675 unvested RSAs consisting of 314,175 time-vested RSAs and 24,500 performance-based RSAs.

 

Compensation expense attributable to RSAs was $717 thousand and $1.3 million for the three and six months ended June 30, 2018, respectively, and $503 thousand and $916 thousand for the three and six months ended June 30, 2017, respectively. As of June 30, 2018, there was $6.4 million of total unrecognized compensation cost related to non-vested RSAs. The cost is expected to be recognized over a weighted-average period of 3.5 years.

 

Restricted Stock Units

 

Long Term Incentive Plan

 

An RSU is an award that is denominated in shares of the Company’s common stock on the date of grant and is similar to an RSA award, except no shares of the Company’s common stock are actually issued to the award recipient on the date of grant of an RSU. RSUs are subject to a time-based vesting schedule or the satisfaction of performance conditions, and are settled in shares of the Company’s common stock. RSUs do not provide voting rights and RSUs may provide dividend equivalent rights from the date of grant.

 

During the six months ended June 30, 2018, in accordance with the LTI Plan for NEOs, the Company granted 21,693 RSUs. Of the 21,693 RSUs granted, 12,522 time-vested RSUs vest ratably over five years and 9,171 performance-based RSUs vest subject to the achievement of the Company’s three-year corporate goal for the years 2018, 2019 and 2020.

 

The following table summarizes the unvested NEO RSU activity for the six months ended June 30, 2018:

 

          Weighted  
          Average Grant-Date  
    Shares     Fair Value  
Unvested, January 1, 2018     68,776     $ 24.46  
Granted     21,693       33.23  
Reinvested dividends     987       26.01  
Forfeited     (13,333 )     21.85  
Unvested, June 30, 2018     78,123     $ 27.36  

 

Compensation expense attributable to LTI Plan RSUs was $119 thousand and $220 thousand for the three and six months ended June 30, 2018, respectively, and $79 thousand and $148 thousand in connection with these awards for the three and six months ended June 30, 2017, respectively. As of June 30, 2018, there was $1.5 million of total unrecognized compensation cost related to non-vested RSUs. The cost is expected to be recognized over a weighted-average period of 3.5 years.

 

Directors Plan

 

In April 2009, the Company adopted a Directors Deferred Compensation Plan (“Directors Plan”). Under the Directors Plan, independent directors may elect to defer all or a portion of their annual retainer fee in the form of RSUs. In addition, directors receive a non-election retainer in the form of RSUs. These RSUs vest ratably over one year and have dividend rights but no voting rights. In connection with the Directors Plan, the Company recorded expense of $140 thousand and $275 thousand in connection with these RSUs for the three and six months ended June 30, 2018, respectively, and $132 thousand and $260 thousand for the three and six months ended June 30, 2017, respectively.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES
6 Months Ended
Jun. 30, 2018
SECURITIES  
SECURITIES

4.  SECURITIES

 

The following tables summarize the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio at June 30, 2018 and December 31, 2017 and the corresponding amounts of unrealized gains and losses therein:

 

    June 30, 2018  
          Gross     Gross     Estimated  
    Amortized     Unrealized     Unrealized     Fair  
(In thousands)   Cost     Gains     Losses     Value  
Available for sale:                                
U.S. GSE securities   $ 29,996     $ -     $ (1,258 )   $ 28,738  
State and municipal obligations     38,423       50       (525 )     37,948  
U.S. GSE residential mortgage-backed securities     101,884       -       (3,688 )     98,196  
U.S. GSE residential collateralized mortgage obligations     340,978       6       (8,937 )     332,047  
U.S. GSE commercial mortgage-backed securities     3,584       -       (67 )     3,517  
U.S. GSE commercial collateralized mortgage obligations     94,845       -       (2,438 )     92,407  
Other asset backed securities     24,250       -       (727 )     23,523  
Corporate bonds     46,000       -       (3,300 )     42,700  
Total available for sale     679,960       56       (20,940 )     659,076  
                                 
Held to maturity:                                
State and municipal obligations     57,350       497       (481 )     57,366  
U.S. GSE residential mortgage-backed securities     10,441       -       (451 )     9,990  
U.S. GSE residential collateralized mortgage obligations     51,026       81       (1,318 )     49,789  
U.S. GSE commercial mortgage-backed securities     20,626       -       (897 )     19,729  
U.S. GSE commercial collateralized mortgage obligations     30,274       -       (1,542 )     28,732  
Total held to maturity     169,717       578       (4,689 )     165,606  
Total securities   $ 849,677     $ 634     $ (25,629 )   $ 824,682  

 

    December 31, 2017  
          Gross     Gross     Estimated  
    Amortized     Unrealized     Unrealized     Fair  
(In thousands)   Cost     Gains     Losses     Value  
Available for sale:                                
U.S. GSE securities   $ 57,994     $ -     $ (1,180 )   $ 56,814  
State and municipal obligations     87,582       259       (819 )     87,022  
U.S. GSE residential mortgage-backed securities     189,705       29       (2,833 )     186,901  
U.S. GSE residential collateralized mortgage obligations     314,390       16       (7,016 )     307,390  
U.S. GSE commercial mortgage-backed securities     6,017       2       (40 )     5,979  
U.S. GSE commercial collateralized mortgage obligations     49,965       -       (1,249 )     48,716  
Other asset backed securities     24,250       -       (849 )     23,401  
Corporate bonds     46,000       -       (2,307 )     43,693  
Total available for sale     775,903       306       (16,293 )     759,916  
                                 
Held to maturity:                                
State and municipal obligations     60,762       972       (64 )     61,670  
U.S. GSE residential mortgage-backed securities     11,424       -       (261 )     11,163  
U.S. GSE residential collateralized mortgage obligations     54,250       244       (666 )     53,828  
U.S. GSE commercial mortgage-backed securities     22,953       77       (438 )     22,592  
U.S. GSE commercial collateralized mortgage obligations     31,477       -       (845 )     30,632  
Total held to maturity     180,866       1,293       (2,274 )     179,885  
Total securities   $ 956,769     $ 1,599     $ (18,567 )   $ 939,801  

 

The following table summarizes the amortized cost and estimated fair value by contractual maturity of the available for sale and held to maturity investment securities portfolio at June 30, 2018. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

    June 30, 2018  
          Estimated  
(In thousands)   Amortized Cost     Fair Value  
Maturity                
Available for sale:                
Within one year   $ 8,029     $ 8,016  
One to five years     24,616       24,104  
Five to ten years     90,038       85,462  
Beyond ten years     557,277       541,494  
Total   $ 679,960     $ 659,076  
                 
Held to maturity:                
Within one year   $ 3,377     $ 3,376  
One to five years     30,563       30,374  
Five to ten years     51,321       50,491  
Beyond ten years     84,456       81,365  
Total   $ 169,717     $ 165,606  

 

The following tables summarize securities with gross unrealized losses at June 30, 2018 and December 31, 2017, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:

 

    June 30, 2018  
    Less than 12 months     Greater than 12 months  
    Estimated     Gross     Estimated     Gross  
    Fair     Unrealized     Fair     Unrealized  
(In thousands)   Value     Losses     Value     Losses  
Available for sale:                                
U.S. GSE securities   $ -     $ -     $ 28,739     $ (1,258 )
State and municipal obligations     22,612       (318 )     10,404       (207 )
U.S. GSE residential mortgage-backed securities     39,156       (1,267 )     59,040       (2,421 )
U.S. GSE residential collateralized mortgage obligations     189,200       (2,329 )     132,871       (6,608 )
U.S. GSE commercial mortgage-backed securities     3,518       (67 )     -       -  
U.S. GSE commercial collateralized mortgage obligations     47,103       (326 )     45,304       (2,112 )
Other asset backed securities     -       -       23,523       (727 )
Corporate bonds     12,930       (1,069 )     29,769       (2,231 )
Total available for sale     314,519       (5,376 )     329,650       (15,564 )
                                 
Held to maturity:                                
State and municipal obligations     28,822       (437 )     2,396       (44 )
U.S. GSE residential mortgage-backed securities     1,205       (35 )     8,784       (416 )
U.S. GSE residential collateralized mortgage obligations     23,685       (492 )     19,392       (826 )
U.S. GSE commercial mortgage-backed securities     11,857       (388 )     7,871       (509 )
U.S. GSE commercial collateralized mortgage obligations     9,489       (400 )     19,244       (1,142 )
Total held to maturity   $ 75,058     $ (1,752 )   $ 57,687     $ (2,937 )

  

    December 31, 2017  
    Less than 12 months     Greater than 12 months  
    Estimated     Gross     Estimated     Gross  
    Fair     Unrealized     Fair     Unrealized  
(In thousands)   Value     Losses     Value     Losses  
Available for sale:                                
U.S. GSE securities   $ -     $ -     $ 56,815     $ (1,180 )
State and municipal obligations     35,350       (301 )     28,165       (518 )
U.S. GSE residential mortgage-backed securities     107,408       (1,153 )     69,571       (1,680 )
U.S. GSE residential collateralized mortgage obligations     77,705       (759 )     224,932       (6,257 )
U.S. GSE commercial mortgage-backed securities     2,345       (40 )     -       -  
U.S. GSE commercial collateralized mortgage obligations     452       (1 )     48,264       (1,248 )
Other asset backed securities     -       -       23,401       (849 )
Corporate bonds     13,588       (412 )     30,105       (1,895 )
Total available for sale     236,848       (2,666 )     481,253       (13,627 )
                                 
Held to maturity:                                
State and municipal obligations     7,709       (57 )     1,009       (7 )
U.S. GSE residential mortgage-backed securities     1,359       (16 )     9,804       (245 )
U.S. GSE residential collateralized mortgage obligations     21,329       (94 )     21,112       (572 )
U.S. GSE commercial mortgage-backed securities     8,789       (121 )     8,303       (317 )
U.S. GSE commercial collateralized mortgage obligations     10,341       (116 )     20,290       (729 )
Total held to maturity   $ 49,527     $ (404 )   $ 60,518     $ (1,870 )

 

Other-Than-Temporary Impairment

 

Management evaluates securities for other-than-temporary impairment (“OTTI”) quarterly and more frequently when economic or market conditions warrant. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held to maturity are generally evaluated for OTTI under FASB ASC 320, “Accounting for Certain Investments in Debt and Equity Securities”. In determining OTTI under the FASB ASC 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. 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 these criteria, the amount of impairment is split into two components: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

 

At June 30, 2018substantially all of the securities in an unrealized loss position had a fixed interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. Other asset backed securities are comprised of student loan backed bonds which are guaranteed by the U.S. Department of Education for 97% to 100% of principal. Additionally, the bonds have credit support of 3% to 5% and have maintained their Aa3 Moody’s rating during the time the Bank has owned them.  The corporate bonds within the portfolio have all maintained an investment grade rating by either Moody’s or Standard and Poor’s. None of the unrealized losses is related to credit losses. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2018.

 

Sales and Calls of Securities

 

There were $230.4 million of proceeds from sales of securities with gross losses of $7.9 million realized for the three and six months ended June 30, 2018. There were no proceeds from sales of securities for the three and six months ended June 30, 2017. There were $0.9 million and $1.9 million of proceeds from calls of securities for the three and six months ended June 30, 2018, respectively. There were no proceeds from calls of securities for the three and six months ended June 30, 2017.

 

Pledged Securities

 

Securities having a fair value of $366.4 million and $513.5 million at June 30, 2018 and December 31, 2017, respectively, were pledged to secure public deposits and Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) overnight borrowings.

 

Trading Securities

 

The Company did not hold any trading securities during the six months ended June 30, 2018 or the year ended December 31, 2017.

 

Restricted Securities

 

The Bank is a member of the FHLB of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. The Bank is a member of the Atlantic Central Banker’s Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the FRB system and required to own FRB stock. FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. The Bank owned $26.7 million and $35.3 million in FHLB, ACBB and FRB stock at June 30, 2018 and December 31, 2017, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
FAIR VALUE
6 Months Ended
Jun. 30, 2018
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS  
FAIR VALUE

5. FAIR VALUE

 

As described in Note 14. Recent Accounting Pronouncements, during the first quarter of 2018, the Company adopted ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The Company adopted the amended guidance that requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

 

FASB ASC No. 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

 

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

 

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

The following tables summarize assets and liabilities measured at fair value on a recurring basis:

 

    June 30, 2018  
          Fair Value Measurements Using:  
                Significant        
          Quoted Prices In     Other     Significant  
          Active Markets for     Observable     Unobservable  
    Carrying     Identical Assets     Inputs     Inputs  
(In thousands)   Value     (Level 1)     (Level 2)     (Level 3)  
Financial assets:                                
Available for sale securities:                            
U.S. GSE securities   $ 28,738             $ 28,738          
State and municipal obligations     37,948               37,948          
U.S. GSE residential mortgage-backed securities     98,196               98,196          
U.S. GSE residential collateralized mortgage obligations     332,047               332,047          
U.S. GSE commercial mortgage-backed securities     3,517               3,517          
U.S. GSE commercial collateralized mortgage obligations     92,407               92,407          
Other asset backed securities     23,523               23,523          
Corporate bonds     42,700               42,700          
Total available for sale securities   $ 659,076             $ 659,076          
Derivatives   $ 8,743             $ 8,743          
                                 
Financial liabilities:                                
Derivatives   $ 2,451             $ 2,451          

 

    December 31, 2017  
          Fair Value Measurements Using:  
                Significant        
          Quoted Prices In     Other     Significant  
          Active Markets for     Observable     Unobservable  
    Carrying     Identical Assets     Inputs     Inputs  
(In thousands)   Value     (Level 1)     (Level 2)     (Level 3)  
Financial assets:                                
Available for sale securities:                            
U.S. GSE securities   $ 56,814             $ 56,814          
State and municipal obligations     87,022               87,022          
U.S. GSE residential mortgage-backed securities     186,901               186,901          
U.S. GSE residential collateralized mortgage obligations     307,390               307,390          
U.S. GSE commercial mortgage-backed securities     5,979               5,979          
U.S. GSE commercial collateralized mortgage obligations     48,716               48,716          
Other asset backed securities     23,401               23,401          
Corporate bonds     43,693               43,693          
Total available for sale securities   $ 759,916             $ 759,916          
Derivatives   $ 4,546             $ 4,546          
                                 
Financial liabilities:                                
Derivatives   $ 1,823             $ 1,823          

 

The following tables summarize assets measured at fair value on a non-recurring basis:

 

    June 30, 2018  
          Fair Value Measurements Using:  
                Significant        
          Quoted Prices In     Other     Significant  
          Active Markets for     Observable     Unobservable  
    Carrying     Identical Assets     Inputs     Inputs  
(In thousands)   Value     (Level 1)     (Level 2)     (Level 3)  
Impaired loans   $ -                 $ -  
Other real estate owned   $ 175                     $ 175  

 

    December 31, 2017  
          Fair Value Measurements Using:  
                Significant        
          Quoted Prices In     Other     Significant  
          Active Markets for     Observable     Unobservable  
    Carrying     Identical Assets     Inputs     Inputs  
(In thousands)   Value     (Level 1)     (Level 2)     (Level 3)  
Impaired loans   $ -                 $ -  
Other real estate owned   $ -                     $ -  

 

There were no impaired loans with an allocated allowance for loan losses at June 30, 2018. Impaired loans with an allocated allowance for loan losses at December 31, 2017 had a carrying amount of zero, which is made up of the outstanding balance of $1.7 million, net of a valuation allowance of $1.7 million. This resulted in an additional provision for loan losses of $1.7 million that is included in the amount reported on the Consolidated Statements of Income for the year ended December 31, 2017.

 

Other real estate owned at June 30, 2018 had a carrying amount of $0.2 million with no valuation allowance recorded. Accordingly, there was no additional provision for loan losses included in the amount reported on the Consolidated Statements of Income. There was no other real estate owned at December 31, 2017.

 

The Company used the following methods and assumptions in estimating the fair value of its financial instruments:

 

Cash and Due from Banks and Interest Earning Deposits with Banks: Carrying amounts approximate fair value, since these instruments are either payable on demand or have short-term maturities and as such are classified as Level 1.

 

Securities Available for Sale and Held to Maturity: If available, the estimated fair values are based on independent dealer quotations on nationally recognized securities exchanges and are classified as Level 1. For securities where quoted prices are not available, fair value is based on matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities resulting in a Level 2 classification.

 

Derivatives: Represents interest rate swaps for which the estimated fair values are based on valuation models using observable market data as of the measurement date resulting in a Level 2 classification.

 

Impaired Loans and Other Real Estate Owned: For impaired loans, the Company evaluates the fair value of the loan in accordance with current accounting guidance.  For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of other real estate owned is also evaluated in accordance with current accounting guidance and determined based on recent appraised values less the estimated cost to sell. 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 independent appraisers to adjust for differences between the comparable sales and income data available. Adjustments may relate to location, square footage, condition, amenities, market rate of leases as well as timing of comparable sales. All appraisals undergo a second review process to insure that the methodology employed and the values derived are reasonable. The fair value of the loan is compared to the carrying value to determine if any write-down or specific reserve is required. Impaired loans are evaluated quarterly for additional impairment and adjusted accordingly.

 

Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the Credit Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On a quarterly basis, the Company compares the actual sale price of collateral that has been sold to the most recent appraised value to determine what additional adjustments should be made to appraisal values to arrive at fair value. Management also considers the appraisal values for commercial properties associated with current loan origination activity. Collectively, this information is reviewed to help assess current trends in commercial property values. For each collateral dependent impaired loan, management considers information that relates to the type of commercial property to determine if such properties may have appreciated or depreciated in value since the date of the most recent appraisal. Adjustments to fair value are made only when the analysis indicates a probable decline in collateral values. Adjustments made in the appraisal process are not deemed material to the overall consolidated financial statements given the level of impaired loans measured at fair value on a nonrecurring basis.

 

Deposits: The estimated fair values of certificates of deposit are based on discounted cash flow calculations that use a replacement cost of funds approach to establishing discount rates for certificate of deposit maturities resulting in a Level 2 classification. Stated value is fair value for all other deposits resulting in a Level 1 classification.

 

Borrowed Funds: Represents federal funds purchased, repurchase agreements and FHLB advances for which the estimated fair values are based on discounted cash flow calculations that use a replacement cost of funds approach to establishing discount rates for funding maturities resulting in a Level 1 classification for overnight federal funds purchased, repurchase agreements and FHLB advances and a Level 2 classification for all other maturity terms.

 

Accrued Interest Receivable and Payable: For these short-term instruments, the carrying amount is a reasonable estimate of the fair value resulting in a Level 1, 2 or 3 classification consistent with the underlying asset or liability the interest is associated with.

 

Off-Balance-Sheet Liabilities: The fair value of off-balance-sheet commitments to extend credit is estimated using fees currently charged to enter into similar agreements. The fair value is immaterial as of June 30, 2018 and December 31, 2017.

 

Fair value estimates are made at specific points in time and are based on existing on-and off-balance sheet financial instruments. These estimates are subjective in nature and dependent on a number of significant assumptions associated with each financial instrument or group of financial instruments, including estimates of discount rates, risks associated with specific financial instruments, estimates of future cash flows, and relevant available market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do not reflect the value of anticipated future business, premiums or discounts that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, or the tax consequences of realizing gains or losses on the sale of financial instruments.

 

The following tables summarize the estimated fair values and recorded carrying amounts of the Company’s financial instruments at June 30, 2018 and December 31, 2017:

 

    June 30, 2018  
          Fair Value Measurements Using:        
                Significant              
          Quoted Prices In     Other     Significant        
          Active Markets for     Observable     Unobservable     Total  
    Carrying     Identical Assets     Inputs     Inputs     Fair  
(In thousands)   Amount     (Level 1)     (Level 2)     (Level 3)     Value  
Financial assets:                                        
Cash and due from banks   $ 74,255     $ 74,255     $     $     $ 74,255  
Interest earning deposits with banks     31,636       31,636                   31,636  
Securities available for sale     659,076             659,076             659,076  
Securities restricted     26,747       n/a       n/a       n/a       n/a  
Securities held to maturity     169,717             165,606             165,606  
Loans held for sale     6,338             6,852             6,852  
Loans, net     3,149,024                   3,129,139       3,129,139  
Derivatives     8,743             8,743             8,743  
Accrued interest receivable     11,625             2,881       8,744       11,625  
                                         
Financial liabilities:                                        
Certificates of deposit     326,219             323,551             323,551  
Demand and other deposits     3,226,978       3,226,978                   3,226,978  
Federal Home Loan Bank advances     300,863       10,000       284,531             294,531  
Repurchase agreements     1,437             1,437             1,437  
Subordinated debentures     78,711             74,913             74,913  
Derivatives     2,451             2,451             2,451  
Accrued interest payable     1,639             1,639             1,639  

  

    December 31, 2017  
          Fair Value Measurements Using:        
                Significant              
          Quoted Prices In     Other     Significant        
          Active Markets for     Observable     Unobservable     Total  
    Carrying     Identical Assets     Inputs     Inputs     Fair  
(In thousands)   Amount     (Level 1)     (Level 2)     (Level 3)     Value  
Financial assets:                                        
Cash and due from banks   $ 76,614     $ 76,614     $ -     $ -     $ 76,614  
Interest earning deposits with banks     18,133       18,133       -       -       18,133  
Securities available for sale     759,916       -       759,916       -       759,916  
Securities restricted     35,349       n/a       n/a       n/a       n/a  
Securities held to maturity     180,866       -       179,885       -       179,885  
Loans, net     3,071,045       -       -       3,010,023       3,010,023  
Derivatives     4,546       -       4,546       -       4,546  
Accrued interest receivable     11,652       -       3,211       8,441       11,652  
                                         
Financial liabilities:                                        
Certificates of deposit     222,364       -       220,775       -       220,775  
Demand and other deposits     3,112,179       3,112,179       -       -       3,112,179  
Federal funds purchased     50,000       50,000       -       -       50,000  
Federal Home Loan Bank advances     501,374       185,000       313,558       -       498,558  
Repurchase agreements     877       -       877       -       877  
Subordinated debentures     78,641       -       77,933       -       77,933  
Derivatives     1,823       -       1,823       -       1,823  
Accrued interest payable     1,574       -       1,574       -       1,574  
XML 24 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
LOANS
6 Months Ended
Jun. 30, 2018
LOANS  
LOANS

6. LOANS

 

The following table sets forth the major classifications of loans:

 

(In thousands)   June 30, 2018     December 31, 2017  
Commercial real estate mortgage loans   $ 1,327,947     $ 1,293,906  
Multi-family mortgage loans     570,670       595,280  
Residential real estate mortgage loans     510,303       464,264  
Commercial, industrial and agricultural loans     629,906       616,003  
Real estate construction and land loans     116,899       107,759  
Installment/consumer loans     20,051       21,041  
Total loans     3,175,776       3,098,253  
Net deferred loan costs and fees     4,900       4,499  
Total loans held for investment     3,180,676       3,102,752  
Allowance for loan losses     (31,652 )     (31,707 )
Loans, net   $ 3,149,024     $ 3,071,045  

 

In June 2015, the Company completed the acquisition of Community National Bank (“CNB”) resulting in the addition of $729.4 million of acquired loans recorded at their fair value. There were approximately $303.8 million and $359.4 million of acquired CNB loans remaining as of June 30, 2018 and December 31, 2017, respectively.

 

In February 2014, the Company completed the acquisition of FNBNY Bancorp, Inc. and its wholly owned subsidiary First National Bank of New York (collectively “FNBNY”) resulting in the addition of $89.7 million of acquired loans recorded at their fair value. There were approximately $13.2 million and $15.4 million of acquired FNBNY loans remaining as of June 30, 2018 and December 31, 2017, respectively.

 

Lending Risk

 

The principal business of the Bank is lending in commercial real estate mortgage loans, multi-family mortgage loans, residential real estate mortgage loans, construction loans, home equity loans, commercial, industrial and agricultural loans, land loans and consumer loans. The Bank considers its primary lending area to be Nassau and Suffolk Counties located on Long Island and the New York City boroughs. A substantial portion of the Bank’s loans is secured by real estate in these areas. Accordingly, the ultimate collectability of the loan portfolio is susceptible to changes in market and economic conditions in this region.

  

Commercial Real Estate Mortgages

 

Loans in this classification include income producing investment properties and owner occupied real estate used for business purposes. The underlying properties are located largely in the Bank’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 $250,000 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.

 

Multi-Family Mortgages

 

Loans in this classification include income producing residential investment properties of five or more families. The loans are usually made in areas with limited single-family residences generating high demand for these facilities.  Loans are made to established owners with a proven and demonstrable record of strong performance. Loans are secured by a first mortgage lien on the subject property with a loan to value ratio generally not exceeding 75%. Repayment is derived generally from the rental income generated from the property and may be supplemented by the owners’ personal cash flow. Credit risk arises with an increase in vacancy rates, property mismanagement and the predominance of non-recourse loans that are customary in the industry. 

 

Residential Real Estate Mortgages and Home Equity Loans

 

Loans in these classifications are generally secured by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, can have an effect on the credit quality in this loan class. The Bank generally does not originate loans with a loan-to-value ratio greater than 80% and does not grant subprime loans.

 

Commercial, Industrial and Agricultural Loans

 

Loans in this classification are made to businesses and include term loans, lines of credit, senior secured loans to corporations, equipment financing and taxi medallion loans. 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.

 

Real Estate Construction and Land Loans

 

Loans in this classification 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 primarily 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. To a lesser extent, this class includes commercial development projects that the Company finances, which in most cases require interest only during construction, and then convert to permanent financing. Construction delays, cost overruns, market conditions and the availability of permanent financing, to the extent such permanent financing is not being provided by the Bank, all affect the credit risk in this loan class.

 

Installment and Consumer Loans

 

Loans in this classification may be either secured or unsecured. Repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan, such as automobiles. Therefore, the overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this loan class.

 

Credit Quality Indicators

 

The Company categorizes loans into risk categories of pass, special mention, substandard and doubtful based on relevant information about the ability of borrowers to service their debt including repayment patterns, probable incurred losses, past loss experience, current economic conditions, and various types of concentrations of credit. Assigned risk rating grades are continuously updated as new information is obtained. Loans risk rated special mention; substandard and doubtful are reviewed on a quarterly basis. The Company uses the following definitions for risk rating grades:

  

Pass: Loans classified as pass include current loans performing in accordance with contractual terms, pools of homogenous residential real estate and installment/consumer loans that are not individually risk rated and loans which do not exhibit certain risk factors that require greater than usual monitoring by management.

 

Special mention: Loans classified as special mention, while generally not delinquent, have 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 Bank's credit position at some future date.

 

Substandard: Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

 

Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard loan, and may also be in delinquency status and have defined weaknesses based on currently existing facts, conditions and values making collection or liquidation in full highly questionable and improbable.

 

The following tables represent loans categorized by class and internally assigned risk grades as of June 30, 2018 and December 31, 2017:

 

    June 30, 2018  
(In thousands)   Pass     Special Mention     Substandard     Doubtful     Total  
Commercial real estate:                                        
Owner occupied   $ 464,708     $ 835     $ 18,109     $ -     $ 483,652  
Non-owner occupied     841,338       -       2,957       -       844,295  
Multi-family     570,670       -       -       -       570,670  
Residential real estate:                                        
Residential mortgage     432,515       8,558       861       -       441,934  
Home equity     66,433       1,235       701       -       68,369  
Commercial and industrial:                                        
Secured     95,758       10,386       13,309       -       119,453  
Unsecured     491,851       12,422       6,180       -       510,453  
Real estate construction and land loans     116,588       -       311       -       116,899  
Installment/consumer loans     20,039       12       -               20,051  
Total loans   $ 3,099,900     $ 33,448     $ 42,428     $ -     $ 3,175,776  

 

At June 30, 2018, there were $0.4 million and $0.8 million of acquired CNB loans included in the special mention and substandard grades, respectively, and $0.2 million and $0.3 million of acquired FNBNY loans included in the special mention and substandard grades, respectively.

 

    December 31, 2017  
(In thousands)   Pass     Special Mention     Substandard     Doubtful     Total  
Commercial real estate:                                        
Owner occupied   $ 451,264     $ 1,796     $ 19,589     $ -     $ 472,649  
Non-owner occupied     808,612       8,056       4,589       -       821,257  
Multi-family     595,280       -       -       -       595,280  
Residential real estate:                                        
Residential mortgage     393,029       4,854       290       -       398,173  
Home equity     64,601       698       792       -       66,091  
Commercial and industrial:                                        
Secured     86,116       12,637       13,560       -       112,313  
Unsecured     485,598       14,553       3,539       -       503,690  
Real estate construction and land loans     107,440       -       319       -       107,759  
Installment/consumer loans     21,020       16       5       -       21,041  
Total loans   $ 3,012,960     $ 42,610     $ 42,683     $ -     $ 3,098,253  

 

At December 31, 2017, there were $0.4 million and $1.6 million of acquired CNB loans included in the special mention and substandard grades, respectively, and $0.2 million and $0.3 million of acquired FNBNY loans included in the special mention and substandard grades, respectively.

 

Past Due and Nonaccrual Loans

 

The following tables represent the aging of the recorded investment in past due loans as of June 30, 2018 and December 31, 2017 by class of loans, as defined by FASB ASC 310-10:

 

 

    June 30, 2018  
(In thousands)   30-59
Days
Past
Due
    60-89
Days
Past
Due
    ≥90 Days
Past Due
and
Accruing
    Nonaccrual
Including 90
Days or
More
Past Due
    Total Past
Due and
Nonaccrual
    Current     Total Loans  
Commercial real estate:                                                        
Owner occupied   $ 532     $ -     $ -     $ 382     $ 914     $ 482,738     $ 483,652  
Non-owner occupied     415       -       -       -       415       843,880       844,295  
Multi-family     -       -       -       -       -       570,670       570,670  
Residential real estate:                                                        
Residential mortgages     1,231       -       619       41       1,891       440,043       441,934  
Home equity     458       557       289       161       1,465       66,904       68,369  
Commercial and industrial:                                                        
Secured     141       41       26       573       781       118,672       119,453  
Unsecured     990       -       -       274       1,264       509,189       510,453  
Real estate construction and land loans     -       -       -       152       152       116,747       116,899  
Installment/consumer loans     1       25       -       16       42       20,009       20,051  
Total loans   $ 3,768     $ 623     $ 934     $ 1,599     $ 6,924     $ 3,168,852     $ 3,175,776  

 

    December 31, 2017  
(In thousands)   30-59
Days
Past Due
    60-89
Days Past
Due
    ≥90 Days
Past Due
and
Accruing
    Nonaccrual
Including 90
Days or More
Past Due
    Total Past
Due and
Nonaccrual
    Current     Total Loans  
Commercial real estate:                                                        
Owner occupied   $ 284     $ -     $ 175     $ 2,205     $ 2,664     $ 469,985     $ 472,649  
Non-owner occupied     -       -       1,163       -       1,163       820,094       821,257  
Multi-family     -       -       -       -       -       595,280       595,280  
Residential real estate:                                                        
Residential mortgages     2,074       398       -       401       2,873       395,300       398,173  
Home equity     329       -       271       161       761       65,330       66,091  
Commercial and industrial:                                                        
Secured     113       41       225       570       949       111,364       112,313  
Unsecured     18       35       -       3,618       3,671       500,019       503,690  
Real estate construction and land loans     -       281       -       -       281       107,478       107,759  
Installment/consumer loans     36       5       -       -       41       21,000       21,041  
Total loans   $ 2,854     $ 760     $ 1,834     $ 6,955     $ 12,403     $ 3,085,850     $ 3,098,253  

 

 

There were $1.3 million and $2.4 million of acquired loans that were 30-89 days past due at June 30, 2018 and December 31, 2017, respectively. 

 

Impaired Loans

 

At June 30, 2018 and December 31, 2017, the Company had individually impaired loans as defined by FASB ASC No. 310, “Receivables” of $15.3 million and $22.5 million, respectively. The decrease in impaired loans was attributable to the payoff of certain troubled debt restructurings ("TDRs”), partially offset by new TDRs during the six months ended June 30, 2018, coupled with a decrease in non-accrual loans due to the charge-off of one loan and sales and payoffs. During the six months ended June 30, 2018, the Bank modified certain commercial and industrial TDRs totaling $6.8 million. For a loan to be considered impaired, management determines after review whether it is probable that the Bank will not be able to collect all amounts due according to the contractual terms of the loan agreement. Management applies its normal loan review procedures in making these judgments. Impaired loans include individually classified nonaccrual loans and TDRs. For impaired loans, the Bank evaluates the impairment of the loan in accordance with FASB ASC 310-10-35-22. Impairment is determined based on the present value of expected future cash flows discounted at the loan’s effective interest rate. For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of the collateral or present value of expected cash flows is compared to the carrying value to determine if any write-down or specific loan loss allowance allocation is required.

 

The following tables set forth the recorded investment, unpaid principal balance and related allowance by class of loans at June 30, 2018 and December 31, 2017 for individually impaired loans. The tables also set forth the average recorded investment of individually impaired loans and interest income recognized while the loans were impaired during the three and six months ended June 30, 2018 and 2017:

 

    June 30, 2018    

Three Months Ended 

June 30, 2018

   

Six Months Ended

June 30, 2018

 
(In thousands)   Recorded
Investment
    Unpaid
Principal
Balance
    Related
Allocated
Allowance
    Average
Recorded
Investment
    Interest
Income
Recognized
    Average
Recorded
Investment
    Interest
Income
Recognized
 
With no related allowance recorded:                                                        
Commercial real estate:                                                        
Owner occupied   $ 287     $ 289     $ -     $ 184     $ -     $ 92     $ -  
Non-owner occupied     1,162       1,162       -       1,163       7       1,168       8  
Residential real estate:                                                        
Residential mortgages     -       -       -       -       -       -       -  
Home equity     -       -       -       -       -       -       -  
Commercial and industrial:                                                        
Secured     8,685       9,332       -       8,702       58       8,723       114  
Unsecured     5,166       5,166       -       5,178       39       5,055       76  
Total with no related allowance recorded   $ 15,300     $ 15,949     $ -     $ 15,227     $ 104     $ 15,038     $ 198  
                                                         
With an allowance recorded:                                                        
Commercial real estate:                                                        
Owner occupied   $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Non-owner occupied     -       -       -       -       -       -       -  
Residential real estate:                                                        
Residential mortgages     -       -       -       -       -       -       -  
Home equity     -       -       -       -       -       -       -  
Commercial and industrial:                                                        
Secured     -       -       -       -       -       -       -  
Unsecured     -       -       -       -       -       -       -  
Total with an allowance recorded   $ -     $ -     $ -     $ -     $ -     $ -     $ -  
                                                         
Total:                                                        
Commercial real estate:                                                        
Owner occupied   $ 287     $ 289     $ -     $ 184     $ -     $ 92     $ -  
Non-owner occupied     1,162       1,162       -       1,163       7       1,168       8  
Residential real estate:                                                        
Residential mortgages     -       -       -       -       -       -       -  
Home equity     -       -       -       -       -       -       -  
Commercial and industrial:                                                        
Secured     8,685       9,332       -       8,702       58       8,723       114  
Unsecured     5,166       5,166       -       5,178       39       5,055       76  
Total   $ 15,300     $ 15,949     $ -     $ 15,227     $ 104     $ 15,038     $ 198  
                                                         

  

    December 31, 2017    

Three Months Ended

June 30, 2017

    Six Months Ended 
June 30, 2017
 
(In thousands)   Recorded
Investment
    Unpaid
Principal
Balance
    Related
Allocated
Allowance
    Average
Recorded
Investment
    Interest
Income
Recognized
    Average
Recorded
Investment
    Interest
Income
Recognized
 
With no related allowance recorded:                                                        
Commercial real estate:                                                        
Owner occupied   $ 2,073     $ 2,073     $ -     $ 302     $ 3     $ 309     $ 5  
Non-owner occupied     9,089       9,089       -       8,944       101       5,075       198  
Residential real estate:                                                        
Residential mortgages     -       -       -       535       -       498       -  
Home equity     100       100       -       260       3       261       3  
Commercial and industrial:                                                        
Secured     7,368       8,013       -       1,491       53       1,015       61  
Unsecured     2,154       2,408       -       400       3       396       8  
Total with no related allowance recorded   $ 20,784     $ 21,683     $ -     $ 11,932     $ 163     $ 7,554     $ 275  
                                                         
With an allowance recorded:                                                        
Commercial real estate:                                                        
Owner occupied   $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Non-owner occupied     -       -       -       -       -       -       -  
Residential real estate:                                                        
Residential mortgages     -       -       -       -       -       -       -  
Home equity     -       -       -       -       -       -       -  
Commercial and industrial:                                                        
Secured     -       -       -       405       -       203       -  
Unsecured     1,708       3,235       1,708       58       -       29       1  
Total with an allowance recorded   $ 1,708     $ 3,235     $ 1,708     $ 463     $ -     $ 232     $ 1  
                                                         
Total:                                                        
Commercial real estate:                                                        
Owner occupied   $ 2,073     $ 2,073     $ -     $ 302     $ 3     $ 309     $ 5  
Non-owner occupied     9,089       9,089       -       8,944       101       5,075       198  
Residential real estate:                                                        
Residential mortgages     -       -       -       535       -       498       -  
Home equity     100       100       -       260       3       261       3  
Commercial and industrial:                                                        
Secured     7,368       8,013       -       1,896       53       1,218       61  
Unsecured     3,862       5,643       1,708       458       3       425       9  
Total   $ 22,492     $ 24,918     $ 1,708     $ 12,395     $ 163     $ 7,786     $ 276  
                                                         

 

The Bank had one other real estate owned, consisting of $0.2 million at June 30, 2018 compared to none at December 31, 2017.

 

Troubled Debt Restructurings

 

The terms of certain loans were modified and are considered TDRs. The modification of the terms of such loans generally includes one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. The modification of these loans involved loans to borrowers who were experiencing financial difficulties.

 

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed to determine if that borrower is currently in payment default under any of its obligations or whether there is a probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.

 

During the six months ended June 30, 2018, the Bank modified eight commercial and industrial loans totaling $6.8 million as TDRs compared to two commercial real estate mortgage loans totaling $7.8 million and certain taxi medallion loans totaling $2.8 million as TDR’s for the six months ended June 30, 2017. These modifications did not result in a change to the recorded investment of the loans and did not increase the allowance for loan losses for those periods. During the six months ended June 30, 2018, there were no charge-offs relating to TDRs and there were no loans modified as TDRs for which there was a payment default within twelve months following the modification. During the six months ended June 30, 2017, there were no charge-offs relating to TDRs and there were two loans modified as TDRs for which there was a payment default within twelve months following the modification. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

  

As of June 30, 2018 and December 31, 2017, the Company had $70 thousand and $5 thousand, respectively, of nonaccrual TDRs and $15.5 million and $16.7 million, respectively, of performing TDRs. At June 30, 2018 and December 31, 2017, nonaccrual TDRs were unsecured. The Bank has no commitment to lend additional funds to these debtors.

 

The terms of certain other loans were modified during the six months ended June 30, 2018 that did not meet the definition of a TDR. These loans have a total recorded investment at June 30, 2018 of $25.3 million. These loans were to borrowers who were not experiencing financial difficulties.

 

Purchased Credit Impaired Loans

 

Loans acquired in a business combination are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan losses is not recorded at the acquisition date.

 

At the acquisition date, the purchased credit impaired (“PCI”) loans acquired as part of the FNBNY acquisition had contractually required principal and interest payments receivable of $40.3 million, expected cash flows of $28.4 million, and a fair value (initial carrying amount) of $21.8 million. The difference between the contractually required principal and interest payments receivable and the expected cash flows of $11.9 million represented the non-accretable difference. The difference between the expected cash flows and fair value of $6.6 million represented the initial accretable yield. At June 30, 2018, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $2.6 million and $1.4 million, respectively, with a remaining non-accretable difference of $0.6 million. At December 31, 2017, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $4.0 million and $2.4 million, respectively, with a remaining non-accretable difference of $0.7 million.

 

At the acquisition date, the PCI loans acquired as part of the CNB acquisition had contractually required principal and interest payments receivable of $23.4 million, expected cash flows of $10.1 million, and a fair value (initial carrying amount) of $8.7 million. The difference between the contractually required principal and interest payments receivable and the expected cash flows of $13.3 million represented the non-accretable difference. The difference between the expected cash flows and fair value of $1.4 million represented the initial accretable yield. At June 30, 2018, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $1.4 million and $0.1 million, respectively, with a remaining non-accretable difference of $0.8 million. At December 31, 2017, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $7.6 million and $1.0 million, respectively, with a remaining non-accretable difference of $5.3 million.

 

The following table summarizes the activity in the accretable yield for the PCI loans:

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(In thousands)   2018     2017     2018     2017  
Balance at beginning of period   $ 957     $ 5,333     $ 2,151     $ 6,915  
Accretion     (269 )     (1,046 )     (1,302 )     (2,903 )
Reclassification from (to) nonaccretable difference during the period     424       (321 )     263       (46 )
Accretable discount at end of period   $ 1,112     $ 3,966     $ 1,112     $ 3,966  
XML 25 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
ALLOWANCE FOR LOAN LOSSES
6 Months Ended
Jun. 30, 2018
Allowance For Loan Losses Disclosure [Abstract]  
ALLOWANCE FOR LOAN LOSSES

7. ALLOWANCE FOR LOAN LOSSES

 

The following tables represent the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment, as defined under FASB ASC 310-10, and based on impairment method as of June 30, 2018 and December 31, 2017. The tables include loans acquired from CNB and FNBNY.

 

    June 30, 2018  
(In thousands)   Commercial
Real Estate
Mortgage
Loans
    Multi-
Family
Loans
    Residential
Real Estate
Mortgage
Loans
    Commercial,
Industrial
and
Agricultural
Loans
    Real Estate
Construction
and Land
Loans
    Installment/
Consumer
Loans
    Total  
Allowance for loan losses:                                                        
Individually evaluated for impairment   $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Collectively evaluated for impairment     11,206       2,466       4,237       12,358       1,263       122       31,652  
Loans acquired with deteriorated credit quality     -       -       -       -       -       -       -  
Total allowance for loan losses   $ 11,206     $ 2,466     $ 4,237     $ 12,358     $ 1,263     $ 122     $ 31,652  
                                                         
Loans:                                                        
Individually evaluated for impairment   $ 1,449     $ -     $ -     $ 13,851     $ -     $ -     $ 15,300  
Collectively evaluated for impairment     1,326,498       570,067       509,693       615,808       116,899       20,051       3,159,016  
Loans acquired with deteriorated credit quality     -       603       610       247       -       -       1,460  
Total loans   $ 1,327,947     $ 570,670     $ 510,303     $ 629,906     $ 116,899     $ 20,051     $ 3,175,776  

 

    December 31, 2017  
(In thousands)   Commercial
Real Estate
Mortgage
Loans
    Multi-
Family
Loans
    Residential
Real Estate
Mortgage
Loans
    Commercial,
Industrial
and
Agricultural
Loans
    Real Estate
Construction
and Land
Loans
    Installment/
Consumer
Loans
    Total  
Allowance for loan losses:                                                        
Individually evaluated for impairment   $ -     $ -     $ -     $ 1,708     $ -     $ -     $ 1,708  
Collectively evaluated for impairment     11,048       4,521       2,438       11,130       740       122       29,999  
Loans acquired with deteriorated credit quality     -       -       -       -       -       -       -  
Total allowance for loan losses   $ 11,048     $ 4,521     $ 2,438     $ 12,838     $ 740     $ 122     $ 31,707  
                                                         
Loans:                                                        
Individually evaluated for impairment   $ 11,162     $ -     $ 100     $ 11,230     $ -     $ -     $ 22,492  
Collectively evaluated for impairment     1,281,837       593,645       463,575       604,329       107,759       21,041       3,072,186  
Loans acquired with deteriorated credit quality     907       1,635       589       444       -       -       3,575  
Total loans   $ 1,293,906     $ 595,280     $ 464,264     $ 616,003     $ 107,759     $ 21,041     $ 3,098,253  

 

The following tables represent the changes in the allowance for loan losses for the three and six months ended June 30, 2018, and 2017, by portfolio segment, as defined under FASB ASC 310-10. The portfolio segments represent the categories that the Bank uses to determine its allowance for loan losses.

 

    Three Months Ended June 30, 2018  
                      Commercial,                    
    Commercial           Residential     Industrial     Real Estate              
    Real Estate     Multi-     Real Estate     and     Construction     Installment/        
    Mortgage     Family     Mortgage     Agricultural     and Land     Consumer        
(In thousands)   Loans     Loans     Loans     Loans     Loans     Loans     Total  
Allowance for loan losses:                                                        
Beginning balance   $ 11,334     $ 3,002     $ 3,495     $ 14,055     $ 821     $ 105     $ 32,812  
Charge-offs     -       -       (24 )     (1,708 )     -       -       (1,732 )
Recoveries     -       -       -       171       -       1       172  
Provision     (128 )     (536 )     766       (160 )     442       16       400  
Ending balance   $ 11,206     $ 2,466     $ 4,237     $ 12,358     $ 1,263     $ 122     $ 31,652  

 

    Three Months Ended June 30, 2017  
                      Commercial,                    
    Commercial           Residential     Industrial     Real Estate              
    Real Estate     Multi-     Real Estate     and     Construction     Installment/        
    Mortgage     Family     Mortgage     Agricultural     and Land     Consumer        
(In thousands)   Loans     Loans     Loans     Loans     Loans     Loans     Total  
Allowance for loan losses:                                                        
Beginning balance   $ 8,357     $ 6,480     $ 1,415     $ 9,198     $ 1,058     $ 110     $ 26,618  
Charge-offs     -       -       -       (33 )     -       -       (33 )
Recoveries     -       -       1       8       -       -       9  
Provision     2,222       (1,634 )     70       797       (481 )     (24 )     950  
Ending balance   $ 10,579     $ 4,846     $ 1,486     $ 9,970     $ 577     $ 86     $ 27,544  

 

    Six Months Ended June 30, 2018  
                      Commercial,                    
    Commercial           Residential     Industrial     Real Estate              
    Real Estate     Multi-     Real Estate     and     Construction     Installment/        
    Mortgage     Family     Mortgage     Agricultural     and Land     Consumer        
(In thousands)   Loans     Loans     Loans     Loans     Loans     Loans     Total  
Allowance for loan losses:                                                        
Beginning balance   $ 11,048     $ 4,521     $ 2,438     $ 12,838     $ 740     $ 122     $ 31,707  
Charge-offs     -       -       (24 )     (1,708 )     -       -       (1,732 )
Recoveries     -       -       1       475       -       1       477  
Provision     158       (2,055 )     1,822       753       523       (1 )     1,200  
Ending balance   $ 11,206     $ 2,466     $ 4,237     $ 12,358     $ 1,263     $ 122     $ 31,652  

 

    Six Months Ended June 30, 2017  
                      Commercial,                    
    Commercial           Residential     Industrial     Real Estate              
    Real Estate     Multi-     Real Estate     and     Construction     Installment/        
    Mortgage     Family     Mortgage     Agricultural     and Land     Consumer        
(In thousands)   Loans     Loans     Loans     Loans     Loans     Loans     Total  
Allowance for loan losses:                                                        
Beginning balance   $ 9,225     $ 6,264     $ 1,495     $ 7,837     $ 955     $ 128     $ 25,904  
Charge-offs     -       -       -       (128 )     -       -       (128 )
Recoveries     -       -       2       15       -       1       18  
Provision     1,354       (1,418 )     (11 )     2,246       (378 )     (43 )     1,750  
Ending balance   $ 10,579     $ 4,846     $ 1,486     $ 9,970     $ 577     $ 86     $ 27,544  
XML 26 R16.htm IDEA: XBRL DOCUMENT v3.10.0.1
PENSION AND POSTRETIREMENT PLANS
6 Months Ended
Jun. 30, 2018
EMPLOYEE BENEFITS  
PENSION AND POSTRETIREMENT PLANS

8. PENSION AND POSTRETIREMENT PLANS

 

The Bank maintains a noncontributory pension plan covering all eligible employees. The Bank uses a December 31 measurement date for this plan in accordance with FASB ASC 715-30 “Compensation – Retirement Benefits – Defined Benefit Plans – Pension.” During 2012, the Company amended the pension plan by revising the formula for determining benefits effective January 1, 2013, except for certain grandfathered employees. Additionally, new employees hired on or after October 1, 2012 are not eligible for the pension plan.

 

During 2001, the Bank adopted the Bridgehampton National Bank Supplemental Executive Retirement Plan (“SERP”). As recommended by the Compensation Committee of the Board of Directors and approved by the full Board of Directors, the SERP provides benefits to certain employees, whose benefits under the pension plan are limited by the applicable provisions of the Internal Revenue Code. The benefit under the SERP is equal to the additional amount the employee would be entitled to under the Pension Plan and the 401(k) Plan in the absence of such Internal Revenue Code limitations. The assets of the SERP are held in a rabbi trust to maintain the tax-deferred status of the plan and are subject to the general, unsecured creditors of the Company. As a result, the assets of the rabbi trust are reflected on the Consolidated Balance Sheets of the Company.

 

There were no contributions to the pension plan during the six months ended June 30, 2018 and $2.2 million of contributions to the pension plan during the six months ended June 30, 2017There were no contributions to the SERP during the six months ended June 30, 2018 and 2017, respectivelyIn accordance with the SERP, a retired executive received a distribution from the plan totaling $56 thousand during the six months ended June 30, 2018 and 2017, respectively.

 

The Company’s funding policy with respect to its benefit plans is to contribute at least the minimum amounts required by applicable laws and regulations.

 

As described in Note 14. Recent Accounting Pronouncements, during the first quarter of 2018, the Company adopted ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The Company adopted the guidance in the first quarter of 2018 using the practical expedient that permits an employer to use the amounts disclosed in its pension and postretirement benefit plan note for prior comparative periods as the estimation basis for applying retrospective presentation adjustments. The adoption of this Update resulted in the reclassification of $195 thousand and $391 thousand of net periodic benefit credit components other than service cost from salaries and employee benefits expense to other operating expense for the three and six months ended June 30, 2017, respectively. The Company’s service cost component is reported in the Company’s income statement in salaries and employee benefits, which is the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. All other components of net periodic benefit credit are reported in the other operating expenses income statement line. The change in presentation did not impact the Company’s operating results or financial condition.

 

The following table sets forth the components of net periodic benefit (credit) cost:

 

    Three Months Ended June 30,     Six Months Ended June 30,  
      Pension Benefits       SERP Benefits       Pension Benefits       SERP Benefits  
(In thousands)     2018       2017       2018       2017       2018       2017       2018       2017  
Service cost   $ 325     $ 292     $ 72     $ 52     $ 650     $ 585     $ 145     $ 105  
Interest cost     198       186       31       26       395       370       63       52  
Expected return on plan assets     (625 )     (520 )     -       -       (1,250 )     (1,040 )     -       -  
Amortization of net loss     82       112       31       13       165       225       61       26  
Amortization of prior service credit     (19 )     (19 )     -       -       (38 )     (38 )     -       -  
Amortization of transition obligation     -       -       1       7       -       -       2       14  
Net periodic benefit (credit) cost   $ (39 )   $ 51     $ 135     $ 98     $ (78 )   $ 102     $ 271     $ 197  
XML 27 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
6 Months Ended
Jun. 30, 2018
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE  
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

9. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

 

Securities sold under agreements to repurchase totaled $1.4 million at June 30, 2018 and $0.9 million at December 31, 2017. The repurchase agreements were collateralized by investment securities, of which 18% were U.S. GSE residential collateralized mortgage obligations and 82% were U.S. GSE residential mortgage-backed securities with a carrying amount of $2.4 million at June 30, 2018 and 52% were U.S. GSE residential collateralized mortgage obligations and 48% were U.S. GSE residential mortgage-backed securities with a carrying amount of $1.8 million at December 31, 2017.

 

Securities sold under agreements to repurchase are financing arrangements with $1.4 million maturing during the third quarter of 2018. At maturity, the securities underlying the agreements are returned to the Company. The primary risk associated with these secured borrowings is the requirement to pledge a market value based balance of collateral in excess of the borrowed amount. The excess collateral pledged represents an unsecured exposure to the lending counterparty. As the market value of the collateral changes, both through changes in discount rates and spreads as well as related cash flows, additional collateral may need to be pledged. In accordance with the Company’s policies, eligible counterparties are defined and monitored to minimize exposure.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
FEDERAL HOME LOAN BANK ADVANCES
6 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  
FEDERAL HOME LOAN BANK ADVANCES

10. FEDERAL HOME LOAN BANK ADVANCES

 

The following tables set forth the contractual maturities and weighted average interest rates of FHLB advances over the next two years at June 30, 2018 and December 31, 2017:

 

    June 30, 2018  
(Dollars in thousands)
Contractual Maturity
  Amount     Weighted
Average Rate
 
Overnight   $ 10,000       2.08 %
                 
2018     290,000       2.22 %
2019     863       0.81 %
      290,863       2.22 %
Total FHLB advances   $ 300,863       2.21 %

 

    December 31, 2017  

(Dollars in thousands)

Contractual Maturity

  Amount     Weighted 
Average Rate
 
Overnight   $ 185,000       1.53 %
                 
2018     315,083       1.59 %
2019     1,291       0.94 %
      316,374       1.59 %
Total FHLB advances   $ 501,374       1.57 %

 

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. The advances were collateralized by $1.3 billion and $1.2 billion of residential and commercial mortgage loans under a blanket lien arrangement at June 30, 2018 and December 31, 2017, respectively. Based on this collateral and the Company’s holdings of FHLB stock, the Company is eligible to borrow up to a total of $1.3 billion at June 30, 2018.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
BORROWED FUNDS
6 Months Ended
Jun. 30, 2018
Subordinated Borrowings [Abstract]  
BORROWED FUNDS

11. BORROWED FUNDS

 

Subordinated Debentures

 

In September 2015, the Company issued $80.0 million in aggregate principal amount of fixed-to-floating rate subordinated debentures. $40.0 million of the subordinated debentures are callable at par after five years, have a stated maturity of September 30, 2025 and bear interest at a fixed annual rate of 5.25% per year, from and including September 21, 2015 until but excluding September 30, 2020. From and including September 30, 2020 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 360 basis points. The remaining $40.0 million of the subordinated debentures are callable at par after ten years, have a stated maturity of September 30, 2030 and bear interest at a fixed annual rate of 5.75% per year, from and including September 21, 2015 until but excluding September 30, 2025. From and including September 30, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 345 basis points. The subordinated debentures totaled $78.7 million and $78.6 million at June 30, 2018 and December 31, 2017, respectively.

  

The subordinated debentures are included in tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

 

Junior Subordinated Debentures

 

In December 2009, the Company completed the private placement of $16.0 million in aggregate liquidation amount of 8.50% cumulative convertible trust preferred securities (“TPS”), through its subsidiary, Bridge Statutory Capital Trust II (the “Trust”). The TPS had a liquidation amount of $1,000 per security, were convertible into the Company’s common stock, at a modified effective conversion price of $29 per share, matured in 2039 and were callable by the Company at par after September 30, 2014.

 

The Company issued $16.0 million of junior subordinated debentures (the “Debentures”) to the Trust in exchange for ownership of all of the common securities of the Trust and the proceeds of the TPS sold by the Trust. In accordance with accounting guidance, the Trust was not consolidated in the Company’s financial statements, but rather the Debentures were shown as a liability. The Debentures had the same interest rate, maturity and prepayment provisions as the TPS.

 

On December 15, 2016, the Company notified holders of the $15.8 million in outstanding TPS of the full redemption of the TPS on January 18, 2017. The redemption price equaled the liquidation amount, plus accrued but unpaid interest until but not including the redemption date. TPS not converted into shares of the Company’s common stock on or prior to January 17, 2017 were redeemed as of January 18, 2017. 15,450 shares of TPS with a liquidation amount of $15.5 million were converted into 532,740 shares of the Company’s common stock, which includes 100 shares of TPS with a liquidation amount of $100,000 which were converted into 3,448 shares of the Company’s common stock on December 28, 2016. The remaining 350 shares of TPS with a liquidation amount of $350,000 were redeemed on January 18, 2017. The Trust was cancelled effective April 24, 2017.

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVES
6 Months Ended
Jun. 30, 2018
DERIVATIVES  
DERIVATIVES

12. DERIVATIVES

 

Cash Flow Hedges of Interest Rate Risk

 

As part of its asset liability management, the Company utilizes interest rate swap agreements to help manage its interest rate risk position. The notional amount of the interest rate swap does not represent the amount exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

 

Interest rate swaps with notional amounts totaling $290.0 million at June 30, 2018 and December 31, 2017, were designated as cash flow hedges of certain FHLB advances. The swaps were determined to be fully effective during the periods presented and therefore no amount of ineffectiveness has been included in net income. The aggregate fair value of the swaps is recorded in other assets/ (other liabilities), with changes in fair value recorded in other comprehensive income (loss). The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining term of the swaps.

 

The following table summarizes information about the interest rate swaps designated as cash flow hedges at June 30, 2018 and December 31, 2017:

 

(Dollars in thousands)   June 30, 2018     December 31, 2017  
Notional amounts   $ 290,000     $ 290,000  
Weighted average pay rates     1.78 %     1.78 %
Weighted average receive rates     2.33 %     1.61 %
Weighted average maturity     2.14 years       2.64 years  

 

Interest income recorded on these swap transactions totaled $344 thousand and $279 thousand for the three and six months ended June 30, 2018 and interest expense recorded on these swap transactions totaled $459 thousand and $734 thousand for the three and six months ended June 30, 2017, respectively, and is reported as a component of interest expense on FHLB advances. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income/expense as interest payments are made/received on the Company’s variable-rate assets/liabilities. During the six months ended June 30, 2018, the Company had $279 thousand of reclassifications as a reduction to interest expense. During the next twelve months, the Company estimates that $1.9 million will be reclassified as a decrease in interest expense.

  

The following table presents the net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income relating to the cash flow derivative instruments for the three and six months ended June 30, 2018 and 2017:

 

                Amount of loss  
    Amount of gain (loss)     Amount of gain (loss)     recognized in other  
(In thousands)   recognized in OCI     reclassified from OCI     non-interest income  
Interest rate contracts   (Effective Portion)     to interest expense     (Ineffective Portion)  
Three months ended June 30, 2018   $ 1,020     $ 344     $ -  
Six months ended June 30, 2018   $ 3,847     $ 279     $ -  
Three months ended June 30, 2017   $ (1,385 )   $ (459 )   $ -  
Six months ended June 30, 2017   $ (1,360 )   $ (734 )   $ -  

 

The following table reflects the cash flow hedges included in the Consolidated Balance Sheets at the dates indicated:

 

    June 30, 2018     December 31, 2017  
          Fair     Fair           Fair     Fair  
(In thousands)   Notional     Value     Value     Notional     Value     Value  
Included in other assets/(liabilities):   Amount     Asset     Liability     Amount     Asset     Liability  
Interest rate swaps related to FHLB advances   $ 290,000     $ 6,324     $ (32 )   $ 290,000     $ 3,133     $ (410 )

 

Non-Designated Hedges

 

Derivatives not designated as hedges may be used to manage the Company’s exposure to interest rate movements or to provide service to customers but do not meet the requirements for hedge accounting under U.S. GAAP. The Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Company executes with a third party in order to minimize the net risk exposure resulting from such transactions. These interest-rate swap agreements do not qualify for hedge accounting treatment, and therefore changes in fair value are reported in current period earnings.

 

The following table presents summary information about these interest rate swaps at June 30, 2018 and December 31, 2017:

 

(Dollars in thousands)   June 30, 2018     December 31, 2017  
Notional amounts   $ 174,997     $ 147,967  
Weighted average pay rates     4.32 %     3.96 %
Weighted average receive rates     4.32 %     3.96 %
Weighted average maturity     11.92 years       12.37 years  
Fair value of combined interest rate swaps   $ -     $ -  

 

Credit-Risk-Related Contingent Features

 

As of June 30, 2018, the termination value of derivatives in a net asset position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $8.5 million, while there were no derivatives in a net liability position. The Company has minimum collateral posting thresholds with certain of its derivative counterparties. If the termination value of derivatives is a net asset position, the counterparty is required to post collateral against its obligations to the Company under the agreements. However, if the termination value of derivatives is a net liability position, the Company is required to post collateral to the counterparty. At June 30, 2018, the Company received collateral of $8.3 million from its counterparties under the agreements in a net asset position and did not post collateral. If the Company had breached any of these provisions at June 30, 2018, it could have been required to settle its obligations under the agreements at the termination value.

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
6 Months Ended
Jun. 30, 2018
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME  
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

13. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

 

The following table summarizes the components of other comprehensive (loss) income and related income tax effects:

 

    Three Months Ended     Six Months Ended  
(In thousands)   June 30, 2018     June 30, 2017     June 30, 2018     June 30, 2017  
Unrealized holding (losses) gains on available for sale securities   $ (4,231 )   $ 2,595     $ (12,818 )   $ 4,211  
Reclassification adjustment for losses realized in income     7,921       -       7,921       -  
Income tax effect     (1,074 )     (1,062 )     1,425       (1,668 )
Net change in unrealized gains (losses) on available for sale securities     2,616       1,533       (3,472 )     2,543  
                                 
Reclassification adjustment for amortization realized in income     95       113       190       227  
Income tax effect     (27 )     (47 )     (55 )     (64 )
Net change in post-retirement obligation     68       66       135       163  
                                 
Change in fair value of derivatives used for cash flow hedges     1,020       (1,385 )     3,847       (1,360 )
Reclassification adjustment for (gains) losses realized in income     (344 )     459       (279 )     734  
Income tax effect     (197 )     379       (1,038 )     253  
Net change in unrealized gain (loss) on cash flow hedges     479       (547 )     2,530       (373 )
                                 
Other comprehensive income (loss)   $ 3,163     $ 1,052     $ (807 )   $ 2,333  

 

The following is a summary of the accumulated other comprehensive loss balances, net of income taxes, at the dates indicated:

 

          Other Comprehensive        
(In thousands)   December 31, 2017     Income     June 30, 2018  
Unrealized losses on available for sale securities   $ (11,337 )   $ (3,472 )   $ (14,809 )
Unrealized (losses) gain on pension benefits     (5,533 )     135       (5,398 )
Unrealized gains on cash flow hedges     1,931       2,530       4,461  
Accumulated other comprehensive loss, net of income taxes   $ (14,939 )   $ (807 )   $ (15,746 )

 

The following represents the reclassifications out of accumulated other comprehensive (loss) income for the three and six months ended June 30, 2018 and 2017:

 

    Three Months Ended     Six Months Ended     Affected Line Item
    June 30,     June 30,     June 30,     June 30,     in the Consolidated
(In thousands)   2018     2017     2018     2017     Statements of Income
Realized losses on sale of available for sale securities   $ (7,921 )   $ -     $ (7,921 )   $ -     Net securities losses
Amortization of defined benefit pension plan and defined benefit plan component of the SERP:                                    
Prior service credit     19       19       38       38     Other operating expenses
Transition obligation     (1 )     (7 )     (2 )     (14 )   Other operating expenses
Actuarial losses     (113 )     (125 )     (226 )     (251 )   Other operating expenses
Realized gains (losses) on cash flow hedges     344       (459 )     279       (734 )   Interest expense
Total reclassifications, before income tax   $ (7,672 )   $ (572 )   $ (7,832 )   $ (961 )    
Income tax benefit     2,231       234       2,278       393     Income tax expense
Total reclassifications, net of income tax   $ (5,441 )   $ (338 )   $ (5,554 )   $ (568 )    
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
RECENT ACCOUNTING PRONOUNCEMENTS
6 Months Ended
Jun. 30, 2018
RECENT ACCOUNTING PRONOUNCEMENTS  
RECENT ACCOUNTING PRONOUNCEMENTS

14. RECENT ACCOUNTING PRONOUNCEMENTS

 

Adoption of Accounting Standards Effective in 2018

 

Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606)

On January 1, 2018, the Company adopted ASU 2014-09 and all subsequent amendments to the ASU (collectively, Accounting Standards Codification 606 (“ASC 606”), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as other real estate owned. These amendments are effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The majority of the Company’s revenues come from interest income and other sources that are outside the scope of ASC 606. The Company’s services that fall within the scope of ASC 606 are presented in services charges and other fees within non-interest income and are recognized as revenue as the Company satisfies its obligations to its customers.

 

The Company adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts continue to be reported in accordance with legacy GAAP. The adoption of ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment to retained earnings was recorded at January 1, 2018.

 

The Company evaluated its customer contracts, which are typically day-to-day contracts where each day represents a renewal of the contract. The Company’s revenue streams accounted for under ASC 606 primarily consist of service charges on deposit accounts and fees for other customer services. The Company’s revenues from transaction-based fees, such as overdraft fees, ATM use fees, stop payment charges, and ACH fees are recognized at the time the transaction is executed, which is the point in time the Company fulfills the customer’s request and satisfies the performance obligation. Account maintenance fees, which relate primarily to monthly service charges, are earned over the course of the month, representing the same period over which the Company satisfies the performance obligation. The Company earns revenues from interchange fees from debit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions are recognized daily, concurrently with the services provided to the cardholder. As a result of the Company’s assessment ASC 606, there is no change in the amount and timing of revenue recognized in the six months ended June 30, 2018.

 

ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB amended existing guidance that requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendments require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). ASU 2016-01 eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These amendments are effective for public business entities for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years. The adoption of this standard did not have a material effect on the Company’s operating results or financial condition; however, it did impact the fair value disclosures included in Note 5.

 

ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB amended existing guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit costs are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The line item used in the income statement to present the other components of net benefit cost must be disclosed. Additionally, only the service cost component of net benefit cost is eligible for capitalization, if applicable. For public business entities, like the Company, ASU 2017-07 was effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The amendment requires disclosure that the practical expedient was used. The Company adopted the guidance in the first quarter of 2018 using the practical expedient for prior comparative periods. The change in presentation did not impact the Company’s operating results or financial condition. Refer to Note 8. Pension and Postretirement Plans for further details of the components of net periodic benefit cost.

  

ASU 2017-09, Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting

In May 2017, the FASB provided guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in ASU 2017-09. The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The amendments should be applied prospectively to an award modified on or after the adoption date. The adoption of ASU 2017-09 did not impact the Company’s Consolidated Financial Statements.

 

Standards Effective in 2019

 

ASU 2016-02, Leases (Topic 842)

In February 2016, the FASB amended existing guidance that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, the lessor accounting model and Topic 606, Revenue from Contracts with Customers. ASU 2016-02 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently evaluating the impact of ASU 2016-02 on the consolidated financial statements. Based on leases outstanding at June 30, 2018, the Company does not expect the updates to have a material impact on the income statement, but does anticipate the adoption of ASU 2016-02 will result in an increase in the Company’s Consolidated Balance Sheets as a result of recognizing right-of-use assets and lease liabilities.

 

ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments also simplify the application of the hedge accounting guidance. The amendments in the Update better align an entity’s risk management activities and financial reporting for hedging relationships through changes in both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. While the Company continues to assess all potential impacts of the standard, ASU 2017-12 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

 

Standards Effective in 2020

 

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326)

In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held-to maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. For public business entities that meet the definition of an SEC filer, like the Company, the standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may early adopt for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company plans to adopt ASU 2016-13 in the first quarter of 2020 using the required modified retrospective method with a cumulative effect adjustment as of the beginning of the reporting period. The Company has created a cross-functional committee responsible for evaluating the impact of adopting ASU 2016-13, assessing data and system needs, and implementing required changes to loss estimation methods under the CECL model. The Company cannot yet determine the overall impact this guidance will have on the Company’s Consolidated Financial Statements.

  

ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

In January 2017, the FASB amended existing guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments are effective for public business entities that are an SEC filer, like the Company, for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments should be applied prospectively. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments. The adoption of ASU 2017-04 is not expected to have a material effect on the Company’s Consolidated Financial Statements.

XML 33 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
BASIS OF PRESENTATION

BASIS OF PRESENTATION

 

Bridge Bancorp, Inc. (the “Registrant” or “Company”), is a registered bank holding company for BNB Bank (the “Bank”), which was formerly known as The Bridgehampton National Bank prior to the Bank’s conversion to a New York chartered commercial bank in December 2017. The Registrant was incorporated under the laws of the State of New York in 1988, at the direction of the Board of Directors of the Bank for the purpose of becoming a bank holding company pursuant to a plan of reorganization under which the former shareholders of the Bank became the shareholders of the Company. Since commencing business in March 1989, after the reorganization, the Registrant has functioned primarily as the holder of all of the Bank’s common stock. In May 1999, the Bank established a real estate investment trust subsidiary, Bridgehampton Community, Inc. (“BCI”), as an operating subsidiary. The assets transferred to BCI are viewed by the bank regulators as part of the Bank’s assets in consolidation. The operations of the Bank also include Bridge Abstract LLC (“Bridge Abstract”), a wholly owned subsidiary of the Bank, which is a broker of title insurance services and Bridge Financial Services LLC (“Bridge Financial Services”), an investment services subsidiary that was formed in March 2014. The Company formed Bridge Statutory Capital Trust II (the “Trust”) as a subsidiary in 2009, which sold $16.0 million of 8.5% cumulative convertible Trust Preferred Securities (the “Trust Preferred Securities”) in a private placement to accredited investors. The Trust Preferred Securities were redeemed effective January 18, 2017 and the Trust was cancelled effective April 24, 2017.

 

The accompanying Unaudited Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiary, the Bank, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The Unaudited Consolidated Financial Statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders’ equity. The Unaudited Consolidated Financial Statements should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

 

Adoption of Accounting Standards Effective in 2018

 

Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606)

On January 1, 2018, the Company adopted ASU 2014-09 and all subsequent amendments to the ASU (collectively, Accounting Standards Codification 606 (“ASC 606”), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as other real estate owned. These amendments are effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The majority of the Company’s revenues come from interest income and other sources that are outside the scope of ASC 606. The Company’s services that fall within the scope of ASC 606 are presented in services charges and other fees within non-interest income and are recognized as revenue as the Company satisfies its obligations to its customers.

 

The Company adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts continue to be reported in accordance with legacy GAAP. The adoption of ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment to retained earnings was recorded at January 1, 2018.

 

The Company evaluated its customer contracts, which are typically day-to-day contracts where each day represents a renewal of the contract. The Company’s revenue streams accounted for under ASC 606 primarily consist of service charges on deposit accounts and fees for other customer services. The Company’s revenues from transaction-based fees, such as overdraft fees, ATM use fees, stop payment charges, and ACH fees are recognized at the time the transaction is executed, which is the point in time the Company fulfills the customer’s request and satisfies the performance obligation. Account maintenance fees, which relate primarily to monthly service charges, are earned over the course of the month, representing the same period over which the Company satisfies the performance obligation. The Company earns revenues from interchange fees from debit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions are recognized daily, concurrently with the services provided to the cardholder. As a result of the Company’s assessment ASC 606, there is no change in the amount and timing of revenue recognized in the six months ended June 30, 2018.

 

ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB amended existing guidance that requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendments require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). ASU 2016-01 eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These amendments are effective for public business entities for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years. The adoption of this standard did not have a material effect on the Company’s operating results or financial condition; however, it did impact the fair value disclosures included in Note 5.

 

ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB amended existing guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit costs are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The line item used in the income statement to present the other components of net benefit cost must be disclosed. Additionally, only the service cost component of net benefit cost is eligible for capitalization, if applicable. For public business entities, like the Company, ASU 2017-07 was effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The amendment requires disclosure that the practical expedient was used. The Company adopted the guidance in the first quarter of 2018 using the practical expedient for prior comparative periods. The change in presentation did not impact the Company’s operating results or financial condition. Refer to Note 8. Pension and Postretirement Plans for further details of the components of net periodic benefit cost.

  

ASU 2017-09, Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting

In May 2017, the FASB provided guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in ASU 2017-09. The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The amendments should be applied prospectively to an award modified on or after the adoption date. The adoption of ASU 2017-09 did not impact the Company’s Consolidated Financial Statements.

 

Standards Effective in 2019

 

ASU 2016-02, Leases (Topic 842)

In February 2016, the FASB amended existing guidance that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, the lessor accounting model and Topic 606, Revenue from Contracts with Customers. ASU 2016-02 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently evaluating the impact of ASU 2016-02 on the consolidated financial statements. Based on leases outstanding at June 30, 2018, the Company does not expect the updates to have a material impact on the income statement, but does anticipate the adoption of ASU 2016-02 will result in an increase in the Company’s Consolidated Balance Sheets as a result of recognizing right-of-use assets and lease liabilities.

 

ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments also simplify the application of the hedge accounting guidance. The amendments in the Update better align an entity’s risk management activities and financial reporting for hedging relationships through changes in both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. While the Company continues to assess all potential impacts of the standard, ASU 2017-12 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

 

Standards Effective in 2020

 

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326)

In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held-to maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. For public business entities that meet the definition of an SEC filer, like the Company, the standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may early adopt for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company plans to adopt ASU 2016-13 in the first quarter of 2020 using the required modified retrospective method with a cumulative effect adjustment as of the beginning of the reporting period. The Company has created a cross-functional committee responsible for evaluating the impact of adopting ASU 2016-13, assessing data and system needs, and implementing required changes to loss estimation methods under the CECL model. The Company cannot yet determine the overall impact this guidance will have on the Company’s Consolidated Financial Statements.

  

ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

In January 2017, the FASB amended existing guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments are effective for public business entities that are an SEC filer, like the Company, for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments should be applied prospectively. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments. The adoption of ASU 2017-04 is not expected to have a material effect on the Company’s Consolidated Financial Statements.

XML 34 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
EARNINGS PER SHARE (Tables)
6 Months Ended
Jun. 30, 2018
EARNINGS PER SHARE  
Schedule of computation of EPS
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(In thousands, except per share data)   2018     2017     2018     2017  
Net income   $ 6,743     $ 8,841     $ 18,816     $ 18,012  
Dividends paid on and earnings allocated to participating securities     (148 )     (182 )     (405 )     (360 )
Income attributable to common stock   $ 6,595     $ 8,659     $ 18,411     $ 17,652  
                                 
Weighted average common shares outstanding, including participating securities     19,884       19,781       19,859       19,725  
Weighted average participating securities     (445 )     (410 )     (433 )     (401 )
Weighted average common shares outstanding     19,439       19,371       19,426       19,324  
Basic earnings per common share   $ 0.34     $ 0.45     $ 0.95     $ 0.91  
                                 
Income attributable to common stock   $ 6,595     $ 8,659     $ 18,411     $ 17,652  
Impact of assumed conversions - interest on 8.5% trust preferred securities     -       -       -       32  
Income attributable to common stock including assumed conversions   $ 6,595     $ 8,659     $ 18,411     $ 17,684  
                                 
Weighted average common shares outstanding     19,439       19,371       19,426       19,324  
Incremental shares from assumed conversions of options and restricted stock units     29       23       27       20  
Incremental shares from assumed conversions of 8.5% trust preferred securities     -       -       -       35  
Weighted average common and equivalent shares outstanding     19,468       19,394       19,453       19,379  
Diluted earnings per common share   $ 0.34     $ 0.45     $ 0.95     $ 0.91  
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCK BASED COMPENSATION PLANS (Tables)
6 Months Ended
Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Schedule of company's stock options
                Weighted        
          Weighted     Average        
    Number     Average     Remaining     Aggregate  
    of     Exercise     Contractual     Intrinsic  
(Dollars in thousands, except per share amounts)   Options     Price     Life     Value  
Outstanding, January 1,  2018     -     $ -                  
Granted     47,393       36.19                  
Outstanding, June 30, 2018     47,393     $ 36.19       9.6 years     $ -  
Vested and Exercisable, June 30, 2018     -     $ -     $ -     $ -  

 

    Number of     Weighted
Average
 
Range of Exercise Prices   Options     Exercise Price  
$36.19     47,393     $ 36.19  
      47,393     $ 36.19  
Restricted stock  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Schedule of status of unvested restricted stock
          Weighted  
          Average Grant-Date  
    Shares     Fair Value  
Unvested, January 1, 2018     317,692     $ 27.16  
Granted     82,982       33.00  
Vested     (58,233 )     23.90  
Forfeited     (3,766 )     30.48  
Unvested, June 30, 2018     338,675     $ 29.12  
Restricted stock units  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Schedule of status of unvested restricted stock
          Weighted  
          Average Grant-Date  
    Shares     Fair Value  
Unvested, January 1, 2018     68,776     $ 24.46  
Granted     21,693       33.23  
Reinvested dividends     987       26.01  
Forfeited     (13,333 )     21.85  
Unvested, June 30, 2018     78,123     $ 27.36  
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES (Tables)
6 Months Ended
Jun. 30, 2018
SECURITIES  
Schedule of amortized cost and fair value of the available for sale and held to maturity
    June 30, 2018  
          Gross     Gross     Estimated  
    Amortized     Unrealized     Unrealized     Fair  
(In thousands)   Cost     Gains     Losses     Value  
Available for sale:                                
U.S. GSE securities   $ 29,996     $ -     $ (1,258 )   $ 28,738  
State and municipal obligations     38,423       50       (525 )     37,948  
U.S. GSE residential mortgage-backed securities     101,884       -       (3,688 )     98,196  
U.S. GSE residential collateralized mortgage obligations     340,978       6       (8,937 )     332,047  
U.S. GSE commercial mortgage-backed securities     3,584       -       (67 )     3,517  
U.S. GSE commercial collateralized mortgage obligations     94,845       -       (2,438 )     92,407  
Other asset backed securities     24,250       -       (727 )     23,523  
Corporate bonds     46,000       -       (3,300 )     42,700  
Total available for sale     679,960       56       (20,940 )     659,076  
                                 
Held to maturity:                                
State and municipal obligations     57,350       497       (481 )     57,366  
U.S. GSE residential mortgage-backed securities     10,441       -       (451 )     9,990  
U.S. GSE residential collateralized mortgage obligations     51,026       81       (1,318 )     49,789  
U.S. GSE commercial mortgage-backed securities     20,626       -       (897 )     19,729  
U.S. GSE commercial collateralized mortgage obligations     30,274       -       (1,542 )     28,732  
Total held to maturity     169,717       578       (4,689 )     165,606  
Total securities   $ 849,677     $ 634     $ (25,629 )   $ 824,682  

 

    December 31, 2017  
          Gross     Gross     Estimated  
    Amortized     Unrealized     Unrealized     Fair  
(In thousands)   Cost     Gains     Losses     Value  
Available for sale:                                
U.S. GSE securities   $ 57,994     $ -     $ (1,180 )   $ 56,814  
State and municipal obligations     87,582       259       (819 )     87,022  
U.S. GSE residential mortgage-backed securities     189,705       29       (2,833 )     186,901  
U.S. GSE residential collateralized mortgage obligations     314,390       16       (7,016 )     307,390  
U.S. GSE commercial mortgage-backed securities     6,017       2       (40 )     5,979  
U.S. GSE commercial collateralized mortgage obligations     49,965       -       (1,249 )     48,716  
Other asset backed securities     24,250       -       (849 )     23,401  
Corporate bonds     46,000       -       (2,307 )     43,693  
Total available for sale     775,903       306       (16,293 )     759,916  
                                 
Held to maturity:                                
State and municipal obligations     60,762       972       (64 )     61,670  
U.S. GSE residential mortgage-backed securities     11,424       -       (261 )     11,163  
U.S. GSE residential collateralized mortgage obligations     54,250       244       (666 )     53,828  
U.S. GSE commercial mortgage-backed securities     22,953       77       (438 )     22,592  
U.S. GSE commercial collateralized mortgage obligations     31,477       -       (845 )     30,632  
Total held to maturity     180,866       1,293       (2,274 )     179,885  
Total securities   $ 956,769     $ 1,599     $ (18,567 )   $ 939,801  
Schedule of amortized cost, fair value and maturities of the available for sale and held to maturity investment securities portfolio
    June 30, 2018  
          Estimated  
(In thousands)   Amortized Cost     Fair Value  
Maturity                
Available for sale:                
Within one year   $ 8,029     $ 8,016  
One to five years     24,616       24,104  
Five to ten years     90,038       85,462  
Beyond ten years     557,277       541,494  
Total   $ 679,960     $ 659,076  
                 
Held to maturity:                
Within one year   $ 3,377     $ 3,376  
One to five years     30,563       30,374  
Five to ten years     51,321       50,491  
Beyond ten years     84,456       81,365  
Total   $ 169,717     $ 165,606  
Schedule of securities having a continuous unrealized loss position aggregated by a period of time less than or greater than 12 months
    June 30, 2018  
    Less than 12 months     Greater than 12 months  
    Estimated     Gross     Estimated     Gross  
    Fair     Unrealized     Fair     Unrealized  
(In thousands)   Value     Losses     Value     Losses  
Available for sale:                                
U.S. GSE securities   $ -     $ -     $ 28,739     $ (1,258 )
State and municipal obligations     22,612       (318 )     10,404       (207 )
U.S. GSE residential mortgage-backed securities     39,156       (1,267 )     59,040       (2,421 )
U.S. GSE residential collateralized mortgage obligations     189,200       (2,329 )     132,871       (6,608 )
U.S. GSE commercial mortgage-backed securities     3,518       (67 )     -       -  
U.S. GSE commercial collateralized mortgage obligations     47,103       (326 )     45,304       (2,112 )
Other asset backed securities     -       -       23,523       (727 )
Corporate bonds     12,930       (1,069 )     29,769       (2,231 )
Total available for sale     314,519       (5,376 )     329,650       (15,564 )
                                 
Held to maturity:                                
State and municipal obligations     28,822       (437 )     2,396       (44 )
U.S. GSE residential mortgage-backed securities     1,205       (35 )     8,784       (416 )
U.S. GSE residential collateralized mortgage obligations     23,685       (492 )     19,392       (826 )
U.S. GSE commercial mortgage-backed securities     11,857       (388 )     7,871       (509 )
U.S. GSE commercial collateralized mortgage obligations     9,489       (400 )     19,244       (1,142 )
Total held to maturity   $ 75,058     $ (1,752 )   $ 57,687     $ (2,937 )

  

    December 31, 2017  
    Less than 12 months     Greater than 12 months  
    Estimated     Gross     Estimated     Gross  
    Fair     Unrealized     Fair     Unrealized  
(In thousands)   Value     Losses     Value     Losses  
Available for sale:                                
U.S. GSE securities   $ -     $ -     $ 56,815     $ (1,180 )
State and municipal obligations     35,350       (301 )     28,165       (518 )
U.S. GSE residential mortgage-backed securities     107,408       (1,153 )     69,571       (1,680 )
U.S. GSE residential collateralized mortgage obligations     77,705       (759 )     224,932       (6,257 )
U.S. GSE commercial mortgage-backed securities     2,345       (40 )     -       -  
U.S. GSE commercial collateralized mortgage obligations     452       (1 )     48,264       (1,248 )
Other asset backed securities     -       -       23,401       (849 )
Corporate bonds     13,588       (412 )     30,105       (1,895 )
Total available for sale     236,848       (2,666 )     481,253       (13,627 )
                                 
Held to maturity:                                
State and municipal obligations     7,709       (57 )     1,009       (7 )
U.S. GSE residential mortgage-backed securities     1,359       (16 )     9,804       (245 )
U.S. GSE residential collateralized mortgage obligations     21,329       (94 )     21,112       (572 )
U.S. GSE commercial mortgage-backed securities     8,789       (121 )     8,303       (317 )
U.S. GSE commercial collateralized mortgage obligations     10,341       (116 )     20,290       (729 )
Total held to maturity   $ 49,527     $ (404 )   $ 60,518     $ (1,870 )
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
FAIR VALUE (Tables)
6 Months Ended
Jun. 30, 2018
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS  
Schedule of assets and liabilities measured on a recurring basis
    June 30, 2018  
          Fair Value Measurements Using:  
                Significant        
          Quoted Prices In     Other     Significant  
          Active Markets for     Observable     Unobservable  
    Carrying     Identical Assets     Inputs     Inputs  
(In thousands)   Value     (Level 1)     (Level 2)     (Level 3)  
Financial assets:                                
Available for sale securities:                            
U.S. GSE securities   $ 28,738             $ 28,738          
State and municipal obligations     37,948               37,948          
U.S. GSE residential mortgage-backed securities     98,196               98,196          
U.S. GSE residential collateralized mortgage obligations     332,047               332,047          
U.S. GSE commercial mortgage-backed securities     3,517               3,517          
U.S. GSE commercial collateralized mortgage obligations     92,407               92,407          
Other asset backed securities     23,523               23,523          
Corporate bonds     42,700               42,700          
Total available for sale securities   $ 659,076             $ 659,076          
Derivatives   $ 8,743             $ 8,743          
                                 
Financial liabilities:                                
Derivatives   $ 2,451             $ 2,451          

 

    December 31, 2017  
          Fair Value Measurements Using:  
                Significant        
          Quoted Prices In     Other     Significant  
          Active Markets for     Observable     Unobservable  
    Carrying     Identical Assets     Inputs     Inputs  
(In thousands)   Value     (Level 1)     (Level 2)     (Level 3)  
Financial assets:                                
Available for sale securities:                            
U.S. GSE securities   $ 56,814             $ 56,814          
State and municipal obligations     87,022               87,022          
U.S. GSE residential mortgage-backed securities     186,901               186,901          
U.S. GSE residential collateralized mortgage obligations     307,390               307,390          
U.S. GSE commercial mortgage-backed securities     5,979               5,979          
U.S. GSE commercial collateralized mortgage obligations     48,716               48,716          
Other asset backed securities     23,401               23,401          
Corporate bonds     43,693               43,693          
Total available for sale securities   $ 759,916             $ 759,916          
Derivatives   $ 4,546             $ 4,546          
                                 
Financial liabilities:                                
Derivatives   $ 1,823             $ 1,823          
Schedule of assets measured at fair value on a non-recurring basis
    June 30, 2018  
          Fair Value Measurements Using:  
                Significant        
          Quoted Prices In     Other     Significant  
          Active Markets for     Observable     Unobservable  
    Carrying     Identical Assets     Inputs     Inputs  
(In thousands)   Value     (Level 1)     (Level 2)     (Level 3)  
Impaired loans   $ -                 $ -  
Other real estate owned   $ 175                     $ 175  

 

    December 31, 2017  
          Fair Value Measurements Using:  
                Significant        
          Quoted Prices In     Other     Significant  
          Active Markets for     Observable     Unobservable  
    Carrying     Identical Assets     Inputs     Inputs  
(In thousands)   Value     (Level 1)     (Level 2)     (Level 3)  
Impaired loans   $ -                 $ -  
Other real estate owned   $ -                     $ -  
Schedule of estimated fair values and recorded carrying values of financial instruments
    June 30, 2018  
          Fair Value Measurements Using:        
                Significant              
          Quoted Prices In     Other     Significant        
          Active Markets for     Observable     Unobservable     Total  
    Carrying     Identical Assets     Inputs     Inputs     Fair  
(In thousands)   Amount     (Level 1)     (Level 2)     (Level 3)     Value  
Financial assets:                                        
Cash and due from banks   $ 74,255     $ 74,255     $     $     $ 74,255  
Interest earning deposits with banks     31,636       31,636                   31,636  
Securities available for sale     659,076             659,076             659,076  
Securities restricted     26,747       n/a       n/a       n/a       n/a  
Securities held to maturity     169,717             165,606             165,606  
Loans held for sale     6,338             6,852             6,852  
Loans, net     3,149,024                   3,129,139       3,129,139  
Derivatives     8,743             8,743             8,743  
Accrued interest receivable     11,625             2,881       8,744       11,625  
                                         
Financial liabilities:                                        
Certificates of deposit     326,219             323,551             323,551  
Demand and other deposits     3,226,978       3,226,978                   3,226,978  
Federal Home Loan Bank advances     300,863       10,000       284,531             294,531  
Repurchase agreements     1,437             1,437             1,437  
Subordinated debentures     78,711             74,913             74,913  
Derivatives     2,451             2,451             2,451  
Accrued interest payable     1,639             1,639             1,639  

  

    December 31, 2017  
          Fair Value Measurements Using:        
                Significant              
          Quoted Prices In     Other     Significant        
          Active Markets for     Observable     Unobservable     Total  
    Carrying     Identical Assets     Inputs     Inputs     Fair  
(In thousands)   Amount     (Level 1)     (Level 2)     (Level 3)     Value  
Financial assets:                                        
Cash and due from banks   $ 76,614     $ 76,614     $ -     $ -     $ 76,614  
Interest earning deposits with banks     18,133       18,133       -       -       18,133  
Securities available for sale     759,916       -       759,916       -       759,916  
Securities restricted     35,349       n/a       n/a       n/a       n/a  
Securities held to maturity     180,866       -       179,885       -       179,885  
Loans, net     3,071,045       -       -       3,010,023       3,010,023  
Derivatives     4,546       -       4,546       -       4,546  
Accrued interest receivable     11,652       -       3,211       8,441       11,652  
                                         
Financial liabilities:                                        
Certificates of deposit     222,364       -       220,775       -       220,775  
Demand and other deposits     3,112,179       3,112,179       -       -       3,112,179  
Federal funds purchased     50,000       50,000       -       -       50,000  
Federal Home Loan Bank advances     501,374       185,000       313,558       -       498,558  
Repurchase agreements     877       -       877       -       877  
Subordinated debentures     78,641       -       77,933       -       77,933  
Derivatives     1,823       -       1,823       -       1,823  
Accrued interest payable     1,574       -       1,574       -       1,574  
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
LOANS (Tables)
6 Months Ended
Jun. 30, 2018
LOANS  
Schedule of the major classifications of loans
(In thousands)   June 30, 2018     December 31, 2017  
Commercial real estate mortgage loans   $ 1,327,947     $ 1,293,906  
Multi-family mortgage loans     570,670       595,280  
Residential real estate mortgage loans     510,303       464,264  
Commercial, industrial and agricultural loans     629,906       616,003  
Real estate construction and land loans     116,899       107,759  
Installment/consumer loans     20,051       21,041  
Total loans     3,175,776       3,098,253  
Net deferred loan costs and fees     4,900       4,499  
Total loans held for investment     3,180,676       3,102,752  
Allowance for loan losses     (31,652 )     (31,707 )
Loans, net   $ 3,149,024     $ 3,071,045  
Schedule of loans by class categorized by internally assigned credit risk grades
    June 30, 2018  
(In thousands)   Pass     Special Mention     Substandard     Doubtful     Total  
Commercial real estate:                                        
Owner occupied   $ 464,708     $ 835     $ 18,109     $ -     $ 483,652  
Non-owner occupied     841,338       -       2,957       -       844,295  
Multi-family     570,670       -       -       -       570,670  
Residential real estate:                                        
Residential mortgage     432,515       8,558       861       -       441,934  
Home equity     66,433       1,235       701       -       68,369  
Commercial and industrial:                                        
Secured     95,758       10,386       13,309       -       119,453  
Unsecured     491,851       12,422       6,180       -       510,453  
Real estate construction and land loans     116,588       -       311       -       116,899  
Installment/consumer loans     20,039       12       -               20,051  
Total loans   $ 3,099,900     $ 33,448     $ 42,428     $ -     $ 3,175,776  

 

    December 31, 2017  
(In thousands)   Pass     Special Mention     Substandard     Doubtful     Total  
Commercial real estate:                                        
Owner occupied   $ 451,264     $ 1,796     $ 19,589     $ -     $ 472,649  
Non-owner occupied     808,612       8,056       4,589       -       821,257  
Multi-family     595,280       -       -       -       595,280  
Residential real estate:                                        
Residential mortgage     393,029       4,854       290       -       398,173  
Home equity     64,601       698       792       -       66,091  
Commercial and industrial:                                        
Secured     86,116       12,637       13,560       -       112,313  
Unsecured     485,598       14,553       3,539       -       503,690  
Real estate construction and land loans     107,440       -       319       -       107,759  
Installment/consumer loans     21,020       16       5       -       21,041  
Total loans   $ 3,012,960     $ 42,610     $ 42,683     $ -     $ 3,098,253  
Schedule of the aging of the recorded investment in past due loans by class of loans

 

    June 30, 2018  
(In thousands)   30-59
Days
Past
Due
    60-89
Days
Past
Due
    ≥90 Days
Past Due
and
Accruing
    Nonaccrual
Including 90
Days or
More
Past Due
    Total Past
Due and
Nonaccrual
    Current     Total Loans  
Commercial real estate:                                                        
Owner occupied   $ 532     $ -     $ -     $ 382     $ 914     $ 482,738     $ 483,652  
Non-owner occupied     415       -       -       -       415       843,880       844,295  
Multi-family     -       -       -       -       -       570,670       570,670  
Residential real estate:                                                        
Residential mortgages     1,231       -       619       41       1,891       440,043       441,934  
Home equity     458       557       289       161       1,465       66,904       68,369  
Commercial and industrial:                                                        
Secured     141       41       26       573       781       118,672       119,453  
Unsecured     990       -       -       274       1,264       509,189       510,453  
Real estate construction and land loans     -       -       -       152       152       116,747       116,899  
Installment/consumer loans     1       25       -       16       42       20,009       20,051  
Total loans   $ 3,768     $ 623     $ 934     $ 1,599     $ 6,924     $ 3,168,852     $ 3,175,776  

 

    December 31, 2017  
(In thousands)   30-59
Days
Past Due
    60-89
Days Past
Due
    ≥90 Days
Past Due
and
Accruing
    Nonaccrual
Including 90
Days or More
Past Due
    Total Past
Due and
Nonaccrual
    Current     Total Loans  
Commercial real estate:                                                        
Owner occupied   $ 284     $ -     $ 175     $ 2,205     $ 2,664     $ 469,985     $ 472,649  
Non-owner occupied     -       -       1,163       -       1,163       820,094       821,257  
Multi-family     -       -       -       -       -       595,280       595,280  
Residential real estate:                                                        
Residential mortgages     2,074       398       -       401       2,873       395,300       398,173  
Home equity     329       -       271       161       761       65,330       66,091  
Commercial and industrial:                                                        
Secured     113       41       225       570       949       111,364       112,313  
Unsecured     18       35       -       3,618       3,671       500,019       503,690  
Real estate construction and land loans     -       281       -       -       281       107,478       107,759  
Installment/consumer loans     36       5       -       -       41       21,000       21,041  
Total loans   $ 2,854     $ 760     $ 1,834     $ 6,955     $ 12,403     $ 3,085,850     $ 3,098,253  
Schedule of individually impaired loans by class

 

    June 30, 2018    

Three Months Ended 

June 30, 2018

   

Six Months Ended

June 30, 2018

 
(In thousands)   Recorded
Investment
    Unpaid
Principal
Balance
    Related
Allocated
Allowance
    Average
Recorded
Investment
    Interest
Income
Recognized
    Average
Recorded
Investment
    Interest
Income
Recognized
 
With no related allowance recorded:                                                        
Commercial real estate:                                                        
Owner occupied   $ 287     $ 289     $ -     $ 184     $ -     $ 92     $ -  
Non-owner occupied     1,162       1,162       -       1,163       7       1,168       8  
Residential real estate:                                                        
Residential mortgages     -       -       -       -       -       -       -  
Home equity     -       -       -       -       -       -       -  
Commercial and industrial:                                                        
Secured     8,685       9,332       -       8,702       58       8,723       114  
Unsecured     5,166       5,166       -       5,178       39       5,055       76  
Total with no related allowance recorded   $ 15,300     $ 15,949     $ -     $ 15,227     $ 104     $ 15,038     $ 198  
                                                         
With an allowance recorded:                                                        
Commercial real estate:                                                        
Owner occupied   $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Non-owner occupied     -       -       -       -       -       -       -  
Residential real estate:                                                        
Residential mortgages     -       -       -       -       -       -       -  
Home equity     -       -       -       -       -       -       -  
Commercial and industrial:                                                        
Secured     -       -       -       -       -       -       -  
Unsecured     -       -       -       -       -       -       -  
Total with an allowance recorded   $ -     $ -     $ -     $ -     $ -     $ -     $ -  
                                                         
Total:                                                        
Commercial real estate:                                                        
Owner occupied   $ 287     $ 289     $ -     $ 184     $ -     $ 92     $ -  
Non-owner occupied     1,162       1,162       -       1,163       7       1,168       8  
Residential real estate:                                                        
Residential mortgages     -       -       -       -       -       -       -  
Home equity     -       -       -       -       -       -       -  
Commercial and industrial:                                                        
Secured     8,685       9,332       -       8,702       58       8,723       114  
Unsecured     5,166       5,166       -       5,178       39       5,055       76  
Total   $ 15,300     $ 15,949     $ -     $ 15,227     $ 104     $ 15,038     $ 198  
                                                         

 

    December 31, 2017    

Three Months Ended

June 30, 2017

    Six Months Ended 
June 30, 2017
 
(In thousands)   Recorded
Investment
    Unpaid
Principal
Balance
    Related
Allocated
Allowance
    Average
Recorded
Investment
    Interest
Income
Recognized
    Average
Recorded
Investment
    Interest
Income
Recognized
 
With no related allowance recorded:                                                        
Commercial real estate:                                                        
Owner occupied   $ 2,073     $ 2,073     $ -     $ 302     $ 3     $ 309     $ 5  
Non-owner occupied     9,089       9,089       -       8,944       101       5,075       198  
Residential real estate:                                                        
Residential mortgages     -       -       -       535       -       498       -  
Home equity     100       100       -       260       3       261       3  
Commercial and industrial:                                                        
Secured     7,368       8,013       -       1,491       53       1,015       61  
Unsecured     2,154       2,408       -       400       3       396       8  
Total with no related allowance recorded   $ 20,784     $ 21,683     $ -     $ 11,932     $ 163     $ 7,554     $ 275  
                                                         
With an allowance recorded:                                                        
Commercial real estate:                                                        
Owner occupied   $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Non-owner occupied     -       -       -       -       -       -       -  
Residential real estate:                                                        
Residential mortgages     -       -       -       -       -       -       -  
Home equity     -       -       -       -       -       -       -  
Commercial and industrial:                                                        
Secured     -       -       -       405       -       203       -  
Unsecured     1,708       3,235       1,708       58       -       29       1  
Total with an allowance recorded   $ 1,708     $ 3,235     $ 1,708     $ 463     $ -     $ 232     $ 1  
                                                         
Total:                                                        
Commercial real estate:                                                        
Owner occupied   $ 2,073     $ 2,073     $ -     $ 302     $ 3     $ 309     $ 5  
Non-owner occupied     9,089       9,089       -       8,944       101       5,075       198  
Residential real estate:                                                        
Residential mortgages     -       -       -       535       -       498       -  
Home equity     100       100       -       260       3       261       3  
Commercial and industrial:                                                        
Secured     7,368       8,013       -       1,896       53       1,218       61  
Unsecured     3,862       5,643       1,708       458       3       425       9  
Total   $ 22,492     $ 24,918     $ 1,708     $ 12,395     $ 163     $ 7,786     $ 276  
 
Schedule of activity in the accretable yield for the purchased credit impaired loans
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(In thousands)   2018     2017     2018     2017  
Balance at beginning of period   $ 957     $ 5,333     $ 2,151     $ 6,915  
Accretion     (269 )     (1,046 )     (1,302 )     (2,903 )
Reclassification from (to) nonaccretable difference during the period     424       (321 )     263       (46 )
Accretable discount at end of period   $ 1,112     $ 3,966     $ 1,112     $ 3,966  
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
ALLOWANCE FOR LOAN LOSSES (Tables)
6 Months Ended
Jun. 30, 2018
Allowance For Loan Losses Disclosure [Abstract]  
Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method
    June 30, 2018  
(In thousands)   Commercial
Real Estate
Mortgage
Loans
    Multi-
Family
Loans
    Residential
Real Estate
Mortgage
Loans
    Commercial,
Industrial
and
Agricultural
Loans
    Real Estate
Construction
and Land
Loans
    Installment/
Consumer
Loans
    Total  
Allowance for loan losses:                                                        
Individually evaluated for impairment   $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Collectively evaluated for impairment     11,206       2,466       4,237       12,358       1,263       122       31,652  
Loans acquired with deteriorated credit quality     -       -       -       -       -       -       -  
Total allowance for loan losses   $ 11,206     $ 2,466     $ 4,237     $ 12,358     $ 1,263     $ 122     $ 31,652  
                                                         
Loans:                                                        
Individually evaluated for impairment   $ 1,449     $ -     $ -     $ 13,851     $ -     $ -     $ 15,300  
Collectively evaluated for impairment     1,326,498       570,067       509,693       615,808       116,899       20,051       3,159,016  
Loans acquired with deteriorated credit quality     -       603       610       247       -       -       1,460  
Total loans   $ 1,327,947     $ 570,670     $ 510,303     $ 629,906     $ 116,899     $ 20,051     $ 3,175,776  

 

    December 31, 2017  
(In thousands)   Commercial
Real Estate
Mortgage
Loans
    Multi-
Family
Loans
    Residential
Real Estate
Mortgage
Loans
    Commercial,
Industrial
and
Agricultural
Loans
    Real Estate
Construction
and Land
Loans
    Installment/
Consumer
Loans
    Total  
Allowance for loan losses:                                                        
Individually evaluated for impairment   $ -     $ -     $ -     $ 1,708     $ -     $ -     $ 1,708  
Collectively evaluated for impairment     11,048       4,521       2,438       11,130       740       122       29,999  
Loans acquired with deteriorated credit quality     -       -       -       -       -       -       -  
Total allowance for loan losses   $ 11,048     $ 4,521     $ 2,438     $ 12,838     $ 740     $ 122     $ 31,707  
                                                         
Loans:                                                        
Individually evaluated for impairment   $ 11,162     $ -     $ 100     $ 11,230     $ -     $ -     $ 22,492  
Collectively evaluated for impairment     1,281,837       593,645       463,575       604,329       107,759       21,041       3,072,186  
Loans acquired with deteriorated credit quality     907       1,635       589       444       -       -       3,575  
Total loans   $ 1,293,906     $ 595,280     $ 464,264     $ 616,003     $ 107,759     $ 21,041     $ 3,098,253  

   

    Three Months Ended June 30, 2018  
                      Commercial,                    
    Commercial           Residential     Industrial     Real Estate              
    Real Estate     Multi-     Real Estate     and     Construction     Installment/        
    Mortgage     Family     Mortgage     Agricultural     and Land     Consumer        
(In thousands)   Loans     Loans     Loans     Loans     Loans     Loans     Total  
Allowance for loan losses:                                                        
Beginning balance   $ 11,334     $ 3,002     $ 3,495     $ 14,055     $ 821     $ 105     $ 32,812  
Charge-offs     -       -       (24 )     (1,708 )     -       -       (1,732 )
Recoveries     -       -       -       171       -       1       172  
Provision     (128 )     (536 )     766       (160 )     442       16       400  
Ending balance   $ 11,206     $ 2,466     $ 4,237     $ 12,358     $ 1,263     $ 122     $ 31,652  

 

    Three Months Ended June 30, 2017  
                      Commercial,                    
    Commercial           Residential     Industrial     Real Estate              
    Real Estate     Multi-     Real Estate     and     Construction     Installment/        
    Mortgage     Family     Mortgage     Agricultural     and Land     Consumer        
(In thousands)   Loans     Loans     Loans     Loans     Loans     Loans     Total  
Allowance for loan losses:                                                        
Beginning balance   $ 8,357     $ 6,480     $ 1,415     $ 9,198     $ 1,058     $ 110     $ 26,618  
Charge-offs     -       -       -       (33 )     -       -       (33 )
Recoveries     -       -       1       8       -       -       9  
Provision     2,222       (1,634 )     70       797       (481 )     (24 )     950  
Ending balance   $ 10,579     $ 4,846     $ 1,486     $ 9,970     $ 577     $ 86     $ 27,544  

 

    Six Months Ended June 30, 2018  
                      Commercial,                    
    Commercial           Residential     Industrial     Real Estate              
    Real Estate     Multi-     Real Estate     and     Construction     Installment/        
    Mortgage     Family     Mortgage     Agricultural     and Land     Consumer        
(In thousands)   Loans     Loans     Loans     Loans     Loans     Loans     Total  
Allowance for loan losses:                                                        
Beginning balance   $ 11,048     $ 4,521     $ 2,438     $ 12,838     $ 740     $ 122     $ 31,707  
Charge-offs     -       -       (24 )     (1,708 )     -       -       (1,732 )
Recoveries     -       -       1       475       -       1       477  
Provision     158       (2,055 )     1,822       753       523       (1 )     1,200  
Ending balance   $ 11,206     $ 2,466     $ 4,237     $ 12,358     $ 1,263     $ 122     $ 31,652  

 

    Six Months Ended June 30, 2017  
                      Commercial,                    
    Commercial           Residential     Industrial     Real Estate              
    Real Estate     Multi-     Real Estate     and     Construction     Installment/        
    Mortgage     Family     Mortgage     Agricultural     and Land     Consumer        
(In thousands)   Loans     Loans     Loans     Loans     Loans     Loans     Total  
Allowance for loan losses:                                                        
Beginning balance   $ 9,225     $ 6,264     $ 1,495     $ 7,837     $ 955     $ 128     $ 25,904  
Charge-offs     -       -       -       (128 )     -       -       (128 )
Recoveries     -       -       2       15       -       1       18  
Provision     1,354       (1,418 )     (11 )     2,246       (378 )     (43 )     1,750  
Ending balance   $ 10,579     $ 4,846     $ 1,486     $ 9,970     $ 577     $ 86     $ 27,544  
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
PENSION AND POSTRETIREMENT PLANS (Tables)
6 Months Ended
Jun. 30, 2018
EMPLOYEE BENEFITS  
Schedule of components of net periodic benefit (credit) cost
    Three Months Ended June 30,     Six Months Ended June 30,  
      Pension Benefits       SERP Benefits       Pension Benefits       SERP Benefits  
(In thousands)     2018       2017       2018       2017       2018       2017       2018       2017  
Service cost   $ 325     $ 292     $ 72     $ 52     $ 650     $ 585     $ 145     $ 105  
Interest cost     198       186       31       26       395       370       63       52  
Expected return on plan assets     (625 )     (520 )     -       -       (1,250 )     (1,040 )     -       -  
Amortization of net loss     82       112       31       13       165       225       61       26  
Amortization of prior service credit     (19 )     (19 )     -       -       (38 )     (38 )     -       -  
Amortization of transition obligation     -       -       1       7       -       -       2       14  
Net periodic benefit (credit) cost   $ (39 )   $ 51     $ 135     $ 98     $ (78 )   $ 102     $ 271     $ 197  
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
FEDERAL HOME LOAN BANK ADVANCES (Tables)
6 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  
Schedule of contractual maturities and weighted average interest rates of FHLB advances
    June 30, 2018  
(Dollars in thousands)
Contractual Maturity
  Amount     Weighted
Average Rate
 
Overnight   $ 10,000       2.08 %
                 
2018     290,000       2.22 %
2019     863       0.81 %
      290,863       2.22 %
Total FHLB advances   $ 300,863       2.21 %

 

    December 31, 2017  

(Dollars in thousands)

Contractual Maturity

  Amount     Weighted 
Average Rate
 
Overnight   $ 185,000       1.53 %
                 
2018     315,083       1.59 %
2019     1,291       0.94 %
      316,374       1.59 %
Total FHLB advances   $ 501,374       1.57 %
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVES (Tables)
6 Months Ended
Jun. 30, 2018
DERIVATIVES  
Schedule of information about the interest rate swap designated as a cash flow hedge
(Dollars in thousands)   June 30, 2018     December 31, 2017  
Notional amounts   $ 290,000     $ 290,000  
Weighted average pay rates     1.78 %     1.78 %
Weighted average receive rates     2.33 %     1.61 %
Weighted average maturity     2.14 years       2.64 years  
Schedule of the net gains (losses) recorded, net of income tax, in accumulated other comprehensive income and the Consolidated Statements of Income relating to the cash flow derivative instruments
                Amount of loss  
    Amount of gain (loss)     Amount of gain (loss)     recognized in other  
(In thousands)   recognized in OCI     reclassified from OCI     non-interest income  
Interest rate contracts   (Effective Portion)     to interest expense     (Ineffective Portion)  
Three months ended June 30, 2018   $ 1,020     $ 344     $ -  
Six months ended June 30, 2018   $ 3,847     $ 279     $ -  
Three months ended June 30, 2017   $ (1,385 )   $ (459 )   $ -  
Six months ended June 30, 2017   $ (1,360 )   $ (734 )   $ -  
Schedule of cash flow hedge included in the Consolidated Balance Sheets
    June 30, 2018     December 31, 2017  
          Fair     Fair           Fair     Fair  
(In thousands)   Notional     Value     Value     Notional     Value     Value  
Included in other assets/(liabilities):   Amount     Asset     Liability     Amount     Asset     Liability  
Interest rate swaps related to FHLB advances   $ 290,000     $ 6,324     $ (32 )   $ 290,000     $ 3,133     $ (410 )
Schedule of information about interest rate swaps
(Dollars in thousands)   June 30, 2018     December 31, 2017  
Notional amounts   $ 174,997     $ 147,967  
Weighted average pay rates     4.32 %     3.96 %
Weighted average receive rates     4.32 %     3.96 %
Weighted average maturity     11.92 years       12.37 years  
Fair value of combined interest rate swaps   $ -     $ -  
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Tables)
6 Months Ended
Jun. 30, 2018
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME  
Schedule of other comprehensive (loss) income and related income tax effects
    Three Months Ended     Six Months Ended  
(In thousands)   June 30, 2018     June 30, 2017     June 30, 2018     June 30, 2017  
Unrealized holding (losses) gains on available for sale securities   $ (4,231 )   $ 2,595     $ (12,818 )   $ 4,211  
Reclassification adjustment for losses realized in income     7,921       -       7,921       -  
Income tax effect     (1,074 )     (1,062 )     1,425       (1,668 )
Net change in unrealized gains (losses) on available for sale securities     2,616       1,533       (3,472 )     2,543  
                                 
Reclassification adjustment for amortization realized in income     95       113       190       227  
Income tax effect     (27 )     (47 )     (55 )     (64 )
Net change in post-retirement obligation     68       66       135       163  
                                 
Change in fair value of derivatives used for cash flow hedges     1,020       (1,385 )     3,847       (1,360 )
Reclassification adjustment for (gains) losses realized in income     (344 )     459       (279 )     734  
Income tax effect     (197 )     379       (1,038 )     253  
Net change in unrealized gain (loss) on cash flow hedges     479       (547 )     2,530       (373 )
                                 
Other comprehensive income (loss)   $ 3,163     $ 1,052     $ (807 )   $ 2,333  
Schedule of accumulated other comprehensive loss balances, net of income taxes
          Other Comprehensive        
(In thousands)   December 31, 2017     Income     June 30, 2018  
Unrealized losses on available for sale securities   $ (11,337 )   $ (3,472 )   $ (14,809 )
Unrealized (losses) gain on pension benefits     (5,533 )     135       (5,398 )
Unrealized gains on cash flow hedges     1,931       2,530       4,461  
Accumulated other comprehensive loss, net of income taxes   $ (14,939 )   $ (807 )   $ (15,746 )
Schedule of reclassifications out of accumulated other comprehensive (loss) income
    Three Months Ended     Six Months Ended     Affected Line Item
    June 30,     June 30,     June 30,     June 30,     in the Consolidated
(In thousands)   2018     2017     2018     2017     Statements of Income
Realized losses on sale of available for sale securities   $ (7,921 )   $ -     $ (7,921 )   $ -     Net securities losses
Amortization of defined benefit pension plan and defined benefit plan component of the SERP:                                    
Prior service credit     19       19       38       38     Other operating expenses
Transition obligation     (1 )     (7 )     (2 )     (14 )   Other operating expenses
Actuarial losses     (113 )     (125 )     (226 )     (251 )   Other operating expenses
Realized gains (losses) on cash flow hedges     344       (459 )     279       (734 )   Interest expense
Total reclassifications, before income tax   $ (7,672 )   $ (572 )   $ (7,832 )   $ (961 )    
Income tax benefit     2,231       234       2,278       393     Income tax expense
Total reclassifications, net of income tax   $ (5,441 )   $ (338 )   $ (5,554 )   $ (568 )    
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
BASIS OF PRESENTATION (Detail Textuals) - Bridge Statutory Capital Trust II - Trust preferred securities (TPS)
$ in Millions
1 Months Ended
Dec. 31, 2009
USD ($)
Debt Instrument [Line Items]  
Value of trust preferred securities issued $ 16.0
Distribution rate of trust preferred securities (as a percent) 8.50%
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
EARNINGS PER SHARE (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
EARNINGS PER SHARE        
Net income $ 6,743 $ 8,841 $ 18,816 $ 18,012
Dividends paid on and earnings allocated to participating securities (148) (182) (405) (360)
Income attributable to common stock $ 6,595 $ 8,659 $ 18,411 $ 17,652
Weighted average common shares outstanding, including participating securities 19,884 19,781 19,859 19,725
Weighted average participating securities (in shares) (445) (410) (433) (401)
Weighted average common shares outstanding 19,439 19,371 19,426 19,324
Basic earnings per common share (in dollars per share) $ 0.34 $ 0.45 $ 0.95 $ 0.91
Income attributable to common stock $ 6,595 $ 8,659 $ 18,411 $ 17,652
Impact of assumed conversions - interest on 8.5% trust preferred securities 0 0 0 32
Income attributable to common stock including assumed conversions $ 6,595 $ 8,659 $ 18,411 $ 17,684
Weighted average common shares outstanding 19,439 19,371 19,426 19,324
Incremental shares from assumed conversions of options and restricted stock units 29 23 27 20
Incremental shares from assumed conversions of 8.5% trust preferred securities 0 0 0 35
Weighted average common and equivalent shares outstanding (in shares) 19,468 19,394 19,453 19,379
Diluted earnings per common share (in dollars per share) $ 0.34 $ 0.45 $ 0.95 $ 0.91
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
EARNINGS PER SHARE (Parentheticals) (Details)
6 Months Ended
Jun. 30, 2018
EARNINGS PER SHARE  
Interest on trust preferred securities 8.50%
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
EARNINGS PER SHARE (Detail Textuals) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Dec. 31, 2016
Stock option      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities excluded from computation of earnings per share (in shares) 47,393    
Restricted stock units      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities excluded from computation of earnings per share (in shares) 0 20,084  
Trust preferred securities      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Outstanding amount of securities included in computation of diluted earnings per share     $ 15.7
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCK BASED COMPENSATION PLANS (Details)
$ / shares in Units, $ in Thousands
6 Months Ended
Jun. 30, 2018
USD ($)
$ / shares
shares
Number of Options  
Outstanding, January 1, 2018 | shares 0
Granted | shares 47,393
Outstanding, June 30, 2018 | shares 47,393
Vested and Exercisable, June 30, 2018 | shares 0
Weighted Average Exercise Price  
Weighted Average Exercise Price, January 1, 2018 | $ / shares $ 0
Granted | $ / shares 36.19
Vested and Exercisable, June 30, 2018 | $ / shares 36.19
Vested and Exercisable, June 30, 2018 | $ / shares $ 0
Weighted Average Remaining Contractual Life, Outstanding 9 years 7 months 6 days
Aggregate Intrinsic Value, Outstanding | $ $ 0
Aggregate Intrinsic Value, Vested and Exercisable | $ $ 0
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCK BASED COMPENSATION PLANS (Details 1) - $ / shares
Jun. 30, 2018
Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Number of Options 47,393 0
Weighted Average Exercise Price $ 36.19 $ 0
$36.19    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Number of Options 47,393  
Weighted Average Exercise Price $ 36.19  
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCK BASED COMPENSATION PLANS (Details 2) - Restricted stock
6 Months Ended
Jun. 30, 2018
$ / shares
shares
Shares  
Unvested, January 1, 2018 | shares 317,692
Granted | shares 82,982
Vested | shares (58,233)
Forfeited | shares (3,766)
Unvested, June 30, 2018 | shares 338,675
Weighted Average Grant-Date Fair Value  
Unvested, January 1, 2018 | $ / shares $ 27.16
Granted | $ / shares 33.00
Vested | $ / shares 23.90
Forfeited | $ / shares 30.48
Unvested, June 30, 2018 | $ / shares $ 29.12
XML 51 R41.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCK BASED COMPENSATION PLANS (Details 3) - Long Term Incentive Plan - Restricted stock units
6 Months Ended
Jun. 30, 2018
$ / shares
shares
Shares  
Unvested, January 1, 2018 | shares 68,776
Granted | shares 21,693
Reinvested dividends | shares 987
Forfeited | shares (13,333)
Unvested, June 30, 2018 | shares 78,123
Weighted Average Grant-Date Fair Value  
Unvested, January 1, 2018 | $ / shares $ 24.46
Granted | $ / shares 33.23
Reinvested dividends | $ / shares 26.01
Forfeited | $ / shares 21.85
Unvested, June 30, 2018 | $ / shares $ 27.36
XML 52 R42.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCK BASED COMPENSATION PLANS (Detail Textuals)
Jun. 30, 2018
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Shares of common stock approved for issuance under the Plan 803,385
Shares available for issuance 273,585
2012 Plan  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Shares available for issuance 525,000
2006 Plan  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Shares available for issuance 278,385
XML 53 R43.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCK BASED COMPENSATION PLANS (Detail Textuals 1) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Granted     47,393    
Stock option          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Compensation expense $ 26   $ 39    
Unrecognized compensation cost related to unvested stock options 270   $ 270    
Cost is expected to be recognized period     2 years 7 months 6 days    
Restricted stock          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Compensation expense $ 717 $ 503 $ 1,300 $ 916  
Number of restricted stock awards granted     82,982    
Number of restricted stock awards granted 338,675   338,675   317,692
Unrecognized compensation cost related to non-vested RSAs $ 6,400   $ 6,400    
Cost is expected to be recognized period     3 years 6 months    
Restricted stock | Time-vested RSAs vest          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of restricted stock awards granted 314,175   314,175    
Restricted stock | Time-vested RSAs vest ratably over five years          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of restricted stock awards granted     44,750    
Vesting period (in years)     5 years    
Restricted stock | Time-vested RSAs vest ratably over three years          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of restricted stock awards granted     13,115    
Vesting period (in years)     3 years    
Restricted stock | Performance-based RSAs vest          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of restricted stock awards granted     25,117    
Vesting period (in years)     2 years    
Number of restricted stock awards granted 24,500   24,500    
Directors | Restricted stock units          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period (in years)     1 year    
Deferred compensation expense $ 140 132 $ 275 260  
LTI Plan | Restricted stock units          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Compensation expense $ 119 $ 79 $ 220 $ 148  
Number of restricted stock awards granted     21,693    
Number of restricted stock awards granted 78,123   78,123   68,776
Unrecognized compensation cost related to non-vested RSAs $ 1,500   $ 1,500    
Cost is expected to be recognized period     3 years 6 months    
LTI Plan | Restricted stock units | Time-vested RSAs vest ratably over five years          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of restricted stock awards granted     12,522    
Vesting period (in years)     5 years    
LTI Plan | Restricted stock units | Performance-based RSAs vest          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of restricted stock awards granted     9,171    
Vesting period (in years)     3 years    
LTI Plan | NEOs          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Granted     47,393    
Vesting period (in years)     3 years    
Weighted-average grant-date fair value     $ 6.52    
Method used     Black-Scholes option-pricing model    
Dividend yield     2.80%    
Expected volatility rate     27.53%    
Risk-free interest rate     2.67%    
Expected option life     6 years 6 months    
XML 54 R44.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES (Details) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Available for sale:    
Amortized Cost $ 679,960 $ 775,903
Gross Unrealized Gains 56 306
Gross Unrealized Losses (20,940) (16,293)
Estimated Fair Value 659,076 759,916
U.S. GSE securities    
Available for sale:    
Amortized Cost 29,996 57,994
Gross Unrealized Gains 0 0
Gross Unrealized Losses (1,258) (1,180)
Estimated Fair Value 28,738 56,814
State and municipal obligations    
Available for sale:    
Amortized Cost 38,423 87,582
Gross Unrealized Gains 50 259
Gross Unrealized Losses (525) (819)
Estimated Fair Value 37,948 87,022
U.S. GSE residential mortgage-backed securities    
Available for sale:    
Amortized Cost 101,884 189,705
Gross Unrealized Gains 0 29
Gross Unrealized Losses (3,688) (2,833)
Estimated Fair Value 98,196 186,901
U.S. GSE residential collateralized mortgage obligations    
Available for sale:    
Amortized Cost 340,978 314,390
Gross Unrealized Gains 6 16
Gross Unrealized Losses (8,937) (7,016)
Estimated Fair Value 332,047 307,390
U.S. GSE commercial mortgage-backed securities    
Available for sale:    
Amortized Cost 3,584 6,017
Gross Unrealized Gains 0 2
Gross Unrealized Losses (67) (40)
Estimated Fair Value 3,517 5,979
U.S. GSE commercial collateralized mortgage obligations    
Available for sale:    
Amortized Cost 94,845 49,965
Gross Unrealized Gains 0 0
Gross Unrealized Losses (2,438) (1,249)
Estimated Fair Value 92,407 48,716
Other asset backed securities    
Available for sale:    
Amortized Cost 24,250 24,250
Gross Unrealized Gains 0 0
Gross Unrealized Losses (727) (849)
Estimated Fair Value 23,523 23,401
Corporate bonds    
Available for sale:    
Amortized Cost 46,000 46,000
Gross Unrealized Gains 0 0
Gross Unrealized Losses (3,300) (2,307)
Estimated Fair Value $ 42,700 $ 43,693
XML 55 R45.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES (Details 1) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Held to maturity:    
Amortized Cost $ 169,717 $ 180,866
Gross Unrealized Gains 578 1,293
Gross Unrealized Losses (4,689) (2,274)
Estimated Fair Value 165,606 179,885
State and municipal obligations    
Held to maturity:    
Amortized Cost 57,350 60,762
Gross Unrealized Gains 497 972
Gross Unrealized Losses (481) (64)
Estimated Fair Value 57,366 61,670
U.S. GSE residential mortgage-backed securities    
Held to maturity:    
Amortized Cost 10,441 11,424
Gross Unrealized Gains 0 0
Gross Unrealized Losses (451) (261)
Estimated Fair Value 9,990 11,163
U.S. GSE residential collateralized mortgage obligations    
Held to maturity:    
Amortized Cost 51,026 54,250
Gross Unrealized Gains 81 244
Gross Unrealized Losses (1,318) (666)
Estimated Fair Value 49,789 53,828
U.S. GSE commercial mortgage-backed securities    
Held to maturity:    
Amortized Cost 20,626 22,953
Gross Unrealized Gains 0 77
Gross Unrealized Losses (897) (438)
Estimated Fair Value 19,729 22,592
U.S. GSE commercial collateralized mortgage obligations    
Held to maturity:    
Amortized Cost 30,274 31,477
Gross Unrealized Gains 0 0
Gross Unrealized Losses (1,542) (845)
Estimated Fair Value $ 28,732 $ 30,632
XML 56 R46.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES (Details 2) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Total securities    
Amortized Cost $ 849,677 $ 956,769
Gross Unrealized Gains 634 1,599
Gross Unrealized Losses (25,629) (18,567)
Total securities $ 824,682 $ 939,801
XML 57 R47.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES (Details 3) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Amortized Cost, Available for sale:    
Within one year $ 8,029  
One to five years 24,616  
Five to ten years 90,038  
Beyond ten years 557,277  
Total 679,960 $ 775,903
Estimated Fair Value, Available for sale:    
Within one year 8,016  
One to five years 24,104  
Five to ten years 85,462  
Beyond ten years 541,494  
Estimated Fair Value $ 659,076 $ 759,916
XML 58 R48.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES (Details 4) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Amortized Cost, Held to maturity:    
Within one year $ 3,377  
One to five years 30,563  
Five to ten years 51,321  
Beyond ten years 84,456  
Total 169,717 $ 180,866
Estimated Fair Value, Held to maturity:    
Within one year 3,376  
One to five years 30,374  
Five to ten years 50,491  
Beyond ten years 81,365  
Estimated Fair Value $ 165,606 $ 179,885
XML 59 R49.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES (Details 5) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Available for sale:    
Less than 12 months, Estimated Fair Value $ 314,519 $ 236,848
Less than 12 months, Gross Unrealized Losses (5,376) (2,666)
Greater than 12 months, Estimated Fair Value 329,650 481,253
Greater than 12 months, Gross Unrealized Losses (15,564) (13,627)
U.S. GSE securities    
Available for sale:    
Less than 12 months, Estimated Fair Value 0 0
Less than 12 months, Gross Unrealized Losses 0 0
Greater than 12 months, Estimated Fair Value 28,739 56,815
Greater than 12 months, Gross Unrealized Losses (1,258) (1,180)
State and municipal obligations    
Available for sale:    
Less than 12 months, Estimated Fair Value 22,612 35,350
Less than 12 months, Gross Unrealized Losses (318) (301)
Greater than 12 months, Estimated Fair Value 10,404 28,165
Greater than 12 months, Gross Unrealized Losses (207) (518)
U.S. GSE residential mortgage-backed securities    
Available for sale:    
Less than 12 months, Estimated Fair Value 39,156 107,408
Less than 12 months, Gross Unrealized Losses (1,267) (1,153)
Greater than 12 months, Estimated Fair Value 59,040 69,571
Greater than 12 months, Gross Unrealized Losses (2,421) (1,680)
U.S. GSE residential collateralized mortgage obligations    
Available for sale:    
Less than 12 months, Estimated Fair Value 189,200 77,705
Less than 12 months, Gross Unrealized Losses (2,329) (759)
Greater than 12 months, Estimated Fair Value 132,871 224,932
Greater than 12 months, Gross Unrealized Losses (6,608) (6,257)
U.S. GSE commercial mortgage-backed securities    
Available for sale:    
Less than 12 months, Estimated Fair Value 3,518 2,345
Less than 12 months, Gross Unrealized Losses (67) (40)
Greater than 12 months, Estimated Fair Value 0 0
Greater than 12 months, Gross Unrealized Losses 0 0
U.S. GSE commercial collateralized mortgage obligations    
Available for sale:    
Less than 12 months, Estimated Fair Value 47,103 452
Less than 12 months, Gross Unrealized Losses (326) (1)
Greater than 12 months, Estimated Fair Value 45,304 48,264
Greater than 12 months, Gross Unrealized Losses (2,112) (1,248)
Other asset backed securities    
Available for sale:    
Less than 12 months, Estimated Fair Value 0 0
Less than 12 months, Gross Unrealized Losses 0 0
Greater than 12 months, Estimated Fair Value 23,523 23,401
Greater than 12 months, Gross Unrealized Losses (727) (849)
Corporate bonds    
Available for sale:    
Less than 12 months, Estimated Fair Value 12,930 13,588
Less than 12 months, Gross Unrealized Losses (1,069) (412)
Greater than 12 months, Estimated Fair Value 29,769 30,105
Greater than 12 months, Gross Unrealized Losses $ (2,231) $ (1,895)
XML 60 R50.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES (Details 6) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Held to maturity:    
Less than 12 months, Estimated Fair Value $ 75,058 $ 49,527
Less than 12 months, Gross Unrealized losses (1,752) (404)
Greater than 12 months, Estimated Fair Value 57,687 60,518
Greater than 12 months, Gross Unrealized losses (2,937) (1,870)
State and municipal obligations    
Held to maturity:    
Less than 12 months, Estimated Fair Value 28,822 7,709
Less than 12 months, Gross Unrealized losses (437) (57)
Greater than 12 months, Estimated Fair Value 2,396 1,009
Greater than 12 months, Gross Unrealized losses (44) (7)
U.S. GSE residential mortgage-backed securities    
Held to maturity:    
Less than 12 months, Estimated Fair Value 1,205 1,359
Less than 12 months, Gross Unrealized losses (35) (16)
Greater than 12 months, Estimated Fair Value 8,784 9,804
Greater than 12 months, Gross Unrealized losses (416) (245)
U.S. GSE residential collateralized mortgage obligations    
Held to maturity:    
Less than 12 months, Estimated Fair Value 23,685 21,329
Less than 12 months, Gross Unrealized losses (492) (94)
Greater than 12 months, Estimated Fair Value 19,392 21,112
Greater than 12 months, Gross Unrealized losses (826) (572)
U.S. GSE commercial mortgage-backed securities    
Held to maturity:    
Less than 12 months, Estimated Fair Value 11,857 8,789
Less than 12 months, Gross Unrealized losses (388) (121)
Greater than 12 months, Estimated Fair Value 7,871 8,303
Greater than 12 months, Gross Unrealized losses (509) (317)
U.S. GSE commercial collateralized mortgage obligations    
Held to maturity:    
Less than 12 months, Estimated Fair Value 9,489 10,341
Less than 12 months, Gross Unrealized losses (400) (116)
Greater than 12 months, Estimated Fair Value 19,244 20,290
Greater than 12 months, Gross Unrealized losses $ (1,142) $ (729)
XML 61 R51.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2018
Dec. 31, 2017
Other than Temporary Impairment Losses, Investments [Abstract]      
Guaranteed portion of student loan backed bonds   student loan backed bonds which are guaranteed by the U.S. Department of Education for 97% to 100% of principal.  
Credit support for student loan backed bonds description   the bonds have credit support of 3% to 5%  
Proceeds from sales of securities available for sale $ 230,400 $ 230,372  
Securities gross losses realized (7,921) (7,921)  
Proceeds from calls of securities 900 1,900  
Fair value of securities pledged to secure public deposits and FHLB and FRB overnight borrowings 366,400 366,400 $ 513,500
Amount owned in FHLB, ACBB and FRB stock $ 26,747 $ 26,747 $ 35,349
XML 62 R52.htm IDEA: XBRL DOCUMENT v3.10.0.1
FAIR VALUE (Details) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Assets measured at fair value on recurring basis    
Available for sale securities $ 659,076 $ 759,916
U.S. GSE securities    
Assets measured at fair value on recurring basis    
Available for sale securities 28,738 56,814
State and municipal obligations    
Assets measured at fair value on recurring basis    
Available for sale securities 37,948 87,022
U.S. GSE residential mortgage-backed securities    
Assets measured at fair value on recurring basis    
Available for sale securities 98,196 186,901
U.S. GSE residential collateralized mortgage obligations    
Assets measured at fair value on recurring basis    
Available for sale securities 332,047 307,390
U.S. GSE commercial mortgage-backed securities    
Assets measured at fair value on recurring basis    
Available for sale securities 3,517 5,979
U.S. GSE commercial collateralized mortgage obligations    
Assets measured at fair value on recurring basis    
Available for sale securities 92,407 48,716
Other asset backed securities    
Assets measured at fair value on recurring basis    
Available for sale securities 23,523 23,401
Corporate bonds    
Assets measured at fair value on recurring basis    
Available for sale securities 42,700 43,693
Carrying Value    
Assets measured at fair value on recurring basis    
Available for sale securities 659,076 759,916
Financial Assets: Derivatives 8,743 4,546
Financial Liabilities:    
Financial liabilities: Derivatives 2,451 1,823
Quoted Prices In Active Markets for Identical Assets (Level 1)    
Assets measured at fair value on recurring basis    
Available for sale securities 0 0
Financial Assets: Derivatives 0 0
Financial Liabilities:    
Financial liabilities: Derivatives 0 0
Significant Other Observable Inputs (Level 2)    
Assets measured at fair value on recurring basis    
Available for sale securities 659,076 759,916
Financial Assets: Derivatives 8,743 4,546
Financial Liabilities:    
Financial liabilities: Derivatives 2,451 1,823
Significant Unobservable Inputs (Level 3)    
Assets measured at fair value on recurring basis    
Available for sale securities 0 0
Financial Assets: Derivatives 0 0
Financial Liabilities:    
Financial liabilities: Derivatives 0 0
Recurring basis | Carrying Value    
Assets measured at fair value on recurring basis    
Available for sale securities 659,076 759,916
Recurring basis | Carrying Value | U.S. GSE securities    
Assets measured at fair value on recurring basis    
Available for sale securities 28,738 56,814
Recurring basis | Carrying Value | State and municipal obligations    
Assets measured at fair value on recurring basis    
Available for sale securities 37,948 87,022
Recurring basis | Carrying Value | U.S. GSE residential mortgage-backed securities    
Assets measured at fair value on recurring basis    
Available for sale securities 98,196 186,901
Recurring basis | Carrying Value | U.S. GSE residential collateralized mortgage obligations    
Assets measured at fair value on recurring basis    
Available for sale securities 332,047 307,390
Recurring basis | Carrying Value | U.S. GSE commercial mortgage-backed securities    
Assets measured at fair value on recurring basis    
Available for sale securities 3,517 5,979
Recurring basis | Carrying Value | U.S. GSE commercial collateralized mortgage obligations    
Assets measured at fair value on recurring basis    
Available for sale securities 92,407 48,716
Recurring basis | Carrying Value | Other asset backed securities    
Assets measured at fair value on recurring basis    
Available for sale securities 23,523 23,401
Recurring basis | Carrying Value | Corporate bonds    
Assets measured at fair value on recurring basis    
Available for sale securities 42,700 43,693
Recurring basis | Carrying Value | Derivatives    
Assets measured at fair value on recurring basis    
Financial Assets: Derivatives 8,743 4,546
Financial Liabilities:    
Financial liabilities: Derivatives 2,451 1,823
Recurring basis | Significant Other Observable Inputs (Level 2)    
Assets measured at fair value on recurring basis    
Available for sale securities 659,076 759,916
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE securities    
Assets measured at fair value on recurring basis    
Available for sale securities 28,738 56,814
Recurring basis | Significant Other Observable Inputs (Level 2) | State and municipal obligations    
Assets measured at fair value on recurring basis    
Available for sale securities 37,948 87,022
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE residential mortgage-backed securities    
Assets measured at fair value on recurring basis    
Available for sale securities 98,196 186,901
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE residential collateralized mortgage obligations    
Assets measured at fair value on recurring basis    
Available for sale securities 332,047 307,390
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE commercial mortgage-backed securities    
Assets measured at fair value on recurring basis    
Available for sale securities 3,517 5,979
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE commercial collateralized mortgage obligations    
Assets measured at fair value on recurring basis    
Available for sale securities 92,407 48,716
Recurring basis | Significant Other Observable Inputs (Level 2) | Other asset backed securities    
Assets measured at fair value on recurring basis    
Available for sale securities 23,523 23,401
Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate bonds    
Assets measured at fair value on recurring basis    
Available for sale securities 42,700 43,693
Recurring basis | Significant Other Observable Inputs (Level 2) | Derivatives    
Assets measured at fair value on recurring basis    
Financial Assets: Derivatives 8,743 4,546
Financial Liabilities:    
Financial liabilities: Derivatives $ 2,451 $ 1,823
XML 63 R53.htm IDEA: XBRL DOCUMENT v3.10.0.1
FAIR VALUE (Details 1) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Assets measured at fair value on non-recurring basis    
Other real estate owned $ 175  
Non-recurring basis | Carrying Value    
Assets measured at fair value on non-recurring basis    
Impaired loans 0 $ 0
Other real estate owned 175 0
Non-recurring basis | Quoted Prices In Active Markets for Identical Assets (Level 1)    
Assets measured at fair value on non-recurring basis    
Impaired loans 0 0
Other real estate owned 0 0
Non-recurring basis | Significant Other Observable Inputs (Level 2)    
Assets measured at fair value on non-recurring basis    
Impaired loans 0 0
Other real estate owned 0 0
Non-recurring basis | Significant Unobservable Inputs (Level 3)    
Assets measured at fair value on non-recurring basis    
Impaired loans 0 0
Other real estate owned $ 175 $ 0
XML 64 R54.htm IDEA: XBRL DOCUMENT v3.10.0.1
FAIR VALUE (Details 2) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Financial assets:    
Cash and due from banks $ 74,255 $ 76,614
Interest earning deposits with banks 31,636 18,133
Securities available for sale 659,076 759,916
Securities held to maturity 165,606 179,885
Accrued interest receivable 11,625 11,652
Carrying Amount    
Financial assets:    
Cash and due from banks 74,255 76,614
Interest earning deposits with banks 31,636 18,133
Securities available for sale 659,076 759,916
Securities restricted 26,747 35,349
Securities held to maturity 169,717 180,866
Loans held for sale 6,338  
Loans, net 3,149,024 3,071,045
Derivatives 8,743 4,546
Accrued interest receivable 11,625 11,652
Financial liabilities:    
Certificates of deposit 326,219 222,364
Demand and other deposits 3,226,978 3,112,179
Federal funds purchased   50,000
Federal Home Loan Bank advances 300,863 501,374
Repurchase agreements 1,437 877
Subordinated debentures 78,711 78,641
Derivatives 2,451 1,823
Accrued interest payable 1,639 1,574
Fair Value    
Financial assets:    
Cash and due from banks 74,255 76,614
Interest earning deposits with banks 31,636 18,133
Securities available for sale 659,076 759,916
Securities held to maturity 165,606 179,885
Loans held for sale 6,852  
Loans, net 3,129,139 3,010,023
Derivatives 8,743 4,546
Accrued interest receivable 11,625 11,652
Financial liabilities:    
Certificates of deposit 323,551 220,775
Demand and other deposits 3,226,978 3,112,179
Federal funds purchased   50,000
Federal Home Loan Bank advances 294,531 498,558
Repurchase agreements 1,437 877
Subordinated debentures 74,913 77,933
Derivatives 2,451 1,823
Accrued interest payable 1,639 1,574
Quoted Prices In Active Markets for Identical Assets (Level 1)    
Financial assets:    
Cash and due from banks 74,255 76,614
Interest earning deposits with banks 31,636 18,133
Securities available for sale 0 0
Securities held to maturity 0 0
Loans held for sale 0  
Loans, net 0 0
Derivatives 0 0
Accrued interest receivable 0 0
Financial liabilities:    
Certificates of deposit 0 0
Demand and other deposits 3,226,978 3,112,179
Federal funds purchased   50,000
Federal Home Loan Bank advances 10,000 185,000
Repurchase agreements 0 0
Subordinated debentures 0 0
Derivatives 0 0
Accrued interest payable 0 0
Significant Other Observable Inputs (Level 2)    
Financial assets:    
Cash and due from banks 0 0
Interest earning deposits with banks 0 0
Securities available for sale 659,076 759,916
Securities held to maturity 165,606 179,885
Loans held for sale 6,852  
Loans, net 0 0
Derivatives 8,743 4,546
Accrued interest receivable 2,881 3,211
Financial liabilities:    
Certificates of deposit 323,551 220,775
Demand and other deposits 0 0
Federal funds purchased   0
Federal Home Loan Bank advances 284,531 313,558
Repurchase agreements 1,437 877
Subordinated debentures 74,913 77,933
Derivatives 2,451 1,823
Accrued interest payable 1,639 1,574
Significant Unobservable Inputs (Level 3)    
Financial assets:    
Cash and due from banks 0 0
Interest earning deposits with banks 0 0
Securities available for sale 0 0
Securities held to maturity 0 0
Loans held for sale 0  
Loans, net 3,129,139 3,010,023
Derivatives 0 0
Accrued interest receivable 8,744 8,441
Financial liabilities:    
Certificates of deposit 0 0
Demand and other deposits 0 0
Federal funds purchased   0
Federal Home Loan Bank advances 0 0
Repurchase agreements 0 0
Subordinated debentures 0 0
Derivatives 0 0
Accrued interest payable $ 0 $ 0
XML 65 R55.htm IDEA: XBRL DOCUMENT v3.10.0.1
FAIR VALUE (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]          
Provision for Loan and Lease Losses $ 400 $ 950 $ 1,200 $ 1,750  
Assets measured at fair value on non-recurring basis          
Outstanding balance of impaired loans with an allowance recorded 0   0   $ 1,708
Valuation allowance on impaired loans 0   0   1,708
Other real estate $ 175   $ 175    
Non-recurring basis          
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]          
Provision for Loan and Lease Losses         $ 1,700
XML 66 R56.htm IDEA: XBRL DOCUMENT v3.10.0.1
LOANS (Details) - USD ($)
$ in Thousands
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Classifications of loans            
Total loans $ 3,175,776   $ 3,098,253      
Net deferred loan costs and fees 4,900   4,499      
Total loans held for investment 3,180,676   3,102,752      
Allowance for loan losses (31,652) $ (32,812) (31,707) $ (27,544) $ (26,618) $ (25,904)
Loans, net 3,149,024   3,071,045      
Commercial real estate | Mortgage loans            
Classifications of loans            
Total loans 1,327,947   1,293,906      
Allowance for loan losses (11,206) (11,334) (11,048) (10,579) (8,357) (9,225)
Multi-family | Mortgage loans            
Classifications of loans            
Total loans 570,670   595,280      
Allowance for loan losses (2,466) (3,002) (4,521) (4,846) (6,480) (6,264)
Residential real estate | Mortgage loans            
Classifications of loans            
Total loans 510,303   464,264      
Allowance for loan losses (4,237) (3,495) (2,438) (1,486) (1,415) (1,495)
Commercial, industrial and agricultural loans            
Classifications of loans            
Total loans 629,906   616,003      
Allowance for loan losses (12,358) (14,055) (12,838) (9,970) (9,198) (7,837)
Real estate construction and land loans            
Classifications of loans            
Total loans 116,899   107,759      
Allowance for loan losses (1,263) (821) (740) (577) (1,058) (955)
Installment/consumer loans            
Classifications of loans            
Total loans 20,051   21,041      
Allowance for loan losses $ (122) $ (105) $ (122) $ (86) $ (110) $ (128)
XML 67 R57.htm IDEA: XBRL DOCUMENT v3.10.0.1
LOANS (Details 1) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Loans by class categorized by internally assigned risk grades    
Total loans $ 3,175,776 $ 3,098,253
Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 3,099,900 3,012,960
Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 33,448 42,610
Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 42,428 42,683
Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Commercial real estate | Mortgage loans    
Loans by class categorized by internally assigned risk grades    
Total loans 1,327,947 1,293,906
Commercial real estate | Mortgage loans | Owner occupied    
Loans by class categorized by internally assigned risk grades    
Total loans 483,652 472,649
Commercial real estate | Mortgage loans | Owner occupied | Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 464,708 451,264
Commercial real estate | Mortgage loans | Owner occupied | Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 835 1,796
Commercial real estate | Mortgage loans | Owner occupied | Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 18,109 19,589
Commercial real estate | Mortgage loans | Owner occupied | Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Commercial real estate | Mortgage loans | Non-owner occupied    
Loans by class categorized by internally assigned risk grades    
Total loans 844,295 821,257
Commercial real estate | Mortgage loans | Non-owner occupied | Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 841,338 808,612
Commercial real estate | Mortgage loans | Non-owner occupied | Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 0 8,056
Commercial real estate | Mortgage loans | Non-owner occupied | Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 2,957 4,589
Commercial real estate | Mortgage loans | Non-owner occupied | Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Multi-Family | Mortgage loans    
Loans by class categorized by internally assigned risk grades    
Total loans 570,670 595,280
Multi-Family | Mortgage loans | Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 570,670 595,280
Multi-Family | Mortgage loans | Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Multi-Family | Mortgage loans | Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Multi-Family | Mortgage loans | Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Residential real estate | Mortgage loans    
Loans by class categorized by internally assigned risk grades    
Total loans 510,303 464,264
Residential real estate | Mortgage loans | Residential mortgage    
Loans by class categorized by internally assigned risk grades    
Total loans 441,934 398,173
Residential real estate | Mortgage loans | Residential mortgage | Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 432,515 393,029
Residential real estate | Mortgage loans | Residential mortgage | Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 8,558 4,854
Residential real estate | Mortgage loans | Residential mortgage | Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 861 290
Residential real estate | Mortgage loans | Residential mortgage | Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Residential real estate | Mortgage loans | Home equity    
Loans by class categorized by internally assigned risk grades    
Total loans 68,369 66,091
Residential real estate | Mortgage loans | Home equity | Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 66,433 64,601
Residential real estate | Mortgage loans | Home equity | Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 1,235 698
Residential real estate | Mortgage loans | Home equity | Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 701 792
Residential real estate | Mortgage loans | Home equity | Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Commercial and Industrial    
Loans by class categorized by internally assigned risk grades    
Total loans 629,906 616,003
Commercial and Industrial | Secured    
Loans by class categorized by internally assigned risk grades    
Total loans 119,453 112,313
Commercial and Industrial | Secured | Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 95,758 86,116
Commercial and Industrial | Secured | Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 10,386 12,637
Commercial and Industrial | Secured | Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 13,309 13,560
Commercial and Industrial | Secured | Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Commercial and Industrial | Unsecured    
Loans by class categorized by internally assigned risk grades    
Total loans 510,453 503,690
Commercial and Industrial | Unsecured | Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 491,851 485,598
Commercial and Industrial | Unsecured | Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 12,422 14,553
Commercial and Industrial | Unsecured | Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 6,180 3,539
Commercial and Industrial | Unsecured | Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Real estate construction and land loans    
Loans by class categorized by internally assigned risk grades    
Total loans 116,899 107,759
Real estate construction and land loans | Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 116,588 107,440
Real estate construction and land loans | Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Real estate construction and land loans | Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 311 319
Real estate construction and land loans | Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans 0 0
Installment/consumer loans    
Loans by class categorized by internally assigned risk grades    
Total loans 20,051 21,041
Installment/consumer loans | Pass    
Loans by class categorized by internally assigned risk grades    
Total loans 20,039 21,020
Installment/consumer loans | Special Mention    
Loans by class categorized by internally assigned risk grades    
Total loans 12 16
Installment/consumer loans | Substandard    
Loans by class categorized by internally assigned risk grades    
Total loans 0 5
Installment/consumer loans | Doubtful    
Loans by class categorized by internally assigned risk grades    
Total loans $ 0 $ 0
XML 68 R58.htm IDEA: XBRL DOCUMENT v3.10.0.1
LOANS (Details 2) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing $ 934 $ 1,834
Nonaccrual Including 90 Days or More Past Due 1,599 6,955
Total Past Due and Nonaccrual 6,924 12,403
Current 3,168,852 3,085,850
Total Loans 3,175,776 3,098,253
30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 3,768 2,854
60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 623 760
Commercial Real Estate | Mortgage loans    
Past Due and Nonaccrual Loans    
Total Loans 1,327,947 1,293,906
Commercial Real Estate | Mortgage loans | Owner occupied    
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing 0 175
Nonaccrual Including 90 Days or More Past Due 382 2,205
Total Past Due and Nonaccrual 914 2,664
Current 482,738 469,985
Total Loans 483,652 472,649
Commercial Real Estate | Mortgage loans | Owner occupied | 30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 532 284
Commercial Real Estate | Mortgage loans | Owner occupied | 60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 0 0
Commercial Real Estate | Mortgage loans | Non-owner occupied    
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing 0 1,163
Nonaccrual Including 90 Days or More Past Due 0 0
Total Past Due and Nonaccrual 415 1,163
Current 843,880 820,094
Total Loans 844,295 821,257
Commercial Real Estate | Mortgage loans | Non-owner occupied | 30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 415 0
Commercial Real Estate | Mortgage loans | Non-owner occupied | 60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 0 0
Multi-Family | Mortgage loans    
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing 0 0
Nonaccrual Including 90 Days or More Past Due 0 0
Total Past Due and Nonaccrual 0 0
Current 570,670 595,280
Total Loans 570,670 595,280
Multi-Family | Mortgage loans | 30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 0 0
Multi-Family | Mortgage loans | 60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 0 0
Residential Real Estate | Mortgage loans    
Past Due and Nonaccrual Loans    
Total Loans 510,303 464,264
Residential Real Estate | Mortgage loans | Residential Real Estate Mortgage Loans    
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing 619 0
Nonaccrual Including 90 Days or More Past Due 41 401
Total Past Due and Nonaccrual 1,891 2,873
Current 440,043 395,300
Total Loans 441,934 398,173
Residential Real Estate | Mortgage loans | Residential Real Estate Mortgage Loans | 30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 1,231 2,074
Residential Real Estate | Mortgage loans | Residential Real Estate Mortgage Loans | 60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 0 398
Residential Real Estate | Mortgage loans | Home equity    
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing 289 271
Nonaccrual Including 90 Days or More Past Due 161 161
Total Past Due and Nonaccrual 1,465 761
Current 66,904 65,330
Total Loans 68,369 66,091
Residential Real Estate | Mortgage loans | Home equity | 30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 458 329
Residential Real Estate | Mortgage loans | Home equity | 60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 557 0
Commercial, Industrial and Agricultural Loans    
Past Due and Nonaccrual Loans    
Total Loans 629,906 616,003
Commercial, Industrial and Agricultural Loans | Secured    
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing 26 225
Nonaccrual Including 90 Days or More Past Due 573 570
Total Past Due and Nonaccrual 781 949
Current 118,672 111,364
Total Loans 119,453 112,313
Commercial, Industrial and Agricultural Loans | Secured | 30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 141 113
Commercial, Industrial and Agricultural Loans | Secured | 60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 41 41
Commercial, Industrial and Agricultural Loans | Unsecured    
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing 0 0
Nonaccrual Including 90 Days or More Past Due 274 3,618
Total Past Due and Nonaccrual 1,264 3,671
Current 509,189 500,019
Total Loans 510,453 503,690
Commercial, Industrial and Agricultural Loans | Unsecured | 30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 990 18
Commercial, Industrial and Agricultural Loans | Unsecured | 60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 0 35
Real Estate Construction and Land Loans    
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing 0 0
Nonaccrual Including 90 Days or More Past Due 152 0
Total Past Due and Nonaccrual 152 281
Current 116,747 107,478
Total Loans 116,899 107,759
Real Estate Construction and Land Loans | 30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 0 0
Real Estate Construction and Land Loans | 60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 0 281
Installment/Consumer Loans    
Past Due and Nonaccrual Loans    
>90 Days Past Due and Accruing 0 0
Nonaccrual Including 90 Days or More Past Due 16 0
Total Past Due and Nonaccrual 42 41
Current 20,009 21,000
Total Loans 20,051 21,041
Installment/Consumer Loans | 30-59 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual 1 36
Installment/Consumer Loans | 60-89 Days Past Due    
Past Due and Nonaccrual Loans    
Total Past Due and Nonaccrual $ 25 $ 5
XML 69 R59.htm IDEA: XBRL DOCUMENT v3.10.0.1
LOANS (Details 3) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Dec. 31, 2017
Recorded Investment          
With no related allowance recorded $ 15,300   $ 15,300   $ 20,784
With an allowance recorded 0   0   1,708
Total impaired loans 15,300   15,300   22,492
Unpaid Principal Balance          
With no related allowance recorded 15,949   15,949   21,683
With an allowance recorded 0   0   3,235
Total impaired loans 15,949   15,949   24,918
Related Allocated Allowance          
With an allowance recorded 0   0   1,708
Total impaired loans 0   0   1,708
Average Recorded Investment          
With no related allowance recorded 15,227 $ 11,932 15,038 $ 7,554  
With an allowance recorded 0 463 0 232  
Average recorded investment in impaired loans 15,227 12,395 15,038 7,786  
Interest Income Recognized          
With no related allowance recorded 104 163 198 275  
With an allowance recorded 0 0 0 1  
Total impaired loans 104 163 198 276  
Commercial Real Estate | Mortgage loans | Owner occupied          
Recorded Investment          
With no related allowance recorded 287   287   2,073
With an allowance recorded 0   0   0
Total impaired loans 287   287   2,073
Unpaid Principal Balance          
With no related allowance recorded 289   289   2,073
With an allowance recorded 0   0   0
Total impaired loans 289   289   2,073
Related Allocated Allowance          
With an allowance recorded 0   0   0
Total impaired loans 0   0   0
Average Recorded Investment          
With no related allowance recorded 184 302 92 309  
With an allowance recorded 0 0 0 0  
Average recorded investment in impaired loans 184 302 92 309  
Interest Income Recognized          
With no related allowance recorded 0 3 0 5  
With an allowance recorded 0 0 0 0  
Total impaired loans 0 3 0 5  
Commercial Real Estate | Mortgage loans | Non-owner occupied          
Recorded Investment          
With no related allowance recorded 1,162   1,162   9,089
With an allowance recorded 0   0   0
Total impaired loans 1,162   1,162   9,089
Unpaid Principal Balance          
With no related allowance recorded 1,162   1,162   9,089
With an allowance recorded 0   0   0
Total impaired loans 1,162   1,162   9,089
Related Allocated Allowance          
With an allowance recorded 0   0   0
Total impaired loans 0   0   0
Average Recorded Investment          
With no related allowance recorded 1,163 8,944 1,168 5,075  
With an allowance recorded 0 0 0 0  
Average recorded investment in impaired loans 1,163 8,944 1,168 5,075  
Interest Income Recognized          
With no related allowance recorded 7 101 8 198  
With an allowance recorded 0 0 0 0  
Total impaired loans 7 101 8 198  
Residential Real Estate | Mortgage loans | Residential Real Estate Mortgage Loans          
Recorded Investment          
With no related allowance recorded 0   0   0
With an allowance recorded 0   0   0
Total impaired loans 0   0   0
Unpaid Principal Balance          
With no related allowance recorded 0   0   0
With an allowance recorded 0   0   0
Total impaired loans 0   0   0
Related Allocated Allowance          
With an allowance recorded 0   0   0
Total impaired loans 0   0   0
Average Recorded Investment          
With no related allowance recorded 0 535 0 498  
With an allowance recorded 0 0 0 0  
Average recorded investment in impaired loans 0 535 0 498  
Interest Income Recognized          
With no related allowance recorded 0 0 0 0  
With an allowance recorded 0 0 0 0  
Total impaired loans 0 0 0 0  
Residential Real Estate | Mortgage loans | Home equity          
Recorded Investment          
With no related allowance recorded 0   0   100
With an allowance recorded 0   0   0
Total impaired loans 0   0   100
Unpaid Principal Balance          
With no related allowance recorded 0   0   100
With an allowance recorded 0   0   0
Total impaired loans 0   0   100
Related Allocated Allowance          
With an allowance recorded 0   0   0
Total impaired loans 0   0   0
Average Recorded Investment          
With no related allowance recorded 0 260 0 261  
With an allowance recorded 0 0 0 0  
Average recorded investment in impaired loans 0 260 0 261  
Interest Income Recognized          
With no related allowance recorded 0 3 0 3  
With an allowance recorded 0 0 0 0  
Total impaired loans 0 3 0 3  
Commercial, Industrial and Agricultural Loans | Secured          
Recorded Investment          
With no related allowance recorded 8,685   8,685   7,368
With an allowance recorded 0   0   0
Total impaired loans 8,685   8,685   7,368
Unpaid Principal Balance          
With no related allowance recorded 9,332   9,332   8,013
With an allowance recorded 0   0   0
Total impaired loans 9,332   9,332   8,013
Related Allocated Allowance          
With an allowance recorded 0   0   0
Total impaired loans 0   0   0
Average Recorded Investment          
With no related allowance recorded 8,702 1,491 8,723 1,015  
With an allowance recorded 0 405 0 203  
Average recorded investment in impaired loans 8,702 1,896 8,723 1,218  
Interest Income Recognized          
With no related allowance recorded 58 53 114 61  
With an allowance recorded 0 0 0 0  
Total impaired loans 58 53 114 61  
Commercial, Industrial and Agricultural Loans | Unsecured          
Recorded Investment          
With no related allowance recorded 5,166   5,166   2,154
With an allowance recorded 0   0   1,708
Total impaired loans 5,166   5,166   3,862
Unpaid Principal Balance          
With no related allowance recorded 5,166   5,166   2,408
With an allowance recorded 0   0   3,235
Total impaired loans 5,166   5,166   5,643
Related Allocated Allowance          
With an allowance recorded 0   0   1,708
Total impaired loans 0   0   $ 1,708
Average Recorded Investment          
With no related allowance recorded 5,178 400 5,055 396  
With an allowance recorded 0 58 0 29  
Average recorded investment in impaired loans 5,178 458 5,055 425  
Interest Income Recognized          
With no related allowance recorded 39 3 76 8  
With an allowance recorded 0 0 0 1  
Total impaired loans $ 39 $ 3 $ 76 $ 9  
XML 70 R60.htm IDEA: XBRL DOCUMENT v3.10.0.1
LOANS (Details 4) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Activity in the accretable yield for the purchased credit impaired loans        
Balance at beginning of period $ 957 $ 5,333 $ 2,151 $ 6,915
Accretion (269) (1,046) (1,302) (2,903)
Reclassification from (to) nonaccretable difference during the period 424 (321) 263 (46)
Accretable discount at end of period $ 1,112 $ 3,966 $ 1,112 $ 3,966
XML 71 R61.htm IDEA: XBRL DOCUMENT v3.10.0.1
LOANS (Detail Textuals)
6 Months Ended
Jun. 30, 2018
USD ($)
Family
Dec. 31, 2017
USD ($)
Jun. 19, 2015
USD ($)
Feb. 14, 2014
USD ($)
CNB        
Classifications of loans        
Addition in acquired loans recorded at fair value     $ 729,400,000  
Fair value of loans acquired $ 303,800,000 $ 359,400,000    
FNBNY        
Classifications of loans        
Addition in acquired loans recorded at fair value       $ 89,700,000
Fair value of loans acquired 13,200,000 $ 15,400,000    
Commercial real estate | Mortgage loans        
Lending Risk        
Loan amount beyond which annual financial information is sought $ 250,000      
Residential real estate | Mortgage loans | Home equity | Minimum        
Lending Risk        
Loan-to-value ratio (as a percent) 80.00%      
Multi-Family | Mortgage loans        
Lending Risk        
Number of families having income producing residential investment properties | Family 5      
Multi-Family | Mortgage loans | Maximum        
Lending Risk        
Loan-to-value ratio (as a percent) 75.00%      
XML 72 R62.htm IDEA: XBRL DOCUMENT v3.10.0.1
LOANS (Detail Textuals 1)
$ in Thousands
1 Months Ended 6 Months Ended
Jun. 19, 2015
USD ($)
Feb. 14, 2014
USD ($)
Jun. 30, 2018
USD ($)
Loan
Jun. 30, 2017
USD ($)
Loan
Dec. 31, 2017
USD ($)
Financing Receivables          
Total loans     $ 3,175,776   $ 3,098,253
Impaired loans     15,300   22,500
Loans modified as TDR     $ 6,800 $ 7,800  
Number of loans modified as TDRs for which there was a payment default within twelve months following the modification | Loan     8 2  
Nonaccrual troubled debt restructured loans     $ 70   5
Amount of current and performing TDR loans     15,500   16,700
Post-Modification of other than troubled debt restructuring, recorded investment     25,300    
Impaired Loans     15,300   22,492
Other real estate owned     $ 175    
Period of modified contractually past due loans to be considered as payment default     30 days    
Special Mention          
Financing Receivables          
Total loans     $ 33,448   42,610
Substandard          
Financing Receivables          
Total loans     42,428   42,683
Substandard | Taxi medallion          
Financing Receivables          
Loans modified as TDR       $ 2,800  
FNBNY          
Acquired Loans          
Contractually required principal and interest payments receivable   $ 40,300      
Expected cash flows   28,400      
Fair value (initial carrying amount) of purchased credit impaired loans   21,800      
Non-accretable difference   11,900      
Initial accretable yield   $ 6,600      
Outstanding balance of purchased credit impaired loans     2,600   4,000
Carrying amount of purchased credit impaired loans     1,400   2,400
Remaining non-accretable difference     600   700
FNBNY | Special Mention          
Financing Receivables          
Total loans     200   200
FNBNY | Substandard          
Financing Receivables          
Total loans     300   300
CNB          
Acquired Loans          
Contractually required principal and interest payments receivable $ 23,400        
Expected cash flows 10,100        
Fair value (initial carrying amount) of purchased credit impaired loans 8,700        
Non-accretable difference 13,300        
Initial accretable yield $ 1,400        
Outstanding balance of purchased credit impaired loans     1,400   7,600
Carrying amount of purchased credit impaired loans     100   1,000
Remaining non-accretable difference     800   5,300
CNB | 30-89 days past due          
Acquired Loans          
Acquired loans     1,300   2,400
CNB | Special Mention          
Financing Receivables          
Total loans     400   400
CNB | Substandard          
Financing Receivables          
Total loans     $ 800   $ 1,600
XML 73 R63.htm IDEA: XBRL DOCUMENT v3.10.0.1
ALLOWANCE FOR LOAN LOSSES (Details) - USD ($)
$ in Thousands
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Allowance for Loan Losses:            
Individually evaluated for impairment $ 0   $ 1,708      
Collectively evaluated for impairment 31,652   29,999      
Loans acquired with deteriorated credit quality 0   0      
Total Allowance for Loan Losses 31,652 $ 32,812 31,707 $ 27,544 $ 26,618 $ 25,904
Loans:            
Individually evaluated for impairment 15,300   22,492      
Collectively evaluated for impairment 3,159,016   3,072,186      
Loans acquired with deteriorated credit quality 1,460   3,575      
Total Loans 3,175,776   3,098,253      
Commercial Real Estate | Mortgage loans            
Allowance for Loan Losses:            
Individually evaluated for impairment 0   0      
Collectively evaluated for impairment 11,206   11,048      
Loans acquired with deteriorated credit quality 0   0      
Total Allowance for Loan Losses 11,206 11,334 11,048 10,579 8,357 9,225
Loans:            
Individually evaluated for impairment 1,449   11,162      
Collectively evaluated for impairment 1,326,498   1,281,837      
Loans acquired with deteriorated credit quality 0   907      
Total Loans 1,327,947   1,293,906      
Multi-Family | Mortgage loans            
Allowance for Loan Losses:            
Individually evaluated for impairment 0   0      
Collectively evaluated for impairment 2,466   4,521      
Loans acquired with deteriorated credit quality 0   0      
Total Allowance for Loan Losses 2,466 3,002 4,521 4,846 6,480 6,264
Loans:            
Individually evaluated for impairment 0   0      
Collectively evaluated for impairment 570,067   593,645      
Loans acquired with deteriorated credit quality 603   1,635      
Total Loans 570,670   595,280      
Residential Real Estate | Mortgage loans            
Allowance for Loan Losses:            
Individually evaluated for impairment 0   0      
Collectively evaluated for impairment 4,237   2,438      
Loans acquired with deteriorated credit quality 0   0      
Total Allowance for Loan Losses 4,237 3,495 2,438 1,486 1,415 1,495
Loans:            
Individually evaluated for impairment 0   100      
Collectively evaluated for impairment 509,693   463,575      
Loans acquired with deteriorated credit quality 610   589      
Total Loans 510,303   464,264      
Commercial, Industrial and Agricultural Loans            
Allowance for Loan Losses:            
Individually evaluated for impairment 0   1,708      
Collectively evaluated for impairment 12,358   11,130      
Loans acquired with deteriorated credit quality 0   0      
Total Allowance for Loan Losses 12,358 14,055 12,838 9,970 9,198 7,837
Loans:            
Individually evaluated for impairment 13,851   11,230      
Collectively evaluated for impairment 615,808   604,329      
Loans acquired with deteriorated credit quality 247   444      
Total Loans 629,906   616,003      
Real Estate Construction and Land Loans            
Allowance for Loan Losses:            
Individually evaluated for impairment 0   0      
Collectively evaluated for impairment 1,263   740      
Loans acquired with deteriorated credit quality 0   0      
Total Allowance for Loan Losses 1,263 821 740 577 1,058 955
Loans:            
Individually evaluated for impairment 0   0      
Collectively evaluated for impairment 116,899   107,759      
Loans acquired with deteriorated credit quality 0   0      
Total Loans 116,899   107,759      
Installment/Consumer Loans            
Allowance for Loan Losses:            
Individually evaluated for impairment 0   0      
Collectively evaluated for impairment 122   122      
Loans acquired with deteriorated credit quality 0   0      
Total Allowance for Loan Losses 122 $ 105 122 $ 86 $ 110 $ 128
Loans:            
Individually evaluated for impairment 0   0      
Collectively evaluated for impairment 20,051   21,041      
Loans acquired with deteriorated credit quality 0   0      
Total Loans $ 20,051   $ 21,041      
XML 74 R64.htm IDEA: XBRL DOCUMENT v3.10.0.1
ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Dec. 31, 2017
Allowance for Loan Losses          
Beginning balance $ 32,812 $ 26,618 $ 31,707 $ 25,904 $ 25,904
Charge-offs (1,732) (33) (1,732) (128)  
Recoveries 172 9 477 18  
Provision 400 950 1,200 1,750  
Ending balance 31,652 27,544 31,652 27,544 31,707
Commercial Real Estate | Mortgage loans          
Allowance for Loan Losses          
Beginning balance 11,334 8,357 11,048 9,225 9,225
Charge-offs 0 0 0 0  
Recoveries 0 0 0 0  
Provision (128) 2,222 158 1,354  
Ending balance 11,206 10,579 11,206 10,579 11,048
Multi-Family | Mortgage loans          
Allowance for Loan Losses          
Beginning balance 3,002 6,480 4,521 6,264 6,264
Charge-offs 0 0 0 0  
Recoveries 0 0 0 0  
Provision (536) (1,634) (2,055) (1,418)  
Ending balance 2,466 4,846 2,466 4,846 4,521
Residential Real Estate | Mortgage loans          
Allowance for Loan Losses          
Beginning balance 3,495 1,415 2,438 1,495 1,495
Charge-offs (24) 0 (24) 0  
Recoveries 0 1 1 2  
Provision 766 70 1,822 (11)  
Ending balance 4,237 1,486 4,237 1,486 2,438
Commercial, Industrial and Agricultural Loans          
Allowance for Loan Losses          
Beginning balance 14,055 9,198 12,838 7,837 7,837
Charge-offs (1,708) (33) (1,708) (128)  
Recoveries 171 8 475 15  
Provision (160) 797 753 2,246  
Ending balance 12,358 9,970 12,358 9,970 12,838
Real Estate Construction and Land Loans          
Allowance for Loan Losses          
Beginning balance 821 1,058 740 955 955
Charge-offs 0 0 0 0  
Recoveries 0 0 0 0  
Provision 442 (481) 523 (378)  
Ending balance 1,263 577 1,263 577 740
Installment/Consumer Loans          
Allowance for Loan Losses          
Beginning balance 105 110 122 128 128
Charge-offs 0 0 0 0  
Recoveries 1 0 1 1  
Provision 16 (24) (1) (43)  
Ending balance $ 122 $ 86 $ 122 $ 86 $ 122
XML 75 R65.htm IDEA: XBRL DOCUMENT v3.10.0.1
PENSION AND POSTRETIREMENT PLANS (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Pension Benefits        
Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income        
Service cost $ 325 $ 292 $ 650 $ 585
Interest cost 198 186 395 370
Expected return on plan assets (625) (520) (1,250) (1,040)
Amortization of net loss 82 112 165 225
Amortization of prior service credit (19) (19) (38) (38)
Amortization of transition obligation 0 0 0 0
Net periodic benefit (credit) cost (39) 51 (78) 102
SERP Benefits        
Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income        
Service cost 72 52 145 105
Interest cost 31 26 63 52
Expected return on plan assets 0 0 0 0
Amortization of net loss 31 13 61 26
Amortization of prior service credit 0 0 0 0
Amortization of transition obligation 1 7 2 14
Net periodic benefit (credit) cost $ 135 $ 98 $ 271 $ 197
XML 76 R66.htm IDEA: XBRL DOCUMENT v3.10.0.1
PENSION AND POSTRETIREMENT PLANS (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Defined Benefit Plan Disclosure [Line Items]      
Contribution to the plan     $ 2,200
Reclassification of net periodic benefit credit components other than service cost from salaries and employee benefits expense to operating expense $ 195   391
SERP Benefits      
Defined Benefit Plan Disclosure [Line Items]      
Distribution from the plan   $ 56 $ 56
XML 77 R67.htm IDEA: XBRL DOCUMENT v3.10.0.1
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Detail Textuals) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Securities sold under agreements to repurchase    
Securities sold under agreements to repurchase $ 1,437 $ 877
Carrying amount of U.S. GSE residential collateralized mortgage obligations and U.S. GSE residential mortgage-backed securities 2,400 $ 1,800
Maturing during the third quarter    
Securities sold under agreements to repurchase    
Securities sold under agreements to repurchase $ 1,400  
U.S. GSE residential collateralized mortgage obligations    
Securities sold under agreements to repurchase    
Percentage of investment securities held as collateral 18.00% 52.00%
U.S. GSE residential mortgage-backed securities    
Securities sold under agreements to repurchase    
Percentage of investment securities held as collateral 82.00% 48.00%
XML 78 R68.htm IDEA: XBRL DOCUMENT v3.10.0.1
FEDERAL HOME LOAN BANK ADVANCES (Details) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Contractual Maturity, Amount    
Overnight $ 10,000 $ 185,000
2018 290,000 315,083
2019 863 1,291
Total FHLB advances except overnight advances 290,863 316,374
Total FHLB advances $ 300,863 $ 501,374
Weighted Average Rate    
Overnight (as a percent) 2.08% 1.53%
2018 (as a percent) 2.22% 1.59%
2019 (as a percent) 0.81% 0.94%
Weighted Average Rate for total FHLB advances except overnight advances (as a percent) 2.22% 1.59%
Weighted Average Rate for total FHLB advances (as a percent) 2.21% 1.57%
XML 79 R69.htm IDEA: XBRL DOCUMENT v3.10.0.1
FEDERAL HOME LOAN BANK ADVANCES (Detail Textuals) - USD ($)
$ in Billions
Jun. 30, 2018
Dec. 31, 2017
Debt Disclosure [Abstract]    
Advances collateralized amount $ 1.3 $ 1.2
Maximum borrowing amount from FHLB term advances $ 1.3  
XML 80 R70.htm IDEA: XBRL DOCUMENT v3.10.0.1
BORROWED FUNDS (Detail Textuals) - USD ($)
$ in Thousands
1 Months Ended
Sep. 30, 2015
Jun. 30, 2018
Dec. 31, 2017
Debt Instrument [Line Items]      
Fixed-to-floating rate subordinated debentures $ 80,000    
Subordinated debentures, net   $ 78,711 $ 78,641
Subordinated Debentures | Callable after five years      
Debt Instrument [Line Items]      
Fixed-to-floating rate subordinated debentures $ 40,000    
Fixed annual interest rate 5.25%    
Debt instrument variable rate description three-month LIBOR    
Basis points 3.60%    
Subordinated Debentures | Callable after ten years      
Debt Instrument [Line Items]      
Fixed-to-floating rate subordinated debentures $ 40,000    
Fixed annual interest rate 5.75%    
Debt instrument variable rate description three-month LIBOR    
Basis points 3.45%    
XML 81 R71.htm IDEA: XBRL DOCUMENT v3.10.0.1
BORROWED FUNDS (Detail Textuals 1) - USD ($)
1 Months Ended
Dec. 15, 2016
Jan. 18, 2017
Jan. 17, 2017
Dec. 28, 2016
Dec. 31, 2009
Trust preferred securities (TPS)          
Junior subordinated debentures          
Aggregate liquidation amount of trust preferred securities converted     $ 15,500,000 $ 100,000  
Trust preferred securities outstanding $ 15,800,000        
Number of trust preferred securities converted     15,450 100  
Number of shares issued for trust preferred securities conversions     532,740 3,448  
Trust preferred shares to be redeemed   350      
Amount of preferred securities liquidation to be redeemed   $ 350,000      
Junior Subordinated Debentures          
Junior subordinated debentures          
Amount of debentures issued to trust         $ 16,000,000
Bridge Statutory Capital Trust II | Trust preferred securities (TPS)          
Junior subordinated debentures          
Distribution rate of trust preferred securities (as a percent)         8.50%
Liquidation amount per security (in dollars per share)         $ 1,000
Trust preferred securities outstanding         $ 16,000,000
Conversion price (in dollars per share)         $ 29
XML 82 R72.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVES (Details) - Interest rate swaps - Derivative designated as a cash flow hedge - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2018
Dec. 31, 2017
Derivatives    
Notional amounts $ 290,000 $ 290,000
Weighted average pay rates (as a percent) 1.78% 1.78%
Weighted average receive rates (as a percent) 2.33% 1.61%
Weighted average maturity 2 years 1 month 21 days 2 years 7 months 21 days
XML 83 R73.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVES (Details 1) - Derivative designated as a cash flow hedge - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income        
Interest rate contracts, Amount of gain (loss) recognized in OCI (Effective Portion) $ 1,020 $ (1,385) $ 3,847 $ (1,360)
Interest rate contracts, Amount of gain (loss) reclassified from OCI to interest expense 344 (459) 279 (734)
Interest rate contracts, Amount of loss recognized in other non-interest income (Ineffective Portion) $ 0 $ 0 $ 0 $ 0
XML 84 R74.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVES (Details 2) - Derivative designated as a cash flow hedge - Interest rate swaps related to FHLB advances - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Derivative Instruments, Gain (Loss) [Line Items]    
Notional Amount $ 290,000 $ 290,000
Fair Value Asset 6,324 3,133
Fair Value Liability $ (32) $ (410)
XML 85 R75.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVES (Details 3) - Interest rate swaps - Non-Designated Hedges - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2018
Dec. 31, 2017
Derivatives    
Notional amounts $ 174,997 $ 147,967
Weighted average pay rates (as a percent) 4.32% 3.96%
Weighted average receive rates (as a percent) 4.32% 3.96%
Weighted average maturity 11 years 11 months 1 day 12 years 4 months 13 days
Fair value of combined interest rate swaps $ 0 $ 0
XML 86 R76.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVES (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Dec. 31, 2017
Derivative [Line Items]          
Derivative asset position net $ 8,500   $ 8,500    
Collateral received against obligations in net asset position 8,300   8,300    
Interest rate swaps | Derivative designated as a cash flow hedge          
Derivative [Line Items]          
Notional amounts 290,000   290,000   $ 290,000
Interest rate swaps | Derivative designated as a cash flow hedge | Federal Home Loan Bank          
Derivative [Line Items]          
Interest (income) expense on derivative $ (344) $ 459 (279) $ 734  
Reduction to interest expense     (279)    
Reclassified estimated decrease in interest expense     $ 1,900    
XML 87 R77.htm IDEA: XBRL DOCUMENT v3.10.0.1
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME        
Unrealized holding (losses) gains on available for sale securities $ (4,231) $ 2,595 $ (12,818) $ 4,211
Reclassification adjustment for losses realized in income 7,921 0 7,921 0
Income tax effect (1,074) (1,062) 1,425 (1,668)
Net change in unrealized gains (losses) on available for sale securities 2,616 1,533 (3,472) 2,543
Reclassification adjustment for amortization realized in income 95 113 190 227
Income tax effect (27) (47) (55) (64)
Net change in post-retirement obligation 68 66 135 163
Change in fair value of derivatives used for cash flow hedges 1,020 (1,385) 3,847 (1,360)
Reclassification adjustment for (gains) losses realized in income (344) 459 (279) 734
Income tax effect (197) 379 (1,038) 253
Net change in unrealized gains (losses) on cash flow hedges 479 (547) 2,530 (373)
Other comprehensive income (loss) $ 3,163 $ 1,052 $ (807) $ 2,333
XML 88 R78.htm IDEA: XBRL DOCUMENT v3.10.0.1
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Details 1) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Unrealized losses on available for sale securities        
Balance at the beginning of the period     $ (11,337)  
Current Period Change $ 2,616 $ 1,533 (3,472) $ 2,543
Balance at the end of the period (14,809)   (14,809)  
Unrealized (losses) gain on pension benefits        
Balance at the beginning of the period     (5,533)  
Current Period Change 68 66 135 163
Balance at the end of the period (5,398)   (5,398)  
Unrealized gains on cash flow hedges        
Balance at the beginning of the period     1,931  
Current Period Change 479 (547) 2,530 (373)
Balance at the end of the period 4,461   4,461  
Accumulated other comprehensive loss, net of income taxes        
Balance at the beginning of the period     (14,939)  
Current Period Change 3,163 $ 1,052 (807) $ 2,333
Balance at the end of the period $ (15,746)   $ (15,746)  
XML 89 R79.htm IDEA: XBRL DOCUMENT v3.10.0.1
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Details 2) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Amounts Reclassified from AOCI        
Interest expense $ 7,622 $ 5,441 $ 14,447 $ 10,197
Income tax benefit 1,701 4,505 4,882 8,821
Amount Reclassified from Accumulated Other Comprehensive Income        
Amounts Reclassified from AOCI        
Total reclassifications, before income tax (7,672) (572) (7,832) (961)
Income tax benefit 2,231 234 2,278 393
Total reclassifications, net of income tax (5,441) (338) (5,554) (568)
Amount Reclassified from Accumulated Other Comprehensive Income | Realized losses on sale of available for sale securities        
Amounts Reclassified from AOCI        
Net securities losses (7,921) 0 (7,921) 0
Amount Reclassified from Accumulated Other Comprehensive Income | Prior service credit        
Amounts Reclassified from AOCI        
Other operating expenses 19 19 38 38
Amount Reclassified from Accumulated Other Comprehensive Income | Transition obligation        
Amounts Reclassified from AOCI        
Other operating expenses (1) (7) (2) (14)
Amount Reclassified from Accumulated Other Comprehensive Income | Actuarial losses        
Amounts Reclassified from AOCI        
Other operating expenses (113) (125) (226) (251)
Amount Reclassified from Accumulated Other Comprehensive Income | Realized losses on cash flow hedges        
Amounts Reclassified from AOCI        
Interest expense $ 344 $ (459) $ 279 $ (734)
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