10-Q 1 nfbk-20130331x10q.htm 10-Q 093101f0cba74fc

 

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, 2013

or

[   ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For transition period from               to 

 

 

 

Commission File Number

 

1-35791

 

 

 

 

 

NORTHFIELD BANCORP, INC.

(Exact name of registrant as specified in its charter) 

 

 

 

 

 

 

 

 

 

Delaware

 

 

 

80-0882592

(State or other jurisdiction of incorporation)

 

 

 

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

 

 

 

 

 

581 Main Street, Woodbridge, New Jersey

 

07095

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (732) 499-7200

 

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

 

 

 

 

 

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 o.

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

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):

 

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  o 

Accelerated filer  x

         Non-accelerated filer  o (Do not check if smaller reporting company)

Smaller reporting company  o

 

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

58,205,172 shares of Common Stock, par value $0.01 per share, were issued and outstanding as of May 3, 2013.

 

 

 

 

 


 

NORTHFIELD BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

 

 

 

2


 

PART I

ITEM1            FINANCIAL STATEMENTS

NORTHFIELD BANCORP, INC.

CONSOLIDATED BALANCE SHEETS
March 31, 2013,  and December 31, 2012

(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

December 31, 2012

 

(Unaudited)

 

 

ASSETS:

 

 

 

Cash and due from banks

$           22,631

 

$           25,354

Interest-bearing deposits in other financial institutions

43,288 

 

103,407 

Total cash and cash equivalents

65,919 

 

128,761 

Trading securities

5,161 

 

4,677 

Securities available-for-sale, at estimated fair value

 

 

 

(encumbered $257,544 in 2013 and $254,190 in 2012)

1,336,772 

 

1,275,631 

Securities held-to-maturity, at amortized cost (estimated fair value of $2,309 in 2012)

 

 

 

(encumbered $0 in 2012)

 -

 

2,220 

Loans held-for-sale

 -

 

5,447 

Purchased credit-impaired (PCI) loans held-for-investment

71,406 

 

75,349 

Loans acquired

97,038 

 

101,433 

Originated loans held-for-investment, net

1,085,526 

 

1,066,200 

Loans held-for-investment, net

1,253,970 

 

1,242,982 

Allowance for loan losses

(26,316)

 

(26,424)

Net loans held-for-investment

1,227,654 

 

1,216,558 

Accrued interest receivable

8,308 

 

8,154 

Bank owned life insurance

93,614 

 

93,042 

Federal Home Loan Bank of New York stock, at cost

11,679 

 

12,550 

Premises and equipment, net

30,386 

 

29,785 

Goodwill

16,159 

 

16,159 

Other real estate owned

870 

 

870 

Other assets

47,108 

 

19,347 

Total assets

$      2,843,630

 

$      2,813,201

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

 

 

LIABILITIES:

 

 

 

Deposits

$      1,624,554

 

$      1,956,860

Securities sold under agreements to repurchase

226,000 

 

226,000 

Other borrowings

173,504 

 

193,122 

Advance payments by borrowers for taxes and insurance

5,944 

 

3,488 

Accrued expenses and other liabilities

69,600 

 

18,858 

Total liabilities

2,099,602 

 

2,398,328 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued or outstanding

 -

 

 -

Common stock, $0.01 par value: 150,000,000 shares authorized, 58,202,819 and 46,904,286

 

 

 

shares issued at March 31, 2013, and December 31, 2012, respectively, 58,202,819

 

 

 

and 41,486,819 outstanding at March 31, 2013 and December 31, 2012, respectively

582 

 

469 

Additional paid-in-capital

505,658 

 

230,253 

Unallocated common stock held by employee stock ownership plan

(27,957)

 

(13,965)

Retained earnings

251,404 

 

249,892 

Accumulated other comprehensive income

14,341 

 

18,231 

Treasury stock at cost; 0 and 5,417,467 shares at March 31, 2013 and December 31, 2012, respectively

 -

 

(70,007)

Total stockholders’ equity

744,028 

 

414,873 

Total liabilities and stockholders’ equity

$      2,843,630

 

$      2,813,201

 

See accompanying notes to consolidated financial statements.

 

 

3


 

NORTHFIELD BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
Three months ended March 31, 2013, and 2012

(Unaudited)

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2013

 

2012

Interest income:

 

 

 

Loans

$              16,487 

 

$              15,150 

Mortgage-backed securities

6,392 

 

6,776 

Other securities

441 

 

653 

Federal Home Loan Bank of New York dividends

156 

 

142 

Deposits in other financial institutions

40 

 

18 

Total interest income

23,516 

 

22,739 

Interest expense:

 

 

 

Deposits

2,138 

 

2,524 

Borrowings

2,613 

 

3,290 

Total interest expense

4,751 

 

5,814 

Net interest income

18,765 

 

16,925 

Provision for loan losses

277 

 

615 

Net interest income after provision for loan losses

18,488 

 

16,310 

Non-interest income:

 

 

 

Fees and service charges for customer services

711 

 

802 

Income on bank owned life insurance

765 

 

719 

Gain on securities transactions, net

1,813 

 

2,137 

Other-than-temporary impairment losses on securities

(72)

 

 -

Portion recognized in other comprehensive income (before taxes)

 -

 

 -

Net impairment losses on securities recognized in earnings

(72)

 

 -

Other

39 

 

317 

Total non-interest income

3,256 

 

3,975 

Non-interest expense:

 

 

 

Compensation and employee benefits

6,912 

 

6,287 

Occupancy

2,402 

 

1,965 

Furniture and equipment

429 

 

333 

Data processing

1,596 

 

1,083 

Professional fees

746 

 

858 

FDIC insurance

387 

 

426 

Other

1,894 

 

1,690 

Total non-interest expense

14,366 

 

12,642 

Income before income tax expense

7,378 

 

7,643 

Income tax expense

2,586 

 

2,695 

Net income

$                4,792 

 

$                4,948 

Net income per common share - basic and diluted

$                  0.09 

 

$                  0.09 

Other comprehensive (loss) income:

 

 

 

Unrealized (losses) gains on securities:

 

 

 

Net unrealized holding (losses) gains on securities

$              (4,914)

 

$                1,792 

Less: reclassification adjustment for gains included in net income (included in gain on securities transactions, net)

(1,570)

 

(1,741)

Net unrealized (losses) gains

(6,484)

 

51 

Reclassification adjustment for OTTI impairment included in net income (included OTTI losses on securities)

72 

 

 -

Other comprehensive (loss) income , before tax

(6,412)

 

51 

Income tax (benefit) expense related to net unrealized holding (losses) gains on securities

(1,923)

 

718 

Income tax expense related to reclassification adjustment for gains included in net income

(628)

 

(696)

Income tax benefit related to reclassification adjustment for OTTI impairment included in net income

29 

 

 -

Other comprehensive (loss) income, net of tax

(3,890)

 

30 

Comprehensive income

$                   902 

 

$                4,978 

 

See accompanying notes to consolidated financial statements.

 

 

4


 

NORTHFIELD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three months ended March 31, 2013, and 2012

(Unaudited)

(In thousands, except share data) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

Other

 

 

 

 

 

Common Stock

 

Additional

 

Held by the

 

 

 

Comprehensive

 

 

 

Total

 

 

 

Par

 

Paid-in

 

Employee Stock

 

Retained

 

Income (Loss),

 

Treasury

 

Stockholders'

 

Shares

 

Value

 

Capital

 

Ownership Plan

 

Earnings

 

Net of tax

 

Stock

 

Equity

 

 

Balance at December 31, 2011

45,632,611 

 

$               456 

 

$        209,302 

 

$                       (14,570)

 

$        235,776 

 

$                       17,470 

 

$       (65,784)

 

$                  382,650 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

4,948 

 

 

 

 

 

4,948 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

30 

 

 

 

30 

ESOP shares allocated or committed to be released

 

 

 

 

63 

 

146 

 

 

 

 

 

 

 

209 

Stock compensation expense

 

 

 

 

756 

 

 

 

 

 

 

 

 

 

756 

Cash dividends declared ($0.09 per common share)

 

 

 

 

 

 

 

 

(1,718)

 

 

 

 

 

(1,718)

Treasury stock (average cost of $9.84 per share)

 

 

 

 

 

 

 

 

 

 

 

 

(1,716)

 

(1,716)

Balance at March 31, 2012

45,632,611 

 

$               456 

 

$        210,121 

 

$                       (14,424)

 

$        239,006 

 

$                       17,500 

 

$       (67,500)

 

$                  385,159 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2012

46,904,286 

 

$               469 

 

$        230,253 

 

$                       (13,965)

 

$        249,892 

 

$                       18,231 

 

$       (70,007)

 

$                  414,873 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

4,792 

 

 

 

 

 

4,792 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

(3,890)

 

 

 

(3,890)

ESOP shares allocated or committed to be released

 

 

 

 

96 

 

232 

 

 

 

 

 

 

 

328 

Stock compensation expense

 

 

 

 

786 

 

 

 

 

 

 

 

 

 

786 

Additional tax benefit on equity awards

 

 

 

 

296 

 

 

 

 

 

 

 

 

 

296 

Corporate reorganization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger of Northfield Bancorp, MHC

(24,641,684)

 

(246)

 

370 

 

 

 

 

 

 

 

 

 

124 

Exchange of common stock

(16,845,135)

 

(169)

 

169 

 

 

 

 

 

 

 

 

 

Treasury stock retired

(5,417,467)

 

(54)

 

(69,953)

 

 

 

 

 

 

 

70,007 

 

Proceeds of stock offering, net of costs

58,199,819 

 

582 

 

329,396 

 

 

 

 

 

 

 

 

 

329,978 

Purchase of common stock by ESOP

 

 

 

 

14,224 

 

(14,224)

 

 

 

 

 

 

 

Exercise of stock options

3,000 

 

 

 

21 

 

 

 

 

 

 

 

 

 

21 

Cash dividends declared ($0.06 per common share)

 

 

 

 

 

 

 

 

(3,280)

 

 

 

 

 

(3,280)

Balance at March 31, 2013

58,202,819 

 

$               582 

 

$        505,658 

 

$                       (27,957)

 

$        251,404 

 

$                       14,341 

 

$                   - 

 

$                  744,028 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

5


 

NORTHFIELD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 2013, and 2012

(Unaudited) (In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

2012

 

Cash flows from operating activities:

 

 

 

 

Net income

$      4,792

 

$      4,948

 

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

 

 

 

 

Provision for loan losses

277 

 

615 

 

ESOP and stock compensation expense

1,114 

 

965 

 

Depreciation

855 

 

632 

 

Amortization of premiums, and deferred loan costs, net of (accretion) of discounts, and deferred loan fees

889 

 

286 

 

Amortization intangible assets

112 

 

82 

 

Income on bank owned life insurance

(765)

 

(719)

 

Net gain on sale of loans held-for-sale

(13)

 

(117)

 

Proceeds from sale of loans held-for-sale

6,992 

 

7,324 

 

Origination of  loans held-for-sale

(1,532)

 

(3,911)

 

Gain on securities transactions, net

(1,813)

 

(2,137)

 

Net purchases of trading securities

(241)

 

(35)

 

(Increase) decrease in accrued interest receivable

(154)

 

801 

 

(Increase) decrease in other assets

(1,671)

 

3,623 

 

Increase in accrued expenses and other liabilities

4,189 

 

2,790 

 

Net cash provided by operating activities

13,031 

 

15,147 

 

Cash flows from investing activities:

 

 

 

 

Net (increase) decrease in loans receivable

(12,018)

 

30,667 

 

Redemptions of Federal Home Loan Bank of New York stock, net

871 

 

225 

 

Purchases of securities available-for-sale

(192,112)

 

(278,784)

 

Principal payments and maturities on securities available-for-sale

123,644 

 

115,669 

 

Principal payments and maturities on securities held-to-maturity

2,219 

 

294 

 

Proceeds from sale of securities available-for-sale

25,115 

 

98,744 

 

Death benefits received from bank owned life insurance

193 

 

 -

 

Proceeds from sale of other real estate owned

 -

 

991 

 

Purchases and improvements of premises and equipment

(1,456)

 

(2,822)

 

Net cash used in investing activities

(53,544)

 

(35,016)

 

Cash flows from financing activities:

 

 

 

 

Net (decrease) increase in deposits

(42,752)

 

6,966 

 

Dividends paid

(3,280)

 

(1,718)

 

Net proceeds from sale of common stock

54,648 

 

 -

 

Merger of Northfield Bancorp, MHC

124 

 

 -

 

Purchase of common stock for ESOP

(14,224)

 

 -

 

Exercise of stock options

21 

 

 -

 

Purchase of treasury stock

 -

 

(1,716)

 

Additional tax benefit on equity awards

296 

 

 -

 

Increase in advance payments by borrowers for taxes and insurance

2,456 

 

1,720 

 

Repayments under capital lease obligations

(68)

 

(59)

 

Proceeds from securities sold under agreements to repurchase and other borrowings

 -

 

64,244 

 

Repayments related to securities sold under agreements to repurchase and other borrowings

(19,550)

 

(69,000)

 

Net cash (used in) provided by  financing activities

(22,329)

 

437 

 

Net decrease in cash and cash equivalents

(62,842)

 

(19,432)

 

Cash and cash equivalents at beginning of period

128,761 

 

65,269 

 

Cash and cash equivalents at end of period

$    65,919

 

$    45,837

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

Cash paid during the period for:

 

 

 

 

Interest

$      4,780

 

$      5,989

 

Income taxes

4,096 

 

104 

 

Non-cash transactions:

 

 

 

 

Loans charged-off, net

385 

 

351 

 

Increase in due to broker from the purchases of securities available-for-sale

22,944 

 

19,762 

 

Increase in due from broker from the sale of securities available-for-sale

46,553 

 

 -

 

Deposits utilized to purchase common stock

289,554 

 

 -

 

 

See accompanying notes to consolidated financial statements.

 

 

6


 

 

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

Note 1 – Basis of Presentation

            The consolidated financial statements are comprised of the accounts of Northfield Bancorp, Inc. and its wholly owned subsidiaries, Northfield Investments, Inc. and Northfield Bank (the Bank) and the Bank’s wholly-owned significant subsidiaries, NSB Services Corp. and NSB Realty Trust. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

            In the opinion of management, all adjustments (consisting solely of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the unaudited periods presented have been included.  The results of operations and other data presented for the three months ended March 31, 2013, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2013.  Certain prior year amounts have been reclassified to conform to the current year presentation.

In preparing the unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”); management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and results of operations for the periods indicated.  Material estimates that are particularly susceptible to change are: the allowance for loan losses; the evaluation of goodwill and other intangible assets, impairment on investment securities, fair value measurements of assets and liabilities, and income taxes.  Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are deemed necessary. While management uses its best judgment, actual amounts or results could differ significantly from those estimates. The current economic environment has increased the degree of uncertainty inherent in these material estimates.

Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for the preparation of interim financial statements.  The consolidated financial statements presented should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2012, of Northfield Bancorp, Inc. as filed with the SEC.

On January 24, 2013, Northfield Bancorp, Inc., completed its conversion from the mutual holding company to the stock holding company form of organization. A total of 35,558,927 shares of common stock were sold in the subscription and community offerings at a price of $10.00 per share, including 1,422,357 shares of common stock purchased by the Northfield Bank Employee Stock Ownership Plan. As part of the conversion, each existing share of Northfield-Federal common stock held by public shareholders was converted into the right to receive 1.4029 shares of Northfield-Delaware common stock. The exchange ratio ensured that, after the conversion and offering, the public shareholders of Northfield-Federal maintained approximately the same ownership interest in Northfield-Delaware as they owned previously. 58,199,819 shares of Northfield-Delaware common stock were outstanding after the completion of the offering and the exchange. The Company incurred costs of approximately $11.5 million related to the conversion. 

 

Share amounts at December 31, 2012, have been restated to reflect the conversion at a rate of 1.4029, unless noted otherwise.

 

Note 2 – Securities

            The following is a comparative summary of mortgage-backed securities and other securities available-for- sale at March 31, 2013, and December 31, 2012 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

 

 

Gross

 

Gross

 

Estimated

 

Amortized

 

unrealized

 

unrealized

 

fair

 

cost

 

gains

 

losses

 

value

Mortgage-backed securities:

 

 

 

 

 

 

 

Pass-through certificates:

 

 

 

 

 

 

 

Government sponsored enterprises (GSE)

$          438,544

 

$         18,454

 

$            448

 

$          456,550

Real estate mortgage investment conduits (REMICs):

 

 

 

 

 

 

 

GSE

685,784 

 

6,331 

 

731 

 

691,384 

Non-GSE

6,678 

 

225 

 

30 

 

6,873 

 

1,131,006 

 

25,010 

 

1,209 

 

1,154,807 

Other securities:

 

 

 

 

 

 

 

GSE bonds

55,542 

 

 

 -

 

55,543 

Equity investments-mutual funds

14,410 

 

 -

 

 -

 

14,410 

Corporate bonds

111,444 

 

614 

 

46 

 

112,012 

 

181,396 

 

615 

 

46 

 

181,965 

 

 

 

 

 

 

 

 

Total securities available-for-sale

$       1,312,402

 

$         25,625

 

$         1,255

 

$       1,336,772

 

 

7


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

 

 

 

Gross

 

Gross

 

Estimated

 

Amortized

 

unrealized

 

unrealized

 

fair

 

cost

 

gains

 

losses

 

value

Mortgage-backed securities:

 

 

 

 

 

 

 

Pass-through certificates:

 

 

 

 

 

 

 

GSE

$          456,441

 

$         22,996

 

$              99

 

$          479,338

Real estate mortgage investment conduits (REMICs):

 

 

 

 

 

 

 

GSE

694,087 

 

7,092 

 

62 

 

701,117 

Non-GSE

7,543 

 

266 

 

33 

 

7,776 

 

1,158,071 

 

30,354 

 

194 

 

1,188,231 

Other securities:

 

 

 

 

 

 

 

Equity investments-mutual funds

12,998 

 

— 

 

— 

 

12,998 

Corporate bonds

73,708 

 

694 

 

— 

 

74,402 

 

86,706 

 

694 

 

— 

 

87,400 

 

 

 

 

 

 

 

 

Total securities available-for-sale

$       1,244,777

 

$         31,048

 

$            194

 

$       1,275,631

 

            The following is a summary of the expected maturity distribution of debt securities available-for-sale, other than mortgage-backed securities, at March 31, 2013 (in thousands):

 

 

 

 

 

 

 

 

 

Available-for-sale

Amortized cost

 

Estimated fair value

Due in one year or less

$           22,749

 

$           22,913

Due after one year through five years

144,237 

 

144,643 

 

$         166,986

 

$         167,555

 

Expected maturities on mortgage-backed securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties.

 

For the three months ended March 31, 2013, the Company had gross proceeds of $25.1 million on sales of securities available-for-sale with gross realized gains of approximately  $1.6 million and gross realized losses of $55,000For the three months ended March 31, 2012, the Company had gross proceeds of $98.7 million on sales of securities available-for-sale with gross realized gains of approximately $1.7 million and no gross realized losses.  The Company recognized $243,000 in gains on its trading securities portfolio during the three months ended March 31, 2013.  The Company recognized $396,000 in gains on its trading securities portfolio during the three months ended March 31, 2012.  The Company recognized $72,000 of other-than-temporary impairment charges during the three months ended March 31, 2013 and did not recognize any other-than-temporary impairment charges during the three months ended March 31, 2012

 

Activity related to the credit component recognized in earnings on debt securities for which a portion of other-than-temporary impairment was recognized in accumulated other comprehensive income for the three months ended March 31, 2013 and 2012, is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

Three months ended

 

March 31,

 

2013

 

2012

Balance, beginning of period

$                -

 

$            578

Additions to the credit component on debt securities in which other-than-temporary

 

 

 

impairment was not previously recognized

 -

 

 -

Cumulative pre-tax credit losses, end of period

$                -

 

$            578

 

 

8


 

 

Gross unrealized losses on mortgage-backed securities, equity investments, and corporate bonds available-for-sale, and the estimated fair value of the related securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2013, and December 31, 2012, were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

Less than 12 months

 

12 months or more

 

Total

 

Unrealized

 

Estimated

 

Unrealized

 

Estimated

 

Unrealized

 

Estimated

 

losses

 

fair value

 

losses

 

fair value

 

losses

 

fair value

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

Pass-through certificates:

 

 

 

 

 

 

 

 

 

 

 

GSE

$            448

 

$        73,576

 

$                 -

 

$               -

 

$            448

 

$        73,576

REMICs:

 

 

 

 

 

 

 

 

 

 

 

GSE

681 

 

79,488 

 

50 

 

35,186 

 

731 

 

114,674 

Non-GSE

 -

 

 -

 

30 

 

552 

 

30 

 

552 

Other securities:

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

46 

 

52,724 

 

 -

 

 -

 

46 

 

52,724 

Total

$         1,175

 

$      205,788

 

$              80

 

$     35,738

 

$         1,255

 

$      241,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

 

Less than 12 months

 

12 months or more

 

Total

 

Unrealized

 

Estimated

 

Unrealized

 

Estimated

 

Unrealized

 

Estimated

 

losses

 

fair value

 

losses

 

fair value

 

losses

 

fair value

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

Pass-through certificates:

 

 

 

 

 

 

 

 

 

 

 

GSE

$              99

 

$        14,156

 

$                 -

 

$               -

 

$              99

 

$        14,156

REMICs:

 

 

 

 

 

 

 

 

 

 

 

GSE

58 

 

100,310 

 

 

7,633 

 

62 

 

107,943 

Non-GSE

 -

 

 -

 

33 

 

604 

 

33 

 

604 

Total

$            157

 

$      114,466

 

$              37

 

$       8,237

 

$            194

 

$      122,703

 

The Company held six REMIC’s mortgage-backed securities issued or guaranteed by GSEs and one REMIC mortgage-backed security not issued or guaranteed by GSEs that were in a continuous unrealized loss position of greater than twelve months at March 31, 2013.  There were 62 pass-through mortgage-backed securities issued or guaranteed by GSEs,  seven REMIC mortgage-backed securities issued or guaranteed by GSEs and nine corporate bonds that were in an unrealized loss position of less than twelve months, and rated investment grade at March 31, 2013.  The declines in value relate to the general interest rate environment and are considered temporary.  The securities cannot be prepaid in a manner that would result in the Company not receiving substantially all of its amortized cost.  The Company neither has an intent to sell, nor is it more likely than not that the Company will be required to sell, the securities before the recovery of their amortized cost basis or, if necessary, maturity.

 

            The fair values of our investment securities could decline in the future if the underlying performance of the collateral for the collateralized mortgage obligations or other securities deteriorates and our credit enhancement levels do not provide sufficient protections to our contractual principal and interest. 

 

Note 3 – Loans

 

Net loans held-for-investment is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

2013

 

2012

Real estate loans:

 

Multifamily

$                   629,214 

 

$                   610,129 

Commercial mortgage

314,265 

 

315,450 

One-to-four family residential mortgage

66,816 

 

64,733 

Home equity and lines of credit

33,950 

 

33,573 

Construction and land

23,296 

 

23,243 

Total real estate loans

1,067,541 

 

1,047,128 

Commercial and industrial loans

14,718 

 

14,786 

Other loans

1,291 

 

1,830 

Total commercial and industrial and other loans

16,009 

 

16,616 

Deferred loan cost, net

1,976 

 

2,456 

Originated loans held-for-investment, net

1,085,526 

 

1,066,200 

PCI Loans

71,406 

 

75,349 

Loans acquired:

 

 

 

Multifamily

5,235 

 

5,763 

Commercial mortgage

16,133 

 

17,053 

One-to-four family residential mortgage

75,670 

 

78,617 

Total loans acquired

97,038 

 

101,433 

Loans held for investment, net

1,253,970 

 

1,242,982 

Allowance for loan losses

(26,316)

 

(26,424)

Net loans held-for-investment

$                1,227,654 

 

$                1,216,558 

 

 

9


 

 

Loans held-for-sale amounted to $0 and  $5.4 million at March 31, 2013 and December 31, 2012, respectively.    

PCI loans, primarily acquired as part of a Federal Deposit Insurance Corporation-assisted transaction, totaled $71.4 million at March 31, 2013 as compared to $75.3 million at December 31, 2012.   The Company accounts for PCI loans utilizing generally accepting accounting principles applicable to loans acquired with deteriorated credit quality.  PCI loans consist of approximately 37% commercial real estate and 49% commercial and industrial loans, with the remaining balance in residential and home equity loans.  The following details the accretable yield for the periods indicated: 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2013

 

For the Three Months Ended March 31, 2012

Balance at the beginning of period

$                       43,431

 

$                       42,493

Accretion into interest income

(1,523)

 

(1,620)

Balance at end of period

$                       41,908

 

$                       40,873

 

 

Activity in the allowance for loan losses is as follows (in thousands):

 

 

 

 

 

 

 

 

 

At or for the three months ended March 31,

 

2013

 

2012

 

 

 

 

Beginning balance

$            26,424

 

$            26,836

Provision for loan losses

277 

 

615 

Charge-offs, net

(385)

 

(351)

Ending balance

$            26,316

 

$            27,100

 

The following tables set forth activity in our allowance for loan losses, by loan type, for the three months ended March 31, 2013 and the year ended December 31, 2012.  The following tables also detail the amount of originated and acquired loans held-for-investment, net of deferred loan fees and costs, that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for loan losses that is allocated to each loan portfolio segment, as of March 31, 2013 and December 31, 2012 (in thousands). There was no related allowance for acquired loans as of March 31, 2013 and December 31, 2012.

 

 

 

10


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

One -to- Four Family

 

Construction and Land

 

Multifamily

 

Home Equity and Lines of Credit

 

Commercial and Industrial

 

Other

 

Unallocated

 

Originated Loans Total

 

Purchased Credit-Impaired

 

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance

$              13,343 

 

$                  623 

 

$                    994 

 

$              7,086 

 

$                        623 

 

$                  2,297 

 

$          21 

 

$               1,201 

 

$              26,188 

 

$                      236 

 

$           26,424 

Charge-offs

(278)

 

 -

 

 -

 

 -

 

(96)

 

 -

 

(26)

 

 -

 

(400)

 

 -

 

(400)

Recoveries

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

15 

 

 -

 

15 

Provisions

(474)

 

45 

 

16 

 

64 

 

308 

 

199 

 

16 

 

103 

 

277 

 

 -

 

277 

Ending Balance

$              12,598 

 

$                  668 

 

$                 1,010 

 

$              7,155 

 

$                        835 

 

$                  2,496 

 

$          14 

 

$               1,304 

 

$              26,080 

 

$                      236 

 

$           26,316 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance: individually evaluated for impairment

$                1,476 

 

$                    21 

 

$                         - 

 

$                 307 

 

$                        234 

 

$                  1,734 

 

$            - 

 

$                      - 

 

$                3,772 

 

$                          - 

 

$             3,772 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance: collectively evaluated for impairment

$              11,122 

 

$                  647 

 

$                 1,010 

 

$              6,848 

 

$                        601 

 

$                     762 

 

$          14 

 

$               1,304 

 

$              22,308 

 

$                      236 

 

$           22,544 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance

$            314,459 

 

$            67,337 

 

$               23,312 

 

$          630,475 

 

$                   33,909 

 

$                14,743 

 

$     1,291 

 

$                      - 

 

$         1,085,526 

 

$                          - 

 

$     1,085,526 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance: individually evaluated for impairment

$              38,065 

 

$               2,519 

 

$                 2,085 

 

$              2,132 

 

$                     1,843 

 

$                  1,660 

 

$            - 

 

$                      - 

 

$              48,304 

 

$                          - 

 

$           48,304 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance: collectively evaluated for impairment

$            276,394 

 

$            64,818 

 

$               21,227 

 

$          628,343 

 

$                   32,066 

 

$                13,083 

 

$     1,291 

 

$                      - 

 

$         1,037,222 

 

$                          - 

 

$     1,037,222 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

One -to- Four Family

 

Construction and Land

 

Multifamily

 

Home Equity and Lines of Credit

 

Commercial and Industrial

 

Other

 

Unallocated

 

Total

 

Purchased Credit-Impaired

 

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance

$              14,120 

 

$                  967 

 

$                  1,189 

 

$              6,772 

 

$                        418 

 

$                  2,035 

 

$        226 

 

$               1,109 

 

$              26,836 

 

$                          - 

 

$           26,836 

Charge-offs