UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 20172022
Or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________to ___________
Commission File Number: 0-50275
BCB Bancorp, Inc.
(Exact name of registrant as specified in its charter)
New Jersey | 26-0065262 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer I.D. No.) | |
104-110 Avenue C Bayonne, New Jersey | 07002 | |
(Address of principal executive offices) | (Zip Code) | |
(201) 823-0700
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year if changed since last report)
Securities registered pursuant to section 12(b) of the Securities and Exchange Act of 1934:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, no par value | BCBP | The Nasdaq Stock Market, LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒T Yes ☐o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒x Yes ☐o No
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer, larger accelerated filer, non-accelerated filer, smallerfiler”, “smaller reporting company, or emergingcompany”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | o |
| Accelerated Filer |
|
| x | |
Non-Accelerated Filer | o |
| Smaller Reporting Company |
| x | ||
Emerging Growth Company |
| o | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐¨
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). ☐o Yes ☒ T No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 7th, 2017,1, 2022, BCB Bancorp, Inc., had 15,031,69116,891,520 shares of common stock, no par value, outstanding.
BCB BANCORP INC. AND SUBSIDIARIES
INDEX
Page | ||||||||
1 | ||||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
6 | ||||||||
7 | ||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | |||||||
Item 3. Quantitative and Qualitative Disclosures about Market Risk | 32 | |||||||
32 | ||||||||
33 | ||||||||
33 | ||||||||
33 | ||||||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 33 | |||||||
33 | ||||||||
33 | ||||||||
33 | ||||||||
34 | ||||||||
PART I. CONSOLIDATED FINANCIAL INFORMATION
ITEM I. CONSOLIDATED FINANCIAL STATEMENTS
BCB BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(In Thousands,thousands, Except Share and Per Share Data, Unaudited)
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| September 30, |
| December 31, | September 30, | December 31, | |||||
| 2017 |
| 2016 | 2022 | 2021 | |||||
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ASSETS |
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Cash and amounts due from depository institutions | $ | 15,035 |
| $ | 12,121 | $ | 11,192 | $ | 9,606 | |
Interest-earning deposits |
| 82,583 |
|
| 52,917 | 209,832 | 402,023 | |||
Total cash and cash equivalents |
| 97,618 |
|
| 65,038 | 221,024 | 411,629 | |||
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Interest-earning time deposits |
| 980 |
|
| 980 | 735 | 735 | |||
Securities available for sale |
| 100,077 |
|
| 94,765 | |||||
Debt securities available for sale | 92,751 | 85,186 | ||||||||
Equity investments | 18,408 | 25,187 | ||||||||
Loans held for sale |
| 2,484 |
|
| 4,153 | - | 952 | |||
Loans receivable, net of allowance for loan losses |
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| |||||
of $18,449 and $17,209 respectively |
| 1,619,245 |
|
| 1,485,159 | |||||
of $33,195 and $37,119 respectively | 2,787,015 | 2,304,942 | ||||||||
Federal Home Loan Bank of New York stock, at cost |
| 8,096 |
|
| 9,306 | 12,388 | 6,084 | |||
Premises and equipment, net |
| 19,259 |
|
| 19,382 | 10,723 | 12,237 | |||
Accrued interest receivable |
| 5,808 |
|
| 5,573 | 11,093 | 9,183 | |||
Other real estate owned |
| 1,410 |
|
| 3,525 | 75 | 75 | |||
Deferred income taxes |
| 6,481 |
|
| 9,953 | 15,863 | 12,959 | |||
Goodwill and other intangibles | 5,394 | 5,431 | ||||||||
Operating lease right-of-use assets | 11,785 | 12,457 | ||||||||
Bank-owned life insurance ("BOLI") | 71,072 | 72,485 | ||||||||
Other assets |
| 10,282 |
|
| 10,374 | 7,286 | 7,986 | |||
Total Assets | $ | 1,871,740 |
| $ | 1,708,208 | $ | 3,265,612 | $ | 2,967,528 | |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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LIABILITIES |
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Non-interest bearing deposits | $ | 169,222 |
| $ | 158,523 | |||||
Non-interest -bearing deposits | $ | 610,425 | $ | 588,207 | ||||||
Interest bearing deposits |
| 1,376,926 |
|
| 1,233,682 | 2,102,521 | 1,973,195 | |||
Total deposits |
| 1,546,148 |
|
| 1,392,205 | 2,712,946 | 2,561,402 | |||
Short-term debt |
| - |
|
| 20,000 | |||||
Long-term debt |
| 138,000 |
|
| 155,000 | |||||
FHLB advances | 212,123 | 71,711 | ||||||||
Subordinated debentures |
| 4,124 |
|
| 4,124 | 37,450 | 37,275 | |||
Other liabilities and accrued interest payable |
| 5,900 |
|
| 5,798 | |||||
Operating lease liability | 12,102 | 12,752 | ||||||||
Other liabilities | 8,309 | 10,364 | ||||||||
Total Liabilities |
| 1,694,172 |
|
| 1,577,127 | 2,982,930 | 2,693,504 | |||
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STOCKHOLDERS' EQUITY |
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Preferred stock: $0.01 par value, 10,000,000 shares authorized, |
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issued and outstanding 1,342 shares of series C 6% and series D 4.5% noncumulative |
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perpetual preferred stock (liquidation value $10,000 per share) at September 30, 2017 and 1,560 shares |
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of series A, B, C 6% noncumulative preferred stock at December 31, 2016 |
| - |
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| - | |||||
Preferred stock: $0.01 par value, 10,000,000 shares authorized; issued and outstanding 2,123 shares of Series H 3.5% and Series I 3.0%, (liquidation value $10,000 per share) noncumulative perpetual preferred stock at September 30, 2022 and 2,916 shares of Series D 4.5%, Series G 6%, Series H 3.5% and Series I 3% (liquidation value $10,000 per share) noncumulative perpetual preferred stock at December 31, 2021 | - | - | ||||||||
Additional paid-in capital preferred stock |
| 13,241 |
|
| 15,464 | 21,003 | 28,923 | |||
Common stock; no par value; 20,000,000 shares authorized, issued 17,562,454 and 13,797,088 |
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at September 30, 2017 and December 31, 2016, respectively, outstanding 15,031,691 shares and |
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11,267,225 shares, respectively |
| - |
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| - | |||||
Common stock: no par value; 40,000,000 shares authorized; issued 19,858,738 and 19,708,375 at September 30, 2022 and December 31, 2021, respectively, outstanding 16,973,870 and 16,940,133, at September 30, 2022 and December 31, 2021, respectively | - | - | ||||||||
Additional paid-in capital common stock |
| 164,010 |
|
| 120,417 | 195,057 | 193,927 | |||
Retained earnings |
| 31,613 |
|
| 28,159 | 105,894 | 81,171 | |||
Accumulated other comprehensive (loss) |
| (2,180) |
|
| (3,856) | |||||
Treasury stock, at cost, 2,530,763 and 2,529,863 shares, respectively, at September 30, 2017 and December 31, 2016 |
| (29,116) |
|
| (29,103) | |||||
Accumulated other comprehensive loss | (6,149) | 1,128 | ||||||||
Treasury stock, at cost, 2,884,868 and 2,768,242 shares at September 30, 2022 and December 31, 2021, respectively | (33,123) | (31,125) | ||||||||
Total Stockholders' Equity |
| 177,568 |
|
| 131,081 | 282,682 | 274,024 | |||
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Total Liabilities and Stockholders' Equity | $ | 1,871,740 |
| $ | 1,708,208 | $ | 3,265,612 | $ | 2,967,528 | |
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See accompanying notes to unaudited consolidated financial statements. | ||||||||||
BCB BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, Except for Per Share Amounts, Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2022 | 2021 | 2022 | 2021 | |||||||
Interest and dividend income: | ||||||||||
Loans, including fees | $ | 32,302 | 26,922 | $ | 87,404 | $ | 80,673 | |||
Mortgage-backed securities | 173 | 159 | 379 | 532 | ||||||
Other investment securities | 1,103 | 814 | 2,990 | 2,345 | ||||||
FHLB stock and other interest earning assets | 822 | 249 | 1,812 | 673 | ||||||
Total interest income | 34,400 | 28,144 | 92,585 | 84,223 | ||||||
Interest expense: | ||||||||||
Deposits: | ||||||||||
Demand | 1,169 | 1,059 | 2,873 | 3,407 | ||||||
Savings and club | 113 | 131 | 331 | 376 | ||||||
Certificates of deposit | 1,087 | 1,344 | 2,916 | 4,975 | ||||||
2,369 | 2,534 | 6,120 | 8,758 | |||||||
Borrowings | 1,080 | 997 | 2,701 | 3,226 | ||||||
Total interest expense | 3,449 | 3,531 | 8,821 | 11,984 | ||||||
Net interest income | 30,951 | 24,613 | 83,764 | 72,239 | ||||||
(Credit) provision for loan losses | - | 680 | (2,575) | 4,840 | ||||||
Net interest income after (credit) provision for loan losses | 30,951 | 23,933 | 86,339 | 67,399 | ||||||
Non-interest income: | ||||||||||
Fees and service charges | 1,251 | 713 | 3,678 | 2,853 | ||||||
BOLI income | 646 | 765 | 2,087 | 2,195 | ||||||
Gain on sales of loans | 18 | 83 | 126 | 575 | ||||||
Loss on bulk sale of impaired loans held in portfolio | - | - | - | (64) | ||||||
Gain on sales of other real estate owned | - | 11 | - | 11 | ||||||
Gain on sale of premises | - | - | - | 371 | ||||||
Realized and unrealized (losses) on equity investments | (559) | (307) | (5,546) | (4) | ||||||
Other | 90 | 52 | 188 | 150 | ||||||
Total non-interest income | 1,446 | 1,317 | 533 | 6,087 | ||||||
Non-interest expense: | ||||||||||
Salaries and employee benefits | 6,944 | 6,511 | 20,395 | 19,568 | ||||||
Occupancy and equipment | 2,608 | 2,983 | 7,976 | 8,604 | ||||||
Data processing and communications | 1,520 | 1,511 | 4,454 | 4,493 | ||||||
Professional fees | 614 | 543 | 1,597 | 1,446 | ||||||
Director fees | 375 | 233 | 992 | 790 | ||||||
Regulatory assessments | 264 | 303 | 812 | 993 | ||||||
Advertising and promotional | 286 | 200 | 681 | 392 | ||||||
Other real estate owned, net | 1 | (11) | 6 | 12 | ||||||
Loss from extinguishment of debt | - | 337 | - | 1,071 | ||||||
Other | 841 | 918 | 2,555 | 2,899 | ||||||
Total non-interest expense | 13,453 | 13,528 | 39,468 | 40,268 | ||||||
Income before income tax provision | 18,944 | 11,722 | 47,404 | 33,218 | ||||||
Income tax provision | 5,552 | 3,400 | 13,897 | 9,729 | ||||||
Net Income | $ | 13,392 | 8,322 | $ | 33,507 | $ | 23,489 | |||
Preferred stock dividends | 174 | 286 | 624 | 852 | ||||||
Net Income available to common stockholders | $ | 13,218 | 8,036 | $ | 32,883 | $ | 22,637 | |||
Net Income per common share-basic and diluted | ||||||||||
Basic | $ | 0.78 | 0.47 | $ | 1.94 | $ | 1.33 | |||
Diluted | $ | 0.76 | 0.47 | $ | 1.89 | $ | 1.31 | |||
Weighted average number of common shares outstanding | ||||||||||
Basic | 16,982 | 17,019 | 16,986 | 17,085 | ||||||
Diluted | 17,356 | 17,222 | 17,369 | 17,242 | ||||||
See accompanying notes to unaudited consolidated financial statements.
BCB BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In Thousands, except for per share amounts,thousands, Unaudited)
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||
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| 2017 |
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| 2016 |
| 2017 |
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| 2016 |
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Interest income: |
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Loans, including fees | $ | 18,399 |
| $ | 17,191 | $ | 53,967 |
| $ | 51,947 |
Mortgage-backed securities |
| 581 |
|
| 167 |
| 1,712 |
|
| 291 |
Municipal bonds and other debt |
| 113 |
|
| - |
| 377 |
|
| - |
FHLB stock and other interest earning assets |
| 313 |
|
| 373 |
| 874 |
|
| 1,005 |
Total interest income |
| 19,406 |
|
| 17,731 |
| 56,930 |
|
| 53,243 |
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Interest expense: |
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Deposits: |
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Demand |
| 700 |
|
| 585 |
| 2,050 |
|
| 1,417 |
Savings and club |
| 100 |
|
| 99 |
| 299 |
|
| 281 |
Certificates of deposit |
| 2,284 |
|
| 2,077 |
| 6,437 |
|
| 6,237 |
|
| 3,084 |
|
| 2,761 |
| 8,786 |
|
| 7,935 |
Borrowed money |
| 748 |
|
| 1,373 |
| 2,902 |
|
| 4,650 |
Total interest expense |
| 3,832 |
|
| 4,134 |
| 11,688 |
|
| 12,585 |
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Net interest income |
| 15,574 |
|
| 13,597 |
| 45,242 |
|
| 40,658 |
Provision (credit) for loan losses |
| 511 |
|
| (301) |
| 1,785 |
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| (75) |
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Net interest income after provision for loan losses |
| 15,063 |
|
| 13,898 |
| 43,457 |
|
| 40,733 |
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Non-interest income: |
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Fees and service charges |
| 749 |
|
| 873 |
| 2,383 |
|
| 2,320 |
Gain on sales of loans |
| 540 |
|
| 718 |
| 1,611 |
|
| 2,671 |
Loss on bulk sale of impaired loans held in portfolio |
| - |
|
| (88) |
| - |
|
| (373) |
Gain on sales of other real estate owned |
| 222 |
|
| - |
| 1,570 |
|
| - |
Gain on sale of investment securities |
| 97 |
|
| - |
| 97 |
|
| - |
Other |
| 25 |
|
| 27 |
| 307 |
|
| 72 |
Total non-interest income |
| 1,633 |
|
| 1,530 |
| 5,968 |
|
| 4,690 |
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Non-interest expense: |
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Salaries and employee benefits |
| 5,925 |
|
| 6,747 |
| 17,893 |
|
| 18,931 |
Occupancy and equipment |
| 2,038 |
|
| 2,192 |
| 6,185 |
|
| 6,107 |
Data processing and service fees |
| 703 |
|
| 358 |
| 2,034 |
|
| 2,253 |
Professional fees |
| 491 |
|
| 457 |
| 2,237 |
|
| 1,367 |
Director fees |
| 198 |
|
| 183 |
| 576 |
|
| 519 |
Regulatory assessments |
| 318 |
|
| 429 |
| 1,010 |
|
| 1,139 |
Advertising and promotional |
| 117 |
|
| 482 |
| 375 |
|
| 1,235 |
Other real estate owned, net |
| 9 |
|
| 36 |
| 64 |
|
| 146 |
Other |
| 1,500 |
|
| 1,459 |
| 4,635 |
|
| 4,549 |
Total non-interest expense |
| 11,299 |
|
| 12,343 |
| 35,009 |
|
| 36,246 |
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Income before income tax provision |
| 5,397 |
|
| 3,085 |
| 14,416 |
|
| 9,177 |
Income tax provision |
| 2,180 |
|
| 1,171 |
| 5,773 |
|
| 3,647 |
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Net Income | $ | 3,217 |
| $ | 1,914 | $ | 8,643 |
| $ | 5,530 |
Preferred stock dividends |
| 166 |
|
| 234 |
| 449 |
|
| 702 |
Net Income available to common stockholders | $ | 3,051 |
| $ | 1,680 | $ | 8,194 |
| $ | 4,828 |
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Net Income per common share-basic and diluted |
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Basic | $ | 0.25 |
| $ | 0.15 | $ | 0.71 |
| $ | 0.43 |
Diluted | $ | 0.25 |
| $ | 0.15 | $ | 0.70 |
| $ | 0.43 |
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Weighted average number of common shares outstanding |
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Basic |
| 12,142 |
|
| 11,246 |
| 11,572 |
|
| 11,230 |
Diluted |
| 12,226 |
|
| 11,258 |
| 11,664 |
|
| 11,236 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Net Income | $ | 13,392 | $ | 8,322 | $ | 33,507 | $ | 23,489 | |||
Other comprehensive loss, net of tax: | |||||||||||
Unrealized (losses) gains on available-for-sale debt securities: | |||||||||||
Unrealized holding (losses) gains arising during the period | (4,191) | (161) | (9,675) | (12) | |||||||
Tax Effect | 1,039 | 40 | 2,398 | 3 | |||||||
Other comprehensive loss | (3,152) | (121) | (7,277) | (9) | |||||||
Comprehensive income | $ | 10,240 | $ | 8,201 | $ | 26,230 | $ | 23,480 | |||
See accompanying notes to unaudited consolidated financial statements.
BCB BANCORP INC. AND SUBSIDIARIES
Consolidated StatementsStatement of Comprehensive Income
(In Thousands,thousands, Except Share and Per Share Data, Unaudited)
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
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Net Income | $ | 3,217 |
| $ | 1,914 |
| $ | 8,643 |
| $ | 5,530 |
Other comprehensive income, net of tax: |
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Unrealized gains on available-for-sale securities: |
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Unrealized holding gains (losses) arising during the period (a) |
| 293 |
|
| (297) |
|
| 1,676 |
|
| (144) |
Benefit plans (b) |
| - |
|
| (24) |
|
| - |
|
| (39) |
Other comprehensive income (loss) |
| 293 |
|
| (321) |
|
| 1,676 |
|
| (183) |
Comprehensive income | $ | 3,510 |
| $ | 1,593 |
| $ | 10,319 |
| $ | 5,347 |
Preferred | Common | Additional | Retained | Treasury | Accumulated | Total | ||||||||||||||
Balance at January 1, 2022 | $ | - | $ | - | $ | 222,850 | $ | 81,171 | $ | (31,125) | $ | 1,128 | $ | 274,024 | ||||||
Net income | - | - | - | 33,507 | - | - | 33,507 | |||||||||||||
Other comprehensive income | - | - | - | - | - | (7,277) | (7,277) | |||||||||||||
Stock-based compensation expense | - | - | 458 | - | - | - | 458 | |||||||||||||
Exercise of stock options (111,950 shares) | - | - | 3 | - | - | - | 3 | |||||||||||||
Treasury stock purchases (71,513 shares) | - | - | - | - | (1,998) | - | (1,998) | |||||||||||||
Dividends payable on Series D 4.5%, Series G 6%, Series H 3.5%, and Series I 3.0% noncumulative perpetual preferred stock | - | - | - | (624) | - | - | (624) | |||||||||||||
Redemption of Series D and Series G Preferred Stock | - | - | (14,730) | - | - | - | (14,730) | |||||||||||||
Issuance of Series I Preferred Stock | - | - | 6,809 | - | - | - | 6,809 | |||||||||||||
Cash dividends on common stock ($0.48 per share declared) | - | - | (7,809) | - | - | (7,809) | ||||||||||||||
Dividend reinvestment plan | - | - | 351 | (351) | - | - | - | |||||||||||||
Stock purchase plan | - | - | 319 | - | - | - | 319 | |||||||||||||
Balance at September 30, 2022 | $ | - | $ | - | $ | 216,060 | $ | 105,894 | $ | (33,123) | $ | (6,149) | $ | 282,682 | ||||||
Preferred | Common | Additional | Retained | Treasury | Accumulated | Total | ||||||||||||||
Balance at July 1, 2022 | $ | - | $ | - | $ | 211,130 | $ | 95,393 | $ | (31,889) | $ | (2,997) | $ | 271,637 | ||||||
Net income | - | - | - | 13,392 | - | - | 13,392 | |||||||||||||
Other comprehensive income | - | - | - | - | - | (3,152) | (3,152) | |||||||||||||
Stock-based compensation expense | - | - | 267 | - | - | - | 267 | |||||||||||||
Exercise stock option expense (111,750 shares) | - | - | 3 | - | - | - | 3 | |||||||||||||
Treasury stock purchases (116,626 shares) | - | - | - | - | (1,234) | - | (1,234) | |||||||||||||
Dividends payable on Series H 3.5%, and Series I 3.0% noncumulative perpetual preferred stock | - | - | - | (174) | - | - | (174) | |||||||||||||
Issuance of Series I preferred stock | - | - | 4,439 | - | - | - | 4,439 | |||||||||||||
Cash dividends on common stock ($0.16 per share declared) | - | - | - | (2,596) | - | - | (2,596) | |||||||||||||
Dividend reinvestment plan | - | - | 121 | (121) | - | - | - | |||||||||||||
Stock purchase plan | - | - | 100 | - | - | - | 100 | |||||||||||||
Balance at September 30, 2022 | $ | - | $ | - | $ | 216,060 | $ | 105,894 | $ | (33,123) | $ | (6,149) | $ | 282,682 | ||||||
|
|
|
|
See accompanying notes to unaudited consolidated financial statements.
BCB BANCORP INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders’ Equity
(In Thousands, except sharethousands, Except Share and per share data,Per Share Data, Unaudited)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred Stock |
| Common Stock |
| Additional Paid-In Capital |
| Retained Earnings |
| Treasury Stock |
| Accumulated Other Comprehensive Income (Loss) |
| Total | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance at January 1, 2017 | $ | - |
| $ | - |
| $ | 135,881 |
| $ | 28,159 |
| $ | (29,103) |
| $ | (3,856) |
| $ | 131,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Stock |
| - |
|
| - |
|
| 42,759 |
|
| - |
|
| - |
|
| - |
|
| 42,759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption of Series A and B Preferred Stock |
| - |
|
| - |
|
| (11,720) |
|
| - |
|
| - |
|
| - |
|
| (11,720) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Series D Preferred Stock |
| - |
|
| - |
|
| 9,497 |
|
| - |
|
| - |
|
| - |
|
| 9,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of Stock Options (700 shares) |
| - |
|
| - |
|
| 2 |
|
| - |
|
| - |
|
| - |
|
| 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
| - |
|
| - |
|
| 126 |
|
| - |
|
| - |
|
| - |
|
| 126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury Stock purchases |
| - |
|
| - |
|
| - |
|
| - |
|
| (13) |
|
| - |
|
| (13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends payable on Series C 6% and Series D 4.5% noncumulative perpetual preferred stock |
| - |
|
| - |
|
| - |
|
| (449) |
|
| - |
|
| - |
|
| (449) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends on common stock ($0.14 per share declared) |
| - |
|
| - |
|
| - |
|
| (4,519) |
|
| - |
|
| - |
|
| (4,519) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Reinvestment Plan |
| - |
|
| - |
|
| 221 |
|
| (221) |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Purchase Plan |
| - |
|
| - |
|
| 485 |
|
| - |
|
| - |
|
| - |
|
| 485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| - |
|
| - |
|
| - |
|
| 8,643 |
|
| - |
|
| - |
|
| 8,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 1,676 |
|
| 1,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance at September 30, 2017 | $ | - |
| $ | - |
| $ | 177,251 |
| $ | 31,613 |
| $ | (29,116) |
| $ | (2,180) |
| $ | 177,568 |
Preferred | Common | Additional | Retained | Treasury | Accumulated | Total | ||||||||||||||
Balance at January 1, 2021 | $ | - | $ | - | $ | 217,999 | $ | 58,335 | $ | (26,918) | $ | (205) | $ | 249,211 | ||||||
Net income | - | - | - | 23,489 | - | - | 23,489 | |||||||||||||
Other comprehensive income | - | - | - | - | - | (9) | (9) | |||||||||||||
Stock-based compensation expense | - | - | 337 | - | - | - | 337 | |||||||||||||
Exercise of stock options (31,000 shares) |
|
| 281 | 281 | ||||||||||||||||
Treasury stock purchases (189,366 shares) | - | - | - | - | (2,511) | - | (2,511) | |||||||||||||
Dividends payable on Series D 4.5%, and Series G 6%, and Series H 3.5% noncumulative perpetual preferred stock | - | - | - | (852) | - | - | (852) | |||||||||||||
Cash dividends on common stock ($0.14 per share declared for the first two quarters ended June 30, 2021 and $0.16 per share for the quarter ended September 30, 2021 | - | - | - | (7,241) | - | - | (7,241) | |||||||||||||
Dividend reinvestment plan | - | - | 343 | (343) | - | - | - | |||||||||||||
Stock purchase plan | - | - | 376 | - | - | - | 376 | |||||||||||||
Balance at September 30, 2021 | $ | - | $ | - | $ | 219,336 | $ | 73,388 | $ | (29,429) | $ | (214) | $ | 263,081 | ||||||
Preferred | Common | Additional | Retained | Treasury | Accumulated | Total | ||||||||||||||
Balance at July 1, 2021 | $ | - | $ | - | $ | 218,691 | $ | 68,123 | $ | (28,197) | $ | (93) | $ | 258,524 | ||||||
Net income | - | - | - | 8,322 | - | - | 8,322 | |||||||||||||
Other comprehensive income | - | - | - | - | - | (121) | (121) | |||||||||||||
Stock-based compensation expense | - | - | 86 | - | - | - | 86 | |||||||||||||
Exercise Stock Options Expense (31,000 shares) | - | - | 281 | - | - | - | 281 | |||||||||||||
Treasury stock purchases (91,491 shares) | - | - | - | - | (1,232) | - | (1,232) | |||||||||||||
Dividends payable on Series D 4.5%, Series G 6%, and Series H 3.5% noncumulative perpetual preferred stock | - | - | - | (286) | - | - | (286) | |||||||||||||
Cash dividends on common stock ($0.16 per share declared) | - | - | - | (2,647) | - | - | (2,647) | |||||||||||||
Dividend reinvestment plan | - | - | 124 | (124) | - | - | - | |||||||||||||
Stock purchase plan | - | - | 154 | - | - | - | 154 | |||||||||||||
Balance at September 30, 2021 | $ | - | $ | - | $ | 219,336 | $ | 73,388 | $ | (29,429) | $ | (214) | $ | 263,081 | ||||||
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|
|
|
|
|
|
| Preferred Stock |
| Common Stock |
| Additional Paid-In Capital |
| Retained Earnings |
| Treasury Stock |
| Accumulated Other Comprehensive Income (Loss) |
| Total | |||||||
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Beginning Balance at January 1, 2016 | $ | - |
| $ | 879 |
| $ | 135,977 |
| $ | 27,382 |
| $ | (29,096) |
| $ | (1,598) |
| $ | 133,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption of Series A Preferred Stock |
| - |
|
| - |
|
| (1,710) |
|
| - |
|
| - |
|
| - |
|
| (1,710) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
| - |
|
| - |
|
| 84 |
|
| - |
|
| - |
|
| - |
|
| 84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends payable on Series A, B and C 6% noncumulative perpetual preferred stock |
| - |
|
| - |
|
| - |
|
| (702) |
|
| - |
|
| - |
|
| (702) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends on Common Stock ($0.14 per share) declared |
| - |
|
| - |
|
| - |
|
| (4,509) |
|
| - |
|
| - |
|
| (4,509) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Reinvestment Plan |
| - |
|
| 3 |
|
| 204 |
|
| (204) |
|
| - |
|
| - |
|
| 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Purchase Plan |
| - |
|
| - |
|
| 242 |
|
| - |
|
| - |
|
| - |
|
| 242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| - |
|
| - |
|
| - |
|
| 5,530 |
|
| - |
|
| - |
|
| 5,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (183) |
|
| (183) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance at September 30, 2016 | $ | - |
| $ | 882 |
| $ | 134,797 |
| $ | 27,497 |
| $ | (29,096) |
| $ | (1,781) |
| $ | 132,299 |
See accompanying notes to unaudited consolidated financial statements.
BCB BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands,thousands, Unaudited)
|
|
|
|
|
|
| Nine Months Ended September 30, | ||||
| 2017 |
| 2016 | ||
Cash Flows from Operating Activities : |
|
|
|
|
|
Net Income | $ | 8,643 |
| $ | 5,530 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
Depreciation of premises and equipment |
| 1,927 |
|
| 1,790 |
Amortization and accretion, net |
| (1,013) |
|
| (1,440) |
Provision (credit) for loan losses |
| 1,785 |
|
| (75) |
Deferred income tax |
| 2,314 |
|
| 1,460 |
Loans originated for sale |
| (19,371) |
|
| (26,568) |
Proceeds from sales of loans originated for sale |
| 22,651 |
|
| 29,748 |
Gain on sales of loans originated for sale |
| (1,611) |
|
| (2,671) |
Gain on sales of securities available for sale |
| (97) |
|
| - |
Fair value adjustment of OREO |
| - |
|
| 392 |
Loss on bulk sale of impaired loans held in portfolio |
| - |
|
| 373 |
Stock compensation expense |
| 126 |
|
| 84 |
(Increase) decrease in interest receivable |
| (235) |
|
| 366 |
Decrease (increase) in other assets |
| 92 |
|
| (2,353) |
(Decrease) in accrued interest payable |
| (209) |
|
| (298) |
Increase in other liabilities |
| 311 |
|
| 552 |
Net Cash Provided by Operating Activities |
| 15,313 |
|
| 6,890 |
Cash flows from investing activities: |
|
|
|
|
|
Proceeds from calls on securities available for sale |
| 22,423 |
|
| 1,764 |
Purchases of securities available for sale |
| (46,298) |
|
| (45,332) |
Proceeds from sales of other real estate owned |
| 4,813 |
|
| 952 |
Proceeds from bulk sale of impaired loans held |
| - |
|
| 1,180 |
Proceeds from sales of securities available for sale |
| 21,165 |
|
| - |
Gains on sales of other real estate owned |
| (1,570) |
|
| - |
Purchase of interest-bearing time deposits |
| - |
|
| 258 |
Net increase in loans receivable |
| (135,657) |
|
| (13,837) |
Additions to premises and equipment |
| (1,804) |
|
| (3,303) |
Redemption of Federal Home Loan Bank of New York stock |
| 1,210 |
|
| 1,720 |
Net Cash Used In Investing Activities |
| (135,718) |
|
| (56,598) |
Cash flows from financing ofctivities: |
|
|
|
|
|
Net increase in deposits |
| 153,943 |
|
| 106,456 |
Proceeds from long-term debt |
| 38,000 |
|
| 10,000 |
Repayments of long-term debt |
| (55,000) |
|
| (55,000) |
Net change in short-term debt |
| (20,000) |
|
| - |
Purchases/adjustments of treasury stock |
| (13) |
|
| - |
Cash dividend paid on common stock |
| (4,519) |
|
| (4,509) |
Cash dividend paid on preferred stock |
| (449) |
|
| (702) |
Net proceeds from issuance of common stock |
| 43,244 |
|
| 245 |
Net proceeds from issuance of preferred stock |
| 9,497 |
|
| - |
Net payment on redemption of preferred stock |
| (11,720) |
|
| (1,710) |
Exercise of stock options |
| 2 |
|
| - |
Net Cash Provided by Financing Activities |
| 152,985 |
|
| 54,780 |
|
|
|
|
|
|
Net Increase In Cash and Cash Equivalents |
| 32,580 |
|
| 5,072 |
Cash and Cash Equivalents-Beginning |
| 65,038 |
|
| 132,635 |
|
|
|
|
|
|
Cash and Cash Equivalents-Ending | $ | 97,618 |
| $ | 137,707 |
|
|
|
|
|
|
Supplementary Cash Flow Information: |
|
|
|
|
|
Cash paid during the year for: |
|
|
|
|
|
Income taxes | $ | 4,285 |
| $ | 5,317 |
Interest | $ | 11,898 |
| $ | 12,883 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash items: |
|
|
|
|
|
Transfer of loans to other real estate owned | $ | 1,128 |
| $ | 2,747 |
Nine Months Ended September 30, | |||||
2022 | 2021 | ||||
Cash Flows from Operating Activities: | |||||
Net Income | $ | 33,507 | $ | 23,489 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation of premises and equipment | 1,735 | 2,156 | |||
Amortization and accretion, net | (1,005) | (406) | |||
(Credit) provision for loan losses | (2,575) | 4,840 | |||
Deferred income tax expense (benefit) | (505) | (938) | |||
Loans originated for sale | (5,733) | (21,927) | |||
Proceeds from sales of loans | 6,811 | 25,119 | |||
Gain on sales of loans originated for sale | (126) | (575) | |||
Gain on sale of premises | - | (371) | |||
Realized and unrealized losses on equity investments | 5,546 | 4 | |||
Gain on sales of other real estate owned | - | (11) | |||
Loss on bulk sale of impaired loans held in portfolio | - | 64 | |||
Stock-based compensation expense | 458 | 337 | |||
BOLI Income | (2,087) | (2,195) | |||
(Increase) decrease in interest receivable | (1,910) | 2,536 | |||
(Increase) decrease in other assets | 700 | 1,313 | |||
Decrease in accrued interest payable | (214) | (803) | |||
(Decrease) increase in other liabilities | (1,841) | 454 | |||
Net Cash Provided by Operating Activities | 32,761 | 33,086 | |||
Cash flows from investing activities: | |||||
Proceeds from repayments, calls, and maturities on securities available for sale | 9,310 | 29,245 | |||
Purchases of securities | (26,968) | (18,345) | |||
Proceeds from bulk sale of impaired loans | - | 3,442 | |||
Proceeds from sales of securities | 1,232 | - | |||
Purchase of loans | - | - | |||
Net increase in loans receivable | (477,429) | (1,671) | |||
Purchases of BOLI | - | (8,500) | |||
Proceeds from BOLI | 3,500 | - | |||
Proceeds from sales of other real estate owned | - | 425 | |||
Additions to premises and equipment | (221) | (254) | |||
Proceeds from the sale of fixed assets and premises | - | 742 | |||
Redemption of Federal Home Loan Bank of New York stock | (6,304) | 3,131 | |||
Net Cash Used In Investing Activities | (496,880) | 8,215 | |||
Cash flows from financing activities: | |||||
Net increase in deposits | 151,544 | 223,355 | |||
Proceeds from Federal Home Loan Bank of New York Advances | 140,000 | 10,000 | |||
Repayments of Federal Home Loan Bank of New York Advances | - | (83,000) | |||
Purchases of treasury stock | (1,998) | (2,511) | |||
Cash dividends paid on common stock | (7,809) | (7,241) | |||
Cash dividends paid on preferred stock | (624) | (852) | |||
Net proceeds from issuance of common stock | 319 | 376 | |||
Net proceeds from issuance of preferred stock | 6,809 | - | |||
Net payment for redemption of preferred stock | (14,730) | - | |||
Proceeds from exercise of stock options | 3 | 281 | |||
Net Cash Provided by Financing Activities | 273,514 | 140,408 | |||
Net Increase (Decrease) Increase in Cash and Cash Equivalents | (190,605) | 181,709 | |||
Cash and Cash Equivalents-Beginning | 411,629 | 261,229 | |||
Cash and Cash Equivalents-Ending | $ | 221,024 | $ | 442,938 | |
Supplementary Cash Flow Information: | |||||
Cash paid during the period for: | |||||
Income taxes | $ | 16,532 | $ | 10,150 | |
Interest | 9,036 | 12,787 | |||
See accompanying notes to unaudited consolidated financial statements.
BCB Bancorp Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
Note 1 – Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of BCB Bancorp, Inc. (the “Company”) and the Company’s wholly owned subsidiaries, BCB Community Bank (the “Bank”), BCB Holding Company Investment Company, BCB New YorkCorporation, Special Asset Management, Inc.REO I, LLC., and Pamrapo Service Corporation.Special Asset REO II, LLC. The Company’s business is conducted principally through the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and, therefore, do not necessarily include all information that would be included in audited consolidated financial statements. The information furnished reflects all adjustments that are, in the opinion of management, necessary for a fair presentation of consolidated financial condition and results of operations. All such adjustments are of a normal recurring nature. These results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 or any other future period. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statement of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates.
These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2016,2021, which are included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission. In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred between September 30, 2017,December 31, 2021 and the date these consolidated financial statements were issued. See Note 9 related
Risks and Uncertainties - We are subject to subsequent events. risks and uncertainties as a result of the COVID-19 pandemic. The full fallout from the pandemic and its long-term impact on economies, markets, industries and financial institutions is not known at this time, and it may take years to fully determine COVID-19’s economic impact.
Recent Accounting Pronouncements
In May 2014,The occurrence of events which adversely affect the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contractsglobal, national and regional economies may have a negative impact on our business. Like other financial institutions, our business relies upon the ability and willingness of our customers to transact business with Customers (Topic 606),us, including banking, borrowing and other financial transactions. A strong and stable economy at each of the local, federal and global levels is often a critical component of consumer confidence and typically correlates positively with our customers’ ability and willingness to transact certain types of business with us. Local and global events outside of our control which will supersededisrupt the current revenue recognition requirements in Topic 605, Revenue Recognition. The ASUNew Jersey, New York, United States and/or global economy may therefore negatively impact our business and financial condition. A public health crisis such as the COVID-19 pandemic is based onno exception, and its adverse health and economic effects may adversely impact our business and financial condition. As of the principle that revenue is recognized to depictdate of issuance of the transfer of goods or services to customers in an amount that reflectscondensed consolidated financial statements, the considerationextent to which the entity expects to be entitled in exchange for those goodsCOVID-19 pandemic may impact the Company’s financial condition, liquidity, or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertaintyresults of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. operations is uncertain.
Note 2 - Recent Accounting Pronouncements
In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year. The new guidance will be effective for public companies for periods beginning after December 15, 2017 with private companies provided a one-year deferral until periods beginning after December 15, 2018. The scope of ASC 606 excludes net interest income or other revenues associated with financial assets and liabilities, including loans, leases, securities and derivatives, which would then exclude the majority of the Company's revenues. However, the recognition and measurement of certain non-interest income items such as gain on sale of other real estate owned and deposit-related fees, could be affected by ASC 606.
In FebruaryJune 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), which will supersede the current lease requirements in Topic 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of income. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new guidance will be effective for years beginning after December 15, 2018 for public companies and for years beginning after December 15, 2019 for private companies. Once effective, the standard will be applied using a modified retrospective transition method to the beginning of the earliest period presented. The Company is currently assessing the impacts this new standard will have on its consolidated financial statements.
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses. Losses ASU 2016-13, and related guidance, requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the consolidated financial statements. For public business entities that are U.S. Securities and Exchange Commission filers, theThe amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.the Company in 2023. The Company has begun evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and results of operations. The effect of this change cannot be ascertained at this point, and will depend upon factors including asset components, asset quality and market conditions at the adoption date.
In May 2017, The Company has created a Current Expected Credit Loss (“CECL”) task group comprised of members of its finance, credit administration, lending, internal audit, loan operations, compliance, and information systems units. The CECL task group has become familiar with the FASB issuedprovisions of ASU 2017-09, “Compensation-Stock Compensation (Topic 718): Scope2016-13 and is in the process of Modification Accounting”. The amendments in this update requires that an entity account for the effects of a modification unless the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified, the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. ASU 2017-09 is effective for all entities on a prospective basis for annual periods beginning after December 15, 2017. Due to prospective application,implementing the new guidance, which includes, but is not expectedlimited to: (1) identifying segments and sub-segments within the loan portfolio that have similar risk characteristics; (2) determining the appropriate methodology for each segment; (3) implementing changes that are necessary to have an impact onits core operating system and interfaces to be able to capture appropriate data requirements; and (4) evaluating qualitative and economic factors to develop appropriate forecasts for integration into the Company’s Consolidated Financial Statements upon adoption.
ASU 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities." ASU 2017-08 was issued to enhance the accounting for the amortization of premiums for purchased callable debt securities. This amendment requires that the amortization premium be shortened to the earliest call date. For public business entities, ASU 2017-08 is effective for fiscal years after December 15, 2018, and interim periods within those fiscal years.model. The Company is currently evaluating the impact of the adoptions of ASU 2017-08effect this guidance may have on its consolidatedoperating results and/or financial statements.position, including assessing any potential impact on its capital.
6
Note 23 – Reclassification
Certain amounts as of December 31, 20162021 and for the three and nine month periodsperiod ended September 30, 2016, respectively2021 have been reclassified to conform to the current period’s presentation. These changes had no effect on the Company’s results of operations or financial position.
Note 4 – Equity Incentive Plans
Note 3 – Pension and Other PostretirementEquity Incentive Plans(Continued)
The Company, under the plan approved by its stockholdersshareholders on April 28, 2011 (“2011 Stock Plan”), authorized the issuance of up to 900,000 shares of common stock of the Company pursuant to grants of stock options. Employees and directors of the Company and the Bank arewere eligible to participate in the 2011 Stock Plan. All stock options were granted in the form of either "incentive" stock options or "non-qualified" stock options. Incentive stock options have certain tax advantages that must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees were permitted to receive incentive stock options. No awards were permitted to be granted under this Plan after April 26, 2021 pursuant to the terms of the 2011 Equity Incentive Plan (defined below).
The Company, under the plan approved by its shareholders on April 26, 2018 (“2018 Equity Incentive Plan”), authorized the issuance of up to 1,000,000 shares of common stock of the Company pursuant to grants of stock options, restricted stock awards, restricted stock units, and performance awards. Employees and directors of the Company and the Bank are eligible to participate in the 2018 Equity Incentive Plan. All stock options will be granted in the form of either "incentive" stock options or "non-qualified" stock options. Incentive stock options have certain tax advantages that must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees are permitted to receive incentive stock options. On September 13, 2017, a grant
Under the 2018 Equity Incentive Plan, on February 10, 2021, grants of 350,00066,000 options, wasin aggregate, were declared for members of the Board of Directors of the Bank and Executive Officersthe Company which vest atover a rate of 10% per year and 20% per year, respectively,5-year period, commencing on the first anniversary of the grant date. The exercise price was recorded as of close of business on February 10, 2021. On September 16, 2016, a grantFebruary 10, 2021, awards of 160,000 options was26,400 shares of restricted stock, in aggregate, were declared for members of the Board of Directors of the Bank and the Chief Executive Officer,Company, which vest atover a rate4-year period, commencing on the anniversary of 10% per yearthe award date. On February 19, 2021, an award of 300 shares of restricted stock was declared for an officer of the Bank and 33% per year, respectively,the Company, which vests over a 2-year period, commencing on the anniversary of the award date.
Further, on April 26, 2021, grants of 6,800 options, in aggregate, were declared for certain officers of the Bank and the Company, which vest over a 5-year period commencing on the first anniversary of the grant date. The exercise price was recorded as of close of business on April 26, 2021.
On December 2, 2015, a grantJanuary 12, 2022, awards of 120,000 options and on March 7, 2014, a grant33,000 shares of 110,000 options wasrestricted stock, in aggregate, were declared for certain members of the Board of Directors of the Bank and the Company, which vest atover a rate of 10% per year, over ten years4-year period, commencing on the first anniversary of the grantaward date.
Note 4 – Equity Incentive Plans (Continued)
The following table presents a summary of the status of the Company’s restricted shares as of September 30, 2022 and 2021.
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| Number of Option |
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| Shares |
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| Range of Exercise Prices |
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| Weighted Average Exercise Price |
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Outstanding at December 31, 2016 |
| 575,000 |
| $ | 8.93-13.32 |
| $ | 10.78 |
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Options granted |
| 350,000 |
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| 12.40 |
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| 12.40 |
Options exercised |
| (700) |
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| 10.55 |
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| - |
Options forfeited |
| (35,000) |
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| 8.93-13.32 |
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| - |
Options expired |
| - |
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Outstanding at September 30, 2017 |
| 889,300 |
| $ | 8.93-13.32 |
| $ | 11.42 |
Number of Shares Awarded | Weighted Average Grant Date Fair Value | |||
Non-vested at January 1, 2022 | 26,700 | $ | 12.89 | |
Granted | 69,000 | 17.05 | ||
Vested | (9,150) | 13.91 | ||
Forfeited | - | - | ||
Non-vested at September 30, 2022 | 86,550 | $ | 16.19 |
Restricted stock expense for the nine months ended September 30, 2022 and September 30, 2021 was $278,000 and $162,000, respectively. Expected future expenses relating to the non-vested restricted shares outstanding as of September 30, 2022 was approximately $1.1 million over a weighted average period of 1.65 years.
The following table presents a summary of the status of the Company’s outstanding stock option awards as of September 30, 2022.
| Number of Option Shares | Range of Exercise Prices | Weighted Average Exercise Price | |||||
Outstanding at January 1, 2022 | 1,194,425 | $ | 9.02-13.68 | $ | 11.64 | |||
Options granted | - | - | - | |||||
Options exercised | (111,950) | 9.02-13.68 | 11.52 | |||||
Options forfeited | - | - | - | |||||
Options expired | - | - | - | |||||
Outstanding at September 30, 2022 | 1,082,475 | $ | 9.02-13.68 | $ | 11.65 |
As of September 30, 2017,2022, stock options which were granted and were exercisable totaled 139,367 stock options.
844,035. It is Company policy to issue new shares upon share option exercise.
Compensation expense for the nine months ended September 30, 2022 and September 30, 2021 was $180,000 and $175,000, respectively. Expected future compensation expense relating to the 749,933238,440 shares of unvested options outstanding as of September 30, 20172022 was $1,783,000$418,000 over a weighted average period of 6.603.91years.
Note 45 – Net Income per Common Share
Basic net income per common share is computed by dividing net income less dividends on preferred stock by the weighted average number of shares of common stock outstanding. The diluted net income per common share is computed by adjusting the weighted average number of shares of common stock outstanding to include the effects of outstanding stock options, if dilutive, using the treasury stock method. Dilution is not applicable in periods of net loss. For the three and nine months ended September 30, 20172022 and 2016,2021, the difference in the weighted average number of basic and diluted common shares was due solely to the effects of outstanding stock options. No adjustments to net income were necessary in calculating basic and diluted net income per share. For the three months ended September 30, 20172022 and 20162021, the weighted average number of outstanding options considered to be anti-dilutive were 0 and 24,8230, respectively. For the nine months ended September 30, 20172022 and 20162021, the weighted average number of outstanding options considered to be anti-dilutive were 0 and 32,6197,015, respectively.
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:
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| For the Three Months Ended September 30, | ||||||||||||||
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| 2017 |
| 2016 | ||||||||||||
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| Income |
| Shares |
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| Per Share |
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| Income |
| Shares |
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| Per Share |
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| (Denominator) |
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| Amount |
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| Amount |
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Net income available to common stockholders |
| $ | 3,051 |
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| $ | 1,680 |
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Basic earnings per share- |
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Income available to |
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Common stockholders |
| $ | 3,051 |
| 12,142 |
| $ | 0.25 |
| $ | 1,680 |
| 11,246 |
| $ | 0.15 |
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Effect of dilutive securities: |
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Stock options |
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| - |
| 84 |
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| - |
| 12 |
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Diluted earnings per share- |
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Income available to |
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Common stockholders |
| $ | 3,051 |
| 12,226 |
| $ | 0.25 |
| $ | 1,680 |
| 11,258 |
| $ | 0.15 |
For the Three Months Ended September 30, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Income | Shares | Per Share | Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||
(In Thousands, except per share data) | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||
Income available to common stockholders | $ | 13,218 | 16,982 | $ | 0.78 | $ | 8,036 | 17,019 | $ | 0.47 | ||||||
Effect of dilutive securities: | - | - | - | - | ||||||||||||
Stock options | - | 374 | - | 203 | ||||||||||||
Diluted earnings per share: | ||||||||||||||||
Income available to common stockholders | $ | 13,218 | 17,356 | $ | 0.76 | $ | 8,036 | 17,222 | $ | 0.47 | ||||||
For the Nine Months Ended September 30, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Income | Shares | Per Share | Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||
(In Thousands, except per share data) | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||
Income available to common stockholders | $ | 32,883 | 16,986 | $ | 1.94 | $ | 22,637 | 17,085 | $ | 1.33 | ||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options | - | 383 | - | 157 | ||||||||||||
Diluted earnings per share: | ||||||||||||||||
Income available to common stockholders | $ | 32,883 | 17,369 | $ | 1.89 | $ | 22,637 | 17,242 | $ | 1.31 | ||||||
Note 6 - Securities
Equity Securities
Equity securities are defined to include (a) preferred, common and other ownership interests in entities including partnerships, joint ventures and limited liability companies and (b) rights to acquire or dispose of ownership interest in entities at fixed or determinable prices.
The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2022 and 2021:
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| For the Nine Months Ended September 30, | ||||||||||||||
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| 2017 |
| 2016 | ||||||||||||
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| Income |
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| Per Share |
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| Shares |
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| Per Share |
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Net income available to common stockholders |
| $ | 8,194 |
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| $ | 4,828 |
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Basic earnings per share- |
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Income available to |
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Common stockholders |
| $ | 8,194 |
| 11,572 |
| $ | 0.71 |
| $ | 4,828 |
| 11,230 |
| $ | 0.43 |
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Effect of dilutive securities: |
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Stock options |
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| - |
| 92 |
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| - |
| 6 |
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Diluted earnings per share- |
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Income available to |
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Common stockholders |
| $ | 8,194 |
| 11,664 |
| $ | 0.70 |
| $ | 4,828 |
| 11,236 |
| $ | 0.43 |
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For the three months ended September 30, | For the nine months ended September 30, | |||||||||||
(In Thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||
Net (losses) gains recognized during the period on equity securities held at the reporting date | $ | (559) | $ | (307) | $ | (5,487) | $ | (4) | ||||
Net losses recognized during the period on equity securities sold during the period | - | - | (59) | - | ||||||||
Realized and unrealized losses on equity investments during the reporting period | $ | (559) | $ | (307) | $ | (5,546) | $ | (4) | ||||
Note 6 - Securities (continued)
Note 5 –Debt Securities Available for Sale
The following tables present by maturity the amortized cost, gross unrealized gains and losses on, and fair value of, securities available for sale as of September 30, 20172022 and December 31, 2016: 2021:
September 30, 2022 | |||||||||||
| Gross |
| Gross |
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Amortized | Unrealized | Unrealized | |||||||||
Cost | Gains | Losses | Fair Value | ||||||||
(In Thousands) | |||||||||||
Residential Mortgage-backed securities: |
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Less than one year | $ | - | $ | - | $ | - | $ | - | |||
More than one to five years | - | - | - | - | |||||||
More than five to ten years | 5,754 |
| - |
| 401 |
| 5,353 | ||||
More than ten years | 23,708 | - | 3,620 | 20,088 | |||||||
Sub-total: | 29,462 | - | 4,021 | 25,441 | |||||||
Corporate Debt securities: | |||||||||||
More than five to ten years | 66,499 | - | 3,199 | 63,300 | |||||||
Sub-total: | 66,499 | - | 3,199 | 63,300 | |||||||
Municipal obligations: | |||||||||||
More than ten years | 4,025 | - | 15 |
| 4,010 | ||||||
Sub-total: | 4,025 | - | 15 | 4,010 | |||||||
Total securities | $ | 99,986 |
| $ | - |
| $ | 7,235 |
| $ | 92,751 |
December 31, 2021 | |||||||||||
| Gross |
| Gross |
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Amortized | Unrealized | Unrealized | |||||||||
Cost | Gains | Losses | Fair Value | ||||||||
(In Thousands) | |||||||||||
Residential Mortgage-backed securities: |
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Due within one year | $ | 2,952 | $ | - | $ | 114 | $ | 2,838 | |||
More than one to five years | 53 | - | - | 53 | |||||||
More than five to ten years | 6,317 | 165 | 27 | 6,455 | |||||||
More than ten years | 21,555 | 298 | 287 | 21,566 | |||||||
Sub-total: | 30,877 | 463 | 428 | 30,912 | |||||||
Corporate Debt securities: | |||||||||||
More than five to ten years | 47,765 | 2,465 | 159 | 50,071 | |||||||
Sub-total: | 47,765 | 2,465 | 159 | 50,071 | |||||||
Municipal obligations: | |||||||||||
Due after ten years | 4,104 | 99 | - | 4,203 | |||||||
Sub-total: | 4,104 | 99 | - | 4,203 | |||||||
Total Debt Securities Available | $ | 82,746 | $ | 3,027 | $ | 587 | $ | 85,186 | |||
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| September 30, 2017 | ||||||||||
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| Gross |
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| Amortized |
| Unrealized |
| Unrealized |
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| Cost |
| Gains |
| Losses |
| Fair Value | ||||
| (In Thousands) | ||||||||||
Residential mortgage-backed securities: |
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Due after one year through five years | $ | 3,295 |
| $ | 23 |
| $ | 62 |
| $ | 3,256 |
Due after five years through ten years |
| 674 |
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| - |
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| 6 |
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| 668 |
Due after ten years |
| 87,027 |
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| 76 |
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| 1,835 |
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| 85,268 |
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Municipal obligations: |
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Due within one year |
| 2,512 |
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| - |
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| 3 |
|
| 2,509 |
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock: |
|
|
|
|
|
|
|
|
|
|
|
Due after 10 years |
| 8,119 |
|
| 286 |
|
| 29 |
|
| 8,376 |
| $ | 101,627 |
| $ | 385 |
| $ | 1,935 |
| $ | 100,077 |
Note 6 - Securities (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2016 | ||||||||||
|
|
|
| Gross |
| Gross |
|
| |||
| Amortized |
| Unrealized |
| Unrealized |
|
|
| |||
| Cost |
| Gains |
| Losses |
| Fair Value | ||||
| (In Thousands) | ||||||||||
Residential mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
Due after five years through ten years | $ | 6,230 |
| $ | 23 |
| $ | 86 |
| $ | 6,167 |
Due after ten years |
| 80,594 |
|
| 65 |
|
| 4,354 |
|
| 76,305 |
|
|
|
|
|
|
|
|
|
|
|
|
Municipal obligations: |
|
|
|
|
|
|
|
|
|
|
|
Due within one year |
| 6,968 |
|
| - |
|
| 7 |
|
| 6,961 |
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock: |
|
|
|
|
|
|
|
|
|
|
|
Due after 10 years |
| 5,356 |
|
| - |
|
| 24 |
|
| 5,332 |
| $ | 99,148 |
| $ | 88 |
| $ | 4,471 |
| $ | 94,765 |
The unrealized losses, categorized by the length of time of continuous loss position, and fair value of related securities available for sale were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than 12 Months |
| More than 12 Months |
| Total | ||||||||||||
| Fair |
| Unrealized |
| Fair |
| Unrealized |
| Fair |
| Unrealized | ||||||
| Value |
| Losses |
| Value |
| Losses |
| Value |
| Losses | ||||||
| (In Thousands) | ||||||||||||||||
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities | $ | 77,797 |
| $ | 1,787 |
| $ | 3,219 |
| $ | 116 |
| $ | 81,016 |
| $ | 1,903 |
Municipal obligations |
| 2,509 |
|
| 3 |
|
| - |
|
| - |
|
| 2,509 |
|
| 3 |
Preferred stock |
| 2,499 |
|
| 29 |
|
| - |
|
| - |
|
| 2,499 |
|
| 29 |
| $ | 82,805 |
| $ | 1,819 |
| $ | 3,219 |
| $ | 116 |
| $ | 86,024 |
| $ | 1,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities | $ | 74,672 |
| $ | 4,313 |
| $ | 3,379 |
| $ | 127 |
| $ | 78,051 |
| $ | 4,440 |
Municipal obligations |
| 6,961 |
|
| 7 |
|
| - |
|
| - |
|
| 6,961 |
|
| 7 |
Preferred stock |
| 1,983 |
|
| 24 |
|
| - |
|
| - |
|
| 1,983 |
|
| 24 |
| $ | 83,616 |
| $ | 4,344 |
| $ | 3,379 |
| $ | 127 |
| $ | 86,995 |
| $ | 4,471 |
12 Months or Less |
| More than 12 Months |
| Total | |||||||||||||
Fair |
| Unrealized |
| Fair |
| Unrealized |
| Fair |
| Unrealized | |||||||
Value | Losses | Value | Losses | Value | Losses | ||||||||||||
(In Thousands) | |||||||||||||||||
September 30, 2022 |
|
|
|
|
| ||||||||||||
Residential mortgage-backed securities | $ | 19,430 |
| $ | 2,441 |
| $ | 6,012 |
| $ | 1,580 |
| $ | 25,442 |
| $ | 4,021 |
Corporate Debt securities | 56,521 | 3,079 | 5,978 | 120 | 62,499 | 3,199 | |||||||||||
Municipal bond | 4,010 | 15 | 4,010 | 15 | |||||||||||||
$ | 79,961 |
| $ | 5,535 |
| $ | 11,990 |
| $ | 1,700 |
| $ | 91,951 |
| $ | 7,235 | |
December 31, 2021 |
|
|
|
|
| ||||||||||||
Residential mortgage-backed securities | $ | 7,801 |
| $ | 159 |
| $ | 4,681 |
| $ | 269 |
| $ | 12,482 |
| $ | 428 |
Corporate Debt Securities | 12,324 | 159 | - | - | 12,324 | 159 | |||||||||||
$ | 20,125 |
| $ | 318 |
| $ | 4,681 |
| $ | 269 |
| $ | 24,806 |
| $ | 587 | |
Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Company intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery. At September 30, 20172022 and December 31, 2016, the unrealized losses on the municipal obligations and preferred stock were very minimal and all less than 12 months in duration. At September 30, 2017 and December 31, 2016,2021, management performed an assessment for possible OTTI of the Company’s residential mortgage-backed securities and corporate debt on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security dependeddepends on the size of the Company’s investment, as well as management’s perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of these securities, at September 30, 20172022 and December 31, 20162021, to be temporary.
10
Note 67 - Loans Receivable and Allowance for Loan Losses
The following table presentstables present the recorded investment in loans receivable as of September 30, 20172022 and December 31, 20162021 by segment and class:
|
|
|
|
|
| |||||
|
|
|
|
|
| |||||
| September 30, 2017 |
| December 31, 2016 | September 30, 2022 | December 31, 2021 | |||||
|
| (In Thousands) | (In Thousands) | |||||||
Originated loans: |
|
|
|
|
| |||||
Residential one-to-four family | $ | 178,533 |
| $ | 142,081 | $ | 242,238 | $ | 224,534 | |
Commercial and multi-family |
| 1,182,098 |
|
| 1,056,806 | 2,164,320 | 1,720,174 | |||
Construction |
| 60,699 |
|
| 70,867 | 153,103 | 153,904 | |||
Commercial business(1) |
| 63,705 |
|
| 63,444 | 205,661 | 191,139 | |||
Home equity(2) |
| 38,297 |
|
| 32,417 | 56,064 | 50,469 | |||
Consumer |
| 1,239 |
|
| 1,269 | 2,545 | 3,717 | |||
|
|
|
|
|
| 2,823,931 | 2,343,937 | |||
Sub-total |
| 1,524,571 |
|
| 1,366,884 | |||||
|
|
|
|
|
| |||||
Acquired loans recorded at fair value: |
|
|
|
|
| |||||
Residential one-to-four family |
| 50,602 |
|
| 56,310 | |||||
Commercial and multi-family |
| 49,546 |
|
| 60,422 | |||||
Construction |
| - |
|
| - | |||||
Commercial business(1) |
| 3,355 |
|
| 4,460 | |||||
Home equity(2) |
| 9,216 |
|
| 13,877 | |||||
Consumer |
| 156 |
|
| 225 | |||||
|
|
|
|
|
| |||||
Sub-total |
| 112,875 |
|
| 135,294 | |||||
|
|
|
|
|
| |||||
Acquired loans with deteriorated credit: |
|
|
|
|
| |||||
Residential one-to-four family |
| 1,419 |
|
| 1,443 | |||||
Commercial and multi-family |
| 737 |
|
| 753 | |||||
Construction |
| - |
|
| - | |||||
Commercial business(1) |
| - |
|
| - | |||||
Home equity(2) |
| - |
|
| - | |||||
Consumer |
| - |
|
| - | |||||
Sub-total |
| 2,156 |
|
| 2,196 | |||||
|
|
|
|
|
| |||||
Total Loans |
| 1,639,602 |
|
| 1,504,374 | |||||
|
|
|
|
|
| |||||
Less: |
|
|
|
|
| |||||
Deferred loan fees, net |
| (1,908) |
|
| (2,006) | (3,721) | (1,876) | |||
Allowance for loan losses |
| (18,449) |
|
| (17,209) | (33,195) | (37,119) | |||
|
|
|
|
|
| |||||
|
| (20,357) |
|
| (19,215) | |||||
|
|
|
|
|
| |||||
Total Loans, net | $ | 1,619,245 |
| $ | 1,485,159 | $ | 2,787,015 | $ | 2,304,942 | |
|
|
|
|
|
| |||||
_____________________________ |
|
|
|
|
| |||||
(1) Includes business lines of credit. |
|
|
|
|
| |||||
(2) Includes home equity lines of credit. |
|
|
|
|
| |||||
|
|
|
|
|
| |||||
|
|
|
|
|
| |||||
|
|
|
|
|
| |||||
Note 6 -7 – Loans Receivable and Allowance for Loan Losses (Continued)
Allowance for Loan Losses
Management reviewsThe allowance for loan loss is evaluated regularly by management and reflects consideration of all significant factors that affect the adequacycollectability of the allowance on at least a quarterly basis to ensure that the provision for loan losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is adequate based on management’s assessment of probable estimated losses.portfolio. The Company’s methodology for assessing the adequacy of the allowance for loan losses consists of several key elements. These elements include a general allocated reserve for performing loans, a specific reserve for impaired loans and an unallocated portion.
The Company consistently applies the following comprehensive methodology. During the quarterly review of the allowance for loan losses, the Company considers a variety of qualitative factors that include:
• General
Lending policies and procedures;
Personnel responsible for the particular portfolio - relative to experience and ability of staff;
Trend for past due, criticized and classified loans;
Relevant economic conditions.factors;
• TrendsQuality of the loan review system;
Value of collateral for collateral dependent loans;
The effect of any concentrations of credit and the changes in charge-offs.the level of such concentrations; and
• Trends and levels of delinquent loans.Other external factors.
• Trends and levels of non-performing loans, including loans over 90 days delinquent.
• Trends in volume and terms of loans.
• Levels of allowance for specific classified loans.
• Credit concentrations.
The methodology includes the segregation of the loan portfolio into two divisions. Loans that aredivisions: performing loans and loans that aredetermined to be impaired. Loans which are performing are evaluated homogeneously by loan class or loan type. The allowance for performing loans is evaluated based on historical loan experience, including consideration of peer loss analysis,experience with an adjustment for the qualitative factors referred tolisted above. Impaired loans arecan be loans which are more than 90 days delinquent, or troubled debt restructured.restructurings, in the process of foreclosure, or a forced bankruptcy plan. These loans are individually evaluated for loan loss either by current appraisal, or net present value.value of expected cash flows. Management reviews the overall estimate for feasibility and bases the loan loss provision accordingly. During 2022 and 2021, additional stress tests were performed to model a potential collateral deficiency on those loans that are in sectors that have demonstrated a weakness in the current COVID environment.
The Bank also maintains an unallocated allowance to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio. Management must make estimates using assumptions and information that is often subjective and subject to change.
The loan portfolio is segmented into the following loan classes,segments, where the risk level for each class is analyzed when determining the allowance for loan losses:
Residential singleone-to-four family real estate loans involve certain risks such as interest rate risk and risk of non-repayment. Adjustable-rate residential family real estate loans decreasesdecrease the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying propertyproperties may be adversely affected by higher interest rates. Repayment risk may be affected by a number of factors including, but not necessarily limited to, job loss, divorce, illness and personal bankruptcy of the borrower.
Commercial and multi-family real estate lending entails additional risks as compared with residential family property lending. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for commercial real estate as well as general economic conditions.
Construction lending is generally considered to involve a high risk due to the concentration of principal in a limited number of loans and borrowers and the effects of the general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not necessarily pre-sold and thus pose a greater potential risk to the Bank than construction loans to individuals on their personal residence.
Commercial and multi-family real estate lending entails significant additional risks as compared with residential family property lending. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for commercial real estate as well as economic conditions generally.
Commercial business lending, including lines of credit, is generally considered higher risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on the business. Commercial business loans are primarily secured by inventories and other business assets. In mostmany cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance.
Home equity lending entails certain risks such as interest rate risk and risk of non-repayment. The marketability of the underlying property may be adversely affected by higher interest rates, decreasing the collateral value securing the loan. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy of the borrower. Home equity line of credit lending entails securing an equity interest in the borrower’s home. In many cases, the Bank’s position in these loans is as a junior lien holder to another institution’s superior lien. This type of lending is often priced on an adjustable rate basis with the rate set at or above a predefined index. Adjustable-rate loans decreasesdecrease the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default.
Other consumer loans generally have more credit risk because of the type and nature of the collateral and, in certain cases, the absence of collateral. Consumer loans generally have shorter terms and higher interest rates than other lending. In addition, consumer lending collections are dependent on the borrower’s continuing financial
stability, and thus are more likely to be adversely effectedaffected by job loss, divorce, illness and personal bankruptcy. In mostmany cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan.
Note 67 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table sets forth the activity in the Company’s allowance for loan losses for the three and nine months ended September 30, 2022, and the related portion of the allowances for loan losses that is allocated to each loan class, as of September 30, 2022 (in thousands):
Residential | Commercial & Multi-family | Construction | Commercial Business (1) | Home Equity (2) | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||
Beginning Balance, July 1, 2022 | $ | 2,565 | $ | 21,157 | $ | 2,348 | $ | 7,639 | $ | 387 | $ | 17 | - | $ | 34,113 | ||||||||
Charge-offs: | - | - | - | (931) |
| - | - | (931) | |||||||||||||||
Recoveries: | 7 | - | - | 2 | 4 | - | - | 13 | |||||||||||||||
(Credit) Provisions: | (374) | 390 | 96 | (993) | 75 | 3 | 803 | - | |||||||||||||||
Ending Balance, September 30, 2022 | 2,198 | 21,547 | 2,444 | 5,717 | 466 | 20 | 803 | 33,195 | |||||||||||||||
Ending Balance attributable to loans: | |||||||||||||||||||||||
Individually evaluated for impairment | 204 | - | 519 | 3,509 | 6 | - | - | 4,238 | |||||||||||||||
Collectively evaluated for impairment | 1,994 | 21,547 | 1,925 | 2,208 | 460 | 20 | 803 | 28,957 | |||||||||||||||
Ending Balance, September 30, 2022 | 2,198 | 21,547 | 2,444 | 5,717 | 466 | 20 | 803 | 33,195 | |||||||||||||||
Loans Receivables: | |||||||||||||||||||||||
Individually evaluated for impairment | 4,914 | 27,090 | 3,180 | 4,607 | 733 | - | - | 40,524 | |||||||||||||||
Collectively evaluated for impairment | 237,324 | 2,137,230 | 149,923 | 201,054 | 55,331 | 2,545 | - | 2,783,407 | |||||||||||||||
Total Gross Loans: | $ | 242,238 | $ | 2,164,320 | $ | 153,103 | $ | 205,661 | $ | 56,064 | $ | 2,545 | $ | - | $ | 2,823,931 | |||||||
(1) Includes business lines of credit. | |||||||||||||||||||||||
(2) Includes home equity lines of credit. | |||||||||||||||||||||||
Residential | Commercial & Multi-family | Construction | Commercial Business (1) | Home Equity (2) | Consumer | Unallocated | Total | |||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||
Beginning Balance, January 1, 2022 | $ | 4,094 | $ | 22,065 | $ | 2,231 | $ | 8,000 | $ | 533 | $ | 14 | $ | 182 | $ | 37,119 | ||||||||
Charge-offs: | - | - | - | (1,703) | - | - | - | (1,703) | ||||||||||||||||
Recoveries: | 9 | - | - | 138 | 9 | 198 | - | 354 | ||||||||||||||||
(Credit) Provisions: | (1,905) | (518) | 213 | (718) | (76) | (192) | 621 | (2,575) | ||||||||||||||||
Ending Balance, September 30, 2022 | $ | 2,198 | $ | 21,547 | $ | 2,444 | $ | 5,717 | $ | 466 | $ | 20 | $ | 803 | $ | 33,195 | ||||||||
_____________________________ | ||||||||||||||||||||||||
(1) Includes business lines of credit. | ||||||||||||||||||||||||
(2) Includes home equity lines of credit. | ||||||||||||||||||||||||
Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table sets forth the activity in the Company’s allowance for loan losses for the three and nine months ended September 30, 2021, and the related portion of the allowances for loan losses that is allocated to each loan class, as of September 30, 2021 (in thousands):
Residential | Commercial & Multi-family | Construction | Commercial Business (1) | Home Equity (2) | Consumer | Unallocated | Total | |||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||
Beginning Balance, July 1, 2021 | $ | 2,911 | $ | 24,438 | $ | 2,341 | $ | 6,852 | $ | 294 | - | $ | 3 | $ | 633 | $ | 37,472 | |||||||
Charge-offs: | - | - | - | - | - | - | - | - | ||||||||||||||||
Recovery: | - | - | - | 1 | 3 | - | - | 4 | ||||||||||||||||
(Credit) Provisions: | (75) | 370 | (307) | 879 | 19 | 20 | (226) | 680 | ||||||||||||||||
Ending Balance September 30, 2021 | $ | 2,836 | $ | 24,808 | $ | 2,034 | $ | 7,732 | $ | 316 | $ | 23 | $ | 407 | $ | 38,156 | ||||||||
Ending Balance attributable to loans: | ||||||||||||||||||||||||
Individually evaluated for impairment | $ | 276 | $ | 1,469 | $ | 150 | $ | 5,770 | $ | 16 | $ | - | $ | - | $ | 7,681 | ||||||||
Collectively evaluated for impairment | 2,560 | 23,339 | 1,884 | 1,962 | 300 | 23 | 407 | 30,475 | ||||||||||||||||
Ending Balance September 30, 2021 | $ | 2,836 | $ | 24,808 | $ | 2,034 | $ | 7,732 | $ | 316 | $ | 23 | $ | 407 | $ | 38,156 | ||||||||
Loans Receivables: | ||||||||||||||||||||||||
Individually evaluated for impairment | $ | 5,104 | $ | 39,356 | $ | 2,787 | $ | 10,343 | $ | 1,273 | $ | - | $ | - | $ | 58,863 | ||||||||
Collectively evaluated for impairment | 219,226 | 1,700,620 | 146,289 | 151,073 | 50,836 | 2,730 | - | 2,270,774 | ||||||||||||||||
Total Gross Loans: | $ | 224,330 | $ | 1,739,976 | $ | 149,076 | $ | 161,416 | $ | 52,109 | $ | 2,730 | $ | - | $ | 2,329,637 | ||||||||
_____________________________ | ||||||||||||||||||||||||
(1) Includes business lines of credit. | ||||||||||||||||||||||||
(2) Includes home equity lines of credit. | ||||||||||||||||||||||||
Residential | Commercial & Multi-family | Construction | Commercial Business (1) | Home Equity (2) | Consumer | Unallocated | Total | |||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||
Beginning Balance, January 1, 2021 | $ | 3,293 | $ | 21,772 | $ | 1,977 | $ | 6,306 | $ | 286 | $ | - | $ | 5 | $ | 33,639 | ||||||||
Charge-offs: | (60) | - | - | (103) | - | (198) | - | (361) | ||||||||||||||||
Recovery: | 27 | - | - | 2 | - | 9 | - | 38 | ||||||||||||||||
(Credit) Provisions: | (424) | 3,036 | 57 | 1,527 | 30 | 212 | 402 | 4,840 | ||||||||||||||||
Ending Balance, September 30, 2021 | $ | 2,836 | $ | 24,808 | $ | 2,034 | $ | 7,732 | $ | 316 | $ | 23 | $ | 407 | $ | 38,156 | ||||||||
_____________________________ | ||||||||||||||||||||||||
(1) Includes business lines of credit. | ||||||||||||||||||||||||
(2) Includes home equity lines of credit. | ||||||||||||||||||||||||
The following table sets forth the amount recorded in loans receivable at December 31, 2021. The table also details the amount of total loans receivable that are evaluated individually, and collectively, for impairment and the related portion of the allowance for loan losses that is allocated to each loan class (in thousands):
Residential | Commercial & Multi-family | Construction | Commercial Business (1) | Home Equity (2) | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | |||||||||||||||||||||||
Ending Balance attributable to loans: | |||||||||||||||||||||||
Individually evaluated for impairment | $ | 265 | $ | 1,690 | $ | 210 | $ | 5,650 | $ | 13 | $ | - | $ | - | $ | 7,828 | |||||||
Collectively evaluated for impairment | 3,829 | 20,375 | 2,021 | 2,350 | 520 | 14 | 182 | 29,291 | |||||||||||||||
Ending Balance, December 31, 2021 | $ | 4,094 | $ | 22,065 | $ | 2,231 | $ | 8,000 | $ | 533 | $ | 14 | $ | 182 | $ | 37,119 | |||||||
Loans Receivables: | |||||||||||||||||||||||
Individually evaluated for impairment | $ | 4,961 | $ | 31,745 | $ | 2,847 | $ | 8,746 | $ | 1,083 | $ | - | $ | - | $ | 49,382 | |||||||
Collectively evaluated for impairment | 219,573 | 1,688,429 | 151,057 | 182,393 | 49,386 | 3,717 | - | 2,294,555 | |||||||||||||||
Total Gross Loans: | $ | 224,534 | $ | 1,720,174 | $ | 153,904 | $ | 191,139 | $ | 50,469 | $ | 3,717 | $ | - | $ | 2,343,937 | |||||||
(1) Includes business lines of credit. | |||||||||||||||||||||||
(2) Includes home equity lines of credit. |
Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes the average recorded investment and interest income recognized on impaired loans with no related allowance recorded by portfolio class for the three and nine months ended September 30, 2022 and 2021 (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2022 | 2021 | 2021 | 2022 | 2022 | 2021 | 2021 | ||||||||||||||||
Average | Interest | Average | Interest | Average | Interest | Average | Interest | ||||||||||||||||
Recorded | Income | Recorded | Income | Recorded | Income | Recorded | Income | ||||||||||||||||
Investment | Recognized | Investment | Recognized | Investment | Recognized | Investment | Recognized | ||||||||||||||||
Loans with no related allowance recorded: | |||||||||||||||||||||||
Residential one-to-four family | $ | 2,862 | $ | 36 | $ | 3,050 | $ | 37 | $ | 2,881 | $ | 109 | $ | 2,973 | $ | 108 | |||||||
Commercial and Multi-family | 27,360 | 315 | 29,742 | 271 | 25,415 | 901 | 30,614 | 830 | |||||||||||||||
Construction | - | - | - | - | - | - | 929 | 36 | |||||||||||||||
Commercial business(1) | 828 | 3 | 2,465 | 65 | 1,149 | 73 | 3,143 | 104 | |||||||||||||||
Home equity(2) | 488 | 7 | 938 | 12 | 474 | 17 | 1,048 | 35 | |||||||||||||||
Consumer | - | - | - | - | - | - | - | - | |||||||||||||||
Total Impaired Loans with no allowance recorded: | $ | 31,538 | $ | 361 | $ | 36,195 | $ | 385 | $ | 29,919 | $ | 1,100 | $ | 38,707 | $ | 1,113 | |||||||
- | - | ||||||||||||||||||||||
Loans with an allowance recorded: | |||||||||||||||||||||||
Residential one-to-four family | $ | 1,989 | 24 | $ | 2,110 | $ | 66 | $ | 1,964 | $ | 61 | $ | 2,302 | $ | 165 | ||||||||
Commercial and Multi-family |
| - | 10,942 | 100 | 1,125 | 266 | 11,204 | 331 | |||||||||||||||
Construction | 3,112 | - | 2,787 | 3 | 3,059 | 22 | 1,858 | 6 | |||||||||||||||
Commercial business(1) | 4,567 | - | 8,197 | 24 | 4,953 | 65 | 8,388 | 141 | |||||||||||||||
Home equity(2) | 264 | - | 340 | - | 276 | 5 | 368 | 2 | |||||||||||||||
Consumer | - | - | - | - | - | - | - | - | |||||||||||||||
Total Impaired Loans with an allowance recorded: | $ | 9,932 | $ | 24 | $ | 24,376 | $ | 193 | $ | 11,377 | $ | 419 | $ | 24,120 | $ | 645 | |||||||
- | - | ||||||||||||||||||||||
Total Impaired Loans: | $ | 41,470 | $ | 385 | $ | 60,571 | $ | 578 | $ | 41,296 | $ | 1,519 | $ | 62,827 | $ | 1,758 | |||||||
__________
(1)Includes business lines of credit.
(2)Includes home equity lines of credit.
The following table summarizes the recorded investment by portfolio class at September 30, 2022 and December 31, 2021. (in thousands):
As of September 30, 2022 | As of December 31, 2021 | ||||||||||||||||
Recorded | Unpaid Principal | Related | Recorded | Unpaid Principal | Related | ||||||||||||
Investment | Balance | Allowance | Investment | Balance | Allowance | ||||||||||||
Loans with no related allowance recorded: | |||||||||||||||||
Residential one-to-four family | $ | 2,845 | $ | 3,209 | $ | - | $ | 2,950 | $ | 3,300 | $ | - | |||||
Commercial and multi-family | 27,090 | 28,266 | - | 20,915 | 22,100 | - | |||||||||||
Construction | - | - | - | - | - | - | |||||||||||
Commercial business(1) | 947 | 4,910 | - | 2,114 | 6,905 | - | |||||||||||
Home equity(2) | 504 | 504 | - | 779 | 780 | - | |||||||||||
Total Impaired Loans with no related allowance recorded: | $ | 31,386 | $ | 36,889 | $ | - | $ | 26,758 | $ | 33,085 | $ | - | |||||
Loans with an allowance recorded: | |||||||||||||||||
Residential one-to-four family | $ | 2,069 | $ | 2,090 | $ | 204 | $ | 2,011 | $ | 2,032 | $ | 265 | |||||
Commercial and Multi-family | - | - | - | 10,830 | 14,494 | 1,690 | |||||||||||
Construction | 3,180 | 3,180 | 519 | 2,847 | 2,847 | 210 | |||||||||||
Commercial business(1) | 3,660 | 8,519 | 3,509 | 6,632 | 17,514 | 5,650 | |||||||||||
Home equity(2) | 229 | 229 | 6 | 304 | 304 | 13 | |||||||||||
Total Impaired Loans with an allowance recorded: | $ | 9,138 | $ | 14,018 | $ | 4,238 | $ | 22,624 | $ | 37,191 | $ | 7,828 | |||||
Total Impaired Loans: | $ | 40,524 | $ | 50,907 | $ | 4,238 | $ | 49,382 | $ | 70,276 | $ | 7,828 | |||||
__________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)
A troubled debt restructured loan (“TDR”) is a loan that has been modified whereby the Company has agreed to make certain concessions to a borrower to meet the needs of both the borrower and the Company to maximize the ultimate recovery of a loan. A TDR occurs when a borrower is experiencing, or is expected to experience, financial difficulties and the loan is modified using a concession that would otherwise not be granted to the borrower. All TDRs were considered impaired and therefore were individually evaluated for impairment in the calculation of the allowance for loan losses. Prior to their classification as TDRs, certain of these loans had been collectively evaluated for impairment in the calculation of the allowance for loan losses.
At September 30, 2022 | At December 31, 2021 | ||||
(In thousands) | |||||
Recorded investment in TDRs: | |||||
Accrual status | $ | 10,503 | $ | 12,402 | |
Non-accrual status | 483 | 3,570 | |||
Total recorded investment in TDRs | $ | 10,986 | $ | 15,972 | |
The Company granted one TDR loan of $180,078 and one TDR loan of $168,102 for the three months ended September 30, 2022 and September 30, 2021, respectively.
For the three months ended September 30, 2022 and September 30, 2021, TDRs, for which there was a payment default within twelve months of restructuring, totaled $0 and $232,072for one loan, respectively.
The following table sets forth the delinquency status of total loans receivable as of September 30, 2022:
Loans Receivable | ||||||||||||||||||||
30-59 Days | 60-90 Days | Greater Than | Total Past | Total Loans | >90 Days | |||||||||||||||
Past Due | Past Due | 90 Days | Due | Current | Receivable | and Accruing | ||||||||||||||
(In Thousands) | ||||||||||||||||||||
Residential one-to-four family | $ | 615 | $ | 187 | $ | 230 | $ | 1,032 | $ | 241,206 | $ | 242,238 | $ | 230 | ||||||
Commercial and multi-family | 2,245 | 356 | 757 | 3,358 | 2,160,962 | 2,164,320 | - | |||||||||||||
Construction | - | - | 3,180 | 3,180 | 149,923 | 153,103 | - | |||||||||||||
Commercial business(1) | 885 | 47 | 1,578 | 2,510 | 203,151 | 205,661 | - | |||||||||||||
Home equity(2) | 199 | - | - | 199 | 55,865 | 56,064 | - | |||||||||||||
Consumer |
| - | - | - | 2,545 | 2,545 | - | |||||||||||||
Total | $ | 3,944 | $ | 590 | $ | 5,745 | $ | 10,279 | $ | 2,813,652 | $ | 2,823,931 | $ | 230 | ||||||
_________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
The following table sets forth the delinquency status of total loans receivable at December 31, 2021:
Loans Receivable | ||||||||||||||||||||
30-59 Days | 60-90 Days | Greater Than | Total Past | Total Loans | >90 Days | |||||||||||||||
Past Due | Past Due | 90 Days | Due | Current | Receivable | and Accruing | ||||||||||||||
(In Thousands) | ||||||||||||||||||||
Residential one-to-four family | $ | 1,063 | $ | - | $ | 86 | $ | 1,149 | $ | 223,385 | $ | 224,534 | $ | - | ||||||
Commercial and multi-family | 1,181 | - | 5,167 | 6,348 | 1,713,826 | 1,720,174 | - | |||||||||||||
Construction | 2,899 | - | 2,847 | 5,746 | 148,158 | 153,904 | - | |||||||||||||
Commercial business(1) | 405 | 166 | 6,775 | 7,346 | 183,793 | 191,139 | 3,124 | |||||||||||||
Home equity(2) | 190 | - | 27 | 217 | 50,252 | 50,469 | - | |||||||||||||
Consumer | - | - | - | - | 3,717 | 3,717 | - | |||||||||||||
Total | $ | 5,738 | $ | 166 | $ | 14,902 | $ | 20,806 | $ | 2,323,131 | $ | 2,343,937 | $ | 3,124 | ||||||
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)
The table below sets forth the amounts and types of non-accrual loans in the Bank’s loan portfolio at September 30, 2022 and December 31, 2021, respectively. Loans are placed on non-accrual status when they become more than 90 days delinquent, or when the collection of principal and/or interest become doubtful. As of September 30, 2022, and December 31, 2021, non-accrual loans differed from the amount of total loans past due greater than 90 days due to troubled debt restructuring of loans, loans 90 days past due and still accruing, or loans that were previously 90 days past due which are maintained on non-accrual status for a minimum of six months until the borrower has demonstrated its ability to satisfy the terms of the loan. There were $230,000 at September 30, 2022 and $3.8 million at December 31, 2021 in nonaccrual loans that were less than ninety days past due. Nonaccrual loans do not include loans acquired with deteriorated credit quality which were recorded at their fair value at acquisition and totaled $0 at September 30, 2022 and $670,000 at December 31, 2021.
As of September 30, 2022 | As of December 31, 2021 | ||||
(In Thousands) | (In Thousands) | ||||
Non-Accruing Loans: | |||||
Residential one-to-four family | $ | 263 | $ | 282 | |
Commercial and multi-family | 757 | 8,601 | |||
Construction | 3,180 | 2,847 | |||
Commercial business(1) | 4,305 | 3,132 | |||
Home equity(2) | - | 27 | |||
Total | $ | 8,505 | $ | 14,889 | |
_________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
Had non-accrual loans been performing in accordance with their original terms, the interest income recognized for the nine months ended September 30, 2022 and the twelve months ended December 31, 2021 would have been approximately $842,000 and $1.3 million, respectively.
Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)
Criticized and Classified Assets.Assets
OurCompany policies provide for a classification system for problem assets. Under this classification system, problem assets are classified as “substandard,” “doubtful,” “loss” or “special mention.“loss.”
When we classifythe Company classifies problem assets, wethe Company may establish general allowances for loan losses in an amount deemed prudent by management. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. A portion of general loss allowances established to cover possible losses related to assets classified as substandard or doubtful may be included in determining ourthe Company’s regulatory capital. Specific valuation allowances for loan losses generally do not qualify as regulatory capital. The loans classified as substandard represent primarily commercial loansare secured either by residential real estate, commercial real estate or heavy equipment. The loans that have been classified substandard were classified as such primarily due to payment status, because updated financial information has not been timely provided, or the collateral underlying the loan is in the process of being revalued.
The Company’s internal credit risk grades are based on the definitions currently utilized by the banking regulatory agencies. The grades assigned and definitions are as follows, and loans graded excellent, above average, good and watch list (risk ratings 1-4)1-5) are treated as “pass” for grading purposes:purposes. The “criticized” risk rating (6) and the “classified” risk ratings (7-9) are detailed below:
56 – Special Mention- Loans currently performing but with potential weaknesses including adverse trends in borrower’s operations, credit quality, financial strength, or possible collateral deficiency.
67 – Substandard- Loans that are inadequately protected by current sound worth, paying capacity, and collateral support. Loans on “nonaccrual” status. The loan needs special and corrective attention.
78 – Doubtful- Weaknesses in credit quality and collateral support make full collection improbable, but pending reasonable factors remain sufficient to defer the loss status.
89 – Loss- Continuance as a bankable asset is not warranted. However, this does not preclude future attempts at partial recovery.
13
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended September 30, 2017. The table also details the amount of total loans receivable, loans receivable that are evaluated individually and collectively for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class, as of September 30, 2017. (In Thousands):
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| Residential |
|
| Commercial & Multi-family |
| Construction |
| Commercial Business (1) |
| Home Equity (2) |
| Consumer |
| Unallocated |
| Total | |||||||
Allowance for loan losses: |
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Originated Loans: | $ | 2,092 |
| $ | 11,182 |
| $ | 753 |
| $ | 3,229 |
| $ | 347 |
| $ | 5 |
| $ | 99 |
| $ | 17,707 |
Acquired loans recorded at fair value: |
| 203 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 203 |
Acquired loans with deteriorated credit: |
| 41 |
|
| 13 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 54 |
Beginning Balance, June 30, 2017 |
| 2,336 |
|
| 11,195 |
|
| 753 |
|
| 3,229 |
|
| 347 |
|
| 5 |
|
| 99 |
|
| 17,964 |
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Charge-offs: |
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Originated Loans: |
| - |
|
| - |
|
| - |
|
| 1 |
|
| - |
|
| 5 |
|
| - |
|
| 6 |
Acquired loans recorded at fair value: |
| - |
|
| - |
|
| - |
|
| - |
|
| 20 |
|
| - |
|
| - |
|
| 20 |
Acquired loans with deteriorated credit: |
| - |
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|
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Sub-total: |
| - |
|
| - |
|
| - |
|
| 1 |
|
| 20 |
|
| 5 |
|
| - |
|
| 26 |
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Recoveries: |
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Originated Loans: |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Acquired loans recorded at fair value: |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Acquired loans with deteriorated credit: |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Sub-total: |
| - |
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| - |
|
| - |
|
| - |
|
| - |
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| - |
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| - |
|
| - |
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Provisions: |
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Originated Loans: |
| 234 |
|
| 304 |
|
| (135) |
|
| 46 |
|
| (20) |
|
| 7 |
|
| 7 |
|
| 443 |
Acquired loans recorded at fair value: |
| 47 |
|
| 3 |
|
| - |
|
| - |
|
| 20 |
|
| - |
|
| - |
|
| 70 |
Acquired loans with deteriorated credit: |
| (1) |
|
| (1) |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (2) |
Sub-total: |
| 280 |
|
| 306 |
|
| (135) |
|
| 46 |
|
| - |
|
| 7 |
|
| 7 |
|
| 511 |
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Totals: |
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Originated Loans: |
| 2,326 |
|
| 11,486 |
|
| 618 |
|
| 3,274 |
|
| 327 |
|
| 7 |
|
| 106 |
|
| 18,144 |
Acquired loans recorded at fair value: |
| 250 |
|
| 3 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 253 |
Acquired loans with deteriorated credit: |
| 40 |
|
| 12 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 52 |
Ending Balance, September 30, 2017 | $ | 2,616 |
| $ | 11,501 |
| $ | 618 |
| $ | 3,274 |
| $ | 327 |
| $ | 7 |
| $ | 106 |
| $ | 18,449 |
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Loans Receivable: |
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Ending Balance Originated Loans: | $ | 178,533 |
| $ | 1,182,098 |
| $ | 60,699 |
| $ | 63,705 |
| $ | 38,297 |
| $ | 1,239 |
| $ | - |
| $ | 1,524,571 |
Ending Balance Acquired loans recorded at fair value: |
| 50,602 |
|
| 49,546 |
|
| - |
|
| 3,355 |
|
| 9,216 |
|
| 156 |
|
| - |
|
| 112,875 |
Ending Balance Acquired loans with deteriorated credit: |
| 1,419 |
|
| 737 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 2,156 |
Total Gross Loans: | $ | 230,554 |
| $ | 1,232,381 |
| $ | 60,699 |
| $ | 67,060 |
| $ | 47,513 |
| $ | 1,395 |
| $ | - |
| $ | 1,639,602 |
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Ending Balance: Loans individually evaluated |
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for impairment: |
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Ending Balance Originated Loans: | $ | 8,257 |
| $ | 12,469 |
| $ | - |
| $ | 3,539 |
| $ | 1,055 |
| $ | - |
| $ | - |
| $ | 25,320 |
Ending Balance Acquired loans recorded at fair value: |
| 7,647 |
|
| 5,662 |
|
| - |
|
| - |
|
| 429 |
|
| - |
|
| - |
|
| 13,738 |
Ending Balance Acquired loans with deteriorated credit: |
| 1,419 |
|
| 515 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 1,934 |
Ending Balance Loans individually evaluated |
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for impairment: | $ | 17,323 |
| $ | 18,646 |
| $ | - |
| $ | 3,539 |
| $ | 1,484 |
| $ | - |
| $ | - |
| $ | 40,992 |
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Ending Balance: Loans collectively evaluated |
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for impairment: |
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Ending Balance Originated Loans: | $ | 170,276 |
| $ | 1,169,629 |
| $ | 60,699 |
| $ | 60,166 |
| $ | 37,242 |
| $ | 1,239 |
| $ | - |
| $ | 1,499,251 |
Ending Balance Acquired loans recorded at fair value: |
| 42,955 |
|
| 43,884 |
|
| - |
|
| 3,355 |
|
| 8,787 |
|
| 156 |
|
| - |
|
| 99,137 |
Ending Balance Acquired loans with deteriorated credit: |
| - |
|
| 222 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 222 |
Ending Balance Loans collectively evaluated |
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for impairment: | $ | 213,231 |
| $ | 1,213,735 |
| $ | 60,699 |
| $ | 63,521 |
| $ | 46,029 |
| $ | 1,395 |
| $ | - |
| $ | 1,598,610 |
_____________________________ |
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(1) Includes business lines of credit. |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes home equity lines of credit. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table set forth the activity in the Company’s allowance for loan losses for the nine months ended September 30, 2017, and the related portion of the allowance for loan losses that is allocated to each loan class (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential |
|
| Commercial & Multi-family |
| Construction |
| Commercial Business (1) |
|
| Home Equity (2) |
| Consumer |
| Unallocated |
| Total | ||||||
Allowance for credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
| $ | 2,098 |
| $ | 10,621 |
| $ | 736 |
| $ | 3,079 |
| $ | 374 |
| $ | 2 |
| $ | 69 |
| $ | 16,979 |
Acquired loans recorded at fair value: |
|
| 170 |
|
| - |
|
| - |
|
| - |
|
| 4 |
|
| - |
|
| - |
|
| 174 |
Acquired loans with deteriorated credit: |
|
| 43 |
|
| 13 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 56 |
Beginning Balance, December 31, 2016 |
|
| 2,311 |
|
| 10,634 |
|
| 736 |
|
| 3,079 |
|
| 378 |
|
| 2 |
|
| 69 |
|
| 17,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| - |
| - | 190 |
|
| - |
| - | 1 |
| - | - |
| - | 11 |
| - | - |
| - | 202 |
Acquired loans recorded at fair value: |
|
| 308 |
| - | - |
|
| - |
| - | - |
| - | 54 |
| - | - |
| - | - |
| - | 362 |
Acquired loans with deteriorated credit: |
|
| - |
| - | - |
|
| - |
| - | - |
| - | - |
| - | - |
| - | - |
| - | - |
Sub-total: |
|
| 308 |
|
| 190 |
|
| - |
|
| 1 |
|
| 54 |
|
| 11 |
|
| - |
|
| 564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Acquired loans recorded at fair value: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Acquired loans with deteriorated credit: |
|
| - |
|
| - |
|
| - |
|
| 19 |
|
| - |
|
| - |
|
| - |
|
| 19 |
Sub-total: |
|
| - |
|
| - |
|
| - |
|
| 19 |
|
| - |
|
| - |
|
| - |
|
| 19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| 228 |
|
| 1,055 |
|
| (118) |
|
| 196 |
|
| (47) |
|
| 16 |
|
| 37 |
|
| 1,367 |
Acquired loans recorded at fair value: |
|
| 388 |
|
| 3 |
|
| - |
|
| - |
|
| 50 |
|
| - |
|
| - |
|
| 441 |
Acquired loans with deteriorated credit: |
|
| (3) |
|
| (1) |
|
| - |
|
| (19) |
|
| - |
|
| - |
|
| - |
|
| (23) |
Sub-total: |
|
| 613 |
|
| 1,057 |
|
| (118) |
|
| 177 |
|
| 3 |
|
| 16 |
|
| 37 |
|
| 1,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| 2,326 |
|
| 11,486 |
|
| 618 |
|
| 3,274 |
|
| 327 |
|
| 7 |
|
| 106 |
|
| 18,144 |
Acquired loans recorded at fair value: |
|
| 250 |
|
| 3 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 253 |
Acquired loans with deteriorated credit: |
|
| 40 |
|
| 12 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 52 |
Ending Balance, September 30, 2017 |
| $ | 2,616 |
| $ | 11,501 |
| $ | 618 |
| $ | 3,274 |
| $ | 327 |
| $ | 7 |
| $ | 106 |
| $ | 18,449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes business lines of credit. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes home equity lines of credit. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table sets forth the activity in the Company’s allowance for loan losses for the year ended December 31, 2016. The table also details the amount of total loans receivable that are evaluated individually and collectively for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class, as of December 31, 2016. (In Thousands):
____
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential |
|
| Commercial & Multi-family |
|
| Construction |
|
| Commercial Business (1) |
| Home Equity (2) |
| Consumer |
|
| Unallocated |
|
| Total | ||
Allowance for credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
| $ | 2,107 |
| $ | 11,643 |
| $ | 722 |
| $ | 1,749 |
| $ | 369 |
| $ | 879 |
| $ | 168 |
| $ | 17,637 |
Acquired loans recorded at fair value: |
|
| 270 |
|
| 17 |
|
| - |
|
| - |
|
| 50 |
|
| - |
|
| - |
|
| 337 |
Acquired loans with deteriorated credit: |
|
| 47 |
|
| 14 |
|
| - |
|
| 4 |
|
| 3 |
|
| - |
|
| - |
|
| 68 |
Beginning Balance, December 31, 2015 |
|
| 2,424 |
|
| 11,674 |
|
| 722 |
|
| 1,753 |
|
| 422 |
|
| 879 |
|
| 168 |
|
| 18,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| - |
|
| 367 |
|
| - |
|
| 160 | - |
| - |
|
| - |
|
| - |
|
| 527 |
Acquired loans recorded at fair value: |
|
| 459 |
|
| 38 |
|
| - |
|
| 3 |
|
| 54 |
|
| - |
|
| - |
|
| 554 |
Acquired loans with deteriorated credit: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Sub-total: |
|
| 459 |
|
| 405 |
|
| - |
|
| 163 |
|
| 54 |
|
| - |
|
| - |
|
| 1,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| - |
|
| 74 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 74 |
Acquired loans recorded at fair value: |
|
| - |
|
| 4 |
|
| - |
|
| - |
|
| 14 | - |
| - |
|
| - |
|
| 18 |
Acquired loans with deteriorated credit: |
|
| - |
|
| - |
|
| - |
|
| 129 |
|
| - |
|
| - |
|
| - |
|
| 129 |
Sub-total: |
|
| - |
|
| 78 |
|
| - |
|
| 129 |
|
| 14 |
|
| - |
|
| - |
|
| 221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| (9) |
|
| (729) |
|
| 14 |
|
| 1,490 |
|
| 5 |
|
| (877) |
|
| (99) |
|
| (205) |
Acquired loans recorded at fair value: |
|
| 359 |
|
| 17 |
|
| - |
|
| 3 |
|
| (6) |
|
| - |
|
| - |
|
| 373 |
Acquired loans with deteriorated credit: |
|
| (4) |
|
| (1) |
|
| - |
|
| (133) |
|
| (3) |
|
| - |
|
| - |
|
| (141) |
Sub-total: |
|
| 346 |
|
| (713) |
|
| 14 |
|
| 1,360 |
|
| (4) |
|
| (877) |
|
| (99) |
|
| 27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| 2,098 |
|
| 10,621 |
|
| 736 |
|
| 3,079 |
|
| 374 |
|
| 2 |
|
| 69 |
|
| 16,979 |
Acquired loans recorded at fair value: |
|
| 170 |
|
| - |
|
| - |
|
| - |
|
| 4 |
|
| - |
|
| - |
|
| 174 |
Acquired loans with deteriorated credit: |
|
| 43 |
|
| 13 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 56 |
Ending Balance, December 31, 2016 |
| $ | 2,311 |
| $ | 10,634 |
| $ | 736 |
| $ | 3,079 |
| $ | 378 |
| $ | 2 |
| $ | 69 |
| $ | 17,209 |
Loans Receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance Originated Loans: |
| $ | 142,081 |
| $ | 1,056,806 |
| $ | 70,867 |
| $ | 63,444 |
| $ | 32,417 |
| $ | 1,269 |
| $ | - |
| $ | 1,366,884 |
Ending Balance Acquired Loans: |
|
| 56,310 |
|
| 60,422 |
|
| - |
|
| 4,460 |
|
| 13,877 |
|
| 225 |
|
| - |
|
| 135,294 |
Ending Balance Acquired loans with deteriorated credit: |
|
| 1,443 |
|
| 753 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 2,196 |
Total Gross Loans: |
| $ | 199,834 |
| $ | 1,117,981 |
| $ | 70,867 |
| $ | 67,904 |
| $ | 46,294 |
| $ | 1,494 |
| $ | - |
| $ | 1,504,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Loans individually evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance Originated Loans: |
| $ | 10,651 |
| $ | 12,325 |
| $ | 6 |
| $ | 4,088 |
| $ | 1,362 |
| $ | - |
| $ | - |
| $ | 28,432 |
Ending Balance Acquired Loans: |
|
| 7,600 |
|
| 6,356 |
|
| - |
|
| - |
|
| 1,065 |
|
| - |
|
| - |
|
| 15,021 |
Ending Balance Acquired loans with deteriorated credit: |
|
| 1,443 |
|
| 523 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 1,966 |
Ending Balance Loans individually evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment: |
| $ | 19,694 |
| $ | 19,204 |
| $ | 6 |
| $ | 4,088 |
| $ | 2,427 |
| $ | - |
| $ | - |
| $ | 45,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Loans collectively evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance Originated Loans: |
| $ | 131,430 |
| $ | 1,044,481 |
| $ | 70,861 |
| $ | 59,356 |
| $ | 31,055 |
| $ | 1,269 |
| $ | - |
| $ | 1,338,452 |
Ending Balance Acquired Loans: |
|
| 48,710 |
|
| 54,066 |
|
| - |
|
| 4,460 |
|
| 12,812 |
|
| 225 |
|
| - |
|
| 120,273 |
Ending Balance Acquired loans with deteriorated credit: |
|
| - |
|
| 230 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 230 |
Ending Balance Loans collectively evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment: |
| $ | 180,140 |
| $ | 1,098,777 |
| $ | 70,861 |
| $ | 63,816 |
| $ | 43,867 |
| $ | 1,494 |
| $ | - |
| $ | 1,458,955 |
|
|
|
|
16
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended September 30, 2016. The table also details the amount of total loans receivable that are evaluated individually and collectively for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class, as of September 30, 2016 (In Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential |
|
| Commercial & Multi-family |
| Construction |
| Business (1) |
| Equity (2) |
| Consumer |
| Unallocated |
| Total | |||||||
Allowance for credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
| $ | 1,995 |
| $ | 11,730 |
| $ | 764 |
| $ | 1,759 |
| $ | 375 |
| $ | 1,029 |
| $ | 216 |
| $ | 17,868 |
Acquired loans recorded at fair value: |
|
| 357 |
|
| - |
|
| - |
|
| - |
|
| 56 |
|
| - |
|
| - |
|
| 413 |
Acquired loans with deteriorated credit: |
|
| 43 |
|
| 14 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 57 |
Beginning Balance, June 30, 2016 |
|
| 2,395 |
|
| 11,744 |
|
| 764 |
|
| 1,759 |
|
| 431 |
|
| 1,029 |
|
| 216 |
|
| 18,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| - |
| - | 293 |
|
| - |
|
| - |
| - | - |
| - | - |
| - | - |
| - | 293 |
Acquired loans recorded at fair value: |
|
| 154 |
| - | - |
|
| - |
|
| - |
|
| - |
| - | - |
| - | - |
| - | 154 |
Acquired loans with deteriorated credit: |
|
| - |
| - | - |
|
| - |
|
| - |
| - | - |
| - | - |
| - | - |
| - | - |
Sub-total: |
|
| 154 |
|
| 293 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Acquired loans recorded at fair value: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Acquired loans with deteriorated credit: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Sub-total: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| 48 |
|
| (414) |
|
| (61) |
|
| 1,069 |
|
| 27 |
|
| (1,026) |
|
| (94) |
|
| (451) |
Acquired loans recorded at fair value: |
|
| 148 |
|
| - |
|
| - |
|
| - |
|
| 3 |
|
| - |
|
|
|
|
| 151 |
Acquired loans with deteriorated credit: |
|
| - |
|
| (1) |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1) |
Sub-total: |
|
| 196 |
|
| (415) |
|
| (61) |
|
| 1,069 |
|
| 30 |
|
| (1,026) |
|
| (94) |
|
| (301) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| 2,043 |
|
| 11,023 |
|
| 703 |
|
| 2,828 |
|
| 402 |
|
| 3 |
|
| 122 |
|
| 17,124 |
Acquired loans recorded at fair value: |
|
| 351 |
|
| - |
|
| - |
|
| - |
|
| 59 |
|
| - |
|
| - |
|
| 410 |
Acquired loans with deteriorated credit: |
|
| 43 |
|
| 13 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 56 |
Ending Balance, September 30, 2016 |
| $ | 2,437 |
| $ | 11,036 |
| $ | 703 |
| $ | 2,828 |
| $ | 461 |
| $ | 3 |
| $ | 122 |
| $ | 17,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance Originated Loans: |
| $ | 138,681 |
| $ | 1,010,989 |
| $ | 67,747 |
| $ | 55,176 |
| $ | 31,788 |
| $ | 817 |
| $ | - |
| $ | 1,305,198 |
Ending Balance Acquired loans recorded at fair value: |
|
| 59,594 |
|
| 63,471 |
|
| - |
|
| 4,157 |
|
| 16,003 |
|
| 229 |
|
| - |
|
| 143,454 |
Ending Balance Acquired loans with deteriorated credit: |
|
| 1,451 |
|
| 760 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 2,211 |
Total Gross Loans: |
| $ | 199,726 |
| $ | 1,075,220 |
| $ | 67,747 |
| $ | 59,333 |
| $ | 47,791 |
| $ | 1,046 |
| $ | - |
| $ | 1,450,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Loans individually evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance Originated Loans: |
| $ | 10,645 |
| $ | 14,302 |
| $ | - |
| $ | 4,347 |
| $ | 1,251 |
| $ | - |
| $ | - |
| $ | 30,545 |
Ending Balance Acquired loans recorded at fair value: |
|
| 8,524 |
|
| 6,178 |
|
| - |
|
| - |
|
| 1,324 |
|
| - |
|
| - |
|
| 16,026 |
Ending Balance Acquired loans with deteriorated credit: |
|
| 1,451 |
|
| 525 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 1,976 |
Ending Balance Loans individually evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment: |
| $ | 20,620 |
| $ | 21,005 |
| $ | - |
| $ | 4,347 |
| $ | 2,575 |
| $ | - |
| $ | - |
| $ | 48,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Loans collectively evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance Originated Loans: |
| $ | 128,036 |
| $ | 996,687 |
| $ | 67,747 |
| $ | 50,829 |
| $ | 30,537 |
| $ | 817 |
| $ | - |
| $ | 1,274,653 |
Ending Balance Acquired loans recorded at fair value: |
|
| 51,070 |
|
| 57,293 |
|
| - |
|
| 4,157 |
|
| 14,679 |
|
| 229 |
|
| - |
|
| 127,428 |
17
Ending Balance Acquired loans with deteriorated credit: |
|
| - |
|
| 235 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 235 |
Ending Balance Loans collectively evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment: |
| $ | 179,106 |
| $ | 1,054,215 |
| $ | 67,747 |
| $ | 54,986 |
| $ | 45,216 |
| $ | 1,046 |
| $ | - |
| $ | 1,402,316 |
_____________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes business lines of credit. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes home equity lines of credit. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table sets forth the activity in the Company’s allowance for loans losses for the nine months ended September 30, 2016, and the related portion of the allowance for loan losses that is allocated to each loan class (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential |
|
| Commercial & Multi-family |
| Construction |
| Commercial Business (1) |
|
| Home Equity (2) |
| Consumer |
| Unallocated |
| Total | ||||||
Allowance for credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
| $ | 2,107 |
| $ | 11,643 |
| $ | 722 |
| $ | 1,749 |
| $ | 369 |
| $ | 879 |
| $ | 168 |
| $ | 17,637 |
Acquired loans recorded at fair value: |
|
| 270 |
|
| 17 |
|
| - |
|
| - |
|
| 50 |
|
| - |
|
| - |
|
| 337 |
Acquired loans with deteriorated credit: |
|
| 47 |
|
| 14 |
|
| - |
|
| 4 |
|
| 3 |
|
| - |
|
| - |
|
| 68 |
Beginning Balance, December 31, 2015 |
|
| 2,424 |
|
| 11,674 |
|
| 722 |
|
| 1,753 |
|
| 422 |
|
| 879 |
|
| 168 |
|
| 18,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| - |
|
| 293 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| - | 293 |
Acquired loans recorded at fair value: |
|
| 221 |
|
| - |
|
| - |
|
| 3 |
|
| 3 |
|
| - |
|
| - |
| - | 227 |
Acquired loans with deteriorated credit: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| - | - |
Sub-total: |
|
| 221 |
|
| 293 |
|
| - |
|
| 3 |
|
| 3 |
|
| - |
|
| - |
|
| 520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Acquired loans recorded at fair value: |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 14 |
|
| - |
|
| - |
|
| 14 |
Acquired loans with deteriorated credit: |
|
| - |
|
| - |
|
| - |
|
| 129 |
|
| - |
|
| - |
|
| - |
|
| 129 |
Sub-total: |
|
| - |
|
| - |
|
| - |
|
| 129 |
|
| 14 |
|
| - |
|
| - |
|
| 143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| (64) |
|
| (327) |
|
| (19) |
|
| 1,079 |
|
| 33 |
|
| (876) |
|
| (46) |
|
| (220) |
Acquired loans recorded at fair value: |
|
| 302 |
|
| (17) |
|
| - |
|
| 3 |
|
| (2) |
|
| - |
|
| - |
|
| 286 |
Acquired loans with deteriorated credit: |
|
| (4) |
|
| (1) |
|
| - |
|
| (133) |
|
| (3) |
|
| - |
|
| - |
|
| (141) |
Sub-total: |
|
| 234 |
|
| (345) |
|
| (19) |
|
| 949 |
|
| 28 |
|
| (876) |
|
| (46) |
|
| (75) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated Loans: |
|
| 2,043 |
|
| 11,023 |
|
| 703 |
|
| 2,828 |
|
| 402 |
|
| 3 |
|
| 122 |
|
| 17,124 |
Acquired loans recorded at fair value: |
|
| 351 |
|
| - |
|
| - |
|
| - |
|
| 59 |
|
| - |
|
| - |
|
| 410 |
Acquired loans with deteriorated credit: |
|
| 43 |
|
| 13 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 56 |
Ending Balance, September 30, 2016 |
| $ | 2,437 |
| $ | 11,036 |
| $ | 703 |
| $ | 2,828 |
| $ | 461 |
| $ | 3 |
| $ | 122 |
| $ | 17,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes business lines of credit. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes home equity lines of credit. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The table below sets forth the amounts and types of non-accrual loans in the Company’s loan portfolio as of September 30, 2017 and December 31, 2016. Loans are placed on non-accrual status when they become more than 90 days delinquent, or when the collection of principal and/or interest become doubtful. As of September 30, 2017 and December 31, 2016, total non-accrual loans differed from the amount of total loans past due greater than 90 days due to troubled debt restructuring of loans which are maintained on non-accrual status for a minimum of six months and until the borrower has demonstrated its ability to satisfy the terms of the restructured loan.
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of September 30, 2017 |
|
| As of December 31, 2016 |
|
| (In Thousands) |
|
| (In Thousands) |
Non-Accruing Loans: |
|
|
|
|
|
|
|
|
|
|
|
Originated loans: |
|
|
|
|
|
Residential one-to-four family | $ | 3,698 |
| $ | 3,693 |
Commercial and multi-family |
| 6,994 |
|
| 5,437 |
Construction |
| - |
|
| - |
Commercial business(1) |
| 2,080 |
|
| 726 |
Home equity(2) |
| 205 |
|
| 416 |
Consumer |
| - |
|
| 6 |
|
|
|
|
|
|
Sub-total: | $ | 12,977 |
| $ | 10,278 |
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
Residential one-to-four family | $ | 126 |
| $ | 3,429 |
Commercial and multi-family |
| 590 |
|
| 1,182 |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| 3,265 |
|
| 763 |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: | $ | 3,981 |
| $ | 5,374 |
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
Residential one-to-four family | $ | - |
| $ | - |
Commercial and multi-family |
| - |
|
| - |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: | $ | - |
| $ | - |
|
|
|
|
|
|
Total | $ | 16,958 |
| $ | 15,652 |
|
|
|
|
|
|
__________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
19
Note 6-Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes the average recorded investment and interest income recognized on impaired loans with no related allowance recorded by portfolio class for the three and nine months ended September 30, 2017 and 2016 (In Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| ||||||||||||||||||
|
| 2017 |
|
| 2017 |
|
| 2016 |
|
| 2016 |
| 2017 |
|
| 2017 |
|
| 2016 |
|
| 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average |
|
| Interest |
|
| Average |
|
| Interest |
| Average |
|
| Interest |
|
| Average |
|
| Interest |
|
|
| Recorded |
|
| Income |
|
| Recorded |
|
| Income |
| Recorded |
|
| Income |
|
| Recorded |
|
| Income |
|
Originated loans |
| Investment |
|
| Recognized |
|
| Investment |
|
| Recognized |
| Investment |
|
| Recognized |
|
| Investment |
|
| Recognized |
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 2,761 |
| $ | 10 |
| $ | 4,931 |
| $ | 24 | $ | 3,121 |
| $ | 30 |
| $ | 4,431 |
| $ | 72 |
|
Commercial and Multi-family |
| 12,269 |
|
| 68 |
|
| 11,411 |
|
| 88 |
| 12,397 |
|
| 205 |
|
| 10,928 |
|
| 265 |
|
Construction |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| 995 |
|
| - |
|
Commercial business(1) |
| 664 |
|
| - |
|
| 1,800 |
|
| 37 |
| 528 |
|
| - |
|
| 1,897 |
|
| 112 |
|
Home equity(2) |
| 879 |
|
| 10 |
|
| 924 |
|
| 7 |
| 875 |
|
| 29 |
|
| 995 |
|
| 22 |
|
Consumer |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 16,573 |
| $ | 88 |
| $ | 19,066 |
| $ | 156 | $ | 16,921 |
| $ | 264 |
| $ | 19,246 |
| $ | 471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 4,360 |
| $ | 35 |
| $ | 4,771 |
| $ | 35 | $ | 4,970 |
| $ | 105 |
| $ | 5,119 |
| $ | 104 |
|
Commercial and Multi-family |
| 4,036 |
|
| 56 |
|
| 5,197 |
|
| 58 |
| 4,070 |
|
| 168 |
|
| 4,882 |
|
| 174 |
|
Construction |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
Home equity(2) |
| 462 |
|
| - |
|
| 571 |
|
| 2 |
| 533 |
|
| 10 |
|
| 595 |
|
| 6 |
|
Consumer |
| - |
|
| 4 |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total | $ | 8,858 |
| $ | 95 |
| $ | 10,539 |
| $ | 95 | $ | 9,573 |
| $ | 283 |
| $ | 10,596 |
| $ | 284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 1,422 |
| $ | 22 |
| $ | 1,455 |
| $ | - | $ | 1,426 |
| $ | 65 |
| $ | 1,458 |
| $ | - |
|
Commercial and Multi-family |
| 517 |
|
| 7 |
|
| 527 |
|
| 7 |
| 518 |
|
| 20 |
|
| 528 |
|
| 21 |
|
Construction |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
Home equity(2) |
| - |
|
| - |
|
| - |
|
| 22 |
| - |
|
| - |
|
| 25 |
|
| 67 |
|
Consumer |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 1,939 |
| $ | 29 |
| $ | 1,982 |
| $ | 29 | $ | 1,944 |
| $ | 85 |
| $ | 2,011 |
| $ | 88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Impaired Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded: | $ | 27,370 |
| $ | 212 |
| $ | 31,587 |
| $ | 280 | $ | 28,438 |
| $ | 632 |
| $ | 31,853 |
| $ | 843 |
|
__________
(1) Includes business lines of credit.(2) Includes home equity lines of credit.
20
Note 6-Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes the average recorded investment and interest income recognized on impaired loans with allowance recorded by portfolio class for the three and nine months ended September 30, 2017 and 2016. (In Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
|
| ||||||||||||||||||
|
| 2017 |
|
| 2017 |
|
| 2016 |
|
| 2016 |
| 2017 |
|
| 2017 |
|
| 2016 |
|
| 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average |
|
| Interest |
|
| Average |
|
| Interest |
| Average |
|
| Interest |
|
| Average |
|
| Interest |
|
|
|
| Recorded |
|
| Income |
|
| Recorded |
|
| Income |
| Recorded |
|
| Income |
|
| Recorded |
|
| Income |
|
|
Originated loans |
| Investment |
|
| Recognized |
|
| Investment |
|
| Recognized |
| Investment |
|
| Recognized |
|
| Investment |
|
| Recognized |
|
|
with an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 5,887 |
| $ | 46 |
| $ | 5,570 |
| $ | 64 | $ | 6,075 |
| $ | 137 |
| $ | 5,587 |
| $ | 191 |
|
|
Commercial and Multi-family |
| 357 |
|
| - |
|
| 2,997 |
|
| 24 |
| 561 |
|
| - |
|
| 3,554 |
|
| 72 |
|
|
Construction |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
Commercial business(1) |
| 3,196 |
|
| 20 |
|
| 2,273 |
|
| 26 |
| 3,411 |
|
| 61 |
|
| 2,186 |
|
| 78 |
|
|
Home equity(2) |
| 196 |
|
| 2 |
|
| 265 |
|
| 4 |
| 242 |
|
| 5 |
|
| 257 |
|
| 12 |
|
|
Consumer |
| - |
|
| - |
|
| 632 |
|
| - |
| - |
|
| - |
|
| 842 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 9,636 |
| $ | 68 |
| $ | 11,737 |
| $ | 118 | $ | 10,289 |
| $ | 203 |
| $ | 12,426 |
| $ | 353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 3,350 |
| $ | 21 |
| $ | 3,867 |
| $ | 22 | $ | 2,842 |
| $ | 64 |
| $ | 3,782 |
| $ | 66 |
|
|
Commercial and Multi-family |
| 1,712 |
|
| 16 |
|
| 1,033 |
|
| 11 |
| 1,714 |
|
| 47 |
|
| 1,175 |
|
| 34 |
|
|
Construction |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
Home equity(2) |
| 96 |
|
| 2 |
|
| 730 |
|
| 5 |
| 99 |
|
| 5 |
|
| 725 |
|
| 13 |
|
|
Consumer |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total | $ | 5,158 |
| $ | 39 |
| $ | 5,630 |
| $ | 38 | $ | 4,655 |
| $ | 116 |
| $ | 5,682 |
| $ | 113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | - |
| $ | - |
| $ | - |
| $ | - | $ | - |
| $ | - |
| $ | - |
| $ | - |
|
|
Commercial and Multi-family |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
Construction |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| 54 |
|
| - |
|
|
Home equity(2) |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
Consumer |
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | - |
| $ | - |
| $ | - |
| $ | - | $ | - |
| $ | - |
| $ | 54 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Impaired Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with an allowance recorded: | $ | 14,794 |
| $ | 107 |
| $ | 17,367 |
| $ | 156 | $ | 14,944 |
| $ | 319 |
| $ | 18,162 |
| $ | 466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
(1) Includes business lines of credit.(2) Includes home equity lines of credit.
21
Note 6-Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes the recorded investment and unpaid principal balances where there is no related allowance on impaired loans by portfolio class at
September 30, 2017 and December 31, 2016. (In Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of September 30, 2017 |
|
| As of December 31, 2016 | ||||||||||||
|
| Recorded |
|
| Unpaid Principal |
|
| Related |
|
| Recorded |
|
| Unpaid Principal |
|
| Related |
Originated loans |
| Investment |
|
| Balance |
|
| Allowance |
|
| Investment |
|
| Balance |
|
| Allowance |
with no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 2,082 |
| $ | 2,242 |
| $ | - |
| $ | 5,158 |
| $ | 5,341 |
| $ | - |
Commercial and multi-family |
| 12,462 |
|
| 13,148 |
|
| - |
|
| 10,498 |
|
| 10,722 |
|
| - |
Construction |
| - |
|
| - |
|
| - |
|
| 6 |
|
| 6 |
|
| - |
Commercial business(1) |
| 159 |
|
| 727 |
|
| - |
|
| 1,022 |
|
| 1,966 |
|
| - |
Home equity(2) |
| 897 |
|
| 942 |
|
| - |
|
| 1,022 |
|
| 1,101 |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 15,600 |
| $ | 17,059 |
| $ | - |
| $ | 17,706 |
| $ | 19,136 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value with no related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 4,300 |
| $ | 4,432 |
| $ | - |
| $ | 5,577 |
| $ | 6,149 |
| $ | - |
Commercial and Multi-family |
| 3,956 |
|
| 3,956 |
|
| - |
|
| 5,575 |
|
| 5,710 |
|
| - |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Home equity(2) |
| 343 |
|
| 394 |
|
| - |
|
| 545 |
|
| 650 |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 8,599 |
| $ | 8,782 |
| $ | - |
| $ | 11,697 |
| $ | 12,509 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
credit with no related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 1,419 |
| $ | 2,041 |
| $ | - |
| $ | 1,443 |
| $ | 2,069 |
| $ | - |
Commercial and Multi-family |
| 515 |
|
| 541 |
|
| - |
|
| 523 |
|
| 552 |
|
| - |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 1,934 |
| $ | 2,582 |
| $ | - |
| $ | 1,966 |
| $ | 2,621 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Impaired Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with no related allowance recorded: | $ | 26,133 |
| $ | 28,423 |
| $ | - |
| $ | 31,369 |
| $ | 34,266 |
| $ | - |
__________
(1) Includes business lines of credit.(2) Includes home equity lines of credit.
22
Note 6-Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes the recorded investment, unpaid principal balance, and the related allowance on impaired loans by portfolio class at September 30, 2017 and December 31, 2016. (In Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of September 30, 2017 |
|
| As of December 31, 2016 | ||||||||||||
|
| Recorded |
|
| Unpaid Principal |
|
| Related |
|
| Recorded |
|
| Unpaid Principal |
|
| Related |
Originated loans |
| Investment |
|
| Balance |
|
| Allowance |
|
| Investment |
|
| Balance |
|
| Allowance |
with an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 6,175 |
| $ | 6,276 |
| $ | 508 |
| $ | 5,493 |
| $ | 5,493 |
| $ | 496 |
Commercial and Multi-family |
| 7 |
|
| 7 |
|
| 7 |
|
| 1,827 |
|
| 1,866 |
|
| 380 |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Commercial business(1) |
| 3,380 |
|
| 4,202 |
|
| 2,617 |
|
| 3,066 |
|
| 4,006 |
|
| 2,359 |
Home equity(2) |
| 158 |
|
| 158 |
|
| 26 |
|
| 340 |
|
| 340 |
|
| 32 |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 9,720 |
| $ | 10,643 |
| $ | 3,158 |
| $ | 10,726 |
| $ | 11,705 |
| $ | 3,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value with an allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
Residential one-to-four family | $ | 3,347 |
| $ | 3,588 |
| $ | 288 |
| $ | 2,023 |
| $ | 2,080 |
| $ | 202 |
Commercial and Multi-family |
| 1,706 |
|
| 1,759 |
|
| 194 |
|
| 781 |
|
| 781 |
|
| 37 |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Home equity(2) |
| 86 |
|
| 86 |
|
| 7 |
|
| 520 |
|
| 571 |
|
| 24 |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total | $ | 5,139 |
| $ | 5,433 |
| $ | 489 |
| $ | 3,324 |
| $ | 3,432 |
| $ | 263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
credit with an allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
Commercial and Multi-family |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Impaired Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with an allowance recorded: | $ | 14,859 |
| $ | 16,076 |
| $ | 3,647 |
| $ | 14,050 |
| $ | 15,137 |
| $ | 3,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Impaired Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with no related allowance recorded: | $ | 26,133 |
| $ | 28,423 |
| $ | - |
| $ | 31,369 |
| $ | 34,266 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Impaired Loans: | $ | 40,992 |
| $ | 44,499 |
| $ | 3,647 |
| $ | 45,419 |
| $ | 49,403 |
| $ | 3,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
23
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table presents the total troubled debt restructured (“TDR”) loans at September 30, 2017, excluding the purchase impairment mark on the acquired loans with deteriorated credit. (Dollars In Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accrual |
| Non-accrual |
| Total | |||||||||
September 30, 2017 |
| # of Loans |
|
| Amount |
| # of Loans |
|
| Amount |
| # of Loans |
|
| Amount |
Originated loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family |
| 4 |
| $ | 1,113 |
| 3 |
| $ | 2,239 |
| 7 |
| $ | 3,352 |
Commercial and multi-family |
| 8 |
|
| 4,865 |
| 8 |
|
| 5,493 |
| 16 |
|
| 10,358 |
Construction |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Commercial business(1) |
| 1 |
|
| 416 |
| 2 |
|
| 1,412 |
| 3 |
|
| 1,828 |
Home equity(2) |
| 5 |
|
| 794 |
| 1 |
|
| 44 |
| 6 |
|
| 838 |
Consumer |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: |
| 18 |
| $ | 7,188 |
| 14 |
| $ | 9,188 |
| 32 |
| $ | 16,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family |
| 19 |
| $ | 4,203 |
| 7 |
| $ | 2,079 |
| 26 |
| $ | 6,282 |
Commercial and Multi-family |
| 13 |
|
| 4,725 |
| 1 |
|
| 590 |
| 14 |
|
| 5,315 |
Construction |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Home equity(2) |
| 2 |
|
| 263 |
| - |
|
| - |
| 2 |
|
| 263 |
Consumer |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: |
| 34 |
| $ | 9,191 |
| 8 |
| $ | 2,669 |
| 42 |
| $ | 11,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family |
| 5 |
| $ | 2,041 |
| - |
| $ | - |
| 5 |
| $ | 2,041 |
Commercial and Multi-family |
| 1 |
|
| 541 |
| - |
|
| - |
| 1 |
|
| 541 |
Construction |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Consumer |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: |
| 6 |
| $ | 2,582 |
| - |
| $ | - |
| 6 |
| $ | 2,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
| 58 |
| $ | 18,961 |
| 22 |
| $ | 11,857 |
| 80 |
| $ | 30,818 |
__________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
24
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table presents the total troubled debt restructured loans at December 31, 2016, excluding the purchase impairment mark on the acquired loans with deteriorated credit. (Dollars In Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accrual |
| Non-accrual |
| Total | |||||||||
December 31, 2016 |
| # of Loans |
|
| Amount |
| # of Loans |
|
| Amount |
| # of Loans |
|
| Amount |
Originated loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family |
| 8 |
| $ | 2,687 |
| - |
| $ | - |
| 8 |
| $ | 2,687 |
Commercial and multi-family |
| 9 |
|
| 5,141 |
| 8 |
|
| 2,297 |
| 17 |
|
| 7,438 |
Construction |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Commercial business(1) |
| 2 |
|
| 1,868 |
| 1 |
|
| 345 |
| 3 |
|
| 2,213 |
Home equity(2) |
| 5 |
|
| 817 |
| 1 |
|
| 46 |
| 6 |
|
| 863 |
Consumer |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: |
| 24 |
| $ | 10,513 |
| 10 |
| $ | 2,688 |
| 34 |
| $ | 13,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family |
| 18 |
| $ | 3,979 |
| 5 |
| $ | 1,893 |
| 23 |
| $ | 5,872 |
Commercial and Multi-family |
| 13 |
|
| 4,807 |
| 1 |
|
| 583 |
| 14 |
|
| 5,390 |
Construction |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Home equity(2) |
| 2 |
|
| 265 |
| 1 |
|
| 219 |
| 3 |
|
| 484 |
Consumer |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: |
| 33 |
| $ | 9,051 |
| 7 |
| $ | 2,695 |
| 40 |
| $ | 11,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family |
| 5 |
| $ | 2,069 |
| - |
| $ | - |
| 5 |
| $ | 2,069 |
Commercial and Multi-family |
| 1 |
|
| 552 |
| - |
|
| - |
| 1 |
|
| 552 |
Construction |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Consumer |
| - |
|
| - |
| - |
|
| - |
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: |
| 6 |
| $ | 2,621 |
| - |
| $ | - |
| 6 |
| $ | 2,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
| 63 |
| $ | 22,185 |
| 17 |
| $ | 5,383 |
| 80 |
| $ | 27,568 |
__________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
25
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
A (“TDR”) is a loan that has been modified whereby the Company has agreed to make certain concessions to a borrower to meet the needs of both the borrower and the Company to maximize the ultimate recovery of a loan. A TDR occurs when a borrower is experiencing, or is expected to experience, financial difficulties and the loan is modified using a modification that would otherwise not be granted to the borrower. The types of concessions granted generally include, but are not limited to interest rate reductions, limitations on the accrued interest charged, term extensions, and deferment of principal.
The following table summarizes information with regards to troubled debt restructurings which occurred during the three months ended September 30, 2017. (Dollars in Thousands):
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
| Pre-Modification Outstanding |
|
| Post-Modification Outstanding |
|
| Number of Contracts |
|
| Recorded Investments |
|
| Recorded Investments |
|
|
|
|
|
|
|
|
|
Originated loans: |
|
|
|
|
|
|
|
|
Residential one-to-four family |
| - |
| $ | - |
| $ | - |
Commercial and multi-family |
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: |
| - |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
Residential one-to-four family |
| 1 |
| $ | 212 |
| $ | 243 |
Commercial and Multi-family |
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: |
| 1 |
| $ | 212 |
| $ | 243 |
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
|
|
|
Residential one-to-four family |
| - |
| $ | - |
| $ | - |
Commercial and Multi-family |
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: |
| - |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
|
|
Total |
| 1 |
| $ | 212 |
| $ | 243 |
__________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
The loans included above are considered TDRs as a result of the Company implementing one or more of the following concessions: granting a material extension of time, issuing a forbearance agreement, adjusting the interest rate to a below market rate, accepting interest only for a period of time or a change in amortization period. All TDRs were considered impaired and therefore were individually evaluated for impairment in the calculation of the allowance for loan losses. Prior to their classification as TDRs, certain of these loans had been collectively evaluated for impairment in the calculation of the allowance for loan losses.
26
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes information in regards to troubled debt restructurings for which there was a payment default within twelve months of restructuring during the three months ended September 30, 2017. (Dollars in thousands)
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
| Number of Contracts |
|
| Recorded Investment |
|
|
|
|
|
|
Originated loans: |
|
|
|
|
|
Residential one-to-four family |
| 1 |
| $ | 299 |
Commercial and multi-family |
| 2 |
|
| 772 |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: |
| 3 |
| $ | 1,071 |
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
Residential one-to-four family |
| 1 |
| $ | 103 |
Commercial and Multi-family |
| - |
|
| - |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: |
| 1 |
| $ | 103 |
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
Residential one-to-four family |
| - |
| $ | - |
Commercial and Multi-family |
| - |
|
| - |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: |
| 0 |
| $ | 0 |
|
|
|
|
|
|
Total |
| 4 |
| $ | 1,174 |
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
27
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes information with regards to troubled debt restructurings which occurred during the nine months ended September 30, 2017 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2017 |
|
|
|
| Pre-Modification Outstanding |
|
| Post-Modification Outstanding |
|
| Number of Contracts |
|
| Recorded Investments |
|
| Recorded Investments |
|
|
|
|
|
|
|
|
|
Originated loans: |
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 2 |
| $ | 1,445 |
| $ | 1,556 |
Commercial and multi-family |
| 3 |
|
| 4,441 |
|
| 4,608 |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 5 |
| $ | 5,886 |
| $ | 6,164 |
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 5 |
| $ | 1,052 |
| $ | 1,266 |
Commercial and Multi-family |
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 5 |
| $ | 1,052 |
| $ | 1,266 |
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | - |
| $ | - |
| $ | - |
Commercial and Multi-family |
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: | $ | - |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
|
|
Total | $ | 10 |
| $ | 6,938 |
| $ | 7,430 |
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
28
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes information in regard to troubled debt restructurings for which there was a payment default within twelve months of restructuring during the nine months ended September 30, 2017. (Dollars in Thousands)
|
|
|
|
|
|
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
| Number of Contracts |
|
| Recorded Investment |
|
|
|
|
|
|
Originated loans: |
|
|
|
|
|
|
| 1 |
| $ | 299 |
Commercial and multi-family |
| 2 |
|
| 772 |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: |
| 3 |
| $ | 1,071 |
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
Residential one-to-four family |
| 1 |
| $ | 103 |
Commercial and Multi-family |
| - |
|
| - |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: |
| 1 |
| $ | 103 |
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
Residential one-to-four family |
| - |
| $ | - |
Commercial and Multi-family |
| - |
|
| - |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: |
| - |
| $ | - |
|
|
|
|
|
|
Total |
| 4 |
| $ | 1,174 |
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
29
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes information with regards to troubled debt restructurings which occurred during the three months ended September 30, 2016. (Dollars in thousands):
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2016 |
|
|
|
| Pre-Modification Outstanding |
|
| Post-Modification Outstanding |
|
| Number of Contracts |
|
| Recorded Investments |
|
| Recorded Investments |
|
|
|
|
|
|
|
|
|
Originated loans: |
|
|
|
|
|
|
|
|
Residential one-to-four family |
| - |
| $ | - |
| $ | - |
Commercial and multi-family |
| 2 |
|
| 537 |
|
| 640 |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| 1 |
|
| - |
|
| 1,137 |
Home equity(2) |
| 1 |
|
| 155 |
|
| 162 |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: |
| 4 |
| $ | 692 |
| $ | 1939 |
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
Residential one-to-four family |
| 1 |
| $ | 278 |
| $ | 320 |
Commercial and Multi-family |
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: |
| 1 |
| $ | 278 |
| $ | 320 |
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
|
|
|
Residential one-to-four family |
| - |
| $ | - |
| $ | - |
Commercial and Multi-family |
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: |
| - |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
|
|
Total |
| 5 |
| $ | 970 |
| $ | 2,259 |
30
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes information in regards to troubled debt restructurings for which there was a payment default within twelve months of restructuring during the three months ended September 30, 2016 (dollars in thousands):
|
|
|
|
|
|
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
| Number of Contracts |
|
| Recorded Investment |
|
|
|
|
|
|
Originated loans: |
|
|
|
|
|
Residential one-to-four family |
| - |
| $ | - |
Commercial and multi-family |
| - |
|
| - |
Construction |
| - |
|
| - |
Commercial business(1) |
| 1 |
|
| 226 |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: |
| 1 |
| $ | 226 |
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
Residential one-to-four family |
| - |
| $ | - |
Commercial and Multi-family |
| - |
|
| - |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: |
| - |
| $ | - |
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
Residential one-to-four family |
| - |
| $ | - |
Commercial and Multi-family |
| - |
|
| - |
Construction |
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
Consumer |
| - |
|
| - |
|
|
|
|
|
|
Sub-total: |
| - |
| $ | - |
|
|
|
|
|
|
Total |
| 1 |
| $ | 226 |
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
31
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table summarizes information with regards to troubled debt restructurings which occurred during the nine months ended September 30, 2016. (Dollars in thousands):
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016 |
|
|
|
| Pre-Modification Outstanding |
|
| Post-Modification Outstanding |
|
| Number of Contracts |
|
| Recorded Investments |
|
| Recorded Investments |
|
|
|
|
|
|
|
|
|
Originated loans: |
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 1 |
| $ | 71 |
| $ | 71 |
Commercial and multi-family |
| 2 |
|
| 536 |
|
| 640 |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| 1 |
|
| - |
|
| 1,137 |
Home equity(2) |
| 1 |
|
| 155 |
|
| 162 |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 5 |
| $ | 762 |
| $ | 2010 |
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 1 |
| $ | 278 |
| $ | 320 |
Commercial and Multi-family |
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| 1 |
|
| 223 |
|
| 223 |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 2 |
| $ | 501 |
| $ | 543 |
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | - |
| $ | - |
| $ | - |
Commercial and Multi-family |
| - |
|
| - |
|
| - |
Construction |
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Sub-total: | $ | - |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
|
|
Total | $ | 7 |
| $ | 1,263 |
| $ | 2,553 |
There were no troubled debt restructurings for which there was a payment default within twelve months of restructuring during the nine months ended September 30, 2016.
32
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued
The following table sets forth the delinquency status of total loans receivable as of September 30, 2017. (In Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans Receivable | |
| 30-59 Days |
| 60-90 Days |
| Greater Than |
| Total Past |
|
|
|
| Total Loans |
| >90 Days | ||||||
| Past Due |
| Past Due |
| 90 Days |
| Due |
| Current |
| Receivable |
| and Accruing | |||||||
|
| (In Thousands) | ||||||||||||||||||
Originated loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 1,212 |
| $ | 1,425 |
| $ | 2,272 |
| $ | 4,909 |
| $ | 173,624 |
| $ | 178,533 |
| $ | - |
Commercial and multi-family |
| 16,542 |
|
| 830 |
|
| 127 |
|
| 17,499 |
|
| 1,164,599 |
|
| 1,182,098 |
|
| - |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| 60,699 |
|
| 60,699 |
|
| - |
Commercial business(1) |
| 625 |
|
| - |
|
| 1,658 |
|
| 2,283 |
|
| 61,422 |
|
| 63,705 |
|
| - |
Home equity(2) |
| 325 |
|
| - |
|
| 44 |
|
| 369 |
|
| 37,928 |
|
| 38,297 |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| 1,239 |
|
| 1,239 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 18,704 |
| $ | 2,255 |
| $ | 4,101 |
| $ | 25,060 |
| $ | 1,499,511 |
| $ | 1,524,571 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 391 |
| $ | - |
| $ | 1,790 |
| $ | 2,181 |
| $ | 48,421 |
|
| 50,602 |
| $ | 233 |
Commercial and multi-family |
| 2,204 |
|
| - |
|
| 1,291 |
|
| 3,495 |
|
| 46,051 |
|
| 49,546 |
|
| 701 |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| 3,355 |
|
| 3,355 |
|
| - |
Home equity(2) |
| 233 |
|
| 89 |
|
| 133 |
|
| 455 |
|
| 8,761 |
|
| 9,216 |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| 156 |
|
| 156 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 2,828 |
| $ | 89 |
| $ | 3,214 |
| $ | 6,131 |
| $ | 106,744 |
| $ | 112,875 |
| $ | 934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | 1,419 |
|
| 1,419 |
| $ | - |
Commercial and multi-family |
| - |
|
| - |
|
| - |
|
| - |
|
| 737 |
|
| 737 |
|
| - |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | 2,156 |
| $ | 2,156 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total | $ | 21,532 |
| $ | 2,344 |
| $ | 7,315 |
| $ | 31,191 |
| $ | 1,608,411 |
| $ | 1,639,602 |
| $ | 934 |
_________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
33
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table sets forth the delinquency status of total loans receivable at December 31, 2016. (In Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans Receivable | |
| 30-59 Days |
| 60-90 Days |
| Greater Than |
| Total Past |
|
|
|
| Total Loans |
| >90 Days | ||||||
| Past Due |
| Past Due |
| 90 Days |
| Due |
| Current |
| Receivable |
| and Accruing | |||||||
|
| (In Thousands) | ||||||||||||||||||
Originated loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 2,873 |
| $ | 963 |
| $ | 1,889 |
| $ | 5,725 |
| $ | 136,356 |
| $ | 142,081 |
| $ | - |
Commercial and multi-family |
| 10,472 |
|
| 989 |
|
| 5,182 |
|
| 16,643 |
|
| 1,040,163 |
|
| 1,056,806 |
|
| 2,828 |
Construction |
| 348 |
|
| - |
|
| - |
|
| 348 |
|
| 70,519 |
|
| 70,867 |
|
| - |
Commercial business(1) |
| 491 |
|
| 69 |
|
| 315 |
|
| 875 |
|
| 62,569 |
|
| 63,444 |
|
| - |
Home equity(2) |
| 78 |
|
| 218 |
|
| - |
|
| 296 |
|
| 32,121 |
|
| 32,417 |
|
| - |
Consumer |
| - |
|
| - |
|
| 6 |
|
| 6 |
|
| 1,263 |
|
| 1,269 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 14,262 |
| $ | 2,239 |
| $ | 7,392 |
| $ | 23,893 |
| $ | 1,342,991 |
| $ | 1,366,884 |
| $ | 2,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | 498 |
| $ | 515 |
| $ | 3,138 |
| $ | 4,151 |
| $ | 52,159 |
|
| 56,310 |
| $ | - |
Commercial and multi-family |
| 1,958 |
|
| 221 |
|
| 737 |
|
| 2,916 |
|
| 57,506 |
|
| 60,422 |
|
| - |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| 4,460 |
|
| 4,460 |
|
| - |
Home equity(2) |
| 309 |
|
| 132 |
|
| 280 |
|
| 721 |
|
| 13,156 |
|
| 13,877 |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| 225 |
|
| 225 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | 2,765 |
| $ | 868 |
| $ | 4,155 |
| $ | 7,788 |
| $ | 127,506 |
| $ | 135,294 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential one-to-four family | $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | 1,443 |
| $ | 1,443 |
| $ | - |
Commercial and multi-family |
| - |
|
| - |
|
| - |
|
| - |
|
| 753 |
|
| 753 |
|
| - |
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Home equity(2) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total: | $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | 2,196 |
| $ | 2,196 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total | $ | 17,027 |
| $ | 3,107 |
| $ | 11,547 |
| $ | 31,681 |
| $ | 1,472,693 |
| $ | 1,504,374 |
| $ | 2,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
34
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table presents the loan portfolio types summarized by the aggregate pass rating and the classified ratings of special mention substandard, doubtful, and losssubstandard within the Company’s internal risk rating system as of September 30, 2017. (In Thousands):2022 (in thousands). As of September 30, 2022, the Company had no loans with the classified rating of doubtful or loss.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass | Special Mention | Substandard | Total | |||||||
| Pass |
| Special Mention |
| Substandard |
| Doubtful |
| Loss |
| Total | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Originated loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Residential one-to-four family | $ | 170,010 |
| $ | 4,825 |
| $ | 3,698 |
| $ | - |
| $ | - |
| $ | 178,533 | |||||||||||
Commercial and multi-family |
| 1,167,586 |
|
| 3,332 |
|
| 11,109 |
|
| - |
|
| 71 |
|
| 1,182,098 | |||||||||||
Construction |
| 60,232 |
|
| 467 |
|
| - |
|
| - |
|
| - |
|
| 60,699 | |||||||||||
Commercial business(1) |
| 58,440 |
|
| 1,728 |
|
| 3,495 |
|
| - |
|
| 42 |
|
| 63,705 | |||||||||||
Home equity(2) |
| 36,998 |
|
| 910 |
|
| 389 |
|
| - |
|
| - |
|
| 38,297 | |||||||||||
Consumer |
| 1,232 |
|
| 7 |
|
| - |
|
| - |
|
| - |
|
| 1,239 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Sub-total: | $ | 1,494,498 |
| $ | 11,269 |
| $ | 18,691 |
| $ | - |
| $ | 113 |
| $ | 1,524,571 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Residential one-to-four family | $ | 46,246 |
| $ | 611 |
| $ | 3,745 |
| $ | - |
| $ | - |
|
| 50,602 | |||||||||||
Commercial and multi-family |
| 45,626 |
|
| 669 |
|
| 3,251 |
|
| - |
|
| - |
|
| 49,546 | |||||||||||
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | |||||||||||
Commercial business(1) |
| 3,355 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 3,355 | |||||||||||
Home equity(2) |
| 9,050 |
|
| - |
|
| 159 |
|
| - |
|
| 7 |
|
| 9,216 | |||||||||||
Consumer |
| 156 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 156 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Sub-total: | $ | 104,433 |
| $ | 1,280 |
| $ | 7,155 |
| $ | - |
| $ | 7 |
| $ | 112,875 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Residential one-to-four family | $ | 150 |
| $ | 572 |
| $ | 697 |
| $ | - |
| $ | - |
|
| 1,419 | $ | 241,324 | $ | 485 | $ | 429 | $ | 242,238 | |||
Commercial and multi-family |
| 222 |
|
| 515 |
|
| - |
|
| - |
|
| - |
|
| 737 | 2,122,215 | 20,064 | 22,041 | 2,164,320 | |||||||
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | 149,923 | - | 3,180 | 153,103 | |||||||
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | 196,583 | 4,760 | 4,318 | 205,661 | |||||||
Home equity(2) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | 55,803 | 49 | 212 | 56,064 | |||||||
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | 2,545 | - | - | 2,545 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Sub-total: | $ | 372 |
| $ | 1,087 |
| $ | 697 |
| $ | - |
| $ | - |
| $ | 2,156 | |||||||||||
Total Gross Loans | $ | 2,768,393 | $ | 25,358 | $ | 30,180 | $ | 2,823,931 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Gross Loans | $ | 1,599,303 |
| $ | 13,636 |
| $ | 26,543 |
| $ | - |
| $ | 120 |
| $ | 1,639,602 | |||||||||||
_________
_________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
35
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)
The following table presents the loan portfolio types summarized by the aggregate pass rating and the classified ratings of special mention substandard, doubtful, and losssubstandard within the Company’s internal risk rating system as of December 31, 2016. (In Thousands):2021 (in thousands). As of December 31, 2021, the Company had no loans with the classified rating of doubtful or loss.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| Pass |
| Special Mention |
| Substandard |
| Doubtful |
| Loss |
| Total | Pass | Special Mention | Substandard | Total | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Originated loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Residential one-to-four family | $ | 131,807 |
| $ | 6,393 |
| $ | 3,881 |
| $ | - |
| $ | - |
| $ | 142,081 | $ | 223,660 | $ | 505 | $ | 369 | $ | 224,534 | |||
Commercial and multi-family |
| 1,039,519 |
|
| 6,263 |
|
| 10,811 |
|
| - |
|
| 213 |
|
| 1,056,806 | 1,647,701 | 45,087 | 27,386 | 1,720,174 | |||||||
Construction |
| 70,391 |
|
| 476 |
|
| - |
|
| - |
|
| - |
|
| 70,867 | 151,057 | - | 2,847 | 153,904 | |||||||
Commercial business(1) |
| 57,567 |
|
| 1,789 |
|
| 4,000 |
|
| - |
|
| 88 |
|
| 63,444 | 178,056 | 4,767 | 8,316 | 191,139 | |||||||
Home equity(2) |
| 31,052 |
|
| 816 |
|
| 549 |
|
| - |
|
| - |
|
| 32,417 | 50,230 | - | 239 | 50,469 | |||||||
Consumer |
| 1,249 |
|
| 14 |
|
| 6 |
|
| - |
|
| - |
|
| 1,269 | 3,717 | - | - | 3,717 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Sub-total: | $ | 1,331,585 |
| $ | 15,751 |
| $ | 19,247 |
| $ | - |
| $ | 301 |
| $ | 1,366,884 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Acquired loans recorded at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Residential one-to-four family | $ | 51,628 |
| $ | 626 |
| $ | 4,056 |
| $ | - |
| $ | - |
|
| 56,310 | |||||||||||
Commercial and multi-family |
| 55,216 |
|
| 1,311 |
|
| 3,895 |
|
| - |
|
| - |
|
| 60,422 | |||||||||||
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | |||||||||||
Commercial business(1) |
| 4,460 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 4,460 | |||||||||||
Home equity(2) |
| 12,652 |
|
| 424 |
|
| 782 |
|
| - |
|
| 19 |
|
| 13,877 | |||||||||||
Consumer |
| 225 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 225 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Sub-total: | $ | 124,181 |
| $ | 2,361 |
| $ | 8,733 |
| $ | - |
| $ | 19 |
| $ | 135,294 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Acquired loans with deteriorated credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Residential one-to-four family | $ | 147 |
| $ | 272 |
| $ | 1,024 |
| $ | - |
| $ | - |
|
| 1,443 | |||||||||||
Commercial and multi-family |
| 230 |
|
| 523 |
|
| - |
|
| - |
|
| - |
|
| 753 | |||||||||||
Construction |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | |||||||||||
Commercial business(1) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | |||||||||||
Home equity(2) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | |||||||||||
Consumer |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Sub-total: | $ | 377 |
| $ | 795 |
| $ | 1,024 |
| $ | - |
| $ | - |
| $ | 2,196 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Gross Loans | $ | 1,456,143 |
| $ | 18,907 |
| $ | 29,004 |
| $ | - |
| $ | 320 |
| $ | 1,504,374 | $ | 2,254,421 | $ | 50,359 | $ | 39,157 | $ | 2,343,937 | |||
________
________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.
Note 8 – Stockholders’ Equity
On September 23, 2022, the company closed a round of private placement of Series I Noncumulative Perpetual Stock, par value $0.01 per share (the “Series I Preferred Stock”), resulting in gross proceeds of $4,440,000 for 444 shares.
On May 1, 2022, the Company redeemed all 940 outstanding shares of it’s Series D 4.5% Noncumulative Perpetual Preferred Stock, at their face value of $10,000 per share, for a total redemption amount of $9.4 million.
On March 24, 2022, BCB Bancorp, Inc. (the “Company”) closed a round of private placement of Series I Noncumulative Perpetual Stock, par value $0.01 per share (the “Series I Preferred Stock”), resulting in gross proceeds of $2,620,000 for 260 shares.
On February 4, 2022, the Company redeemed all 533 outstanding shares of its Series G 6.0% Noncumulative Perpetual Preferred Stock, at their face value of $10,000 per share, for a total redemption amount of $5.3 million.
On December 21, 2021, BCB Bancorp, Inc. (the “Company”) closed a round of private placement of Series I Noncumulative Perpetual Stock, par value $0.01 per share (the “Series I Preferred Stock”), resulting in gross proceeds of $3,200,000 for 320 shares.
Note 6 - Loans Receivable and Allowance for Loan Losses (Continued)9 – Bank Owned Life Insurance
The following table presentsBank purchased an additional $8.5 million of bank owned life insurance (“BOLI”) in January, 2021. BOLI involves life insurance purchased by the unpaid principal balanceBank on a chosen group of employees, and the relatedBank is owner and beneficiary of the policies. At September 30, 2022 the Bank had $71.1 million in BOLI. BOLI is accounted for using the cash surrender value method and is recorded investmentat its net realizable value.
Note 10 – Goodwill and Other Intangible Assets
The Company’s intangible assets consist of goodwill and core deposit intangibles in connection with the acquisition of IA Bancorp, Inc. as of April 17, 2018. The initial recording of goodwill and other intangible assets requires subjective judgments concerning estimates of the fair value of the acquired loans includedassets and assumed liabilities. Goodwill is not amortized but is subject to annual tests for impairment or more often if events or circumstances indicate it may be impaired.
The Company’s core deposit intangibles are amortized on an accelerated basis using an estimated life of 10 years and in our Consolidated Statementsaccordance with U.S. GAAP are evaluated annually for impairment. An impairment loss will be recognized if the carrying amount of Financial Condition. (In Thousands):the intangible asset is not recoverable and exceeds fair value. The carrying amount of the intangible asset is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset.
The Company believes that the fair values of its goodwill and other intangible assets were in excess of their carrying amounts and there was no impairment at September 30, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| December 31, | ||
| 2017 |
| 2016 | ||
|
|
|
|
|
|
Unpaid principal balance | $ | 117,345 |
| $ | 140,049 |
Recorded investment |
| 115,031 |
|
| 137,045 |
The following table presents changes inAmortization expense of the accretable discount on loans acquiredcore deposit intangibles was $12,000 and $37,000 for the three and nine months ended September 30, 20172022, respectively, and 2016. (In Thousands):
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||
| 2017 |
| 2016 | 2017 |
| 2016 | ||||
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period | $ | 32,720 |
| $ | 46,332 | $ | 39,119 |
| $ | 53,612 |
Accretion |
| (2,512) |
|
| (3,926) |
| (9,071) |
|
| (11,528) |
Net Reclassification from Non-Accretable Difference |
| 84 |
|
| 80 |
| 244 |
|
| 402 |
Balance, End of Period | $ | 30,292 |
| $ | 42,486 | $ | 30,292 |
| $ | 42,486 |
The following table presents changes in the non-accretable yield on loans acquired$14,000 and $43,000 for the three and nine months ended September 30, 20172021. The unamortized balance of the core deposit intangibles and 2016. (In Thousands):the amount of goodwill at September 30, 2022 was $141,000 and $5.2 million, respectively. The unamortized balance of the core deposits intangibles and the amount of goodwill at September 30, 2021 was $191,000 and $5.3 million, respectively.
Note 711 – Fair Values of Financial Instruments
Guidance on fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).
An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The only assets or liabilitiesAssets that the Company measured at fair value on a recurring basis were as follows.follows (In Thousands)thousands):
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|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
| (Level 1) |
| (Level 2) |
|
|
| ||
|
|
|
|
| Quoted Prices in |
| Significant |
| (Level 3) | |||
|
|
|
|
| Active Markets |
| Other |
| Significant | |||
|
|
|
|
| for Identical |
| Observable |
| Unobservable | |||
Description |
| Total |
| Assets |
| Inputs |
| Inputs | ||||
As of September 30, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale - Residential mortgage-backed securities, Municipal obligations and Preferred Stock |
| $ | 100,077 |
| $ | - |
| $ | 100,077 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale — Residential mortgage-backed securities, Municipal obligations and Preferred Stock |
| $ | 94,765 |
| $ | - |
| $ | 94,765 |
| $ | - |
| (Level 1) |
| (Level 2) |
| ||||||||
Quoted Prices in | Significant | (Level 3) | ||||||||||
Active Markets | Other | Significant | ||||||||||
for Identical | Observable | Unobservable | ||||||||||
Description | Total | Assets | Inputs | Inputs | ||||||||
As of September 30, 2022: |
|
|
| |||||||||
Securities |
|
|
| |||||||||
Debt Securities Available for Sale | $ | 92,751 | $ | - | $ | 92,751 | $ | - | ||||
Marketable Equities | $ | 18,408 | $ | 18,408 | $ | - | $ | - | ||||
Total Securities | $ | 111,159 | $ | 18,408 | $ | 92,751 | $ | - | ||||
As of December 31, 2021: |
|
|
| |||||||||
Securities |
|
| ||||||||||
Debt Securities Available for Sale | $ | 85,186 | $ | - | $ | 85,186 | $ | - | ||||
Marketable Equities | $ | 25,187 | $ | 25,187 | $ | - | $ | - | ||||
Total Securities | $ | 110,373 | $ | 25,187 | $ | 85,186 | $ | - | ||||
The Company’s policy is to recognize transfers between levels as of the actual date of the event or change in circumstances that caused the transfer. There were no transfers of assets or liabilities into or out of Level 1, Level 2, or Level 3 of the fair value hierarchy during the ninethree months ended September 30, 20172022 and 2016.2021.
There were no liabilities measured at fair value on a recurring basis at September 30, 2022 or December 31, 2021.
The only assets or liabilitiesAssets that the Company measured at fair value on a nonrecurring basis were as follows. (In Thousands)thousands):
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| |||||||||||||||
|
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| |||||||||||||||
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| (Level 1) |
| (Level 2) |
|
|
|
| (Level 1) |
| (Level 2) |
| |||||||||
|
|
|
|
| Quoted Prices in |
| Significant |
| (Level 3) | Quoted Prices in | Significant | (Level 3) | ||||||||||||
|
|
|
|
| Active Markets |
| Other |
| Significant | Active Markets | Other | Significant | ||||||||||||
|
|
|
|
| for Identical |
| Observable |
| Unobservable | for Identical | Observable | Unobservable | ||||||||||||
Description |
| Total |
| Assets |
| Inputs |
| Inputs | Total | Assets | Inputs | Inputs | ||||||||||||
As of September 30, 2017 |
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| ||||||||||||
As of September 30, 2022 |
|
|
| |||||||||||||||||||||
Impaired Loans |
| $ | 11,212 |
| $ | - |
| $ | - |
| $ | 11,212 | $ | 4,900 |
| $ | - |
| $ | - |
| $ | 4,900 | |
Other real estate owned |
| $ | 1,410 |
| $ | - |
| $ | - |
| $ | 1,410 | $ | 75 |
| $ | - |
| $ | - |
| $ | 75 | |
|
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|
|
|
|
|
|
| |||||||||||||||
As of December 31, 2016: |
|
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|
|
|
|
|
|
|
| ||||||||||||
As of December 31, 2021: |
|
|
| |||||||||||||||||||||
Impaired Loans |
| $ | 10,519 |
| $ | - |
| $ | - |
| $ | 10,519 | $ | 14,796 | $ | - | $ | - | $ | 14,796 | ||||
Other real estate owned |
| $ | 3,525 |
| $ | - |
| $ | - |
| $ | 3,525 | $ | 75 |
| $ | - |
| $ | - |
| $ | 75 | |
There were no liabilities measured at fair value on a recurring basis at September 30, 2022 or December 31, 2021.
Note 711 – Fair Values of Financial Instruments (Continued)
The following tables present additional quantitative information as of September 30, 20172022 and December 31, 20162021 about assets measured at fair value on a nonrecurring basis and for which the Company has utilized adjusted Level 3 inputs to determine fair value. (Dollars in thousands):
Quantitative Information about Level 3 Fair Value Measurements | |||||
Fair Value | Valuation | Unobservable |
| ||
Estimate | Techniques | Input | Range | ||
September 30, | |||||
Impaired Loans | $ |
| Appraisal of collateral (1) | Appraisal adjustments (2) | 0%-10% |
|
| ||||
Other real estate owned | $ |
| Appraisal of collateral (1) | Appraisal adjustments (2) | 0%-10% |
Fair Value | Valuation |
|
|
|
|
| Range | ||
December 31, 2021: |
|
|
| ||
| $ | 14,796 | |||
|
|
| Appraisal of collateral (1) | Appraisal adjustments (2) | 0%-10% |
|
| ||||
Other real estate owned | $ |
| Appraisal of collateral (1) | Appraisal adjustments (2) | 0%-10% |
|
|
|
|
|
|
|
|
(1)Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not objectively determinable.
(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.
The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments as of September 30, 20172022 and December 31, 2016.2021.
Cash and Cash Equivalents and Interest-Earning Time Deposits (Carried at Cost)
The carrying amounts reported in the consolidated statements of financial condition for cash and short-term instruments approximate those assets’ fair values.
Securities
Securities (Carried at Fair Value)
The fair value of securities available for sale (carried at fair value) areis determined by obtaining quoted market prices on nationally recognized security exchanges (Level 1) or, by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.
Loans Held for Sale (Carried at Lower of Cost or Fair Value)Cost)
The fair value of loans held for sale is determined, when possible, using quoted secondary-market prices. If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for specific attributes of that loan. Loans held for sale are carried at theirthe lower of cost as of September 30, 2017 and December 31, 2016.or fair value.
Loans Receivable (Carried at Cost)
The fair valuevalues of loans, except for certain impaired loans, are estimated using discounted cash flow analyses, using market rates at the balance sheet date of the Statement of Financial Condition that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.
Note 711 – Fair Values of Financial Instruments (Continued)
Impaired Loans (Generally Carried at Fair Value)
A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement.
Impaired loans are those for which the Company has measured and recorded an impairment generally based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, at the loans observable market price or the fair value of the loan’s collateral, if the loan is collateral dependent.less estimated costs to sell. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value at September 30, 20172022 and December 31, 20162021 consisted of the loan balances of $14.86 million and $14.05$9.1 million net of a valuation allowance of $3.65$4.2 million and $3.53$22.6 million net of a valuation of loan allowance of $7.8 million, respectively.
Other Real Estate Owned (Generally Carried at Lower of Cost or Fair Value)
Real Estate Owned is generally carried at fair value when the carrying value is written downless estimated costs to fair value,sell which is determined based upon independent third-party appraisals of the properties or based upon the expected proceeds from a pending sale. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.
FHLB of New York Stock (Carried at Cost)
The carrying amount of restricted investment in bank stock approximates fair value and considers the limited marketability of such securities.
Accrued Interest Receivable and Payable (Carried at Cost)
The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.
Deposits (Carried at Cost)
The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings and money market accounts)accounts1) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.
Long-Term
Debt Including Subordinated Debentures (Carried at Cost)
Fair values of long-term debt are estimated using discounted cash flow analysis, based on quoted prices for new long-term debt with similar credit risk characteristics, terms and remaining maturity. These pricesPrices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.
Off-Balance Sheet Financial Instruments (Disclosed at Cost)
Fair values for the Company’s off-balance sheet financial instruments (lending commitments and unused lines of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing. The fair value of these commitments was deemed immaterial and is not presented in the accompanying table.
Note 711 – Fair Values of Financial Instruments (Continued)
The carrying values and estimated fair values of financial instruments were as follows as of September 30, 20172022 and December 31, 2016:2021:
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
|
|
| As of September 30, 2017 | As of September 30, 2022 | ||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||
|
|
|
|
|
|
| Quoted Prices in Active |
| Significant |
| Significant | Quoted Prices in Active | Significant | Significant | ||||||||||||||||
|
| Carrying |
|
|
|
| Markets for Identical Assets |
| Other Observable Inputs |
| Unobservable Inputs | Carrying | Markets for Identical Assets | Other Observable Inputs | Unobservable Inputs | |||||||||||||||
|
| Value |
| Fair Value |
| (Level 1) |
| (Level 2) |
| (Level 3) | Value | Fair Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||
|
|
|
|
|
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|
|
|
|
|
|
| ||||||||||||||
|
| (In Thousands) | (In Thousands) | |||||||||||||||||||||||||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Cash and cash equivalents |
| $ | 97,618 |
| $ | 97,618 |
| $ | 97,618 |
| $ | - |
| $ | - | $ | 221,024 | $ | 221,024 |
| $ | 221,024 |
| $ | - | $ | - | |||
Interest-earning time deposits |
|
| 980 |
| 980 |
|
| 980 |
|
| - |
| - | 735 | 735 |
| - |
| 735 | - | ||||||||||
Securities available for sale |
|
| 100,077 |
| 100,077 |
|
| - |
|
| 100,077 |
| - | |||||||||||||||||
Debt securities available for sale | 92,751 | 92,751 | - | 92,751 | - | |||||||||||||||||||||||||
Equity investments | 18,408 | 18,408 |
| 18,408 |
| - | - | |||||||||||||||||||||||
Loans held for sale |
|
| 2,484 |
| 2,505 |
|
| - |
|
| 2,505 |
| - | - | - |
| - |
| - | - | ||||||||||
Loans receivable, net |
|
| 1,619,245 |
| 1,629,647 |
|
| - |
|
| - |
| 1,629,647 | 2,787,015 | 2,604,820 |
| - |
| - | 2,604,820 | ||||||||||
FHLB of New York stock, at cost |
|
| 8,096 |
| 8,096 |
|
| - |
|
| 8,096 |
| - | 12,388 | 12,388 |
| - |
| 12,388 | - | ||||||||||
Accrued interest receivable |
|
| 5,808 |
| 5,808 |
|
| - |
|
| 5,808 |
| - | 11,093 | 11,093 |
| - |
| 11,093 | - | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Deposits |
|
| 1,546,148 |
| 1,549,372 |
|
| 897,870 |
|
| 651,502 |
| - | 2,712,946 | 2,400,813 |
| 1,749,373 |
| 651,440 | - | ||||||||||
Borrowings |
|
| 138,000 |
| 137,357 |
|
| - |
|
| 137,357 |
| - | 212,123 | 206,426 |
| - |
| 206,426 | - | ||||||||||
Subordinated debentures |
|
| 4,124 |
| 4,105 |
| - |
| 4,105 |
| - | 37,450 | 40,502 | - | 40,502 | - | ||||||||||||||
Accrued interest payable |
|
| 616 |
| 616 |
|
| - |
|
| 616 |
| - | 837 | 837 |
| - |
| 837 | - | ||||||||||
As of December 31, 2021 | |||||||||||||||
Quoted Prices in Active | Significant | Significant | |||||||||||||
Carrying | Markets for Identical Assets | Other Observable Inputs | Unobservable Inputs | ||||||||||||
Value | Fair Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||
| |||||||||||||||
(In Thousands) | |||||||||||||||
Financial assets: |
|
|
| ||||||||||||
Cash and cash equivalents | $ | 411,629 | $ | 411,629 |
| $ | 411,629 |
| $ | - | $ | - | |||
Interest-earning time deposits | 735 | 735 |
| - |
| 735 | - | ||||||||
Debt securities available for sale | 85,186 | 85,186 | - | 85,186 | - | ||||||||||
Equity investments | 25,187 | 25,187 |
| 25,187 |
| - | - | ||||||||
Loans held for sale | 952 | 952 |
| - |
| 952 | - | ||||||||
Loans receivable, net | 2,304,942 | 2,313,204 |
| - |
| - | 2,313,204 | ||||||||
FHLB of New York stock, at cost | 6,084 | 6,084 |
| - |
| 6,084 | - | ||||||||
Accrued interest receivable | 9,183 | 9,183 |
| - |
| 9,183 | - | ||||||||
Financial liabilities: |
|
| |||||||||||||
Deposits | 2,561,402 | 2,520,191 |
| 1,881,121 |
| 639,070 | - | ||||||||
Debt | 71,711 | 71,214 |
| - |
| 71,214 | - | ||||||||
Subordinated debentures | 37,275 | 45,020 | - | 45,020 | - | ||||||||||
Accrued interest payable | 1,051 | 1,051 |
| - |
| 1,051 | - | ||||||||
Note 12 – Subordinated debt
Note 8 – Definitive Merger Agreement
On June 7, 2017,July 30, 2018, the Company entered into an Agreementissued $33.5 million of fixed-to-floating rate subordinated debentures (the “Notes”) in a private placement. The Notes have a 10-year term and Planbear interest at a fixed annual rate of Reorganization5.625% for the first five years of the term (the "Agreement""Fixed Interest Rate Period") with IA Bancorp, Inc. ("IAB"), providing for, among other things,. From and including August 1, 2023, the merger of IAB with and intointerest rate will adjust to a floating rate based on the three-month LIBOR plus 2.72% until redemption or maturity (the "Floating Interest Rate Period"). The Notes are scheduled to mature on August 1, 2028. Subject to limited exceptions, the Company (the "Merger"), withcannot redeem the Company as the surviving entity. The Agreement also providesNotes for the mergerfirst five years of Indus-American Bank, a New Jersey chartered bankthe term. The Company will pay interest in arrears semi-annually during the Fixed Interest Rate Period and wholly owned subsidiaryquarterly during the Floating Interest Rate Period during the term of IAB, withthe Notes. The Notes constitute an unsecured and into the Bank, with the Bank as the surviving entity. The Agreement has been unanimously approved by the boards of directors of eachsubordinated obligation of the Company and IAB.
Subjectrank junior in right of payment to any senior indebtedness and obligations to general and secured creditors. The Notes qualify as Tier 2 capital for the Company for regulatory purposes, when applicable, and the portion that the Company contributes to the termsBank will qualify as Tier 1 capital for the Bank. The additional capital is used for general corporate purposes including organic growth initiatives. Subordinated debt includes associated deferred costs of $174,000 and conditions$349,000 at September 30, 2022 and December 31, 2021, respectively.
The Company also has $4,124,000 of mandatory redeemable trust preferred securities. The interest rate on these floating rate junior subordinated debentures adjusts quarterly, equal to the Agreement, at the effective time of the Merger (the "Effective Time"), IAB shareholdersthree-month LIBOR plus 2.65%.
As it is anticipated that LIBOR will have the right to receive, for each share of IAB common stock, either (i) 0.189 of a share of the Company’s common stock, or (ii) $3.05not be supported in cash, at the election of such holder, subject to adjustment if IAB's tangible common equity falls below a certain level. All such elections are subject to adjustment on a pro rata basis, so that approximately 20% of the aggregate consideration paid to IAB shareholders will be cash and approximately 80% will be the Company’s common stock. In addition,its current form after June 30, 2023, the Company is issuing two seriesreviewing the agreements for the above debentures to determine alternative reference rates and does not anticipate there will be a significant financial statement impact.
Note 13 – Lease Obligations
The Company leases 28 of preferred stock in exchange for two outstanding series of IAB preferred stock.its offices under various operating lease agreements. The two series of the Company’s preferred stock willleases have terms substantially similar to theremaining terms of one year to 10 years.The leases contain provisions for the two seriespayment by the Company of IAB preferred stock.
At the Effective Time, each option granted by IABits pro-rata share of real estate taxes, insurance, common area maintenance and other variable expenses. The Company will allocate payments made under such leases between lease and non-lease components. Some leases contain renewal options and options to purchase sharesthe assets.
The Company has elected not to recognize a lease liability and a right of IAB common stock under IAB's equity plan that is unexpired, unexercised and outstanding, whether vesteduse asset for leases with a lease term of 12 or unvested, will be canceled and converted into the right to receive a cash payment equal to the difference, if positive, between $3.05 and the exercise price of the option.fewer months.
The Agreement containsfollowing tables present certain termination rights for both the Company and IAB and further provides that a termination fee of $800,000 will be payable by IAB to the Company upon termination of the Agreement under certain specified circumstances. Subject to regulatory and shareholder approval, the Company anticipates the Merger to close in the fourth quarter of 2017 or the first quarter of 2018.
Note 9– CommonStock Offering
On September 12, 2017, the Company issued and sold in a public offering an aggregate 3,265,306 shares of our common stock at a public offering price of $12.25 per share. The Shares were registered under the Securities Act of 1933, as amended, pursuantinformation related to the Company’s shelf registration statement on Form S-3 (Registration Statement No. 333-219617) which became effective on August 10, 2017. Onleases (in thousands):
Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | ||||||||
Operating lease expense | $ | 964 | $ | 917 | $ | 2,804 | $ | 2,801 | |||
Variable lease expense-operating leases | $ | 258 | $ | 236 | $ | 734 | $ | 726 |
At September 30, 2022 | At December 31, 2021 | ||||
Supplemental balance sheet information related to leases: | |||||
Operating Leases | |||||
Operating lease right-of-use assets | $ | 11,785 | $ | 12,457 | |
Current liabilities | $ | 3,033 | $ | 3,296 | |
Operating lease liabilities (noncurrent portion) | 9,963 | 10,529 | |||
Imputed Interest | (894) | (1,073) | |||
Total operating lease liabilities | $ | 12,102 | $ | 12,752 |
The weighted average remaining lease term for operating leases at September 19, 201730, 2022 and December 31, 2021 was 5.63 years and 5.99 years, respectively. The weighted average discount rate for operating leases at September 30, 2022 and December 31, 2021 was 2.39 percent and 2.60 percent, respectively.
The following table summarizes the Company’s underwriters exercised, in part, their over-allotment optionmaturity of lease obligations for operating leases at September 30, 2022 and purchased an additional 449,796 sharesDecember 31, 2021 (in thousands):
Maturities of lease liabilities: | |||||
At September 30, 2022 | At December 31, 2021 | ||||
Operating Leases | Operating Leases | ||||
One year or less | $ | 3,033 | $ | 3,296 | |
Over one year through three years | 4,544 | 4,455 | |||
Over three years through five years | 3,082 | 3,012 | |||
Over five years | 2,337 | 3,062 | |||
Gross Operating Lease Liabilities | $ | 12,996 | $ | 13,825 | |
Imputed Interest | (894) | (1,073) | |||
Total Operating Lease Liabilities | $ | 12,102 | $ | 12,752 | |
Note 14 – Subsequent Events
On October 11, 2022, the Board of common stock. The net proceeds totaled approximately $42.8 million, after deducting underwriting discounts and commissions and other offering expenses of $2.8 million payable by us.
Keefe, Bruyette & Woods, A Stifel Company, and D.A. Davidson & Co. served as joint book-running managers for the offering. Oppenheimer & Co. acted as co-manager for the offering. NoneDirectors of the underwriting discounts and commissions or other offering expenses were incurred or paidCompany declared a cash dividend of $0.16 per share to our directors or officers or their associates or to persons owning 10% or moreshareholders of ourrecord of its common stock or to anyon November 1, 2022 with a payment date of our affiliates.November 15, 2022.
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
This report on Form 10-Q contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, or the PSLRA. Such forward-looking statements, in addition to historical information, involve risk and uncertainties, and are based on the beliefs, assumptions and expectations of our management team. Words such as “expects,” “believes,” “should,” “plans,” “anticipates,” “will,” “potential,” “could,” “intend,” “may,” “outlook,” “predict,” “project,” “would,” “estimated,” “assumes,” “likely,” and variation of such similar expressions are intended to identify such forward-looking statements. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possiblepossibly materially, from those that we anticipated in our forward-looking statements and future results could differ materially from historical performance.
Factors that could cause future results to vary from current management expectations as reflected in our forward lookingforward-looking statements include, but are not limited to:
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unfavorable economic conditions in the United States generally and particularly in our primary market area;
the effects of declines in housing markets and real estate values that may adversely impact the collateral underlying our loans;
increase in unemployment levels and slowdowns in economic growth;
our level of non-performing assets and the costs associated with resolving any problem loans including litigation and other costs;
the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of our loan and investment securities portfolios;
the credit risk associated with our loan portfolio;
changes in the quality and composition of the Bank’s loan and investment portfolios;
changes in our ability to access cost-effective funding;
deposit flows;
legislative and regulatory changes, including increases in Federal Deposit Insurance Corporation, or FDIC, insurance rates;
monetary and fiscal policies of the federal and state governments;
changes in tax policies, rates and regulations of federal, state and local tax authorities;
inflation;
demands for our loan products;
demand for financial services;
competition;
changes in the securities or secondary mortgage markets;
changes in management’s business strategies;
our ability to enter new markets successfully;
our ability to successfully integrate acquired businesses;
changes in consumer spending;
our ability to retain key employees;
the effects of any reputational, credit, interest rate, market, operational, legal, liquidity, or regulatory risk;
expanding regulatory requirements which could adversely affect operating results;
civil unrest in the communities that we serve;
the global spread of the Coronavirus Disease 2019 (“COVID-19”) and the impact that it is having on the United States, in general, and New Jersey and New York, in particular (see Item 1.A. Risk Factors in the Company’s Annual Report on Form 10-K); and
other factors discussed elsewhere in this report, and in other reports we filed with the SEC, including under “Risk Factors” in Part I, Item 1A of our annual Report on Form 10-K, in Part II, Item 1A of our quarterly reports on Form 10-Q, and our other periodic reports that we file with the SEC.
You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Form 10-Q. We do not assume any obligation to revise forward-looking statements except as may be required by law.
BCB Bancorp, Inc. is a New Jersey corporation, and is the holding company parent of BCB Community Bank, or the Bank. The Company has not engaged in any significant business activity other than owning all of the outstanding common stock of BCB Community Bank. Our executive office is located at 104-110 Avenue C, Bayonne, New Jersey 07002. At September 30, 20172022, we had approximately $1.872$3.266 billion in consolidated assets, $1.546$2.713 billion in deposits and $177.6$282.7 million in consolidated stockholders’ equity.
BCB Community Bank opened for business on November 1, 2000 as Bayonne Community Bank, a New Jersey chartered commercial bank. The Bank changed its name from Bayonne Community Bank to BCB Community Bank in April 2007. At September 30, 20172022, the Bank operated through twenty-two28 branches in Bayonne, Carteret, Colonia, Edison, Jersey City, Hoboken, Fairfield, Holmdel, Lodi, Lyndhurst, Maplewood, Monroe Township, Newark, Parsippany, Plainsboro, River Edge, Rutherford, South Orange, Union, and Woodbridge, New Jersey, as well as twothree branches in Hicksville and Staten Island, NY, and through executive offices located at 104-110 Avenue C and an administrative office located at 591-595 Avenue C, Bayonne, New Jersey 07002. The Bank’s deposit accounts are insured by the FDIC, and the Bank is a member of the Federal Home Loan Bank System.
We are a community-oriented financial institution. Our business is to offer FDIC-insured deposit products and to invest funds held in deposit accounts at the Bank, together with funds generated from operations, in loans and investment securities. We offer our customers:
For descriptionsloans, including commercial and multi-family real estate loans, one- to four-family mortgage loans, home equity loans, construction loans, consumer loans and commercial business loans. In recent years the primary growth in our loan portfolio has been in loans secured by commercial real estate and multi-family properties;
FDIC-insured deposit products, including savings and club accounts, interest and non-interest bearing demand accounts, money market accounts, certificates of deposit and individual retirement accounts; and
retail and commercial banking services including wire transfers, money orders, safe deposit boxes, a night depository, debit cards, online banking, mobile banking, gift cards, fraud detection (positive pay), and automated teller services.
Critical Accounting Estimates
Estimates and assumptions are necessary in the merger recently entered into byapplication of certain accounting policies and can be susceptible to significant change. Critical accounting estimates are defined as those that involve a significant level of estimation uncertainty and have had, or could have, a material impact on the Company’s financial conditions or results of operation. At September 30, 2022, the Company and the stock offering recently completed by the Company, see Notes 8 and 9 to the Company’s unaudited financial statements.
The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenue and expenses. We regularly evaluate these estimates and assumptions including those used to determineconsiders the allowance for loancredit losses deferred taxes, fair value measurements, goodwill and other intangible assets. We base our estimates on historical experience and various other factors and assumptions that are believed to be reasonable under the circumstances. These form the basis for making judgments on the carrying value of assets and liabilities that are not readily apparent from other sources. Although our current estimates contemplate current economic conditions and how we expect them to change in the future, for the remainder of 2017, it is reasonably possible that actual conditions may be worse than anticipated in those estimates, which could materially affect our results of operations and financial condition. Actual results may differ from these estimates under different assumptions or conditions.its critical accounting estimate.
See further discussion of thesethis critical accounting policiesestimate in our Annual Report on Form 10-K for the year ended December 31, 2016 and Note 1, Basis of Presentation, to the unaudited Consolidated Financial Statements. There has been no change in critical accounting policies since the Company’s last reported Form 10-K.2021.
Financial Condition
Total assets increased by $163.5$298.1 million, or 9.610.0 percent, to $1.872$3.266 billion at September 30, 20172022, from $1.708$2.968 billion at December 31, 2016.2021. The increase in total assets occurredwas mainly related to increases in total loans partially offset by decreases in cash and cash equivalents.
Total cash and cash equivalents decreased by $190.6 million, or 46.3 percent, to $221.0 million at September 30, 2022, from $411.6 million at December 31, 2021. This decrease was primarily as a result ofdue to an increase in loans, receivable of $134.1 million,partly offset by an increase in cash and cash equivalents of $32.6 million, and an increase in securities available for sale of $5.3 million. Management is concentrating on maintaining adequate liquidity in anticipation of funding loans in the loan pipeline as well as seeking opportunities to purchase securities in the secondary market that provide competitive returns in a risk-mitigated environment. It is our intention to grow our assets at a measured pace consistent with our capital levels and as business opportunities permit.deposits.
Loans receivable, gross, increased by $134.1$479.9 million, or 9.020.5 percent, to $1.619$2.824 billion at September 30, 20172022, from $1.485$2.344 billion at December 31, 2016, and is consistent with2021. Total loan increases for the Company’s growth strategy for 2017. The increase resulted primarily fromfirst nine months of 2022 included increases of $114.4$444.1 million in commercial real estate and multi-family loans, $30.7$17.7 million in residential one-to-four family loans, $14.5 million in commercial business loans, and $1.2$5.6 million in home equity loans, partly offset by decreases of $1.2 million in consumer loans, and $801,000 in construction loans of $10.2 million, commercial business loans of $844,000, and consumer loans of $99,000. As of September 30, 2017, theloans. The allowance for loan losses was $18.4decreased $3.9 million to $33.2 million, or 108.8390.3 percent of non-performingnon-accruing loans and 1.121.18 percent of gross loans.loans, at September 30, 2022, as compared to an allowance for loan losses of $37.1 million, or 249.3 percent of non-accruing loans and 1.58 percent of gross loans, at December 31, 2021.
Total cash and cash equivalentsinvestment securities increased by $32.6 million,$786,000, or 50.10.7 percent, to $97.6$111.2 million at September 30, 20172022, from $65.0$110.4 million at December 31, 2016 primarily2021, due to the Company’s capital raise in the third quarterpurchases of $26.9 million, partly offset by sales of $1.2 million and the Company’s strategy to increase our deposit base including the success of our 17-month promotional CD product in the first quarter of 2017.repayments, calls and maturities.
Securities available for sale increased by $5.3 million, or 5.6 percent, to $100.1 million at September 30, 2017 from $94.8 million at December 31, 2016, as the Company deployed excess cash to improve returns on interest-earning assets and liquidity.
Deposit liabilities increased by $153.9$151.5 million, or 11.15.9 percent, to $1.546$2.713 billion at September 30, 20172022, from $1.392$2.561 billion at December 31, 2016. The increase resulted primarily from2021. Total increases of $102.9 million in certificates of deposit, $19.9 million in NOW deposit accounts, $10.7 million in non-interest bearing deposit accounts, $17.1 million in money market checking accounts and $1.2 million in savings and club accounts. In addition to organic deposit growth resulting from the opening of seven
43
additional branches in 2016, the Company has also added listing service certificates of deposit and brokered certificates of deposit to fund loan growth, which totaled $35.9 million and $42.1 million, respectively, at September 30, 2017.
Long-term debt decreased by $17.0 million, or 11.0 percent, to $138.0 million at September 30, 2017 from $155.0 million at December 31, 2016, the net result of scheduled maturities of FHLB advances and the issuance of new FHLB advances. The purpose of these borrowings reflected the use of long-term Federal Home Loan Bank advances to augment deposits as the Company’s funding source for originating loans and investing in investment securities. Short-term debt borrowings of $20.0 million at December 31, 2016 were repaid in 2017. The weighted average interest rate of borrowings was 1.71 percent at September 30, 2017.
Stockholders’ equity increased by $46.5 million, or 35.5 percent, to $177.6 million at September 30, 2017 from $131.1 million at December 31, 2016. The increase in stockholders’ equity was primarily attributable to proceeds received from the issuance of $42.8 million of common stock, proceeds received from the issuance of $9.5 million of series D 4.5 percent non-cumulative perpetual preferred stock, as well as an increase in retained earnings of $3.5 million for the nine months ended September 30, 2017,2022, included $57.7 million in NOW deposit accounts, $33.2 million in money market checking accounts, $29.2 million in certificates of deposit, including listing service and brokered deposit accounts, $22.2 million in non-interest-bearing deposit accounts, and $9.1 million in savings and club accounts. The weighted average interest rate of certificates of deposit was 0.70 percent at September 30, 2022 and 0.72 percent at December 31, 2021.
Debt obligations increased by $140.6 million to $249.6 million at September 30, 2022, from $109.0 million at December 31, 2021, and consisted of both Federal Home Loan Bank (“FHLB”) borrowings and subordinated debt balances. The increase in debt obligations related to short-term FHLB borrowings. The weighted average interest rate of FHLB advances was 2.63 percent at September 30, 2022, and 1.39 percent at December 31, 2021. The fixed interest rate of our subordinated debt balances was 5.625 percent at September 30, 2022, and at December 31, 2021.
Stockholders’ equity increased by $8.7 million, or 3.2 percent, to $282.7 million at September 30, 2022, from $274.0 million at December 31, 2021. The increase was primarily attributable to an increase in retained earnings of $24.7 million, or 30.5 percent, to $105.9 million at September 30, 2022, from $81.2 million at December 31, 2021, related to the net effect of net income less dividends paid for the nine months ended September 30, 2022. The increase was partly offset by a decrease of $7.9 million in additional paid-in-capital for preferred stock, an increase in accumulated other comprehensive losses of $7.3 million, and an increase in treasury stock of $2.0 million. The decrease in additional paid-in-capital for preferred stock was primarily related to the redemption of $11.7$9.4 million of series A and B 6the Company’s then-outstanding Series D 4.5 percent noncumulative perpetual preferred stock that occurred inand $5.3 million of the first quarter of 2017. The Company accrued a dividend payable for the third quarter on our outstandingCompany’s then-outstanding Series G 6.0 percent preferred stock, partially offset by the issuance of $166,000 which will be paid$6.8 million of Series I 3.0 percent preferred stock. The decrease in accumulated other comprehensive income over the fourth quarter.prior year was based upon the increase in market rates generally compared to the yield on the Company’s available-for-sale debt securities.
Net Interest Income Analysis
Net interest income represents the difference between income earned on our interest-earning assets and the expense incurred on our interest-bearing liabilities, and is analyzed and monitored by the Company on a regular basis. The following tables set forth average balance sheets, yields, and costs. The yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or expense.
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| Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||
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| 2017 |
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| 2016 | 2022 | 2021 | ||||||||||||||||||||
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| Average Balance |
| Interest Earned/Paid | Average Yield/Rate |
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| Average Balance |
| Interest Earned/Paid | Average Yield/Rate | Average Balance | Interest Earned/Paid | Average Yield/Rate (3) | Average Balance | Interest Earned/Paid | Average Yield/Rate (3) | ||||||||||
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| (Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||||||
Interest-earning assets: |
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Loans Receivable | $ | 1,610,388 | $ | 18,399 | 4.57% |
| $ | 1,443,121 | $ | 17,191 | 4.76% | ||||||||||||||||
Investment Securities |
| 95,834 |
| 694 | 2.90% |
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| 27,454 |
| 167 | 2.42% | ||||||||||||||||
Interest-earning deposits |
| 72,668 |
| 313 | 1.72% |
|
| 216,926 |
| 373 | 0.69% | ||||||||||||||||
Total Interest-earning assets |
| 1,778,890 |
| 19,406 | 4.36% |
|
| 1,687,501 |
| 17,731 | 4.20% | ||||||||||||||||
Loans receivable (4) (5) | $ | 2,699,093 | $ | 32,302 | 4.79% | $ | 2,340,690 | $ | 26,922 | 4.60% | |||||||||||||||||
Investment securities (6) | 112,172 | 1,276 | 4.55% | 105,595 | 973 | 3.69% | |||||||||||||||||||||
FHLB Stock and other interest earning assets | 153,705 | 822 | 2.14% | 402,618 | 249 | 0.25% | |||||||||||||||||||||
Total interest-earning assets | 2,964,970 | 34,400 | 4.64% | 2,848,903 | 28,144 | 3.95% | |||||||||||||||||||||
Non-interest-earning assets |
| 49,868 |
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| 45,451 |
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| 106,750 | 105,399 | ||||||||||||||
Total assets | $ | 1,828,758 |
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| $ | 1,732,952 |
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| $ | 3,071,720 | $ | 2,954,302 | ||||||||||||
Interest-bearing liabilities: |
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Interest-bearing demand accounts | $ | 303,737 | $ | 402 | 0.53% |
| $ | 301,709 | $ | 427 | 0.57% | $ | 774,871 | $ | 707 | 0.36% | $ | 638,812 | $ | 648 | 0.41% | ||||||
Money market accounts |
| 138,088 |
| 298 | 0.86% |
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| 91,579 |
| 158 | 0.69% | 353,821 | 462 | 0.52% | 344,142 | 411 | 0.48% | ||||||||||
Savings accounts |
| 264,841 |
| 100 | 0.15% |
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| 257,069 |
| 99 | 0.15% | 343,515 | 113 | 0.13% | 321,783 | 131 | 0.16% | ||||||||||
Certificates of Deposit |
| 625,951 |
| 2,284 | 1.46% |
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| 593,145 |
| 2,077 | 1.40% | 545,293 | 1,087 | 0.80% | 674,558 | 1,344 | 0.80% | ||||||||||
Total interest-bearing deposits |
| 1,332,617 |
| 3,084 | 0.93% |
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| 1,243,502 |
| 2,761 | 0.89% | 2,017,500 | 2,369 | 0.47% | 1,979,295 | 2,534 | 0.51% | ||||||||||
Borrowed funds |
| 151,706 |
| 748 | 1.97% |
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| 184,504 |
| 1,373 | 2.98% | 138,314 | 1,080 | 3.12% | 163,814 | 997 | 2.43% | ||||||||||
Total interest-bearing liabilities |
| 1,484,323 |
| 3,832 | 1.03% |
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| 1,428,006 |
| 4,134 | 1.16% | 2,155,814 | 3,449 | 0.64% | 2,143,109 | 3,531 | 0.66% | ||||||||||
Non-interest-bearing liabilities |
| 204,156 |
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| 173,400 |
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| 640,102 | 551,938 | ||||||||||||||
Total liabilities |
| 1,688,479 |
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| 1,601,406 |
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| 2,795,916 | 2,695,047 | ||||||||||||||
Stockholders' equity |
| 140,279 |
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| 131,546 |
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| 275,804 | 259,255 | ||||||||||||||
Total liabilities and stockholders' equity | $ | 1,828,758 |
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| $ | 1,732,952 |
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| $ | 3,071,720 | $ | 2,954,302 | ||||||||||||
Net interest income |
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| $ | 15,574 |
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| $ | 13,597 |
| $ | 30,951 | $ | 24,613 | ||||||||||||
Net interest rate spread(1) |
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| 3.33% |
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| 3.04% | 4.00% | 3.29% | ||||||||||||||
Net interest margin(2) |
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| 3.50% |
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| 3.22% | 4.18% | 3.46% | ||||||||||||||
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(1)Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities.
(2)Net interest margin represents net interest income divided by average total interest-earning assets.
(3)Annualized.
(4)Excludes allowance for loan losses.
(5)Includes non-accrual loans which are immaterial to the yield.
(6)Includes Federal Home Loan Bank of New York Stock
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| Nine Months Ended September 30, | |||||||||
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| 2017 |
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| 2016 | ||||||
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| Average Balance |
| Interest Earned/Paid | Average Yield/Rate |
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| Average Balance |
| Interest Earned/Paid | Average Yield/Rate |
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| (Dollars in thousands) | |||||||||
Interest-earning assets: |
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Loans Receivable | $ | 1,570,033 | $ | 53,967 | 4.58% |
| $ | 1,443,500 | $ | 51,947 | 4.80% |
Investment Securities |
| 92,791 |
| 2,089 | 3.00% |
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| 15,797 |
| 291 | 2.46% |
Interest-earning deposits |
| 79,171 |
| 874 | 1.47% |
|
| 202,629 |
| 1,005 | 0.66% |
Total Interest-earning assets |
| 1,741,995 |
| 56,930 | 4.36% |
|
| 1,661,926 |
| 53,243 | 4.27% |
Non-interest-earning assets |
| 55,605 |
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| 44,893 |
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Total assets | $ | 1,797,601 |
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| $ | 1,706,819 |
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Interest-bearing liabilities: |
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Interest-bearing demand accounts | $ | 302,615 | $ | 1,235 | 0.54% |
| $ | 274,974 | $ | 1,108 | 0.54% |
Money market accounts |
| 132,342 |
| 815 | 0.82% |
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| 68,127 |
| 309 | 0.60% |
Savings accounts |
| 264,963 |
| 299 | 0.15% |
|
| 254,488 |
| 281 | 0.15% |
Certificates of Deposit |
| 608,608 |
| 6,437 | 1.41% |
|
| 610,073 |
| 6,237 | 1.36% |
Total interest-bearing deposits |
| 1,308,528 |
| 8,786 | 0.90% |
|
| 1,207,662 |
| 7,935 | 0.88% |
Borrowed funds |
| 159,676 |
| 2,902 | 2.42% |
|
| 201,040 |
| 4,650 | 3.08% |
Total interest-bearing liabilities |
| 1,468,204 |
| 11,688 | 1.06% |
|
| 1,408,702 |
| 12,585 | 1.19% |
Non-interest-bearing liabilities |
| 196,404 |
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|
|
| 165,817 |
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Total liabilities |
| 1,664,608 |
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| 1,574,519 |
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Stockholders' equity |
| 132,993 |
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|
|
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| 132,300 |
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Total liabilities and stockholders' equity | $ | 1,797,601 |
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| $ | 1,706,819 |
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Net interest income |
|
| $ | 45,242 |
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|
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| $ | 40,658 |
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Net interest rate spread(1) |
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| 3.30% |
|
|
|
|
| 3.08% |
Net interest margin(2) |
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| 3.46% |
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|
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| 3.26% |
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Nine Months Ended September 30, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Average Balance | Interest Earned/Paid | Average Yield/Rate (3) | Average Balance | Interest Earned/Paid | Average Yield/Rate (3) | |||||||||||
(Dollars in thousands) | ||||||||||||||||
Interest-earning assets: | ||||||||||||||||
Loans receivable (4) (5) | $ | 2,521,375 | $ | 87,404 | 4.62% | $ | 2,336,950 | $ | 80,673 | 4.60% | ||||||
Investment securities (6) | 109,422 | 3,369 | 4.11% | 108,492 | 2,877 | 3.54% | ||||||||||
FHLB Stock and other interest earning assets | 314,024 | 1,812 | 0.77% | 330,500 | 673 | 0.27% | ||||||||||
Total Interest-earning assets | 2,944,821 | 92,585 | 4.19% | 2,775,942 | 84,223 | 4.05% | ||||||||||
Non-interest-earning assets | 105,368 | 107,319 | ||||||||||||||
Total assets | $ | 3,050,189 | $ | 2,883,261 | ||||||||||||
Interest-bearing liabilities: | ||||||||||||||||
Interest-bearing demand accounts | $ | 759,307 | $ | 1,674 | 0.29% | $ | 627,193 | $ | 2,108 | 0.47% | ||||||
Money market accounts | 351,846 | 1,199 | 0.45% | 332,489 | 1,299 | 0.54% | ||||||||||
Savings accounts | 342,199 | 331 | 0.13% | 313,315 | 376 | 0.16% | ||||||||||
Certificates of Deposit | 573,951 | 2,916 | 0.68% | 677,868 | 4,975 | 1.07% | ||||||||||
Total interest-bearing deposits | 2,027,303 | 6,120 | 0.40% | 1,950,865 | 8,758 | 0.64% | ||||||||||
Borrowed funds | 119,059 | 2,701 | 3.02% | 179,913 | 3,226 | 2.39% | ||||||||||
Total interest-bearing liabilities | 2,146,362 | 8,821 | 0.55% | 2,130,778 | 11,984 | 0.75% | ||||||||||
Non-interest-bearing liabilities | 631,097 | 497,358 | ||||||||||||||
Total liabilities | 2,777,459 | 2,628,136 | ||||||||||||||
Stockholders' equity | 272,730 | 255,125 | ||||||||||||||
Total liabilities and stockholders' equity | $ | 3,050,189 | $ | 2,883,261 | ||||||||||||
Net interest income | $ | 83,764 | $ | 72,239 | ||||||||||||
Net interest rate spread(1) | 3.64% | 3.30% | ||||||||||||||
Net interest margin(2) | 3.79% | 3.47% | ||||||||||||||
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(1)Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities.
(2)Net interest margin represents net interest income divided by average total interest-earning assets.
(3)Annualized.
(4)Excludes allowance for loan losses.
(5)Includes non-accrual loans which are immaterial to the yield.
(6)Includes Federal Home Loan Bank of New York Stock
Results of Operations comparison for the Three Months Ended September 30, 20172022 and 20162021
Net income increased $1.3 million, or 68.1 percent, to $3.2 million for the three months ended September 30, 2017, compared with $1.9 million for the three months ended September 30, 2016. The increase in net income was primarily related to an increase in total interest income, a decrease in total interest expense, an increase in total non-interest income, and a decrease in total non-interest expense, partly offset by a higher provision for loan losses and a higher income tax provision for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016.
Net interest income increased by $2.0$6.3 million, or 14.525.8 percent, to $15.6$30.9 million for the three months ended September 30, 2017third quarter of 2022, from $13.6$24.6 million for the three months ended September 30, 2016.third quarter of 2021. The increase in net interest income resulted primarily from ana $6.3 million increase in interest income as well as a decrease of $82,000 in interest expense.
Interest income increased by $6.3 million, or 22.2 percent, to $34.4 million for the third quarter of 2022, from $28.1 million for the third quarter of 2021. The average balance of interest-earning assets increased $116.1 million, or 4.1 percent, to $2.965 billion for the third quarter of 2022, from $2.849 billion for the third quarter of 2021, while the average yield increased 69 basis points to 4.64 percent for the third quarter of 2022, from 3.95 percent for the third quarter of 2021. The increase in the average balance on total interest earningof interest-earning assets of $91.4 million, or 5.4 percent,mainly related to $1.779 billion for the three months ended September 30, 2017 from $1.687 billion for the three months ended September 30, 2016, as well as an increase in the Company’s level of average yield on total interest earning assets of 16 basis points, or 3.8 percent, to 4.36 percentloans receivable for the three months ended September 30, 2017 from 4.20 percent forthird quarter of 2022, as compared to the three months ended September 30, 2016.third quarter of 2021.
Interest income on loans receivable increased by $1.2 million or 7.0 percent, to $18.4 million for the three months ended September 30, 2017 from $17.2 million for the three months ended September 30, 2016.
The increase was primarily attributablein interest income mainly related to an increase in the average balance of loans receivable of $167.3$358.4 million or 11.6 percent, to $1.610$2.699 billion for the three months ended September 30, 2017third quarter of 2022, from $1.443$2.341 billion for the three months ended September 30, 2016, partly offset by a decrease in the average yield on loans receivablethird quarter of 19 basis points, or 4.09 percent, to 4.57 percent for the three months ended September 30, 2017 from 4.76 percent for the three months ended September 30, 2016.2021. The increase in the average balance of loans receivable was in accordance withthe result of the strength of the Company’s growth strategy, which included growing the Bank’s geographic footprint vis-à-vis our organic branching strategy and the hiring of seasoned loan and business development officers. The decrease in average yield on loans reflected the competitive price environment prevalent in the Company’s primary market area on loan facilities, as well as the repricing downward of certain variable rate loans.
pipeline. Interest income on equity and debt securities increased by $527,000 to $694,000loans also included $314,000 of amortization of purchase credit fair value adjustments for the three months ended September 30, 2017 from $167,000 for the three months ended September 30, 2016. The increase was primarily attributablethird quarter of 2022 related to an increase in the average balance of investment securities of $68.4 million, or 249.1 percent,a prior acquisition, which added approximately four basis points to $95.8 million for the three months ended September 30, 2017 from $27.4 million for the three months ended September 30, 2016, and an increase in the average yield on investment securities of 48 basis points,interest earning assets.
Interest expense decreased by $82,000, or 19.82.3 percent, to 2.90 percent,$3.4 million for the three months ended September 30, 2017third quarter of 2022, from 2.42 percent$3.5 million for the three months ended September 30, 2016. The increase in the average balance and average yieldthird quarter of equity and debt securities2021. This decrease resulted from deploying excess cash to improve returns on interest earning assets and liquidity.
Interest income on other interest-earning assets decreased by $60,000, or 16.1 percent, to $313,000 for the three months ended September 30, 2017 from $373,000 for the three months ended September 30, 2016. The decrease was primarily attributable tofrom a decrease in the average balancerate on interest-bearing liabilities of other interest-earning assets of $144.3 million, or 66.5 percent, to $72.7 million for the three months ended September 30, 2017 from $217.0 million for the three months ended September 30, 2016 partly offset by as an increase in the average yield of other interest-earning deposits of 1032 basis points or 149.8 percent, to 1.720.64 percent for the three months ended September 30, 2017third quarter of 2022, from 0.690.66 percent for the three months ended September, 30, 2016. The decrease in the average balancethird quarter of other interest-earning assets related to a decrease in cash as funds were deployed for repayment of Federal Home Loan Bank (“FHLB”) borrowings, purchases of investment securities and to fund loan growth, while the increase in the average yield primarily resulted from increases in the Fed Funds rate.
Total interest expense decreased2021, partly offset by $302,000, or 7.3 percent, to $3.8 million for the three months ended September 30, 2017 from $4.1 million for the three months ended September 30, 2016. Despite an increase in the average balance of interest-bearing liabilities of $56.3$12.7 million, or 3.90.6 percent, to $1.484$2.156 billion for the three months ended September 30, 2017third quarter of 2022, from $1.428$2.143 billion for the three months ended September 30, 2016,third quarter of 2021. The decrease in the average cost of funds decreased 13 basis points, or 10.8 percent, to 1.03 percent forprimarily resulted from the three months ended September 30, 2017 from 1.16 percent for the three months ended September 30, 2016. Interest expense decreased due to a decrease in the average balance of average cost of borrowings. The average balance of total deposit liabilities increased by $89.1 million, or 7.2 percent, to $1.333 billion for the three months ended September 30, 2017 from $1.244 billion for the three months ended September 30, 2016, and the average cost of deposits increased by 4 basis points, or 4.2 percent, to 0.93 percent for the three months ended September 30, 2017 from 0.89 percent for the three months ended September 30, 2016. The average balance of borrowings decreased by $32.8 million, or 17.8 percent, to $151.7 million for the three months ended September 30, 2017 from $184.5 million for the three months ended September 30, 2016, and the average cost of borrowings decreased 101 basis points, or 33.7 percent, to 1.97 percent, for the three months ended September 30, 2017 from 2.98 percent for the three months ended September 30, 2016. The net decrease in borrowings was primarily the result of scheduled repayments of high-cost Federal Home Loan Bank advances.Company’s focus on managing funding costs.
Net interest margin was 3.504.18 percent for the three-month period ended September 30, 2017 and 3.22third quarter of 2022, compared to 3.46 percent for the three-month period ended September 30, 2016.third quarter of 2021. The improvementincrease in the net interest margin was primarilylargely the result of the repayment of higher cost FHLB borrowings in 2017, partly offset by competitive pressures in attracting new loans and deposits, as evidenced by a declinean increase in the average volume and average yield on loans receivable. and to a slightmuch lesser extent to a decrease in funding costs, partly offset by an increase in the average costbalance of depositinterest-bearing liabilities.
The Company’s overall asset quality is trending favorably with continued reduction in non-accrual loans. A review of the existing level of loan loss reserves and the asset quality resulted in no provision for loan losses increased by $812,000 to $511,000 for the three months ended September 30, 2017 from ($301,000) for the three months ended September 30, 2016. The negativethird quarter of 2022. This compared to a $680,000 provision for loan losses induring the prior period reflects the excess specific provisions previously accrued on certain loans that were settled in that period. The provision for loan losses is established based upon management’s reviewthird quarter of the Company’s loans and consideration of a variety of factors, including but not limited to: (1) the risk characteristics of the loan portfolio; (2) current economic conditions; (3) actual losses previously experienced; (4) the dynamic activity and fluctuating balance of loans receivable; and (5) the existing level of reserves for loan losses that are probable and estimable.2021. During the three months ended September 30, 2017,third quarter of 2022, the Company experienced $26,000$918,000 in net charge-offs compared to $447,000 in net charge-offsrecoveries of $4,000 for the three months ended September 30, 2016.third quarter of 2021. The Bank had non-performingnon-accrual loans totaling $17.0$8.5 million, or 1.030.30 percent of gross loans at September 30, 2017 and $15.72022, as compared to $20.7 million, or 1.04 percent, of gross loans at December 31, 2016. The allowance for loan losses was $18.4 million, or 1.120.89 percent of gross loans at September 30, 2017, $17.22021. The allowance for loan losses was $33.2 million, or 1.14 percent, of gross loans at December 31, 2016 and $17.6 million, or 1.211.18 percent of gross loans at September 30, 2016. The amount2022, and $38.2 million, or 1.64 percent of the allowance is based on estimates and the ultimate losses may vary from such estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses ongross loans future loan loss provisions may be necessary based on changes in the aforementioned criteria. In addition various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and
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may require the Company to recognize additional provisions based on their judgment of information available to them at the time of their examination. Management believes that the allowance for loan losses was adequate at September 30, 2017 and December 31, 2016.2021.
Total non-interest
Noninterest income increased by $103,000,$129,000, or 6.79.8 percent, to $1.6$1.4 million for the three months ended September 30, 2017third quarter of 2022, from $1.5$1.3 million in income for the three months ended September 30, 2016. The increase was primarily attributable to gains on sales on other real estate owned propertiesthird quarter of $222,000 for the three months ended September 30, 2017 with no comparable sales for the three months ended September 30, 2016, a gain on sales of investment securities of $97,000 for the three months ended September 30, 2017 with no comparable sales for the three months ended September 30, 2016, a loss on a bulk sale of impaired loans held in the portfolio of $88,000 for the three months ended September 30, 2016 with no comparable sale for the three months ended September 30, 2017.2021. The increase in total non-interestnoninterest income was partly offset by a decrease in gains on sales of loans of $178,000, or 24.8 percent,mainly related to $540,000, for the three months ended September 30, 2017 from $718,000 for the three months ended September 30, 2016, as well as a decreasean increase in fees and service charges of $124,000, or 14.2 percent, to $749,000 for the three months ended September 30, 2017, from $873,000 for the three months ended September 30, 2016.
Totaland other non-interest expense decreased by $1.0 million, or 8.5 percent, to $11.3 million for the three months ended September 30, 2017 from $12.3 million for the three months ended September 30, 2016. Salaries and employee benefits decreased by $822,000, or 12.2 percent, to $5.9 million for the three months ended September 30, 2017 from $6.7 million for the three months ended September 30, 2016, primarily related to a reduction in workforce over the last 12 months. Advertising expense decreased by $365,000, or 75.7 percent, to $117,000 for the three months ended September 30, 2017 from $482,000 for the three months ended September 30, 2016, aa result of advertising efforts with the opening of several de novo branches in 2016. Occupancy and equipment expense decreased by $154,000, or 7.0 percent, to $2.0 million for the three months ended September 30, 2017 from $ 2.2 million for the three months ended September 30, 2016, also related to costs associated with opening de novo branches in 2016. Regulatory assessment expense decreased by $111,000, or 25.9 percent, to $318,000 for the three months ended September 30, 2017 from $429,000 for the three months ended September 30, 2016, primarily related to lower FDIC rates. The decrease in total non-interest expense wasincome, partly offset by an increase in data processingthe losses on equity securities, a decrease in BOLI income, and a decrease in the gain on the sale of loans. Fees and service charge income increased by $538,000, or 75.5 percent, to $1.3 million for the third quarter of 2022, compared to $713,000 for the third quarter of 2021. Fees and service charge income include revenue from loan servicing fees, ATM fees, and other customer account fees. The losses on equity securities for the third quarter of 2022 was $559,000 compared to $307,000 for the third quarter 2021. The increase in losses on equity securities was due to the rising rate environment.
Noninterest expense decreased by $75,000, or 0.6 percent, to $13.5 million for the third quarter of 2022, from $13.5 million for the third quarter of 2021. The decrease was mainly related to a decrease in occupancy and debt extinguishment expenses, as well as other non-interest expense. The Company recognized an expense of $345,000, or 96.4 percent, to $703,000$337,000 for the three months ended September 30, 2017 from $358,000 for the three months ended September 30, 2016, mainly attributable to credit adjustmentsa loss on extinguishment of debt related to the new core processing system implementedprepayment of higher-cost FHLB borrowings in the prior year period. Otherthird quarter of 2021. There was no comparable expense in the third quarter of 2022. The decrease in other non-interest expense consistedmainly related to a decrease in loan-related legal expenses. Salaries and employee benefits expense increased by $433,000, or 6.7 percent, to $6.9 million for the third quarter of occupancy and equipment, director fees, regulatory assessments, other real estate owned (net), and other fees/expenses.2022, from $6.5 million for the third quarter of 2021. The increase mainly related to an increase in the number of fulltime equivalent employees to 301 for the third quarter of 2022, compared to 291 for the same period in 2021.
The income tax provision increased by $1.0$2.2 million, or 86.263.3 percent, to $2.2$5.6 million for the three months ended September 30, 2017third quarter of 2022, from $1.2$3.4 million for the three months ended September 30, 2016.third quarter of 2021. The increase in the income tax provision was a result of higher taxable income duringfor the three-month period ended September 30, 2017third quarter of 2022, as compared with the three months ended September 30, 2016.that same period for 2021. The consolidated effective tax rate for the three months ended September 30, 2017third quarter of 2022 was 40.029.3 percent compared to 39.729.0 percent for the three months ended September 30, 2016.third quarter of 2021.
Results of Operations comparison for the Nine Months Ended September 30, 20172022 and 20162021
Net income increased $3.1 million, or 56.3 percent, to $8.6 million for the nine months ended September 30, 2017 compared with $5.5 million for the nine months ended September 30, 2016. The increase in net income was primarily related to increases in total interest income, a decrease in total interest expense, an increase in total non-interest income, and a decrease in non-interest expense, partly offset by an increase in the provision for loan losses and a higher income tax provision for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.
Net interest income increased by $4.6$11.5 million, or 11.316.0 percent, to $45.2$83.8 million for the first nine months ended September 30, 2017of 2022, from $40.6$72.2 million for the first nine months ended September 30, 2016.of 2021. The increase in net interest income was primarilyresulted from an increase of $8.4 million in total interest income as well as a decrease of $3.2 million in total interest expense.
Interest income increased by $8.4 million, or 9.9 percent, to $92.6 million for the first nine months of 2022, from $84.2 million for the first nine months of 2021. The average balance of interest-earning assets increased $168.9 million, or 6.1 percent, to $2.945 billion for the first nine months of 2022, from $2.776 billion for the first nine months of 2021, while the average yield increased 14 basis points to 4.19 percent for the first nine months of 2022, from 4.05 percent for the first nine months of 2021. The increase in the average balance of interest-earning assets mainly related to an increase in the Company’s level of average balance of total interest-earning assets of $80.0 million, or 4.8 percent, to $1.742 billionloans receivable for the first nine months ended September 30, 2017of 2022, as compared to $1.662 billion for the first nine months ended September 30, 2016 as well as anof 2021.
The increase in the average yield in total interest-earning assets of 9 basis points, or 2.0 percent, to 4.36 percent for the nine months ended September 30, 2017 from 4.27 percent for the nine months ended September 30, 2016.
Interestinterest income on loans receivable increased by $2.0 million, or 3.9 percent, to $54.0 million for the nine months ended September 30, 2017 from $52.0 million for the nine months ended September 30, 2016. The increase was primarily attributablemainly related to an increase in the average balance of loans receivable of $126.5$184.4 million or 8.8 percent, to $1.570$2.521 billion for the first nine months ended September 30, 2017of 2022, from $1.443$2.337 billion for the first nine months ended September 30, 2016, partly offset by a decrease in the average yield on loans receivable of 22 basis points, or 4.5 percent, to 4.58 percent for the nine months ended September 30, 2017 from 4.80 percent for the nine months ended September 30, 2016.2021. The increase in the average balance of loans receivable was in accordance withthe result of the strength of the Company’s growth strategy,loan pipeline. Interest income on loans for the first nine months of 2022 also included $622,000 of amortization of purchase credit fair value adjustments related to a prior acquisition, which includedadded approximately three basis points to the hiring of additional loan production and business development personnel and the opening of seven additional branches in 2016. The decrease in average yield on loans reflected the competitive price environment prevalent in the Company’s primary market area on loan facilities, as well as the repricing downward of certain variable rate loans.interest earning assets.
Interest income on equity and debt securities increasedexpense decreased by $1.8$3.2 million, or 26.4 percent, to $2.1$8.8 million for the first nine months ended September 30, 2017of 2022, from $291,000 for the nine months ended September 30, 2016. This increase was primarily related to an increase in the average balance of investment securities of $77.0 million, or 487.4 percent, to $92.8$12.0 million for the first nine months ended September 30, 2017of 2021. This decrease resulted primarily from $15.8 million for the nine months ended September 30, 2016, and an increase in the average yield of 54 basis points, or 22.2 percent, to 3.0 percent, for the nine months ended September 30, 2017 from 2.46 percent for the nine months ended September 30, 2016. The increase in the average balance and average yield of equity and debt securities resulted from deploying excess cash to improve returns on interest earning assets and liquidity.
Interest income on other interest-earning assets decreased by $131,000, or 13.0 percent, to $874,000 for the nine months ended September 30, 2017 from $1.0 million for the nine months ended September 30, 2016. The decrease was primarily related to a decrease in the average balancerate on other interest-earning assetsinterest-bearing liabilities of $123.4 million, or 60.9 percent, to $79.2 million for the nine months ended September 30, 2017 from $202.6 million for the nine months ended September 30, 2016, partly offset by an increase in the average yield of other interest-earning assets of 814 basis points or 122.6 percent, to 1.470.71 percent for the first nine months ended September 30, 2017of 2022, from 0.660.75 percent for the first nine months ended September 30, 2016. The decrease in the average balance of other interest-earning assets related to a decrease in cash as funds were deployed for repayment of (“FHLB”) borrowings, purchases of investment securities, and to fund loan growth, while the increase in the average yield resulted primarily from increases in the Fed Funds rate.
Total interest expense decreased2021, partly offset by $897,000, or 7.1 percent, to $11.7 million for the nine months ended September 30, 2017 from $12.6 million for the nine months ended September 30, 2016. Despite an increase in the average balance of interest-bearing liabilities of $59.5$15.6 million, or 4.20.7 percent, to $1.468$2.146 billion for the first nine months ended September 30, 2017of 2022, from $1.409$2.131 billion for the first nine months ended September 30, 2016,of 2021. The decrease in the average cost of funds decreased 13 basis points, or 10.9 percent, to 1.06primarily resulted the Company’s focus on managing funding costs.
Net interest margin was 3.79 percent for the first nine months ended September 30, 2017 from 1.19of 2022, compared to 3.47 percent for the first nine months ended September 30, 2016. Interest expense decreased due to a decrease
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in the average balance and average cost of borrowings.2021. The average balance of total deposit liabilities increased by $100.9 million, or 8.4 percent, to $1.309 billion for the nine months ended September 30, 2017 from $1.208 billion for the nine months ended September 30, 2016, and the average cost of deposits increased two basis points to 0.90 percent for the nine months ended September 30, 2017 from 0.88 percent for the nine months ended September 30, 2016. The average balance of borrowings decreased by $41.4 million, or 20.6 percent, to $159.7 million for the nine months ended September 30, 2017 from $201.1 million for the nine months ended September 30, 2016, and the average cost of borrowings decreased 66 basis points, or 21.4 percent, to 2.42 percent for the nine months ended September 30, 2017 from 3.08 percent for the nine months ended September 30, 2016. The decrease in borrowings was primarily the result of scheduled repayments of high-cost Federal Home Loan Bank advances.
The net interest margin was 3.46 percent for the nine-month period ended September 30, 2017 and 3.26 percent for the nine-month period ended September 30, 2016. The improvementincrease in the net interest margin compared to the first nine months of 2021 was primarily the result of the repayment of higher cost FHLB borrowings in 2017, partly offset by competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and a slightan increase in the average costvolume of deposit liabilities.loans receivable as well as a decrease in funding costs.
The Company recorded a credit to the provision for loan losses increased by $1.9 million, to $1.8of $2.6 million for the first nine months ended September 30, 2017 from ($75,000) for the nine months ended September 30, 2016. The negativeof 2022, compared to a $4.8 million provision for loan losses infor the prior period reflects the excess specific provisions previously accrued on certain loans that were settled in that period. The provision for loan losses is established based upon management’s reviewfirst nine months of the Company’s loans and consideration of a variety of factors, including but not limited to: (1) the risk characteristics of the loan portfolio; (2) current economic conditions; (3) actual losses previously experienced; (4) the dynamic activity and fluctuating balance of loans receivable; and (5) the existing level of reserves for loan losses that are probable and estimable.2021. During the first nine months ended September 30, 2017,of 2022, the Company experienced $546,000recorded $1.3 million in net charge-offscharge offs compared to $377,000$323,000 in net recoveriescharge offs for the first nine months ended September 30, 2016. The Bank had non-performing loans totaling $17.0of 2021.
Noninterest income decreased by $5.6 million, or 1.0391.2 percent, to $533,000 for the first nine months of gross loans at September 30, 2017 and $15.72022, from $6.1 million or 1.04 percent,for the first nine months of gross loans at December 31, 2016.2021. The allowance for loan lossesdecrease in total noninterest income was $18.4 million, or 1.12 percent, of gross loans at September 30, 2017, $17.2 million, or 1.14 percent, of gross loans at December 31, 2016 and $17.6 million, or 1.21 percent, of gross loans at September 30, 2016. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in ordermainly related to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in the aforementioned criteria. In addition various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require the Company to recognize additional provisions based on their judgment of information available to them at the time of their examination. The increase in the allowance for loan loss reflected growth in the loan portfolio. Management believes that the allowance for loan losses was adequate at September 30, 2017 and December 31, 2016.
Total non-interest income increased by $1.3 million, or 27.2 percent, to $6.0 million for the nine months ended September 30, 2017 from $4.7 million for the nine months ended September 30, 2016. Total non-interest income increased primarily ason equity securities, a result of gainslower gain on sales of other real estate owned properties of $1.6 million for the nine months ended September 30, 2017 with no comparable gain for the nine months ended September 30, 2016, a loss on a bulk sale of impaired loans, held in the portfolio of $373,000 for the nine months ended September 30, 2016 with no comparable sale for the nine months ended September 30, 2017, an increase in other non-interest income of $235,000, or 326.4 percent, to $307,000 for the nine months ended September 30, 2017 from $72,000 for the nine months ended September 30, 2016, a gain on sale of investment securities of $97,000 for the nine months ended September 30, 2017 with no comparable sale for the nine months ended September 30, 2016, partly offset byand a decrease in gains on the sale of premises, partly offset by an increase in fees and service charges. The losses on equity securities increased to $5.5 million for the first nine months of 2022, from losses of $4,000 for the first nine months of 2021. The losses on equity securities are due to market rate conditions. Gains on sales of loans decreased by $449,000, or 78.1 percent, to $126,000 for the first nine months of 2022, from $575,000 for the first nine months of 2021. Factors considered when deciding to sell loans include market conditions, demand, and the overall loan portfolio strategy. Gains on the sale of premises sold were $371,000 for the first nine months of 2021 with no comparable gain or loss for the first nine months of 2022. These decreases were partly offset by an $825,000 increase in fees and service charge income resulting from loan servicing income, ATM fees, and other customer account fees.
Noninterest expense decreased by $800,000, or 2.0 percent, to $39.5 million for the first nine months of 2022, from $40.3 million for the first nine months of 2021. The decrease was mainly related to a decrease in debt extinguishment expense and other non-interest expense. The Company recognized an expense of $1.1 million for a loss on extinguishment of debt related to the prepayment of higher-cost FHLB borrowings in the first nine months of 2021. There was no comparable expense in the first nine months of 2022. Salaries and employee benefits expense increased by $827,000, or 39.74.2 percent, to $1.6$20.4 million for the first nine months ended September 30, 2017of 2022, from $2.7$19.6 million for the first nine months ended September 30, 2016. The sales of loans and other real estate owned properties is generally based on market conditions.2021. The increase in other non-interest incomemainly related to $237,000payments made to the estate of proceeds from a legal settlementformer officer of the Company who passed away in 2022, pursuant to the second quarterterms of 2017.
Total non-interest expense decreased by $1.2 million, or 3.4 percent, to $35.0 millionhis employment agreement, and normal compensation increases. The number of full-time equivalent employees for the first nine months ended September 30, 2017 from $36.2 millionof 2022 was 302 compared to 297 for the nine months ended September 30, 2016. Salaries and benefits decreased by $1.0 million, or 5.5 percent, to $17.9 million for the nine months ended September 30, 2017 from $18.9 million for the nine months ended September 30, 2016, primarily related to a reduction in workforce over the last 12 months. Advertising expense decreased by $860,000, or 69.6 percent, to $375,000 for the nine months ended September 30, 2017 from $1.2 million for the nine months ended September 30, 2016, as a resultsame period of advertising efforts with the opening of several de novo branches throughout 2016. Data processing expense decreased by $219,000, or 9.7 percent, to $2.0 million for the nine months ended September 30, 2017 from $2.2 million for the nine months ended September 30, 2016, primarily related to cost efficiencies achieved with the conversion to a new core system. Regulatory assessment expense decreased by $129,000, or 11.3 percent, to $1.0 million for the nine months ended September 30, 2017 from $1.1 million for the nine months ended September 30, 2016, primarily related to lower FDIC rates. Professional fee expense increased by $870,000, or 63.6 percent, to $2.2 million for the nine months ended September 30, 2017 from $1.3 million for the nine months ended September 30, 2016, primarily related to counsel fees and litigation expenses awarded to the plaintiff’s class counsel of $1.0 million in the matter of Kube v. Pamrapo Bancorp, Inc. et al. Other non-interest expense consisted of occupancy and equipment, director fees, regulatory assessments, other real estate owned (net), and other fees/expenses.2021.
Income
The income tax provision increased by $2.1$4.2 million, or 58.342.8 percent, to $5.8$13.9 million for the first nine months ended September 30, 2017of 2022, from $3.7$9.7 million for the first nine months ended September 30, 2016.of 2021. The increase in the income tax provision was a result of higher taxable income duringfor the first nine months ended September 30, 2017of 2022, as compared with the nine months ended September 30, 2016.that same period for 2021. The consolidated effective tax rate for the first nine months ended September 30, 2017of 2022 and 2021 was 40.0 percent compared to 39.7 percent for the nine months ended September 30, 2016.29.3 percent.
Liquidity and Capital Resources
Liquidity
The overall objective of our liquidity management practices is to ensure the availability of sufficient funds to meet financial commitments and to take advantage of lending and investment opportunities. The Company manages liquidity in order to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings and other obligations as they mature, and to fund loan and investment portfolio opportunities as they arise.
The Company’s primary sources of funds to satisfy its objectives are net growth in deposits (primarily retail), principal and interest payments on loans and investment securities, proceeds from the sale of originated loans and FHLB and other borrowings. The scheduled amortization of loans is a predictable source of funds. Deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company has other sources of liquidity if a need for additional funds arises, including unsecured overnight lines of credit and other collateralized borrowings from the FHLB and othercertain correspondent banks.
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At September 30, 2017,2022 and December 31, 2021, the Company had no$40.0 million and $0 in overnight borrowings outstanding with the FHLB, as compared to $20.0 million at December 31, 2016.FHLB. The Company utilizes overnight borrowings from time to time to fund short-term liquidity needs. The Company had total FHLB borrowings of $142.1$212.1 million at September 30, 20172022 and $179.1$71.7 million at December 31, 2016.2021. The average rate of FHLB borrowingsadvances was 1.712.63 percent at September 30, 2017, as compared with 2.452022 and 1.39 percent at December 31, 2016.2021.
The Company had the ability at September 30, 20172022 to obtain additional funding from the FHLB of up to $87.0$507.5 million, utilizing unencumbered loan collateral. The Company expects to have sufficient funds available to meet current loan commitments in the normal course of business through typical sources of liquidity. Time deposits scheduled to mature in one year or less totaled $390.9$621.8 million at September 30, 2017.2022. Based upon historical experience, data, management estimates that a significant portion of such deposits will remain with the Company.
The Company was well positioned with adequate levels of cash and liquid assets as of September 30, 2022, as well as wholesale borrowing capacity of over $800 million.
Subordinated Debentures
The Company has subordinated debentures outstanding, whose aggregate principal totaled $33.3 million at September 30, 2022, which includes $174,000 remaining unamortized debt issuance costs. The debt issuance costs are being amortized over the expected life of the issue. The subordinated debentures have a ten-year term and bear interest at a fixed annual rate of 5.625% for the first five years of the term. From and including August 1, 2023, the interest rate will adjust to a floating rate based on the LIBOR plus 2.72% until redemption or maturity. The Notes are scheduled to mature on August 1, 2028.
The Company also has $4.1 million of mandatory redeemable Trust Preferred securities. The interest rate on these floating rate junior subordinated debentures adjusts quarterly based on the three-month LIBOR plus 2.650 percent. The rate paid as of September 30, 2022 and 2021 was 6.177 percent and 2.770 percent, respectively. The trust preferred debenture became callable, at the Company’s option, on June 17, 2009, and quarterly thereafter.
As it is anticipated that LIBOR will not be supported in its current form after June 30, 2023, the Company is reviewing the agreements for the above debentures to determine alternative reference rates and does not anticipate there will be a significant financial statement impact.
Capital Resources
The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.
On September 17, 2019, the FDIC passed a final rule providing qualifying community banking organizations the ability to opt-in to a new community bank leverage ratio (tier 1 capital to average consolidated assets) (“CBLR”) framework, with a minimum requirement of 9% for institutions under $10 billion in assets. Such institutions meeting that requirement may elect to utilize the CBLR in lieu of the general applicable risk-based capital requirements under Basel III. Such institutions that meet the CBLR and certain other qualifying criteria will automatically be deemed to be well-capitalized. The Bank decided to opt-in to the new CBLR, effective for the quarter ended March 31, 2020. Pursuant to the CARES Act, the federal banking regulators in April 2020 issued interim final rules to set the CBLR at 8.0% beginning in the second quarter of 2020 through the end of 2020. Beginning in 2021, the CBLR increased to 8.5% for the calendar year. At January 1, 2022, the CBLR requirement returned to 9%.
At September 30, 2017,2022 and December 31, 2016,2021, BCB Community Bank exceeded all of its regulatory capital requirements to which it was subject. The following table sets forth the regulatory capital ratios for BCB Community Bank as well as regulatory capital requirements for the periods presented.
| Actual | For Capital Adequacy Purposes | For Well Capitalized Under Prompt Corrective Action | |||||||||||
Dollars in Thousands | ||||||||||||||
As of September 30, 2022: | ||||||||||||||
Bank | ||||||||||||||
Community Bank Leverage Ratio | $ | 316,604 | 10.33 | % | $ | 245,268 | 8.00 | % | 275,927 | 9.00 | % | |||
As of December 31, 2021: | ||||||||||||||
Bank | ||||||||||||||
Community Bank Leverage Ratio | $ | 299,247 | 9.92 | % | $ | 211,177 | 7.00 | % | $ | 256,429 | 8.50 | % | ||
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| For Well Capitalized Under Prompt Corrective Action | ||||
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As of September 30, 2017: |
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Total capital (to risk-weighted assets) | $ | 200,797 | 13.67 | % | $ | 117,475 | 8.00 | % | $ | 146,844 | 10.00 | % |
Tier 1 capital (to risk-weighted assets) |
| 182,440 | 12.42 |
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| 88,106 | 6.00 |
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| 117,475 | 8.00 |
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Common Equity Tier 1 Capital (to risk-weighted assets) |
| 182,440 | 12.42 |
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| 66,080 | 4.50 |
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| 95,449 | 6.50 |
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Tier 1 capital (to average assets) |
| 182,440 | 9.97 |
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| 73,163 | 4.00 |
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| 91,454 | 5.00 |
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As of December 31, 2016: |
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Common Equity Tier 1 Capital (to risk-weighted assets) | $ | 154,923 | 11.34 | % | $ | 109,330 | 8.00 | % | $ | 136,663 | 10.00 | % |
Tier 1 capital (to risk-weighted assets) |
| 137,839 | 10.09 |
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| 81,998 | 6.00 |
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| 109,330 | 8.00 |
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Common Equity Tier 1 Capital (to risk-weighted assets) |
| 137,839 | 10.09 |
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| 61,498 | 4.50 |
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| 88,831 | 6.50 |
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Tier 1 capital (to average assets) |
| 137,839 | 8.10 |
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| 68,074 | 4.00 |
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| 85,092 | 5.00 |
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In July 2013, the FDIC and the other federal bank regulatory agencies issued a final rule that revised their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. Among other things, the new rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increased the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain available-for-sale securities holdings and defined benefit plan obligations to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised. The Bank exercised the opt-out election. The rule limits a banking organization's capital distributions and certain discretionary bonus payments if the banking organization does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.
The final rule became effective for the Bank and the Company on January 1, 2015. The capital conservation buffer requirement is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. For 2017, it is 1.25% of risk-weighted assets. The Bank and the Company currently comply with the minimum capital and capital conservation buffer requirements set forth in the final rule.
At September 30, 2017 and December 31, 2016, the capital ratios of the Bank and the Company exceeded the quantitative capital ratios required for an institution to be considered “well-capitalized.”
ItemITEM 3. Quantitative and Qualitative Disclosures Aboutabout Market Risk
Management of Market Risk
General. The majority of our assets and liabilities are monetary in nature. Consequently, one of our most significant forms of market risk is interest rate risk. Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has established an Asset/Liability Committee which is responsibleNot required for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors. Senior management monitors the level of interest rate risk on a regular basis and the Asset/Liability Committee, which consists of senior management and outside directors operating under a policy adopted by the Board of Directors, meets quarterly to review our asset/liability policies and interest rate risk position.smaller reporting companies.
The following table presents the Company’s net portfolio value (“NPV”). These calculations were based upon assumptions believed to be fundamentally sound, although they may vary from assumptions utilized by other financial institutions. The information set forth below is based on data that included all financial instruments as of September 30, 2017. Assumptions have been made by the Company relating to interest rates, loan prepayment rates, core deposit duration, and the market values of
49
certain assets and liabilities under the various interest rate scenarios. Actual maturity dates were used for fixed rate loans and certificate accounts. Investment securities were scheduled at either the maturity date or the next scheduled call date based upon management’s judgment of whether the particular security would be called in the current interest rate environment and under assumed interest rate scenarios. Variable rate loans were scheduled as of their next scheduled interest rate repricing date. Additional assumptions made in the preparation of the NPV table include prepayment rates on loans and mortgage-backed securities, core deposits without stated maturity dates were scheduled with an assumed term of 48 months, and money market and non-interest bearing accounts were scheduled with an assumed term of 24 months. The NPV at “PAR” represents the difference between the Company’s estimated value of assets and estimated value of liabilities assuming no change in interest rates. The NPV for a decrease of 200 to 300 basis points has been excluded since it would not be meaningful, in the interest rate environment as of September 30, 2017. The following sets forth the Company’s NPV as of that date.
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| NPV as a % of Assets |
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Change in Calculation |
| Net Portfolio Value |
| $ Change from PAR |
| % Change from PAR |
| NPV Ratio |
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+300bp |
| $ | 185,845 |
| $ | (67,272) |
| (26.58) | % |
| 10.68 | % |
| (262) | bps |
+200bp |
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| 207,280 |
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| (45,837) |
| (18.11) |
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| 11.57 |
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| (174) | bps |
+100bp |
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| 230,529 |
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| (22,588) |
| (8.92) |
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| 12.49 |
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| (81) | bps |
PAR |
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| 253,117 |
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| 13.30 |
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-100bp |
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| 268,765 |
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| 15,648 |
| 6.18 |
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| 13.74 |
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| 44 | bps |
bp – basis points
The table above indicates that as of September 30, 2017, in the event of a 100 basis point increase in interest rates, we would experience a 8.92% decrease in NPV.
Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in NPV require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the NPV table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the NPV table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income, and will differ from actual results.
Controls and Procedures
Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Interim Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and Interim Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.
There has been no change in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATIONINFORMATION
ITEM 1. LEGAL PROCEEDINGSPROCEEDINGS
We are involved, from time to time, as plaintiff or defendant in various legal actions arising in the normal course of business. Other than as set forth below, asAs of September 30, 2017,2022, we were not involved in any material legal proceedings the outcome of which, if determined in a manner adverse to the Company, would have a material adverse effect on our financial condition or results of operations.
The Company, as the successor to Pamrapo Bancorp, Inc., and in its own corporate capacity, was a named defendant in a shareholder class action lawsuit, Kube v. Pamrapo Bancorp, Inc., et al., filed in the Superior Court of New Jersey, Hudson County, Chancery Division, General Equity (the "Action”).
On September 21, 2015, the court entered an Order and Final Judgment (“Judgment”), whereby the Stipulation of Settlement ("Stipulation") agreed to by the plaintiff class, the Company and the remaining defendants was approved.
Pursuant to the Stipulation, the plaintiff class's counsel reserved the right to seek an award of counsel fees and litigation expenses (“Fees Motion”). The maximum amount which may be awarded as a result of the Fees Motion is $1,000,000.00. The plaintiff class’s counsel made a Fee Motion to the court seeking a final award of counsel fees and litigation expenses of approximately $1,000,000.00. The Company and the remaining defendants vigorously opposed that motion. By Order, dated July 5, 2017, the court awarded counsel fees and litigation expenses to the plaintiff’s class counsel in the amount of $1,000,000.00. The Company satisfied the Order by July 31, 2017.
The Company and the other defendants in the Action ("Plaintiffs") brought an action ("Carrier Suit") against Progressive Insurance Company ("Progressive"), the Directors' and Officers' Liability insurance carrier for Pamrapo Bancorp, Inc., at the time of its merger with the Company on July 6, 2010, and Colonial American Insurance Company ("Colonial"), the Directors' and Officers' Liability insurance carrier for the Company at the time of the merger. The Carrier Suit seeks, among other claims, indemnification, payment of and/or contribution toward the above settlement, payment of and/or contribution toward the above awards of attorney's fees to the plaintiff class's counsel, and reimbursement of the attorney's fees and defense costs incurred by the Plaintiffs in defending the Action and pursuing the Carrier Suit.
Progressive made a motion to dismiss the Carrier Suit in 2014. The Plaintiffs opposed that motion. That motion was administratively terminated by Order of the court, dated December 3, 2014. By Order of the court, dated December 3, 2014, the Plaintiffs' motion to file an Amended Complaint was granted.
On or about January 6, 2015, Progressive again made a motion to dismiss the Carrier Suit. The Plaintiffs opposed that motion. That motion was denied by oral decision on October 22, 2015, and by written Order, dated January 20, 2016.
A Mediation session ("Mediation") was held on March 11, 2015, among the parties. Following the Mediation, the Plaintiffs and Colonial agreed to settle the Plaintiffs’ claims against Colonial for $1,750,000.00. A Settlement Agreement and Release, dated June 30, 2015, was entered into by the Plaintiffs and Colonial. The Plaintiffs received the settlement amount of $1,750,000.00 from Colonial on July 9, 2015.
The Plaintiffs and Progressive did not settle their respective claims at the Mediation. The Carrier Suit continues with respect to these parties. Initial discovery has been exchanged between the parties.
By Order of the court, dated August 10, 2016, the parties were granted permission to serve and file motions for summary judgment by November 9, 2016. Prior to consideration of these motions, a Settlement Conference was held before the court on November 16, 2016. The Plaintiffs and Progressive did not settle their respective claims at that Settlement Conference.
The Plaintiffs have filed a motion for partial summary judgment. Progressive has filed a motion for summary judgment. These motions were returnable before the court on December 5, 2016.
By Order, dated September 18, 2017, the court granted the Plaintiffs’ motion for partial summary judgment, and denied Progressive’ motion for summary judgment.
A Status Conference was held before the court on October 26, 2017. As a result thereof, a Settlement Conference has been scheduled for December 1, 2017, before the court.
Discovery has been stayed until the conclusion of the Settlement Conference.
The Plaintiffs are vigorously pursuing full recovery.
There have been no material changes to the risk factors set forth under the Item 1.A1.A. Risk Factors as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The stock repurchase plans have terminated, as nofollowing table provides certain information related to shares remain under any ofrepurchased by the former plans.Company during the three months ended September 30, 2022:
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||
July 1 - July 31, 2022 | 19,113 | 16.99 | 19,113 | 134,750 | ||||
August 1 - August 31, 2022 | - | - | - | - | ||||
September 1 - September 30, 2022 | 52,400 | 17.31 | 52,400 | 82,350 | ||||
Total | 71,513 | $ | 17.23 | 71,513 | ||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. MINE SAFTEY DISCLOSURES
Not applicable
None.
None.
ITEM 6. EXHIBITS
Exhibit 10.1 | |
Exhibit | |
Exhibit 31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
Exhibit 31.2 | |
Exhibit 32 | Officers’ Certification filed pursuant to section 906 of the Sarbanes-Oxley Act of |
Exhibit 101.INS | XBRL Instance Document |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema |
Exhibit 101.CAL | XBRL Taxonomy Extension Calculation LinkBase |
Exhibit 101.DEF | XBRL Taxonomy Extension Definition LinkBase |
Exhibit 101.LAB | XBRL Taxonomy Extension Label LinkBase |
Exhibit 101.PRE | XBRL Taxonomy Extension Presentation LinkBase |
Exhibit 104 | Cover page Interactive Data File (embedded within the Inline XBRL document) |
Signatures
Signatures
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
BCB BANCORP, INC. | ||||
Date: November | By: | /s/ Thomas Coughlin | ||
Thomas Coughlin | ||||
| ||||
President and Chief Executive Officer (Principal Executive Officer) | ||||
Date: November | By: | /s/ Jawad Chaudhry | ||
| Jawad Chaudhry Chief Financial Officer | |||
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(Principal Accounting and Financial Officer) | ||||