10-Q 1 a12-13941_110q.htm 10-Q

 

 

 

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 June 30, 2012

 


 

Commission file number 001-34096

 


 

BRIDGE BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

NEW YORK

11-2934195

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification Number)

 

 

2200 MONTAUK HIGHWAY, BRIDGEHAMPTON, NEW YORK

11932

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (631) 537-1000

 

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.  (Check one):

 

Large accelerated filer [  ]

 

Accelerated filer [X]

 

 

 

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 Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

There were 8,709,994 shares of common stock outstanding as of August 6, 2012.

 

 



 

 

BRIDGE BANCORP, INC.

 

PART I -

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011

3

 

 

 

 

Consolidated Statements of Income for the Three and Six Months Ended June 30, 2012 and 2011

4

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2012 and 2011

5

 

 

 

 

Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30, 2012 and 2011

6

 

 

 

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011

7

 

 

 

 

Condensed Notes to Consolidated Financial Statements

8

 

 

 

Item 2.

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

35

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

53

 

 

 

Item 4.

Controls and Procedures

54

 

 

 

PART II -

OTHER INFORMATION

54

 

 

 

Item 1.

Legal Proceedings

54

 

 

 

Item 1A.

Risk Factors

54

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

54

 

 

 

Item 3.

Defaults Upon Senior Securities

55

 

 

 

Item 4.

Mine Safety Disclosures

55

 

 

 

Item 5.

Other Information

55

 

 

 

Item 6.

Exhibits

55

 

 

 

Signatures

 

56

 

 



 

 

Item 1. Financial Statements

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (unaudited)

(In thousands, except share and per share amounts)

 

 

 

June 30,

 

December 31,

 

 

 

2012

 

2011

 

ASSETS

 

 

 

 

 

Cash and due from banks

 

$

29,034

 

$

25,921

 

Interest earning deposits with banks

 

35,183

 

53,625

 

Total cash and cash equivalents

 

64,217

 

79,546

 

 

 

 

 

 

 

Securities available for sale, at fair value

 

449,493

 

441,439

 

Securities held to maturity (fair value of $180,344 and $170,952, respectively)

 

177,922

 

169,153

 

Total securities

 

627,415

 

610,592

 

 

 

 

 

 

 

Securities, restricted

 

2,828

 

1,660

 

 

 

 

 

 

 

Loans held for sale

 

 

2,300

 

 

 

 

 

 

 

Loans held for investments

 

678,532

 

612,143

 

Allowance for loan losses

 

(13,556

)

(10,837

)

Loans, net

 

664,976

 

601,306

 

 

 

 

 

 

 

Premises and equipment, net

 

24,993

 

24,171

 

Accrued interest receivable

 

5,029

 

4,940

 

Goodwill

 

2,034

 

2,034

 

Core deposit intangible

 

281

 

316

 

Other assets

 

10,436

 

10,593

 

Total Assets

 

$

1,402,209

 

$

1,337,458

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Demand deposits

 

$

367,768

 

$

321,496

 

Savings, NOW and money market deposits

 

686,171

 

683,863

 

Certificates of deposit of $100,000 or more

 

135,875

 

140,578

 

Other time deposits

 

40,710

 

42,248

 

Total deposits

 

1,230,524

 

1,188,185

 

 

 

 

 

 

 

Federal Home Loan Bank term advances

 

15,000

 

 

Repurchase agreements

 

12,317

 

16,897

 

Junior subordinated debentures

 

16,002

 

16,002

 

Accrued interest payable

 

233

 

319

 

Other liabilities and accrued expenses

 

15,545

 

9,068

 

Total Liabilities

 

1,289,621

 

1,230,471

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, par value $.01 per share (2,000,000 shares authorized; none issued)

 

 

 

Common stock, par value $.01 per share:

 

 

 

 

 

Authorized: 20,000,000 shares; 8,608,108 and 8,374,917 shares issued, respectively; 8,597,050 and 8,345,399 shares outstanding, respectively

 

86

 

84

 

Surplus

 

58,395

 

54,034

 

Retained earnings

 

54,355

 

52,228

 

Less: Treasury Stock at cost, 11,058 and 29,518 shares, respectively

 

(1,155

)

(1,787

)

 

 

111,681

 

104,559

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

Net unrealized gain on securities, net of deferred income taxes of ($2,729) and ($3,774), respectively

 

4,146

 

5,734

 

Pension liability, net of deferred income taxes of $2,148 and $2,205, respectively

 

(3,219

)

(3,306

)

Net unrealized loss on cash flow hedge, net of deferred income taxes of $13 and $0, respectively

 

(20

)

 

Total Stockholders’ Equity

 

112,588

 

106,987

 

Total Liabilities and Stockholders’ Equity

 

$

1,402,209

 

$

1,337,458

 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

3



 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans (including fee income)

 

$

9,764

 

$

8,564

 

$

19,286

 

$

16,519

 

Mortgage-backed securities, CMOs and other asset-backed securities

 

2,064

 

2,385

 

4,083

 

4,701

 

State and municipal obligations

 

831

 

706

 

1,614

 

1,427

 

U.S. GSE securities

 

813

 

433

 

1,585

 

814

 

Corporate Bonds

 

160

 

186

 

320

 

373

 

Deposits with banks

 

18

 

41

 

42

 

59

 

Other interest and dividend income

 

27

 

18

 

45

 

36

 

Total interest income

 

13,677

 

12,333

 

26,975

 

23,929

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Savings, NOW and money market deposits

 

931

 

1,025

 

1,877

 

1,991

 

Certificates of deposit of $100,000 or more

 

367

 

245

 

753

 

488

 

Other time deposits

 

109

 

126

 

223

 

253

 

Federal funds purchased and repurchase agreements

 

115

 

135

 

226

 

269

 

Federal home loan bank advances

 

8

 

 

8

 

 

Junior subordinated debentures

 

342

 

341

 

683

 

683

 

Total interest expense

 

1,872

 

1,872

 

3,770

 

3,684

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

11,805

 

10,461

 

23,205

 

20,245

 

Provision for loan losses

 

2,500

 

900

 

3,325

 

1,600

 

Net interest income after provision for loan losses

 

9,305

 

9,561

 

19,880

 

18,645

 

 

 

 

 

 

 

 

 

 

 

Non interest income:

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

856

 

833

 

1,665

 

1,566

 

Fees for other customer services

 

720

 

575

 

1,325

 

1,055

 

Title fee income

 

470

 

263

 

693

 

467

 

Net securities gains

 

1,721

 

135

 

1,993

 

135

 

Other operating income

 

33

 

19

 

77

 

56

 

Total non interest income

 

3,800

 

1,825

 

5,753

 

3,279

 

 

 

 

 

 

 

 

 

 

 

Non interest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,262

 

4,399

 

10,373

 

8,574

 

Net occupancy expense

 

805

 

743

 

1,595

 

1,505

 

Furniture and fixture expense

 

264

 

308

 

562

 

614

 

FDIC assessments

 

180

 

193

 

352

 

501

 

Acquisition costs

 

 

386

 

 

619

 

Amortization of core deposit intangible

 

17

 

8

 

35

 

8

 

Cost of extinguishment of debt

 

 

 

158

 

 

Other operating expenses

 

2,039

 

1,747

 

3,713

 

3,371

 

Total non interest expense

 

8,567

 

7,784

 

16,788

 

15,192

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

4,538

 

3,602

 

8,845

 

6,732

 

Income tax expense

 

1,475

 

1,126

 

2,843

 

2,096

 

Net income

 

$

3,063

 

$

2,476

 

$

6,002

 

$

4,636

 

Basic earnings per share

 

$

0.36

 

$

0.38

 

$

0.71

 

$

0.71

 

Diluted earnings per share

 

$

0.36

 

$

0.38

 

$

0.71

 

$

0.71

 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

4



 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (unaudited)

(In thousands)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Net Income

 

$

3,063

 

$

2,476

 

$

6,002

 

$

4,636

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Change in unrealized net gains on securities available for sale, net of reclassification and deferred income tax effects

 

(1,162

)

1,564

 

(1,588

)

1,027

 

Adjustment to pension liability, net of deferred income taxes

 

43

 

21

 

87

 

42

 

Unrealized loss on cash flow hedge, net of deferred income taxes

 

(20

)

 

(20

)

 

Total other comprehensive income (loss)

 

(1,139

)

1,585

 

(1,521

)

1,069

 

Comprehensive income

 

$

1,924

 

$

4,061

 

$

4,481

 

$

5,705

 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

5



 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (unaudited)

(In thousands, except per share amounts)

 

 

 

Common
Stock

 

Surplus

 

Retained
Earnings

 

Treasury
Stock

 

Accumulated
Other
Comprehensive
Income

 

Total

 

Balance at January 1, 2012

 

$

84

 

$

54,034

 

$

52,228

 

$

(1,787

)

$

2,428

 

$

106,987

 

Net income

 

 

 

 

 

6,002

 

 

 

 

 

6,002

 

Shares issued under the dividend reinvestment plan (“DRP”)

 

2

 

4,385

 

 

 

7

 

 

 

4,394

 

Stock awards granted

 

 

 

(717

)

 

 

717

 

 

 

 

Stock awards forfeited

 

 

 

4

 

 

 

(4

)

 

 

 

Vesting of stock awards

 

 

 

 

 

 

 

(88

)

 

 

(88

)

Tax effect of stock plans

 

 

 

(10

)

 

 

 

 

 

 

(10

)

Share based compensation expense

 

 

 

699

 

 

 

 

 

 

 

699

 

Cash dividend declared, $0.46 per share

 

 

 

 

 

(3,875

)

 

 

 

 

(3,875

)

Other comprehensive income, net of deferred income taxes

 

 

 

 

 

 

 

 

 

(1,521

)

(1,521

)

Balance at June 30, 2012

 

$

86

 

$

58,395

 

$

54,355

 

$

(1,155

)

$

907

 

$

112,588

 

 

 

 

Common
Stock

 

Surplus

 

Retained
Earnings

 

Treasury
Stock

 

Accumulated
Other
Comprehensive
Income

 

Total

 

Balance at January 1, 2011

 

$

64

 

$

20,946

 

$

46,463

 

$

(3,520

)

$

1,767

 

$

65,720

 

Net income

 

 

 

 

 

4,636

 

 

 

 

 

4,636

 

Shares issued under the dividend reinvestment plan (“DRP”)

 

1

 

1,792

 

 

 

5

 

 

 

1,798

 

Shares issued in the acquisition of Hampton State Bank (273,476 shares)

 

3

 

5,847

 

 

 

 

 

 

 

5,850

 

Stock awards granted

 

 

 

(486

)

 

 

486

 

 

 

 

Stock awards forfeited

 

 

 

37

 

 

 

(37

)

 

 

 

Vesting of stock awards

 

 

 

 

 

 

 

(61

)

 

 

(61

)

Tax effect of stock plans

 

 

 

(1

)

 

 

 

 

 

 

(1

)

Share based compensation expense

 

 

 

512

 

 

 

 

 

 

 

512

 

Cash dividend declared, $0.23 per share

 

 

 

 

 

(1,477

)

 

 

 

 

(1,477

)

Other comprehensive income, net of deferred income taxes

 

 

 

 

 

 

 

 

 

1,069

 

1,069

 

Balance at June 30, 2011

 

$

68

 

$

28,647

 

$

49,622

 

$

(3,127

)

$

2,836

 

$

78,046

 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

6



 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

 

 

 

For the

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2012

 

2011

 

Cash flows from operating activities:

 

 

 

 

 

Net Income

 

$

6,002

 

$

4,636

 

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

 

 

 

 

 

Provision for loan losses

 

3,325

 

1,600

 

Depreciation and amortization

 

862

 

908

 

Net amortization on securities

 

2,135

 

1,055

 

Amortization of core deposit intangible

 

35

 

8

 

Share based compensation expense

 

699

 

512

 

Net securities gains

 

(1,993

)

(135

)

Increase in accrued interest receivable

 

(89

)

(417

)

Decrease (increase) in other assets

 

123

 

(59

)

Increase in accrued expenses and other liabilities

 

665

 

1,918

 

Net cash provided by operating activities

 

11,764

 

10,026

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of securities available for sale

 

(220,313

)

(108,124

)

Purchases of securities, restricted

 

(15,500

)

(140

)

Purchases of securities held to maturity

 

(55,097

)

(38,689

)

Proceeds from sales of securities available for sale

 

63,807

 

14,084

 

Redemption of securities, restricted

 

14,332

 

225

 

Maturities, calls and principal payments of securities available for sale

 

148,563

 

56,680

 

Maturities, calls and principal payments of securities held to maturity

 

50,314

 

33,493

 

Net increase in loans

 

(64,695

)

(47,280

)

Purchase of premises and equipment

 

(1,684

)

(599

)

Net cash acquired in business combination

 

 

2,309

 

Net cash used in investing activities

 

(80,273

)

(88,041

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Net increase in deposits

 

42,339

 

98,411

 

Net decrease in federal funds purchased and FHLB overnight borrowings

 

 

(7,000

)

Net increase (decrease) in FHLB term advances

 

15,000

 

(5,016

)

Net decrease in repurchase agreements

 

(4,580

)

(173

)

Net proceeds from issuance of common stock

 

4,394

 

1,798

 

Repurchase of surrendered stock from exercise of stock options and vesting of restricted stock awards

 

(88

)

(61

)

Excess tax expense from share based compensation

 

(10

)

(1

)

Cash dividends paid

 

(3,875

)

(2,944

)

Net cash provided by financing activities

 

53,180

 

85,014

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(15,329

)

6,999

 

Cash and cash equivalents at beginning of period

 

79,546

 

22,918

 

Cash and cash equivalents at end of period

 

$

64,217

 

$

29,917

 

 

 

 

 

 

 

Supplemental Information-Cash Flows:

 

 

 

 

 

Cash paid for:

 

 

 

 

 

Interest

 

$

3,856

 

$

3,695

 

Income tax

 

$

1,415

 

$

820

 

 

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

 

Securities which settled in the subsequent period

 

$

6,871

 

$

 

 

 

 

 

 

 

Acquisition of noncash assets and liabilities:

 

 

 

 

 

Fair value of assets acquired

 

$

 

$

66,566

 

Fair value of liabilities assumed

 

$

 

$

65,059

 

 

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

 

7



 

 

BRIDGE BANCORP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. BASIS OF PRESENTATION

 

Bridge Bancorp, Inc. (the “Company”) is a bank holding company incorporated under the laws of the State of New York. The Company’s business currently consists of the operations of its wholly-owned subsidiary, The Bridgehampton National Bank (the “Bank”). The Bank’s operations include its real estate investment trust subsidiary, Bridgehampton Community, Inc. (“BCI”) and a financial title insurance subsidiary, Bridge Abstract LLC (“Bridge Abstract”). In addition to the Bank, the Company has another subsidiary Bridge Statutory Capital Trust II which was formed in 2009. In accordance with current accounting guidance, the trust is not consolidated in the Company’s financial statements.

 

The accompanying Unaudited Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiary, the Bank, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The Unaudited Consolidated Financial Statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the six months ended June 30, 2012 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or stockholders’ equity. The Unaudited Consolidated Financial Statements should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

 

2. EARNINGS PER SHARE

 

FASB ASC 260-10-45 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”).  The restricted stock awards and restricted stock units granted by the Company contain nonforfeitable rights to dividends and therefore are considered participating securities.  The two-class method for calculating basic EPS excludes dividends paid to participating securities and any undistributed earnings attributable to participating securities.

 

The computation of EPS for the three and six months ended June 30, 2012 and 2011 is as follows:

 

 

 

Three months ended,

 

Six months ended,

 

 

 

June 30,

 

June 30,

 

(In thousands, except per share data)

 

2012

 

2011

 

2012

 

2011

 

Net Income

 

$

3,063

 

$

2,476

 

$

6,002

 

$

4,636

 

Less: Dividends paid on and earnings allocated to participating securities

 

(79

)

(73

)

(156

)

(137

)

Income attributable to common stock

 

$

2,984

 

$

2,403

 

$

5,846

 

$

4,499

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, including participating securities

 

8,576

 

6,563

 

8,511

 

6,488

 

Less: weighted average participating securities

 

(224

)

(192

)

(224

)

(192

)

Weighted average common shares outstanding

 

8,352

 

6,371

 

8,287

 

6,296

 

Basic earnings per common share

 

$

0.36

 

$

0.38

 

$

0.71

 

$

0.71

 

 

 

 

 

 

 

 

 

 

 

Income attributable to common stock

 

$

2,984

 

$

2,403

 

$

5,846

 

$

4,499

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

8,352

 

6,371

 

8,287

 

6,296

 

Weighted average common equivalent shares outstanding

 

1

 

1

 

1

 

1

 

Weighted average common and equivalent shares outstanding

 

8,353

 

6,372

 

8,288

 

6,297

 

Diluted earnings per common share

 

$

0.36

 

$

0.38

 

$

0.71

 

$

0.71

 

 

8



 

 

There were 49,737 and 52,123 options outstanding at June 30, 2012 and June 30, 2011, respectively, that were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of common stock and were, therefore, antidilutive. The $16.0 million in convertible trust preferred securities outstanding at June 30, 2012, were not included in the computation of diluted earnings per share because the assumed conversion of the trust preferred securities was antidilutive.

 

3. STOCK BASED COMPENSATION PLANS

 

The Compensation Committee of the Board of Directors determines stock options and restricted stock awarded under the Bridge Bancorp, Inc. Equity Incentive Plan (“Plan”) and the Company accounts for this Plan under the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) No. 718 and 505. On May 4, 2012, the stockholders of the Company approved the Company’s 2012 Stock-Based Incentive Plan. The plan provides for the grant of stock-based and other incentive awards to officers, employees and directors of the Company.

 

No new grants of stock options were awarded during the six months ended June 30, 2012 and June 30, 2011.  There was no compensation expense attributable to stock options for the six months ended June 30, 2012 and June 30, 2011, because all stock options were vested.

 

The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of our common stock as of the reporting date.  No stock options were exercised during the first six months of 2012 and 2011. The intrinsic value of options outstanding and exercisable at June 30, 2012 and June 30, 2011 was $17,000 and $12,000, respectively.

 

A summary of the status of the Company’s stock options as of and for the six months ended June 30, 2012 is as follows:

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Weighted

 

Average

 

 

 

 

 

Number

 

Average

 

Remaining

 

Aggregate

 

 

 

of

 

Exercise

 

Contractual

 

Intrinsic

 

(Dollars in thousands, except per share amounts)

 

Options

 

Price

 

Life

 

Value

 

Outstanding, December 31, 2011

 

54,223

 

$

25.05

 

 

 

 

 

Granted

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

Forfeited

 

(2,386

)

$

25.27

 

 

 

 

 

Expired

 

 

 

 

 

 

 

Outstanding, June 30, 2012

 

51,837

 

$

25.04

 

3.83 years   

 

$

17

 

Vested and Exercisable, June 30, 2012

 

51,837

 

$

25.04

 

3.83 years   

 

$

17

 

 

 

 

Number of

 

Exercise

 

Range of Exercise Prices

 

Options

 

Price

 

 

 

2,100

 

$

15.47

 

 

 

4,872

 

$

24.00

 

 

 

39,659

 

$

25.25

 

 

 

3,000

 

$

26.55

 

 

 

2,206

 

$

30.60

 

 

 

51,837

 

 

 

 

During the six months ended June 30, 2012 and 2011, respectively, restricted stock awards of 21,993 and 13,688 shares were granted. These awards vest over approximately five years with a third vesting after years three, four and five. Compensation expense attributable to restricted stock awards was $293,000 and $620,000 for the three and six months ended June 30, 2012, respectively, and $220,000 and $447,000 for the three and six months ended June 30, 2011, respectively.

 

A summary of the status of the Company’s unvested restricted stock as of and for the six months ended June 30, 2012 is as follows:

 

 

 

 

 

Weighted

 

 

 

 

 

Average Grant-Date

 

 

 

Shares

 

Fair Value

 

Unvested, December 31, 2011

 

211,371

 

$

21.56

 

Granted

 

21,993

 

$

19.82

 

Vested

 

(30,100

)

$

21.44

 

Forfeited

 

(150

)

$

20.32

 

Unvested, June 30, 2012

 

203,114

 

$

21.39

 

 

9



 

 

In April 2009, the Company adopted a Directors Deferred Compensation Plan. Under the Plan, independent directors may elect to defer all or a portion of their annual retainer fee in the form of restricted stock units. In addition, Directors receive a non-election retainer in the form of restricted stock units.  These restricted stock units vest ratably over one year and have dividend rights but no voting rights. In connection with this Plan, the Company recorded expenses of approximately $40,000 and $79,000 for the three and six months ended June 30, 2012, respectively, and $33,000 and $65,000 for the three and six months ended June 30, 2011, respectively.

 

4. SECURITIES

 

The following table summarizes the amortized cost and fair value of the available for sale and held to maturity investment securities portfolio at June 30, 2012 and December 31, 2011 and the corresponding amounts of unrealized gains and losses therein:

 

 

 

June 30, 2012

 

 

 

 

 

Gross

 

Gross

 

Estimated

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

(In thousands)

 

Cost

 

Gains

 

Losses

 

Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

108,856

 

$

1,054

 

$

 

$

109,910

 

State and municipal obligations

 

62,549

 

1,390

 

(70

)

63,869

 

U.S. GSE residential mortgage-backed securities

 

29,907

 

2,007

 

 

31,914

 

U.S. GSE residential collateralized mortgage obligations

 

219,099

 

2,729

 

(289

)

221,539

 

U.S. GSE commercial collateralized mortgage obligations (1)

 

9,159

 

225

 

 

9,384

 

Non Agency commercial mortgage-backed securities

 

5,069

 

 

(7

)

5,062

 

Other Asset-backed securities

 

7,979

 

 

(164

)

7,815

 

Total available for sale

 

442,618

 

7,405

 

(530

)

449,493

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

10,491

 

41

 

 

10,532

 

State and municipal obligations

 

96,416

 

2,004

 

(31

)

98,389

 

U.S. GSE residential collateralized mortgage obligations

 

37,299

 

856

 

(10

)

38,145

 

U.S. GSE commercial mortgage-backed securities

 

5,953

 

148

 

 

6,101

 

U.S. GSE commercial collateralized mortgage obligations

 

4,974

 

212

 

 

5,186

 

Corporate Bonds

 

22,789

 

107

 

(905

)

21,991

 

Total held to maturity

 

177,922

 

3,368

 

(946

)

180,344

 

Total securities

 

$

620,540

 

$

10,773

 

$

(1,476

)

$

629,837

 

 

 

 

December 31, 2011

 

 

 

 

 

Gross

 

Gross

 

Estimated

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

(In thousands)

 

Cost

 

Gains

 

Losses

 

Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

130,708

 

$

968

 

$

(2

)

$

131,674

 

State and municipal obligations

 

52,861

 

1,366

 

(8

)

54,219

 

U.S. GSE residential mortgage-backed securities

 

67,317

 

3,667

 

 

70,984

 

U.S. GSE residential collateralized mortgage obligations

 

175,878

 

3,493

 

(46

)

179,325

 

U.S. GSE commercial collateralized mortgage obligations (1)

 

5,167

 

70

 

 

5,237

 

Total available for sale

 

431,931

 

9,564

 

(56

)

441,439

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

State and municipal obligations

 

104,314

 

2,048

 

(5

)

106,357

 

U.S. GSE residential collateralized mortgage obligations

 

42,081

 

1,104

 

(21

)

43,164

 

Corporate Bonds

 

22,758

 

3

 

(1,330

)

21,431

 

Total held to maturity

 

169,153

 

3,155

 

(1,356

)

170,952

 

Total securities

 

$

601,084

 

$

12,719

 

$

(1,412

)

$

612,391

 

 

(1)                U.S. GSE commercial collateralized mortgage obligations represent securities with multi-family mortgage loans as the collateral.

 

10



 

 

The following table summarizes the amortized cost, fair value and maturities of the available for sale and held to maturity investment securities portfolio at June 30, 2012. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

 

June 30, 2012

 

 

 

Amortized

 

Fair

 

(In thousands)

 

Cost

 

Value

 

Maturity

 

 

 

 

 

Available for sale:

 

 

 

 

 

Within one year

 

$

16,584

 

$

16,699

 

One to five years

 

62,437

 

63,846

 

Five to ten years

 

105,846

 

107,322

 

Beyond ten years

 

257,751

 

261,626

 

Total

 

$

442,618

 

$

449,493

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

Within one year

 

$

46,915

 

$

46,998

 

One to five years

 

37,894

 

38,090

 

Five to ten years

 

33,731

 

33,796

 

Beyond ten years

 

59,382

 

61,460

 

Total

 

$

177,922

 

$

180,344

 

 

Securities with unrealized losses at June 30, 2012 and December 31, 2011, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

 

 

 

Less than 12 months

 

Greater than 12 months

 

June 30, 2012

 

 

 

Unrealized

 

 

 

Unrealized

 

(In thousands)

 

Fair Value

 

losses

 

Fair Value

 

losses

 

Available for sale:

 

 

 

 

 

 

 

 

 

State and municipal obligations

 

$

16,529

 

$

70

 

$

 

$

 

U.S. GSE residential collateralized mortgage obligations

 

58,633

 

289

 

 

 

Non Agency commercial mortgage-backed securities

 

5,062

 

7

 

 

 

 

 

Other Asset-backed securities

 

7,815

 

164

 

 

 

 

 

Total available for sale

 

88,039

 

530

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

State and municipal obligations

 

17,407

 

31

 

 

 

U.S. GSE residential collateralized mortgage obligations

 

4,307

 

10

 

 

 

Corporate Bonds

 

4,803

 

197

 

12,292

 

708

 

Total held to maturity

 

$

26,517

 

$

238

 

$

12,292

 

$

708

 

 

 

 

Less than 12 months

 

Greater than 12 months

 

December 31, 2011

 

 

 

Unrealized

 

 

 

Unrealized

 

(In thousands)

 

Fair Value

 

losses

 

Fair Value

 

losses

 

Available for sale:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

7,196

 

$

2

 

$

 

$

 

State and municipal obligations

 

4,283

 

8

 

 

 

U.S. GSE residential collateralized mortgage obligations

 

7,672

 

46

 

 

 

Total available for sale

 

$

19,151

 

$

56

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

State and municipal obligations

 

7,011

 

5

 

 

 

U.S. GSE residential collateralized mortgage obligations

 

4,810

 

21

 

 

 

Corporate Bonds

 

4,664

 

336

 

12,006

 

994

 

Total held to maturity

 

$

16,485

 

$

362

 

$

12,006

 

$

994

 

 

11



 

 

Other-Than-Temporary-Impairment

 

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held-to-maturity are generally evaluated for OTTI under FASB ASC 320, Accounting for Certain Investments in Debt and Equity Securities. In determining OTTI under the FASB ASC 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

 

At June 30, 2012, the majority of unrealized losses on available for sale securities are related to the Company’s U.S. GSE residential collateralized mortgage obligations and the majority of unrealized losses on held to maturity securities are related to corporate bonds.  The decrease in fair value of the U.S. GSE residential collateralized mortgage obligations and the corporate bond portfolio is attributable to changes in interest rates and not credit quality.  Each issuer of corporate bonds has maintained their well capitalized status and continues to be reviewed periodically.  The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2012.

 

Proceeds from sales of securities available for sale were $60.5 million and $14.1 million for the three months ended June 30, 2012 and 2011, respectively. Proceeds from sales of securities available for sale were $63.8 million and $14.1 million for the six months ended June 30, 2012 and 2011, respectively. Gross gains of $1.7 million and $0.1 million were realized on these sales during the three months ended June 30, 2012 and 2011, respectively. Gross gains of $2.0 million and $0.1 million were realized on these sales during the six months ended June 30, 2012 and 2011, respectively. Proceeds from calls of securities were $62.9 million and $17.2 million for the three months ended June 30, 2012 and 2011, respectively. Proceeds from calls of securities were $108.5 million and $27.2 million for the six months ended June 30, 2012 and 2011, respectively.

 

Securities having a fair value of approximately $266.2 million and $287.8 million at June 30, 2012 and December 31, 2011, respectively, were pledged to secure public deposits and Federal Home Loan Bank and Federal Reserve Bank overnight borrowings. The Bank did not hold any trading securities during the six months ended June 30, 2012 or the year ended December 31, 2011.

 

The Bank is a member of the Federal Home Loan Bank (“FHLB”) of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors, and may invest in additional amounts.  The Bank is a member of the Atlantic Central Banker’s Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the Federal Reserve Bank (“FRB”) system and required to own FRB stock.  FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value.  Both cash and stock dividends are reported as income.  The Bank owned approximately $2.8 million in FHLB, ACBB and FRB stock at June 30, 2012 and approximately $1.7 million at December 31, 2011. These amounts were reported as restricted securities in the consolidated balance sheets.

 

5. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

 

FASB ASC No. 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

 

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

 

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

12



 

 

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

Investment Securities: The estimated fair values are based on independent dealer quotations on nationally recognized securities exchanges, if available (Level 1). For securities where quoted prices are not available, fair value is based on matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2).

 

Derivatives: Represents an interest rate swap and the estimated fair values are based on valuation models using observable market data as of measurement date (Level 2).

 

Impaired Loans:  At the time a loan is considered impaired, it is valued at the lower of cost or fair value.  For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based upon recent appraised values. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Adjustments may relate to locate, square footage, condition, amenities, market rate of leases as well as timing of comparable sales. Such adjustments are generally capped at 15% of appraised value and typically result in a Level 3 classification of the inputs for determining fair value. The fair value of the loan is compared to the carrying value to determine if any write-down or specific reserve is required. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

 

Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  Once received, the Credit Administration department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.  On a quarterly basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value.  The most recent analysis performed indicated that a discount of 1-5% should be applied to residential properties with appraisals performed within 12 months and an appreciation of 16-18% should be applied to commercial properties with appraisals performed within 12 months.

 

Loans Held For Sale:  Loans held for sale are carried at the lower of cost or fair values.  The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors (Level 3).

 

Assets and liabilities measured on a recurring basis:

 

 

 

 

 

Fair Value Measurements at

 

 

 

 

 

June 30, 2012 Using:

 

 

 

 

 

 

 

Significant

 

 

 

 

 

 

 

Quoted Prices In

 

Other

 

Significant

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

 

 

Carrying

 

Identical Assets

 

Inputs

 

Inputs

 

(In thousands)

 

Value

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

Available for sale securities:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

109,910

 

 

 

$

109,910

 

 

 

State and municipal obligations

 

63,869

 

 

 

63,869

 

 

 

U.S. GSE residential mortgage-backed securities

 

31,914

 

 

 

31,914

 

 

 

U.S. GSE residential collateralized mortgage obligations

 

221,539

 

 

 

221,539

 

 

 

U.S. GSE commercial collateralized mortgage obligations (1)

 

9,384

 

 

 

9,384

 

 

 

Non Agency commercial mortgage-backed securities

 

5,062

 

 

 

5,062

 

 

 

Other Asset backed securities

 

7,815

 

 

 

7,815

 

 

 

Total available for sale

 

$

449,493

 

 

 

$

449,493

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

$

(34

)

 

 

$

(34

)

 

 

 

13



 

 

 

 

 

 

Fair Value Measurements at

 

 

 

 

 

December 31, 2011 Using:

 

 

 

 

 

 

 

Significant

 

 

 

 

 

 

 

Quoted Prices In

 

Other

 

Significant

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

 

 

Carrying

 

Identical Assets

 

Inputs

 

Inputs

 

(In thousands)

 

Value

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

Available for sale securities:

 

 

 

 

 

 

 

 

 

U.S. GSE securities

 

$

131,674

 

 

 

$

131,674

 

 

 

State and municipal obligations

 

54,219

 

 

 

54,219

 

 

 

U.S. GSE residential mortgage-backed securities

 

70,984

 

 

 

70,984

 

 

 

U.S. GSE residential collateralized mortgage obligations

 

179,325

 

 

 

179,325

 

 

 

U.S. GSE commercial collateralized mortgage obligations (1)

 

5,237

 

 

 

5,237

 

 

 

Total available for sale

 

$

441,439

 

 

 

$

441,439

 

 

 

 

(1)        U.S. GSE commercial collateralized mortgage obligations represent securities with multi-family mortgage loans as the collateral.

 

Assets measured at fair value on a non-recurring basis are summarized below:

 

 

 

 

 

Fair Value Measurements at

 

 

 

 

 

June 30, 2012 Using:

 

 

 

 

 

 

 

Significant

 

 

 

 

 

 

 

Quoted Prices In

 

Other

 

Significant

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

 

 

Carrying

 

Identical Assets

 

Inputs

 

Inputs

 

(In thousands)

 

Value

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Impaired loans

 

$

262

 

 

 

 

 

$

262

 

 

 

 

 

 

Fair Value Measurements at

 

 

 

 

 

December 31, 2011 Using:

 

 

 

 

 

 

 

Significant

 

 

 

 

 

 

 

Quoted Prices In

 

Other

 

Significant

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

 

 

Carrying

 

Identical Assets

 

Inputs

 

Inputs

 

(In thousands)

 

Value

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Impaired loans

 

$

1,868

 

 

 

 

 

$

1,868

 

Loans held for sale

 

2,300

 

 

 

 

 

2,300

 

 

Impaired loans with allocated allowance for loan losses at June 30, 2012, had a carrying amount of $0.3 million, which is made up of the outstanding balance of $0.8 million, net of a valuation allowance of $0.5 million. This resulted in an additional provision for loan losses of $0.3 million that is included in the amount reported on the income statement. Impaired loans with allocated allowance for loan losses at December 31, 2011, had a carrying amount of $1.9 million, which is made up of the outstanding balance of $2.1 million, net of a valuation allowance of $0.2 million. This resulted in an additional provision for loan losses of $0.2 million that is included in the amount reported on the income statement.

 

Loans held for sale at December 31, 2011 had a carrying amount and outstanding balance of $2.3 million. There was no valuation allowance at December 31, 2011. Charge-offs of $0.9 million were incurred on loans transferred to loans held for sale at December 31, 2011. These loans were subsequently sold in January 2012 with no gain or loss incurred.

 

14



 

 

The Company used the following method and assumptions, not previously presented, in estimating the fair value of its financial instruments:

 

Cash and Due from Banks and Federal Funds Sold: Carrying amounts approximate fair value, since these instruments are either payable on demand or have short-term maturities. Cash on hand and non-interest due from bank accounts are Level 1 and interest bearing Cash Due from Banks and and Federal Funds Sold are Level 2.

 

Restricted Securities: It is not practicable to determine the fair value of FHLB, ACBB and FRB stock due to restrictions placed on its transferability.

 

Loans: The estimated fair values of real estate mortgage loans and other loans receivable are based on discounted cash flow calculations that use available market benchmarks when establishing discount factors for the types of loans resulting in a Level 3 classification. Exceptions may be made for adjustable rate loans (with resets of one year or less), which would be discounted straight to their rate index plus or minus an appropriate spread. All nonaccrual loans are carried at their current fair value. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price and therefore, while permissible for presentation purposed under ASC 825-10, do not conform with ASC 820-10.

 

Deposits: The estimated fair value of certificates of deposits are based on discounted cash flow calculations that use a replacement cost of funds approach to establishing discount rates for certificates of deposits maturities resulting in a Level 2 classification. Stated value is fair value for all other deposits resulting in a Level 1 classification.

 

Borrowed Funds: The estimated fair value of borrowed funds are based on discounted cash flow calculations that use a replacement cost of funds approach to establishing discount rates for funding maturities resulting in a Level 2 classification.

 

Junior Subordinated Debentures: The estimated fair value is based on estimates using market data for similarly risk weighted items and takes into consideration the convertible features of the debentures into common stock of the Company which is an unobservable input resulting in a Level 3 classification.

 

Accrued Interest Receivable and Payable: For these short-term instruments, the carrying amount is a reasonable estimate of the fair value resulting in a Level 1 or 2 classification.

 

Off-Balance-Sheet Liabilities: The fair value of off-balance-sheet commitments to extend credit is estimated using fees currently charged to enter into similar agreements. The fair value is immaterial as of June 30, 2012 and December 31, 2011.

 

Fair value estimates are made at specific points in time and are based on existing on-and off-balance sheet financial instruments. Such estimates are generally subjective in nature and dependent upon a number of significant assumptions associated with each financial instrument or group of financial instruments, including estimates of discount rates, risks associated with specific financial instruments, estimates of future cash flows, and relevant available market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do not reflect the value of anticipated future business, premiums or discounts that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, or the tax consequences of realizing gains or losses on the sale of financial instruments.

 

15



 

 

The estimated fair values and recorded carrying amounts of the Bank’s financial instruments at June 30, 2012 and December 31, 2011 are as follows:

 

 

 

 

 

Fair Value Measurements at

 

 

 

 

 

 

 

June 30, 2012 Using:

 

 

 

 

 

 

 

 

 

Significant

 

 

 

 

 

 

 

 

 

Quoted Prices In

 

Other

 

Significant

 

 

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

 

 

 

 

Carrying

 

Identical Assets

 

Inputs

 

Inputs

 

 

 

(In thousands)

 

Amount

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

29,034

 

$

29,034

 

$

 

$

 

$

29,034

 

Interest bearing deposits with banks

 

35,183

 

 

35,183

 

 

35,183

 

Securities available for sale

 

449,493

 

 

449,493

 

 

449,493

 

Securities restricted

 

2,828

 

n/a

 

n/a

 

n/a

 

n/a

 

Securities held to maturity

 

177,922

 

 

180,344

 

 

180,344

 

Loans, net

 

664,976

 

 

 

695,024

 

695,024

 

Accrued interest receivable

 

5,029

 

 

2,797

 

2,232

 

5,029

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

176,585

 

 

 

178,184

 

 

178,184

 

Demand and other deposits

 

1,053,939

 

1,053,939

 

 

 

1,053,939

 

Federal Home Loan Bank term advances

 

15,000

 

 

15,017

 

 

15,017

 

Repurchase agreements

 

12,317

 

 

13,101

 

 

13,101

 

Junior Subordinated Debentures

 

16,002

 

 

 

17,283

 

17,283

 

Accrued interest payable

 

233

 

11

 

222

 

 

233

 

 

 

 

At December 31, 2011

 

 

 

 

 

 

 

 

 

Carrying

 

Fair

 

 

 

 

 

 

 

(In thousands)

 

Amount

 

Value

 

 

 

 

 

 

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

25,921

 

$

25,921

 

 

 

 

 

 

 

Interest bearing deposits with banks

 

53,625

 

53,625

 

 

 

 

 

 

 

Securities available for sale

 

441,439

 

441,439

 

 

 

 

 

 

 

Securities restricted

 

1,660

 

n/a

 

 

 

 

 

 

 

Securities held to maturity

 

169,153

 

170,952

 

 

 

 

 

 

 

Loans, net

 

603,606

 

632,616

 

 

 

 

 

 

 

Accrued interest receivable

 

4,940

 

4,940

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

Demand and other deposits

 

1,188,185

 

1,190,080

 

 

 

 

 

 

 

Repurchase agreements

 

16,897

 

17,990