10-Q 1 f10q_093012-0375.htm FORM 10-Q 9-30-12 ROMA FINANCIAL CORPORATION f10q_093012-0375.htm
UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-Q
 
(Mark One)
       
 
X
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     
EXCHANGE ACT OF 1934
       
 
For the quarterly period ended
September 30, 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  000-52000
       
       
 
ROMA FINANCIAL CORPORATION
 
(Exact name of registrant as specified in its charter)
       
 
UNITED STATES
 
51-0533946
 
(State or other jurisdiction of
 
(I.R.S. Employer
 
Incorporation or organization)
 
Identification Number)
       
 
2300 Route 33, Robbinsville, New Jersey
 
08691
 
(Address of principal executive offices)
 
(Zip Code)
       
 
Registrant’s telephone number, including area code:
(609) 223-8300
       
 
        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [ X  ]   No [ ]
 
 
        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer [   ]Accelerated filer [ X ]
 
                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]
   
 
        The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date,
November 5, 2012:
       
 
$0.10 par value common stock  -  30,296,327 shares outstanding
 
 
 

 

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

INDEX

   
Page
 
   
Number
 
PART I - FINANCIAL INFORMATION
     
       
Item 1:
Financial Statements
     
         
 
Consolidated Statements of Financial Condition
 
3
 
 
at September 30, 2012 and December 31, 2011 (Unaudited)
     
         
 
Consolidated Statements of Income for the Three and Nine Months Ended
 
4
 
 
September 30, 2012 and 2011 (Unaudited)
 
Consolidated Statements of Comprehensive Income for the Three and Nine Months
Ended September 30, 2012 and 2011 (Unaudited)
 
 
 
5
 
         
 
Consolidated Statements of Changes in Stockholders’ Equity for the Nine
 
6
 
 
Months Ended September 30, 2012 and 2011 (Unaudited)
     
         
 
Consolidated Statements of Cash Flows for the Nine Months
 
7
 
 
Ended September 30, 2012 and 2011 (Unaudited)
     
         
 
Notes to Consolidated Financial Statements (Unaudited)
 
9
 
         
Item 2:
Management’s Discussion and Analysis of
 
41
 
 
Financial Condition and Results of Operations
     
       
Item 3:
Quantitative and Qualitative Disclosure About Market Risk
 
48
 
       
Item 4:
Controls and Procedures
 
49
 
       
       
PART II - OTHER INFORMATION
 
49
 
       
      Item 1:      Legal Proceedings
 
      Item 1A:   Risk Factors
 
      Item 2:      Unregistered Sales of Equity Securities and Use of Proceeds
 
      Item 3:      Defaults Upon Senior Securities
 
      Item 4:      Mine Safety Disclosures
 
      Item 5:      Other Information
 
      Item 6:      Exhibits
 
 
 
 
SIGNATURES
 
51
 
       


 
2

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
     September 30,
2012
    December 31,
2012
 
    (In thousands, except per share data)  
 Assets
Cash and amounts due from depository institutions
  $ 17,740     $ 17,791  
Interest-bearing deposits in other banks
    54,578       41,775  
Money market funds
    37,837       25,093  
Cash and Cash Equivalents
    110,155       84,659  
Investment securities available for sale (“AFS”) at fair value
    31,977       42,491  
Investment securities held to maturity (“HTM”) at amortized cost (fair value of $ 169,746 and  
$243,022, respectively)
    167,966       241,185  
Mortgage-backed securities held to maturity at amortized cost (fair value of $ 403,724 and
$458,555, respectively)
    378,644       438,523  
Loans receivable, net of allowance for loan losses of $8,122
and $5,416, respectively
    1,014,864       962,389  
Real estate and other repossessed assets owned
    7,905       3,276  
Real estate held for sale
    640       970  
Real estate owned via equity investment
    3,825       3,905  
Premises and equipment, net
    49,005       47,433  
Federal Home Loan Bank of New York and ACBB stock
    8,459       5,798  
Accrued interest receivable
    6,084       6,492  
Bank owned life insurance
    34,292       28,852  
Goodwill
    1,826       1,826  
Deferred tax asset
    11,964       12,253  
Other assets
    7,487       8,032  
                Total Assets
  $ 1,835,093     $ 1,888,084  
Liabilities and Stockholders’ Equity
Liabilities
Deposits:
           
   Non-interest bearing
  $ 71,966     $ 63,766  
   Interest bearing
    1,420,519       1,511,840  
         Total deposits
    1,492,485       1,575,606  
Federal Home Loan Bank of New York advances
    53,287       33,316  
Securities sold under agreements to repurchase
    40,000       40,000  
Subordinated debentures
    -       1,915  
Securities purchased and not settled
    12,000       -  
Advance payments by borrowers for taxes and insurance
    3,654       3,064  
Accrued interest payable and other liabilities
    14,888       16,188  
Total Liabilities
    1,616,314       1,670,089  
Stockholders’ Equity
               
Common stock, $0.10 par value, 45,000,000 shares authorized, 32,731,875 shares issued;
               
        30,183,127 and 30,320,927 shares outstanding at September 30, 2012 and
December 31, 2011, respectively
    3,274       3,274  
Paid-in capital
    100,725       100,310  
Retained earnings
    158,651       157,669  
Unearned shares held by Employee Stock Ownership Plan
    (4,736 )     (5,141 )
Treasury stock, 2,548,748 and 2,410,948 shares, respectively
    (36,512 )     (35,335 )
Accumulated other comprehensive loss
    (4,613 )     (4,637 )
         Total Roma Financial Corporation stockholders’ equity
    216,789       216,140  
Noncontrolling interest
    1,990       1,855  
Total Stockholders’ Equity
    218,779       217,995  
Total Liabilities and Stockholders’ Equity
  $ 1,835,093     $ 1,888,084  
See notes to consolidated financial statements.
 
3

 
ROMA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
    Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
    2012     2011     2012     2011  
    (In thousands, except per share data)     (In thousands, except per share data)  
Interest Income                                
Loans, including fees
  $ 11,522     $ 11,675     $ 35,402     $ 35,060  
Mortgage-backed securities held to maturity
    3,391       4,375       11,307       13,087  
Investment securities held to maturity
    742       1,956       2,946       6,395  
Securities available for sale
    135       243       370       784  
Other interest-earning assets
    150       104       400       346  
                                 
Total Interest Income
    15,940       18,353       50,425       55,672  
 
Interest Expense
Deposits
    3,248       4,576       10,144       13,924  
Borrowings
    353       703       1,986       2,083  
                                 
Total Interest Expense
    3,601       5,279       12,130       16,007  
                                 
Net Interest Income
    12,339       13,074       38,295       39,665  
                                 
Provision for  loan losses
    2,756       771       5,408       2,884  
                                 
Net Interest Income after Provision for Loan Losses
    9,583       12,303       32,887       36,781  
 
Non-Interest  Income
Commissions on sales of title policies
    343       224       859       698  
Fees and service charges on deposits and loans
    387       402       1,246       1,216  
Income from bank owned life insurance
    361       308       1,070       917  
Net gain from sale of mortgage loans originated for sale
    754       178       1,552       345  
Net gain from sale of available for sale securities
    407       38       420       78  
Realized gain (loss) on real estate held for sale
    -       -       (3 )     -  
Realized (loss) on real estate owned
    (258 )     -       (262 )     (107 )
Other
    495       404       1,404       993  
                                 
Total Non-Interest Income
    2,489       1,554       6,286       4,140  
 
Non-Interest Expense
Salaries and employee benefits
    6,372       6,100       19,112       18,287  
Net occupancy expense of premises
    1,087       1,200       3,349       3,583  
Equipment
    970       872       2,756       2,655  
Data processing fees
    566       542       1,688       1,724  
Federal Deposit Insurance Premium
    381       190       1,339       1,406  
Advertising
    203       274       614       840  
Commercial and residential loan expense
    663       333       2,123       1,042  
Other
    1,339       1,152       4,354       3,374  
Total Non-Interest Expense
    11,581       10,663       35,335       32,911  
                                 
Income Before Income Taxes
    491       3,194       3,838       8,010  
                                 
Income Taxes
    122       1,031       1,083       2,551  
                                 
Net income
    369       2,163       2,755       5,459  
Plus: net gain attributable to the noncontrolling interest
    (24 )     (26 )     (98 )     (80 )
                                 
Net Income attributable to Roma Financial Corporation
  $ 345     $ 2,137     $ 2,657     $ 5,379  
Net income attributable to Roma Financial Corporation per common share
                               
       Basic and Diluted
  $ .01     $ .07     $ .09     $ .18  
     Dividends Declared Per Share
  $ .00     $ .08     $ .12     $ .24  
Weighted Average Number of Common
        Shares Outstanding
                               
      Basic and Diluted
    29,751,979       29,784,365       29,788,312       29,745,328  
See notes to consolidated financial statements.
 
4

 

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)


 
   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
    2012     2011     2012     2011  
    (In thousands)     (In thousands)  
                                 
Net Income
  $ 369     $ 2,163     $ 2,755     $ 5,459  
Other comprehensive income:
                   
Unrealized holding gains on available for sale securities:
                   
Unrealized holding gains (losses) arising during the period
    242       791       536       1,537  
Less:  reclassification adjustment for (gains) included in net income
    (407 )     (38 )     (420 )     (78 )
Net realized gain (loss) on securities available for sale
    (165 )     753       116       1,459  
Tax effect
    65       (316 )     (55 )     (614 )
                     
Other comprehensive income (loss), net of tax
    (100 )     437       61       845  
                     
Comprehensive income
  $ 269     $ 2,600     $ 2,816     $ 6,304  
Comprehensive income attributable to the noncontrolling interest
    (29 )     (26 )     (135 )     (80 )
                     
Comprehensive income attributable to Roma Financial Corporation
  $ 240     $ 2,574     $ 2,681     $ 6,224  
                                 
 
See notes to consolidated financial statements.

 
5

 

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)

 
 
 
 
 
Common Stock
Shares Amount
   
 
 
 
 
Paid-In
Capital
   
 
 
 
 
 
Retained Earnings
   
 
 
Unearned
Shares Held By ESOP
   
 
 
Accumulated
Other Comprehensive 
Income (Loss)
   
 
 
 
 
Treasury
Stock
   
 
 
 
 
Noncontrolling
Interest
   
 
 
 
 
 
Total
 
Balance December 31, 2010
  30,281     $ 3,274     $ 99,585     $ 152,911     $ (5,683 )   $ (3,463 )   $ (35,880 )   $ 1,732     $ 212,476  
Net income for the nine months
                                                                     
  ended September 30, 2011
  -       -       -       5,379       -       -       -       80       5,459  
Other comprehensive income, 
  net
  -       -       -       -       -       845       -       -       845  
Vesting of restricted stock
  40       -       (545 )     -       -       -       545       -       -  
Dividends declared and paid
  -       -       -       (1,666 )     -       -       -       -       (1,666 )
Stock-based compensation
  -       -       967       -       -       -       -       -       967  
ESOP shares earned
  -       -       1       -       407       -       -       -       408  
Balance September 30, 2011
  30,321     $ 3,274     $ 100,008     $ 156,624     $ (5,276 )   $ (2,618 )   $ (35,335 )   $ 1,812     $ 218,489  
                                                                       
Balance December 31, 2011
  30,321     $ 3,274     $ 100,310     $ 157,669     $ (5,141 )   $ (4,637 )   $ (35,335 )   $ 1,855     $ 217,995  
Net income for the nine months
                                                                     
  ended September 30, 2012
  -       -       -       2,657       -       -       -       98       2,755  
Other comprehensive income,
  net
  -       -       -       -       -       24       -       37       61  
Vesting of restricted stock
  49       -       (521 )     -       -       -       521       -       -  
Dividends declared and paid
  -       -       -       (1,675 )     -       -       -       -       (1,675 )
Treasury shares repurchased
  (187 )     -       -       -       -       -       (1,698 )     -       (1,698 )
Stock-based compensation
  -       -       960       -       -       -       -       -       960  
ESOP shares earned
  -       -       (24 )     -       405       -       -       -       381  
Balance September 30, 2012
  30,183     $ 3,274     $ 100,725     $ 158,651     $ (4,736 )   $ (4,613 )   $ (36,512 )   $ 1,990     $ 218,779  
 
See notes to consolidated financial statements


 
6

 
ROMA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
   
Nine Months Ended
September 30,
 
     2012      2011  
Cash Flows from Operating Activities            
Net income
  $ 2,755     $ 5,459  
Adjustments to reconcile net income to net cash provided by
operating activities:
               
  Depreciation and amortization
    1,876       1,820  
  Amortization of premiums and accretion of discounts on securities
    709       19  
  Accretion of deferred loan fees and discounts
    (309 )     (101 )
  Amortization of net premiums on loans
    515       609  
  Amortization of premiums on deposits
    (15 )     (209 )
  Amortization of premiums on subordinated debt
    271       -  
  Gain on sale of securities available for sale
    (420 )     (78 )
  Net gain on sale of mortgage loans originated for sale
    (1,552 )     (345 )
  Mortgage loans originated for sale
    (41,122 )     (12,156 )
  Proceeds from sales of mortgage loans originated for sale
    42,674       12,501  
  Net realized loss from sales of real estate owned
    262       107  
  Proceeds from sale of real estate held for sale
    327       -  
  Realized loss on sale of real estate held for sale
    3       -  
  Provision for loan losses
    5,408       2,884  
  Stock-based compensation, including warrants
    960       967  
  ESOP shares earned
    381       408  
  Decrease in accrued interest receivable
    408       1,359  
  Increase in cash surrender value of bank owned life insurance
    (890 )     (761 )
  (Increase) decrease in other assets
    553       (529 )
  Decrease in accrued interest payable
    (133 )     (148 )
  Decrease in deferred income taxes
    236       270  
  (Decrease) increase in other liabilities
    (547 )     950  
 
Net Cash Provided by Operating Activities
    12,350       13,026  
 
Cash Flows from Investing Activities
Proceeds from maturities, calls and principal repayments of securities available for sale
    9,997       8,858  
Proceeds from sale of securities available for sale
    8,813       3,233  
Purchases of securities available for sale
    (8,161 )     (2,767 )
Proceeds from maturities, calls and principal repayments of investment securities held to maturity
    188,247       152,368  
Purchases of investment securities held to maturity
    (102,904 )     (106,277 )
Principal repayments on mortgage-backed securities held to maturity
    98,004       57,459  
Purchases of mortgage-backed securities held to maturity
    (38,559 )     (104,549 )
Net increase in loans receivable
    (63,855 )     (44,582 )
Purchase of bank owned life insurance
    (4,550 )     -  
Proceeds from life insurance redemption
    -       236  
Additions to premises and equipment and real estate owned via equity investment
    (3,368 )     (2,116 )
Proceeds from sale of real estate owned
    866       2,344  
Purchases of Federal Home Loan Bank of New York stock
    (2,661 )     (789 )
 
Net Cash Provided by (Used in) Provided by  Investing Activities
     81,869       (36,582
 
Cash Flows from Financing Activities
Net  (decrease) increase in deposits
    (83,106 )     95,902  
Increase in advance payments by borrowers for taxes and insurance
    590       468  
Purchase of treasury stock
    (1,698 )     -  
Dividends paid to minority stockholders of Roma Financial Corp.
    (2,294 )     (1,662 )
Repayment of Federal Home Loan Bank of New York advances
    (6,240 )     (5,119 )
Proceeds from Federal Home Loan Bank of New York advances
    26,211       3,500  
Repayment of subordinated debentures
    (2,186 )     -  
                 
Net Cash (Used in) Provided by Financing Activities
    (68,723 )     93,089  
Net Increase in Cash and Cash Equivalents
    25,496       69,533  
Cash and Cash Equivalents – Beginning
    84,659       89,587  
                 
Cash and Cash Equivalents – Ending
  $ 110,155     $ 159,120  

 
7

 

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont’d)
(Unaudited)

 
    Nine Months Ended
September 30,
 
    2012     2011  
    (In thousands)  
Supplementary Cash Flows Information
               
                 
Income taxes paid, net
  $ 150     $ 4,037  
Interest paid
  $ 12,263     $ 16,155  
Securities purchased and not settled
  $ 12,000     $ 17,000  
Loans receivable transferred to real estate owned
  $ 5,757     $ 3,060  


See notes to consolidated financial statements.

 
8

 
ROMA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A – ORGANIZATION

Roma Financial Corporation (the “Company”) is a federally-chartered corporation organized in January 2005 for the purpose of acquiring all of the capital stock that Roma Bank issued in its mutual holding company reorganization.  Roma Financial Corporation’s principal executive offices are located at 2300 Route 33, Robbinsville, New Jersey 08691 and its telephone number at that address is (609) 223-8300.

Roma Financial Corporation, MHC is a federally-chartered mutual holding company that was formed in January 2005 in connection with the mutual holding company reorganization.  Roma Financial Corporation, MHC has not engaged in any significant business since its formation.  So long as Roma Financial Corporation MHC is in existence, it will at all times own a majority of the outstanding stock of Roma Financial Corporation. Roma Financial Corporation, MHC, whose activity is not included in these consolidated financial statements, held 22,584,995 shares or 74.5% of the Company’s outstanding common stock at September 30, 2012.

Roma Bank is a federally-chartered stock savings bank.  It was originally founded in 1920 and received its federal charter in 1991.  Roma Bank’s deposits are federally insured by the Deposit Insurance Fund as administered by the Federal Deposit Insurance Corporation.

RomAsia Bank is a federally-chartered stock savings bank. RomAsia Bank received all regulatory approvals on June 23, 2008 to be a federal savings bank and began operations on that date. The Company originally invested $13.4 million in RomAsia Bank and in 2011 invested an additional $2.5 million.  The Company currently holds a 91.12% ownership interest.

Roma Bank and RomAsia Bank are collectively referred to as (the “Banks”).  Pursuant to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as of July 21, 2011, Roma Financial Corporation, MHC and the Company are regulated by the Federal Reserve Bank of Philadelphia and Roma Bank and RomAsia Bank by the Office of the Comptroller of the Currency.

The Banks offer traditional retail banking services, one-to four-family residential mortgage loans, multi-family and commercial mortgage loans, construction loans, commercial business loans and consumer loans, including home equity loans and lines of credit. Roma Bank operates from its main office in Robbinsville, New Jersey, and twenty-three branch offices located in Mercer, Burlington, Camden and Ocean Counties, New Jersey. RomAsia Bank operates from two locations in Monmouth Junction, New Jersey. As of September 30, 2012, the Banks had 317 full-time employees and 27 part-time employees.  Roma Bank maintains a website at www.romabank.com.  RomAsia Bank maintains a website at www.Romasiabank.com.

Throughout this document, references to “we,” “us,” or “our” refer to the Banks or the Company, or both, as the context indicates.

NOTE B - BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, Roma Bank and Roma Bank’s wholly-owned subsidiaries, Roma Capital Investment Corp. (the “Investment Co.”) and General Abstract and Title Agency (the “Title Co.”), and the Company’s majority owned investment of 91.12% in RomAsia Bank. The consolidated statements also include the Company’s 50% interest in 84 Hopewell, LLC (the “LLC”), a real estate investment which is consolidated according to the requirements of Accounting Standards Codification Topic 810, Variable Interest Entities.   All significant inter-company accounts and transactions have been eliminated in consolidation. These statements were prepared in accordance with instructions for Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not  include all information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

In the opinion of management, all adjustments which are necessary for a fair presentation of the consolidated financial statements have been made at and for the three and nine months ended September 30, 2012 and 2011.  The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results which may be expected for the entire fiscal year or other interim periods.

The December 31, 2011 data in the consolidated statements of financial condition was derived from the Company’s audited consolidated financial statements for that date. That data, along with the interim financial information presented in the consolidated statements of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows should be read in conjunction with the 2011 audited consolidated financial statements for the year ended December 31, 2011, including the notes thereto included in the Company’s Annual Report on Form 10-K.

The Investment Co. was incorporated in the State of New Jersey effective September 4, 2004, and began operations October 1, 2004.  The Investment Co. is subject to the investment company provisions of the New Jersey Corporation Business Tax Act.  The Title Co. was incorporated in the State of New Jersey effective March 7, 2005 and commenced operations April 1, 2005. The Company, together with
 
9

 

NOTE B - BASIS OF PRESENTATION (Continued)

two individuals, formed a limited liability company, 84 Hopewell, LLC. The LLC was formed to build a commercial office building in which is located the Company’s Hopewell branch, corporate offices for the other LLC members construction company and tenant space.

The Company invested $370,000 in the LLC and provided a loan in the amount of $3.6 million to the LLC. The Company and the other 50% owner’s construction company both have signed lease commitments to the LLC.

The consolidated financial statements have been prepared in conformity with GAAP.  In preparing the 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 consolidated statements of financial condition and revenues and expenses for the periods then ended.  Actual results could differ significantly from those estimates.

A material estimate that is particularly susceptible to significant change relates to the determination of the allowance for loan losses.  The allowance for loan losses represents management’s best estimate of losses known and inherent in the portfolio that are both probable and reasonable to estimate.  While management uses the most current information available to estimate losses on loans, actual losses are dependent on future events and, as such, increases in the allowance for loan losses may be necessary.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Banks’ allowance for loan losses.  Such agencies may require the Banks to recognize additions to the allowance based on their judgments about information available to them at the time of their examinations.

In accordance with Accounting Standards Codification (“FASB ASC”) Topic 855, Subsequent Events, management has evaluated subsequent events until the date of issuance of this report, and concluded that no events occurred that were of a material nature.


NOTE C - CONTINGENCIES

The Company, from time to time, is a party to routine litigation that arises in the normal course of business.  In the opinion of management, the resolution of such litigation, if any, would not have a material adverse effect, as of September 30, 2012, on the Company’s consolidated financial position or results of operations.


NOTE D – EARNINGS PER SHARE

Basic earnings per share is based on the weighted average number of common shares actually outstanding adjusted for Employee Stock Ownership Plan (“ESOP”) shares not yet committed to be released. Diluted EPS is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of outstanding stock options and unvested stock awards, if dilutive, using the treasury stock method. Shares issued and reacquired during any period are weighted for the portion of the period they were outstanding.

Outstanding stock options and restricted stock grants for the three and nine months ended September 30, 2012 and 2011 were not considered in the calculation of diluted earnings per share because they were anti-dilutive.


NOTE E – STOCK BASED COMPENSATION

Equity Incentive Plan

At the Annual Meeting held on April 23, 2008, stockholders of the Company approved the Roma Financial Corporation 2008 Equity Incentive Plan.

The 2008 Plan enables the Board of Directors to grant stock options to executives, other key employees and nonemployee directors. The options granted under the Plan may be either incentive stock options or non-qualified stock options. The Company has reserved 1,292,909 shares of common stock for issuance upon the exercise of options granted under the 2008 Plan and 517,164 shares for grants of restricted stock.  The Plan will terminate in ten years from the grant date.  Options will be granted with an exercise price not less than the Fair Market Value of a share of Common Stock on the date of the grant. Options may not be granted for a term greater than ten years.  Stock options granted under the Incentive Plan are subject to limitations under Section 422 of the Internal Revenue Code.  The number of shares available under the 2008 Plan, the number of shares subject to outstanding options and the exercise price of outstanding options will be adjusted to reflect any stock dividend, stock split, merger, reorganization or other event generally affecting the number of Company’s outstanding shares.

 
10

 
NOTE E – STOCK BASED COMPENSATION (Continued)

On June 25, 2008, Directors, Senior Officers and certain employees of the Company were granted, in the aggregate, 820,000 stock options and awarded 222,000 shares of restricted stock.

On June 15, 2011, Directors of the Company were granted in the aggregate 32,000 stock options and awarded 54,000 shares of restricted stock.

On November 16, 2011, Senior Officers and certain employees of the Company were awarded 19,350 shares of restricted stock.

At September 30, 2012, there were 488,909 shares available for option grants under the 2008 Plan and 231,814 shares available for grants of restricted stock.

The Company accounts for stock based compensation under FASB ASC Topic 718, Compensation-Stock Compensation.  ASC Topic 718 covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. ASC Topic 718 requires that compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is measured based on the fair value of the equity or liability instruments issued.

ASC Topic 718 also requires the Company to realize as a financing cash flow rather than an operating cash flow, as previously required, the benefits of realized tax deductions in excess of previously recognized tax benefits on compensation expense.  In accordance with SEC Staff Accounting Bulletin (“SAB”) No. 107, the Company classified share-based compensation for employees and outside directors within “salaries and employee benefits” in the consolidated statement of income to correspond with the same line item as the cash compensation paid.

The stock options will vest over a five year service period and are exercisable within ten years. Compensation expense for all option grants is recognized over the awards’ respective requisite service period.

Restricted shares vest over a five year service period. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period of the awards of five years. The number of shares granted and the grant date market price of the Company’s common stock determines the fair value of the restricted shares under the Company’s restricted stock plan.
 
The following is a summary of the status of the Company’s stock option activity and related information for the year ended December 31, 2011 and for the nine months ended September 30, 2012:

   
 
 
Number of
Stock Options
   
 
Weighted Avg.
Exercise Price
 
Weighted Avg.
Remaining
Contractual Life
 
 
Aggregate
Intrinsic
Value
 
                     
 
Balance at December 31, 2010
    797,200     $ 13.67          
                Granted
    32,000       13.67          
                Forfeited
    (8,000 )     13.67          
Balance at December 31, 2011
    821,200     $ 13.67  
6.35 years
  $ 0.00  
                Forfeited
    (17,200 )     13.67            
Balance at September 30, 2012
    804,000     $ 13.67  
5.86 years
  $ 0.00  
                           
Exercisable at September 30, 2012
    608,600     $ 13.67  
5.77 years
  $ 0.00  


The key valuation assumptions and fair value of stock options granted June 15, 2011 were:

             Expected life
 
6.5 years
             Risk-free rate
 
2.26%
             Volatility
 
35.42%
             Dividend yield
 
3.32%
             Fair value
 
$1.70


 
11

 

NOTE E – STOCK BASED COMPENSATION (Continued)

The following is a summary of the status of the Company’s restricted shares as of September 30, 2012 and changes during the year ended December 31, 2011 and for the nine months ended September 30, 2012:
   
 
Number of
Restricted Shares
   
Weighted
Average Grant
Date Fair Value
 
             
Non-vested restricted shares at December 31, 2010
    120,000     $ 13.67  
                 Granted
    73,350       9.40  
                 Vested
    (40,000 )     13.67  
Non-vested restricted shares at December 31, 2011
    153,350     $ 11.63  
                 Vested
    (48,800 )     12.78  
                 Forfeited
    (4,000 )     13.67  
Non-vested restricted shares at September 30, 2012
    100,550     $ 10.99  


Stock option and stock award expenses included in compensation expense were $302,000 and $917,000, respectively, for the three and nine months ended September 30, 2012 with respective tax benefits of $121,000 and $367,000; and $300,000 and $844,000 for the three and nine months ended September 30, 2011, with respective tax benefits of $120,000 and $338,000. At September 30, 2012, there was approximately $1.4 million of unrecognized cost, related to outstanding stock options and restricted shares, which will be recognized over a period of approximately 2.1 years.

Equity Incentive Plan – RomAsia Bank

The stockholders of RomAsia Bank approved an equity incentive plan in 2009. On January 6, 2010, directors, senior officers and certain employees of the RomAsia Bank were granted, in the aggregate, options to purchase 75,500 shares of RomAsia common stock.

The Plan enables the Board of Directors of RomAsia Bank to grant stock options to executives, other key employees and nonemployee directors. The options granted under the Plan may be either incentive stock options or non-qualified stock options. RomAsia has reserved 225,000 shares of its common stock for issuance upon the exercise of options granted under the Plan.  The Plan will terminate in ten years from the grant date.  Options will be granted with an exercise price not less than the Fair Market Value of a share of RomAsia’s Common Stock on the date of the grant. Options may not be granted for a term greater than ten years.  The stock options vest over a five year service period and are exercisable within ten years.  Stock options granted under the Incentive Plan are subject to limitations under Section 422 of the Internal Revenue Code.  The number of shares available under the Plan, the number of shares subject to outstanding options and the exercise price of outstanding options will be adjusted to reflect any stock dividend, stock split, merger, reorganization or other event generally affecting the number of Company’s outstanding shares. At September 30, 2012, there were 114,500 shares available for option grants under the Plan. On March 1, 2012 RomAsia Bank granted 46,500 options. The key valuation assumptions and fair value of stock options granted in March 2012 were:

                Expected life
 
6.5 years
                Risk-free rate
 
1.33%
                Volatility
 
28.30%
                Fair value
 
$2.76

The following is a summary of the status of the RomAsia’s stock option activity and related information for the year ended December 31, 2011 and for the nine months ended September 30, 2012:
   
 
 
Number of
Stock Options
   
 
Weighted
Avg.
Exercise Price
 
Weighted Avg.
Remaining
Contractual
Life
 
 
Aggregate
Intrinsic
Value
 
                     
Balance at December 31, 2010
    75,500     $ 8.47          
                Forfeited
    (9,500 )     8.47          
Balance at December 31, 2011
    66,000       8.47          
                Forfeited
    (2,000 )     8.47          
                Granted
    46,500       8.81          
Balance at September 30, 2012
    110,500     $ 8.61  
8.17 years
  $ 0.00  
                           
Exercisable at September 30, 2012
    25,600                    
 
 
12

 
NOTE E – STOCK BASED COMPENSATION (Continued)

Stock option expense, related to the RomAsia plan included with compensation expense was $16,000 and $43,000, respectively, for the three and nine months ended September 30, 2012 with respective tax benefits of $7,000 and $19,000; and $11,000 and $33,000, respectively, for the three months and nine months ended September 30, 2011, with respective tax benefits of $5,000 and $14,000.  At September 30, 2012, approximately $191,000 of unrecognized cost, related to outstanding stock options, will be recognized over a period of approximately 3.17 years.

Employee Stock Ownership Plan

Roma Bank has an Employee Stock Ownership Plan (“ESOP”) for the benefit of employees who meet the eligibility requirements defined in the plan.  The ESOP trust purchased 811,750 shares of common stock as part of the stock offering using proceeds from a loan from the Company.  The total cost of the shares purchased by the ESOP trust was $8.1 million, reflecting a cost of $10 per share.  Roma Bank makes cash contributions to the ESOP on a quarterly basis sufficient to enable the ESOP to make the required loan payments to the Company.  The loan bears an interest rate of 8.25% with principal and interest payable in equal quarterly installments over a fifteen year period.  The loan is secured by the shares of the stock purchased.

Shares purchased with the loan proceeds were initially pledged as collateral for the term loan and are held in a suspense account for future allocation among participants.  Contributions to the ESOP and shares released from the suspense account will be allocated among the participants on the basis of compensation, as described by the Plan, in the year of allocation.  As shares are committed to be released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings per share computations.  Roma Bank made its first loan payment in October 2006.  As of September 30, 2012, there were 473,525 unearned shares. The Company’s ESOP compensation expense was $125 thousand and $381 thousand, respectively, for the three and nine months ended September 30, 2012; and $124 thousand and $408 thousand, respectively, for the three and nine months ended September 30, 2011.

NOTE F – STOCK WARRANTS

RomAsia Bank issued warrants to purchase 150,500 shares of RomAsia Common Stock (the “warrants”), bearing an exercise price of $10.00 per share, to the Founding Stockholders who subscribed initially for 150,500 shares of RomAsia Common Stock and provided $1,505,000 to pay  RomAsia’s organizational expenses. The warrants were issued on June 23, 2008.

The warrants will become exercisable in three equal installments on the first, second and third anniversaries after their respective dates of issuance. Warrants will be convertible into one share of RomAsia Common Stock and will be transferable only in compliance with the Securities Act of 1933, as amended, and applicable state securities laws.  RomAsia may redeem the Warrants at a price of $1.00 per Warrant at any time after January 1, 2012 upon 60 days prior written notice to the holders thereof.

The Warrants provide that, in the event that RomAsia’s capital falls below certain minimum requirements, the FDIC or the OCC may require RomAsia to notify the holders of the Warrants that such holders must exercise the Warrants within 30 days of such notice, or such longer period as the FDIC or OCC may prescribe, or forfeit all rights to purchase shares of RomAsia Common Stock under the Warrants after the expiration of such period.

The Warrants expire ten years after being issued. In the event a holder fails to exercise the Warrants prior to their expiration, the Warrants will expire and the holder thereof will have no further rights with respect to the Warrants.

The Warrant expense for minority shareholders, (8.88% ownership), for the three and nine months ended September 30, 2012 was $0 and $0, respectively, with respective tax benefits of $0 and $0; and for the three and nine months ended September 30, 2011 was $0 and $90,000, respectively, with respective tax benefits of $0 and $39,000. The warrant expense for the majority shareholder, Roma Financial Corporation, was eliminated in consolidation. The warrants were 100% vested at September 30, 2012.

NOTE G - REAL ESTATE OWNED VIA EQUITY INVESTMENTS

In 2008, Roma Bank, together with two individuals, formed 84 Hopewell, LLC. The LLC was formed to build a commercial office building which includes Roma Bank’s Hopewell branch, corporate offices for the other 50% owners’ construction company and tenant space. Roma Bank made a cash investment of approximately $370,000 in the LLC and provided a loan to the LLC in the amount of $3.6 million. Roma Bank and the construction company both have signed lease commitments to the LLC. With the adoption of guidance in regards to variable interest entities now codified in FASB ASC Topic 810, Consolidation, the Company is required to perform an analysis to determine whether such an investment meets the criteria for consolidation into the Company’s financial statements.  As of September 30, 2012 and December 31, 2011, this variable interest entity met the requirements of ASC Topic 810 for consolidation based on Roma Bank

 
13

 

NOTE G - REAL ESTATE OWNED VIA EQUITY INVESTMENTS (Continued)

being the primary financial beneficiary. This was determined based on the amount invested by the Bank compared to the other partners to the LLC and the lack of personal guarantees. As of September 30, 2012, the LLC had $3.8 million in fixed assets and a loan from Roma Bank for $3.3 million, which was eliminated in consolidation. The LLC had accrued interest payable to the Bank of $23 thousand at September 30, 2012 and during the nine months then ended the Bank paid $76 thousand in rent to the LLC.  Both of these amounts were eliminated in consolidation. Roma Bank’s 50% share of the LLC’s net income for the three and nine months ended September 30, 2012 was $5 thousand and $44 thousand, respectively.

NOTE H – INVESTMENT AND MORTGAGE-BACKED SECURITIES 

The following summarizes the amortized cost and estimated fair value of securities available for sale at September 30, 2012 and December 31, 2011 with gross unrealized gains and losses therein:

 
    September 30, 2012  
     Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair Value   
    (In Thousands)  
Available for sale:
                       
     Mortgage-backed securities-U.S. Government
Sponsored Enterprises (GSEs)
  $ 13,028     $ 403     $ 138     $ 13,293  
     Obligations of state and political  subdivisions
    3,539       348       -       3,887  
     U.S. Government (including agencies)
    10,297       425       -       10,722  
     Corporate bond
    1,000       1       19       982  
     Equity securities
    50       -       1       49  
     Mutual funds
    3,106       -       62       3,044  
                                 
    $ 31,020     $ 1,177     $ 220     $ 31,977  


     December 31, 2011  
     Amortized
Cost
   
 Gross
Unrealized
Gains
   
 Gross
Unrealized
Losses
     Fair Value  
     (In Thousands)  
Available for sale:
                       
     Mortgage-backed securities-U.S. Government
Sponsored Enterprises (GSEs)
  $ 22,896     $ 604     $ 132     $ 23,368  
     Obligations of state and political subdivisions
    5,364       242       -       5,606  
     U.S. Government (including agencies)
    9,328       311       -       9,639  
     Corporate bond
    1,000       -       106       894  
     Equity securities
    50       -       1       49  
     Mutual funds
    3,012       -       77       2,935  
                                 
    $ 41,650     $ 1,157     $ 316     $ 42,491  
 
 
 
14

 
 
NOTE H – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)

 
The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related securities available for sale at September 30, 2012 and December 31, 2011 are as follows:

    Less than 12 Months     More than 12 Months      Total  
    Fair
Value
    Unrealized
Losses 
    Fair
Value 
    Unrealized
Losses 
    Fair
Value 
    Unrealized
Losses 
 
    (In Thousands)  
September 30, 2012:
                                   
     Mortgage-backed securities-GSEs
  $ 6     $ 1     $ 2,977     $ 137     $ 2,983     $ 138  
     Equity securities
    49       1       -       -       49       1  
     Corporate bond
    481       19       -       -       481       19  
     Mutual funds
    -       -       3,044       62       3,044       62  
                                                 
    $ 536     $ 21     $ 6,021     $ 199     $ 6,557     $ 220  
 
December 31, 2011:
                                   
     Mortgage-backed securities-GSEs
  $ 798     $ 4     $ 3,736     $ 128     $ 4,534     $ 132  
      Equity securities
    49       1       -       -       49       1  
      Corporate bond
    480       20       414       86       894       106  
      Mutual funds
    -       -       2,935       77       2,935       77  
                                                 
    $ 1,327     $ 25     $ 7,085     $ 291     $ 8,412     $ 316  

Management evaluates securities for other-than-temporary-impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

In determining OTTI under the ASC Topic 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost; (2) the financial condition and near term prospects of the issuer; (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  The assessment of whether an other-than-temporary-impairment decline exists involves a high degree of subjectivity and judgment and is based on information available to management at a point in time.  An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.

When OTTI for debt securities, occurs under the model, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date.  If any entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors.  The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings.  The amount of the total OTTI related to other factors shall be recognized in other comprehensive income, net of applicable tax benefit.  The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.
 
 
15

 

NOTE H – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)

As of September 30, 2012, the Company’s available for sale portfolio in an unrealized loss position consisted of 22 securities.  There was one mutual fund, and 21 mortgage-backed securities in an unrealized loss position for more than twelve months at September 30, 2012.  As of December 31, 2011, the Company’s available for sale portfolio in an unrealized loss position consisted of 26 securities.  There was one mutual fund, two corporate bonds, and 23 mortgage backed securities in an unrealized loss position for more than twelve months at December 31, 2011.

The available for sale mutual funds are CRA investments that had an unrealized loss of approximately $62 thousand and $77 thousand at September 30, 2012 and December 31, 2011, respectively.  They have been in a loss position for the last two years with the greatest unrealized loss being approximately $109 thousand.  Management does not believe the mutual fund securities available for sale are other-than-temporarily impaired due to reasons of credit quality.  Unrealized losses in the mortgage-backed securities and corporate bond categories are due to the current interest rate environment and not due to credit concerns.  The Company does not intend to sell these securities and it is not more likely than not that we will be required to sell these securities.  As of September 30, 2012, management believes the impairments are temporary and no impairment loss has been realized in the Company’s consolidated income statement for the year ended September 30, 2012.

Proceeds from the sale of securities available for sale amounted to $5.1 million and $8.8 million for the three and nine months ended September 30, 2012, with gross realized gains of $407 thousand and $420 thousand, and gross realized losses of $0 and $0, respectively.  Proceeds from the sale of securities available for sale amounted to $1.1 million and $3.0 million for the three and nine months ended September 30, 2011, with gross realized gains of $40 thousand and $80 thousand, and gross realized losses of $2 thousand and $2 thousand, respectively.

The amortized cost and estimated fair value of securities available for sale at September 30, 2012 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:
   
Amortized Cost
   
Fair Value
 
   
(in Thousands)
 
             
U.S. Government, Obligations of Political Subdivisions and Corporate bond:
           
  After one to five years
  $ 3,610     $ 3,709  
  After five to ten years
    7,126       7,590  
  After ten years
    4,100       4,292  
     Total
    14,836       15,591  
Mortgage-backed securities
    13,028       13,293  
Equity securities
    50       49  
Mutual funds
    3,106       3,044  
     Total
  $ 31,020     $ 31,977  


 
16

 

NOTE H – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)


The following summarizes the amortized cost and estimated fair value of securities held to maturity at September 30, 2012 and December 31, 2011 with gross unrealized gains and losses therein:
 

    
September 30, 2012
 
   
Amortized Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
 
Fair Value
 
   
(In Thousands)
 
Held to maturity:
                       
     U.S. Government (including agencies)
  $ 150,191     $ 414     $ 2     $ 150,603  
     Obligations of state and political subdivisions
    16,184       1,365       -       17,549  
      Corporate and other
    1,591       5       2       1,594  
                                 
    $ 167,966     $ 1,784     $ 4     $ 169,746  
 
 
 
   
December 31, 2011
 
   
Amortized Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
 
Fair Value
 
   
(In Thousands)
 
Held to maturity:
                       
     U.S. Government (including agencies)
  $ 220,728     $ 843     $ 12     $ 221,559  
     Obligations of state and political subdivisions
    18,684       1,073       -       19,757  
     Corporate and other
    1,773       -       67       1,706  
                                 
    $ 241,185     $ 1,916     $ 79     $ 243,022  

 
17

 
NOTE H – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)
 
The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related securities held to maturity are as follows:
 

    
Less than 12 Months
   
More than 12 Months
   
Total
 
   
Fair
Value
   
Unrealized
Losses
   
Fair
Value
   
Unrealized
Losses
   
Fair
Value
   
Unrealized
Losses
 
   
(In Thousands)
 
September 30, 2012
                                   
     U.S. Government (including
          agencies)
  $ 998     $ 2     $ -     $ -     $ 998     $ 2  
     Obligations of state and
          Political subdivisions
    -       -       -       -       -       -  
     Corporate and other
    498       2       -       -       498       2  
    $ 1,496     $ 4     $ -     $ -     $ 1,496     $ 4  
                                                 
December 31, 2011
                                               
     U.S. Government (including agencies)
  $ 18,983     $ 12     $ -     $ -     $ 18,983     $ 12  
     Corporate and other
    1,706       67       -       -       1,706       67  
    $ 20,689     $ 79     $ -     $ -     $ 20,689     $ 79  
 
At September 30, 2012, the Company’s held to maturity debt securities portfolio consisted of approximately 92 securities, of which two were in an unrealized loss position for less than twelve months and none were in a loss position for more than twelve months. No OTTI charges were recorded for the nine months ended September 30, 2012. The Company does not intend to sell these securities and it is not more likely than not that we will be required to sell these securities. Unrealized losses primarily relate to interest rate fluctuations and not credit concerns.

The amortized cost and estimated fair value of securities held to maturity at September 30, 2012 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:
   
Amortized Cost
     Fair Value  
 
   
(In Thousands)
           
One year or less
  $ 60     $ 60  
After one to five years
    55,159       55,451  
After five to ten years
    103,024       103,865  
After ten  years
    9,723       10,370  
    Total
  $ 167,966     $ 169,746  
 
Approximately $111.0 million of securities held to maturity are pledged as collateral for Federal Home Loan Bank of New York (“FHLBNY”) advances, borrowings, and deposits at September 30, 2012.


 
18

 

NOTE H – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)


The following tables set forth the composition of our mortgage- backed securities portfolio as of September 30, 2012 and December 31, 2011:

 
   
September 30, 2012
 
    Amortized
Cost
   
Gross
Unrealized
Gains
 
   
Gross
Unrealized
Losses
    Fair Value  
    (In Thousands)  
                                 
Government National Mortgage Association
  $ 6,745     $ 269     $ 170     $ 6,844  
Federal Home Loan Mortgage Corporation
    139,085       7,519       676       145,928  
Federal National Mortgage Association
    228,857       17,975       4       246,828  
Collateralized mortgage obligations-GSEs
    3,957       167       -       4,124  
                                 
    $ 378,644     $ 25,930     $ 850     $ 403,724  

 
 
    
December 31, 2011
 
    Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
    Fair Value  
    (In Thousands)  
                                 
Government National Mortgage Association
  $ 7,906     $ 229     $ 111     $ 8,024  
Federal Home Loan Mortgage Corporation
    181,779       6,851       580       188,050  
Federal National Mortgage Association
    242,568       13,412       5       255,975  
Collateralized mortgage obligations-GSEs
    6,270       236       -       6,506  
                                 
    $ 438,523     $ 20,728     $ 696     $ 458,555  

 
19

 

NOTE H – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)


The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related mortgage-backed securities held to maturity are as follows:
 

 
   
Less than 12 Months
   
More than 12 Months
   
Total
 
   
Fair
Value
   
Unrealized
Losses
   
Fair
Value
   
Unrealized
Losses
   
Fair
Value
   
Unrealized
Losses
 
   
(In Thousands)
 
September 30, 2012
                                   
    Government National Mortgage Association
  $ -     $ -     $ 1,081     $ 170     $ 1,081     $ 170  
     Federal Home Loan
   Mortgage  Corporation
    13,715       675       92       1       13,807       676  
     Federal National
   Mortgage Association
    1,690       3       149       1       1,839       4  
    $ 15,405     $ 678     $ 1,322     $ 172     $ 16,727     $ 850  
                      &