XNYS:NYB Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2012

Commission File Number 1-31565

NEW YORK COMMUNITY BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

Delaware     06-1377322

(State or other jurisdiction of

incorporation or organization)

    (I.R.S. Employer Identification No.)

615 Merrick Avenue, Westbury, New York 11590

(Address of principal executive offices)

(Registrant’s telephone number, including area code)  (516) 683-4100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  X  No      

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  X  No      

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  Large Accelerated Filer X    Accelerated Filer         Non-accelerated Filer         Smaller Reporting Company     

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

 

439,118,145

 
 

Number of shares of common stock outstanding at

August 2, 2012

 


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

FORM 10-Q

Quarter Ended June 30, 2012

 

INDEX

          Page No.  

Part I.

    

FINANCIAL INFORMATION

  

Item 1.

    

Financial Statements

  
    

Consolidated Statements of Condition as of June 30, 2012 (unaudited) and December 31, 2011

     1   
     Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 30, 2012 and 2011 (unaudited)      2   
     Consolidated Statement of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2012 (unaudited)      3   
    

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011 (unaudited)

     4   
    

Notes to the Unaudited Consolidated Financial Statements

     5   

Item 2.

    

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     41   

Item 3.

    

Quantitative and Qualitative Disclosures about Market Risk

     89   

Item 4.

    

Controls and Procedures

     89   

Part II.

    

OTHER INFORMATION

     90   

Item 1.

    

Legal Proceedings

     90   

Item 1A.

    

Risk Factors

     90   

Item 2.

    

Unregistered Sales of Equity Securities and Use of Proceeds

     90   

Item 3.

    

Defaults Upon Senior Securities

     90   

Item 4.

    

Mine Safety Disclosures

     90   

Item 5.

    

Other Information

     90   

Item 6.

    

Exhibits

     91   

Signatures

     92   

Exhibits

  


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CONDITION

(in thousands, except share data)

 

    June 30, 2012
    
(unaudited)    
   December 31, 
2011

Assets:

       

Cash and cash equivalents

    $ 3,160,673         $ 2,001,737   

Securities:

       

Available-for-sale ($227,545 and $590,488 pledged, respectively)

      411,503          724,662   

Held to maturity ($3,268,071 and $3,610,172 pledged, respectively) (fair value of $4,032,094 and $3,966,185, respectively)

      3,853,587          3,815,854   
   

 

 

     

 

 

 

Total securities

      4,265,090          4,540,516   
   

 

 

     

 

 

 

Non-covered loans held for sale

      1,059,340          1,036,918   

Non-covered loans held for investment, net of deferred loan fees and costs

      26,492,755          25,532,818   

Less: Allowance for losses on non-covered loans

      (137,914)         (137,290)  
   

 

 

     

 

 

 

Non-covered loans held for investment, net

      26,354,841          25,395,528   

Covered loans

      3,516,097          3,753,031   

Less: Allowance for losses on covered loans

      (51,771)         (33,323)  
   

 

 

     

 

 

 

Covered loans, net

      3,464,326          3,719,708   
   

 

 

     

 

 

 

Total loans, net

      30,878,507          30,152,154   

Federal Home Loan Bank stock, at cost

      424,269          490,228   

Premises and equipment, net

      250,675          250,859   

FDIC loss share receivable

      631,156          695,179   

Goodwill

      2,436,131          2,436,131   

Core deposit intangibles, net

      41,589          51,668   

Mortgage servicing rights

      136,562          117,012   

Bank-owned life insurance

      777,990          768,996   

Other real estate owned (includes $50,732 and $71,400, respectively, covered by loss sharing agreements)

      98,033          155,967   

Other assets

      386,672          363,855   
   

 

 

     

 

 

 

Total assets

    $ 43,487,347         $ 42,024,302   
   

 

 

     

 

 

 

Liabilities and Stockholders’ Equity:

       

Deposits:

       

NOW and money market accounts

    $ 8,692,549         $ 8,757,198   

Savings accounts

      4,107,372          3,953,859   

Certificates of deposit

      9,852,702          7,373,263   

Non-interest-bearing accounts

      2,344,026          2,189,810   
   

 

 

     

 

 

 

Total deposits

      24,996,649          22,274,130   

Borrowed funds:

       

Wholesale borrowings:

       

Federal Home Loan Bank advances

      7,847,283          9,314,193   

Repurchase agreements

      4,125,000          4,125,000   

Fed funds purchased

      185,000          --   
   

 

 

     

 

 

 

Total wholesale borrowings

      12,157,283          13,439,193   

Junior subordinated debentures

      427,029          426,936   

Other borrowings

      4,300          94,284   
   

 

 

     

 

 

 

Total borrowed funds

      12,588,612          13,960,413   

Other liabilities

      290,567          224,055   
   

 

 

     

 

 

 

Total liabilities

      37,875,828          36,458,598   
   

 

 

     

 

 

 

Stockholders’ equity:

       

Preferred stock at par $0.01 (5,000,000 shares authorized; none issued)

      --          --   

Common stock at par $0.01 (600,000,000 shares authorized; 439,133,951 and 437,426,665 shares issued, and 439,124,100 and 437,344,796 shares outstanding, respectively)

      4,391          4,374   

Paid-in capital in excess of par

      5,316,176          5,309,269   

Retained earnings

      355,215          324,967   

Treasury stock, at cost (9,851 and 81,869 shares)

      (134)         (996)  

Accumulated other comprehensive loss, net of tax:

       

Net unrealized gain on securities available for sale, net of tax

      5,979          1,321   

Net unrealized loss on the non-credit portion of other-than-temporary impairment (“OTTI”) losses on securities, net of tax

      (13,578)         (13,627)  

Net unrealized loss on pension and post-retirement obligations, net of tax

      (56,530)         (59,604)  
   

 

 

     

 

 

 

Total accumulated other comprehensive loss, net of tax

      (64,129)         (71,910)  
   

 

 

     

 

 

 

Total stockholders’ equity

      5,611,519          5,565,704   
   

 

 

     

 

 

 

Total liabilities and stockholders’ equity

    $ 43,487,347         $ 42,024,302   
   

 

 

     

 

 

 

See accompanying notes to the consolidated financial statements.

 

1


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

 

     For the
Three Months Ended
June 30,
     For the
Six Months Ended
June 30,
 
     2012      2011      2012      2011  

Interest Income:

           

Mortgage and other loans

     $406,481           $408,292           $804,665           $824,234     

Securities and money market investments

     48,499           60,716           96,953           115,697     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total interest income

     454,980           469,008           901,618           939,931     
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest Expense:

           

NOW and money market accounts

     9,357           10,398           18,090           21,552     

Savings accounts

     3,565           4,206           7,061           8,333     

Certificates of deposit

     23,489           24,952           47,209           51,926     

Borrowed funds

     121,913           127,508           244,188           252,924     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total interest expense

     158,324           167,064           316,548           334,735     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

     296,656           301,944           585,070           605,196     

Provision for losses on non-covered loans

     15,000           15,000           30,000           41,000     

Provision for losses on covered loans

     18,448           8,708           18,448           8,708     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income after provisions for loan losses

     263,208           278,236           536,622           555,488     
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-Interest Income:

           

Total loss on OTTI of securities

     --           (18,124)          --           (18,124)    

Less: Non-credit portion of OTTI recorded in other comprehensive income (before taxes)

     --           --           --           --     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss on OTTI recognized in earnings

     --           (18,124)          --           (18,124)    

Fee income

     9,433           12,143           19,191           24,042     

Bank-owned life insurance

     6,802           7,564           16,387           14,453     

Net gain on sales of securities

     141           18,743           859           28,735     

Mortgage banking income

     58,323           11,774           93,488           31,712     

Gain on business disposition

     --           9,823           --           9,823     

FDIC indemnification income

     14,759           7,624           14,759           7,624     

Other

     8,747           9,341           15,517           19,233     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total non-interest income

     98,205           58,888           160,201           117,498     
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-Interest Expense:

           

Operating expenses:

           

Compensation and benefits

     73,591           73,218           147,208           145,286     

Occupancy and equipment

     23,249           21,770           45,133           43,710     

General and administrative

     53,669           52,912           103,186           98,221     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     150,509           147,900           295,527           287,217     

Amortization of core deposit intangibles

     4,920           7,144           10,079           14,529     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total non-interest expense

     155,429           155,044           305,606           301,746     
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     205,984           182,080           391,217           371,240     

Income tax expense

     74,772           62,621           141,752           128,605     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Income

     $131,212           $119,459           $249,465           $242,635     
  

 

 

    

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss), net of tax:

           

Change in net unrealized gain/loss on securities available for sale, net of tax of $2,096; $5,065; $3,473; and $7,643, respectively

     3,094           (7,439)          5,185           (11,276)    

Change in the non-credit portion of OTTI losses recognized in other comprehensive income, net of tax of $16; $4,811; $31; and $4,825, respectively

     26           7,187           49           7,207     

Change in pension and post-retirement obligations, net of tax of $1,044; $505; $2,086; and $1,006, respectively

     1,537           740           3,074           1,484     

Less: Reclassification adjustment for sales of available for sale securities and loss on OTTI of securities, net of tax of $57; $250; $332; and $1,428, respectively

     (84)          (369)          (527)          (2,122)    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other comprehensive income (loss), net of tax

     4,573           119           7,781           (4,707)    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income, net of tax

     $135,785           $119,578           $257,246           $237,928     
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic earnings per share

     $0.30           $0.27           $0.56           $0.55     
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

     $0.30           $0.27           $0.56           $0.55     
  

 

 

    

 

 

    

 

 

    

 

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

2


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

 

     For the Six Months
 Ended June 30, 2012 

Common Stock (Par Value: $0.01):

    

Balance at beginning of year

     $ 4,374   

Shares issued for restricted stock awards (1,707,286 shares)

       17   
    

 

 

 

Balance at end of period

       4,391   
    

 

 

 

Paid-in Capital in Excess of Par:

    

Balance at beginning of year

       5,309,269   

Shares issued for restricted stock awards, net of forfeitures

       (3,395)  

Compensation expense related to restricted stock awards

       10,337   

Tax effect of stock plans

       (35)  
    

 

 

 

Balance at end of period

       5,316,176   
    

 

 

 

Retained Earnings:

    

Balance at beginning of year

       324,967   

Net income

       249,465   

Dividends paid on common stock ($0.50 per share)

       (219,217)  
    

 

 

 

Balance at end of period

       355,215   
    

 

 

 

Treasury Stock:

    

Balance at beginning of year

       (996)  

Purchase of common stock (197,057 shares)

       (2,554)  

Shares issued for restricted stock awards (269,075 shares)

       3,416   
    

 

 

 

Balance at end of period

       (134)  
    

 

 

 

Accumulated Other Comprehensive Loss, net of tax:

    

Balance at beginning of year

       (71,910)  

 Other comprehensive income, net of tax

       7,781   
    

 

 

 

Balance at end of period

       (64,129)  
    

 

 

 

Total stockholders’ equity

     $ 5,611,519   
    

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

3


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

     Six Months Ended June 30,  
     2012      2011  

Cash Flows from Operating Activities:

     

Net income

   $ 249,465          $ 242,635     

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

     

Provision for loan losses

     48,448           49,708     

Depreciation and amortization

     12,139           11,876     

Accretion of premiums and discounts, net

     (742)          (850)    

Amortization of core deposit intangibles

     10,079           14,529     

Net gain on sale of securities

     (859)           (28,735)    

Net gain on sale of loans

     (92,976)           (25,213)    

Gain on business disposition

     --           (9,823)    

Stock plan-related compensation

     10,375           7,919     

Loss on OTTI of securities recognized in earnings

     --           18,124     

Changes in assets and liabilities:

     

Decrease in deferred tax asset, net

     13,512           38,358     

Decrease (increase) in other assets

     51,779           (11,574)    

Increase (decrease) in other liabilities

     71,671           (83,978)    

Origination of loans held for sale

     (5,094,278)          (2,640,272)    

Proceeds from sale of loans originated for sale

     5,117,092           3,379,810     
  

 

 

    

 

 

 

Net cash provided by operating activities

     395,705           962,514     
  

 

 

    

 

 

 

Cash Flows from Investing Activities:

     

Proceeds from repayment of securities held to maturity

     1,378,707           963,317     

Proceeds from repayment of securities available for sale

     370,667           81,642     

Proceeds from sale of securities held to maturity

     --           284,406     

Proceeds from sale of securities available for sale

     330,859           544,149     

Purchase of securities held to maturity

     (1,415,389)          (2,609,676)    

Purchase of securities available for sale

     (379,890)          (142,178)    

Net redemption of Federal Home Loan Bank stock

     65,959           21,277     

Net increase in loans

     (704,639)          (653,405)    

Purchase of premises and equipment, net

     (11,955)          (24,027)    

Net cash acquired in business transactions

     --           100,027     
  

 

 

    

 

 

 

Net cash used in investing activities

     (365,681)          (1,434,468)    
  

 

 

    

 

 

 

Cash Flows from Financing Activities:

     

Net increase (decrease) in deposits

     2,722,519           (11,340)    

Net decrease in short-term borrowed funds

     (1,277,000)          (500,000)    

Net decrease in long-term borrowed funds

     (94,801)          (18,832)    

Tax effect of stock plans

     (35)          2,252     

Cash dividends paid on common stock

     (219,217)          (218,397)    

Treasury stock purchases

     (2,554)          (2,677)    

Net cash received from stock option exercises

     --           3,519     
  

 

 

    

 

 

 

Net cash provided by (used in) financing activities

     1,128,912           (745,475)    
  

 

 

    

 

 

 

Net increase (decrease) in cash and cash equivalents

     1,158,936           (1,217,429)    

Cash and cash equivalents at beginning of period

     2,001,737           1,927,542     
  

 

 

    

 

 

 

Cash and cash equivalents at end of period

   $ 3,160,673          $ 710,113     
  

 

 

    

 

 

 

Supplemental information:

     

Cash paid for interest

     $311,632           $346,984     

Cash paid for income taxes

     171,965           89,958     

Non-cash investing and financing activities:

     

Transfers to other real estate owned from loans

     59,208           111,612     

See accompanying notes to the consolidated financial statements.

 

4


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Organization

Formerly known as Queens County Bancorp, Inc., New York Community Bancorp, Inc. (on a stand-alone basis, the “Parent Company” or, collectively with its subsidiaries, the “Company”) was organized under Delaware law on July 20, 1993 and is the holding company for New York Community Bank and New York Commercial Bank (hereinafter referred to as the “Community Bank” and the “Commercial Bank,” respectively, and collectively as the “Banks”). In addition, for the purpose of these Consolidated Financial Statements, the “Community Bank” and the “Commercial Bank” refer not only to the respective banks but also to their respective subsidiaries.

The Community Bank is the primary banking subsidiary of the Company. Founded on April 14, 1859 and formerly known as Queens County Savings Bank, the Community Bank converted from a state-chartered mutual savings bank to the capital stock form of ownership on November 23, 1993, on which date the Company completed its initial offering of common stock (par value: $0.01 per share) at a price of $25.00 per share. The Commercial Bank was established on December 30, 2005.

Reflecting nine stock splits, the Company’s initial offering price adjusts to $0.93 per share. All share and per share data presented in this report have been adjusted to reflect the impact of the stock splits.

The Company changed its name to New York Community Bancorp, Inc. on November 21, 2000 in anticipation of completing the first of eight business combinations that expanded its footprint well beyond Queens County to encompass all five boroughs of New York City, Long Island, and Westchester County in New York, and seven counties in the northern and central parts of New Jersey. The Company expanded beyond this region to south Florida, northeast Ohio, and central Arizona through its FDIC-assisted acquisition of certain assets and assumption of certain liabilities of AmTrust Bank (“AmTrust”) in December 2009, and extended its Arizona franchise through its FDIC-assisted acquisition of certain assets and assumption of certain liabilities of Desert Hills Bank (“Desert Hills”) in March 2010. On June 28, 2012, the Company completed its 11th transaction when it assumed the deposits of Aurora Bank FSB.

Reflecting this strategy of growth through acquisitions, the Community Bank currently operates 241 branches, four of which operate directly under the Community Bank name. The remaining 237 branches operate through seven divisional banks—Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, and Roosevelt Savings Bank (in New York), Garden State Community Bank in New Jersey, AmTrust Bank in Florida and Arizona, and Ohio Savings Bank in Ohio.

The Commercial Bank currently operates 34 branches in Manhattan, Queens, Brooklyn, Westchester County, and Long Island (all in New York), including 17 branches that operate under the name “Atlantic Bank.”

Basis of Presentation

The following is a description of the significant accounting and reporting policies that the Company and its wholly-owned subsidiaries follow in preparing and presenting their consolidated financial statements, which conform to U.S. generally accepted accounting principles (“GAAP”) and to general practices within the banking industry. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates that are particularly susceptible to change in the near term are used in connection with the determination of the allowances for loan losses; the valuation of loans held for sale; the evaluation of goodwill for impairment; the evaluation of other-than-temporary impairment (“OTTI”) on securities; and the evaluation of the need for a valuation allowance on the Company’s deferred tax assets. The current economic environment has increased the degree of uncertainty inherent in these material estimates.

The unaudited consolidated financial statements include the accounts of the Company and other entities in which the Company has a controlling financial interest. All inter-company accounts and transactions are eliminated

 

5


Table of Contents

in consolidation. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2011 Annual Report on Form 10-K. The Company currently has unconsolidated subsidiaries in the form of nine wholly-owned statutory business trusts, which were formed to issue guaranteed capital debentures (“capital securities”). Please see Note 6, “Borrowed Funds,” for additional information regarding these trusts.

When necessary, certain reclassifications have been made to prior-year amounts to conform to the current-year presentation.

Note 2. Computation of Earnings per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the same method as basic EPS, however, the computation reflects the potential dilution that would occur if outstanding in-the-money stock options were exercised and converted into common stock.

Unvested stock-based compensation awards containing non-forfeitable rights to dividends are considered participating securities and therefore are included in the two-class method for calculating EPS. Under the two-class method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. The Company grants restricted stock to certain employees under its stock-based compensation plans. Recipients receive cash dividends during the vesting periods of these awards (i.e., including on the unvested portion of such awards). Since these dividends are non-forfeitable, the unvested awards are considered participating securities and have earnings allocated to them.

The following table presents the Company’s computation of basic and diluted EPS for the periods indicated:

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
(in thousands, except share and per share data)    2012      2011      2012      2011  

Net income

     $131,212           $119,459           $249,465           $242,635     

Less: Dividends paid on and earnings allocated to participating securities

     (1,246)          (921)          (2,339)          (1,815)    
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings applicable to common stock

     $129,966           $118,538           $247,126           $240,820     
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average common shares outstanding

     437,820,639           436,179,448           437,644,249           435,872,952     
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic earnings per common share

     $0.30           $0.27           $0.56           $0.55     
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings applicable to common stock

     $129,966           $118,538           $247,126           $240,820     
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average common shares outstanding

     437,820,639           436,179,448           437,644,249           435,872,952     

Potential dilutive common shares(1)

     4,063           437,504           4,698           646,914     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total shares for diluted earnings per share computation

     437,824,702           436,616,952           437,648,947           436,519,866     
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per common share and common share equivalents

     $0.30           $0.27           $0.56           $0.55     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Options to purchase 4,981,879 shares of the Company’s common stock that were outstanding in the three and six months ended June 30, 2012, at a weighted average exercise price of $15.40, were excluded from the respective computations of diluted EPS because their inclusion would have had an antidilutive effect. Options to purchase 744,838 and 736,938 shares, respectively, of the Company’s common stock that were outstanding in the three and six months ended June 30, 2011, at respective weighted average exercise prices of $21.37 and $21.42, were excluded from the respective computations of diluted EPS because their inclusion would have had an antidilutive effect.

 

6


Table of Contents

Note 3. Securities

The following table summarizes the Company’s portfolio of securities available for sale at June 30, 2012:

 

     June 30, 2012
(in thousands)    Amortized
Cost
   Gross
Unrealized

Gain
   Gross
Unrealized

Loss
   Fair Value

Mortgage-Related Securities:

                   

GSE (1) certificates

     $ 91,166         $ 6,355         $ 8        $ 97,513  

GSE CMOs (2)

       62,305          4,538          --          66,843  

Private label CMOs

       21,728          --          626          21,102  
    

 

 

      

 

 

      

 

 

      

 

 

 

Total mortgage-related securities

     $ 175,199         $ 10,893         $ 634        $ 185,458  
    

 

 

      

 

 

      

 

 

      

 

 

 

Other Securities:

                   

GSE debentures

     $ 97,388         $ 399         $ --        $ 97,787  

State, county, and municipal

       1,192          108          --          1,300  

Capital trust notes

       35,437          900          4,037          32,300  

Preferred stock

       49,890          2,888          --          52,778  

Common stock

       42,983          1,178          2,281          41,880  
    

 

 

      

 

 

      

 

 

      

 

 

 

Total other securities

     $ 226,890         $ 5,473         $ 6,318        $ 226,045  
    

 

 

      

 

 

      

 

 

      

 

 

 

Total securities available for sale (3)

     $ 402,089         $ 16,366         $ 6,952        $ 411,503  
    

 

 

      

 

 

      

 

 

      

 

 

 

 

(1) Government-sponsored enterprises
(2) Collateralized mortgage obligations
(3) The non-credit portion of OTTI recorded in accumulated other comprehensive loss (“AOCL”) was $570,000 (before taxes).

As of June 30, 2012, the fair value of marketable equity securities included common stock of $41.9 million, corporate preferred stock of $52.5 million, and Freddie Mac preferred stock of $280,000. Common stock primarily consisted of an investment in a large cap equity fund and certain other funds that are Community Reinvestment Act (“CRA”) eligible. The Freddie Mac preferred stock was recognized by the Company as other-than-temporarily impaired in the fourth quarter of 2008.

The following table summarizes the Company’s portfolio of securities available for sale at December 31, 2011:

 

     December 31, 2011
(in thousands)    Amortized
Cost
   Gross
Unrealized

Gain
   Gross
Unrealized

Loss
   Fair Value

Mortgage-Related Securities:

                   

GSE certificates

     $ 97,642        $ 5,013        $ 10        $ 102,645  

GSE CMOs

       62,373          2,903          --          65,276  

Private label CMOs

       25,306          --          1,265          24,041  
    

 

 

      

 

 

      

 

 

      

 

 

 

Total mortgage-related securities

     $ 185,321        $ 7,916        $ 1,275        $ 191,962  
    

 

 

      

 

 

      

 

 

      

 

 

 

Other Securities:

                   

GSE debentures

     $ 456,969        $ 1,797        $ --        $ 458,766  

State, county, and municipal

       1,188          97          --          1,285  

Capital trust notes

       36,754          141          4,692          32,203  

Preferred stock

       --          195          --          195  

Common stock

       42,863          1,604          4,216          40,251  
    

 

 

      

 

 

      

 

 

      

 

 

 

Total other securities

     $ 537,774        $ 3,834        $ 8,908        $ 532,700  
    

 

 

      

 

 

      

 

 

      

 

 

 

Total securities available for sale (1)

     $ 723,095        $ 11,750        $ 10,183        $ 724,662  
    

 

 

      

 

 

      

 

 

      

 

 

 

 

(1) The non-credit portion of OTTI recorded in AOCL was $570,000 (before taxes).

 

7


Table of Contents

The following tables summarize the Company’s portfolio of securities held to maturity at June 30, 2012 and December 31, 2011:

 

    June 30, 2012
(in thousands)   Amortized
Cost
  Carrying
Amount
      Gross    
    Unrealized     
    Gain    
      Gross    
    Unrealized     
    Loss    
  Fair Value

Mortgage-Related Securities:

                   

GSE certificates

    $ 912,030       $ 912,030       $ 63,322       $ 62       $ 975,290  

GSE CMOs

      2,251,818         2,251,818         96,927         --         2,348,745  

Other mortgage-related securities

      3,303         3,303         --         --         3,303  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total mortgage-related securities

    $ 3,167,151       $ 3,167,151       $ 160,249       $ 62       $ 3,327,338  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Other Securities:

                   

GSE debentures

    $ 436,312       $ 436,312       $ 12,866       $ --       $ 449,178  

Corporate bonds

      101,304         101,304         9,001         160         110,145  

Municipal bonds

      17,432         17,432         3         226         17,209  

Capital trust notes

      153,044         131,388         15,733         18,897         128,224  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total other securities

    $ 708,092       $ 686,436       $ 37,603       $ 19,283       $ 704,756  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total securities held to maturity (1)

    $ 3,875,243       $ 3,853,587       $ 197,852       $ 19,345       $ 4,032,094  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(1) Held-to-maturity securities are reported at a carrying amount equal to amortized cost less the non-credit portion of OTTI recorded in AOCL. The non-credit portion of OTTI recorded in AOCL was $21.7 million (before taxes).

 

    December 31, 2011
(in thousands)   Amortized
Cost
  Carrying
Amount
      Gross    
    Unrealized     
    Gain    
      Gross    
    Unrealized     
    Loss    
  Fair Value

Mortgage-Related Securities:

                   

GSE certificates

    $ 660,945       $ 660,945       $ 47,064       $ --       $ 708,009  

GSE CMOs

      2,331,916         2,331,916         93,216         --         2,425,132  

Other mortgage-related securities

      3,379         3,379         --         --         3,379  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total mortgage-related securities

    $ 2,996,240       $ 2,996,240       $ 140,280       $ --       $ 3,136,520  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Other Securities:

                   

GSE debentures

    $ 633,258       $ 633,258       $ 14,878       $ 146       $ 647,990  

Corporate bonds

      54,759         54,759         2,826         12         57,573  

Capital trust notes

      153,334         131,597         12,362         19,857         124,102  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total other securities

    $ 841,351       $ 819,614       $ 30,066       $ 20,015       $ 829,665  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total securities held to maturity (1)

    $ 3,837,591       $ 3,815,854       $ 170,346       $ 20,015       $ 3,966,185  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(1) The non-credit portion of OTTI recorded in AOCL was $21.7 million (before taxes).

The Company had $424.3 million and $490.2 million of Federal Home Loan Bank (“FHLB”) stock, at cost, at June 30, 2012 and December 31, 2011, respectively. The Company is required to maintain this investment in order to have access to funding resources provided by the FHLB.

The following table summarizes the gross proceeds, gross realized gains, and gross realized losses from the sale of available-for-sale securities during the six months ended June 30, 2012 and 2011:

 

     For the Six Months  Ended
June 30,
(in thousands)        2012        2011       
    

 

 

      

 

 

    

Gross proceeds

        $330,859            $544,149      

Gross realized gains

       859           20,243      

Gross realized losses

       --           11      
    

 

 

      

 

 

    

In addition, during the six months ended June 30, 2011, the Company sold held-to-maturity securities with gross proceeds of $284.4 million and gross realized gains of $8.5 million. These sales occurred because the Company had either collected a substantial portion (at least 85%) of the initial principal balance or because there was evidence of significant deterioration in the issuers’ creditworthiness.

 

8


Table of Contents

The $160.5 million market value of the capital trust note portfolio at June 30, 2012 included three pooled trust preferred securities. The following table details the pooled trust preferred securities that had at least one credit rating below investment grade as of June 30, 2012:

 

    INCAPS
Funding I
  Alesco Preferred
Funding VII Ltd.
  Preferred Term
Securities II
(dollars in thousands)    Class B-2 Notes    Class C-1 Notes    Mezzanine Notes 

Book value

      $14,964            $ 553            $579     

Fair value

      15,745            228            666     

Unrealized gain (loss)

      781            (325)           87     

Lowest credit rating assigned to security

      CCC            C            C     

Number of banks/insurance companies currently performing

      24            58            24     

Actual deferrals and defaults as a percentage of original collateral

      8%         18%         36%  

Expected deferrals and defaults as a percentage of remaining performing collateral

      22            25            19     

Expected recoveries as a percentage of remaining performing collateral

      --            --            2     

Excess subordination as a percentage of remaining performing collateral

      17            --            --     

As of June 30, 2012, after taking into account the Company’s best estimates of future deferrals, defaults, and recoveries, two of its pooled trust preferred securities had no excess subordination in the classes it owns and one had excess subordination of 17%. Excess subordination is calculated after taking into account the deferrals, defaults, and recoveries noted in the table above, and indicates whether there is sufficient additional collateral to cover the outstanding principal balance of the class owned, after taking into account these projected deferrals, defaults, and recoveries.

As the following table indicates, there was no activity from December 31, 2011 through June 30, 2012 in the credit loss component of OTTI on debt securities for which a non-credit component of OTTI was recognized in AOCL. The beginning balance represents the credit loss component for debt securities for which OTTI occurred prior to January 1, 2012. For credit-impaired debt securities, OTTI recognized in earnings after that date is presented as an addition in two components, based upon whether the current period is the first time a debt security was credit-impaired (initial credit impairment) or is not the first time a debt security was credit-impaired (subsequent credit impairment).

 

(in thousands)        For the Six Months Ended    
     June 30, 2012    

Beginning credit loss amount as of December 31, 2011

     $ 219,978  

Add: Initial other-than-temporary credit losses

       --  

Subsequent other-than-temporary credit losses

       --  

Amount previously recognized in AOCL

       --  

Less: Realized losses for securities sold

       --  

Securities intended or required to be sold

       --  

Increases in expected cash flows on debt securities

       --  
    

 

 

 

Ending credit loss amount as of June 30, 2012

     $ 219,978  
    

 

 

 

 

9


Table of Contents

The following table summarizes the carrying amounts and estimated fair values of held-to-maturity debt securities, and the amortized costs and estimated fair values of available-for-sale debt securities, at June 30, 2012 by contractual maturity. Mortgage-related securities held to maturity and available for sale, all of which have prepayment provisions, are distributed to a maturity category based on the ends of the estimated average lives of such securities. Principal and amortization prepayments are not shown in maturity categories as they occur, but are considered in the determination of estimated average life.

 

    Carrying Amount at June 30, 2012    
(dollars in thousands)   Mortgage-
Related
Securities
  Average
Yield
    U.S. Treasury  
  and GSE  
   Obligations  
  Average
Yield
   State, County, 
 and Municipal 
  Average
Yield 
(1)
   Other Debt 
 Securities 
(2) 
  Average
Yield
  Fair Value

Held-to-Maturity Securities:

                                   

Due within one year

    $ --         --%        $ --         --%        $ --         --%        $ 23,994         5.80%        $ 24,670  

Due from one to five years

      --         --             --         --             --         --             --         --             --  

Due from five to ten years

      1,324,066         3.38             432,524         3.20             1,859         2.92             46,509         4.04             1,912,802  

Due after ten years

      1,843,085         3.76             3,788         2.76             15,573         3.90             162,189         7.21             2,094,622  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total debt securities held to maturity

    $ 3,167,151         3.60%        $ 436,312         3.20%        $ 17,432         3.79%        $ 232,692         6.43%        $ 4,032,094  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Available-for-Sale Securities: (3)

                                   

Due within one year

    $ --         --%        $ --         --%        $ 125         5.63%        $ --         --%        $ 127  

Due from one to five years

      8,363         7.22             --         --             510         6.21             --         --             9,353  

Due from five to ten years

      72,944         3.55             97,388         3.56             557         6.56             --         --             177,524  

Due after ten years

      93,892         3.90             --         --             --         --             35,437         4.62             129,841  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total debt securities available for sale

    $ 175,199         3.91%        $ 97,388         3.56%        $ 1,192         6.31%        $ 35,437         4.62%        $ 316,845  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(1) Not presented on a tax-equivalent basis.
(2) Includes corporate bonds and capital trust notes. Included in capital trust notes are $15.5 million and $579,000 of pooled trust preferred securities available for sale and held to maturity, respectively, all of which are due after ten years. The remaining capital trust notes consist of single-issue trust preferred securities.
(3) As equity securities have no contractual maturity, they have been excluded from this table.

At June 30, 2012, the Company had commitments to purchase $707.4 million of securities, all of which were GSE securities.

 

10


Table of Contents

The following tables present held-to-maturity and available-for-sale securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of June 30, 2012:

 

At June 30, 2012    Less than Twelve Months    Twelve Months or Longer   Total
(in thousands)      Fair Value       Unrealized Loss       Fair Value       Unrealized Loss      Fair Value       Unrealized Loss 

Temporarily Impaired Held-to-Maturity

                            

Debt Securities:

                            

GSE certificates

       $    62,557        $   62          $        --          $        --         $  62,557          $       62  

Corporate bonds

       46,349          160          --          --         46,349          160  

Municipal bonds

       15,347          226          --          --         15,347          226  

Capital trust notes

       --          --          69,238          18,897         69,238          18,897  
    

 

 

      

 

 

      

 

 

      

 

 

     

 

 

      

 

 

 

Total temporarily impaired held-to-maturity debt securities

       $124,253        $ 448          $69,238          $18,897         $193,491          $19,345  
    

 

 

      

 

 

      

 

 

      

 

 

     

 

 

      

 

 

 

Temporarily Impaired Available-for-Sale Securities:

                            

Debt Securities:

                            

GSE certificates

       $       354        $     8          $        --          $        --         $     354          $         8  

Private label CMOs

       21,102          626          --          --         21,102          626  

Capital trust notes

       --          --          10,658          4,037         10,658          4,037  
    

 

 

      

 

 

      

 

 

      

 

 

     

 

 

      

 

 

 

Total temporarily impaired available-for-sale debt securities

       $21,456        $ 634          $10,658          $  4,037         $  32,114          $  4,671  

Equity securities

       --          --          28,721          2,281 (1)       28,721          2,281  
    

 

 

      

 

 

      

 

 

      

 

 

     

 

 

      

 

 

 

Total temporarily impaired available-for-sale securities

       $21,456        $ 634          $39,379          $  6,318         $  60,835          $  6,952  
    

 

 

      

 

 

      

 

 

      

 

 

     

 

 

      

 

 

 

 

(1) The twelve months or longer unrealized losses on equity securities of $2.3 million at June 30, 2012 relate to available-for-sale equity securities that primarily consisted of a large cap equity fund at that date. The principal balance of this large cap equity fund was $29.0 million and the twelve months or longer unrealized loss was $1.6 million.

 

11


Table of Contents

The following tables present held-to-maturity and available-for-sale securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of December 31, 2011:

 

At December 31, 2011    Less than Twelve Months    Twelve Months or Longer    Total
(in thousands)      Fair Value       Unrealized Loss       Fair Value       Unrealized Loss       Fair Value       Unrealized Loss 

Temporarily Impaired Held-to-Maturity Debt Securities:

                             

GSE debentures

       $62,601        $ 146          $        --          $        --          $  62,601          $     146  

GSE certificates

       --          --          --          --          --          --  

GSE CMOs

       --          --          --          --          --          --  

Corporate bonds

       4,987          12          --          --          4,987          12  

Capital trust notes

       971          43          68,570          19,814          69,541          19,857  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total temporarily impaired held-to-maturity debt securities

       $68,559        $ 201          $68,570          $19,814          $137,129          $20,015  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Temporarily Impaired Available-for-Sale Securities:

                             

Debt Securities:

                             

GSE certificates

       $181        $ 9          $        13          $          1          $        194          $       10  

Private label CMOs

       24,041          1,265          --          --          24,041          1,265  

Corporate bonds

       --          --          --          --          --          --  

State, county, and municipal

       --          --          --          --          --          --  

Capital trust notes

       15,154          363          9,810          4,329          24,964          4,692  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total temporarily impaired available-for-sale debt securities

       $39,376        $ 1,637          $9,823          $  4,330          $  49,199          $  5,967  

Equity securities

       784          40          26,651          4,176          27,435          4,216  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total temporarily impaired available-for-sale securities

       $40,160        $ 1,677          $36,474          $  8,506          $  76,634          $10,183  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

12


Table of Contents

An OTTI loss on impaired securities must be fully recognized in earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost. However, even if an investor does not expect to sell a debt security, it must evaluate the expected cash flows to be received and determine if a credit loss has occurred. In the event that a credit loss occurs, only the amount of impairment associated with the credit loss is recognized in earnings. Amounts relating to factors other than credit losses are recorded in AOCL. Financial Accounting Standards Board (“FASB”) guidance also requires additional disclosures regarding the calculation of credit losses, as well as factors considered by the investor in reaching a conclusion that an investment is not other-than-temporarily impaired.

Available-for-sale securities in unrealized loss positions are analyzed as part of the Company’s ongoing assessment of OTTI. When the Company intends to sell such available-for-sale securities, the Company recognizes an impairment loss equal to the full difference between the amortized cost basis and the fair value of those securities. When the Company does not intend to sell available-for-sale equity or debt securities in an unrealized loss position, potential OTTI is considered based on a variety of factors, including the length of time and extent to which the fair value has been less than the cost; adverse conditions specifically related to the industry, the geographic area, or financial condition of the issuer, or the underlying collateral of a security; the payment structure of the security; changes to the rating of the security by a rating agency; the volatility of the fair value changes; and changes in fair value of the security after the balance sheet date. For debt securities, the Company estimates cash flows over the remaining life of the underlying collateral to assess whether credit losses exist and, where applicable, to determine if any adverse changes in cash flows have occurred. The Company’s cash flow estimates take into account expectations of relevant market and economic data as of the end of the reporting period. As of June 30, 2012, the Company did not intend to sell the securities with an unrealized loss position in AOCL, and it was more likely than not that the Company would not be required to sell these securities before recovery of their amortized cost basis. The Company believes that the securities with an unrealized loss position in AOCL were not other-than-temporarily impaired as of June 30, 2012.

Other factors considered in determining whether a loss is temporary include the length of time and the extent to which fair value has been below cost; the severity of the impairment; the cause of the impairment; the financial condition and near-term prospects of the issuer; activity in the market of the issuer that may indicate adverse credit conditions; and the forecasted recovery period using current estimates of volatility in market interest rates (including liquidity and risk premiums).

Management’s assertion regarding its intent not to sell, or that it is not more likely than not that the Company will be required to sell the security before its anticipated recovery, is based on a number of factors, including a quantitative estimate of the expected recovery period (which may extend to maturity) and management’s intended strategy with respect to the identified security or portfolio. If management does have the intent to sell, or believes it is more likely than not that the Company will be required to sell the security before its anticipated recovery, the unrealized loss is charged directly to earnings in the Consolidated Statement of Income and Comprehensive Income.

The Company reviews quarterly financial information related to its investments in capital trust notes as well as other information that is released by each financial institution to determine the continued creditworthiness of the issuer of the securities. The contractual terms of these investments do not permit settling the securities at prices that are less than the amortized costs of the investments; therefore, the Company expects that these investments will not be settled at prices that are less than their amortized costs. The Company continues to monitor these investments and currently estimates that the present value of expected cash flows is not less than the amortized cost of the securities. Because the Company does not have the intent to sell the investments, and it is not more likely than not

 

13


Table of Contents

that the Company will be required to sell them before the anticipated recovery of fair value, which may be at maturity, it did not consider these investments to be other-than-temporarily impaired at June 30, 2012. It is possible that these securities will perform worse than is currently expected, which could lead to adverse changes in cash flows from these securities and potential OTTI losses in the future. Events that may occur in the future at the financial institutions that issued these securities could trigger material unrecoverable declines in the fair values of the Company’s investments and therefore could result in future potential OTTI losses. Such events include, but are not limited to, government intervention, deteriorating asset quality and credit metrics, significantly higher levels of default and loan loss provisions, losses in value on the underlying collateral, deteriorating credit enhancement, net operating losses, and further illiquidity in the financial markets.

At June 30, 2012, the Company’s equity securities portfolio consisted of perpetual preferred and common stock, and mutual funds. The Company considers a decline in the fair value of available-for-sale equity securities to be other than temporary if the Company does not expect to recover the entire amortized cost basis of the security. The unrealized losses on the Company’s equity securities were primarily caused by market volatility. The Company evaluated the near-term prospects of a recovery of fair value for each security in the portfolio, together with the severity and duration of impairment to date. Based on this evaluation, and the Company’s ability and intent to hold these investments for a period of time reasonably sufficient to realize a near-term forecasted recovery of fair value, the Company did not consider these investments to be other-than-temporarily impaired at June 30, 2012. Nonetheless, it is possible that these equity securities will perform worse than is currently expected, which could lead to adverse changes in their fair values, or the failure of the securities to fully recover in value as presently forecasted by management, causing the Company to potentially record OTTI losses in future periods. Events that could trigger material declines in the fair values of these securities include, but are not limited to, deterioration in the equity markets; a decline in the quality of the loan portfolios of the issuers in which the Company has invested; and the recording of higher loan loss provisions and net operating losses by such issuers.

The investment securities designated as having a continuous loss position for twelve months or more at June 30, 2012 consisted of 11 capital trust notes and six equity securities. At December 31, 2011, the investment securities designated as having a continuous loss position for twelve months or more consisted of one mortgage-related security, eleven capital trust notes, and six equity securities. At June 30, 2012 and December 31, 2011, the combined market value of the respective securities represented unrealized losses of $25.2 million and $28.3 million. At June 30, 2012, the fair value of securities having a continuous loss position for twelve months or more was 18.9% below the collective amortized cost of $133.3 million. At December 31, 2011, the fair value of such securities was 21.2% below the collective amortized cost of $133.4 million.

 

14


Table of Contents

Note 4. Loans

The following table sets forth the composition of the loan portfolio at June 30, 2012 and December 31, 2011:

 

     June 30, 2012        December 31, 2011
(dollars in thousands)    Amount    Percent of
Non-Covered
Loans Held for
Investment
       Amount    Percent of
Non-Covered
Loans Held for
Investment

Non-Covered Loans Held for Investment:

                     

Mortgage Loans:

                     

Multi-family

      $ 18,181,045             68.65%             $ 17,430,628             68.28%    

Commercial real estate

       7,157,726             27.03                 6,855,244             26.85       

Acquisition, development, and construction

       390,590             1.47                 445,671             1.75       

One-to-four family

       120,186             0.45                 127,361             0.50       
    

 

 

      

 

 

        

 

 

      

 

 

 

Total mortgage loans held for investment

      $ 25,849,547             97.60                $ 24,858,904             97.38       
    

 

 

      

 

 

        

 

 

      

 

 

 

Other Loans:

                     

Commercial and industrial

       579,960             2.19                 599,986             2.35       

Other

       55,673             0.21                 69,907             0.27       
    

 

 

      

 

 

        

 

 

      

 

 

 

Total other loans held for investment

       635,633             2.40                 669,893             2.62       
    

 

 

      

 

 

        

 

 

      

 

 

 

Total non-covered loans held for investment

      $ 26,485,180             100.00%             $ 25,528,797             100.00%    
         

 

 

             

 

 

 

Net deferred loan origination costs

       7,575                    4,021          

Allowance for losses on non-covered loans

       (137,914)                   (137,290)         
    

 

 

             

 

 

      

Non-covered loans held for investment, net

      $ 26,354,841                   $ 25,395,528          

Covered loans

       3,516,097                    3,753,031          

Allowance for losses on covered loans

       (51,771)                   (33,323)         
    

 

 

             

 

 

      

Total covered loans, net

      $ 3,464,326                   $ 3,719,708          

Loans held for sale

       1,059,340                    1,036,918          
    

 

 

             

 

 

      

Total loans, net

      $ 30,878,507                   $ 30,152,154          
    

 

 

             

 

 

      

Non-Covered Loans

Non-Covered Loans Held for Investment

The vast majority of the loans the Company originates for investment are multi-family loans, most of which are collateralized by non-luxury apartment buildings in New York City that feature below-market rents. In addition, the Company originates commercial real estate (“CRE”) loans, most of which are collateralized by properties located in New York City and, to a lesser extent, on Long Island and in New Jersey.

To a lesser extent, the Company also originates acquisition, development, and construction (“ADC”) loans and commercial and industrial (“C&I”) loans. ADC loans are primarily originated for multi-family and residential tract projects in New York City and on Long Island, while C&I loans are made to small and mid-size businesses in New York City, Long Island, New Jersey, and, to a lesser extent, Arizona, on both a secured and unsecured basis, for working capital, business expansion, and the purchase of machinery and equipment.

Payments on multi-family and CRE loans generally depend on the income produced by the underlying properties which, in turn, depends on their successful operation and management. Accordingly, the ability of the Company’s borrowers to repay these loans may be impacted by adverse conditions in the local real estate market and the local economy. While the Company generally requires that such loans be qualified on the basis of the collateral property’s current cash flows, appraised value, and debt service coverage ratio, among other factors, there can be no assurance that its underwriting policies will protect the Company from credit-related losses or delinquencies.

ADC loans typically involve a higher degree of credit risk than loans secured by improved or owner-occupied real estate. The risk of loss on an ADC loan is largely dependent upon the accuracy of the initial appraisal of the property’s value upon completion of construction or development; the estimated cost of construction, including interest; and the estimated time to complete and/or sell or lease such property. The Company seeks to minimize these risks by maintaining consistent lending policies and rigorous underwriting standards. However, if the estimate of value proves to be inaccurate, the cost of completion is greater than expected, the length of time to complete

 

15


Table of Contents

and/or sell or lease the collateral property is greater than anticipated, or if there is a downturn in the local economy or real estate market, the property could have a value upon completion that is insufficient to assure full repayment of the loan. This could have a material adverse effect on the quality of the ADC loan portfolio, and could result in significant losses or delinquencies.

The Company seeks to minimize the risks involved in C&I lending by underwriting such loans on the basis of the cash flows produced by the business; by requiring that such loans be collateralized by various business assets, including inventory, equipment, and accounts receivable, among others; and by requiring personal guarantees. However, the capacity of a borrower to repay a C&I loan is substantially dependent on the degree to which his or her business is successful. In addition, the collateral underlying such loans may depreciate over time, may not be conducive to appraisal, or may fluctuate in value, based upon the results of operations of the business.

The ability of the Company’s borrowers to repay their loans, and the value of the collateral securing such loans, could be adversely impacted by continued or more significant economic weakness in its local markets as a result of increased unemployment, declining real estate values, or increased residential and office vacancies. This not only could result in the Company experiencing an increase in charge-offs and/or non-performing assets, but also could necessitate an increase in the provision for loan losses. These events, if they were to occur, would have an adverse impact on the Company’s results of operations and its capital.

One-to-Four Family Loans Originated for Sale

The Community Bank’s mortgage banking operation is one of the largest aggregators of one-to-four family loans for sale to GSEs in the nation. Community banks, credit unions, mortgage companies, and mortgage brokers use the subsidiary’s proprietary web-accessible mortgage banking platform to originate and close one-to-four family loans in all 50 states. The Company sells these loans, primarily servicing retained.

Prior to December 2010, the Company would originate one-to-four family loans for in its branches and on its website on a pass-through, or conduit, basis, and would sell the loans to the third-party conduit shortly after they closed. Since then, the Company had been originating one-to-four family loans through its mortgage banking operation, directly and indirectly, rather than through the single third-party conduit with which it previously worked. The one-to-four family loans produced for the Company’s customers are aggregated with loans produced by its mortgage banking clients throughout the nation, and then sold.

The Company also services mortgage loans for various third parties. At June 30, 2012, the unpaid principal balance of serviced loans amounted to $15.6 billion. At December 31, 2011, the unpaid principal balance of loans serviced for others amounted to $13.1 billion.

Asset Quality

The following table presents information regarding the quality of the Company’s non-covered loans at June 30, 2012:

 

(in thousands)    30-89 Days
Past Due
   Non-
Accrual
    90 Days or More 
Delinquent and
Still  Accruing
Interest
    Total Past 
Due
   Current    Total Loans
Receivable

Multi-family

      $ 27,554         $ 156,711         $ --         $ 184,265        $ 17,996,780          $ 18,181,045  

Commercial real estate

       6,319          54,888          --          61,207          7,096,519          7,157,726  

Acquisition, development, and construction

       --          24,996          --          24,996          365,594          390,590  

One-to-four family

       2,747          8,977          --          11,724          108,462          120,186  

Commercial and industrial

       1,631          5,375          --          7,006          572,954          579,960  

Other

       321          1,059          --          1,380          54,293          55,673  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total

      $ 38,572         $ 252,006         $ --         $ 290,578        $ 26,194,602          $ 26,485,180  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

16


Table of Contents

The following table presents information regarding the quality of the Company’s non-covered loans at December 31, 2011:

 

(in thousands)     30-89 Days 
Past Due
   Non-
Accrual
    90 Days or More 
Delinquent and
Still Accruing
Interest
    Total Past 
Due
   Current    Total Loans
Receivable

Multi-family

       $  46,702          $205,064          $--          $251,766          $17,178,862          $17,430,628  

Commercial real estate

       53,798          68,032          --          121,830          6,733,414          6,855,244  

Acquisition, development, and construction

       6,520          29,886          --          36,406          409,265          445,671  

One-to-four family

       2,712          11,907          --          14,619          112,742          127,361  

Commercial and industrial

       1,223          8,827          --          10,050          589,936          599,986  

Other

       702          2,099          --          2,801          67,106          69,907  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total

       $111,657          $325,815          $--          $437,472          $25,091,325          $25,528,797  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

The following table summarizes the Company’s non-covered loan portfolio by credit quality indicator at June 30, 2012:

 

(in thousands)     Multi-Family      Commercial 
Real Estate
   Acquisition,
Development, and
Construction
   One-to-Four
Family
   Total
Mortgage
Segment
   Commercial
and
Industrial
   Other    Total Other
Loan Segment

Credit Quality Indicator:

                                       

Pass

      $ 17,968,840         $ 7,070,472          $ 357,656         $ 113,500          $ 25,510,468         $ 561,498         $ 54,614        $ 616,112  

Special mention

       12,119          10,775          6,398          --          29,292          6,112          --          6,112  

Substandard

       200,086          76,479          26,536          6,686          309,787          12,350          1,059          13,409  

Doubtful

       --          --          --          --          --          --          --          --  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total

      $ 18,181,045         $ 7,157,726          $ 390,590         $ 120,186          $ 25,849,547         $ 579,960         $ 55,673        $ 635,633  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

The following table summarizes the Company’s non-covered loan portfolio by credit quality indicator at December 31, 2011:

 

(in thousands)     Multi-Family      Commercial 
Real Estate
   Acquisition,
Development, and
Construction
   One-to-Four
Family
   Total
Mortgage
Segment
   Commercial
and
Industrial
   Other    Total Other
Loan Segment

Credit Quality Indicator:

                                       

Pass

      $ 17,135,461         $ 6,704,824          $ 399,811         $ 118,293          $ 24,358,389          $ 570,442         $ 67,808        $ 638,250  

Special mention

       58,134          64,802          6,489          --          129,425          13,234          --          13,234  

Substandard

       237,033          85,618          39,371          9,068          371,090          15,928          2,099          18,027  

Doubtful

       --          --          --          --          --          382          --          382  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total

      $ 17,430,628         $ 6,855,244          $ 445,671         $ 127,361          $ 24,858,904          $ 599,986         $ 69,907        $ 669,893  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

The preceding classifications follow regulatory guidelines and can be generally described as follows: pass loans are of satisfactory quality; special mention loans have a potential weakness or risk that may result in the deterioration of future repayment; substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness and there is a distinct possibility that the Company will sustain some loss); and doubtful loans, based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable. In addition, one-to-four family residential loans are classified utilizing an inter-regulatory agency methodology that incorporates the extent of delinquency and the loan-to-value ratios. These classifications are the most current available and have been generally updated within the last twelve months.

Troubled Debt Restructurings

In accordance with GAAP, the Company is required to account for certain loan modifications or restructurings as Troubled Debt Restructurings (“TDRs”). In general, a modification or restructuring of a loan constitutes a TDR if the Company grants a concession to a borrower experiencing financial difficulty. Loans modified as TDRs are placed on non-accrual status until the Company determines that future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate performance according to the restructured terms for a period of at least six consecutive months.

 

17


Table of Contents

The following table presents information regarding the Company’s TDRs as of June 30, 2012 and December 31, 2011:

 

     June 30, 2012    December 31, 2011
(in thousands)     Accruing     Non-Accrual        Total         Accruing     Non-Accrual        Total    

Loan Category:

                             

Multi-family

     $ 75,141          $136,034        $ 211,175        $ 60,454          $166,248        $ 226,702  

Commercial real estate

       37,489          39,266          76,755          3,389          39,054          42,443  

Acquisition, development, and construction

       --          12,208          12,208          --          15,886          15,886  

Commercial and industrial

       --          --          --          --          667          667  

One-to-four family

       --          1,126          1,126          --          1,411          1,411  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total

     $ 112,630          $188,634        $ 301,264        $ 63,843          $223,266        $ 287,109  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

In an effort to proactively manage delinquent loans, the Company has selectively extended to certain borrowers concessions such as rate reductions, extension of maturity dates, and forbearance agreements. As of June 30, 2012, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $269.5 million and loans on which forbearance agreements were reached amounted to $31.8 million.

The eligibility of a borrower for work-out concessions of any nature depends upon the facts and circumstances of each transaction, which may change from period to period, and involve judgment by Company personnel regarding the likelihood that the concession will result in the maximum recovery for the Company.

The financial effects of TDRs granted in the three and six months ended June 30, 2012 were as follows:

 

     Financial Effect of Modifications
     For the Three Months Ended
June 30, 2012
   For the Six Months Ended
June 30, 2012
     Weighted Average Interest Rate   Charge-off
Amount
   Weighted Average Interest Rate   Charge-off
Amount

(dollars in thousands)

   Number
of Loans
   Pre-
Modification
  Post-
Modification
     Number
of Loans
   Pre-
Modification
  Post-
Modification
 

Loan Category:

                                   

Multi-family

       4          6.19 %       5.34 %     $  --          4          6.19 %       5.34 %     $  --  

Commercial real estate

       2          6.27         4.48         --          3          6.30         4.50         --  

Acquisition, development, and construction

       --          --         --         --          --          --         --         --  

Other

       --          --         --         --          --          --         --         --  
    

 

 

              

 

 

      

 

 

              

 

 

 

Total/average

       6          6.25 %       4.70 %     $ --          7          6.28 %       4.71 %     $ --  
    

 

 

              

 

 

      

 

 

              

 

 

 

As of June 30, 2012, there were no payment defaults on any loans that had been modified as TDRs during the preceding twelve months. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

Covered Loans

The following table presents the balance of covered loans acquired in the AmTrust and Desert Hills acquisitions as of June 30, 2012:

 

(dollars in thousands)     Amount     Percent of
Covered Loans

Loan Category:

         

One-to-four family

     $ 3,169,838          90.2 %

All other loans

       346,259          9.8  
    

 

 

      

 

 

 

Total covered loans

     $ 3,516,097          100.0 %
    

 

 

      

 

 

 

The Company refers to the loans acquired in the AmTrust and Desert Hills acquisitions as “covered loans” because the Company is being reimbursed for a substantial portion of losses on these loans under the terms of the FDIC loss sharing agreements. Covered loans are accounted for under Accounting Standards Codification (“ASC”) Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”), and

 

18


Table of Contents

initially measured at fair value, which includes estimated future credit losses expected to be incurred over the lives of the loans. Under ASC 310-30, purchasers are permitted to aggregate acquired loans into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.

At June 30, 2012 and December 31, 2011, the outstanding balances of covered loans (representing amounts owed to the Company) were $4.2 billion and $4.5 billion, respectively. The carrying values of such loans were $3.5 billion and $3.8 billion, respectively, at June 30, 2012 and December 31, 2011.

At the respective acquisition dates, the Company estimated the fair values of the AmTrust and Desert Hills loan portfolios, which represented the expected cash flows from the portfolios discounted at market-based rates. In estimating such fair value, the Company (a) calculated the contractual amount and timing of undiscounted principal and interest payments (the “undiscounted contractual cash flows”); and (b) estimated the expected amount and timing of undiscounted principal and interest payments (the “undiscounted expected cash flows”). The amount by which the undiscounted expected cash flows exceed the estimated fair value (the “accretable yield”) is accreted into interest income over the lives of the loans. The difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is referred to as the “non-accretable difference.” The non-accretable difference represents an estimate of the credit risk in the loan portfolios at the acquisition date.

The accretable yield is affected by changes in interest rate indices for variable rate loans, changes in prepayment assumptions, and changes in expected principal and interest payments over the estimated lives of the loans. Changes in interest rate indices for variable rate loans increase or decrease the amount of interest income expected to be collected, depending on the direction of interest rates. Prepayments affect the estimated lives of covered loans and could change the amount of interest income and principal expected to be collected. Changes in expected principal and interest payments over the estimated lives of covered loans are driven by the credit outlook and actions that may be taken with borrowers.

The Company periodically evaluates the estimates of the cash flows it expects to collect. Expected future cash flows from interest payments are based on the variable rates at the time of the periodic evaluation. Estimates of expected cash flows that are impacted by changes in interest rate indices for variable rate loans and prepayment assumptions are treated as prospective yield adjustments and included in interest income.

Changes in the accretable yield for covered loans were as follows for the six months ended June 30, 2012:

 

(in thousands)   Accretable Yield

Balance at beginning of period

       $1,365,978     

Reclassification to non-accretable difference

      (115,975)    

Accretion

      (90,858)    
   

 

 

 

Balance at end of period

       $1,159,145     
   

 

 

 

The line item in the preceding table titled “reclassification to non-accretable difference” includes changes in cash flows the Company expects to collect due to changes in prepayment assumptions and changes in interest rates on variable rate loans. As of the Company’s last periodic evaluation, prepayment assumptions increased and, accordingly, future expected interest cash flows decreased. This resulted in a decrease in the accretable yield. In addition, these decreases were coupled with additional reductions in the expected cash flows from interest payments, as interest rates continued to be very low. As a result, a large percentage of the Company’s covered variable rate loans continue to reset at lower interest rates. Partially offsetting these decreases were increases in the expected principal and interest payments driven by better expectations relating to credit.

In connection with the AmTrust and Desert Hills transactions, the Company has acquired other real estate owned (“OREO”), all of which is covered under FDIC loss sharing agreements. Covered OREO is initially recorded at its estimated fair value on the acquisition date, based on independent appraisals less the estimated selling costs. Any subsequent write-downs due to declines in fair value are charged to non-interest expense, and partially offset by loss reimbursements under the FDIC loss sharing agreements. Any recoveries of previous write-downs are credited to non-interest expense and partially offset by the portion of the recovery that is due to the FDIC.

 

19


Table of Contents

The FDIC loss share receivable represents the present value of the estimated losses on covered loans to be reimbursed by the FDIC. The estimated losses were based on the same cash flow estimates used in determining the fair value of the covered loans. The FDIC loss share receivable is reduced as losses on covered loans are recognized and as loss sharing payments are received from the FDIC. Realized losses in excess of acquisition-date estimates will result in an increase in the FDIC loss share receivable. Conversely, if realized losses are less than the acquisition-date estimates, the FDIC loss share receivable will be reduced.

The following table presents information regarding the Company’s covered loans 90 days or more past due at June 30, 2012 and December 31, 2011:

 

(in thousands)       June 30,    
2012
  December 31,
2011

Covered Loans 90 Days or More Past Due:

       

One-to-four family

      $311,258          $314,821   

Other loans

      20,686          32,621   
   

 

 

     

 

 

 

Total covered loans 90 days or more past due

      $331,944          $347,442   
   

 

 

     

 

 

 

The following table presents information regarding the Company’s covered loans that were 30 to 89 days past due at June 30, 2012 and December 31, 2011:

 

(in thousands)       June 30,    
2012
  December 31,
2011

Covered Loans 30-89 Days Past Due:

       

One-to-four family

      $78,268          $103,495   

Other loans

      9,114          8,494   
   

 

 

     

 

 

 

Total covered loans 30-89 days past due

      $87,382          $111,989   
   

 

 

     

 

 

 

At June 30, 2012, the Company had $87.4 million of covered loans that were 30 to 89 days past due, and covered loans of $331.9 million that were 90 days or more past due but considered to be performing due to the application of the yield accretion method under ASC 310-30. The remaining portion of the Company’s covered loan portfolio totaled $3.1 billion at June 30, 2012 and was considered current as of that date. ASC 310-30 allows the Company to aggregate credit-impaired loans acquired in the same fiscal quarter into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Accordingly, loans that may have been classified as non-performing loans by AmTrust or Desert Hills are no longer classified as non-performing because, at the respective dates of acquisition, the Company believed that it would fully collect the new carrying value of these loans. The new carrying value represents the contractual balance, reduced by the portion that is expected to be uncollectible (referred to as the “non-accretable difference”) and by an accretable yield (discount) that is recognized as interest income. It is important to note that management’s judgment is required in reclassifying loans subject to ASC 310-30 as performing loans, and its judgment is dependent on having a reasonable expectation about the timing and amount of the cash flows to be collected, even if the loan is contractually past due.

The primary credit quality indicator for covered loans is the expectation of underlying cash flows. The Company recorded an $18.4 million provision for losses on covered loans during the three and six months ended June 30, 2012. This provision was largely due to credit deterioration in the acquired portfolios of one-to-four family and home equity loans. The provision for covered loans was largely offset by FDIC indemnification income of $14.8 million that was recorded in non-interest income for the three and six months ended June 30, 2012.

 

20


Table of Contents

Note 5. Allowance for Loan Losses

The following tables provide additional information regarding the Company’s allowance for loan losses, based upon the method of evaluating loan impairment:

 

(in thousands)  

Mortgage

    Other        Total    

Allowance for Loan Losses at June 30, 2012:

           

Individually evaluated for impairment

     $ 3,540         $ --      $ 3,540   

Collectively evaluated for impairment

       120,754           13,620        134,374   

Acquired loans with deteriorated credit quality

       30,804           20,967         51,771   
    

 

 

      

 

 

   

 

 

 

Total

     $ 155,098         $ 34,587      $ 189,685   
    

 

 

      

 

 

   

 

 

 
(in thousands)  

Mortgage

    Other        Total    

Allowance for Loan Losses at December 31, 2011:

           

Individually evaluated for impairment

     $ 490         $ --      $ 490   

Collectively evaluated for impairment

       121,505           15,295        136,800   

Acquired loans with deteriorated credit quality

       14,227           19,096        33,323   
    

 

 

      

 

 

   

 

 

 

Total

     $ 136,222         $ 34,391      $ 170,613   
    

 

 

      

 

 

   

 

 

 

The following tables provide additional information regarding the methods used to evaluate the Company’s loan portfolio for impairment:

 

(in thousands)    Mortgage      Other      Total  

Loans Receivable at June 30, 2012:

        

Individually evaluated for impairment

   $ 325,467       $ 6,305       $ 331,772   

Collectively evaluated for impairment

     25,524,080         629,328         26,153,408   

Acquired loans with deteriorated credit quality

     3,169,838         346,259         3,516,097   
  

 

 

    

 

 

    

 

 

 

Total

   $ 29,019,385       $ 981,892       $ 30,001,277   
  

 

 

    

 

 

    

 

 

 
(in thousands)    Mortgage      Other      Total  

Loans Receivable at December 31, 2011:

        

Individually evaluated for impairment

   $ 324,427       $ 5,995       $ 330,422   

Collectively evaluated for impairment

     24,534,477         663,898         25,198,375   

Acquired loans with deteriorated credit quality

     3,366,456         386,575         3,753,031   
  

 

 

    

 

 

    

 

 

 

Total

   $ 28,225,360       $ 1,056,468       $ 29,281,828   
  

 

 

    

 

 

    

 

 

 

Non-Covered Loans

The following table summarizes activity in the allowance for losses on non-covered loans for the six months ended June 30, 2012 and 2011:

 

     June 30,
     2012         2011
(in thousands)    Mortgage    Other    Total         Mortgage    Other    Total

Balance, beginning of period

     $ 121,995           $ 15,295           $ 137,290              $ 140,834           $ 18,108           $ 158,942     

Charge-offs

       (28,982)            (2,813)            (31,795)               (60,051)            (8,211)            (68,262)    

Recoveries

       442             1,977             2,419                772             2,019             2,791     

Provision for (recovery of ) loan losses

       30,839             (839)            30,000                38,745             2,255             41,000     
    

 

 

      

 

 

      

 

 

         

 

 

      

 

 

      

 

 

 

Balance, end of period

     $ 124,294           $ 13,620           $ 137,914              $ 120,300           $ 14,171           $ 134,471     
    

 

 

      

 

 

      

 

 

         

 

 

      

 

 

      

 

 

 

Non-accrual loans amounted to $252.0 million and $325.8 million, respectively, at June 30, 2012 and December 31, 2011. There were no loans over 90 days past due and still accruing interest at either of these dates.

 

21


Table of Contents

The following table presents additional information regarding the Company’s impaired loans at or for the six months ended June 30, 2012:

 

(in thousands)    Recorded
 Investment 
   Unpaid
  Principal  
Balance
   Related
Allowance
   Average
Recorded
 Investment 
   Interest
Income
Recognized

Impaired loans with no related allowance:

                        

Multi-family

     $ 173,937        $ 190,177        $ --        $ 194,266        $ 2,641  

Commercial real estate

       78,661          80,086          --          59,382          518  

Acquisition, development, and construction

       21,610          25,704          --          25,884          366  

One-to-four family

       1,127          1,147          --          1,221          --  

Commercial and industrial

       6,305          10,980          --          5,915          57  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans with no related allowance

     $ 281,640        $ 308,094        $ --        $ 286,668        $ 3,582  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Impaired loans with an allowance recorded:

                        

Multi-family

     $ 44,543        $ 46,014        $ 2,907        $ 19,704        $ --  

Commercial real estate

       4,373          5,257          605          5,220          --  

Acquisition, development, and construction

       1,216          1,494          28          2,098          --  

One-to-four family

       --          --          --          --          --  

Commercial and industrial

       --          --          --          --          --  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans with an allowance recorded

     $ 50,132        $ 52,765        $ 3,540        $ 27,022        $ --  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans:

                        

Multi-family

     $ 218,480        $ 236,191        $ 2,907        $ 213,970        $ 2,641  

Commercial real estate

       83,034          85,343          605          64,602          518  

Acquisition, development, and construction

       22,826          27,198          28          27,982          366  

One-to-four family

       1,127          1,147          --          1,221          --  

Commercial and industrial

       6,305          10,980          --          5,915          57  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans

     $ 331,772        $ 360,859        $ 3,540        $ 313,690        $ 3,582  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

The following table presents additional information regarding the Company’s impaired loans at or for the year ended December 31, 2011:

 

(in thousands)    Recorded
 Investment 
   Unpaid
  Principal  
Balance
   Related
Allowance
   Average
Recorded
 Investment 
   Interest
Income
Recognized

Impaired loans with no related allowance:

                        

Multi-family

     $ 235,100        $ 244,684        $ --        $ 321,994        $ 3,435  

Commercial real estate

       49,258          52,152          --          63,032          1,397  

Acquisition, development, and construction

       26,680          27,143          --          42,600          1,141  

One-to-four family

       1,127          1,520          --          2,649          10  

Commercial and industrial

       5,995          10,240          --          6,442          60  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans with no related allowance

     $ 318,160        $ 335,739        $ --        $ 436,717        $ 6,043  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Impaired loans with an allowance recorded:

                        

Multi-family

     $ 6,329        $ 6,899        $ 408        $ 10,893        $ 187  

Commercial real estate

       5,648          5,857          53          10,297          --  

Acquisition, development, and construction

       --          --          --          14,495          --  

One-to-four family

       285          373          29          71          --  

Commercial and industrial

       --          --          --          1,837          --  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans with an allowance recorded

     $ 12,262        $ 13,129        $ 490        $ 37,593        $ 187  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans:

                        

Multi-family

     $ 241,429        $ 251,583        $ 408        $ 332,887        $ 3,622  

Commercial real estate

       54,906          58,009          53          73,329          1,397  

Acquisition, development, and construction

       26,680          27,143          --          57,095          1,141  

One-to-four family

       1,412