10-Q 1 c173-20160331x10q.htm 10-Q osbc-Current Folio_10Q_2014Taxonomy

I  

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

 

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

 

THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2016

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 0 -10537

 

Picture 2

(Exact name of Registrant as specified in its charter)

 

 

 

 

Delaware

 

36-3143493

(State or other jurisdiction

 

(I.R.S. Employer Identification Number)

of incorporation or organization)

 

 

 

37 South River Street, Aurora, Illinois     60507

(Address of principal executive offices)  (Zip Code)

 

(630) 892-0202

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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         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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  No 

 

Indicate by check mark whether 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 Act).  (check one):

 

Large accelerated filer  Accelerated filer  Non-accelerated filer  (do not check if a smaller reporting company)  Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).

Yes         No 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: As of May 4, 2016, the Registrant had outstanding 29,554,716 shares of common stock, $1.00 par value per share.

 

 

 

 

 

 

 


 

2

 


 

 

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2016

    

2015

Assets

 

 

 

 

 

 

Cash and due from banks

 

$

27,168

 

$

26,975

Interest bearing deposits with financial institutions

 

 

9,481

 

 

13,363

Cash and cash equivalents

 

 

36,649

 

 

40,338

Securities available-for-sale, at fair value

 

 

500,912

 

 

456,066

Securities held-to-maturity, at amortized cost

 

 

245,952

 

 

247,746

Federal Home Loan Bank and Federal Reserve Bank stock

 

 

8,518

 

 

8,518

Loans held-for-sale

 

 

6,184

 

 

2,849

Loans

 

 

1,138,838

 

 

1,133,715

Less: allowance for loan losses

 

 

16,246

 

 

16,223

Net loans

 

 

1,122,592

 

 

1,117,492

Premises and equipment, net

 

 

39,151

 

 

39,612

Other real estate owned

 

 

17,745

 

 

19,141

Mortgage servicing rights, net

 

 

5,052

 

 

5,847

Bank-owned life insurance (BOLI)

 

 

59,334

 

 

59,049

Deferred tax assets, net

 

 

64,505

 

 

64,552

Other assets

 

 

14,701

 

 

15,818

Total assets

 

$

2,121,295

 

$

2,077,028

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest bearing demand

 

$

461,764

 

$

442,639

Interest bearing:

 

 

 

 

 

 

Savings, NOW, and money market

 

 

929,742

 

 

908,598

Time

 

 

405,188

 

 

407,849

Total deposits

 

 

1,796,694

 

 

1,759,086

Securities sold under repurchase agreements

 

 

33,852

 

 

34,070

Other short-term borrowings

 

 

20,000

 

 

15,000

Junior subordinated debentures

 

 

57,555

 

 

57,543

Subordinated debt

 

 

45,000

 

 

45,000

Notes payable and other borrowings

 

 

500

 

 

500

Other liabilities

 

 

10,945

 

 

9,900

Total liabilities

 

 

1,964,546

 

 

1,921,099

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

Common stock

 

 

34,427

 

 

34,427

Additional paid-in capital

 

 

116,087

 

 

115,918

Retained earnings

 

 

117,531

 

 

114,209

Accumulated other comprehensive loss

 

 

(15,330)

 

 

(12,659)

Treasury stock

 

 

(95,966)

 

 

(95,966)

Total stockholders’ equity

 

 

156,749

 

 

155,929

Total liabilities and stockholders’ equity

 

$

2,121,295

 

$

2,077,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2016

 

December 31, 2015

 

 

Preferred

 

Common

 

Preferred

 

Common

 

    

Stock

    

Stock

    

Stock

    

Stock

Par value

 

$

1

 

$

1

 

$

1

 

$

1

Liquidation value

 

 

 -

 

 

N/A

 

 

 -

 

 

N/A

Shares authorized

 

 

300,000

 

 

60,000,000

 

 

300,000

 

 

60,000,000

Shares issued

 

 

 -

 

 

34,427,234

 

 

 -

 

 

34,427,234

Shares outstanding

 

 

 -

 

 

29,483,429

 

 

 -

 

 

29,483,429

Treasury shares

 

 

-

 

 

4,943,805

 

 

-

 

 

4,943,805

 

See accompanying notes to consolidated financial statements.

3

 


 

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 31, 

 

 

    

2016

    

2015

    

Interest and dividend income

 

 

 

 

 

 

 

Loans, including fees

 

$

13,058

 

$

13,218

 

Loans held-for-sale

 

 

28

 

 

43

 

Securities:

 

 

 

 

 

 

 

Taxable

 

 

4,211

 

 

3,375

 

Tax exempt

 

 

179

 

 

141

 

Dividends from Federal Reserve Bank and Federal Home Loan Bank stock

 

 

84

 

 

77

 

Interest bearing deposits with financial institutions

 

 

19

 

 

12

 

Total interest and dividend income

 

 

17,579

 

 

16,866

 

Interest expense

 

 

 

 

 

 

 

Savings, NOW, and money market deposits

 

 

191

 

 

179

 

Time deposits

 

 

822

 

 

807

 

Other short-term borrowings

 

 

20

 

 

9

 

Junior subordinated debentures

 

 

1,084

 

 

1,072

 

Subordinated debt

 

 

239

 

 

197

 

Notes payable and other borrowings

 

 

2

 

 

4

 

Total interest expense

 

 

2,358

 

 

2,268

 

Net interest and dividend income

 

 

15,221

 

 

14,598

 

Loan loss reserve

 

 

 -

 

 

 -

 

Net interest and dividend income after provision for loan losses

 

 

15,221

 

 

14,598

 

Noninterest income

 

 

 

 

 

 

 

Trust income

 

 

1,369

 

 

1,486

 

Service charges on deposits

 

 

1,559

 

 

1,541

 

Secondary mortgage fees

 

 

193

 

 

244

 

Mortgage servicing loss, net of changes in fair value

 

 

(620)

 

 

(208)

 

Net gain on sales of mortgage loans

 

 

1,212

 

 

1,623

 

Securities loss, net

 

 

(61)

 

 

(109)

 

Increase in cash surrender value of bank-owned life insurance

 

 

285

 

 

480

 

Debit card interchange income

 

 

947

 

 

959

 

Other income

 

 

1,391

 

 

1,957

 

Total noninterest income

 

 

6,275

 

 

7,973

 

Noninterest expense

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

9,026

 

 

9,255

 

Occupancy expense, net

 

 

1,229

 

 

1,271

 

Furniture and equipment expense

 

 

958

 

 

1,001

 

FDIC insurance

 

 

203

 

 

273

 

General bank insurance

 

 

298

 

 

357

 

Advertising expense

 

 

347

 

 

205

 

Debit card interchange expense

 

 

203

 

 

352

 

Legal fees

 

 

161

 

 

223

 

Other real estate expense, net

 

 

738

 

 

1,352

 

Other expense

 

 

3,101

 

 

2,864

 

Total noninterest expense

 

 

16,264

 

 

17,153

 

Income before income taxes

 

 

5,232

 

 

5,418

 

Provision for income taxes

 

 

1,910

 

 

1,919

 

Net income

 

$

3,322

 

$

3,499

 

Preferred stock dividends and accretion of discount

 

 

 -

 

 

824

 

Net income available to common stockholders

 

$

3,322

 

$

2,675

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.11

 

$

0.09

 

Diluted earnings per share

 

 

0.11

 

 

0.09

 

 

See accompanying notes to consolidated financial statements.

4

 


 

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands)

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

Three Months Ended

 

 

March 31, 

 

    

2016

    

2015

Net Income

 

$

3,322

 

$

3,499

 

 

 

 

 

 

 

Unrealized holding (losses) gains on available-for-sale securities arising during the period

 

 

(2,309)

 

 

921

Related tax benefit (expense)

 

 

925

 

 

(438)

Holding (losses) gains after tax on available-for-sale securities

 

 

(1,384)

 

 

483

 

 

 

 

 

 

 

Less: Reclassification adjustment for the net losses realized during the period

 

 

 

 

 

 

Net realized losses

 

 

(61)

 

 

(109)

Income tax benefit on net realized losses

 

 

25

 

 

45

Net realized losses after tax

 

 

(36)

 

 

(64)

Other comprehensive (loss) income on available-for-sale securities

 

 

(1,348)

 

 

547

 

 

 

 

 

 

 

Accretion of net unrealized holding gains on held-to-maturity securities transferred from available-for-sale securities

 

 

224

 

 

243

Related tax expense

 

 

(92)

 

 

(100)

Other comprehensive income on held-to-maturity securities

 

 

132

 

 

143

 

 

 

 

 

 

 

Changes in fair value of derivatives used for cashflow hedges

 

 

(2,427)

 

 

 -

Related tax benefit

 

 

972

 

 

 -

Other comprehensive loss on cashflow hedges

 

 

(1,455)

 

 

 -

 

 

 

 

 

 

 

Total other comprehensive (loss) income

 

 

(2,671)

 

 

690

Total comprehensive income

 

$

651

 

$

4,189

 

See accompanying notes to consolidated financial statements.

 

5

 


 

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

 

 

 

 

 

 

 

(Unaudited

 

 

Three Months Ended

 

 

March 31, 

 

 

2016

 

2015

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

3,322

 

$

3,499

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

 

 

 

 

 

 

Depreciation and amortization of leasehold improvement

 

 

563

 

 

607

Change in fair value of mortgage servicing rights

 

 

1,041

 

 

609

Provision for deferred tax expense

 

 

1,827

 

 

1,815

Originations of loans held-for-sale

 

 

(34,630)

 

 

(51,641)

Proceeds from sales of loans held-for-sale

 

 

32,395

 

 

50,965

Net gain on sales of mortgage loans

 

 

(1,212)

 

 

(1,623)

Change in current income taxes (payable) receivable

 

 

(17)

 

 

5

Increase in cash surrender value of bank-owned life insurance

 

 

(285)

 

 

(93)

Change in accrued interest receivable and other assets

 

 

983

 

 

398

Change in accrued interest payable and other liabilities

 

 

(1,365)

 

 

(1,949)

Net premium (accretion) amortization/discount on securities

 

 

(201)

 

 

28

Securities losses, net

 

 

61

 

 

109

Amortization of junior subordinated debentures issuance costs

 

 

12

 

 

12

Stock based compensation

 

 

169

 

 

177

Net gain on sale of other real estate owned

 

 

(42)

 

 

(95)

Provision for other real estate owned losses

 

 

451

 

 

609

Net cash provided by operating activities

 

 

3,072

 

 

3,432

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from maturities and calls including pay down of securities available-for-sale

 

 

5,366

 

 

3,478

Proceeds from sales of securities available-for-sale

 

 

35,574

 

 

53,191

Purchases of securities available-for-sale

 

 

(88,005)

 

 

(69,671)

Proceeds from maturities and calls including pay down of securities held-to-maturity

 

 

2,129

 

 

2,710

Net change in loans

 

 

(5,482)

 

 

1,699

Improvements in other real estate owned

 

 

(12)

 

 

 -

Proceeds from sales of other real estate owned

 

 

1,381

 

 

2,115

Net purchases of premises and equipment

 

 

(102)

 

 

(288)

Net cash used in investing activities

 

 

(49,151)

 

 

(6,766)

Cash flows from financing activities

 

 

 

 

 

 

Net change in deposits

 

 

37,608

 

 

59,723

Net change in securities sold under repurchase agreements

 

 

(218)

 

 

5,477

Net change in other short-term borrowings

 

 

5,000

 

 

(15,000)

Redemption of preferred stock

 

 

 -

 

 

(15,778)

Dividends paid on preferred stock

 

 

 -

 

 

(1,006)

Purchase of treasury stock

 

 

 -

 

 

(117)

Net cash provided by financing activities

 

 

42,390

 

 

33,299

Net change in cash and cash equivalents

 

 

(3,689)

 

 

29,965

Cash and cash equivalents at beginning of period

 

 

40,338

 

 

44,197

Cash and cash equivalents at end of period

 

$

36,649

 

$

74,162

 

6

 


 

 

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows - Continued

(In thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

Supplemental cash flow information

    

2016

    

2015

Income taxes paid, net

 

$

100

 

$

100

Interest paid for deposits

 

 

1,019

 

 

1,032

Interest paid for borrowings

 

 

1,333

 

 

1,289

Non-cash transfer of loans to other real estate owned

 

 

382

 

 

6,108

Change in dividends accrued and declared but not paid

 

 

 -

 

 

(182)

 

See accompanying notes to consolidated financial statements.

 

 

7

 


 

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Changes in

Stockholders’ Equity

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

 

 

 

Total

 

 

Common

 

Preferred

 

Paid-In

 

Retained

 

Comprehensive

 

Treasury

 

Stockholders’

 

    

Stock

    

Stock

    

Capital

    

Earnings

    

Loss

    

Stock

    

Equity

Balance, December 31, 2014

 

$

34,365

 

$

47,331

 

$

115,332

 

$

100,697

 

$

(7,713)

 

$

(95,849)

 

$

194,163

Net income

 

 

 

 

 

 

 

 

 

 

 

3,499

 

 

 

 

 

 

 

 

3,499

Other comprehensive gain, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

690

 

 

 

 

 

690

Change in restricted stock

 

 

50

 

 

 

 

 

(50)

 

 

 

 

 

 

 

 

 

 

 

 -

Tax effect from vesting of restricted stock

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

 

 

 

 

 

30

Stock based compensation

 

 

 

 

 

 

 

 

177

 

 

 

 

 

 

 

 

 

 

 

177

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(117)

 

 

(117)

Redemption of preferred stock

 

 

 

 

 

(15,778)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,778)

Preferred stock accretion and declared dividends

 

 

 

 

 

 

 

 

 

 

 

(824)

 

 

 

 

 

 

 

 

(824)

Balance, March 31, 2015

 

$

34,415

 

$

31,553

 

$

115,489

 

$

103,372

 

$

(7,023)

 

$

(95,966)

 

$

181,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2015

 

$

34,427

 

$

 -

 

$

115,918

 

$

114,209

 

$

(12,659)

 

$

(95,966)

 

$

155,929

Net income

 

 

 

 

 

 

 

 

 

 

 

3,322

 

 

 

 

 

 

 

 

3,322

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,671)

 

 

 

 

 

(2,671)

Stock based compensation

 

 

 

 

 

 

 

 

169

 

 

 

 

 

 

 

 

 

 

 

169

Balance, March 31, 2016

 

$

34,427

 

$

 -

 

$

116,087

 

$

117,531

 

$

(15,330)

 

$

(95,966)

 

$

156,749

 

See accompanying notes to consolidated financial statements.

 

 

 

8

 


 

 

Old Second Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Table amounts in thousands, except per share data, unaudited)

 

Note 1 – Summary of Significant Accounting Policies

 

The accounting policies followed in the preparation of the interim consolidated financial statements are consistent with those used in the preparation of the annual financial information.  The interim consolidated financial statements reflect all normal and recurring adjustments that are necessary, in the opinion of management, for a fair statement of results for the interim period presented.  Results for the period ended March 31, 2016, are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.  These interim consolidated financial statements are unaudited and should be read in conjunction with the audited financial statements and notes included in Old Second Bancorp, Inc.’s (the “Company”) annual report on Form 10-K for the year ended December 31, 2015.  Unless otherwise indicated, amounts in the tables contained in the notes to the consolidated financial statements are in thousands.  Certain items in prior periods have been reclassified to conform to the current presentation.

 

The Company’s consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”) and follow general practices within the banking industry.  Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes.  These estimates, assumptions, and judgments are based on information available as of the date of the consolidated financial statements.  Future changes in information may affect these estimates, assumptions, and judgments, which, in turn, may affect amounts reported in the consolidated financial statements.

 

All significant accounting policies are presented in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.  These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the consolidated financial statements and how those values are determined.

 

Recent Accounting Pronouncements

 

 

In May 2014, the FASB issued ASU No. 2014-09 "Revenue from Contracts with Customers (Topic 606)."  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.    In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date.”  This accounting standards update defers the effective date of ASU 2014-09 for an additional year.  ASU 2015-14 will be effective for annual reporting periods beginning after December 15, 2017.  The amendments can be applied retrospectively to each prior reporting period or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application.  Early application is not permitted.  The Company is assessing the impact of ASU 2014-09 on its accounting and disclosures.

 

In April 2015, the FASB issued ASU No. 2015-03 “Simplifying the Presentation of Debt Issuance Costs.”  ASU 2015-03 amended prior guidance to simplify the presentation of debt issuance costs.  The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.  The adoption of this standard did not have a material effect to the Company’s operating results or financial condition.  This standard was adopted by the Company effective January 2016.

 

Subsequent Event

 

On April 19, 2016, the Registrant’s board of directors declared a cash dividend of 1 cent per share payable on May 9, 2016, to stockholders of record as of April 29, 2016.

 

Note 2 – Securities

 

Investment Portfolio Management

 

Our investment portfolio serves the liquidity needs and income objectives of the Company.  While the portfolio serves as an important component of the overall liquidity management at the Bank, portions of the portfolio will also serve as income producing assets.  The size and composition of the portfolio reflects liquidity needs, loan demand and interest income objectives.

 

9

 


 

Portfolio size and composition will be adjusted from time to time.  While a significant portion of the portfolio consists of readily marketable securities to address liquidity, other parts of the portfolio may reflect funds invested pending future loan demand or to maximize interest income without undue interest rate risk.

 

Investments are comprised of debt securities and non-marketable equity investments.  Securities available-for-sale are carried at fair value.  Unrealized gains and losses, net of tax, on securities available-for-sale are reported as a separate component of equity.  This balance sheet component changes as interest rates and market conditions change.  Unrealized gains and losses are not included in the calculation of regulatory capital.

 

Securities held-to-maturity are carried at amortized cost and the discount or premium created in the 2013 transfer from available-for-sale securities or at the time of purchase thereafter is accreted or amortized to the maturity or expected payoff date but not an earlier call.  In accordance with GAAP, the Company has the positive intent and ability to hold the securities to maturity.

 

Nonmarketable equity investments include Federal Home Loan Bank of Chicago (“FHLBC”) stock and Federal Reserve Bank of Chicago (“Reserve Bank”) stock.  FHLBC stock was recorded at $3.7 million at March 31, 2016, and $3.7 million at December 31, 2015.  Reserve Bank stock was recorded at $4.8 million at March 31, 2016, and December 31, 2015.  Our FHLBC stock is necessary to maintain access to FHLBC advances.

 

The following table summarizes the amortized cost and fair value of the securities portfolio at March 31, 2016, and December 31, 2015, and the corresponding amounts of gross unrealized gains and losses (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

March 31, 2016:

    

Cost

    

Gains

    

Losses

    

Value

Securities Available-for-Sale

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

1,503

 

$

 -

 

$

 -

 

$

1,503

U.S. government agencies

 

 

1,675

 

 

 -

 

 

(136)

 

 

1,539

U.S. government agencies mortgage-backed

 

 

2,030

 

 

49

 

 

 -

 

 

2,079

States and political subdivisions

 

 

40,361

 

 

589

 

 

 -

 

 

40,950

Corporate bonds

 

 

30,506

 

 

46

 

 

(463)

 

 

30,089

Collateralized mortgage obligations

 

 

67,971

 

 

293

 

 

(952)

 

 

67,312

Asset-backed securities

 

 

264,364

 

 

463

 

 

(12,182)

 

 

252,645

Collateralized loan obligations

 

 

109,403

 

 

 -

 

 

(4,608)

 

 

104,795

Total Securities Available-for-Sale

 

$

517,813

 

$

1,440

 

$

(18,341)

 

$

500,912

Securities Held-to-Maturity

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency mortgage-backed

 

$

36,470

 

$

2,668

 

$

 -

 

$

39,138

Collateralized mortgage obligations

 

 

209,482

 

 

6,711

 

 

(92)

 

 

216,101

Total Securities Held-to-Maturity

 

$

245,952

 

$

9,379

 

$

(92)

 

$

255,239

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

December 31, 2015:

    

Cost

    

Gains

    

Losses

    

Value

Securities Available-for-Sale

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

1,509

 

$

 -

 

$

 -

 

$

1,509

U.S. government agencies

 

 

1,683

 

 

 -

 

 

(127)

 

 

1,556

U.S. government agencies mortgage-backed

 

 

2,040

 

 

 

 

 

(44)

 

 

1,996

States and political subdivisions

 

 

30,341

 

 

285

 

 

(100)

 

 

30,526

Corporate bonds

 

 

30,157

 

 

 -

 

 

(757)

 

 

29,400

Collateralized mortgage obligations

 

 

68,743

 

 

24

 

 

(1,847)

 

 

66,920

Asset-backed securities

 

 

241,872

 

 

74

 

 

(10,038)

 

 

231,908

Collateralized loan obligations

 

 

94,374

 

 

 -

 

 

(2,123)

 

 

92,251

Total Securities Available-for-Sale

 

$

470,719

 

$

383

 

$

(15,036)

 

$

456,066

Securities Held-to-Maturity

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency mortgage-backed

 

$

36,505

 

$

1,592

 

$

 -

 

$

38,097

Collateralized mortgage obligations

 

 

211,241

 

 

3,302

 

 

(965)

 

 

213,578

Total Securities Held-to-Maturity

 

$

247,746

 

$

4,894

 

$

(965)

 

$

251,675

 

10

 


 

The fair value, amortized cost and weighted average yield of debt securities at March 31, 2016, by contractual maturity, were as follows in the table below.  Securities not due at a single maturity date are shown separately.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Amortized

 

Average

 

 

Fair

 

Securities Available-for-Sale

    

Cost

    

Yield

 

    

Value

  

Due in one year or less

 

$

27,124

 

1.74

%

 

$

27,176

 

Due after one year through five years

 

 

7,255

 

2.77

%

 

 

7,422

 

Due after five years through ten years

 

 

36,261

 

2.38

%

 

 

36,045

 

Due after ten years

 

 

3,405

 

2.71

%

 

 

3,438

 

 

 

 

74,045

 

2.33

%

 

 

74,081

 

Mortgage-backed and collateralized mortgage obligations

 

 

70,001

 

2.24

%

 

 

69,391

 

Asset-backed securities

 

 

264,364

 

1.69

%

 

 

252,645

 

Collateralized loan obligations

 

 

109,403

 

3.46

%

 

 

104,795

 

 

 

$

517,813

 

2.23

%

 

$

500,912

 

Securities Held-to-Maturity

 

 

 

 

 

 

 

 

 

 

Mortgage-backed and collateralized mortgage obligations

 

$

245,952

 

2.99

%

 

$

255,239

 

 

At March 31, 2016, the Company’s investments include $240.8 million of asset-backed securities that are backed by student loans originated under the Federal Family Education Loan program (“FFEL”).  Under the FFEL, private lenders made federally guaranteed student loans to parents and students.  While the program was modified several times before elimination in 2010, not less than 97% of the outstanding principal amount of the loans made under FFEL are guaranteed by the U.S. Department of Education.  A number of major student loan originators packaged loans and sold them as asset-backed securities.

 

 

Securities with unrealized losses at March 31, 2016, and December 31, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands except for number of securities):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than 12 months

 

Greater than 12 months

 

 

 

 

 

 

 

 

March 31, 2016

 

in an unrealized loss position

 

in an unrealized loss position

 

Total

 

 

Number of

 

Unrealized

 

Fair

 

Number of

 

Unrealized

 

Fair

 

Number of

 

Unrealized

 

Fair

Securities Available-for-Sale

    

Securities

   

Losses

   

Value

   

Securities

   

Losses

   

Value

   

Securities

   

Losses

   

Value

U.S. government agencies

 

 -

 

$

 -

 

$

 -

 

1

 

$

136

 

$

1,539

 

1

 

$

136

 

$

1,539

U.S. government agencies mortgage-backed

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

States and political subdivisions

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

Corporate bonds

 

3

 

 

20

 

 

5,940

 

4

 

 

443

 

 

14,104

 

7

 

 

463

 

 

20,044

Collateralized mortgage obligations

 

10

 

 

382

 

 

19,606

 

7

 

 

570

 

 

29,938

 

17

 

 

952

 

 

49,544

Asset-backed securities

 

13

 

 

2,769

 

 

111,133

 

9

 

 

9,413

 

 

118,021

 

22

 

 

12,182

 

 

229,154

Collateralized loan obligations

 

6

 

 

1,083

 

 

43,849

 

9

 

 

3,525

 

 

60,946

 

15

 

 

4,608

 

 

104,795

 

 

32

 

$

4,254

 

$

180,528

 

30

 

$

14,087

 

$

224,548

 

62

 

$

18,341

 

$

405,076

Securities Held-to-Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

2

 

$

79

 

$

8,876

 

1

 

$

13

 

$

8,700

 

3

 

$

92

 

$

17,576

 

 

2

 

$

79

 

$