0001437749-16-036820.txt : 20160809 0001437749-16-036820.hdr.sgml : 20160809 20160809112341 ACCESSION NUMBER: 0001437749-16-036820 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 62 CONFORMED PERIOD OF REPORT: 20160630 FILED AS OF DATE: 20160809 DATE AS OF CHANGE: 20160809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST OF LONG ISLAND CORP CENTRAL INDEX KEY: 0000740663 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 112672906 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32964 FILM NUMBER: 161816815 BUSINESS ADDRESS: STREET 1: 10 GLEN HEAD RD CITY: GLEN HEAD STATE: NY ZIP: 11545 BUSINESS PHONE: 5166714900 MAIL ADDRESS: STREET 1: 10 GLEN HEAD ROAD CITY: GLEN HEAD STATE: NY ZIP: 11545 10-Q 1 flic20160630_10q.htm FORM 10-Q flic20160630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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

June 30, 2016 

 

or

 

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


For the transition period from

to

 

Commission file number 001-32964

 

THE FIRST OF LONG ISLAND CORPORATION

(Exact name of registrant as specified in its charter)

 

 

  New York

11-2672906

  (State or other jurisdiction of incorporation or organization)  

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

 

 

  10 Glen Head Road, Glen Head, NY

 11545

  (Address of principal executive offices)  

(Zip Code)


(516) 671-4900 

(Registrant's telephone number, including area code)

 

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        

 

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

 

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

 

Large accelerated filer [   ]   

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

 

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

 

Title of Each Class                                       

Outstanding at July 29, 2016

Common stock, $.10 par value per share    

15,670,062

 

 
 

 

 

TABLE OF CONTENTS

 

PART I.

FINANCIAL INFORMATION

 
     

ITEM 1.

Financial Statements

 
     
 

Consolidated Balance Sheets (Unaudited) – June 30, 2016 and December 31, 2015

1

     
 

Consolidated Statements of Income (Unaudited) – Six and Three Months Ended June 30, 2016 and 2015

2

     
 

Consolidated Statements of Comprehensive Income (Unaudited) – Six and Three Months Ended June 30, 2016 and 2015

3

     
 

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Six Months Ended June 30, 2016 and 2015

4

     
 

Consolidated Statements of Cash Flows (Unaudited) – Six Months Ended June 30, 2016 and 2015

5

     
 

Notes to Unaudited Consolidated Financial Statements

6

     

ITEM 2.

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

21

     

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

28

     

ITEM 4.

Controls and Procedures

30

     

PART II.

OTHER INFORMATION

 
     

ITEM 1.

Legal Proceedings

30

     

ITEM 1A.

Risk Factors

31

     

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

     

ITEM 3.

Defaults Upon Senior Securities

31

     

ITEM 4.

Mine Safety Disclosures

31

     

ITEM 5.

Other Information

31

     

ITEM 6.

Exhibits

31

     
 

Signatures

33

  

 
 

 

 

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

   

June 30,

   

December 31,

 

(dollars in thousands)

 

2016

   

2015

 
                 

Assets:

               

Cash and cash equivalents

  $ 51,026     $ 39,635  
                 

Investment securities:

               

Held-to-maturity, at amortized cost (fair value of $12,637 and $14,910)

    12,206       14,371  

Available-for-sale, at fair value

    862,001       737,700  
      874,207       752,071  
                 

Loans held-for-sale

    -       105  
                 

Loans:

               

Commercial and industrial

    105,106       93,056  

Secured by real estate:

               

Commercial mortgages

    1,043,560       1,036,331  

Residential mortgages

    1,110,977       1,025,215  

Home equity lines

    87,971       87,848  

Consumer and other

    5,998       5,733  
      2,353,612       2,248,183  

Allowance for loan losses

    (27,677 )     (27,256 )
      2,325,935       2,220,927  
                 

Restricted stock, at cost

    23,074       28,435  

Bank premises and equipment, net

    31,527       30,330  

Bank-owned life insurance

    32,914       32,447  

Pension plan assets, net

    14,451       14,337  

Other assets

    14,154       12,056  
    $ 3,367,288     $ 3,130,343  

Liabilities:

               

Deposits:

               

Checking

  $ 765,392     $ 777,994  

Savings, NOW and money market

    1,562,740       1,195,968  

Time, $100,000 and over

    190,606       198,147  

Time, other

    106,117       112,566  
      2,624,855       2,284,675  
                 

Short-term borrowings

    57,666       211,502  

Long-term debt

    359,212       365,712  

Accrued expenses and other liabilities

    9,497       12,313  

Deferred income taxes payable

    10,406       5,205  
      3,061,636       2,879,407  
                 

Stockholders' Equity:

               

Common stock, par value $.10 per share:

               

Authorized, 40,000,000 shares; Issued and outstanding, 15,590,694 and 14,116,677 shares

    1,559       1,412  

Surplus

    96,273       56,931  

Retained earnings

    194,128       185,069  
      291,960       243,412  

Accumulated other comprehensive income, net of tax

    13,692       7,524  
      305,652       250,936  
    $ 3,367,288     $ 3,130,343  

 

See notes to unaudited consolidated financial statements

  

 
1

 

  

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

   

Six Months Ended June 30,

   

Three Months Ended June 30,

 

(dollars in thousands, except per share data)

 

2016

   

2015

   

2016

   

2015

 
                                 

Interest and dividend income:

                               

Loans

  $ 40,055     $ 33,691     $ 20,241     $ 17,140  

Investment securities:

                               

Taxable

    3,910       4,242       2,020       2,124  

Nontaxable

    6,823       6,792       3,420       3,403  
      50,788       44,725       25,681       22,667  

Interest expense:

                               

Savings, NOW and money market deposits

    2,343       1,150       1,410       605  

Time deposits

    2,674       3,070       1,299       1,489  

Short-term borrowings

    131       94       7       13  

Long-term debt

    3,666       4,111       1,692       2,066  
      8,814       8,425       4,408       4,173  

Net interest income

    41,974       36,300       21,273       18,494  

Provision for loan losses

    392       1,353       139       942  

Net interest income after provision for loan losses

    41,582       34,947       21,134       17,552  
                                 

Noninterest income:

                               

Investment Management Division income

    990       1,039       514       532  

Service charges on deposit accounts

    1,290       1,325       656       669  

Net gains on sales of securities

    1,844       1,133       1,844       1,133  

Other

    1,361       1,542       717       749  
      5,485       5,039       3,731       3,083  

Noninterest expense:

                               

Salaries

    11,049       10,020       5,471       4,968  

Employee benefits

    3,449       2,739       1,780       1,376  

Occupancy and equipment

    4,579       4,569       2,202       2,111  

Debt extinguishment

    1,756       1,084       1,756       1,084  

Other

    6,470       4,777       3,663       2,503  
      27,303       23,189       14,872       12,042  
                                 

Income before income taxes

    19,764       16,797       9,993       8,593  

Income tax expense

    4,714       4,036       2,373       2,317  

Net income

  $ 15,050     $ 12,761     $ 7,620     $ 6,276  
                                 

Earnings per share:

                               

Basic

  $ 1.03     $ .91     $ .51     $ .45  

Diluted

    1.02       .90       .50       .44  
                                 

Cash dividends declared per share

    .40       .38       .20       .19  

 

See notes to unaudited consolidated financial statements

  

 
2

 

  

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

 

   

Six Months Ended

   

Three Months Ended

 
   

June 30,

   

June 30,

 

(dollars in thousands)

 

2016

   

2015

   

2016

   

2015

 
                                 

Net income

  $ 15,050     $ 12,761     $ 7,620     $ 6,276  
                                 

Other comprehensive income (loss):

                               

Change in net unrealized holding gains on available-for-sale securities

    10,653       (6,861 )     5,511       (9,445 )

Change in funded status of pension plan

    122       -       61       -  

Other comprehensive income (loss) before income taxes

    10,775       (6,861 )     5,572       (9,445 )

Income tax expense (benefit)

    4,607       (2,862 )     2,335       (3,839 )

Other comprehensive income (loss)

    6,168       (3,999 )     3,237       (5,606 )

Comprehensive income

  $ 21,218     $ 8,762     $ 10,857     $ 670  

 

See notes to unaudited consolidated financial statements                


 
3

 

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

 

   

Six Months Ended June 30, 2016

 
                                   

Accumulated

         
                                   

Other

         
   

Common Stock

           

Retained

   

Comprehensive

         

(dollars in thousands)

 

Shares

   

Amount

   

Surplus

   

Earnings

   

Income

   

Total

 
                                                 

Balance, January 1, 2016

    14,116,677     $ 1,412     $ 56,931     $ 185,069     $ 7,524     $ 250,936  

Net income

                            15,050               15,050  

Other comprehensive income

                                    6,168       6,168  

Common stock issued in public offering, net of issuance costs

    1,300,000       130       35,132                       35,262  

Repurchase of common stock

    (13,393 )     (1 )     (369 )                     (370 )

Common stock issued under stock compensation plans, including tax benefit

    82,762       8       776                       784  

Common stock issued under dividend reinvestment and stock purchase plan

    104,648       10       2,889                       2,899  

Stock-based compensation

                    914                       914  

Cash dividends declared

                            (5,991 )             (5,991 )

Balance, June 30, 2016

    15,590,694     $ 1,559     $ 96,273     $ 194,128     $ 13,692     $ 305,652  

 

   

Six Months Ended June 30, 2015

 
                                   

Accumulated

         
                                   

Other

         
   

Common Stock

           

Retained

   

Comprehensive

         

(dollars in thousands)

 

Shares

   

Amount

   

Surplus

   

Earnings

   

Income

   

Total

 
                                                 

Balance, January 1, 2015

    13,887,134     $ 1,389     $ 51,009     $ 170,120     $ 10,785     $ 233,303  

Net income

                            12,761               12,761  

Other comprehensive loss

                                    (3,999 )     (3,999 )

Repurchase of common stock

    (12,227 )     (1 )     (286 )                     (287 )

Common stock issued under stock compensation plans, including tax benefit

    61,138       6       461                       467  

Common stock issued under dividend reinvestment and stock purchase plan

    59,576       6       1,428                       1,434  

Stock-based compensation

                    746                       746  

Cash dividends declared

                            (5,312 )             (5,312 )

Balance, June 30, 2015

    13,995,621     $ 1,400     $ 53,358     $ 177,569     $ 6,786     $ 239,113  

 

See notes to unaudited consolidated financial statements

 

 
4

 

  

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

   

Six Months Ended June 30,

 

(dollars in thousands)

 

2016

   

2015

 
                 

Cash Flows From Operating Activities:

               

Net income

  $ 15,050     $ 12,761  

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

               

Provision for loan losses

    392       1,353  

Provision for deferred income taxes

    594       420  

Depreciation and amortization

    1,590       1,543  

Premium amortization on investment securities, net

    1,880       2,581  

Net gains on sales of securities

    (1,844 )     (1,133 )

Net loss on sales of loans held-for-sale

    5       -  

Loss on debt extinguishment

    1,756       1,084  

Stock-based compensation expense

    914       746  

Accretion of cash surrender value on bank-owned life insurance

    (467 )     (447 )

Pension expense (credit)

    9       (245 )

Increase in other assets

    (2,098 )     (849 )

Decrease in accrued expenses and other liabilities

    (3,138 )     (892 )

Net cash provided by operating activities

    14,643       16,922  
                 

Cash Flows From Investing Activities:

               

Proceeds from sales of investment securities:

               

Held-to-maturity

    123       243  

Available-for-sale

    40,989       66,140  

Proceeds from maturities and redemptions of investment securities:

               

Held-to-maturity

    3,384       3,599  

Available-for-sale

    48,646       60,186  

Purchases of investment securities:

               

Held-to-maturity

    (1,287 )     (1,619 )

Available-for-sale

    (203,374 )     (65,742 )

Proceeds from sales of loans held-for-sale

    100       -  

Net increase in loans

    (105,400 )     (167,866 )

Net decrease in restricted stock

    5,361       4,526  

Purchases of premises and equipment, net

    (2,787 )     (2,709 )

Net cash used in investing activities

    (214,245 )     (103,242 )
                 

Cash Flows From Financing Activities:

               

Net increase in deposits

    340,180       223,640  

Net decrease in short-term borrowings

    (153,836 )     (100,028 )

Proceeds from long-term debt

    23,500       54,612  

Repayment of long-term debt

    (31,756 )     (74,584 )

Proceeds from issuance of common stock, net

    38,161       1,434  

Proceeds from exercise of stock options

    470       303  

Tax benefit from stock compensation plans

    314       164  

Repurchase and retirement of common stock

    (370 )     (287 )

Cash dividends paid

    (5,670 )     (5,291 )

Net cash provided by financing activities

    210,993       99,963  
                 

Net increase in cash and cash equivalents

    11,391       13,643  

Cash and cash equivalents, beginning of year

    39,635       32,944  

Cash and cash equivalents, end of period

  $ 51,026     $ 46,587  
                 

Supplemental Information:

               

Cash paid for:

               

Interest

  $ 12,048     $ 8,509  

Income taxes

    4,857       4,535  

Noncash investing and financing activities:

               

Cash dividends payable

    3,144       2,659  

 

See notes to unaudited consolidated financial statements

  

 
5

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

1 - BASIS OF PRESENTATION

 

The accounting and reporting policies of The First of Long Island Corporation (“Corporation”) reflect banking industry practice and conform to generally accepted accounting principles in the United States. In preparing the consolidated financial statements, management is required to make estimates, such as the allowance for loan losses, and assumptions that affect the reported asset and liability balances, revenue and expense amounts, and the disclosure of contingent assets and liabilities. Actual results could differ significantly from those estimates.

 

The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary, The First National Bank of Long Island (“Bank”). The Bank has two wholly owned subsidiaries: FNY Service Corp., an investment company, and The First of Long Island Agency, Inc., a licensed insurance agency under the laws of the State of New York. The Bank and FNY Service Corp. jointly own another subsidiary, The First of Long Island REIT, Inc., a real estate investment trust. The consolidated entity is referred to as the “Corporation” and the Bank and its subsidiaries are collectively referred to as the “Bank.” All intercompany balances and amounts have been eliminated. For further information refer to the consolidated financial statements and notes thereto included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2015.

 

The consolidated financial information included herein as of and for the periods ended June 30, 2016 and 2015 is unaudited. However, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The December 31, 2015 consolidated balance sheet was derived from the Corporation's December 31, 2015 audited consolidated financial statements. When appropriate, items in the prior year financial statements are reclassified to conform to the current period presentation.

 

2 EARNINGS PER SHARE

 

The following table is a reconciliation of basic and diluted earnings per share (“EPS”) for the periods indicated.

  

   

Six Months Ended June 30,

   

Three Months Ended June 30,

 

(dollars in thousands, except per share data)

 

2016

   

2015

   

2016

   

2015

 

Net income

  $ 15,050     $ 12,761     $ 7,620     $ 6,276  

Income allocated to participating securities (1)

    64       -       33       -  

Income allocated to common stockholders

  $ 14,986     $ 12,761     $ 7,587     $ 6,276  
                                 

Weighted average:

                               

Common shares

    14,601,611       13,958,339       15,019,503       13,991,519  

Dilutive stock options and restricted stock units (1)

    146,286       153,321       139,708       156,417  
      14,747,897       14,111,660       15,159,211       14,147,936  

Earnings per share:

                               

Basic

  $ 1.03     $ .91     $ .51     $ .45  

Diluted

    1.02       .90       .50       .44  

 

(1) Restricted stock units (“RSUs”) awarded in January 2016 accrue dividends at the same rate as the dividends declared by the Board of Directors on the Corporation’s common stock. For purposes of computing EPS, these RSUs are considered to participate with common stock in the undistributed earnings of the Corporation and, therefore, the Corporation is required to calculate basic and diluted EPS using the two-class method. Under the two-class method, net income for the period is allocated between common stockholders and participating securities according to dividends declared and participation rights in undistributed earnings. See Note 6 for additional details on the RSUs awarded in 2016.

 

3 - COMPREHENSIVE INCOME 

 

Comprehensive income includes net income and other comprehensive income. Other comprehensive income includes revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but excluded from net income. Other comprehensive income for the Corporation consists of unrealized holding gains or losses on available-for-sale securities and changes in the funded status of the Bank’s defined benefit pension plan, both net of related income taxes. Accumulated other comprehensive income is recognized as a separate component of stockholders’ equity.

  

 
6

 

 

The components of other comprehensive income (loss) and the related tax effects are as follows: 

 

   

Six Months Ended June 30,

   

Three Months Ended June 30,

 
   

2016

   

2015

   

2016

   

2015

 
   

(in thousands)

 

Change in net unrealized holding gains on available-for-sale securities:

                               

Change arising during the period

  $ 12,480     $ (5,736 )   $ 7,338     $ (8,320 )

Reclassification adjustment for gains included in net income (1)

    (1,827 )     (1,125 )     (1,827 )     (1,125 )

Change in net unrealized holding gains on available-for-sale securities

    10,653       (6,861 )     5,511       (9,445 )

Tax effect

    4,608       (2,825 )     2,310       (3,839 )
      6,045       (4,036 )     3,201       (5,606 )
                                 

Change in funded status of pension plan:

                               

Amortization of net actuarial loss included in pension expense (2)

    122       -       61       -  

Tax effect

    (1 )     (37 )     25       -  
      123       37       36       -  

Other comprehensive income (loss)

  $ 6,168     $ (3,999 )   $ 3,237     $ (5,606 )

 

 (1) Reclassification adjustment represents net realized gains arising from the sale of available-for-sale securities. The net realized gains are included in the consolidated statements of income in the line item, “Net gains on sales of securities.” See “Note 4 – Investment Securities” for the income tax expense related to the net realized gains.

 

(2) Represents the amortization into expense of net actuarial loss relating to the Bank’s defined benefit pension plan. This item is included in net periodic pension cost (see Note 7) and in the consolidated statements of income in the line item, “Employee benefits.” The related income tax expense is included in the consolidated statements of income in the line item, “Income tax expense.”

 

The following table sets forth the components of accumulated other comprehensive income, net of tax:

 

 

           

Current

         
   

Balance

   

Period

   

Balance

 
   

12/31/15

   

Change

   

6/30/16

 
   

(in thousands)

 

Unrealized holding gains on available-for-sale securities

  $ 11,675     $ 6,045     $ 17,720  

Unrealized actuarial losses on pension plan

    (4,151 )     123       (4,028 )

Accumulated other comprehensive income, net of tax

  $ 7,524     $ 6,168     $ 13,692  

 

 
7

 

 

4 - INVESTMENT SECURITIES

 

The following tables set forth the amortized cost and estimated fair values of the Bank’s investment securities.

  

   

June 30, 2016

 
           

Gross

   

Gross

         
   

Amortized

   

Unrealized

   

Unrealized

   

Fair

 
   

Cost

   

Gains

   

Losses

   

Value

 

Held-to-Maturity Securities:

  (in thousands)  

State and municipals

  $ 11,041     $ 331     $ -     $ 11,372  

Pass-through mortgage securities

    438       49       -       487  

Collateralized mortgage obligations

    727       51       -       778  
    $ 12,206     $ 431     $ -     $ 12,637  

Available-for-Sale Securities:

                               

State and municipals

  $ 436,647     $ 25,990     $ (6 )   $ 462,631  

Pass-through mortgage securities

    215,153       1,600       (37 )     216,716  

Collateralized mortgage obligations

    179,919       2,901       (166 )     182,654  
    $ 831,719     $ 30,491     $ (209 )   $ 862,001  
                                 
   

December 31, 2015

 

Held-to-Maturity Securities:

                               

State and municipals

  $ 12,922     $ 410     $ -     $ 13,332  

Pass-through mortgage securities

    576       67       -       643  

Collateralized mortgage obligations

    873       62       -       935  
    $ 14,371     $ 539     $ -     $ 14,910  

Available-for-Sale Securities:

                               

State and municipals

  $ 416,957     $ 18,892     $ (156 )   $ 435,693  

Pass-through mortgage securities

    148,402       810       (1,947 )     147,265  

Collateralized mortgage obligations

    152,712       2,720       (690 )     154,742  
    $ 718,071     $ 22,422     $ (2,793 )   $ 737,700  

 

 

At June 30, 2016 and December 31, 2015, investment securities with a carrying value of $469,334,000 and $405,769,000, respectively, were pledged as collateral to secure public deposits and borrowed funds.

 

There were no holdings of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity at June 30, 2016 and December 31, 2015.

 

Securities With Unrealized Losses. The following tables set forth securities with unrealized losses presented by the length of time the securities have been in a continuous unrealized loss position.

 

   

June 30, 2016

 
   

Less than

   

12 Months

                 
   

12 Months

   

or More

   

Total

 
   

Fair

   

Unrealized

   

Fair

   

Unrealized

   

Fair

   

Unrealized

 
   

Value

   

Loss

   

Value

   

Loss

   

Value

   

Loss

 
    (in thousands)  

State and municipals

  $ 2,647     $ (6 )   $ -     $ -     $ 2,647     $ (6 )

Pass-through mortgage securities

    10,546       (29 )     8,966       (8 )     19,512       (37 )

Collateralized mortgage obligations

    250       (2 )     9,361       (164 )     9,611       (166 )

Total temporarily impaired

  $ 13,443     $ (37 )   $ 18,327     $ (172 )   $ 31,770     $ (209 )
       
   

December 31, 2015

 

State and municipals

  $ 13,148     $ (78 )   $ 5,837     $ (78 )   $ 18,985     $ (156 )

Pass-through mortgage securities

    98,504       (1,348 )     27,365       (599 )     125,869       (1,947 )

Collateralized mortgage obligations

    39,133       (305 )     12,743       (385 )     51,876       (690 )

Total temporarily impaired

  $ 150,785     $ (1,731 )   $ 45,945     $ (1,062 )   $ 196,730     $ (2,793 )

 

 

Because the unrealized losses reflected in the preceding tables are deemed by management to be attributable to changes in interest rates and not credit losses, and because management does not have the intent to sell these securities and it is not more likely than not that it will be required to sell these securities before their anticipated recovery, the Bank does not consider these securities to be other-than-temporarily impaired at June 30, 2016.

  

 
8

 

 

Sales of Available-for-Sale Securities. Sales of available-for-sale securities were as follows:

  

   

Six Months Ended June 30,

   

Three Months Ended June 30,

 
   

2016

   

2015

   

2016

   

2015

 
   

(in thousands)

 

Proceeds

  $ 40,989     $ 66,140     $ 40,989     $ 66,140  
                                 

Gross gains

  $ 1,845     $ 1,501     $ 1,845     $ 1,501  

Gross losses

    (18 )     (376 )     (18 )     (376 )

Net gain

  $ 1,827     $ 1,125     $ 1,827     $ 1,125  

 

Income tax expense related to the net realized gains was $761,000 for the six and three months ended June 30, 2016, and $463,000 for the six and three months ended June 30, 2015.

 

Sales of Held-to-Maturity Securities. During the second quarter of 2016, the Bank sold one mortgage-backed security that was classified as held-to-maturity. The sale occurred after the Bank collected 85% or more of the principal outstanding at acquisition. The security sold had a carrying value of $106,000 at the time of sale and the Bank realized a gain upon sale of $17,000.

 

During the second quarter of 2015, the Bank sold one municipal security that was classified as held-to-maturity. The sale was in response to a significant deterioration in the creditworthiness of the issuer. The security sold had a carrying value of $235,000 at the time of sale and the Bank realized a gain upon sale of $8,000.

 

Maturities. The following table sets forth by maturity the amortized cost and fair value of the Bank’s state and municipal securities at June 30, 2016 based on the earlier of their stated maturity or, if applicable, their pre-refunded date. The remaining securities in the Bank’s investment securities portfolio are mortgage-backed securities, consisting of pass-through securities and collateralized mortgage obligations. Although these securities are expected to have substantial periodic repayments they are reflected in the table below in aggregate amounts.  

 

   

Amortized Cost

   

Fair Value

 
   

(in thousands)

 
Held-to-Maturity Securities:                

Within one year

  $ 2,854     $ 2,877  

After 1 through 5 years

    5,742       5,966  

After 5 through 10 years

    2,077       2,142  

After 10 years

    368       387  

Mortgage-backed securities

    1,165       1,265  
    $ 12,206     $ 12,637  

Available-for-Sale Securities:

               

Within one year

  $ 12,245     $ 12,428  

After 1 through 5 years

    49,308       51,591  

After 5 through 10 years

    170,101       180,119  

After 10 years

    204,993       218,493  

Mortgage-backed securities

    395,072       399,370  
    $ 831,719     $ 862,001  

 

 
9

 

 

 

5 – LOANS

 

The following tables set forth by class of loans the amount of loans individually and collectively evaluated for impairment and the portion of the allowance for loan losses allocable to such loans.

 

   

June 30, 2016

 
   

Loans

   

Allowance for Loan Losses

 
   

Individually Evaluated for Impairment

   

Collectively Evaluated for Impairment

   

Ending Balance

   

Individually Evaluated for Impairment

   

Collectively Evaluated for Impairment

   

Ending Balance

 
   

(in thousands)

 

Commercial and industrial

  $ -     $ 105,106     $ 105,106     $ -     $ 1,174     $ 1,174  

Commercial mortgages:

                                               

Multifamily

    -       542,115       542,115       -       6,346       6,346  

Other

    -       368,768       368,768       -       3,828       3,828  

Owner-occupied

    4,361       128,316       132,677       -       1,175       1,175  

Residential mortgages:

                                               

Closed end

    3,727       1,107,250       1,110,977       408       13,740       14,148  

Revolving home equity

    519       87,452       87,971       -       913       913  

Consumer and other

    -       5,998       5,998       -       93       93  
    $ 8,607     $ 2,345,005     $ 2,353,612     $ 408     $ 27,269     $ 27,677  
       
   

December 31, 2015

 

Commercial and industrial

  $ -     $ 93,056     $ 93,056     $ -     $ 928     $ 928  

Commercial mortgages:

                                               

Multifamily

    -       572,322       572,322       -       6,858       6,858  

Other

    -       348,909       348,909       -       3,674       3,674  

Owner-occupied

    594       114,506       115,100       -       1,047       1,047  

Residential mortgages:

                                               

Closed end

    3,797       1,021,418       1,025,215       428       13,211       13,639  

Revolving home equity

    522       87,326       87,848       -       1,016       1,016  

Consumer and other

    -       5,733       5,733       -       94       94  
    $ 4,913     $ 2,243,270     $ 2,248,183     $ 428     $ 26,828     $ 27,256  

 

 

The following tables present the activity in the allowance for loan losses for the six and three months ended June 30, 2016 and 2015. 

 

   

Balance at

1/1/16

   

Chargeoffs

   

Recoveries

   

Provision for Loan

Losses (Credit)

   

Balance at

6/30/16

 
   

(in thousands)

 

Commercial and industrial

  $ 928     $ -     $ 4     $ 242     $ 1,174  

Commercial mortgages:

                                       

Multifamily

    6,858       -       -       (512 )     6,346  

Other

    3,674       -       -       154       3,828  

Owner-occupied

    1,047       -       -       128       1,175  

Residential mortgages:

                                       

Closed end

    13,639       -       8       501       14,148  

Revolving home equity

    1,016       -       12       (115 )     913  

Consumer and other

    94       -       5       (6 )     93  
    $ 27,256     $ -     $ 29     $ 392     $ 27,677  
 
10

 

  

   

Balance at

4/1/16

   

Chargeoffs

   

Recoveries

   

Provision for Loan

Losses (Credit)

   

Balance at

6/30/16

 
   

(in thousands)

 

Commercial and industrial

  $ 1,112     $ -     $ -     $ 62     $ 1,174  

Commercial mortgages:

                                       

Multifamily

    6,805       -       -       (459 )     6,346  

Other

    3,853       -       -       (25 )     3,828  

Owner-occupied

    1,093       -       -       82       1,175  

Residential mortgages:

                                       

Closed end

    13,643       -       -       505       14,148  

Revolving home equity

    927       -       9       (23 )     913  

Consumer and other

    91       -       5       (3 )     93  
    $ 27,524     $ -     $ 14     $ 139     $ 27,677  

 

   

Balance at

1/1/15

   

Chargeoffs

   

Recoveries

   

Provision for Loan

Losses (Credit)

   

Balance at

6/30/15

 
   

(in thousands)

 

Commercial and industrial

  $ 838     $ -     $ 6     $ 142     $ 986  

Commercial mortgages:

                                       

Multifamily

    7,207       67       -       (110 )     7,030  

Other

    2,340       -       1       (78 )     2,263  

Owner-occupied