XNYS:PFS Provident Financial Services, Inc. Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

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

For the quarterly period ended March 31, 2012

or

 

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

For the transition period from             to             

Commission File Number: 001-31566

PROVIDENT FINANCIAL SERVICES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware   42-1547151
(State or Other Jurisdiction of Incorporation or Organization)   (I.R.S. Employer Identification No.)
239 Washington Street, Jersey City, New Jersey   07302
(Address of Principal Executive Offices)   (Zip Code)

(732) 590-9200

(Registrant’s Telephone Number, Including Area Code)

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 twelve 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 twelve 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 definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

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

As of May 2, 2012 there were 83,209,293 shares issued and 60,182,973 shares outstanding of the Registrant’s Common Stock, par value $0.01 per share, including 421,403 shares held by the First Savings Bank Directors’ Deferred Fee Plan not otherwise considered outstanding under U.S. generally accepted accounting principles.


Table of Contents

PROVIDENT FINANCIAL SERVICES, INC.

INDEX TO FORM 10-Q

 

Item Number

   Page Number  
   PART I—FINANCIAL INFORMATION   
1.   

Financial Statements:

     3   
  

Consolidated Statements of Financial Condition as of March 31, 2012 (unaudited) and December 31, 2011

     3   
  

Consolidated Statements of Income for the three months ended March 31, 2012 and 2011 (unaudited)

     4   
  

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2012 and 2011 (unaudited)

     5   
  

Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2012 and 2011 (unaudited)

     6   
  

Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011 (unaudited)

     8   
  

Notes to Consolidated Financial Statements (unaudited)

     9   
2.   

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

     29   
3.   

Quantitative and Qualitative Disclosures About Market Risk

     39   
4.   

Controls and Procedures

     41   
   PART II—OTHER INFORMATION   
1.   

Legal Proceedings

     42   
1A.   

Risk Factors

     42   
2.   

Unregistered Sales of Equity Securities and Use of Proceeds

     42   
3.   

Defaults Upon Senior Securities

     42   
4.   

Mine Safety Disclosures

     42   
5.   

Other Information

     42   
6.   

Exhibits

     43   

Signatures

     45   

 

2


Table of Contents

PART I—FINANCIAL INFORMATION

 

Item 1. FINANCIAL STATEMENTS.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

March 31, 2012 (Unaudited) and December 31, 2011

(Dollars in thousands)

 

      March 31, 2012     December 31, 2011  
ASSETS     

Cash and due from banks

   $ 68,243      $ 68,553  

Short-term investments

     1,012        1,079  
  

 

 

   

 

 

 

Total cash and cash equivalents

     69,255        69,632  
  

 

 

   

 

 

 

Securities available for sale, at fair value

     1,399,961        1,376,119  

Investment securities held to maturity (fair value of $368,016 at March 31, 2012 (unaudited) and $366,296 at December 31, 2011)

     351,669        348,318   

Federal Home Loan Bank Stock

     38,684        38,927   

Loans

     4,658,802        4,653,509  

Less allowance for loan losses

     73,996        74,351  
  

 

 

   

 

 

 

Net loans

     4,584,806        4,579,158  
  

 

 

   

 

 

 

Foreclosed assets, net

     14,440        12,802  

Banking premises and equipment, net

     65,508        66,260   

Accrued interest receivable

     22,701        24,653   

Intangible assets

     360,029        360,714  

Bank-owned life insurance

     143,372        142,010   

Other assets

     70,637        78,810   
  

 

 

   

 

 

 

Total assets

   $ 7,121,062      $ 7,097,403  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Deposits:

    

Demand deposits

   $ 3,199,643      $ 3,136,129  

Savings deposits

     905,440        891,742  

Certificates of deposit of $100,000 or more

     372,759        383,174  

Other time deposits

     717,032        745,552  
  

 

 

   

 

 

 

Total deposits

     5,194,874        5,156,597   

Mortgage escrow deposits

     23,370        20,955   

Borrowed funds

     893,066        920,180   

Other liabilities

     44,277        47,194   
  

 

 

   

 

 

 

Total liabilities

     6,155,587        6,144,926   
  

 

 

   

 

 

 

Stockholders’ Equity:

    

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued

     —          —     

Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,293 shares issued and 60,182,973 shares outstanding at March 31, 2012 and 59,968,195 outstanding at December 31, 2011

     832        832  

Additional paid-in capital

     1,019,425        1,019,253   

Retained earnings

     374,109        363,011   

Accumulated other comprehensive income

     9,316        9,571   

Treasury stock

     (383,442     (384,725

Unallocated common stock held by the Employee Stock Ownership Plan

     (54,765     (55,465

Common stock acquired by the Directors’ Deferred Fee Plan

     (7,367     (7,390

Deferred compensation – Directors’ Deferred Fee Plan

     7,367        7,390   
  

 

 

   

 

 

 

Total stockholders’ equity

     965,475        952,477   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 7,121,062      $ 7,097,403   
  

 

 

   

 

 

 

See accompanying notes to unaudited consolidated financial statements.

 

3


Table of Contents

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Income

Three months ended March 31, 2012 and 2011 (Unaudited)

(Dollars in thousands, except per share data)

 

     Three months ended
March 31,
 
     2012      2011  

Interest income:

     

Real estate secured loans

   $ 38,959       $ 40,290   

Commercial loans

     10,370         10,082   

Consumer loans

     6,289         6,519   

Securities available for sale and Federal Home Loan Bank Stock

     8,332         9,494   

Investment securities

     2,918         3,093   

Deposits, Federal funds sold and other short-term investments

     12         9   
  

 

 

    

 

 

 

Total interest income

     66,880         69,487   
  

 

 

    

 

 

 

Interest expense:

     

Deposits

     7,002         9,830   

Borrowed funds

     5,041         6,210   
  

 

 

    

 

 

 

Total interest expense

     12,043         16,040   
  

 

 

    

 

 

 

Net interest income

     54,837         53,447   

Provision for loan losses

     5,000         7,900   
  

 

 

    

 

 

 

Net interest income after provision for loan losses

     49,837         45,547   
  

 

 

    

 

 

 

Non-interest income:

     

Fees

     8,075         5,562   

Net gain on securities transactions

     2,183         14   

Bank-owned life insurance

     1,362         1,408   

Other income

     1,108         188   
  

 

 

    

 

 

 

Total non-interest income

     12,728         7,172   
  

 

 

    

 

 

 

Non-interest expense:

     

Compensation and employee benefits

     20,508         18,483   

Net occupancy expense

     5,026         5,274   

Data processing expense

     2,588         2,264   

FDIC insurance

     1,390         1,880   

Amortization of intangibles

     739         840   

Impairment of premises and equipment

     —           807   

Advertising and promotion expense

     685         598   

Other operating expenses

     5,855         5,205   
  

 

 

    

 

 

 

Total non-interest expense

     36,791         35,351   
  

 

 

    

 

 

 

Income before income tax expense

     25,774         17,368   

Income tax expense

     7,346         4,437   
  

 

 

    

 

 

 

Net income

   $ 18,428       $ 12,931   
  

 

 

    

 

 

 

Basic earnings per share

   $ 0.32       $ 0.23   

Average basic shares outstanding

     57,051,827         56,771,307   

Diluted earnings per share

   $ 0.32       $ 0.23   

Average diluted shares outstanding

     57,082,631         56,771,307   

See accompanying notes to unaudited consolidated financial statements.

 

4


Table of Contents

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

Three months ended March 31, 2012 and 2011 (Unaudited)

(Dollars in thousands, )

 

        
     Three months ended
March 31,
 
     2012     2011  

Net income

   $ 18,428      $ 12,931   

Other comprehensive (loss) income, net of tax:

    

Unrealized gains and losses on securities available for sale:

    

Net unrealized gains (losses) arising during the period

     1,424        (1,230

Reclassification adjustment for (gains) losses included in net income

     (1,291     —     
  

 

 

   

 

 

 

Total

     133        (1,230

Amortization related to post retirement obligations

     (388     (1,937
  

 

 

   

 

 

 

Total other comprehensive (loss) income

     (255     (3,167
  

 

 

   

 

 

 

Total comprehensive income

   $ 18,173      $ 9,764   
  

 

 

   

 

 

 

See accompanying notes to unaudited consolidated financial statements.

 

5


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PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2012 and 2011 (Unaudited)

(Dollars in thousands)

 

     COMMON
STOCK
     ADDITIONAL
PAID-IN
CAPITAL
    RETAINED
EARNINGS
    ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
    TREASURY
STOCK
    UNALLOCATED
ESOP
SHARES
    COMMON
STOCK
ACQUIRED
BY DDFP
    DEFERRED
COMPENSATION
DDFP
    TOTAL
STOCKHOLDERS’
EQUITY
 

Balance at December 31, 2010

   $ 832       $ 1,017,315      $ 332,472      $ 14,754      $ (385,094   $ (58,592   $ (7,482   $ 7,482      $ 921,687   

Net income

     —           —          12,931        —          —          —          —          —          12,931   

Other comprehensive loss, net of tax

            (3,167             (3,167

Cash dividends declared

     —           —          (6,649     —          —          —          —          —          (6,649

Distributions from DDFP

     —           —          —          —          —          —          23        (23     —     

Purchases of treasury stock

     —           —          —          —          (301     —          —          —          (301

Allocation of ESOP shares

     —           (101     —          —          —          696        —          —          595   

Stock option exercises

        (1         4              3   

Allocation of SAP shares

     —           801        —          —          —          —          —          —          801   

Allocation of stock options

     —           206        —          —          —          —          —          —          206   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at March 31, 2011

   $ 832       $ 1,018,220      $ 338,754      $ 11,587      $ (385,391   $ (57,896   $ (7,459   $ 7,459      $ 926,106   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to unaudited consolidated financial statements.

 

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Table of Contents

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2012 and 2011 (Unaudited) (Continued)

(Dollars in thousands)

 

     COMMON
STOCK
     ADDITIONAL
PAID-IN
CAPITAL
    RETAINED
EARNINGS
    ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
    TREASURY
STOCK
    UNALLOCATED
ESOP
SHARES
    COMMON
STOCK
ACQUIRED
BY DDFP
    DEFERRED
COMPENSATION
DDFP
    TOTAL
STOCKHOLDERS’
EQUITY
 

Balance at December 31, 2011

   $ 832       $ 1,019,253      $ 363,011      $ 9,571      $ (384,725   $ (55,465   $ (7,390   $ 7,390      $ 952,477   

Net income

     —           —          18,428        —          —          —          —          —          18,428   

Other comprehensive loss, net of tax

            (255             (255

Cash dividends paid

     —           —          (7,330     —          —          —          —          —          (7,330

Distributions from DDFP

     —           —          —          —          —          —          23        (23     —     

Purchases of treasury stock

     —           —          —          —          (1,938     —          —          —          (1,938

Shares issued dividend reinvestment plan

        (746         3,221              2,475   

Stock option exercises

        —          —          —          —          —          —          —          —     

Allocation of ESOP shares

     —           (115     —          —          —          700        —          —          585   

Allocation of SAP shares

     —           944        —          —          —          —          —          —          944   

Allocation of stock options

     —           89        —          —          —          —          —          —          89   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at March 31, 2012

   $ 832       $ 1,019,425      $ 374,109      $ 9,316      $ (383,442   $ (54,765   $ (7,367   $ 7,367      $ 965,475   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to unaudited consolidated financial statements.

 

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Table of Contents

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

Three months ended March 31, 2012 and 2011 (Unaudited)

(Dollars in thousands)

 

     Three months ended March 31,  
     2012     2011  

Cash flows from operating activities:

    

Net income

   $ 18,428      $ 12,931   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization of intangibles

     2,444        2,552   

Impairment of premises and equipment

     —          807   

Provision for loan losses

     5,000        7,900   

Deferred tax expense (benefit)

     415        (1,353

Increase in cash surrender value of Bank-owned life insurance

     (1,362     (1,408

Net amortization of premiums and discounts on securities

     3,713        3,354   

Accretion of net deferred loan fees

     (832     (205

Amortization of premiums on purchased loans, net

     427        391   

Net increase in loans originated for sale

     (9,355     (2,267

Proceeds from sales of loans originated for sale

     9,800        2,294   

Proceeds from sales of foreclosed assets

     3,657        787   

ESOP expense

     585        595   

Allocation of stock award shares

     944        801   

Allocation of stock options

     89        206   

Net gain on sale of loans

     (445     (27

Net gain on securities transactions

     (2,183     (14

Net gain (loss) on sale of premises and equipment

     42        (90

Net gain on sale of foreclosed assets

     (25     (38

Decrease in accrued interest receivable

     1,952        1,732   

Decrease in other assets

     2,060        519   

Decrease in other liabilities

     (2,917     (732
  

 

 

   

 

 

 

Net cash provided by operating activities

     32,437        28,735   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Proceeds from maturities, calls and paydowns of investment securities held to maturity

     29,134        14,447   

Purchases of investment securities held to maturity

     (32,662     (10,226

Proceeds from sales of securities available for sale

     47,131        14   

Proceeds from maturities and paydowns of securities available for sale

     118,432        117,036   

Purchases of securities available for sale

     (190,565     (5,094

Purchases of loans

     (19,088     (48,803

Net decrease in loans

     8,930        936   

Proceeds from sales of premises and equipment

     71        448   

Purchases of premises and equipment

     (982     (3,578
  

 

 

   

 

 

 

Net cash (used in) provided by investing activities

     (39,599     65,180   
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net increase in deposits

     38,277        10,265   

Increase in mortgage escrow deposits

     2,415        1,905   

Purchase of treasury stock

     (1,938     (301

Cash dividends paid to stockholders

     (7,330     (6,649

Shares issued dividend reinvestment plan

     2,475        —     

Stock options exercised

     —          3   

Proceeds from long-term borrowings

     —          90,000   

Payments on long-term borrowings

     (397     (82,877

Net decrease in short-term borrowings

     (26,717     (53,518
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     6,785        (41,172
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (377     52,743   

Cash and cash equivalents at beginning of period

     69,632        52,229   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 69,255      $ 104,972   
  

 

 

   

 

 

 

Cash paid during the period for:

    

Interest on deposits and borrowings

   $ 12,147      $ 16,475   
  

 

 

   

 

 

 

Income taxes

   $ —        $ 2,280   
  

 

 

   

 

 

 

Non cash investing activities:

    

Transfer of loans receivable to foreclosed assets

   $ 5,270      $ 366   
  

 

 

   

 

 

 

See accompanying notes to unaudited consolidated financial statements.

 

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Table of Contents

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

A. Basis of Financial Statement Presentation

The accompanying unaudited consolidated financial statements include the accounts of Provident Financial Services, Inc. and its wholly owned subsidiary, The Provident Bank (the “Bank,” together with Provident Financial Services, Inc., the “Company”).

In preparing the interim unaudited consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and the results of operations for the period. Actual results could differ from these estimates. The allowance for loan losses is a material estimate that is particularly susceptible to near-term change. The current unstable economic environment has increased the degree of uncertainty inherent in this material estimate.

The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results of operations that may be expected for all of 2012.

Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission.

These unaudited consolidated financial statements should be read in conjunction with the December 31, 2011 Annual Report to Stockholders on Form 10-K.

B. Earnings Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations:

 

    For the three months ended March 31,  
    2012     2011  
    Net
Income
    Weighted
Average

Common
Shares

Outstanding
    Per Share
Amount
    Net
Income
    Weighted
Average

Common
Shares

Outstanding
    Per Share
Amount
 

Net income

  $ 18,428          $ 12,931       
 

 

 

       

 

 

     

Basic earnings per share:

           

Income available to common stockholders

  $ 18,428        57,051,827      $ 0.32      $ 12,931        56,771,307      $ 0.23   
 

 

 

     

 

 

   

 

 

     

 

 

 

Dilutive shares

      30,804            —       
   

 

 

       

 

 

   

Diluted earnings per share:

           

Income available to common stockholders

  $ 18,428        57,082,631      $ 0.32      $ 12,931        56,771,307      $ 0.23   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Anti-dilutive stock options and awards totaling 3,849,532 shares at March 31, 2012, were excluded from the earnings per share calculations.

 

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Table of Contents

Note 2. Acquisition

On August 11, 2011, the Company’s wholly owned subsidiary, The Provident Bank, completed its acquisition of Beacon Trust Company, a New Jersey limited purpose trust company, and Beacon Global Asset Management, Inc., an SEC-registered investment advisor incorporated in Delaware (collectively “Beacon”). Pursuant to the terms of the Stock Purchase Agreement announced on May 19, 2011, Beacon’s former parent company, Beacon Financial Corporation may be paid cash consideration in an amount up to $10.5 million, based upon the acquired companies’ financial performance in the three years following the closing of the transaction.

The purpose of the Beacon acquisition was to significantly expand the Company’s wealth management business throughout the state of New Jersey. Beacon’s expertise in trust and wealth management services strategically positions the Company to increase market share and enhance the Company’s non-interest earnings growth.

The purchase price was allocated to the acquired assets and liabilities of Beacon based on their fair value as of August 11, 2011. The allocation of the purchase price is presented in the following table.

 

(in thousands)       

Assets:

  

Cash and cash equivalents

   $ 96   

Securities

     164   

Premises and equipment

     241   

Goodwill

     7,124   

Core relationship intangible

     2,423   

Other assets

     1,378   
  

 

 

 

Total assets

   $ 11,426   
  

 

 

 

Liabilities:

  

Other liabilities

     4,076   
  

 

 

 

Total liabilities

   $ 4,076   
  

 

 

 

In connection with the Beacon transaction, the Company recorded goodwill of $7.1 million, none of which was estimated to be deductible for income tax purposes. In addition, a core relationship intangible (“CRI”) of $2.4 million was recognized in connection with the Beacon acquisition and is being amortized on an accelerated basis over an estimated useful life of twelve years.

Note 3. Investment Securities

At March 31, 2012, the Company had $1.40 billion and $351.7 million in available for sale and held to maturity investment securities, respectively. Many factors, including lack of liquidity in the secondary market for certain securities, lack of reliable pricing information, regulatory actions, changes in the business environment or any changes in the competitive marketplace could have an adverse effect on the Company’s investment portfolio which could result in other-than-temporary impairment on certain investment securities in future periods. Included in the Company’s investment portfolio are private label mortgage-backed securities. These investments may pose a higher risk of future impairment charges as a result of the uncertain economic environment and the potential negative effect on future performance of these private label mortgage-backed securities. The total number of all held to maturity and available for sale securities in an unrealized loss position as of March 31, 2012 totaled 46, compared with 24 at December 31, 2011. This included four private label mortgage-backed securities at March 31, 2012, with an amortized cost of $13.8 million and unrealized losses totaling $739,000. Three of these private label mortgage-backed securities were below investment grade at March 31, 2012. All securities with unrealized losses at March 31, 2012 were analyzed for other-than-temporary impairment. Based upon this analysis, no other-than-temporary impairment existed at March 31, 2012.

 

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Securities Available for Sale

The following table presents the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for securities available for sale at March 31, 2012 and December 31, 2011 (in thousands):

 

     March 31, 2012  
     Amortized
cost
     Gross
unrealized
gains
     Gross
unrealized
losses
    Fair
value
 

Agency obligations

   $ 91,995         462         —          92,457   

Mortgage-backed securities

     1,260,289         31,046         (1,810     1,289,525   

State and municipal obligations

     11,054         520         (2     11,572   

Corporate obligations

     6,012         63         —          6,075   

Equity securities

     307         25         —          332   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 1,369,657         32,116         (1,812     1,399,961   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

     December 31, 2011  
     Amortized
cost
     Gross
unrealized
gains
     Gross
unrealized
losses
    Fair
value
 

Agency obligations

     105,130         442         (14     105,558   

Mortgage-backed securities

     1,221,988         31,206         (2,191     1,251,003   

State and municipal obligations

     11,066         553         (5     11,614   

Corporate obligations

     7,517         119         —          7,636   

Equity securities

     307         1         —          308   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 1,346,008         32,321         (2,210     1,376,119   
  

 

 

    

 

 

    

 

 

   

 

 

 

The amortized cost and fair value of securities available for sale at March 31, 2012, by contractual maturity, are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.

 

     March 31, 2012  
     Amortized
cost
     Fair
value
 

Due in one year or less

   $ 41,638         41,780   

Due after one year through five years

     65,693         66,504   

Due after five years through ten years

     1,730         1,820   

Mortgage-backed securities

     1,260,289         1,289,525   

Equity securities

     307         332   
  

 

 

    

 

 

 
   $ 1,369,657         1,399,961   
  

 

 

    

 

 

 

Proceeds from the sale of securities available for sale for the three months ended March 31, 2012 were $47,131,000, resulting in gross gains of $2,160,000 and gross losses of zero. No securities were sold in the three months ended March 31, 2011.

The following table presents a roll-forward of the credit loss component of other-than-temporary impairment (“OTTI”) on debt securities for which a non-credit component of OTTI was recognized in other comprehensive income. OTTI recognized in earnings after that date for credit-impaired debt securities 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). Changes in the credit loss component of credit-impaired debt securities were as follows (in thousands):

 

     March 31,
2012
     March 31,
2011
 

Beginning credit loss amount

   $ 1,240         938   

Add: Initial OTTI credit losses

     —           —     

Subsequent OTTI credit losses

     —           —     

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

   $ 1,240         938   
  

 

 

    

 

 

 

 

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The following table represents the Company’s disclosure regarding the length of time that securities available for sale with temporary impairment were in an unrealized loss position at March 31, 2012 and December 31, 2011 (in thousands):

 

     March 31, 2012 Unrealized Losses  
     Less than 12 months     12 months or longer     Total  
     Fair
value
     Gross
unrealized
losses
    Fair
value
     Gross
unrealized
losses
    Fair
value
     Gross
unrealized
losses
 

Mortgage-backed securities

   $ 204,869         (1,074     12,923         (736     217,792         (1,810

State and municipal obligations

     517         (2     —           —          517         (2
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
   $ 205,386         (1,076     12,923         (736     218,309         (1,812
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     December 31, 2011 Unrealized Losses  
     Less than 12 months     12 months or longer     Total  
     Fair
value
     Gross
unrealized
losses
    Fair
value
     Gross
unrealized
losses
    Fair
value
     Gross
unrealized
losses
 

Mortgage-backed securities

   $ 64,838         (278     12,453         (1,913     77,291         (2,191

State and municipal obligations

     777         (5     —           —          777         (5

Agency notes

     5,032         (14     —           —          5,032         (14
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
   $ 70,647         (297     12,453         (1,913     83,100         (2,210
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

The temporary loss position associated with debt securities is the result of changes in interest rates relative to the coupon of the individual security and changes in credit spreads. In addition, there remains a lack of liquidity in certain sectors of the mortgage-backed securities market. Increases in delinquencies and foreclosures have resulted in limited trading activity and significant price declines, regardless of favorable movements in interest rates. The Company does not have the intent to sell securities in a temporary loss position at March 31, 2012, and it is more likely than not that the Company will not be required to sell the securities before the anticipated recovery.

The Company estimates loss projections for each security by stressing the individual loans collateralizing the security and applying a range of expected default rates, loss severities, and prepayment speeds in conjunction with the underlying credit enhancement for each security. Based on specific assumptions about collateral and vintage, a range of possible cash flows was identified to determine whether other-than-temporary impairment existed during the three months ended March 31, 2012.

 

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Table of Contents

Investment Securities Held to Maturity

The following table presents the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for investment securities held to maturity at March 31, 2012 and December 31, 2011 (in thousands):

 

     March 31, 2012  
     Amortized
cost
     Gross
unrealized
gains
     Gross
unrealized
losses
    Fair
value
 

Agency obligations

   $ 3,947         32         (2     3,977   

Mortgage-backed securities

     18,777         814         —          19,591   

State and municipal obligations

     320,429         15,698         (486     335,641   

Corporate obligations

     8,516         297         (6     8,807   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 351,669         16,841         (494     368,016   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

     December 31, 2011  
     Amortized
cost
     Gross
unrealized
gains
     Gross
unrealized
losses
    Fair
value
 

Agency obligations

   $ 3,647         36         —          3,683   

Mortgage-backed securities

     22,321         859         —          23,180   

State and municipal obligations

     314,108         16,863         (69     330,902   

Corporate obligations

     8,242         296         (7     8,531   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 348,318         18,054         (76     366,296   
  

 

 

    

 

 

    

 

 

   

 

 

 

The Company generally purchases securities for long-term investment purposes, and differences between amortized cost and fair values may fluctuate during the investment period. For the three months ended March 31, 2012, the Company recognized a gain of $23,000 related to calls on certain securities in the held to maturity portfolio, with proceeds from the calls totaling $2,731,000. For the three months ended March 31, 2011, the Company recognized a gain of $14,000 related to calls on certain securities in the held to maturity portfolio, with proceeds from the calls totaling $1,276,000.

The amortized cost and fair value of investment securities held to maturity at March 31, 2012 by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.

 

     March 31, 2012  
     Amortized
cost
     Fair
value
 

Due in one year or less

   $ 51,538         51,768   

Due after one year through five years

     84,119         87,421   

Due after five years through ten years

     88,812         95,179   

Due after ten years

     108,423         114,057   

Mortgage-backed securities

     18,777         19,591   
  

 

 

    

 

 

 
   $ 351,669         368,016   
  

 

 

    

 

 

 

The following table represents the Company’s disclosure regarding the length of time that investment securities held to maturity with temporary impairment were in an unrealized loss position at March 31, 2012 and December 31, 2011 (in thousands)

 

     March 31, 2012 Unrealized Losses  
     Less than 12 months     12 months or longer      Total  
     Fair
value
     Gross
unrealized
losses
    Fair
value
     Gross
unrealized
losses
     Fair
value
     Gross
unrealized
losses
 

Agency obligations

   $ 298         (2     —           —           298         (2

State and municipal obligations

     19,048         (486     —           —           19,048         (486

Corporate obligations

     788         (6     —           —           788         (6
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
   $ 20,134         (494     —           —           20,134         (494
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents
     December 31, 2011 Unrealized Losses  
     Less than 12 months     12 months or longer     Total  
     Fair
value
     Gross
unrealized
losses
    Fair
value
     Gross
unrealized
losses
    Fair
value
     Gross
unrealized
losses
 

State and municipal obligations

     3,868         (63     316         (6     4,184         (69

Corporate obligations

     394         (7     —           —          394         (7
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
   $ 4,262         (70     316         (6     4,578         (76
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Based on a review of the securities portfolio, the Company believes that as of March 31, 2012, securities with unrealized loss positions shown above do not represent impairments that are other-than-temporary. The review of the portfolio for other-than-temporary impairment considers the percentage and length of time the fair value of an investment is below book value, as well as general market conditions, changes in interest rates, credit risk, whether the Company has the intent to sell the securities and whether it is more likely than not that the Company would be required to sell the securities before the anticipated recovery.

Note 4. Loans Receivable and Allowance for Loan Losses

Loans receivable at March 31, 2012 and December 31, 2011 are summarized as follows (in thousands):

 

     March 31,
2012
    December 31,
2011
 

Mortgage loans:

    

Residential

   $ 1,297,437        1,308,635   

Commercial

     1,262,756        1,253,542   

Multi-family

     572,491        564,147   

Construction

     118,714        114,817   
  

 

 

   

 

 

 

Total mortgage loans

     3,251,398        3,241,141   

Commercial loans

     834,211        849,009   

Consumer loans

     571,010        560,970   
  

 

 

   

 

 

 

Total gross loans

     4,656,619        4,651,120   
  

 

 

   

 

 

 

Premiums on purchased loans

     5,621        5,823   

Unearned discounts

     (95     (100

Net deferred fees

     (3,343     (3,334
  

 

 

   

 

 

 
   $ 4,658,802        4,653,509   
  

 

 

   

 

 

 

 

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Table of Contents

The following table summarizes the aging of loans receivable by portfolio segment and class as follows (in thousands):

 

     At March 31, 2012  
     30-59
Days
     60-89
Days
     Non-accrual      Total Past
Due and Non-
accrual
     Current      Total
Loans
Receivable
     Recorded
Investment >
90 days
accruing
 

Mortgage loans:

                    

Residential

   $ 11,229         6,908         39,146         57,283         1,240,154         1,297,437         —     

Commercial

     —           —           29,698         29,698         1,233,058         1,262,756         —     

Multi-family

     —           977         —           977         571,514         572,491         —     

Construction

     —           —           10,888         10,888         107,826         118,714         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total mortgage loans

     11,229         7,885         79,732         98,846         3,152,552         3,251,398         —     

Commercial loans

     5,526         997         32,621         39,144         795,067         834,211         —     

Consumer loans

     5,284         2,369         7,989         15,642         555,368         571,010         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ 22,039         11,251         120,342         153,632         4,502,987         4,656,619         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     At December 31, 2011  
     30-59
Days
     60-89
Days
     Non-accrual      Total Past
Due and Non-
accrual
     Current      Total
Loans
Receivable
     Recorded
Investment >
90 days
accruing
 

Mortgage loans:

                    

Residential

   $ 16,034         7,936         40,386         64,356         1,244,279         1,308,635         —     

Commercial

     939         1,155         29,522         31,616         1,221,926         1,253,542         —     

Multi-family

     —           —           997         997         563,150         564,147         —     

Construction

     —           —           11,018         11,018         103,799         114,817         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total mortgage loans

     16,973         9,091         81,923         107,987         3,133,154         3,241,141         —     

Commercial loans

     2,472         526         32,093         35,091         813,918         849,009         —     

Consumer loans

     5,276         1,908         8,533         15,717         545,253         560,970         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ 24,721         11,525         122,549         158,795         4,492,325         4,651,120         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Within the loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The principal amount of these non-accrual loans was $120.3 million and $122.5 million at March 31, 2012 and December 31, 2011, respectively. Included in non-accrual loans were $41.4 million and $45.6 million of loans which were less than 90 days past due at March 31, 2012 and December 31, 2011, respectively. There were no loans ninety days or greater past due and still accruing interest at March 31, 2012, or December 31, 2011.

The Company defines an impaired loan as a non-homogenous loan greater than $1.0 million for which it is probable, based on current information, that the Bank will not collect all amounts due under the contractual terms of the loan agreement. Impaired loans also include all loans modified as troubled debt restructurings (“TDRs”). A loan is deemed to be a TDR when a loan modification resulting in a concession is made by the Bank in an effort to mitigate potential loss arising from a borrower’s financial difficulty. Smaller balance homogeneous loans, including residential mortgages and other consumer loans, are evaluated collectively for impairment and are excluded from the definition of impaired loans, unless modified as TDRs. The Company separately calculates the reserve for loan losses on impaired loans. The Company may recognize impairment of a loan based upon (1) the present value of expected cash flows discounted at the effective interest rate; or (2) if a loan is collateral dependent, the fair value of collateral; or (3) the market price of the loan. Additionally, if impaired loans have risk characteristics in common, those loans may be aggregated and historical statistics may be used as a means of measuring those impaired loans.

The Company uses third-party appraisals to determine the fair value of the underlying collateral in its analyses of collateral dependent impaired loans. A third party appraisal is generally ordered as soon as a loan is designated as a collateral dependent impaired loan and is updated annually or more frequently, if required.

 

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Table of Contents

A specific allocation of the allowance for loan losses is established for each collateral dependent impaired loan with a carrying balance greater than the collateral’s fair value, less estimated costs to sell. Charge-offs are generally taken for the amount of the specific allocation when operations associated with the respective property cease and it is determined that collection of amounts due will be derived primarily from the disposition of the collateral. At each fiscal quarter end, if a loan is designated as a collateral dependent impaired loan and the third party appraisal has not yet been received, an evaluation of all available collateral is made using the best information available at the time, including rent rolls, borrower financial statements and tax returns, prior appraisals, management’s knowledge of the market and collateral, and internally prepared collateral valuations based upon market assumptions regarding vacancy and capitalization rates, each as and where applicable. Once the appraisal is received and reviewed, the specific reserves are adjusted to reflect the appraised value. The Company believes there have been no significant time lapses during the process described.

At March 31, 2012, there were 79 impaired loans totaling $111.6 million, of which 57 loans totaling $74.0 million were TDRs. Included in this total were 46 TDRs to 42 borrowers totaling $49.9 million that were performing in accordance with their restructured terms and which continued to accrue interest at March 31, 2012. At December 31, 2011, there were 65 impaired loans totaling $103.2 million, of which 48 loans totaling $63.1 million were TDRs. Included in this total were 38 TDRs to 36 borrowers totaling $38.9 million that were performing in accordance with their restructured terms and which continued to accrue interest at December 31, 2011.

Loans receivable summarized by portfolio segment and impairment method are as follows (in thousands):

 

     At March 31, 2012  
     Mortgage
loans
     Commercial
loans
     Consumer
loans
     Total Portfolio
Segments
 

Individually evaluated for impairment

   $ 75,698         35,249         616         111,563   

Collectively evaluated for impairment

     3,175,700         798,962         570,394         4,545,056   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 3,251,398         834,211         571,010         4,656,619   
  

 

 

    

 

 

    

 

 

    

 

 

 
     At December 31, 2011  
     Mortgage
loans
     Commercial
loans
     Consumer
loans
     Total Portfolio
Segments
 

Individually evaluated for impairment

   $ 76,275         26,974         —           103,249   

Collectively evaluated for impairment

     3,164,866         822,035         560,970         4,547,871   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 3,241,141         849,009         560,970         4,651,120   
  

 

 

    

 

 

    

 

 

    

 

 

 

The allowance for loan losses is summarized by portfolio segment and impairment classification as follows (in thousands):

 

     At March 31, 2012  
     Mortgage
loans
     Commercial
loans
     Consumer
loans
     Total Portfolio
Segments
     Unallocated      Total  

Individually evaluated for impairment

   $ 4,569         3,372         44         7,985         —           7,985   

Collectively evaluated for impairment

     33,114         17,590         5,739         56,443         9,568         66,011   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 37,683         20,962         5,783         64,428         9,568         73,996   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     At December 31, 2011  
     Mortgage
loans
     Commercial
loans
     Consumer
loans
     Total Portfolio
Segments
     Unallocated      Total  

Individually evaluated for impairment

   $ 5,360         3,966         —           9,326         —           9,326   

Collectively evaluated for impairment

     34,083         21,415         5,515         61,013         4,012         65,025   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 39,443         25,381         5,515         70,339         4,012         74,351   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Loan modifications to borrowers experiencing financial difficulties that are considered TDRs primarily involve lowering the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. These modifications generally do not result in the forgiveness of principal or accrued interest. In addition, the Company attempts to obtain additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

The following tables present the number of loans modified as TDRs during the three months ended March 31, 2012 and their balances immediately prior to the modification date and post-modification as of March 31, 2012.

 

     Three Months Ended March 31, 2012  
            Pre-Modification      Post-Modification  
Troubled Debt    Number of      Outstanding      Outstanding  

Restructurings

   Loans      Recorded Investment      Recorded Investment  
            ($ in thousands)         

Mortgage loans:

        

Residential

     5       $ 1,173         1,008   

Commercial

     —           —           —     

Total mortgage loans

     5         1,173         1,008   
  

 

 

    

 

 

    

 

 

 

Commercial loans

     3         10,261         10,261   

Consumer loans

     1         54         54   
  

 

 

    

 

 

    

 

 

 

Total restructured loans

     9       $ 11,488         11,323   
  

 

 

    

 

 

    

 

 

 

All TDRs are impaired loans, which are individually evaluated for impairment, as previously discussed. Estimated collateral values of collateral dependent impaired loans modified during the three months ended March 31, 2012 exceeded the carrying amounts of such loans. As a result, there were no charge-offs recorded on collateral dependent impaired loans presented in the preceding tables for the three months ended March 31, 2012. The allowance for loan losses associated with the TDRs presented in the preceding tables totaled $746,000 at March 31, 2012, and was included in the allowance for loan losses for loans individually evaluated for impairment.

The TDRs presented in the preceding tables had a weighted average modified interest rate of approximately 5.45 percent, compared to a rate of 6.45 percent prior to modification for the three months ended March 31, 2012.

The following table presents loans modified as TDRs within the previous 12 months from March 31, 2012, and for which there was a payment default (90 days or more past due) during the quarter ended March 31, 2012:

 

Troubled Debt    March 31, 2012  

Restructurings

Subsequently Defaulted

   Number of
Loans
     Outstanding
Recorded Investment
 
            ($ in thousands)  

Mortgage loans:

     

Residential

     4       $ 791   

Commercial

     —           —     

Multi-family

     —           —     

Construction

     —           —     
  

 

 

    

 

 

 

Total mortgage loans

     4         791   

Commercial loans

     —           —     

Consumer loans

     1         44   
  

 

 

    

 

 

 

Total restructured loans

     5         835   
  

 

 

    

 

 

 

TDRs that subsequently default are considered collateral dependent impaired loans and are evaluated for impairment based on the estimated fair value of the underlying collateral less expected selling costs.

 

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The activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2011 is as follows (in thousands):

 

     Three Months Ended March 31, 2012  
     Mortgage
loans
    Commercial
loans
    Consumer
loans
    Total Portfolio
Segments
    Unallocated      Total  

Balance at beginning of period

   $ 39,443        25,381        5,515        70,339        4,012         74,351   

Provision charged to operations

     (618     (1,037     1,099        (556     5,556         5,000   

Recoveries of loans previously charged off

     41        197        245        483        —           483   

Loans charged off

     (1,183     (3,579     (1,076     (5,838     —           (5,838
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balance at end of period

   $ 37,683        20,962        5,783        64,428        9,568         73,996   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
     Three Months Ended March 31, 2012  
     Mortgage
loans
    Commercial
loans
    Consumer
loans
    Total Portfolio
Segments
    Unallocated      Total  

Balance at beginning of period

   $ 38,417        22,210        5,616        66,242        2,480         68,722   

Provision charged to operations

     255        4,185        2,449        6,890        1,010         7,900   

Recoveries of loans previously charged off

     21        144        98        263        —           263   

Loans charged off

     (895     (1,695     (1,607     (4,197     —           (4,197
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balance at end of period

   $ 37,798        24,844        6,556        69,198        3,490         72,688   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

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Impaired loans receivable by class are summarized as follows (in thousands):

 

    At March 31, 2012     At December 31, 2011  
    Unpaid
Principal
Balance
    Recorded
Investment
    Related
Allowance
    Average
Recorded
Investment
    Interest
Income
Recognized
    Unpaid
Principal
Balance
    Recorded
Investment
    Related
Allowance
    Average
Recorded
Investment
    Interest
Income
Recognized
 

Loans with no related allowance

                   

Mortgage loans:

                   

Residential

  $ 4,388        3,587        —          3,609        40        3,341        2,793        —          3,285        51   

Commercial

    14,987        14,052        —          14,055        —          8,432        7,521        —          7,915        146   

Multi-family

    —          —          —          —          —          —          —          —          —          —     

Construction

    11,410        10,888        —          10,935        —          11,410        11,018        —          11,254        258   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    30,785        28,527        —          28,599        40        23,183        21,332        —          22,454        455   

Commercial loans

    23,277        17,749        —          19,419        4        4,982        4,651        —          6,222        259   

Consumer loans

    —          —          —          —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 54,062        46,276        —          48,018        44        28,165        25,983        —          28,676        714   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans with an allowance recorded

                   

Mortgage loans:

                   

Residential

  $ 7,958        7,059        989        7,114        74        7,681        7,442        1,056        7,644        187   

Commercial

    40,112        40,112        3,580        40,199        288        47,531        47,501        4,304        48,102        1,067   

Multi-family

    —          —          —          —          —          —          —          —          —          —     

Construction

    —          —          —          —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    48,070        47,171        4,569        47,313        362        55,212        54,943        5,360        55,746        1,254   

Commercial loans

    19,349        17,500        3,372        19,463        224        26,504        22,323        3,966        23,637        37   

Consumer loans

    617        616        44        740        8        —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 68,036        65,287        7,985        67,516        594        81,716        77,266        9,326        79,383        1,291   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

                   

Mortgage loans:

                   

Residential

  $ 12,346        10,646        989        10,723        114        11,022        10,235        1,056        10,929        238   

Commercial

    55,099        54,164        3,580        54,254        288        55,963        55,022        4,304        56,017        1,213   

Multi-family

    —          —          —          —          —          —          —          —          —          —     

Construction

    11,410        10,888        —          10,935        —          11,410        11,018        —          11,254        258   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    78,855        75,698        4,569        75,912        402        78,395        76,275        5,360        78,200        1,709   

Commercial loans

    42,626        35,249        3,372        38,882        228        31,486        26,974        3,966        29,859        296   

Consumer loans

    617        616        44        740        8        —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 122,098        111,563        7,985        115,534        638        109,881        103,249        9,326        108,059        2,005   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Specific allocations of the allowance for loan losses attributable to impaired loans totaled $7,985,000 and $9,326,000 at March 31, 2012 and December 31, 2011, respectively. At March 31, 2012 and December 31, 2011, impaired loans for which there was no related allowance for loan losses totaled $46,276,000 and $25,983,000, respectively. The average balances of impaired loans during the three months ended March 31, 2012, was $115,534,000.

The Company utilizes an internal nine-point risk rating system to summarize its loan portfolio into categories with similar characteristics. Loans deemed to be “acceptable quality” (pass) are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (watch) or 6 (special mention). Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. Commercial mortgage, commercial, multi-family and construction loans are rated individually, and each lending officer is responsible for risk rating loans in his or her portfolio. These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and by the Credit Administration Department. The risk ratings are also confirmed through periodic

 

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loan review examinations, which are currently performed by an independent third party. Reports concerning periodic loan review examinations by the independent third party are presented directly to both the Audit and Risk Committees of the Board of Directors.

Loans receivable by credit quality risk rating indicator are as follows (in thousands):

 

     At March 31, 2012  
     Residential      Commercial
mortgage
     Multi-family      Construction      Total
mortgages
     Commercial      Consumer      Total loans  

Special mention

   $ 6,908         16,404         17,576         9,702         50,590         13,874         2,369         66,833   

Substandard

     39,146         85,617         977         17,677         143,417         62,938         7,801         214,156   

Doubtful

     —           —           —           —           —           47         —           47   

Loss

     —           —           —           —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total classified and criticized

     46,054         102,021         18,553         27,379         194,007         76,859         10,170         281,036   

Pass/watch

     1,251,383         1,160,735         553,938         91,335         3,057,391         757,352         560,840         4,375,583   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total outstanding loans

   $ 1,297,437         1,262,756         572,491         118,714         3,251,398         834,211         571,010         4,656,619   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
                       
     At December 31, 2011  
     Residential      Commercial
mortgage
     Multi-family      Construction      Total
mortgages
     Commercial      Consumer      Total loans  

Special mention

   $ 7,980         27,773         12,193         10,699         58,645         14,498         1,908         75,051   

Substandard

     40,386         82,428         8,534         18,643         149,991         73,793         8,533         232,317   

Doubtful

     —           —           —           —           —           —           —           —     

Loss

     —           —           —           —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total classified and criticized

     48,366         110,201         20,727         29,342         208,636         88,291         10,441         307,368   

Pass/watch

     1,260,269         1,143,341         543,420         85,475         3,032,505         760,718         550,529         4,343,752   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total outstanding loans

   $ 1,308,635         1,253,542         564,147         114,817         3,241,141         849,009         560,970         4,651,120   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Note 5. Deposits

Deposits at March 31, 2012 and December 31, 2011 are summarized as follows (in thousands):

 

     March 31,
2012
     December 31,
2011
 

Savings

   $ 905,440       $ 891,742   

Money market

     1,321,732         1,319,392   

NOW

     1,197,371         1,120,985   

Non-interest bearing

     680,540         695,752   

Certificates of deposit

     1,089,791         1,128,726   
  

 

 

    

 

 

 
   $ 5,194,874       $ 5,156,597   
  

 

 

    

 

 

 

Note 6. Components of Net Periodic Benefit Cost

The Bank has a noncontributory defined benefit pension plan (the “Plan”) covering its full-time employees who had attained age 21 with at least one year of service as of April 1, 2003. The Plan was frozen on April 1, 2003. All participants in the Plan are 100% vested. The Plan’s assets are invested in investment funds and group annuity contracts currently managed by the Principal Financial Group and Allmerica Financial.

In addition to pension benefits, certain health care and life insurance benefits are currently made available to certain of the Bank’s retired employees. The costs of such benefits are accrued based on actuarial assumptions from the date of hire to the date the employee is fully eligible to receive the benefits. Effective January 1, 2003, eligibility for retiree health care benefits was frozen to new entrants and benefits were eliminated for employees with less than ten years of service as of December 31, 2002. Effective January 1, 2007, eligibility for retiree life insurance benefits was frozen to new entrants and retiree life insurance benefits were eliminated for employees with less than ten years of service as of December 31, 2006.

 

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Table of Contents

Net periodic benefit (increase) cost for the three months ended March 31, 2012 and 2011 include the following components (in thousands):

 

     Pension     Other post-retirement  
     Three months ended March 31,  
     2012     2011     2012     2011  

Service cost

   $ —          —        $ 63        40   

Interest cost

     322        313        261        253   

Expected return on plan assets

     (645     (561     —          —     

Amortization of prior service cost

     —          —          (1     (1

Amortization of the net loss (gain)

     357        180        3        (106
  

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost (increase)

   $ 34        (68   $ 326        186   
  

 

 

   

 

 

   

 

 

   

 

 

 

The Company previously disclosed in its consolidated financial statements for the year ended December 31, 2011, that it does not expect to contribute to the Plan in 2012. As of March 31, 2012, no contributions to the Plan have been made.

The net periodic benefit costs for pension benefits and other post-retirement benefits for the three months ended March 31, 2012 were calculated using the actual January 1, 2012 pension valuation and the estimated results of the other post-retirement benefits January 1, 2012 valuations.

Note 7. Impact of Recent Accounting Pronouncements

Effective March 31, 2012, the Company adopted guidance regarding the presentation of comprehensive income. In June 2011, FASB issued guidance providing an entity with the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both options, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. As originally issued, ASU 2011-5 requires entities to present reclassification adjustments out of accumulated other comprehensive income by component in the statement in which net income is presented and the statement in which other comprehensive income is presented (for both interim and annual financial statements). This requirement was deferred by ASU 2011-12,—Comprehensive Income (Topic 220)—Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards. ASU No. 2011-05 is effective for all interim and annual periods beginning on or after December 15, 2011 with early adoption permitted, and must be applied retrospectively. The Company presented comprehensive income in a separate consolidated statement of comprehensive income for the three months ended March 31, 2012 and 2011.

 

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In May 2011, the FASB issued guidance which results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and International Financial Reporting Standards. This guidance is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. Early adoption was not permitted. The Company adopted this guidance effective March 31, 2012, and it did not have a material effect on the Company’s consolidated statement of condition or results of operations

In April 2011, the FASB issued guidance to improve financial reporting of repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. The amendments to this guidance remove from the assessment of effective control: (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation guidance related to that criterion. Other criteria applicable to the assessment of effective control are not changed by this new guidance. Those criteria indicate that the transferor is deemed to have maintained effective control over the financial assets transferred (and thus must account for the transaction as a secured borrowing) for agreements that both entitle and obligate the transferor to repurchase or redeem the financial assets before their maturity if all of the following conditions are met: (1) the financial assets to be repurchased or redeemed are the same or substantially the same as those transferred; (2) the agreement is to repurchase or redeem them before maturity, at a fixed or determinable price; and (3) the agreement is entered into contemporaneously with, or in contemplation of, the transfer. This guidance became effective for the first interim or annual period beginning on or after December 15, 2011, and should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption was not permitted. The adoption of this guidance did not have a material effect on the Company’s consolidated statement of condition or results of operations.

Note 8. Fair Value Measurements

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. Where quoted market values in an active market are not readily available, the Company utilizes various valuation techniques to estimate fair value.

Fair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. However, in many instances fair value estimates may not be substantiated by comparison to independent markets and may not be realized in an immediate sale of the financial instrument.

GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are as follows:

 

Level 1:

   Unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

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Level 2:

  

Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability; and

 

Level 3:

   Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The valuation techniques are based upon the unpaid principal balance only, and exclude any accrued interest or dividends at the measurement date. Interest income and expense and dividend income are recorded within the consolidated statements of income depending on the nature of the instrument using the effective interest method based on acquired discount or premium.

Assets Measured at Fair Value on a Recurring Basis

The valuation techniques described below were used to measure fair value of financial instruments in the table below on a recurring basis as of March 31, 2012 and December 31, 2011.

Securities Available for Sale

For securities available for sale, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third party data service providers or dealer market participants with which the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark or comparable securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. As the Company is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. Additionally, the Company compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has not historically resulted in adjustment in the prices obtained from the pricing service. The Company also may hold equity securities and debt instruments issued by the U.S. government and U.S. government-sponsored agencies that are traded in active markets with readily accessible quoted market prices that are considered Level 1 inputs.

Assets Measured at Fair Value on a Non-Recurring Basis

The valuation techniques described below were used to estimate fair value of financial instruments measured on a non-recurring basis as of March 31, 2012 and December 31, 2011.

For loans measured for impairment based on the fair value of the underlying collateral, fair value was estimated using a market approach. The Company measures the fair value of collateral underlying impaired loans primarily through obtaining independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments, on an individual case basis, to comparable assets based on the appraisers’ market knowledge and experience, as well as adjustments for estimated costs to sell of up to 6%. The Company classifies these loans as Level 3 within the fair value hierarchy.

 

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Assets acquired through foreclosure or deed in lieu of foreclosure are carried at fair value, less estimated costs to sell of up to 6%. Fair value is generally based on independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments, on an individual case basis, to comparable assets based on the appraisers’ market knowledge and experience, and are classified as Level 3. When an asset is acquired, the excess of the loan balance over fair value, less estimated costs to sell, is charged to the allowance for loan losses. A reserve for foreclosed assets may be established to provide for possible write-downs and selling costs that occur subsequent to foreclosure. Foreclosed assets are carried net of the related reserve. Operating results from real estate owned, including rental income, operating expenses, and gains and losses realized from the sales of real estate owned, are recorded as incurred.

There were no changes to the valuation techniques for fair value measurements as of March 31, 2012 and December 31, 2011.

The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair values as of March 31, 2012 and December 31, 2011, by level within the fair value hierarchy.

 

     Fair Value Measurements at Reporting Date Using:  
(Dollars in thousands)    March 31,
2012
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs (Level 3)
 

Measured on a recurring basis:

           

Agency obligations

   $ 92,457         92,457         —           —     

Mortgage-backed securities

     1,289,525         —           1,289,525         —     

State and municipal obligations

     11,572         —           11,572         —     

Corporate obligations

     6,075         —           6,075         —     

Equity securities

     332         332         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1,399,961         92,789         1,307,172         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Measured on a non-recurring basis:

           

Loans measured for impairment based on the fair value of the underlying collateral

   $ 54,315         —           —           54,315   

Foreclosed assets

     14,440         —           —           14,440   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 68,755         —           —           68,755   
  

 

 

    

 

 

    

 

 

    

 

 

 
     Fair Value Measurements at Reporting Date Using:  
(Dollars in thousands)    December 31,
2011
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs (Level 3)
 

Measured on a recurring basis:

           

Agency obligations

   $ 105,558         105,558         —           —     

Mortgage-backed securities

     1,251,003         —           1,251,003         —     

State and municipal obligations

     11,614         —           11,614         —     

Corporate obligations

     7,636         —           7,636         —     

Equity securities

     308         308         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1,376,119         105,866         1,270,253         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Measured on a non-recurring basis:

           

Loans measured for impairment based on the fair value of the underlying collateral

   $ 56,620         —           —           56,620   

Foreclosed assets

     12,802         —           —           12,802   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 69,422         —           —           69,422   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

There were no transfers between Level 1 and Level 2 during the three months ended March 31, 2012.

Other Fair Value Disclosures

The Company is required to disclose estimated fair value of financial instruments, both assets and liabilities on and off the balance sheet, for which it is practicable to estimate fair value and the following is a description of valuation methodologies used for those assets and liabilities.

Cash and Cash Equivalents

For cash and due from banks, federal funds sold and short-term investments, the carrying amount approximates fair value.

Investment Securities Held to Maturity

For investment securities held to maturity fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third party data service providers or dealer market participants with which the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark or comparable securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. As the Company is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. Additionally, the Company compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has not historically resulted in adjustment in the prices obtained from the pricing service. The Company also holds debt instruments issued by the U.S. government and U.S. government agencies that are traded in active markets with readily accessible quoted market prices that are considered Level 1 within the fair value hierarchy.

FHLB-NY Stock

The carrying value of FHLB-NY stock was its cost. The fair value of FHLB-NY stock is based on redemption at par value. The Company classifies the estimated fair value as Level 1 within the fair value hierarchy.

Loans

Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial mortgage, residential mortgage, commercial, construction and consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and into performing and non-performing categories. The fair value of performing loans was estimated using a combination of techniques, including a discounted cash flow model that utilizes a discount rate that reflect the Company’s current pricing for loans with similar characteristics and remaining maturity, adjusted by an amount for estimated credit losses inherent in the portfolio at the balance sheet date. The rates take into account the expected yield curve, as well as an adjustment for prepayment risk, when applicable. The Company classifies the estimated fair value of its loan portfolio as Level 3.

 

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Table of Contents

The fair value for significant non-performing loans was based on recent external appraisals of collateral securing such loans, adjusted for the timing of anticipated cash flows. The Company classifies the estimated fair value of its non-performing loan portfolio as Level 3.

Deposits

The fair value of deposits with no stated maturity, such as non-interest bearing demand deposits and savings deposits, was equal to the amount payable on demand and classified as Level 1. The estimated fair value of certificates of deposit was based on the discounted value of contractual cash flows. The discount rate was estimated using the Company’s current rates offered for deposits with similar remaining maturities. The Company classifies the estimated fair value of its certificates of deposit portfolio as Level 2.

Borrowed Funds

The fair value of borrowed funds was estimated by discounting future cash flows using rates available for debt with similar terms and maturities and is classified by the Company as Level 2 within the fair value hierarchy.

Commitments to Extend Credit and Letters of Credit

The fair value of commitments to extend credit and letters of credit was estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value estimates of commitments to extend credit and letters of credit are deemed immaterial.

There were no changes to the valuation techniques for fair value measurements as of March 31, 2012 and December 31, 2011.

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

Significant assets and liabilities that are not considered financial assets or liabilities include goodwill and other intangibles, deferred tax assets and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

 

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Table of Contents

The following tables present the Company’s financial instruments at their carrying and fair values as of March 31, 2012 and December 31, 2011. Fair values are presented by level within the fair value hierarchy.

 

            Fair Value Measurements at March 31, 2012 Using:  
(Dollars in thousands)    Carrying
value
     Fair
value
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs (Level 3)
 

Financial assets:

              

Cash and cash equivalents

   $ 69,255         69,255         69,255         —           —     

Securities available for sale:

              

Agency obligations

     92,457         92,457         92,457         —           —     

Mortgage-backed securities

     1,289525         1,289,525         —           1,289,525         —     

State and municipal obligations

     11,572         11,572         —           11,572         —     

Corporate obligations

     6,075         6,075         —           6,075         —     

Equity securities

     332         332         332         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities for sale

   $ 1,399,961         1,399,961         92,789         1,307,172         —     

Investment securities held to maturity:

              

Agency obligations

   $ 3,947         3,977         3,977         —           —     

Mortgage-backed securities

     18,777         19,591         —           19,591         —     

State and municipal obligations

     320,429         335,641         —           335,641         —     

Corporate obligations

     8,516         8,807         —           8,807         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities held to maturity

   $ 351,669         368,016         3,977         364,039         —     

FHLB-NY stock

     38,684         38,684         38,684         —           —     

Loans, net

     4,584,806         4,789,116         —           —           4,789,116   

Financial liabilities:

              

Deposits other than certificates of deposits

   $ 4,105,083         4,105,083         4,105,083         —           —     

Certificates of deposit

     1,089,791         1,104,098         —           1,104,098         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     5,194,874         5,209,181         4,105,083         1,104,098         —     

Borrowings

   $ 893,066         924,240         —           924,240         —     

 

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Table of Contents
            Fair Value Measurements at December 31, 2011 Using:  
(Dollars in thousands)    Carrying
value
     Fair
value
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs

(Level 2)
     Significant
Unobservable
Inputs (Level 3)
 

Financial assets:

              

Cash and cash equivalents

   $ 69,632         69,632         69,632         —           —     

Securities available for sale:

              

Agency obligations

     105,558         105,558         105,558         —           —     

Mortgage-backed securities

     1,251,003         1,251,003         —           1,251,003         —     

State and municipal obligations

     11,614         11,614         —           11,614         —     

Corporate obligations

     7,636         7,636         —           7,636         —     

Equity securities

     308         308         308         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities for sale

   $ 1,376,119         1,376,119         105,866         1,270,253         —     

Investment securities held to maturity

              

Agency obligations

   $ 3,647         3,683         3,683         —           —     

Mortgage-backed securities

     22,321         23,180         —           23,180         —     

State and municipal obligations

     314,108         330,902         —           330,902         —     

Corporate obligations

     8,242         8,531         —           8,531         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities held to maturity

   $ 348,318         366,296         3,683         326,613         —     

FHLB-NY stock

     38,927         38,927         38,684         —           —     

Loans, net

     4,579,158         4,804,036         —           —           4,804,036   

Financial liabilities:

              

Deposits other than certificates of deposits

   $ 4,027,871         4,027,871         4,027,871         —           —     

Certificates of deposit

     1,128,726         1,143,213         —           1,143,213         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

   $ 5,156,597         5,171,084         4,027,871         1,143,213      

Borrowings

   $ 920,180         955,037         —           955,037         —     

Note 9. Other Comprehensive Income (Loss)

The following table presents the components of other comprehensive income (loss) both gross and net of tax, for the three months ended March 31, 2012 and 2011.

 

     Three months ended March 31,  
     2012     2011  
     Before
Tax
    Tax
Effect
    After
Tax
    Before
Tax
    Tax
Effect
     After
Tax
 

Components of Other Comprehensive Income (Loss):

             

Unrealized gains and losses on securities available for sale