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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Abington Bancorp, Inc. (MM) | NASDAQ:ABBC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 7.20 | 0 | 01:00:00 |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Pennsylvania | 20-8613037 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
180 Old York Road
Jenkintown, Pennsylvania |
19046 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
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CERTIFICATIONS
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Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
June 30, 2011 | December 31, 2010 | |||||||
ASSETS
|
||||||||
Cash and due from banks
|
$ | 25,743,938 | $ | 17,917,261 | ||||
Interest-bearing deposits in other banks
|
47,834,572 | 59,769,447 | ||||||
|
||||||||
Total cash and cash equivalents
|
73,578,510 | 77,686,708 | ||||||
Investment securities held to maturity (estimated fair
value2011, $21,276,727; 2010, $20,806,340) |
20,383,700 | 20,384,781 | ||||||
Investment securities available for sale (amortized cost
2011, $111,861,327; 2010, $124,245,038) |
113,168,140 | 124,903,901 | ||||||
Mortgage-backed securities held to maturity (estimated fair
value2011, $51,270,544; 2010, $58,338,548) |
49,594,120 | 56,872,188 | ||||||
Mortgage-backed securities available for sale (amortized cost
2011, $162,091,967; 2010, $164,632,654) |
166,461,270 | 168,172,796 | ||||||
Loans receivable, net of allowance for loan losses
(2011, $4,357,064; 2010, $4,271,618) |
652,549,648 | 696,443,502 | ||||||
Accrued interest receivable
|
3,746,307 | 4,102,984 | ||||||
Federal Home Loan Bank stockat cost
|
12,524,200 | 13,877,300 | ||||||
Cash surrender value bank owned life insurance
|
43,614,652 | 42,744,766 | ||||||
Property and equipment, net
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9,392,901 | 9,751,694 | ||||||
Real estate owned
|
23,664,479 | 23,588,139 | ||||||
Deferred tax asset
|
3,085,288 | 3,631,218 | ||||||
Prepaid expenses and other assets
|
4,975,606 | 4,938,037 | ||||||
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TOTAL ASSETS
|
$ | 1,176,738,821 | $ | 1,247,098,014 | ||||
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LIABILITIES AND STOCKHOLDERS EQUITY
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LIABILITIES:
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Deposits:
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Noninterest-bearing
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$ | 42,675,317 | $ | 49,807,778 | ||||
Interest-bearing
|
798,030,035 | 850,251,190 | ||||||
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||||||||
Total deposits
|
840,705,352 | 900,058,968 | ||||||
Advances from Federal Home Loan Bank
|
76,869,067 | 109,874,674 | ||||||
Other borrowed money
|
28,826,033 | 15,881,449 | ||||||
Accrued interest payable
|
3,218,208 | 912,321 | ||||||
Advances from borrowers for taxes and insurance
|
4,878,039 | 2,956,425 | ||||||
Accounts payable and accrued expenses
|
5,924,510 | 5,504,215 | ||||||
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Total liabilities
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960,421,209 | 1,035,188,052 | ||||||
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS EQUITY
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Preferred stock, $0.01 par value, 20,000,000 shares authorized
none issued
|
| | ||||||
Common stock, $0.01 par value, 80,000,000 shares authorized;
24,460,240 shares issued; outstanding: 20,245,910 shares in
2011,
20,166,742 shares in 2010
|
244,602 | 244,602 | ||||||
Additional paid-in capital
|
202,885,637 | 202,517,175 | ||||||
Treasury stockat cost, 4,214,330 shares in 2011,
4,293,498 shares in 2010
|
(34,257,469 | ) | (34,949,051 | ) | ||||
Unallocated common stock held by:
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Employee Stock Ownership Plan (ESOP)
|
(13,040,818 | ) | (13,460,338 | ) | ||||
Recognition & Retention Plan Trust (RRP)
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(2,085,784 | ) | (2,589,310 | ) | ||||
Deferred compensation plans trust
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(1,072,856 | ) | (1,045,153 | ) | ||||
Retained earnings
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59,958,638 | 58,519,670 | ||||||
Accumulated other comprehensive income
|
3,685,662 | 2,672,367 | ||||||
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Total stockholders equity
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216,317,612 | 211,909,962 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
$ | 1,176,738,821 | $ | 1,247,098,014 | ||||
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1
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
INTEREST INCOME:
|
||||||||||||||||
Interest on loans
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$ | 8,893,880 | $ | 9,816,008 | $ | 17,881,281 | $ | 19,815,235 | ||||||||
Interest and dividends on investment and
mortgage-backed securities:
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Taxable
|
2,186,224 | 2,674,497 | 4,507,786 | 5,372,474 | ||||||||||||
Tax-exempt
|
367,945 | 388,246 | 745,579 | 786,273 | ||||||||||||
Interest and dividends on other interest-earning assets
|
15,822 | 19,761 | 32,356 | 25,653 | ||||||||||||
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Total interest income
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11,463,871 | 12,898,512 | 23,167,002 | 25,999,635 | ||||||||||||
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INTEREST EXPENSE:
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Interest on deposits
|
2,725,409 | 3,232,872 | 5,494,719 | 6,521,455 | ||||||||||||
Interest on Federal Home Loan Bank advances
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713,796 | 1,413,977 | 1,588,708 | 2,968,343 | ||||||||||||
Interest on other borrowed money
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21,929 | 20,324 | 43,307 | 34,616 | ||||||||||||
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Total interest expense
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3,461,134 | 4,667,173 | 7,126,734 | 9,524,414 | ||||||||||||
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NET INTEREST INCOME
|
8,002,737 | 8,231,339 | 16,040,268 | 16,475,221 | ||||||||||||
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PROVISION FOR LOAN LOSSES
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| | | 563,445 | ||||||||||||
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NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
|
8,002,737 | 8,231,339 | 16,040,268 | 15,911,776 | ||||||||||||
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NON-INTEREST INCOME
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Service charges
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287,718 | 326,956 | 561,649 | 623,334 | ||||||||||||
Income on bank owned life insurance
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438,866 | 446,012 | 869,886 | 884,498 | ||||||||||||
Net loss on real estate owned
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(136,896 | ) | (131,921 | ) | (332,473 | ) | (713,196 | ) | ||||||||
Other income
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195,121 | 164,721 | 380,175 | 366,462 | ||||||||||||
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Total non-interest income
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784,809 | 805,768 | 1,479,237 | 1,161,098 | ||||||||||||
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NON-INTEREST EXPENSES
|
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Salaries and employee benefits
|
3,021,289 | 3,030,727 | 6,118,246 | 5,960,509 | ||||||||||||
Occupancy
|
641,254 | 711,988 | 1,389,916 | 1,424,708 | ||||||||||||
Depreciation
|
190,193 | 227,810 | 386,953 | 457,535 | ||||||||||||
Professional services
|
444,244 | 576,209 | 1,414,886 | 1,020,120 | ||||||||||||
Data processing
|
461,639 | 431,789 | 910,379 | 854,411 | ||||||||||||
Deposit insurance premium
|
336,042 | 494,416 | 854,067 | 854,919 | ||||||||||||
Advertising and promotions
|
175,626 | 148,884 | 345,283 | 256,257 | ||||||||||||
Director compensation
|
144,879 | 225,509 | 287,795 | 445,455 | ||||||||||||
Other
|
465,863 | 549,406 | 1,109,731 | 1,090,145 | ||||||||||||
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Total non-interest expenses
|
5,881,029 | 6,396,738 | 12,817,256 | 12,364,059 | ||||||||||||
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INCOME BEFORE INCOME TAXES
|
2,906,517 | 2,640,369 | 4,702,249 | 4,708,815 | ||||||||||||
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PROVISION FOR INCOME TAXES
|
756,300 | 668,090 | 1,009,579 | 1,128,176 | ||||||||||||
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NET INCOME
|
$ | 2,150,217 | $ | 1,972,279 | $ | 3,692,670 | $ | 3,580,639 | ||||||||
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BASIC EARNINGS PER COMMON SHARE
|
$ | 0.12 | $ | 0.10 | $ | 0.19 | $ | 0.19 | ||||||||
DILUTED EARNINGS PER COMMON SHARE
|
$ | 0.11 | $ | 0.10 | $ | 0.19 | $ | 0.18 | ||||||||
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BASIC AVERAGE COMMON SHARES OUTSTANDING:
|
18,595,898 | 18,920,983 | 18,952,497 | 18,957,926 | ||||||||||||
DILUTED AVERAGE COMMON SHARES OUTSTANDING:
|
19,267,314 | 19,395,076 | 19,290,057 | 19,383,467 |
2
Common | ||||||||||||||||||||||||||||||||
Stock | Accumulated | |||||||||||||||||||||||||||||||
Common | Additional | Acquired by | Other | Total | ||||||||||||||||||||||||||||
Stock | Common | Paid-in | Treasury | Benefit | Retained | Comprehensive | Stockholders | |||||||||||||||||||||||||
Shares | Stock | Capital | Stock | Plans | Earnings | Income | Equity | |||||||||||||||||||||||||
BALANCEJANUARY 1, 2011
|
24,460,240 | $ | 244,602 | $ | 202,517,175 | $ | (34,949,051 | ) | $ | (17,094,801 | ) | $ | 58,519,670 | $ | 2,672,367 | $ | 211,909,962 | |||||||||||||||
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Comprehensive income:
|
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Net income
|
| | | | | 3,692,670 | | 3,692,670 | ||||||||||||||||||||||||
Net unrealized holding gain on
available for sale securities
arising during the period, net
of tax expense of $502,218
|
| | | | | | 974,893 | 974,893 | ||||||||||||||||||||||||
Amortization of unrecognized
deferred costs on SERP, net
of tax benefit of $19,782
|
| | | | | | 38,402 | 38,402 | ||||||||||||||||||||||||
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Comprehensive income
|
4,705,965 | |||||||||||||||||||||||||||||||
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Treasury stock purchased
(22,232 shares)
|
| | | (276,789 | ) | | | | (276,789 | ) | ||||||||||||||||||||||
Cash dividends declared,
($0.12 per share)
|
| | | | | (2,253,702 | ) | | (2,253,702 | ) | ||||||||||||||||||||||
Exercise of stock options
|
| | (112,359 | ) | 968,371 | | | | 856,012 | |||||||||||||||||||||||
Excess tax liability on stock-based
compensation
|
| | 105,770 | | | | | 105,770 | ||||||||||||||||||||||||
Stock options expense
|
| | 271,071 | | | | | 271,071 | ||||||||||||||||||||||||
Common stock released from
benefit plans
|
| | 103,980 | | 925,646 | | | 1,029,626 | ||||||||||||||||||||||||
Common stock acquired by
benefit plans
|
| | | | (30,303 | ) | | | (30,303 | ) | ||||||||||||||||||||||
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BALANCE
JUNE 30, 2011
|
24,460,240 | $ | 244,602 | $ | 202,885,637 | $ | (34,257,469 | ) | $ | (16,199,458 | ) | $ | 59,958,638 | $ | 3,685,662 | $ | 216,317,612 | |||||||||||||||
|
Common | Accumulated | |||||||||||||||||||||||||||||||
Stock | Other | |||||||||||||||||||||||||||||||
Common | Additional | Acquired by | Comprehensive | Total | ||||||||||||||||||||||||||||
Stock | Common | Paid-in | Treasury | Benefit | Retained | Income | Stockholders | |||||||||||||||||||||||||
Shares | Stock | Capital | Stock | Plans | Earnings | (Loss) | Equity | |||||||||||||||||||||||||
BALANCEJANUARY 1, 2010
|
24,460,240 | $ | 244,602 | $ | 201,922,651 | $ | (27,446,596 | ) | $ | (19,214,142 | ) | $ | 54,804,913 | $ | 3,870,572 | $ | 214,182,000 | |||||||||||||||
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Comprehensive income:
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Net income
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| | | | | 3,580,639 | | 3,580,639 | ||||||||||||||||||||||||
Net unrealized holding gain on
available for sale securities
arising during the period, net
of tax expense of $500,483
|
| | | | | | 971,524 | 971,524 | ||||||||||||||||||||||||
Amortization of unrecognized
deferred costs on SERP, net
of tax benefit of $20,350
|
| | | | | | 39,502 | 39,502 | ||||||||||||||||||||||||
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Comprehensive income
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4,591,665 | |||||||||||||||||||||||||||||||
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Treasury stock purchased
(701,351 shares)
|
| | | (5,880,430 | ) | | | | (5,880,430 | ) | ||||||||||||||||||||||
Cash dividends declared,
($0.10 per share)
|
| | | | | (1,927,203 | ) | | (1,927,203 | ) | ||||||||||||||||||||||
Exercise of stock options
|
| | (13,970 | ) | 65,398 | | | | 51,428 | |||||||||||||||||||||||
Excess tax liability on stock-based
compensation
|
| | (63,591 | ) | | | | | (63,591 | ) | ||||||||||||||||||||||
Stock options expense
|
| | 435,585 | | | | | 435,585 | ||||||||||||||||||||||||
Common stock released from
benefit plans
|
| | (108,765 | ) | | 1,256,184 | | | 1,147,419 | |||||||||||||||||||||||
Common stock acquired by
benefit plans
|
| | | | (31,276 | ) | | | (31,276 | ) | ||||||||||||||||||||||
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BALANCE
JUNE 30, 2010
|
24,460,240 | $ | 244,602 | $ | 202,171,910 | $ | (33,261,628 | ) | $ | (17,989,234 | ) | $ | 56,458,349 | $ | 4,881,598 | $ | 212,505,597 | |||||||||||||||
|
3
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
OPERATING ACTIVITIES:
|
||||||||
Net income
|
$ | 3,692,670 | $ | 3,580,639 | ||||
Adjustments to reconcile net income to net cash provided by operating
activities:
|
||||||||
Provision for loan losses
|
| 563,445 | ||||||
Depreciation
|
386,953 | 457,535 | ||||||
Stock-based compensation expense
|
1,298,097 | 1,577,804 | ||||||
Net loss on real estate owned
|
| 417,121 | ||||||
Deferred income tax expense
|
23,930 | 1,656,983 | ||||||
Amortization of:
|
||||||||
Deferred loan fees
|
(561,910 | ) | (648,728 | ) | ||||
Premiums and discounts, net
|
(76,329 | ) | (90,396 | ) | ||||
Income from bank owned life insurance
|
(869,886 | ) | (884,498 | ) | ||||
Changes in assets and liabilities which provided (used) cash:
|
||||||||
Accrued interest receivable
|
356,677 | 23,882 | ||||||
Prepaid expenses and other assets
|
(37,569 | ) | (3,805,507 | ) | ||||
Accrued interest payable
|
2,305,887 | 1,538,195 | ||||||
Accounts payable and accrued expenses
|
450,776 | 6,010,576 | ||||||
|
||||||||
|
||||||||
Net cash provided by operating activities
|
6,969,296 | 10,397,051 | ||||||
|
||||||||
|
||||||||
INVESTING ACTIVITIES:
|
||||||||
Principal collected on loans
|
83,046,394 | 59,774,629 | ||||||
Disbursements for loans
|
(38,590,630 | ) | (30,667,063 | ) | ||||
Purchases of:
|
||||||||
Mortgage-backed securities available for sale
|
(22,787,383 | ) | (34,888,048 | ) | ||||
Investments available for sale
|
(31,011,558 | ) | (96,722,138 | ) | ||||
Property and equipment
|
(28,160 | ) | (38,838 | ) | ||||
Additions to real estate owned, net
|
(76,340 | ) | (186,560 | ) | ||||
Proceeds from:
|
||||||||
Maturities of mortgage-backed securities held to maturity
|
| 150,178 | ||||||
Maturities of mortgage-backed securities available for sale
|
522,951 | 1,883,210 | ||||||
Maturities of investments available for sale
|
43,380,000 | 50,835,000 | ||||||
Principal repayments of mortgage-backed securities held to maturity
|
7,252,008 | 10,417,483 | ||||||
Principal repayments of mortgage-backed securities available for sale
|
24,923,858 | 25,419,334 | ||||||
Redemption of Federal Home Loan Bank stock
|
1,353,100 | | ||||||
Sale of real estate owned
|
| 9,446,295 | ||||||
|
||||||||
|
||||||||
Net cash provided by (used in) investing activities
|
67,984,240 | (4,576,518 | ) | |||||
|
||||||||
|
||||||||
FINANCING ACTIVITIES:
|
||||||||
Net (decrease) increase in demand deposits and savings accounts
|
(32,367,610 | ) | 29,273,922 | |||||
Net (decrease) increase in certificate accounts
|
(26,986,006 | ) | 2,731,782 | |||||
Net increase in other borrowed money
|
12,944,584 | 9,846,588 | ||||||
Advances from Federal Home Loan Bank
|
| 935,000 | ||||||
Repayments of advances from Federal Home Loan Bank
|
(33,005,607 | ) | (20,505,592 | ) | ||||
Net increase in advances from borrowers for taxes and insurance
|
1,921,614 | 1,980,151 | ||||||
Proceeds from exercise of stock options
|
856,012 | 51,428 | ||||||
Excess tax benefit (liability) from stock-based compensation
|
105,770 | (63,591 | ) | |||||
Purchase of treasury stock
|
(276,789 | ) | (5,880,430 | ) | ||||
Payment of cash dividend
|
(2,253,702 | ) | (1,927,203 | ) | ||||
|
||||||||
|
||||||||
Net cash (used in) provided by financing activities
|
(79,061,734 | ) | 16,442,055 | |||||
|
||||||||
|
||||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(4,108,198 | ) | 22,262,588 | |||||
|
||||||||
CASH AND CASH EQUIVALENTSBeginning of period
|
77,686,708 | 44,714,239 | ||||||
|
||||||||
CASH AND CASH EQUIVALENTSEnd of period
|
$ | 73,578,510 | $ | 66,976,827 | ||||
|
4
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid during the year for:
|
||||||||
Interest on deposits and other borrowings
|
$ | 4,820,847 | $ | 7,986,219 | ||||
Income taxes
|
$ | | $ | 1,000,000 | ||||
Non-cash transfer of loans to real estate owned
|
$ | | $ | | ||||
Acquisition of stock for deferred compensation plans trust
|
$ | | $ | 25,979 | ||||
Release of stock from deferred compensation plans trust
|
$ | 2,600 | $ | 5,200 |
5
1. | FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
Basis of Financial Statement Presentation Abington Bancorp, Inc. (the Company) is a Pennsylvania corporation which was organized to be the stock holding company for Abington Savings Bank in connection with our second-step conversion and reorganization completed in 2007. Abington Savings Bank is a Pennsylvania-chartered, FDIC-insured savings bank, which conducts business under the name Abington Bank (the Bank or Abington Bank). As a result of the Banks election pursuant to Section 10(l) of the Home Owners Loan Act, the Company is a savings and loan holding company. The Bank is a wholly owned subsidiary of the Company. The Companys results of operations are primarily dependent on the results of the Bank and the Banks wholly owned subsidiaries that include ASB Investment Co. and certain limited purpose limited liability companies (LLCs). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, which combined constitute one reportable segment. All significant intercompany balances and transactions have been eliminated. |
The Banks executive offices are in Jenkintown, Pennsylvania, with 12 other branches and seven limited service facilities located in Montgomery, Bucks and Delaware Counties, Pennsylvania. The Bank is principally engaged in the business of accepting customer deposits and investing these funds in loans that include residential mortgage, commercial, consumer and construction loans. The principal business of ASB Investment Co. is to hold certain investment securities for the Bank. The principal business of the LLCs is to own and manage certain properties that were acquired as real estate owned. The Bank also has the following inactive subsidiaries Keswick Services II, and its wholly owned subsidiaries, and Abington Corp. |
On January 26, 2011, the Company and Susquehanna Bancshares, Inc., (Susquehanna) announced the signing of a definitive Agreement and Plan of Merger under which Susquehanna will acquire all outstanding shares of common stock of the Company in a stock-for-stock transaction. Under the terms of the agreement, shareholders of the Company will receive 1.32 shares of Susquehannas common stock for each share of common stock of the Company. The proposed transaction is expected to be completed during the third quarter of 2011. For further information on this transaction, see Note 10. |
The accompanying unaudited consolidated financial statements were prepared in accordance with the instructions to Form 10-Q, and therefore, do not include all the information or footnotes necessary for a complete presentation of financial condition, results of operations, changes in stockholders equity and comprehensive income and cash flows in conformity with accounting principles generally accepted in the United States of America. However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the consolidated financial statements have been included. These financial statements should be read in conjunction with the audited consolidated financial statements of Abington Bancorp, Inc. and the accompanying notes thereto for the year ended December 31, 2010, which are included in the Companys Annual Report on Form 10-K for the year ended December 31, 2010. The results for the six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2011, or any other period. |
6
The Company follows accounting standards set by the Financial Accounting Standards Board (the FASB). The FASB sets accounting principles generally accepted in the United States (U.S. GAAP) that we follow to ensure we consistently report our financial condition, results of operations and cash flows. The FASB has established the FASB Accounting Standards Codification (the Codification or the ASC) as the source of authoritative accounting. |
In accordance with the subsequent events topic of the ASC, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements. The effect of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of June 30, 2011. |
Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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 income and expenses during the reporting period. Actual results could differ from those estimates. The Companys most significant estimates are the allowance for loan losses, the assessment of other-than-temporary impairment of investment and mortgage-backed securities and deferred income taxes. |
Other-Than-Temporary Impairment of Securities Securities are evaluated on at least a quarterly basis, and more frequently when market conditions warrant such an evaluation, to determine whether a decline in their value is other-than-temporary. To determine whether a loss in value is other-than-temporary, management utilizes criteria such as the reasons underlying the decline, the magnitude and duration of the decline and whether or not management intends to sell or expects that it is more likely than not that it will be required to sell the security prior to an anticipated recovery of the fair value. The term other-than-temporary is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value for a debt security is determined to be other-than-temporary, the other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income. For equity securities, the full amount of the other-than-temporary impairment is recognized in earnings. No impairment charges were recognized during the three or six months ended June 30, 2011 or 2010. |
Allowance for Loan Losses The allowance for loan losses is increased by charges to income through the provision for loan losses and decreased by charge-offs (net of recoveries). The allowance is maintained at a level that management considers adequate to provide for losses based upon evaluation of the known and inherent risks in the loan portfolio. Managements periodic evaluation of the adequacy of the allowance is based on the Companys past loan loss experience, the volume and composition of lending conducted by the Company, adverse situations that may affect a borrowers ability to repay, the estimated value of any underlying collateral, current economic conditions and other factors affecting the known and inherent losses in the portfolio. This evaluation is inherently subjective as it requires material estimates including, among others, the amount and timing of expected future cash flows on impacted loans, exposure at default, value of collateral, and estimated losses on our loan portfolio. All of these estimates may be susceptible to significant change. |
7
The allowance consists of specifically identified amounts for impaired loans, a general allowance, or in some cases a specific allowance, on all classified loans which are not impaired and a general allowance on the remainder of the portfolio. Although we determine the amount of each element of the allowance separately, the entire allowance for loan losses is available for the entire portfolio. |
A loan is classified as a troubled debt restructuring (TDR) if the Company, for economic or legal reasons related to a debtors financial difficulties, grants a concession to the debtor that it would not otherwise consider. Concessions granted under a TDR typically involve a temporary or permanent reduction in payments or interest rate or an extension of a loans stated maturity date at less than a current market rate of interest. Loans classified as TDRs are designated as impaired. |
We establish an allowance on impaired loans for the amount by which the present value of expected future cash flows discounted at the loans effective interest rate, observable market price or fair value of collateral, if the loan is collateral dependent, is lower than the carrying value of the loan. Impairment losses are included in the provision for loan losses. A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. An insignificant delay or insignificant shortfall in amount of payments does not necessarily result in the loan being identified as impaired. For this purpose, delays less than 90 days are generally considered to be insignificant, although management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for all construction loans and most commercial real estate loans, including all such loans that are classified or criticized. Large groups of smaller balance, homogeneous loans are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring and certain classified or criticized loans. Loans collectively evaluated for impairment include smaller balance commercial real estate loans, residential real estate loans and consumer loans. Further detail of loans identified as impaired is included in Note 4. The determination of fair value for the collateral underlying a loan is more fully described in Note 9. |
We typically establish a general valuation allowance on classified and criticized loans which are not impaired. In establishing the general valuation allowance, we segregate these loans by category. The categories used by the Company include doubtful, substandard and special mention. For commercial and construction loans, the determination of the category for each loan is based on periodic reviews of each loan by our lending officers as well as an independent, third-party consultant. The reviews include a consideration of such factors as recent payment history, current financial data and cash flow projections, collateral evaluations, and current economic and business conditions. Categories for mortgage and consumer loans are determined through a similar review. Placement of a loan within a category is based on identified weaknesses that increase the credit risk of loss on the loan. Each category carries a general rate for the allowance percentage to be assigned to the loans within that category. The general allowance percentage is determined based on inherent losses associated with each type of lending as determined through consideration of our loss history with each type of loan, trends in credit quality and collateral values, and an evaluation of current economic and business conditions. Although the placement of a loan within a given category assists us in our analysis of the risk of loss, the actual allowance percentage assigned to each loan within a category is adjusted for the specific circumstances of each loan, including an evaluation of the appraised value of the specific collateral for the loan, and will often differ from the general rate for the category. These classified and criticized loans, in the aggregate, represent an above-average credit risk and it is expected that more of these loans will prove to be uncollectible compared to loans in the general portfolio. |
8
We establish a general allowance on non-classified and non-criticized loans to recognize the inherent losses associated with lending activities, but which, unlike amounts which have been specifically identified with respect to particular classified and criticized loans, is not established on an individual loan-by-loan basis. This general valuation allowance is determined by segregating the loans by portfolio segments and assigning allowance percentages to each segment. An evaluation of each segment is made to determine the need to further segregate the loans by a more focused class of financing receivable. For our residential mortgage and consumer loan portfolios, we identified similar characteristics throughout the portfolio including credit scores, loan-to-value ratios and collateral. These portfolios generally have high credit scores and strong loan-to-value ratios (typically below 80% at origination), and have not been significantly impacted by recent housing price depreciation. For our commercial real estate loan portfolio, although the loans are less uniform than with our residential mortgage and consumer loan portfolios, a review of our loss history does not suggest significant benefits from further segregation of the segment. With our construction loan portfolio, however, a further analysis is made in which we segregate the loans by class based on the purpose of the loan and the collateral properties securing the loan. Various risk factors are then considered for each class of loan, including the impact of general economic and business conditions, collateral value trends, credit quality trends and historical loss experience. Based on a consideration of our loss history in recent periods in comparison to the aging of our loan portfolio, we evaluated our loss experience using a time period of three years. In choosing this time period, our goal was to select a period that was sufficiently short so as to capture the recent economic environment, but long enough to fairly reflect the age of our loans at the time when losses began to occur. We believe that a three-year period appropriately reflects the life cycle of a loan that is indicative of the risk of loss. |
The allowance is adjusted for significant other factors that, in managements judgment, affect the collectibility of the portfolio as of the evaluation date. These significant factors, many of which have been previously discussed, may include changes in lending policies and procedures, changes in existing general economic and business conditions affecting our primary lending areas, credit quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio, loss experience in particular segments of the portfolio, duration of the current business cycle, and bank regulatory examination results. Under certain circumstances, a portion of the allowance may be unallocated, in that it is not directly attributable to the losses in any specific portion of our loan portfolio. This can occur when management determines that the trends within our loan portfolio are not reflective of the trends in our market area or the general economy. The applied loss factors are reevaluated each reporting period to ensure their relevance in the current economic environment. Although we review key ratios, such as the allowance for loan losses as a percentage of non-performing loans and total loans receivable, in order to help us understand the trends in our loan portfolio, we do not try to maintain any specific target range with respect to such ratios. |
Comprehensive Income The Company presents as a component of comprehensive income the amounts from transactions and other events which currently are excluded from the consolidated statements of income and are recorded directly to stockholders equity. These amounts consist of unrealized holding gains on available for sale securities and amortization of unrecognized deferred costs of the Companys defined benefit pension plan. |
9
The components of other comprehensive income are as follows: |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
|
||||||||||||||||
Net unrealized gain on securities,
net of tax
|
$ | 1,659,700 | $ | 751,480 | $ | 974,893 | $ | 971,524 | ||||||||
|
||||||||||||||||
Amortization of deferred costs on
supplemental retirement plan,
net of tax
|
19,201 | 19,751 | 38,402 | 39,502 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total other comprehensive income,
net of tax
|
$ | 1,678,901 | $ | 771,231 | $ | 1,013,295 | $ | 1,011,026 | ||||||||
|
The components of accumulated other comprehensive income are as follows: |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
|
||||||||
Net unrealized gain on securities, net of tax
|
$ | 3,746,236 | $ | 2,771,343 | ||||
Unrecognized deferred costs of supplemental
retirment plan, net of tax
|
(60,574 | ) | (98,976 | ) | ||||
|
||||||||
|
||||||||
Total accumulated other comprehensive income,
net of tax
|
$ | 3,685,662 | $ | 2,672,367 | ||||
|
Share-Based Compensation The Company accounts for its share-based compensation awards in accordance with the stock compensation topic of the ASC. Under ASC Topic 718, Compensation Stock Compensation (ASC 718), the Company recognizes the cost of employee services received in share-based payment transactions and measures the cost based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award. |
At June 30, 2011, the Company has four share-based compensation plans, the 2005 and the 2007 Recognition and Retention Plans and the 2005 and 2007 Stock Option Plans. Share awards were first issued under the 2005 plans in July 2005. Share awards were first issued under the 2007 plans in January 2008. These plans are more fully described in Note 7. |
The Company also has an employee stock ownership plan (ESOP). This plan is more fully described in Note 7. Shares held under the ESOP are also accounted for under ASC 718. As ESOP shares are committed to be released and allocated among participants, the Company recognizes compensation expense equal to the average market price of the shares over the period earned. |
10
Earnings per share Earnings per share (EPS) consists of two separate components, basic EPS and diluted EPS. Basic EPS is computed based on the weighted average number of shares of common stock outstanding for each period presented. Diluted EPS is calculated based on the weighted average number of shares of common stock outstanding plus dilutive common stock equivalents (CSEs). CSEs consist of shares that are assumed to have been purchased with the proceeds from the exercise of stock options, as well as unvested common stock awards. Common stock equivalents which are considered antidilutive are not included for the purposes of this calculation. For the three and six months ended June 30, 2011, there were 12,840 and 3,200 antidilutive CSEs, respectively. For the three and six months ended June 30, 2010, there were 1,258,080 and 1,277,780 antidilutive CSEs, respectively. Earnings per share were calculated as follows: |
Three Months Ended June 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||
|
||||||||||||||||
Net income
|
$ | 2,150,217 | $ | 2,150,217 | $ | 1,972,279 | $ | 1,972,279 | ||||||||
|
||||||||||||||||
Weighted average shares outstanding
|
18,595,898 | 18,595,898 | 18,920,983 | 18,920,983 | ||||||||||||
Effect of common stock equivalents
|
| 671,416 | | 474,093 | ||||||||||||
|
||||||||||||||||
Adjusted weighted average shares
used
in earnings per share computation
|
18,595,898 | 19,267,314 | 18,920,983 | 19,395,076 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Earnings per share
|
$ | 0.12 | $ | 0.11 | $ | 0.10 | $ | 0.10 | ||||||||
|
Six Months Ended June 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||
|
||||||||||||||||
Net income
|
$ | 3,692,670 | $ | 3,692,670 | $ | 3,580,639 | $ | 3,580,639 | ||||||||
|
||||||||||||||||
Weighted average shares outstanding
|
18,952,497 | 18,952,497 | 18,957,926 | 18,957,926 | ||||||||||||
Effect of common stock equivalents
|
| 337,560 | | 425,541 | ||||||||||||
|
||||||||||||||||
Adjusted weighted average shares
used
in earnings per share computation
|
18,952,497 | 19,290,057 | 18,957,926 | 19,383,467 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Earnings per share
|
$ | 0.19 | $ | 0.19 | $ | 0.19 | $ | 0.18 | ||||||||
|
Recent Accounting Pronouncements In January 2011, the FASB issued Accounting Standards Update (ASU) 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20 . This update temporarily delayed the effective date of additional disclosures relating to TDRs required by ASU 2010-20. The delay was intended to allow the FASB time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about TDRs for public entities and the guidance for determining what constitutes a TDR will then be coordinated. The update related to TDRs was issued April 2011 and is effective for interim and annual periods beginning after June 15, 2011. The Company adopted this guidance as of July 1, 2011. The adoption did not have any impact on our financial position or results of operations. |
In April 2011, the FASB issued ASU 2011-02, A Creditors Determination of Whether a Restructuring Is a Troubled Debt Restructuring , which updates ASC 310. This update clarifies which loan modifications constitute troubled debt restructurings. In evaluating whether a restructuring constitutes a troubled debt restructuring, a creditor must separately conclude that both of the following exist: 1) the restructuring constitutes a concession; 2) the debtor is experiencing financial difficulty. The update clarifies the guidance on a creditors evaluation of whether it has granted a concession to note that if a debtor does not otherwise have access to funds at a market rate for debt with similar characteristics as the restructured debt, the restructuring would be considered to be at a below-market rate, which may indicate that the creditor has granted a concession. Additionally, a temporary or permanent increase in the contractual interest rate as a result of a restructuring does not preclude the restructuring from being considered a concession because the new contractual interest rate on the restructured debt could still be below the market interest rate for new debt with similar characteristics. Furthermore, a restructuring that results in a delay in payment that is insignificant is not a concession. The update also clarifies the guidance on a creditors evaluation of whether a debtor is experiencing financial difficulty to note that a creditor may conclude that a debtor is experiencing financial difficulties, even though the debtor is not currently in payment default. The amendments in this ASU are effective for the first interim or annual period beginning on or after June 15, 2011. The Company adopted this guidance as of July 1, 2011. The adoption did not have any impact on our financial position or results of operations, as we had previously implemented these principles in our evaluations of TDRs. |
11
In April 2011, the FASB issued ASU 2011-03, Reconsideration of Effective Control for Repurchase Agreements , which updates ASC 860, Transfers and Servicing . The ASU removes from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee. Accordingly, upon the adoption of the ASUs guidance, a transferor in a repurchase transaction is deemed to have effective control if the following three conditions in ASC 860-10-40-24 are met: 1) The financial assets to be repurchased or redeemed are the same or substantially the same as those transferred, 2) The agreement is to repurchase or redeem them before maturity, at a fixed or determinable price, and 3) The agreement is entered into contemporaneously with, or in contemplation of, the transfer. The guidance in the ASU is effective prospectively for transactions or modifications of existing transactions that occur on or after the first interim or annual period beginning on or after December 15, 2011. Early adoption is not permitted. The Company is continuing to evaluate this guidance, but does not expect the adoption to have a significant impact on our financial position or results of operations. |
In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs , which updates ASC 820, Fair Value Measurement . The ASU is the result of joint efforts by the FASB and the International Accounting Standards Board (the IASB) to develop a single, converged fair value framework. The ASU is largely consistent with existing fair value measurement principles in U.S. GAAP, however the ASU expands ASC 820s existing disclosure requirements for fair value measurements and makes other amendments. This ASU is effective for interim and annual periods beginning after December 15, 2011 for public entities. The Company is continuing to evaluate this guidance, but does not expect the adoption to have a significant impact on our financial position or results of operations. |
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income , which updates ASC 220, Comprehensive Income . This ASU revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in ASC 220 and requires entities to report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used today, and the second statement would include components of other comprehensive income (OCI). The ASU does not change the items that must be reported in OCI. The ASU is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company is continuing to evaluate this guidance, but does not expect the adoption to have a significant impact on our financial position or results of operations. |
Reclassifications Certain items in the 2010 consolidated financial statements have been reclassified to conform to the presentation in the 2011 consolidated financial statements. Such reclassifications did not have a material impact on the presentation of the overall financial statements. |
12
2. | INVESTMENT SECURITIES |
The amortized cost and estimated fair value of investment securities are summarized as follows: |
Held to Maturity | ||||||||||||||||
June 30, 2011 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
|
||||||||||||||||
Debt securities:
|
||||||||||||||||
Municipal bonds
|
$ | 20,383,700 | $ | 893,928 | $ | (901 | ) | $ | 21,276,727 | |||||||
|
||||||||||||||||
|
||||||||||||||||
Total debt
securities
|
$ | 20,383,700 | $ | 893,928 | $ | (901 | ) | $ | 21,276,727 | |||||||
|
Available for Sale | ||||||||||||||||
June 30, 2011 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
|
||||||||||||||||
Debt securities:
|
||||||||||||||||
Agency bonds
|
$ | 88,458,995 | $ | 742,585 | $ | (228,645 | ) | $ | 88,972,935 | |||||||
Corporate bonds and
commercial paper
|
3,520,165 | 18,424 | (4,534 | ) | 3,534,055 | |||||||||||
Municipal bonds
|
17,184,926 | 738,469 | | 17,923,395 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total debt securities
|
109,164,086 | 1,499,478 | (233,179 | ) | 110,430,385 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Equity securities:
|
||||||||||||||||
Mutual funds
|
2,697,241 | 40,514 | | 2,737,755 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total equity
securities
|
2,697,241 | 40,514 | | 2,737,755 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 111,861,327 | $ | 1,539,992 | $ | (233,179 | ) | $ | 113,168,140 | |||||||
|
Held to Maturity | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Debt securities:
|
||||||||||||||||
Municipal bonds
|
$ | 20,384,781 | $ | 436,457 | $ | (14,898 | ) | $ | 20,806,340 | |||||||
|
||||||||||||||||
|
||||||||||||||||
Total debt
securities
|
$ | 20,384,781 | $ | 436,457 | $ | (14,898 | ) | $ | 20,806,340 | |||||||
|
13
Available for Sale | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Debt securities:
|
||||||||||||||||
Agency bonds
|
$ | 99,365,386 | $ | 812,591 | $ | (865,277 | ) | $ | 99,312,700 | |||||||
Corporate bonds and
commercial paper
|
3,535,415 | 24,245 | (1,365 | ) | 3,558,295 | |||||||||||
Municipal bonds
|
18,680,054 | 640,846 | | 19,320,900 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total debt securities
|
121,580,855 | 1,477,682 | (866,642 | ) | 122,191,895 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Equity securities:
|
||||||||||||||||
Mutual funds
|
2,664,183 | 47,823 | | 2,712,006 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total equity
securities
|
2,664,183 | 47,823 | | 2,712,006 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 124,245,038 | $ | 1,525,505 | $ | (866,642 | ) | $ | 124,903,901 | |||||||
|
There were no sales of debt or equity securities during the three or six months ended June 30, 2011 or 2010. No impairment charges were recognized on investment securities during the three or six months ended June 30, 2011 or 2010. |
All municipal bonds included in debt securities are bank-qualified municipal bonds. |
The amortized cost and estimated fair value of debt securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities because the parties may have the right to call or prepay obligations with or without call or prepayment penalties. |
June 30, 2011 | ||||||||||||||||
Available for Sale | Held to Maturity | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
|
||||||||||||||||
Due in one year or less
|
$ | 2,199,986 | $ | 2,233,162 | $ | | $ | | ||||||||
Due after one year
through five years
|
102,799,498 | 103,845,433 | | | ||||||||||||
Due after five years
through ten years
|
4,164,602 | 4,351,790 | 18,659,704 | 19,486,002 | ||||||||||||
Due after ten years
|
| | 1,723,996 | 1,790,725 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 109,164,086 | $ | 110,430,385 | $ | 20,383,700 | $ | 21,276,727 | ||||||||
|
14
The table below sets forth investment securities which had an unrealized loss position as of June 30, 2011: |
Less than 12 months | More than 12 months | |||||||||||||||
Gross | Estimated | Gross | Estimated | |||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
Securities held to maturity:
|
||||||||||||||||
Municipal bonds
|
$ | (901 | ) | $ | 336,217 | $ | | $ | | |||||||
|
||||||||||||||||
|
||||||||||||||||
Total securities held to maturity
|
(901 | ) | 336,217 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
Agency bonds
|
(228,645 | ) | 33,744,140 | | | |||||||||||
Corporate bonds
|
(4,534 | ) | 1,971,125 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total securities available for
sale
|
(233,179 | ) | 35,715,265 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | (234,080 | ) | $ | 36,051,482 | $ | | $ | | |||||||
|
The table below sets forth investment securities which had an unrealized loss position as of December 31, 2010: |
Less than 12 months | More than 12 months | |||||||||||||||
Gross | Estimated | Gross | Estimated | |||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
|
||||||||||||||||
Securities held to maturity:
|
||||||||||||||||
Municipal bonds
|
$ | (14,898 | ) | $ | 2,119,768 | $ | | $ | | |||||||
|
||||||||||||||||
|
||||||||||||||||
Total securities held to maturity
|
(14,898 | ) | 2,119,768 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
Agency bonds
|
(865,277 | ) | 54,612,715 | | | |||||||||||
Corporate bonds and
commercial paper
|
(1,365 | ) | 489,115 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total securities available for
sale
|
(866,642 | ) | 55,101,830 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | (881,540 | ) | $ | 57,221,598 | $ | | $ | | |||||||
|
On a quarterly basis, management of the Company reviews the securities in its investment portfolio to identify any securities that might have an other-than-temporary impairment. At June 30, 2011, no investment securities were in a gross unrealized loss position for 12 months or longer. Investment securities in a gross unrealized loss position for less than 12 months at June 30, 2011, consisted of 14 securities having an aggregate depreciation of 0.6% from the Companys amortized cost basis. The securities included ten agency bonds, one municipal bond and three corporate bonds. Management has concluded that, as of June 30, 2011, the unrealized losses above were temporary in nature. The unrealized losses on these securities are not related to the underlying credit quality of the issuers, and they are on securities that have a contractual maturity date. The principal and interest payments on these securities have been made as scheduled, and there is no evidence that the issuers will not continue to do so. In managements opinion, the future principal payments will be sufficient to recover the current amortized cost of the securities. The unrealized losses above are primarily related to the current interest rate environment. The Company does not currently have plans to sell any of these securities, nor does it anticipate that it will be required to sell any of these securities prior to a recovery of their cost basis. |
15
3. | MORTGAGE-BACKED SECURITIES |
The amortized cost and estimated fair value of mortgage-backed securities are summarized as follows: |
Held to Maturity | ||||||||||||||||
June 30, 2011 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
|
||||||||||||||||
GNMA pass-through
certificates
|
$ | 12,777,512 | $ | 637,388 | $ | | $ | 13,414,900 | ||||||||
FNMA pass-through
certificates
|
16,968,323 | 1,218,978 | | 18,187,301 | ||||||||||||
FHLMC pass-through
certificates
|
8,362,858 | 388,116 | | 8,750,974 | ||||||||||||
Collateralized mortgage
obligations
|
11,485,427 | 11,780 | (579,838 | ) | 10,917,369 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 49,594,120 | $ | 2,256,262 | $ | (579,838 | ) | $ | 51,270,544 | |||||||
|
Available for sale | ||||||||||||||||
June 30, 2011 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
|
||||||||||||||||
GNMA pass-through
certificates
|
$ | 1,642 | $ | 65 | $ | | $ | 1,707 | ||||||||
FNMA pass-through
certificates
|
25,892,942 | 1,858,796 | | 27,751,738 | ||||||||||||
FHLMC pass-through
certificates
|
20,670,829 | 1,621,528 | | 22,292,357 | ||||||||||||
Collateralized
mortgage
obligations
|
115,526,554 | 1,165,160 | (276,246 | ) | 116,415,468 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 162,091,967 | $ | 4,645,549 | $ | (276,246 | ) | $ | 166,461,270 | |||||||
|
16
Held to Maturity | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
|
||||||||||||||||
GNMA pass-through
certificates
|
$ | 13,854,013 | $ | 485,257 | $ | | $ | 14,339,270 | ||||||||
FNMA pass-through
certificates
|
20,044,999 | 1,217,065 | | 21,262,064 | ||||||||||||
FHLMC pass-through
certificates
|
9,665,262 | 354,111 | | 10,019,373 | ||||||||||||
Collateralized
mortgage
obligations
|
13,307,914 | 8 | (590,081 | ) | 12,717,841 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 56,872,188 | $ | 2,056,441 | $ | (590,081 | ) | $ | 58,338,548 | |||||||
|
Available for Sale | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
|
||||||||||||||||
GNMA pass-through
certificates
|
$ | 1,929 | $ | 77 | $ | | $ | 2,006 | ||||||||
FNMA pass-through
certificates
|
30,005,032 | 1,923,275 | | 31,928,307 | ||||||||||||
FHLMC pass-through
certificates
|
26,843,006 | 1,805,146 | 28,648,152 | |||||||||||||
Collateralized
mortgage
obligations
|
107,782,687 | 648,305 | (836,661 | ) | 107,594,331 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 164,632,654 | $ | 4,376,803 | $ | (836,661 | ) | $ | 168,172,796 | |||||||
|
There were no sales of mortgage-backed securities during the three or six months ended June 30, 2011 or 2010. No impairment charge was recognized on mortgage-backed securities during the three or six months ended June 30, 2011 or 2010. |
Our collateralized mortgage obligations (CMOs) are issued by the FNMA, the FHLMC, and the GNMA as well as certain AAA rated private issuers. At June 30, 2011 and December 31, 2010, respectively, $5.8 million and $6.6 million of our CMOs were issued by private issuers. |
17
The table below sets forth mortgage-backed securities which had an unrealized loss position as of June 30, 2011: |
Less than 12 months | More than 12 months | |||||||||||||||
Gross | Estimated | Gross | Estimated | |||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
|
||||||||||||||||
Securities held to maturity:
|
||||||||||||||||
Collateralized mortgage
obligations
|
$ | (16,062 | ) | $ | 2,639,426 | $ | (563,776 | ) | $ | 2,611,208 | ||||||
|
||||||||||||||||
|
||||||||||||||||
Total securities held to maturity
|
(16,062 | ) | 2,639,426 | (563,776 | ) | 2,611,208 | ||||||||||
|
||||||||||||||||
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
Collateralized mortgage
obligations
|
(276,246 | ) | 28,150,810 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total securities available for
sale
|
(276,246 | ) | 28,150,810 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | (292,308 | ) | $ | 30,790,236 | $ | (563,776 | ) | $ | 2,611,208 | ||||||
|
The table below sets forth mortgage-backed securities which had an unrealized loss position as of December 31, 2010: |
Less than 12 months | More than 12 months | |||||||||||||||
Gross | Estimated | Gross | Estimated | |||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
|
||||||||||||||||
Securities held to maturity:
|
||||||||||||||||
Collateralized mortgage
obligations
|
$ | | $ | | $ | (590,081 | ) | $ | 9,529,808 | |||||||
|
||||||||||||||||
|
||||||||||||||||
Total securities held to maturity
|
| | (590,081 | ) | 9,529,808 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
Collateralized mortgage
obligations
|
(836,661 | ) | 59,786,355 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total securities available for
sale
|
(836,661 | ) | 59,786,355 | | | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | (836,661 | ) | $ | 59,786,355 | $ | (590,081 | ) | $ | 9,529,808 | ||||||
|
18
At June 30, 2011, mortgage-backed securities in a gross unrealized loss position for 12 months or longer consisted of two securities having an aggregate depreciation of 17.8% from the Companys amortized cost basis. Both of these securities were CMOs issued by private issuers. These two CMOs, which had an aggregate principal balance of approximately $3.2 million at June 30, 2011, had declines of approximately 8.7% and 21.6% from their amortized cost basis at such date. Mortgage-backed securities in a gross unrealized loss position for less than 12 months at June 30, 2011, consisted of 12 securities having an aggregate depreciation of 0.9% from the Companys amortized cost basis. One of these securities was a CMO issued by a private issuer. This security had a decline of 0.6% from its amortized cost basis at June 30, 2011. All of the remaining securities were CMOs issued by government agencies. Management has concluded that, as of June 30, 2011, the unrealized losses above were temporary in nature. There is no exposure to subprime loans with these CMOs. The losses are not related to the underlying credit quality of the issuers, all of whom remain AAA rated, including the private issuers, and they are on securities that have contractual maturity dates. The principal and interest payments on these CMOs have been made as scheduled, and there is no evidence that the issuers will not continue to do so. In managements opinion, the future principal payments will be sufficient to recover the current amortized cost of the securities. The unrealized losses above are primarily related to the current market environment. The Company does not currently have plans to sell any of these securities, nor does it anticipate that it will be required to sell any of these securities prior to a recovery of their cost basis. |
4. | LOANS RECEIVABLE AND REAL ESTATE OWNED |
Loans receivable consist of the following: |
June 30, 2011 | December 31, 2010 | |||||||
|
||||||||
One-to four-family residential
|
$ | 379,824,049 | $ | 393,434,519 | ||||
Multi-family residential and
commercial
|
120,969,571 | 141,090,844 | ||||||
Construction
|
126,456,660 | 138,558,368 | ||||||
Home equity lines of credit
|
39,510,595 | 41,213,274 | ||||||
Commercial business loans
|
17,126,554 | 16,326,982 | ||||||
Consumer non-real estate loans
|
677,639 | 870,406 | ||||||
|
||||||||
|
||||||||
Total loans
|
684,565,068 | 731,494,393 | ||||||
|
||||||||
Less:
|
||||||||
Construction loans in process
|
(26,527,015 | ) | (30,065,072 | ) | ||||
Deferred loan fees, net
|
(1,131,341 | ) | (714,201 | ) | ||||
Allowance for loan losses
|
(4,357,064 | ) | (4,271,618 | ) | ||||
|
||||||||
|
||||||||
Loans receivablenet
|
$ | 652,549,648 | $ | 696,443,502 | ||||
|
Our one- to four-family residential loans also include some loans to local businessmen for a commercial purpose, but which are secured by liens on the borrowers residence as well as fixed-rate consumer loans which are secured by liens on the borrowers residence. |
The Bank grants loans primarily to customers in its local market area. The ultimate repayment of these loans is dependent to a certain degree on the local economy and real estate market. |
The Bank has sold and was servicing loans for others in the amounts of approximately $15.1 million and $16.0 million at June 30, 2011 and December 31, 2010, respectively. These loan balances are excluded from the Companys consolidated financial statements. At June 30, 2011 and December 31, 2010, mortgage servicing rights of $21,000 and $26,000, respectively, were included in other assets. No valuation allowance for mortgage servicing rights was deemed necessary for any of the periods presented |
19
Following is a summary of changes in the allowance for loan losses: |
Six Months Ended | Year Ended | Six Months Ended | ||||||||||
June 30, 2011 | December 31, 2010 | June 30, 2010 | ||||||||||
|
||||||||||||
Balancebeginning of year
|
$ | 4,271,618 | $ | 9,090,353 | $ | 9,090,353 | ||||||
Provision for loan losses
|
| 976,550 | 563,445 | |||||||||
Charge-offs
|
(20,517 | ) | (7,076,332 | ) | (3,713,606 | ) | ||||||
Recoveries
|
105,963 | 1,281,047 | 1,216,982 | |||||||||
|
||||||||||||
Charge-offsnet
|
85,446 | (5,795,285 | ) | (2,496,624 | ) | |||||||
|
||||||||||||
|
||||||||||||
Balanceend of period
|
$ | 4,357,064 | $ | 4,271,618 | $ | 7,157,174 | ||||||
|
The provision for loan losses is charged to expense to maintain the allowance for loan losses at a level that management considers adequate to provide for losses based upon an evaluation of the loan portfolio. Factors considered in determining the appropriate level for the allowance for loan losses are discussed in detail in Note 1. |
The following table presents the classes of the loan portfolio summarized by the aggregate pass rating, the criticized rating of special mention and the classified ratings of substandard and doubtful within the Companys internal risk rating system as of June 30, 2011: |
Special | ||||||||||||||||||||
Pass | Mention | Substandard | Doubtful | Total(1) | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
|
||||||||||||||||||||
One-to four-family residential
|
$ | 377,426 | $ | 80 | $ | 2,318 | $ | | $ | 379,824 | ||||||||||
Multi-family residential and
commercial
|
89,019 | 9,909 | 22,042 | | 120,970 | |||||||||||||||
Construction:
|
||||||||||||||||||||
Land only
|
3,244 | 1,810 | 3,511 | | 8,565 | |||||||||||||||
One-to four-family residential
|
17,687 | 13,408 | 8,985 | | 40,080 | |||||||||||||||
Multi-family residential
|
5,625 | 21,499 | | | 27,124 | |||||||||||||||
Commercial
|
7,607 | | 16,553 | | 24,160 | |||||||||||||||
|
||||||||||||||||||||
Total construction
|
34,163 | 36,717 | 29,049 | | 99,929 | |||||||||||||||
Home equity lines of credit
|
39,511 | | | | 39,511 | |||||||||||||||
Commercial business loans
|
15,907 | 1,219 | | | 17,126 | |||||||||||||||
Consumer non-real estate loans
|
678 | | | | 678 | |||||||||||||||
|
||||||||||||||||||||
Total
|
$ | 556,704 | $ | 47,925 | $ | 53,409 | $ | | $ | 658,038 | ||||||||||
|
(1) | Total construction loans are presented net of loans in process. |
20
The following table presents the classes of the loan portfolio summarized by the aggregate pass rating, the criticized rating of special mention and the classified ratings of substandard and doubtful within the Companys internal risk rating system as of December 31, 2010: |
Special | ||||||||||||||||||||
Pass | Mention | Substandard | Doubtful | Total(1) | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
|
||||||||||||||||||||
One-to four-family residential
|
$ | 391,903 | $ | 12 | $ | 1,520 | $ | | $ | 393,435 | ||||||||||
Multi-family residential and
commercial
|
113,589 | 7,286 | 20,216 | | 141,091 | |||||||||||||||
Construction:
|
||||||||||||||||||||
Land only
|
3,212 | 1,810 | 4,045 | | 9,067 | |||||||||||||||
One-to four-family residential
|
18,107 | 15,020 | 9,058 | | 42,185 | |||||||||||||||
Multi-family residential
|
5,677 | 19,703 | 417 | | 25,797 | |||||||||||||||
Commercial
|
19,731 | | 11,713 | | 31,444 | |||||||||||||||
|
||||||||||||||||||||
Total construction
|
46,727 | 36,533 | 25,233 | | 108,493 | |||||||||||||||
Home equity lines of credit
|
41,198 | 15 | | | 41,213 | |||||||||||||||
Commercial business loans
|
14,882 | 1,445 | | | 16,327 | |||||||||||||||
Consumer non-real estate loans
|
870 | | | | 870 | |||||||||||||||
|
||||||||||||||||||||
Total
|
$ | 609,169 | $ | 45,291 | $ | 46,969 | $ | | $ | 701,429 | ||||||||||
|
(1) | Total construction loans are presented net of loans in process. |
A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan. An insignificant delay or insignificant shortfall in amount of payments does not necessarily result in the loan being identified as impaired. For this purpose, delays less than 90 days are generally considered to be insignificant. During the periods presented, loan impairment was evaluated based on the fair value of the loans collateral. Impairment losses are included in the provision for loan losses. Impairment is measured on a loan by loan basis for all construction loans and most commercial real estate loans, including all such loans that are classified or criticized. Large groups of smaller balance, homogeneous loans are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring and certain classified or criticized loans. Loans collectively evaluated for impairment include smaller balance commercial real estate loans, residential real estate loans and consumer loans. The determination of fair value for the collateral underlying a loan is more fully described in Note 9. |
21
The following table summarizes information in regards to impaired loans by loan portfolio class as of June 30, 2011: |
Unpaid | Average | Interest | ||||||||||||||||||
Recorded | Principal | Related | Recorded | Income | ||||||||||||||||
Investment | Balance | Allowance | Investment | Recognized | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
One-to four-family residential
|
$ | 1,952 | $ | 1,952 | $ | 152 | $ | 230 | $ | | ||||||||||
Multi-family residential and
commercial
|
995 | 995 | 220 | 6 | | |||||||||||||||
Construction:
|
||||||||||||||||||||
Land only
|
| | | | | |||||||||||||||
One-to four-family residential
|
3,736 | 4,070 | 208 | 2,049 | 58 | |||||||||||||||
Multi-family residential
|
| | | | | |||||||||||||||
Commercial
|
1,650 | 1,852 | 229 | 1,282 | | |||||||||||||||
|
||||||||||||||||||||
Total construction
|
5,386 | 5,922 | 437 | 3,331 | 58 | |||||||||||||||
Home equity lines of credit
|
| | | | | |||||||||||||||
Commercial business loans
|
| | | | | |||||||||||||||
Consumer non-real estate loans
|
| | | | | |||||||||||||||
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
One-to four-family residential
|
$ | 579 | $ | 579 | $ | | $ | 515 | $ | 20 | ||||||||||
Multi-family residential and
commercial
|
9,742 | 9,742 | | 9,741 | 227 | |||||||||||||||
Construction
|
||||||||||||||||||||
Land only
|
600 | 1,928 | | 600 | | |||||||||||||||
One-to four-family residential
|
3,004 | 5,259 | | 2,344 | | |||||||||||||||
Multi-family residential
|
| | | 336 | | |||||||||||||||
Commercial
|
1,359 | 1,584 | | 1,362 | | |||||||||||||||
|
||||||||||||||||||||
Total construction
|
4,963 | 8,771 | | 4,642 | | |||||||||||||||
Home equity lines of credit
|
| | | | | |||||||||||||||
Commercial business loans
|
| | | | | |||||||||||||||
Consumer non-real estate loans
|
| | | | | |||||||||||||||
|
||||||||||||||||||||
Total:
|
||||||||||||||||||||
One-to four-family residential
|
$ | 2,531 | $ | 2,531 | $ | 152 | $ | 745 | $ | 20 | ||||||||||
Multi-family residential and
commercial
|
10,737 | 10,737 | 220 | 9,747 | 227 | |||||||||||||||
Construction
|
||||||||||||||||||||
Land only
|
600 | 1,928 | | 600 | | |||||||||||||||
One-to four-family residential
|
6,740 | 9,329 | 208 | 4,393 | 58 | |||||||||||||||
Multi-family residential
|
| | | 336 | | |||||||||||||||
Commercial
|
3,009 | 3,436 | 229 | 2,644 | | |||||||||||||||
|
||||||||||||||||||||
Total construction
|
10,349 | 14,693 | 437 | 7,973 | 58 | |||||||||||||||
Home equity lines of credit
|
| | | | | |||||||||||||||
Commercial business loans
|
| | | | | |||||||||||||||
Consumer non-real estate loans
|
| | | | |
22
The following table summarizes information in regards to impaired loans by loan portfolio class as of December 31, 2010: |
Unpaid | Average | Interest | ||||||||||||||||||
Recorded | Principal | Related | Recorded | Income | ||||||||||||||||
Investment | Balance | Allowance | Investment | Recognized | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
One-to four-family residential
|
$ | | $ | | $ | | $ | | $ | | ||||||||||
Multi-family residential and
commercial
|
| | | | | |||||||||||||||
Construction:
|
||||||||||||||||||||
Land only
|
| | | | | |||||||||||||||
One-to four-family residential
|
304 | 452 | 34 | 2,252 | | |||||||||||||||
Multi-family residential
|
| | | | | |||||||||||||||
Commercial
|
1,670 | 1,852 | 272 | 5,556 | | |||||||||||||||
|
||||||||||||||||||||
Total construction
|
1,974 | 2,304 | 306 | 7,808 | | |||||||||||||||
Home equity lines of credit
|
| | | | | |||||||||||||||
Commercial business loans
|
| | | | | |||||||||||||||
Consumer non-real estate loans
|
| | | | | |||||||||||||||
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
One-to four-family residential
|
$ | 583 | $ | 583 | $ | | $ | 506 | $ | 29 | ||||||||||
Multi-family residential and
commercial
|
9,765 | 10,840 | | 6,088 | 114 | |||||||||||||||
Construction
|
||||||||||||||||||||
Land only
|
600 | 1,100 | | 2,879 | | |||||||||||||||
One-to four-family residential
|
1,294 | 3,549 | | 3,881 | | |||||||||||||||
Multi-family residential
|
417 | 417 | | 668 | | |||||||||||||||
Commercial
|
1,379 | 1,584 | | 1,318 | | |||||||||||||||
|
||||||||||||||||||||
Total construction
|
3,690 | 6,650 | | 8,746 | | |||||||||||||||
Home equity lines of credit
|
| | | | | |||||||||||||||
Commercial business loans
|
| | | | | |||||||||||||||
Consumer non-real estate loans
|
| | | | | |||||||||||||||
|
||||||||||||||||||||
Total:
|
||||||||||||||||||||
One-to four-family residential
|
$ | 583 | $ | 583 | $ | | $ | 506 | $ | 29 | ||||||||||
Multi-family residential and
commercial
|
9,765 | 10,840 | | 6,088 | 114 | |||||||||||||||
Construction
|
||||||||||||||||||||
Land only
|
600 | 1,100 | | 2,879 | | |||||||||||||||
One-to four-family residential
|
1,598 | 4,001 | 34 | 6,133 | | |||||||||||||||
Multi-family residential
|
417 | 417 | | 668 | | |||||||||||||||
Commercial
|
3,049 | 3,436 | 272 | 6,874 | | |||||||||||||||
|
||||||||||||||||||||
Total construction
|
5,664 | 8,954 | 306 | 16,554 | | |||||||||||||||
Home equity lines of credit
|
| | | | | |||||||||||||||
Commercial business loans
|
| | | | | |||||||||||||||
Consumer non-real estate loans
|
| | | | |
23
The following table summarizes the activity and the distribution of our allowance for loan losses and recorded investment in loan receivables for the three and six months ended June 30, 2011 and as of June 30, 2011: |
June 30, 2011 | ||||||||||||||||||||||||||||||||||||||||
Multi-family | Construction | Consumer | ||||||||||||||||||||||||||||||||||||||
One- to Four- | Residential | One- to Four- | Home Equity | Commercial | Non-real | |||||||||||||||||||||||||||||||||||
Family | and | Family | Multi-family | Lines of | Business | Estate | Unallocated | |||||||||||||||||||||||||||||||||
Residential | Commercial | Land Only | Residential | Residential | Commercial | Credit | Loans | Loans | Allowance | |||||||||||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||||||||||||||
Three months ended
June 30, 2011
|
||||||||||||||||||||||||||||||||||||||||
Allowance for loan
losses:
|
||||||||||||||||||||||||||||||||||||||||
Beginning balance
|
$ | 559 | $ | 870 | $ | 363 | $ | 1,105 | $ | 28 | $ | 1,069 | $ | 79 | $ | 74 | $ | 14 | $ | 140 | ||||||||||||||||||||
Charge-offs
|
| | | | | | | | (6 | ) | | |||||||||||||||||||||||||||||
Recoveries
|
| 11 | | | 45 | | | | 6 | | ||||||||||||||||||||||||||||||
Provisions
|
(30 | ) | (86 | ) | 74 | (22 | ) | (45 | ) | (225 | ) | | 9 | (12 | ) | 337 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Ending balance
|
$ | 529 | $ | 795 | $ | 437 | $ | 1,083 | $ | 28 | $ | 844 | $ | 79 | $ | 83 | $ | 2 | $ | 477 | ||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Six months ended
June 30, 2011
|
||||||||||||||||||||||||||||||||||||||||
Allowance for loan
losses:
|
||||||||||||||||||||||||||||||||||||||||
Beginning balance
|
$ | 528 | $ | 841 | $ | 362 | $ | 1,100 | $ | 28 | $ | 1,250 | $ | 82 | $ | 75 | $ | 6 | $ | | ||||||||||||||||||||
Charge-offs
|
| | | | | | | | (21 | ) | | |||||||||||||||||||||||||||||
Recoveries
|
| 11 | | | 82 | | | | 13 | | ||||||||||||||||||||||||||||||
Provisions
|
1 | (57 | ) | 75 | (17 | ) | (82 | ) | (406 | ) | (3 | ) | 8 | 4 | 477 | |||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Ending balance
|
$ | 529 | $ | 795 | $ | 437 | $ | 1,083 | $ | 28 | $ | 844 | $ | 79 | $ | 83 | $ | 2 | $ | 477 | ||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||||||
individually evaluated
for impairment
|
$ | 152 | $ | 220 | $ | | $ | 208 | $ | | $ | 229 | $ | | $ | | $ | | n/a | |||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||||||
collectively evaluated
for impairment
|
$ | 377 | $ | 575 | $ | 437 | $ | 875 | $ | 28 | $ | 615 | $ | 79 | $ | 83 | $ | 2 | n/a | |||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Loans receivable:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance
|
$ | 379,824 | $ | 120,970 | $ | 8,565 | $ | 40,080 | $ | 27,124 | $ | 24,160 | $ | 39,511 | $ | 17,126 | $ | 678 | n/a | |||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||||||
individually evaluated
for impairment
|
$ | 2,531 | $ | 10,737 | $ | 600 | $ | 6,740 | $ | | $ | 3,009 | $ | | $ | | $ | | n/a | |||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||||||
collectively evaluated
for impairment
|
$ | 377,293 | $ | 110,233 | $ | 7,965 | $ | 33,340 | $ | 27,124 | $ | 21,151 | $ | 39,511 | $ | 17,126 | $ | 678 | n/a | |||||||||||||||||||||
|
24
December 31, 2010 | ||||||||||||||||||||||||||||||||||||
Multi-family | Construction | Consumer | ||||||||||||||||||||||||||||||||||
One- to Four- | Residential | One- to Four- | Home Equity | Commercial | Non-real | |||||||||||||||||||||||||||||||
Family | and | Family | Multi-family | Lines of | Business | Estate | ||||||||||||||||||||||||||||||
Residential | Commercial | Land Only | Residential | Residential | Commercial | Credit | Loans | Loans | ||||||||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||||||||||
Allowance for loan
losses:
|
||||||||||||||||||||||||||||||||||||
Ending balance
|
$ | 528 | $ | 841 | $ | 362 | $ | 1,100 | $ | 28 | $ | 1,250 | $ | 82 | $ | 75 | $ | 6 | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||
individually evaluated
for impairment
|
$ | | $ | | $ | | $ | 34 | $ | | $ | 272 | $ | | $ | | $ | | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||
collectively evaluated
for impairment
|
$ | 528 | $ | 841 | $ | 362 | $ | 1,066 | $ | 28 | $ | 978 | $ | 82 | $ | 75 | $ | 6 | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Loans receivable:
|
||||||||||||||||||||||||||||||||||||
Ending balance
|
$ | 393,435 | $ | 141,091 | $ | 9,067 | $ | 42,185 | $ | 25,797 | $ | 31,444 | $ | 41,213 | $ | 16,327 | $ | 870 | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||
individually evaluated
for impairment
|
$ | 583 | $ | 9,765 | $ | 600 | $ | 1,598 | $ | 417 | $ | 3,049 | $ | | $ | | $ | | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||
collectively evaluated
for impairment
|
$ | 392,852 | $ | 131,326 | $ | 8,467 | $ | 40,587 | $ | 25,380 | $ | 28,395 | $ | 41,213 | $ | 16,327 | $ | 870 | ||||||||||||||||||
|
25
Loans are charged off when the loan is deemed uncollectible. Loans that are not charged off are placed on non-accrual status when collection of principal or interest is considered doubtful. One- to four-family residential loans are typically placed on non-accrual at the time the loan is 120 days delinquent, and all other loans are typically placed on non-accrual at the time the loan is 90 days delinquent unless the credit is well secured and in the process of collection. In all cases, loans must be placed on non-accrual or charged off at an earlier date if collection of principal or interest is considered doubtful. |
Interest payments on impaired loans and non-accrual loans are typically applied to principal unless the ability to collect the principal amount is fully assured, in which case interest is recognized on the cash basis. No interest income was recognized on non-accrual loans for the three or six months ended June 30, 2011 or 2010. Interest income foregone on non-accrual loans was approximately $429,000 and $735,000, respectively, for the six months ended June 30, 2011 and 2010. |
The following table presents non-accrual loans by classes of the loan portfolio as of the dates indicated: |
June 30, 2011 | December 31, 2010 | |||||||
(In Thousands) | ||||||||
|
||||||||
One-to four-family residential
|
$ | 1,952 | $ | | ||||
Multi-family residential and
commercial
|
2,005 | 1,348 | ||||||
Construction:
|
||||||||
Land only
|
600 | 600 | ||||||
One-to four-family residential
|
3,301 | 1,597 | ||||||
Multi-family residential
|
| 417 | ||||||
Commercial
|
3,009 | 3,050 | ||||||
|
||||||||
Total construction
|
6,910 | 5,664 | ||||||
Home equity lines of credit
|
| | ||||||
Commercial business loans
|
| | ||||||
Consumer non-real estate loans
|
| | ||||||
|
||||||||
Total
|
$ | 10,867 | $ | 7,012 | ||||
|
Non-accrual loans amounted to $10.9 million and $7.0 million, respectively, at June 30, 2011 and December 31, 2010. Non-performing loans, which consist of non-accruing loans plus accruing loans 90 days or more past due, amounted to $13.9 million and $9.0 million, respectively, at June 30, 2011 and December 31, 2010. For the delinquent loans in our portfolio, we have considered our ability to collect the past due interest, as well as the principal balance of the loan, in order to determine whether specific loans should be placed on non-accrual status. In cases where our evaluations have determined that the principal and interest balances are collectible, we have continued to accrue interest. |
26
The following table presents the classes of the loan portfolio summarized by past due status as of June 30, 2011: |
Recorded | ||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||
90 Days | Total | 90 Days or | ||||||||||||||||||||||||||
30-59 Days | 60-89 Days | or More | Total | Loan | More and | |||||||||||||||||||||||
Past Due | Past Due | Past Due | Past Due | Current | Receivables | Accruing | ||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
One-to four-family residential
|
$ | | $ | 21 | $ | 2,629 | $ | 2,650 | $ | 377,174 | $ | 379,824 | $ | 677 | ||||||||||||||
Multi-family residential and
commercial
|
137 | 151 | 2,005 | 2,293 | 118,677 | 120,970 | | |||||||||||||||||||||
Construction:
|
||||||||||||||||||||||||||||
Land only
|
1,255 | 555 | 600 | 2,410 | 6,155 | 8,565 | | |||||||||||||||||||||
One-to four-family residential
|
| 3,036 | 3,740 | 6,776 | 33,304 | 40,080 | 439 | |||||||||||||||||||||
Multi-family residential
|
| | | | 27,124 | 27,124 | | |||||||||||||||||||||
Commercial
|
5,775 | | 4,841 | 10,616 | 13,544 | 24,160 | 1,832 | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Total construction
|
7,030 | 3,591 | 9,181 | 19,802 | 80,127 | 99,929 | 2,271 | |||||||||||||||||||||
Home equity lines of credit
|
23 | | 81 | 104 | 39,407 | 39,511 | 81 | |||||||||||||||||||||
Commercial business loans
|
| | | | 17,126 | 17,126 | | |||||||||||||||||||||
Consumer non-real estate loans
|
| | | | 678 | 678 | | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Total
|
$ | 7,190 | $ | 3,763 | $ | 13,896 | $ | 24,849 | $ | 633,189 | $ | 658,038 | $ | 3,029 | ||||||||||||||
|
27
The following table presents the classes of the loan portfolio summarized by past due status as of December 31, 2010: |
Recorded | ||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||
90 Days | Total | 90 Days or | ||||||||||||||||||||||||||
30-59 Days | 60-89 Days | or More | Total | Loan | More and | |||||||||||||||||||||||
Past Due | Past Due | Past Due | Past Due | Current | Receivables | Accruing | ||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
One-to four-family residential
|
$ | 2,674 | $ | 309 | $ | 1,211 | $ | 4,194 | $ | 389,241 | $ | 393,435 | $ | 1,211 | ||||||||||||||
Multi-family residential and
commercial
|
3,216 | | 725 | 3,941 | 137,150 | 141,091 | 725 | |||||||||||||||||||||
Construction:
|
||||||||||||||||||||||||||||
Land only
|
| | 600 | 600 | 8,467 | 9,067 | | |||||||||||||||||||||
One-to four-family residential
|
| | 1,611 | 1,611 | 40,574 | 42,185 | 14 | |||||||||||||||||||||
Multi-family residential
|
| | 417 | 417 | 25,380 | 25,797 | | |||||||||||||||||||||
Commercial
|
| | 3,050 | 3,050 | 28,394 | 31,444 | | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Total construction
|
| | 5,678 | 5,678 | 102,815 | 108,493 | 14 | |||||||||||||||||||||
Home equity lines of credit
|
20 | 24 | 76 | 120 | 41,093 | 41,213 | 76 | |||||||||||||||||||||
Commercial business loans
|
| | | | 16,327 | 16,327 | | |||||||||||||||||||||
Consumer non-real estate loans
|
| | | | 870 | 870 | | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Total
|
$ | 5,910 | $ | 333 | $ | 7,690 | $ | 13,933 | $ | 687,496 | $ | 701,429 | $ | 2,026 | ||||||||||||||
|
28
A loan is classified as a TDR if the Company, for economic or legal reasons related to a debtors financial difficulties, grants a concession to the debtor that it would not otherwise consider. We had eight loans classified as TDRs at June 30, 2011, with an aggregate outstanding balance of $12.7 million at such date. The $12.7 million of total TDRs consisted of four multi-family residential and commercial real estate loans with an aggregate outstanding balance of $8.7 million, two one- to four-family residential mortgage loans with an aggregate outstanding balance of $579,000, and two construction loans with an outstanding balance of $3.4 million at June 30, 2011. None of the TDRs were either delinquent or classified as non-accrual at June 30, 2011. No specific allowance was reserved on any of the TDRs at such date, except for a reserve of $174,000 in the aggregate reserved on the two construction loans. The loans are deemed to be TDRs due to concessions made to borrowers considered to be experiencing financial difficulties and we have reduced either the monthly payments or interest rate from the original contractual terms. We have no commitments to lend additional funds to the borrowers under any of these loans. We had six loans classified as TDRs at December 31, 2010, with an aggregate outstanding balance of $10.3 million at such date. The $10.3 million of total TDRs consisted of four multi-family residential and commercial real estate loans with an aggregate outstanding balance of $9.8 million and two one- to four-family residential mortgage loans with an aggregate outstanding balance of $583,000 at December 31, 2010. Except for one one- to four-family residential mortgage loan that was 30 days past due, none of the TDRs were delinquent at December 31, 2010. Of the six TDRs, one commercial real estate loan with an outstanding balance of $1.3 million at December 31, 2010 was classified as non-accrual. No specific allowance was reserved on any of the TDRs at such date. |
Following is a summary of changes in the balance of real estate owned for the periods presented: |
Six Months Ended | Year Ended | |||||||
June 30, 2011 | December 31, 2010 | |||||||
|
||||||||
Balancebeginning of period
|
$ | 23,588,139 | $ | 22,818,856 | ||||
Additions
|
| 10,641,000 | ||||||
Capitalized improvements
|
76,340 | 575,699 | ||||||
Valuation adjustments
|
| (350,981 | ) | |||||
Dispositions
|
| (10,096,435 | ) | |||||
|
||||||||
|
||||||||
Balanceend of period
|
$ | 23,664,479 | $ | 23,588,139 | ||||
|
29
5. | DEPOSITS |
Deposits consist of the following major classifications: |
June 30, 2011 | December 31, 2010 | |||||||||||||||
Type of Account | Amount | Percent | Amount | Percent | ||||||||||||
|
||||||||||||||||
Certificates
|
$ | 405,030,472 | 48.2 | % | $ | 432,016,478 | 48.0 | % | ||||||||
Passbook and MMDA
|
303,130,987 | 36.0 | 326,060,212 | 36.2 | ||||||||||||
NOW
|
89,868,576 | 10.7 | 92,174,500 | 10.3 | ||||||||||||
DDA
|
42,675,317 | 5.1 | 49,807,778 | 5.5 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 840,705,352 | 100.0 | % | $ | 900,058,968 | 100.0 | % | ||||||||
|
6. | DEFERRED INCOME TAXES |
Items that gave rise to significant portions of the deferred tax balances are as follows: |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
|
||||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$ | 1,481,402 | $ | 1,452,350 | ||||
Deferred compensation
|
1,917,778 | 2,097,730 | ||||||
Write-down of impaired investments
|
295,529 | 295,529 | ||||||
Write-down of real estate owned
|
164,158 | 164,158 | ||||||
Property and equipment
|
241,317 | 219,098 | ||||||
Alternative minimum tax refund
|
837,440 | 837,440 | ||||||
Other assets
|
438,613 | 365,883 | ||||||
|
||||||||
|
||||||||
Total deferred tax assets
|
5,376,237 | 5,432,188 | ||||||
|
||||||||
|
||||||||
Deferred tax liabilities:
|
||||||||
Unrealized gain on securities
available-for-sale
|
(1,929,879 | ) | (1,427,662 | ) | ||||
Deferred loan fees
|
(353,864 | ) | (364,331 | ) | ||||
Other liabilities
|
(7,206 | ) | (8,977 | ) | ||||
|
||||||||
|
||||||||
Total deferred tax liabilities
|
(2,290,949 | ) | (1,800,970 | ) | ||||
|
||||||||
|
||||||||
Net deferred tax asset
|
$ | 3,085,288 | $ | 3,631,218 | ||||
|
7. | PENSION, PROFIT SHARING AND STOCK COMPENSATION PLANS |
In addition to the plans disclosed below, the Company also maintains an executive deferred compensation plan for selected executive officers, which was frozen retroactive to January 1, 2005, a deferred compensation plan for directors, a supplemental retirement plan for directors and selected executive officers and a 401(k) retirement plan for substantially all of its employees. Further detail of these plans can be obtained from the Companys Annual Report on Form 10-K for the year ended December 31, 2010. |
30
Employee Stock Ownership Plan |
In 2004, the Bank established an employee stock ownership plan (ESOP) for substantially all of its full-time employees. Certain senior officers of the Bank have been designated as Trustees of the ESOP. Shares of the Companys common stock purchased by the ESOP are held in a suspense account until released for allocation to participants. Shares released are allocated to each eligible participant based on the ratio of each such participants base compensation to the total base compensation of all eligible plan participants. As the unearned shares are committed to be released and allocated among participants, the Company recognizes compensation expense equal to the average market price of the shares. Under this plan, during 2004 and 2005 the ESOP acquired 914,112 shares (as adjusted for the exchange ratio as part of the June 2007 second-step conversion) of common stock for approximately $7.4 million, an average price of $8.06 per share (as adjusted). These shares are scheduled to be released over a 15-year period. In June 2007, the ESOP acquired an additional 1,042,771 shares of the Companys common stock for approximately $10.4 million, an average price of $10.00 per share. These shares are scheduled to be released over a 30-year period. No additional purchases are expected to be made by the ESOP. At June 30, 2011, the ESOP held approximately 1.5 million unallocated shares of Company common stock with a fair value of $15.3 million and approximately 482,000 allocated shares with a fair value of $5.0 million. During the three-month periods ended June 30, 2011 and 2010, approximately 24,000 shares were committed to be released to participants in each period, resulting in recognition of approximately $273,000 and $215,000 in compensation expense, respectively. During the six-month periods ended June 30, 2011 and 2010, approximately 48,000 shares were committed to be released to participants in each period, resulting in recognition of approximately $563,000 and $395,000 in compensation expense, respectively. |
Recognition and Retention Plans |
In June 2005, the shareholders of Abington Community Bancorp approved the adoption of the 2005 Recognition and Retention Plan (the 2005 RRP). As a result of the second-step conversion, the 2005 RRP became a stock benefit plan of the Company and the shares of Abington Community Bancorp held by the 2005 RRP were converted to shares of Company common stock. Certain senior officers of the Bank have been designated as Trustees of the 2005 RRP. The 2005 RRP provides for the grant of shares of common stock of the Company to certain officers, employees and directors of the Company. In order to fund the 2005 RRP, the 2005 Recognition Plan Trust (the 2005 Trust) acquired 457,056 shares (adjusted for the second-step conversion exchange ratio) of common stock in the open market for approximately $3.7 million, an average price of $8.09 per share (as adjusted). The Company made sufficient contributions to the 2005 Trust to fund the purchase of these shares. No additional purchases are expected to be made by the 2005 Trust under this plan. Pursuant to the terms of the plan, all 457,056 shares acquired by the 2005 Trust have been granted to certain officers, employees and directors of the Company. 2005 RRP shares generally vest at the rate of 20% per year over five years. |
In January 2008, the shareholders of the Company approved the adoption of the 2007 Recognition and Retention Plan (the 2007 RRP). In order to fund the 2007 RRP, the 2007 Recognition Plan Trust (the 2007 Trust) acquired 520,916 shares of the Companys common stock in the open market for approximately $5.4 million, an average price of $10.28 per share. The Company made sufficient contributions to the 2007 Trust to fund the purchase of these shares. Pursuant to the terms of the plan, all 520,916 shares acquired by the 2007 Trust were granted to certain officers, employees and directors of the Company. 2007 RRP shares generally vest at the rate of 20% per year over five years. |
31
A summary of the status of the shares under the 2005 and 2007 RRP as of June 30, 2010 and 2009, and changes during the six months ended June 30, 2011 and 2010 are presented below: |
Six Months Ended June 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number of | average grant | Number of | average grant | |||||||||||||
shares | date fair value | shares | date fair value | |||||||||||||
|
||||||||||||||||
Nonvested at the beginning of the
year
|
311,060 | $ | 9.21 | 481,272 | $ | 8.79 | ||||||||||
Granted
|
| | | | ||||||||||||
Vested
|
(93,140 | ) | 9.11 | (94,940 | ) | 9.11 | ||||||||||
Forfeited
|
| | (3,876 | ) | 7.95 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Nonvested at the end of the period
|
217,920 | $ | 9.26 | 382,456 | $ | 8.71 | ||||||||||
|
Compensation expense on RRP shares granted is recognized ratably over the five year vesting period in an amount which totals the market price of the common stock at the date of grant. During the three- and six-month periods ended June 30, 2011, approximately 10,000 and 14,000 RRP shares, respectively, were amortized to expense, based on the proportional vesting of the awarded shares, resulting in recognition of approximately $231,000 and $464,000 in compensation expense, respectively. A tax benefit of approximately $79,000 and $263,000, respectively, was recognized during these periods with respect to the 2005 and 2007 RRPs. During the three- and six-month periods ended June 30, 2010, approximately 45,000 and 90,000 RRP shares, respectively, were amortized to expense, based on the proportional vesting of the awarded shares, resulting in recognition of approximately $374,000 and $747,000 in compensation expense, respectively. A tax benefit of approximately $127,000 and $190,000, respectively, was recognized during these periods with respect to the 2005 and 2007 RRPs. As of June 30, 2011, approximately $1.6 million in additional compensation expense is scheduled to be recognized over the remaining lives of the RRP awards. At June 30, 2011, the weighted average remaining lives of the RRP awards was approximately 2.0 years. Under the terms of the 2005 RRP and 2007 RRP, any unvested RRP awards will become fully vested upon a change in control, such as the proposed merger with Susquehanna, resulting in the full recognition of any unrecognized expense. |
Stock Options |
In June 2005, the shareholders of Abington Community Bancorp also approved the adoption of the 2005 Stock Option Plan (the 2005 Option Plan). As a result of the second-step conversion, the 2005 Option Plan became a stock benefit plan of the Company. Unexercised options which were previously granted under the 2005 Option Plan were adjusted by the 1.6 exchange ratio as a result of the second-step conversion and have been converted into options to acquire Company common stock. The 2005 Option Plan authorizes the grant of stock options to officers, employees and directors of the Company to acquire shares of common stock with an exercise price equal to the fair market value of the common stock on the grant date. Options generally become vested and exercisable at the rate of 20% per year over five years and are generally exercisable for a period of ten years after the grant date. As of June 30, 2011, a total of 1,142,640 shares of common stock have been reserved for future issuance pursuant to the 2005 Option Plan. |
In January 2008, the shareholders of the Company also approved the adoption of the 2007 Stock Option Plan (the 2007 Option Plan). As with the 2005 Option Plan, under the 2007 Option Plan options generally become vested and exercisable at the rate of 20% per year over five years and are generally exercisable for a period of ten years after the grant date. As of June 30, 2011, a total of 1,302,990 shares of common stock have been reserved for future issuance pursuant to the 2007 Option Plan. |
32
A summary of the status of the Companys stock options under the 2005 and 2007 Option Plans as of June 30, 2011 and 2010, and changes during the six months ended June 30, 2011 and 2010 are presented below: |
Six Months Ended June 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number of | average | Number of | average | |||||||||||||
shares | exercise price | shares | exercise price | |||||||||||||
|
||||||||||||||||
Outstanding at the beginning of the
year
|
2,167,700 | $ | 8.47 | 2,198,888 | $ | 8.47 | ||||||||||
Granted
|
| | | | ||||||||||||
Exercised
|
(101,400 | ) | 8.44 | (6,848 | ) | 7.51 | ||||||||||
Forfeited
|
(320 | ) | 10.18 | (8,340 | ) | 8.06 | ||||||||||
|
||||||||||||||||
|
||||||||||||||||
Outstanding at the end of the period
|
2,065,980 | $ | 8.47 | 2,183,700 | $ | 8.47 | ||||||||||
|
||||||||||||||||
|
||||||||||||||||
Exercisable at the end of the period
|
1,563,572 | $ | 8.26 | 1,240,920 | $ | 8.21 | ||||||||||
|
The following table summarizes all stock options outstanding under the 2005 and 2007 Option Plans as of June 30, 2011: |
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted | Weighted Average | Weighted | ||||||||||||||||||
Number of | Average | Remaining | Number of | Average | ||||||||||||||||
Exercise Price | Shares | Exercise Price | Contractual Life | Shares | Exercise Price | |||||||||||||||
(in years) | ||||||||||||||||||||
|
||||||||||||||||||||
$6.00 - $7.00
|
12,000 | $ | 6.72 | 8.5 | 2,000 | $ | 6.72 | |||||||||||||
7.01 - 8.00
|
852,960 | 7.51 | 4.0 | 852,960 | 7.51 | |||||||||||||||
8.01 - 9.00
|
2,400 | 8.35 | 4.4 | 2,400 | 8.35 | |||||||||||||||
9.01 - 10.00
|
1,163,500 | 9.14 | 6.6 | 678,500 | 9.14 | |||||||||||||||
Over 10.00
|
35,120 | 10.18 | 5.4 | 27,712 | 10.18 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Total
|
2,065,980 | $ | 8.47 | 5.5 | 1,563,572 | $ | 8.26 | |||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Intrinsic value
|
$ | 4,045,183 | $ | 6,255,036 | ||||||||||||||||
|
No options were granted during the first six months of 2011 or 2010. |
During the three and six months ended June 30, 2011, approximately $136,000 and $271,000, respectively, was recognized in compensation expense for the Option Plans. A tax benefit of approximately $25,000 and $164,000, respectively, was recognized during each of these periods with respect to the Option Plans. During the three and six months ended June 30, 2010, approximately $218,000 and $436,000, respectively, was recognized in compensation expense for the Option Plans. A tax benefit of approximately $22,000 and $46,000, respectively, was recognized during each of these periods with respect to the Option Plans. At June 30, 2011, approximately $835,000 in additional compensation expense for awarded options remained unrecognized. The weighted average period over which this expense will be recognized is approximately 1.6 years. |
33
8. | COMMITMENTS AND CONTINGENCIES |
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the loan agreement. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customers creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on managements credit evaluation of the customer. The amount and type of collateral required varies, but may include accounts receivable, inventory, equipment, real estate and income-producing commercial properties. At June 30, 2011 and December 31, 2010, commitments to originate loans and commitments under unused lines of credit, including undisbursed portions of construction loans in process, for which the Bank was obligated amounted to approximately $133.3 million and $114.9 million, respectively, in the aggregate. |
The Bank had approximately $1.7 million in outstanding mortgage loan commitments at June 30, 2011. The commitments are expected to be funded within 90 days with all $1.7 million being for loans which will have fixed rates of interest ranging from 4.125% to 5.000%. These loans were not originated for resale. Also outstanding at June 30, 2011 were unused home equity lines of credit totaling approximately $30.6 million and unused commercial lines of credit totaling approximately $74.4 million. The unused portion of our construction loans in process at June 30, 2011 amounted to approximately $26.5 million. |
The Bank had approximately $2.9 million in outstanding mortgage loan commitments at December 31, 2010. The commitments are expected to be funded within 90 days with all $2.9 million being for loans which will have fixed rates of interest ranging from 4.125% to 4.875%. These loans were not originated for resale. Also outstanding at December 31, 2010 were unused home equity lines of credit totaling approximately $30.2 million and unused commercial lines of credit totaling approximately $51.8 million. The unused portion of our construction loans in process at December 31, 2010 amounted to approximately $30.1 million. |
Letters of credit are conditional commitments issued by the Bank guaranteeing payments of drafts in accordance with the terms of the letter of credit agreements. Commercial letters of credit are used primarily to facilitate trade or commerce and are also issued to support public and private borrowing arrangements, bond financings and similar transactions. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Collateral may be required to support letters of credit based upon managements evaluation of the creditworthiness of each customer. The credit risk involved in issuing letters of credit is substantially the same as that involved in extending loan facilities to customers. Most letters of credit expire within one year. At June 30, 2011 and December 31, 2010, the Bank had letters of credit outstanding of approximately $46.8 million and $48.3 million, respectively, of which $46.0 million and $47.5 million, respectively, were standby letters of credit. At both June 30, 2011 and December 31, 2010, the uncollateralized portion of the letters of credit extended by the Bank was approximately $7,000, all of which was for standby letters of credit in both periods. The current amount of the liability for guarantees under letters of credit was not material as of June 30, 2011 and December 31, 2010. |
The Company is subject to various pending claims and contingent liabilities arising in the normal course of business which are not reflected in the accompanying consolidated financial statements. Management considers that the aggregate liability, if any, resulting from such matters will not be material to our financial position or results of operations. |
34
Among the Companys contingent liabilities, are exposures to limited recourse arrangements with respect to the sales of whole loans and participation interests. At June 30, 2011, such exposure, which represents a portion of credit risk associated with the sold interests, amounted to $185,000. The exposure is for the life of the related loans and payable, on our proportional share, as losses are incurred. |
9. | FAIR VALUE MEASUREMENTS |
The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Investment and mortgage-backed securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans, real estate owned and certain other assets. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets. |
In accordance with ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820), the Company groups its assets at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are: |
| Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets. |
| Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. |
| Level 3 Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Companys own estimates of assumptions that market participants would use in pricing the asset. |
In accordance with ASC 820, the Company bases its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy in ASC 820. |
Fair value measurements for assets where there exists limited or no observable market data and, therefore, are based primarily upon the Companys or other third-partys estimates, are often calculated based on the characteristics of the asset, the economic and competitive environment and other such factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, that could significantly affect the results of current or future valuations. At June 30, 2011 and December 31, 2010, the Company did not have any assets that were measured at fair value on a recurring basis that use Level 3 measurements. |
Following is a description of valuation methodologies used in determining the fair value for our assets and liabilities. |
35
Cash and Cash Equivalents These assets are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization. |
Investment and Mortgage-backed Securities Available for Sale Investment and mortgage-backed securities available for sale are recorded at fair value on a recurring basis. Fair value measurements for these securities are typically obtained from independent pricing services that we have engaged for this purpose. When available, we, or our independent pricing service, use quoted market prices to measure fair value. If market prices are not available, fair value measurement is based upon models that incorporate available trade, bid and other market information and for structured securities, cash flow and, when available, loan performance data. Because many fixed income securities do not trade on a daily basis, our independent pricing services applications apply available information as applicable through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations. For each asset class, pricing applications and models are based on information from market sources and integrate relevant credit information. All of our securities available for sale are valued using either of the foregoing methodologies to determine fair value adjustments recorded to our financial statements. Level 1 securities include equity securities such as common stock and mutual funds traded on active exchanges. Level 2 securities include corporate bonds, agency bonds, municipal bonds, certificates of deposit, mortgage-backed securities, and collateralized mortgage obligations. Investment and mortgage-backed securities held to maturity are carried at amortized cost. |
Loans Receivable We do not record loans at fair value on a recurring basis. As such, valuation techniques discussed herein for loans are primarily for estimating fair value for footnote disclosure purposes. However, from time to time, we record nonrecurring fair value adjustments to loans to reflect partial write-downs for impairment or the full charge-off of the loan carrying value. The valuation of impaired loans is discussed below. The fair value estimate for footnote disclosure purposes differentiates loans based on their financial characteristics, such as product classification, loan category, pricing features and remaining maturity. Prepayment and credit loss estimates are evaluated by loan type and rate. The fair value of one- to four-family residential mortgage loans is estimated by discounting contractual cash flows using discount rates based on current industry pricing, adjusted for prepayment and credit loss estimates. The fair value of other loans is estimated by discounting contractual cash flows using discount rates based on our current pricing for loans with similar characteristics, adjusted for prepayment and credit loss estimates. |
Impaired Loans A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan. An insignificant delay or insignificant shortfall in the amount of payments does not necessarily result in the loan being identified as impaired. We establish an allowance on certain impaired loans for the amount by which the discounted cash flows, observable market price or fair value of collateral, if the loan is collateral dependent, is lower than the carrying value of the loan. Fair value is generally based upon independent market prices or appraised value of the collateral less estimated cost to sell. During the periods presented, loan impairment was evaluated based on the fair value of the loans collateral. Our appraisals are typically performed by independent third party appraisers, and are obtained as soon as practicable once indicators of possible impairment are identified. We obtained current appraisals of the collateral underlying all of our impaired loans for the periods presented. For appraisals of commercial and construction properties, comparable properties within the area may not be available. In such circumstances, our appraisers will rely on certain judgments in determining how a specific property compares in value to other properties that are not identical in design or in geographic area. Our impaired loans at June 30, 2011 that were recorded at fair value are secured by both residential properties and commercial and construction properties. No comparable properties are available for our residential, commercial or construction properties and, accordingly, all of these impaired loans were classified as Level 3 assets at such date. Our impaired loans at December 31, 2010 that were recorded at fair value are secured by commercial and construction properties and, accordingly, these impaired loans were all classified as Level 3 assets at such date. |
36
Accrued Interest Receivable This asset is carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization. |
FHLB Stock Although Federal Home Loan Bank (FHLB) stock is an equity interest in the FHLB, it is carried at cost because it does not have a readily determinable fair value as its ownership is restricted and it lacks a market. The estimated fair value approximates the carrying amount. FHLB stock is evaluated for impairment based on the ultimate recoverability of the par value of the security. We have evaluated our FHLB stock for impairment, and we have determined that the stock was not impaired at June 30, 2011. |
Real Estate Owned Real estate owned includes foreclosed properties securing commercial and construction loans. Real estate properties acquired through foreclosure are initially recorded at the fair value of the property at the date of foreclosure. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of cost or fair value less estimated costs to sell. As is the case for collateral of impaired loans, fair value is generally based upon independent market prices or appraised value of the collateral. Our appraisal process for real estate owned is identical to our appraisal process for the collateral of impaired loans. Our current portfolio of real estate owned is comprised of commercial and construction properties for which comparable properties within the area are not available. Our appraisers have relied on certain judgments in determining how our specific properties compare in value to other properties that are not identical in design or in geographic area and, accordingly, we classify real estate owned as a Level 3 asset. |
Deposits Deposit liabilities are carried at cost. As such, valuation techniques discussed herein for deposits are primarily for estimating fair value for footnote disclosure purposes. The fair value of deposits is discounted based on rates available for borrowings of similar maturities. A decay rate is estimated for non-time deposits. The discount rate for non-time deposits is adjusted for servicing costs based on industry estimates. |
Advances from Federal Home Loan Bank Advances from the FHLB are carried at amortized cost. However, we are required to estimate the fair value of this debt for footnote disclosure purposes. The fair value is based on the contractual cash flows, which are discounted using rates currently offered for new notes with similar remaining maturities. |
Other Borrowed Money These liabilities are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization. |
Accrued Interest Payable This liability is carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization. |
Commitments to Extend Credit and Letters of Credit The majority of the Banks commitments to extend credit and letters of credit carry current market interest rates if converted to loans. Because commitments to extend credit and letters of credit are generally unassignable by either the Bank or the borrower, they only have value to the Bank and the borrower. The estimated fair value approximates the recorded deferred fee amounts, which are not significant. |
37
The tables below presents the balances of assets measured at fair value on a recurring basis: |
June 30, 2011 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
|
||||||||||||||||
Investment securities
available for sale:
|
||||||||||||||||
Debt securities:
|
||||||||||||||||
Agency bonds
|
$ | 88,972,935 | $ | | $ | 88,972,935 | $ | | ||||||||
Corporate bonds and
commercial paper
|
3,534,055 | | 3,534,055 | | ||||||||||||
Municipal bonds
|
17,923,395 | | 17,923,395 | | ||||||||||||
Equity securities:
|
||||||||||||||||
Mutual funds
|
2,737,755 | 2,737,755 | | | ||||||||||||
|
||||||||||||||||
Total investment securities
available for sale
|
113,168,140 | 2,737,755 | 110,430,385 | | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Mortgage-backed securities
available for sale:
|
||||||||||||||||
GNMA pass-through
certificates
|
$ | 1,707 | $ | | $ | 1,707 | $ | | ||||||||
FNMA pass-through
certificates
|
27,751,738 | | 27,751,738 | | ||||||||||||
FHLMC pass-through
certificates
|
22,292,357 | | 22,292,357 | | ||||||||||||
Collateralized mortgage
obligations
|
116,415,468 | | 116,415,468 | | ||||||||||||
|
||||||||||||||||
Total mortgage-backed
securities available for
sale
|
166,461,270 | | 166,461,270 | | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 279,629,410 | $ | 2,737,755 | $ | 276,891,655 | $ | | ||||||||
|
38
December 31, 2010 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
|
||||||||||||||||
Investment securities
available for sale:
|
||||||||||||||||
Debt securities:
|
||||||||||||||||
Agency bonds
|
$ | 99,312,700 | $ | | $ | 99,312,700 | $ | | ||||||||
Corporate bonds and
commercial paper
|
3,558,295 | | 3,558,295 | | ||||||||||||
Municipal bonds
|
19,320,900 | | 19,320,900 | | ||||||||||||
Equity securities:
|
||||||||||||||||
Mutual funds
|
2,712,006 | 2,712,006 | | | ||||||||||||
|
||||||||||||||||
Total investment securities
available for sale
|
124,903,901 | 2,712,006 | 122,191,895 | | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Mortgage-backed securities
available for sale:
|
||||||||||||||||
GNMA pass-through
certificates
|
$ | 2,006 | $ | | $ | 2,006 | $ | | ||||||||
FNMA pass-through
certificates
|
31,928,307 | | 31,928,307 | | ||||||||||||
FHLMC pass-through
certificates
|
28,648,152 | | 28,648,152 | | ||||||||||||
Collateralized mortgage
obligations
|
107,594,331 | | 107,594,331 | | ||||||||||||
|
||||||||||||||||
Total mortgage-backed
securities available for sale
|
168,172,796 | | 168,172,796 | | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 293,076,697 | $ | 2,712,006 | $ | 290,364,691 | $ | | ||||||||
|
39
For assets measured at fair value on a nonrecurring basis that were still held at the end of the period, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the related individual assets or portfolios at June 30, 2011 and December 31, 2010: |
June 30, 2011 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
|
||||||||||||||||
Impaired loans:
|
||||||||||||||||
One- to four-
family residential
|
$ | 1,799,743 | $ | | $ | | $ | 1,799,743 | ||||||||
Multi-family
residential and
commerical
|
1,101,500 | | | 1,101,500 | ||||||||||||
Construction
|
6,688,364 | | | 6,688,364 | ||||||||||||
|
||||||||||||||||
Total impaired loans
|
9,589,607 | | | 9,589,607 | ||||||||||||
Real estate owned
|
23,664,479 | | | 23,664,479 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 33,254,086 | $ | | $ | | $ | 33,254,086 | ||||||||
|
December 31, 2010 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
|
||||||||||||||||
Impaired loans:
|
||||||||||||||||
Multi-family
residential and
commerical
|
$ | 1,348,304 | $ | | $ | | $ | 1,348,304 | ||||||||
Construction
|
5,357,844 | | | 5,357,844 | ||||||||||||
|
||||||||||||||||
Total impaired loans
|
6,706,148 | | | 6,706,148 | ||||||||||||
Real estate owned
|
23,588,139 | | | 23,588,139 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 30,294,287 | $ | | $ | | $ | 30,294,287 | ||||||||
|
40
The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies as described above. However, considerable judgment is necessarily required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. |
June 30, 2011 | December 31, 2010 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 73,579 | $ | 73,579 | $ | 77,687 | $ | 77,687 | ||||||||
Investment securities
|
133,552 | 134,445 | 145,289 | 145,710 | ||||||||||||
Mortgage-backed
securities
|
216,055 | 217,732 | 225,045 | 226,511 | ||||||||||||
Loans receivablenet
|
652,550 | 654,402 | 696,444 | 702,343 | ||||||||||||
FHLB stock
|
12,524 | 12,524 | 13,877 | 13,877 | ||||||||||||
Accrued interest
receivable
|
3,746 | 3,746 | 4,103 | 4,103 | ||||||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Deposits
|
$ | 840,705 | $ | 834,302 | $ | 900,059 | $ | 886,873 | ||||||||
Advances from Federal
|
||||||||||||||||
Home Loan Bank
|
76,869 | 79,989 | 109,875 | 114,772 | ||||||||||||
Other borrowed money
|
28,826 | 28,826 | 15,881 | 15,881 | ||||||||||||
Accrued interest payable
|
3,218 | 3,218 | 912 | 912 | ||||||||||||
Off balance sheet
financial
instruments
|
| | | |
The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies as described above. However, considerable judgment is necessarily required to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The fair value estimates presented herein are based on pertinent information available to management as of June 30, 2011 and December 31, 2010. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since June 30, 2011 and December 31, 2010 and, therefore, current estimates of fair value may differ significantly from the amounts presented herein. |
10. | MERGER AGREEMENT WITH SUSQUEHANNA BANCSHARES, INC. |
On January 26, 2011, the Company and Susquehanna entered into an Agreement and Plan of Merger (the Merger Agreement) pursuant to which the Company will merge with and into Susquehanna (the Merger). Promptly following consummation of the Merger, it is expected that the Bank will merge with and into Susquehanna Bank (the Bank Merger). The Merger is expected to be completed during the third quarter of 2011. |
41
Under the terms of the Merger Agreement, upon consummation of the Merger, shareholders of the Company will receive 1.32 shares (the Exchange Ratio) of Susquehanna common stock for each share of common stock they own. The Merger Agreement also provides that all options to purchase Company stock which are outstanding and unexercised immediately prior to the closing (Continuing Options) under the Companys Amended and Restated 2005 Stock Option Plan and its 2007 Stock Option Plan, shall become fully vested and exercisable and be converted into fully vested and exercisable options to purchase shares of Susquehanna stock. |
At the closing of the Merger, Susquehanna and Susquehanna Bank will appoint Mr. Robert W. White, the Companys Chairman, President and Chief Executive Officer, as a director of each of Susquehanna and Susquehanna Bank. In the event that Mr. White is unable or unwilling to serve as a director of Susquehanna and Susquehanna Bank pursuant to the terms of the Merger Agreement, another director of Abington, as mutually agreed upon by the Company and Susquehanna, shall be substituted for Mr. White, to serve as a member of the Susquehanna and Susquehanna Bank boards of directors. Mr. White also will become an Executive Vice President of Susquehanna Bank. |
The Merger Agreement contains (a) customary representations and warranties of the Company and Susquehanna, including, among others, with respect to corporate organization, capitalization, corporate authority, third party and governmental consents and approvals, financial statements, and compliance with applicable laws, (b) covenants of the Company to conduct its business in the ordinary course until the Merger is completed; and (c) covenants of the Company and Susquehanna not to take certain actions. The Company has also agreed not to (i) solicit proposals relating to alternative business combination transactions or (ii) subject to certain exceptions, enter into discussions concerning, or provide confidential information in connection with, any alternative transactions. |
Consummation of the Merger is subject to certain conditions, including, among others, governmental filings and regulatory approvals and expiration of applicable waiting periods, accuracy of specified representations and warranties of the other party, absence of a material adverse effect, and receipt of tax opinions. The Merger Agreement was approved by the requisite vote of shareholders of each of the Company and Susquehanna at meetings held on May 6, 2011. |
The Merger Agreement also contains certain termination rights for the Company and Susquehanna, as the case may be, applicable upon the occurrence or non-occurrence of certain events. If the Merger is not consummated under certain circumstances, the Company has agreed to pay Susquehanna a termination fee of $11.0 million. |
ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
42
43
44
45
46
| Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets. |
| Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. |
| Level 3 Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Companys own estimates of assumptions that market participants would use in pricing the asset. |
47
48
49
Actual Ratios At | ||||||||||||||||
June 30, | December 31, | Regulatory | To Be Well | |||||||||||||
2011 | 2009 | Minimum | Capitalized | |||||||||||||
Capital Ratios
:
|
||||||||||||||||
Tier 1 leverage ratio
|
15.16 | % | 13.84 | % | 4.00 | % | 5.00 | % | ||||||||
Tier 1 risk-based capital ratio
|
24.86 | 23.31 | 4.00 | 6.00 | ||||||||||||
Total risk-based capital ratio
|
25.47 | 23.89 | 8.00 | 10.00 |
50
51
Amount of Commitment Expiration - Per Period | ||||||||||||||||||||
After One to | After Three | |||||||||||||||||||
Total Amounts | To | Three | to Five | After Five | ||||||||||||||||
Committed | One Year | Years | Years | Years | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
Letters of credit
|
$ | 46,793 | $ | 28,549 | $ | 18,243 | $ | | $ | 1 | ||||||||||
Recourse obligations on loans
sold
|
185 | | | | 185 | |||||||||||||||
Commitments to originate loans
|
1,691 | 1,691 | | | | |||||||||||||||
Unused portion of home equity
lines of credit
|
30,610 | | | | 30,610 | |||||||||||||||
Unused portion of commercial
lines of credit
|
74,424 | 74,424 | | | | |||||||||||||||
Undisbursed portion of
construction loans in process
|
26,527 | 22,637 | 3,890 | | | |||||||||||||||
|
||||||||||||||||||||
Total commitments
|
$ | 180,230 | $ | 127,301 | $ | 22,133 | $ | | $ | 30,796 | ||||||||||
|
Payments Due By Period | ||||||||||||||||||||
After One to | After Three | |||||||||||||||||||
To | Three | to Five | After Five | |||||||||||||||||
Total | One Year | Years | Years | Years | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
Certificates of deposit
|
$ | 405,030 | $ | 211,314 | $ | 68,334 | $ | 66,359 | $ | 59,023 | ||||||||||
|
||||||||||||||||||||
FHLB advances
|
76,869 | 1,664 | 28,241 | 38,182 | 8,782 | |||||||||||||||
Repurchase agreements
|
28,826 | 28,826 | | | | |||||||||||||||
|
||||||||||||||||||||
Total debt
|
105,695 | 30,490 | 28,241 | 38,182 | 8,782 | |||||||||||||||
|
||||||||||||||||||||
Operating lease obligations
|
4,096 | 900 | 1,517 | 975 | 704 | |||||||||||||||
|
||||||||||||||||||||
Total contractual obligations
|
$ | 514,821 | $ | 242,704 | $ | 98,092 | $ | 105,516 | $ | 68,509 | ||||||||||
|
52
53
Three Months Ended June 30, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||||
Balance | Interest | Yield/Rate | Balance | Interest | Yield/Rate | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Investment securities(1)
|
$ | 130,286 | $ | 801 | 2.46 | % | $ | 129,842 | $ | 883 | 2.72 | % | ||||||||||||
Mortgage-backed securities
|
208,132 | 1,753 | 3.37 | 206,866 | 2,180 | 4.22 | ||||||||||||||||||
Loans receivable(2)
|
666,850 | 8,894 | 5.33 | 725,684 | 9,816 | 5.41 | ||||||||||||||||||
Other interest-earning assets
|
56,329 | 16 | 0.11 | 75,068 | 20 | 0.11 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total interest-earning assets
|
1,061,597 | 11,464 | 4.32 | 1,137,460 | 12,899 | 4.54 | ||||||||||||||||||
|
||||||||||||||||||||||||
Cash and non-interest bearing
balances
|
21,303 | 23,473 | ||||||||||||||||||||||
Other non-interest-earning assets
|
96,737 | 111,561 | ||||||||||||||||||||||
|
||||||||||||||||||||||||
Total assets
|
$ | 1,179,637 | $ | 1,272,494 | ||||||||||||||||||||
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Savings and money market accounts
|
$ | 308,272 | 481 | 0.62 | $ | 291,494 | 666 | 0.91 | ||||||||||||||||
Checking accounts
|
90,705 | 6 | 0.03 | 82,350 | 10 | 0.05 | ||||||||||||||||||
Certificate accounts
|
408,885 | 2,238 | 2.19 | 466,386 | 2,557 | 2.19 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total deposits
|
807,862 | 2,725 | 1.35 | 840,230 | 3,233 | 1.54 | ||||||||||||||||||
FHLB advances
|
80,605 | 714 | 3.54 | 132,079 | 1,414 | 4.28 | ||||||||||||||||||
Other borrowings
|
22,674 | 22 | 0.39 | 25,686 | 21 | 0.33 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total interest-bearing liabilities
|
911,141 | 3,461 | 1.52 | 997,995 | 4,668 | 1.87 | ||||||||||||||||||
|
||||||||||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand
accounts
|
41,531 | 44,204 | ||||||||||||||||||||||
Real estate tax escrow accounts
|
3,894 | 4,215 | ||||||||||||||||||||||
Other liabilities
|
8,637 | 11,558 | ||||||||||||||||||||||
|
||||||||||||||||||||||||
Total liabilities
|
965,203 | 1,057,972 | ||||||||||||||||||||||
Stockholders equity
|
214,434 | 214,522 | ||||||||||||||||||||||
|
||||||||||||||||||||||||
Total liabilities and stockholders
equity
|
$ | 1,179,637 | $ | 1,272,494 | ||||||||||||||||||||
|
||||||||||||||||||||||||
Net interest-earning assets
|
$ | 150,456 | $ | 139,465 | ||||||||||||||||||||
|
||||||||||||||||||||||||
Net interest income; average
interest rate spread
|
$ | 8,003 | 2.80 | % | $ | 8,231 | 2.67 | % | ||||||||||||||||
|
||||||||||||||||||||||||
Net interest margin(3)
|
3.02 | % | 2.89 | % | ||||||||||||||||||||
|
(1) | Investment securities for the 2011 period include 122 tax-exempt municipal bonds with an aggregate average balance of $37.7 million and an average yield of 4.0%. Investment securities for the 2010 period include 131 tax-exempt municipal bonds with an aggregate average balance of $40.0 million and an average yield of 3.9%. The tax-exempt income from such securities has not been presented on a tax equivalent basis. | |
(2) | Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts and loans in process. | |
(3) | Equals net interest income divided by average interest-earning assets. |
54
55
June 30, | December 31, | June 30, | ||||||||||
2011 | 2010 | 2010 | ||||||||||
(Dollars in Thousands) | ||||||||||||
Non-accruing loans:
|
||||||||||||
One- to four-family residential
|
$ | 1,952 | $ | | $ | | ||||||
Multi-family residential and
commercial real estate(1)
|
2,005 | 1,348 | 3,502 | |||||||||
Construction
|
6,910 | 5,664 | 18,456 | |||||||||
Commercial business
|
| | | |||||||||
Home equity lines of credit
|
| | | |||||||||
Consumer non-real estate
|
| | | |||||||||
|
||||||||||||
Total non-accruing loans
|
10,867 | 7,012 | 21,958 | |||||||||
|
||||||||||||
Accruing loans 90 days or more past due:
|
||||||||||||
One- to four-family residential(2)
|
677 | 1,211 | 63 | |||||||||
Multi-family residential and
commercial real estate
|
| 725 | | |||||||||
Construction
|
2,271 | 14 | | |||||||||
Commercial business
|
| | | |||||||||
Home equity lines of credit
|
81 | 76 | 109 | |||||||||
Consumer non-real estate
|
| | | |||||||||
|
||||||||||||
Total accruing loans 90 days or
more past due
|
3,029 | 2,026 | 172 | |||||||||
|
||||||||||||
Total non-performing loans(3)
|
13,896 | 9,038 | 22,130 | |||||||||
|
||||||||||||
Real estate owned, net
|
23,664 | 23,588 | 13,142 | |||||||||
|
||||||||||||
Total non-performing assets
|
37,560 | 32,626 | 35,272 | |||||||||
|
||||||||||||
Performing troubled debt restructurings:
|
||||||||||||
One- to four-family residential(4)
|
579 | 583 | | |||||||||
Multi-family residential and
commercial real estate
|
8,732 | 8,417 | | |||||||||
Construction
|
3,353 | | | |||||||||
Commercial business
|
| | | |||||||||
Home equity lines of credit
|
| | | |||||||||
Consumer non-real estate
|
| | | |||||||||
|
||||||||||||
Total performing troubled debt
restructurings
|
12,664 | 9,000 | | |||||||||
|
||||||||||||
Total non-performing assets and
performing troubled debt
restructurings
|
$ | 50,224 | $ | 41,626 | $ | 35,272 | ||||||
|
||||||||||||
Total non-performing loans as a
percentage of loans
|
2.12 | % | 1.29 | % | 2.98 | % | ||||||
|
||||||||||||
Total non-performing loans as a
percentage of total assets
|
1.18 | % | 0.72 | % | 1.73 | % | ||||||
|
||||||||||||
Total non-performing assets as a
percentage of total assets
|
3.19 | % | 2.62 | % | 2.78 | % | ||||||
|
(1) | Included in this category of non-accruing loans at March 31, 2011 and December 31, 2010 is one troubled debt restructuring with a balance of $1.3 million at each such date. | |
(2) | Included in this category of non-accruing loans at March 31, 2011 is one troubled debt restructuring with a balance of $219,000 at such date. | |
(3) | Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past due. | |
(4) | Two performing troubled debt restructurings (TDRs) included in one- to four-family residential loans with an aggregate outstanding balance of $583,000 at June 30, 2010 were identified as a result of enhanced procedures, although no such balances were previously reported at such date. |
56
Type | Loan Classification | |||||||||||||||||||||||||||||||||||||||||||||||
Allowance | ||||||||||||||||||||||||||||||||||||||||||||||||
Accruing | for Loan | |||||||||||||||||||||||||||||||||||||||||||||||
Loans 90 | Losses | |||||||||||||||||||||||||||||||||||||||||||||||
Total | One- to | Days or | Allocated to | |||||||||||||||||||||||||||||||||||||||||||||
No. of | Balance | Land | Four- | Multi- | Commercial | Special | More Past | Construction | ||||||||||||||||||||||||||||||||||||||||
Range | Loans | Outstanding | Only | Family | Family | Real Estate | Doubtful | Substandard | Mention | Non-Accrual(1) | Due | Loans | ||||||||||||||||||||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Loans over $10.0 million
|
2 | $ | 35,043 | $ | | $ | | $ | 21,499 | $ | 13,544 | $ | | $ | 13,544 | $ | 21,499 | $ | | $ | | $ | 386 | |||||||||||||||||||||||||
Loans $5.0 million to $10.0 million
|
2 | 10,802 | | 5,027 | | 5,775 | | | | | | 374 | ||||||||||||||||||||||||||||||||||||
Loans $2.5 million to $5.0 million
|
7 | 25,299 | 2,911 | 17,465 | 4,923 | | | 2,911 | 10,932 | | | 415 | ||||||||||||||||||||||||||||||||||||
Loans $1.0 million to $2.5 million
|
15 | 25,198 | 4,499 | 15,858 | | 4,841 | | 11,215 | 3,731 | 6,014 | 1,832 | 973 | ||||||||||||||||||||||||||||||||||||
Loans under $1.0 million
|
13 | 3,587 | 1,155 | 1,730 | 702 | | | 1,379 | 555 | 896 | 439 | 244 | ||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Total construction loans
|
39 | $ | 99,929 | $ | 8,565 | $ | 40,080 | $ | 27,124 | $ | 24,160 | $ | | $ | 29,049 | $ | 36,717 | $ | 6,910 | $ | 2,271 | $ | 2,392 | |||||||||||||||||||||||||
|
(1) | All of the $6.9 million of non-accrual construction loans at June 30, 2011 are classified substandard. |
57
58
59
Six Months Ended June 30, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||||
Balance | Interest | Yield/Rate | Balance | Interest | Yield/Rate | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Investment securities(1)
|
$ | 134,933 | $ | 1,630 | 2.42 | % | $ | 122,057 | $ | 1,694 | 2.78 | % | ||||||||||||
Mortgage-backed securities
|
212,463 | 3,624 | 3.41 | 207,798 | 4,465 | 4.30 | ||||||||||||||||||
Loans receivable(2)
|
676,112 | 17,881 | 5.29 | 732,723 | 19,815 | 5.41 | ||||||||||||||||||
Other interest-earning assets
|
56,689 | 32 | 0.11 | 61,490 | 26 | 0.08 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total interest-earning assets
|
1,080,197 | 23,167 | 4.29 | 1,124,068 | 26,000 | 4.63 | ||||||||||||||||||
|
||||||||||||||||||||||||
Cash and non-interest bearing
balances
|
19,868 | 21,563 | ||||||||||||||||||||||
Other non-interest-earning assets
|
96,892 | 113,309 | ||||||||||||||||||||||
|
||||||||||||||||||||||||
Total assets
|
$ | 1,196,957 | $ | 1,258,940 | ||||||||||||||||||||
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Savings and money market accounts
|
$ | 310,438 | 958 | 0.62 | $ | 282,038 | 1,353 | 0.96 | ||||||||||||||||
Checking accounts
|
89,946 | 11 | 0.02 | 81,454 | 19 | 0.05 | ||||||||||||||||||
Certificate accounts
|
418,910 | 4,526 | 2.16 | 463,704 | 5,150 | 2.22 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total deposits
|
819,294 | 5,495 | 1.34 | 827,196 | 6,522 | 1.58 | ||||||||||||||||||
FHLB advances
|
88,007 | 1,589 | 3.61 | 137,506 | 2,968 | 4.32 | ||||||||||||||||||
Other borrowings
|
20,891 | 43 | 0.41 | 22,961 | 35 | 0.30 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total interest-bearing liabilities
|
928,192 | 7,127 | 1.54 | 987,663 | 9,525 | 1.93 | ||||||||||||||||||
|
||||||||||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand
accounts
|
43,321 | 42,871 | ||||||||||||||||||||||
Real estate tax escrow accounts
|
3,743 | 4,028 | ||||||||||||||||||||||
Other liabilities
|
7,941 | 9,868 | ||||||||||||||||||||||
|
||||||||||||||||||||||||
Total liabilities
|
983,197 | 1,044,430 | ||||||||||||||||||||||
Stockholders equity
|
213,760 | 214,510 | ||||||||||||||||||||||
|
||||||||||||||||||||||||
Total liabilities and stockholders
equity
|
$ | 1,196,957 | $ | 1,258,940 | ||||||||||||||||||||
|
||||||||||||||||||||||||
Net interest-earning assets
|
$ | 152,005 | $ | 136,405 | ||||||||||||||||||||
|
||||||||||||||||||||||||
Net interest income; average
interest rate spread
|
$ | 16,040 | 2.75 | % | $ | 16,475 | 2.70 | % | ||||||||||||||||
|
||||||||||||||||||||||||
Net interest margin(3)
|
2.97 | % | 2.93 | % | ||||||||||||||||||||
|
(1) | Investment securities for the 2011 period include 123 tax-exempt municipal bonds with an aggregate average balance of $38.3 million and an average yield of 4.0%. Investment securities for the 2010 period include 133 tax-exempt municipal bonds with an aggregate average balance of $40.0 million and an average yield of 3.9%. The tax-exempt income from such securities has not been presented on a tax equivalent basis. | |
(2) | Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts and loans in process. | |
(3) | Equals net interest income divided by average interest-earning assets. |
60
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
61
62
More than | More than | More than | ||||||||||||||||||||||
6 Months | 6 Months | 1 Year | 3 Years | More than | Total | |||||||||||||||||||
or Less | to 1 Year | to 3 Years | to 5 Years | 5 Years | Amount | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
Interest-earning assets (1):
|
||||||||||||||||||||||||
Loans receivable (2)
|
$ | 215,729 | $ | 42,141 | $ | 146,033 | $ | 97,602 | $ | 144,535 | $ | 646,040 | ||||||||||||
Mortgage-backed
securities
|
30,742 | 25,268 | 70,416 | 40,665 | 44,595 | 211,686 | ||||||||||||||||||
Investment securities
|
6,377 | 1,305 | 52,249 | 71,251 | 1,063 | 132,245 | ||||||||||||||||||
Other interest-earning
assets
|
60,359 | | | | | 60,359 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total interest-earning
assets
|
313,207 | 68,714 | 268,698 | 209,518 | 190,193 | 1,050,330 | ||||||||||||||||||
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Savings and money market
accounts
|
$ | 71,773 | $ | 71,773 | $ | 63,834 | $ | 52,334 | $ | 43,417 | $ | 303,131 | ||||||||||||
Checking accounts
|
| | | | 89,869 | 89,869 | ||||||||||||||||||
Certificate accounts
|
147,781 | 64,803 | 67,064 | 66,359 | 59,023 | 405,030 | ||||||||||||||||||
FHLB advances
|
9,602 | 8,822 | 28,107 | 27,147 | 3,191 | 76,869 | ||||||||||||||||||
Other borrowed money
|
28,826 | | | | | 28,826 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total interest-bearing
liabilities
|
257,982 | 145,398 | 159,005 | 145,840 | 195,500 | 903,725 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Interest-earning assets less
interest-bearing liabilities
|
$ | 55,225 | $ | (76,684 | ) | $ | 109,693 | $ | 63,678 | $ | (5,307 | ) | $ | 146,605 | ||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Cumulative interest-rate
sensitivity gap (3)
|
$ | 55,225 | $ | (21,459 | ) | $ | 88,234 | $ | 151,912 | $ | 146,605 | |||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Cumulative interest-rate
gap
as a percentage of total
assets at June 30, 2011
|
4.71 | % | (1.83 | )% | 7.52 | % | 12.95 | % | 12.49 | % | ||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Cumulative interest-earning
assets as a percentage of
cumulative interest-bearing
liabilities at June 30, 2011
|
121.41 | % | 94.68 | % | 115.69 | % | 121.45 | % | 116.22 | % | ||||||||||||||
|
(1) | Interest-earning assets are included in the period in which the balances are expected to be redeployed and/or repriced as a result of anticipated prepayments, scheduled rate adjustments and contractual maturities. | |
(2) | For purposes of the gap analysis, loans receivable includes non-performing loans net of the allowance for loan losses, undisbursed loan funds, unamortized discounts and deferred loan fees. | |
(3) | Interest-rate sensitivity gap represents the difference between net interest-earning assets and interest-bearing liabilities. |
63
Certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate loans, have features which restrict changes in interest rates both on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table. Finally, the ability of many borrowers to service their adjustable-rate loans may decrease in the event of an interest rate increase. |
ITEM 4. | CONTROLS AND PROCEDURES |
Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SECs rules and regulations and are operating in an effective manner. |
No change in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. |
ITEM 1. | LEGAL PROCEEDINGS |
On May 19, 2011, a lawsuit was filed in the United States District Court for the District of Connecticut by Open Solutions Inc. (OSI) against the Bank. Open Solutions Inc. v. Abington Savings Bank . In the complaint, OSI, a provider of various data processing services and products to financial institutions, alleges that the Bank has failed to honor certain purported contractual obligations with OSI. OSI makes claims for breach of contract, breach of the covenant of good faith and fair dealing and violation of the Connecticut Unfair Trade Practices Act and requests damages in an amount to-be-determined but alleged to be in excess of $5.0 million, plus interest, costs and expenses and punitive damages. The Company believes that the claims asserted are without merit, has filed motions to dismiss and intends to vigorously defend itself and the Bank against this lawsuit. |
ITEM 1A. | RISK FACTORS |
There have been no material changes from the risk factors disclosed in the Companys Annual Report on Form 10-K for the year ended December 31, 2010. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
(a) | Not applicable. |
(b) | Not applicable. |
(c) | Not applicable. |
64
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | (REMOVED AND RESERVED) |
ITEM 5. | OTHER INFORMATION |
Not applicable. |
ITEM 6. | EXHIBITS |
No. | Description | |||
31.1 |
Rule 13a-14(d) and 15d-14(d) Certification of the Chief Executive Officer.
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|
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31.2 |
Rule 13a-14(d) and 15d-14(d) Certification of the Chief Financial Officer.
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32.1 |
Section 1350 Certification.
|
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32.2 |
Section 1350 Certification.
|
The following Exhibits are being furnished* as part of this report: |
No. | Description | |||
101.INS |
XBRL Instance Document.*
|
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101.SCH |
XBRL Taxonomy Extension Schema Document.*
|
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101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document.*
|
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101.LAB |
XBRL Taxonomy Extension Label Linkbase Document.*
|
|||
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document.*
|
|||
101.DEF |
XBRL Taxonomy Extension Definitions Linkbase Document.*
|
* | These interactive data files are being furnished as part of this Quarterly Report, and, in accordance with Rule 402 of Regulation S-T, shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections. |
65
ABINGTON BANCORP, INC.
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Date: August 5, 2011 | By: | /s/ Robert W. White | ||
Robert W. White | ||||
Chairman, President and
Chief Executive Officer |
||||
Date: August 5, 2011 | By: | /s/ Jack J. Sandoski | ||
Jack J. Sandoski | ||||
Senior Vice President and
Chief Financial Officer |
||||
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1 Year Abington Bancorp, Inc. (MM) Chart |
1 Month Abington Bancorp, Inc. (MM) Chart |
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