UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011
or
|
|
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
FOR
THE TRANSITION PERIOD FROM
TO
COMMISSION FILE NUMBER : 000-51525
LEGACY BANCORP, INC.
(Exact name of registrant as specified in its charter)
|
|
|
Delaware
|
|
20-3135053
|
(State or other jurisdiction of incorporation or organization)
|
|
(IRS Employer Identification No.)
|
99 NORTH STREET
PITTSFIELD, MASSACHUSETTS 01201
(Address of principal executive offices) (Zip Code)
(413) 443-4421
(Registrants 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
þ
No
o
.
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
o
No
o
.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definition of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12(b)-2 of the Exchange Act.
Large accelerated filer
o
|
Accelerated
filer
þ
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act).
Yes
o
No
þ
The number of shares of Common Stock outstanding as of
May 9, 2011 was
8,631,732
.
LEGACY BANCORP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
1
PART I FINANCIAL INFORMATION
Item 1: Financial Statements
LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
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|
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March 31,
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December 31,
|
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2011
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|
2010
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|
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(Unaudited)
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|
ASSETS
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|
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Cash and due from banks
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$
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13,947
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|
|
$
|
12,186
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Short-term investments
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|
13,680
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14,906
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Cash and cash equivalents
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27,627
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27,092
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Securities available for sale
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191,853
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185,688
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Securities held to maturity
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97
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|
97
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|
Restricted equity securities and other investments at cost
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16,863
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16,546
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|
Loans held for sale
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|
785
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3,839
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|
Loans, net of allowance for loan losses of $8,694
in 2011 and $9,010 in 2010
|
|
|
592,739
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|
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607,102
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Premises and equipment, net
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18,823
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19,142
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Accrued interest receivable
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2,577
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2,631
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Goodwill, net
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11,558
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11,558
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Mortgage servicing rights
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776
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|
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|
737
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Other intangible assets
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2,675
|
|
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|
2,888
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|
Net deferred tax asset
|
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|
12,428
|
|
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|
12,684
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|
Bank-owned life insurance
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|
17,058
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17,047
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Foreclosed assets
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2,365
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|
2,216
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Other assets
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7,333
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|
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|
7,610
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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$
|
905,557
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|
|
$
|
916,877
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|
|
|
|
|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS EQUITY
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Deposits:
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Noninterest-bearing
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$
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78,115
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$
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75,116
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Interest-bearing
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598,680
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610,129
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Total deposits
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676,795
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|
685,245
|
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|
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|
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|
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Securities sold under agreements to repurchase
|
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3,671
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|
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5,329
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|
Federal Home Loan Bank advances
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105,385
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|
105,388
|
|
Mortgagors escrow accounts
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|
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1,006
|
|
|
|
1,211
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|
Accrued expenses and other liabilities
|
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|
6,886
|
|
|
|
8,145
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
793,743
|
|
|
|
805,318
|
|
|
|
|
|
|
|
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|
|
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Commitments and contingencies
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Stockholders Equity:
|
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|
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|
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|
Preferred Stock ($.01 par value, 10,000,000 shares
authorized, none issued or outstanding)
|
|
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|
|
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|
|
Common Stock ($.01 par value, 40,000,000 shares
authorized and 10,308,600 issued at March 31, 2011 and
December 31, 2010; 8,631,732 outstanding at March 31,
2011 and December 31, 2010)
|
|
|
103
|
|
|
|
103
|
|
Additional paid-in-capital
|
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|
103,125
|
|
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|
103,168
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|
Unearned compensation ESOP
|
|
|
(6,956
|
)
|
|
|
(6,956
|
)
|
Unearned compensation Equity Incentive Plans
|
|
|
(853
|
)
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|
|
(1,053
|
)
|
Retained earnings
|
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|
39,434
|
|
|
|
39,114
|
|
Accumulated other comprehensive loss
|
|
|
(455
|
)
|
|
|
(233
|
)
|
Treasury stock, at cost (1,676,868 shares
at March 31, 2011 and December 31, 2010)
|
|
|
(22,584
|
)
|
|
|
(22,584
|
)
|
|
|
|
|
|
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|
Total stockholders equity
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|
111,814
|
|
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|
111,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
905,557
|
|
|
$
|
916,877
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
2
LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
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|
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|
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Three Months Ended March 31,
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2011
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|
2010
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(Unaudited)
|
|
Interest and dividend income:
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
8,018
|
|
|
$
|
9,296
|
|
Securities:
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
870
|
|
|
|
1,185
|
|
Tax-exempt
|
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|
20
|
|
|
|
167
|
|
Short-term investments
|
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|
4
|
|
|
|
6
|
|
|
|
|
|
|
|
|
Total interest and dividend income
|
|
|
8,912
|
|
|
|
10,654
|
|
|
|
|
|
|
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Interest expense:
|
|
|
|
|
|
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Deposits
|
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|
1,844
|
|
|
|
2,439
|
|
Federal Home Loan Bank advances
|
|
|
1,016
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|
|
|
1,449
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Other borrowed funds
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|
5
|
|
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|
10
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|
|
|
|
|
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Total interest expense
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|
2,865
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|
|
|
3,898
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|
|
|
|
|
|
|
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Net interest income
|
|
|
6,047
|
|
|
|
6,756
|
|
Provision for loan losses
|
|
|
41
|
|
|
|
2,421
|
|
|
|
|
|
|
|
|
Net interest income, after provision for loan losses
|
|
|
6,006
|
|
|
|
4,335
|
|
|
|
|
|
|
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|
Non-interest income:
|
|
|
|
|
|
|
|
|
Customer service fees
|
|
|
724
|
|
|
|
722
|
|
Portfolio management fees
|
|
|
543
|
|
|
|
280
|
|
Income from bank-owned life insurance
|
|
|
140
|
|
|
|
154
|
|
Insurance, annuities and mutual fund fees
|
|
|
51
|
|
|
|
20
|
|
Gain on sales of securities, net
|
|
|
27
|
|
|
|
101
|
|
Impairment losses on investments
|
|
|
(36
|
)
|
|
|
(299
|
)
|
Gain on sales of loans, net
|
|
|
139
|
|
|
|
60
|
|
Miscellaneous
|
|
|
14
|
|
|
|
11
|
|
|
|
|
|
|
|
|
Total non-interest income
|
|
|
1,602
|
|
|
|
1,049
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
2,826
|
|
|
|
3,475
|
|
Occupancy and equipment
|
|
|
1,018
|
|
|
|
991
|
|
Data processing
|
|
|
699
|
|
|
|
694
|
|
Professional fees
|
|
|
302
|
|
|
|
323
|
|
Advertising
|
|
|
89
|
|
|
|
319
|
|
FDIC deposit insurance
|
|
|
305
|
|
|
|
269
|
|
Foreclosed assets, net
|
|
|
330
|
|
|
|
118
|
|
Other general and administrative
|
|
|
944
|
|
|
|
984
|
|
|
|
|
|
|
|
|
Total non-interest expenses
|
|
|
6,513
|
|
|
|
7,173
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
1,095
|
|
|
|
(1,789
|
)
|
Provision (benefit) for income taxes
|
|
|
372
|
|
|
|
(545
|
)
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
723
|
|
|
$
|
(1,244
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.09
|
|
|
$
|
(0.15
|
)
|
Diluted
|
|
$
|
0.09
|
|
|
$
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
8,014,817
|
|
|
|
8,028,621
|
|
Diluted
|
|
|
8,052,772
|
|
|
|
8,028,621
|
|
See accompanying notes to consolidated financial statements
3
LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(Dollars in thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Unearned
|
|
|
Compensation
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Compensation
|
|
|
Equity
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
ESOP
|
|
|
Incentive Plan
|
|
|
Earnings
|
|
|
Income (Loss)
|
|
|
Stock
|
|
|
Equity
|
|
Balance at December 31, 2009
|
|
|
8,734,712
|
|
|
$
|
103
|
|
|
$
|
102,788
|
|
|
$
|
(7,322
|
)
|
|
$
|
(2,078
|
)
|
|
$
|
48,998
|
|
|
$
|
711
|
|
|
$
|
(21,833
|
)
|
|
$
|
121,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,244
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,244
|
)
|
Net unrealized gain/loss on securities
available for sale, net of reclassification
adjustment and tax effects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
333
|
|
|
|
|
|
|
|
333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(911
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared ($0.05 per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(408
|
)
|
|
|
|
|
|
|
|
|
|
|
(408
|
)
|
Common stock
repurchased 5% stock repurchase
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Program announced March 2009
|
|
|
(15,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(145
|
)
|
|
|
(145
|
)
|
Stock option expense
|
|
|
|
|
|
|
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69
|
|
Restricted stock expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220
|
|
Common stock held by ESOP committed
to be released (13,745 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183
|
|
|
|
|
|
|
|
(51
|
)
|
|
|
|
|
|
|
|
|
|
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010
|
|
|
8,719,512
|
|
|
$
|
103
|
|
|
$
|
102,857
|
|
|
$
|
(7,139
|
)
|
|
$
|
(1,858
|
)
|
|
$
|
47,295
|
|
|
$
|
1,044
|
|
|
$
|
(21,978
|
)
|
|
$
|
120,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010
|
|
|
8,631,732
|
|
|
$
|
103
|
|
|
$
|
103,168
|
|
|
$
|
(6,956
|
)
|
|
$
|
(1,053
|
)
|
|
$
|
39,114
|
|
|
$
|
(233
|
)
|
|
$
|
(22,584
|
)
|
|
$
|
111,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
723
|
|
|
|
|
|
|
|
|
|
|
|
723
|
|
Net unrealized gain/loss on securities
available for sale, net of reclassification
adjustment and tax effects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(222
|
)
|
|
|
|
|
|
|
(222
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared ($0.05 per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(403
|
)
|
|
|
|
|
|
|
|
|
|
|
(403
|
)
|
Stock option expense net of cumulative forfeitures
|
|
|
|
|
|
|
|
|
|
|
(48
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48
|
)
|
Restricted stock expense
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2011
|
|
|
8,631,732
|
|
|
$
|
103
|
|
|
$
|
103,125
|
|
|
$
|
(6,956
|
)
|
|
$
|
(853
|
)
|
|
$
|
39,434
|
|
|
$
|
(455
|
)
|
|
$
|
(22,584
|
)
|
|
$
|
111,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
4
LEGACY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Unaudited)
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
723
|
|
|
$
|
(1,244
|
)
|
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Provision for loan losses
|
|
|
41
|
|
|
|
2,421
|
|
Net amortization of securities
|
|
|
149
|
|
|
|
205
|
|
Amortization of mortgage servicing rights
|
|
|
33
|
|
|
|
23
|
|
Amortization of other intangible assets
|
|
|
213
|
|
|
|
154
|
|
Depreciation and amortization expense
|
|
|
374
|
|
|
|
395
|
|
(Gain) loss on sales/impairment of securities, net
|
|
|
9
|
|
|
|
198
|
|
Loss on sales/writedowns of foreclosed real estate, net
|
|
|
213
|
|
|
|
75
|
|
Gain on sales of loans, net
|
|
|
(139
|
)
|
|
|
(60
|
)
|
Loans originated for sale
|
|
|
(6,860
|
)
|
|
|
(5,667
|
)
|
Proceeds from sales of loans
|
|
|
9,981
|
|
|
|
5,415
|
|
Share-based compensation expense
|
|
|
157
|
|
|
|
289
|
|
Deferred tax provision
|
|
|
390
|
|
|
|
1,195
|
|
Employee Stock Ownership Plan expense
|
|
|
|
|
|
|
132
|
|
Net change in:
|
|
|
|
|
|
|
|
|
Bank-owned life insurance
|
|
|
(143
|
)
|
|
|
(156
|
)
|
Accrued interest receivable
|
|
|
54
|
|
|
|
115
|
|
Other assets
|
|
|
277
|
|
|
|
(2,517
|
)
|
Accrued expenses and other liabilities
|
|
|
(1,259
|
)
|
|
|
1,323
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
4,213
|
|
|
|
2,296
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Activity in available-for-sale securities:
|
|
|
|
|
|
|
|
|
Sales
|
|
|
2,097
|
|
|
|
2,141
|
|
Maturities, prepayments and calls
|
|
|
22,935
|
|
|
|
28,010
|
|
Purchases
|
|
|
(31,675
|
)
|
|
|
(42,494
|
)
|
Purchase of other investments
|
|
|
(353
|
)
|
|
|
(196
|
)
|
Loan originations and purchases, net of principal payments
|
|
|
13,827
|
|
|
|
9,986
|
|
Redemption of bank-owned life insurance
|
|
|
132
|
|
|
|
|
|
Additions to premises and equipment
|
|
|
(55
|
)
|
|
|
(481
|
)
|
Proceeds from sales of foreclosed assets
|
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by investing activities
|
|
|
7,041
|
|
|
|
(3,034
|
)
|
|
|
|
|
|
|
|
(continued)
See accompanying notes to consolidated financial statements.
5
LEGACY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Unaudited)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Net (decrease) increase in deposits
|
|
|
(8,450
|
)
|
|
|
9,866
|
|
Net decrease in securities sold under
agreements to repurchase
|
|
|
(1,658
|
)
|
|
|
(221
|
)
|
Repayment of Federal Home Loan Bank advances
|
|
|
(13,760
|
)
|
|
|
(13,021
|
)
|
Proceeds from Federal Home Loan Bank advances
|
|
|
13,757
|
|
|
|
3,018
|
|
Net (decrease) increase in mortgagors escrow accounts
|
|
|
(205
|
)
|
|
|
37
|
|
Repurchase of common stock
|
|
|
|
|
|
|
(145
|
)
|
Payment of dividends on common stock
|
|
|
(403
|
)
|
|
|
(408
|
)
|
|
|
|
|
|
|
|
Net cash used by financing activities
|
|
|
(10,719
|
)
|
|
|
(874
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
535
|
|
|
|
(1,612
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
27,092
|
|
|
|
40,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
27,627
|
|
|
$
|
38,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Interest paid on deposits
|
|
$
|
1,915
|
|
|
$
|
2,497
|
|
Interest paid on Federal Home Loan Bank advances
|
|
|
1,134
|
|
|
|
1,433
|
|
Interest paid on other borrowed funds
|
|
|
5
|
|
|
|
10
|
|
Income taxes paid
|
|
|
20
|
|
|
|
100
|
|
Non-cash activities:
|
|
|
|
|
|
|
|
|
Real estate acquired through foreclosure
|
|
|
495
|
|
|
|
708
|
|
See accompanying notes to consolidated financial statements.
6
LEGACY BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Recent Developments
On December 21, 2010, Legacy Bancorp, Inc. (Legacy or the Company) and Berkshire Hills Bancorp,
Inc. (Berkshire) jointly announced the execution of a definitive agreement whereby Berkshire will
acquire Legacy in a 90% stock and 10% cash transaction. As a result of the merger, Legacys
shareholders will become shareholders of Berkshire and will receive 0.56385 shares of Berkshire
common stock plus $1.30 cash for each share of Legacy common stock they own. The transaction is
expected to be completed during the third quarter of 2011, subject to the approval of regulators
and shareholders of both companies. Berkshires common stock is listed on the NASDAQ Global Select
Market under the trading symbol BHLB. On May 9, 2011, the closing sales price of a share of
Berkshire common stock was $21.13.
2. Basis of presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of
Legacy Bancorp, Inc. (the Company) and its wholly-owned subsidiaries, LB Funding Corporation and
Legacy Banks (the Bank). The accounts of the Bank include all of its wholly-owned subsidiaries.
These financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (GAAP) for interim financial statements and the
instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by GAAP for complete financial statements. In the
opinion of management, the information reflects all adjustments (consisting solely of normal
recurring adjustments) that are necessary for a fair presentation. Financial tables are presented
in thousands ($000s) unless otherwise indicated. The results shown for the interim period ended
March 31, 2011 are not necessarily indicative of the results to be obtained for the year ending
December 31, 2011. These consolidated interim financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in the Companys most
recent Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission
for the year ended December 31, 2010.
3. Recent Accounting Pronouncements
In July 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) No. 2010-20, Receivables (Topic 310),
Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses
. This ASU requires an entity to provide disclosures
that facilitate financial statement users evaluation of (1) the nature of credit risk inherent in
the entitys loan portfolio (2) how that risk is analyzed and assessed in arriving at the allowance
for loan and lease losses and (3) the changes and reasons for those changes in the allowance for
loan and lease losses. The Company adopted this Update as of January 1, 2011 and this adoption did
not have a significant impact on the Companys consolidated financial statements. The Company has
provided the disclosures required as of March 31, 2011 in Note 9.
In April 2011, the FASB issued ASU No. 2011-02, Receivables (Topic 310),
A Creditors Determination
of Whether a Restructuring Is a Troubled Debt Restructuring.
This Update provides additional
guidance and clarification to help creditors in determining whether a creditor has granted a
concession and whether a debtor is experiencing financial difficulties for purposes of determining
whether a restructuring constitutes a troubled debt restructuring (TDR). This Update is effective
for the first interim or annual period beginning on or after June 15, 2011, with retrospective
application to the beginning of the annual period of adoption. The measurement of impairment should
be done prospectively in the period of adoption for loans that are newly identified as TDRs upon
adoption of this Update. In addition, the TDR disclosures required by ASU 2010-20,
Receivables
(Topic 310), Disclosures about the Credit Quality of Financing Receivables and the Allowance for
Credit Losses
should be provided beginning in the period of adoption of this Update. The Company
will adopt this Update on July 1, 2011 and is currently evaluating the impact of adoption on its
consolidated financial statements.
In April 2011, the FASB issued ASU No. 2011-03,
Reconsideration of Effective Control for
Repurchase Agreements
. This update revises the criteria for assessing effective control for
repurchase agreements and other agreements that both entitle and obligate a transferor to
repurchase or redeem financial assets before their maturity. The update will be effective for
interim and annual reporting periods beginning on or after December 15, 2011, early adoption is
prohibited, and the amendments will be applied prospectively to transactions or modifications of
existing transactions that occur on or after the effective date. The adoption of this guidance is
not expected to have a material impact on the Companys financial condition or results of
operations.
7
4. Earnings Per Share
Basic earnings per share is determined by dividing net income by the weighted-average number of net
outstanding shares of common stock for the period. The net outstanding shares of common stock
equals the gross number of shares of common stock issued less the average unallocated shares of the
Legacy Banks Employee Stock Ownership Plan (ESOP), the average number of treasury shares and the
average number of unvested shares related to restricted stock awards. Diluted earnings per share
is determined by dividing net income by the average number of net outstanding common shares
computed as if all potential common shares have been issued by the Company. Potential common
shares to be issued would include those related to outstanding options and unvested stock awards.
Earnings per share have been computed as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common stock
(000s)
|
|
$
|
723
|
|
|
$
|
(1,244
|
)
|
|
|
|
|
|
|
|
|
|
Average number of shares issued
|
|
|
10,308,600
|
|
|
|
10,308,600
|
|
Less: average unallocated ESOP shares
|
|
|
(522,755
|
)
|
|
|
(549,640
|
)
|
Less: average treasury shares
|
|
|
(1,676,868
|
)
|
|
|
(1,581,449
|
)
|
Less: average unvested restricted stock awards
|
|
|
(94,160
|
)
|
|
|
(148,890
|
)
|
|
|
|
|
|
|
|
Average number of basic shares outstanding
|
|
|
8,014,817
|
|
|
|
8,028,621
|
|
|
|
|
|
|
|
|
|
|
Plus: dilutive unvested restricted stock awards
|
|
|
31,141
|
|
|
|
|
|
Plus: diluted stock option shares
|
|
|
6,814
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of diluted shares outstanding
|
|
|
8,052,772
|
|
|
|
8,028,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
0.09
|
|
|
$
|
(0.15
|
)
|
Diluted earnings (loss) per share
|
|
$
|
0.09
|
|
|
$
|
(0.15
|
)
|
5. Comprehensive Income (Loss)
Accounting principles generally require that recognized revenue, expenses, gains and losses be
included in net income. Although certain changes in assets and liabilities are reported as a
separate component of the equity section of the balance sheet, such items, along with net income
are components of comprehensive income.
The components of other comprehensive income (loss) and related tax effects for available-for-sale
securities follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Dollars in thousands)
|
|
Securities
|
|
|
|
|
|
|
|
|
Net unrealized holding (losses) gains on available for
sale (AFS) securities
|
|
$
|
(329
|
)
|
|
$
|
631
|
|
Reclassification adjustment for gains on sales of AFS securities
|
|
|
(27
|
)
|
|
|
(101
|
)
|
|
|
|
|
|
|
|
|
|
|
(356
|
)
|
|
|
530
|
|
Tax effect
|
|
|
134
|
|
|
|
(197
|
)
|
|
|
|
|
|
|
|
Net-of-tax amount
|
|
$
|
(222
|
)
|
|
$
|
333
|
|
|
|
|
|
|
|
|
The components of accumulated other comprehensive income (loss) included in stockholders
equity are as follows:
8
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Dollars in thousands)
|
|
Securities
|
|
|
|
|
|
|
|
|
Net unrealized holding gains
on available for sale securities
|
|
$
|
(469
|
)
|
|
$
|
(112
|
)
|
Tax effects
|
|
|
183
|
|
|
|
48
|
|
|
|
|
|
|
|
|
Net-of-tax amount
|
|
|
(286
|
)
|
|
|
(64
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors Fee Plan
|
|
|
|
|
|
|
|
|
Unrecognized net actuarial loss and
prior service costs
|
|
|
(285
|
)
|
|
|
(285
|
)
|
Tax effect
|
|
|
116
|
|
|
|
116
|
|
|
|
|
|
|
|
|
Net-of-tax amount
|
|
|
(169
|
)
|
|
|
(169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(455
|
)
|
|
$
|
(233
|
)
|
|
|
|
|
|
|
|
6. Dividends
On March 9, 2011, the Company declared a cash dividend of $0.05 per share of common stock which was
paid on April 1, 2011 to shareholders of record as of the close of business on March 20, 2011.
7. Commitments and Other Contingencies
Outstanding loan commitments and other contingencies totaled $112.7 million at March 31, 2011,
compared to $118.2 million as of December 31, 2010. Loan commitments and other contingencies
primarily consist of commitments to originate new loans as well as the outstanding unused portions
of home equity and other lines of credit, unadvanced funds on construction loans and commercial
real estate partnership capital commitments.
8. Securities
The amortized cost and estimated fair value of securities, with gross unrealized gains and losses,
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
(Dollars in thousands)
|
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSE)
|
|
$
|
144,881
|
|
|
$
|
125
|
|
|
$
|
(1,069
|
)
|
|
$
|
143,937
|
|
Municipal
|
|
|
1,599
|
|
|
|
25
|
|
|
|
(9
|
)
|
|
|
1,615
|
|
GSE residential mortgage-backed
|
|
|
5,775
|
|
|
|
228
|
|
|
|
|
|
|
|
6,003
|
|
U.S. Government guaranteed residential mortgage-backed
|
|
|
39,702
|
|
|
|
508
|
|
|
|
(378
|
)
|
|
|
39,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
191,957
|
|
|
|
886
|
|
|
|
(1,456
|
)
|
|
|
191,387
|
|
|
Marketable equity securities
|
|
|
365
|
|
|
|
101
|
|
|
|
|
|
|
|
466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
192,322
|
|
|
$
|
987
|
|
|
$
|
(1,456
|
)
|
|
$
|
191,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other bonds and obligations
|
|
$
|
97
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
(Dollars in thousands)
|
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSE)
|
|
$
|
132,221
|
|
|
$
|
244
|
|
|
$
|
(841
|
)
|
|
$
|
131,624
|
|
Municipal
|
|
|
3,145
|
|
|
|
36
|
|
|
|
(36
|
)
|
|
|
3,145
|
|
Corporate and other
|
|
|
401
|
|
|
|
1
|
|
|
|
|
|
|
|
402
|
|
GSE residential mortgage-backed
|
|
|
6,370
|
|
|
|
225
|
|
|
|
(1
|
)
|
|
|
6,594
|
|
U.S. Government guaranteed residential mortgage-backed
|
|
|
42,775
|
|
|
|
522
|
|
|
|
(330
|
)
|
|
|
42,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
184,912
|
|
|
|
1,028
|
|
|
|
(1,208
|
)
|
|
|
184,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable equity securities
|
|
|
888
|
|
|
|
114
|
|
|
|
(46
|
)
|
|
|
956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
185,800
|
|
|
$
|
1,142
|
|
|
$
|
(1,254
|
)
|
|
$
|
185,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other bonds and obligations
|
|
$
|
97
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amortized cost and estimated fair value of debt securities by contractual maturity at March 31,
2011 is as follows. 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for Sale
|
|
|
Held to Maturity
|
|
|
|
Amortized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 1 year
|
|
$
|
8,791
|
|
|
$
|
8,825
|
|
|
$
|
|
|
|
$
|
|
|
Over 1 year to 5 years
|
|
|
113,652
|
|
|
|
112,978
|
|
|
|
82
|
|
|
|
82
|
|
Over 5 years to 10 years
|
|
|
12,099
|
|
|
|
11,974
|
|
|
|
|
|
|
|
|
|
Over 10 years
|
|
|
11,938
|
|
|
|
11,775
|
|
|
|
15
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total bonds and obligations
|
|
|
146,480
|
|
|
|
145,552
|
|
|
|
97
|
|
|
|
97
|
|
Mortgage-backed
|
|
|
45,477
|
|
|
|
45,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
$
|
191,957
|
|
|
$
|
191,387
|
|
|
$
|
97
|
|
|
$
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2011 and 2010, proceeds from the sale and call of
securities available for sale amounted to $6.1 million and $8.2 million respectively. Gross gains
of $84,000 and $226,000, respectively, and gross losses of $60,000 and $111,000, respectively, were
realized on those sales. Gross gains on called securities were $4,000 and $6,000, respectively and
gross losses were $1,000 and $20,000, respectively in the three months ended 2011 and
2010.
Information pertaining to securities with gross unrealized losses aggregated by investment category
and length of time that individual securities have been in a continuous loss position follows:
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than Twelve Months
|
|
|
Over Twelve Months
|
|
|
|
Gross
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Losses
|
|
|
Value
|
|
|
Losses
|
|
|
Value
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
March 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSE)
|
|
$
|
1,069
|
|
|
$
|
104,056
|
|
|
$
|
|
|
|
$
|
|
|
Municipal
|
|
|
9
|
|
|
|
605
|
|
|
|
|
|
|
|
|
|
U.S. Government guaranteed residential mortgage-backed
|
|
|
338
|
|
|
|
14,894
|
|
|
|
40
|
|
|
|
1,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
1,416
|
|
|
|
119,555
|
|
|
|
40
|
|
|
|
1,199
|
|
Marketable equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities
|
|
$
|
1,416
|
|
|
$
|
119,555
|
|
|
$
|
40
|
|
|
$
|
1,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSE)
|
|
$
|
841
|
|
|
$
|
73,475
|
|
|
$
|
|
|
|
$
|
|
|
Municipal
|
|
|
36
|
|
|
|
1,577
|
|
|
|
|
|
|
|
|
|
GSE residential mortgage-backed
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
131
|
|
U.S. Government guaranteed residential mortgage-backed
|
|
|
330
|
|
|
|
17,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
1,207
|
|
|
|
92,287
|
|
|
|
1
|
|
|
|
131
|
|
Marketable equity securities
|
|
|
46
|
|
|
|
302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities
|
|
$
|
1,253
|
|
|
$
|
92,589
|
|
|
$
|
1
|
|
|
$
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management evaluates securities for other-than-temporary impairment (OTTI) at least on a
quarterly basis, and more frequently when economic or market concerns warrant such evaluation. At
March 31, 2011, temporarily impaired debt and mortgage-backed securities have unrealized losses
from the Companys amortized cost basis as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
# of
|
|
Amortized
|
|
Unrealized
|
|
% of
|
|
|
Securities
|
|
Cost
|
|
Loss
|
|
Depreciation
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSE)
|
|
|
133
|
|
|
$
|
105,125
|
|
|
$
|
1,069
|
|
|
|
1.0
|
%
|
Municipal
|
|
|
2
|
|
|
|
614
|
|
|
|
9
|
|
|
|
1.5
|
%
|
U.S. Government guaranteed residential mortgage-backed
|
|
|
22
|
|
|
|
16,472
|
|
|
|
378
|
|
|
|
2.3
|
%
|
The unrealized losses on the Companys investment in debt securities and mortgage-backed
securities issued by the U.S. government, government-sponsored enterprises and municipal
governments were generally caused by interest rate changes. These investments are guaranteed or
sponsored by the U.S. Government or an agency thereof or by the municipal government. Accordingly,
it is expected that the securities would not be settled at a price less than the par value of the
investment. Because the decline in market value is attributable to changes in interest rates and
not to credit quality, and because the Company has not decided to sell the securities, and it is
more likely than
not it will not have to sell the securities before recovery of its cost basis, the Company does not
consider these investments to be other-than-temporarily impaired at March 31, 2011.
For the quarter ended March 31, 2011 the Company recognized OTTI losses totaling $36,000 on its
investment in certain commercial real estate partnerships which are carried at cost and evaluated
for impairment quarterly based on an analysis of the financial statements of the partnerships and
underlying real estate projects. At March 31, 2011, the Company had potential additional capital
calls of approximately $3.9 million related to these partnership investments. These investments
are not redeemable, but are transferrable. The partnerships have limited remaining lives ranging
from two to seven years (2012 - 2017) over which the underlying assets are expected to be
liquidated by the partnerships.
9. Loans
The following table sets forth the composition of the Banks loan portfolio (excluding loans
held for sale) in dollar amounts and as a percentage of the respective portfolio at the dates
indicated:
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2011
|
|
|
At December 31, 2010
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
257,034
|
|
|
|
42.83
|
%
|
|
$
|
266,166
|
|
|
|
43.30
|
%
|
Land notes
|
|
|
9,777
|
|
|
|
1.63
|
|
|
|
10,599
|
|
|
|
1.72
|
|
Home equity
|
|
|
72,679
|
|
|
|
12.11
|
|
|
|
74,328
|
|
|
|
12.09
|
|
Commercial
|
|
|
207,315
|
|
|
|
34.55
|
|
|
|
211,431
|
|
|
|
34.40
|
|
Commercial contruction
|
|
|
13,496
|
|
|
|
2.24
|
|
|
|
13,596
|
|
|
|
2.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
560,301
|
|
|
|
93.36
|
|
|
|
576,120
|
|
|
|
93.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
29,629
|
|
|
|
4.94
|
|
|
|
28,123
|
|
|
|
4.57
|
|
Consumer and other
|
|
|
10,196
|
|
|
|
1.70
|
|
|
|
10,518
|
|
|
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,825
|
|
|
|
6.64
|
|
|
|
38,641
|
|
|
|
6.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
|
600,126
|
|
|
|
100.00
|
%
|
|
|
614,761
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred loan costs
|
|
|
1,307
|
|
|
|
|
|
|
|
1,351
|
|
|
|
|
|
Allowance for loan losses
|
|
|
(8,694
|
)
|
|
|
|
|
|
|
(9,010
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans, net
|
|
$
|
592,739
|
|
|
|
|
|
|
$
|
607,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has transferred a portion of its originated commercial real estate and commercial
loans to participating lenders. The amounts transferred have been accounted for as sales and are
therefore not included in the Companys accompanying consolidated balance sheets. The Company and
participating lenders share ratably in any gains or losses that may result from a borrowers lack
of compliance with contractual terms of the loan. The Company continues to service the loans on
behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits
payments (net of servicing fees) to participating lenders and disburses required escrow funds to
relevant parties. At March 31, 2011 and December 31, 2010, the Company was servicing loans for
participants aggregating $13.2 million and $11.7 million, respectively.
Information pertaining to the allowance for loan losses, by segment, at March 31, 2011 and December
31, 2010 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
|
Residential
|
|
Commercial
|
|
Home
|
|
Commercial
|
|
Consumer
|
|
|
|
|
Residential
|
|
Land Notes
|
|
Mortgages
|
|
Equity
|
|
Business
|
|
and other
|
|
Total
|
Amount of allowance
for loans
individually
evaluated for
impairement
|
|
$
|
164
|
|
|
$
|
313
|
|
|
$
|
266
|
|
|
$
|
|
|
|
$
|
69
|
|
|
$
|
|
|
|
$
|
812
|
|
Amount of allowance
for loans
collectively
evaluated for
impairement
|
|
$
|
1,028
|
|
|
$
|
568
|
|
|
$
|
5,085
|
|
|
$
|
400
|
|
|
$
|
576
|
|
|
$
|
225
|
|
|
$
|
7,882
|
|
Loans individually
evaluated for
impairement
|
|
$
|
3,642
|
|
|
$
|
579
|
|
|
$
|
10,408
|
|
|
$
|
313
|
|
|
$
|
248
|
|
|
$
|
2
|
|
|
$
|
15,192
|
|
Loans collectively
evaluated for
impairement
|
|
$
|
253,392
|
|
|
$
|
9,198
|
|
|
$
|
210,403
|
|
|
$
|
72,366
|
|
|
$
|
29,381
|
|
|
$
|
10,194
|
|
|
$
|
584,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
Residential
|
|
Commercial
|
|
Home
|
|
Commercial
|
|
Consumer
|
|
|
|
|
Residential
|
|
Land Notes
|
|
Mortgages
|
|
Equity
|
|
Business
|
|
and other
|
|
Total
|
Amount of allowance
for loans
individually
evaluated for
impairement
|
|
$
|
75
|
|
|
$
|
422
|
|
|
$
|
496
|
|
|
$
|
|
|
|
$
|
69
|
|
|
$
|
|
|
|
$
|
1,062
|
|
Amount of allowance
for loans
collectively
evaluated for
impairement
|
|
$
|
1,276
|
|
|
$
|
585
|
|
|
$
|
4,789
|
|
|
$
|
446
|
|
|
$
|
598
|
|
|
$
|
254
|
|
|
$
|
7,948
|
|
Loans individually
evaluated for
impairement
|
|
$
|
3,445
|
|
|
$
|
778
|
|
|
$
|
11,938
|
|
|
$
|
120
|
|
|
$
|
545
|
|
|
$
|
5
|
|
|
$
|
16,831
|
|
Loans collectively
evaluated for
impairement
|
|
$
|
262,721
|
|
|
$
|
9,821
|
|
|
$
|
213,089
|
|
|
$
|
74,208
|
|
|
$
|
27,578
|
|
|
$
|
10,513
|
|
|
$
|
597,930
|
|
12
The following table sets forth activity in the Banks allowance for loan losses for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2011
|
|
|
|
Residential
|
|
|
Land
|
|
|
Commercial
|
|
|
Home
|
|
|
Commercial
|
|
|
Consumer
|
|
|
|
|
|
|
Mortgages
|
|
|
Notes
|
|
|
Mortgages
|
|
|
Equity
|
|
|
Business
|
|
|
& Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
1,351
|
|
|
$
|
1,007
|
|
|
$
|
5,285
|
|
|
$
|
446
|
|
|
$
|
667
|
|
|
$
|
254
|
|
|
$
|
9,010
|
|
Charge-offs
|
|
|
(54
|
)
|
|
|
|
|
|
|
(349
|
)
|
|
|
|
|
|
|
|
|
|
|
(33
|
)
|
|
|
(436
|
)
|
Recoveries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70
|
|
|
|
9
|
|
|
|
79
|
|
Provision
|
|
|
91
|
|
|
|
(126
|
)
|
|
|
70
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
15
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
1,388
|
|
|
$
|
881
|
|
|
$
|
5,006
|
|
|
$
|
437
|
|
|
$
|
737
|
|
|
$
|
245
|
|
|
$
|
8,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2010
|
|
|
|
Residential
|
|
|
Land
|
|
|
Commercial
|
|
|
Home
|
|
|
Commercial
|
|
|
Consumer
|
|
|
|
|
|
|
Mortgages
|
|
|
Notes
|
|
|
Mortgages
|
|
|
Equity
|
|
|
Business
|
|
|
& Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
1,041
|
|
|
$
|
36
|
|
|
$
|
8,922
|
|
|
$
|
348
|
|
|
$
|
561
|
|
|
$
|
181
|
|
|
$
|
11,089
|
|
Charge-offs
|
|
|
(35
|
)
|
|
|
|
|
|
|
(5,177
|
)
|
|
|
|
|
|
|
(198
|
)
|
|
|
(20
|
)
|
|
|
(5,430
|
)
|
Recoveries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
19
|
|
Provision
|
|
|
(5
|
)
|
|
|
(2
|
)
|
|
|
2,231
|
|
|
|
(4
|
)
|
|
|
206
|
|
|
|
(5
|
)
|
|
|
2,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
1,001
|
|
|
$
|
34
|
|
|
$
|
5,976
|
|
|
$
|
344
|
|
|
$
|
569
|
|
|
$
|
175
|
|
|
$
|
8,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The allowance consists of general, allocated and unallocated components, as further described
below.
General component
: The general component of the allowance for loan losses is based on
historical loss experience adjusted for qualitative factors stratified by the following loan
segments: residential real estate, land notes, commercial real estate, home equity loans,
commercial and consumer. Management uses a rolling average of historical losses based on a time
frame appropriate to capture relevant loss data for each loan segment. This historical loss factor
is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume
and terms of loans; effects of changes in risk selection and underwriting standards and other
changes in lending policies, procedures and practices; experience/ability/depth of lending
management and staff; and national and local economic trends and conditions. While there were no
changes in the Companys general policies or methodology pertaining to the general component of the
allowance for loan losses during 2010, certain general reserve ratios were increased during 2010
mainly to reflect the greater risks and uncertainties resulting from the current economy. There
were no adjustments to the general reserve ratios for the three months ended March 31, 2011.
The qualitative factors for the general component of the allowance for loan losses are determined
based on the various risk characteristics of each loan segment. Risk characteristics relevant to
each portfolio segment are as follows:
Residential real estate For residential mortgage loans to be held in portfolio, Legacy Banks
lends up to a maximum loan-to-value ratio of 100% for first-time home buyers and 95% for other
buyers on mortgage loans secured by owner-occupied property, with the general condition that
private mortgage insurance is required for loans with a loan-to-value ratio in excess of 80%. A
licensed appraiser appraises all properties securing residential first mortgage purchase loans.
All loans in this segment are collateralized by owner-occupied residential real estate and
repayment is dependent on the credit quality of the individual borrower. The overall health of
the economy, including unemployment rates and housing prices, will have an effect on the credit
quality in this segment. Land loans are also included in residential real estate.
Commercial real estate Loans in this segment are primarily income-producing properties
throughout the Companys market area, with a segment located out of market generated through the
Companys former national commercial real estate lending program which was discontinued in 2010.
The underlying cash flows generated by the properties are adversely impacted by a downturn in
the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the
credit quality in this segment. Management periodically obtains the borrowers updated financial
information and continually monitors the cash flows of these loans. Commercial construction
loans are included in the commercial real estate segment and are considered to have higher risks
due to their ultimate repayment being sensitive to interest rate changes, demand and supply of
alternative real estate, the availability of long-term financing, and changes in general
economic conditions. Construction loans are underwritten utilizing feasibility studies,
independent appraisal reviews, sensitivity analyses of absorption and lease rates, and financial
analyses of the developers and property owners.
Home equity loans Loans in this segment primarily include home equity lines-of-credit and
loans that are secured by first or second mortgages on one-to-four family owner occupied
properties, and are available to be drawn upon for 10 years, at the end of which time they
become term loans amortized over 10 years. Interest rates on home equity lines normally adjust
based on the prime rate of interest as published by the Wall Street Journal.
Commercial loans Loans in this segment are made to businesses and are generally secured by
assets of the business. Repayment is expected from the cash flows of the business. A weakened
economy, and resultant decreased consumer spending, will have an effect on the credit quality in
this segment.
13
Consumer and other loans Certain loans in this segment are unsecured and repayment is
dependent on the credit quality of the individual borrower. This segment includes manufactured
housing loans.
Allocated component
: The allocated component relates to loans that are classified as
impaired. Impairment is measured on a loan by loan basis for commercial and commercial real estate
loans by either the present value of expected future cash flows discounted at the loans effective
interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance
is established when the discounted cash flows (or collateral value) of the impaired loan is lower
than the carrying value of that loan. Large groups of smaller balance homogeneous loans are
collectively evaluated for impairment. Accordingly, the Company generally does not separately
identify individual consumer and residential real estate loans for impairment disclosures, unless
such loans are subject to a troubled debt restructuring agreement.
A loan is considered impaired when, based on current information and events, it is probable that
the Company will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. Factors considered by management in
determining impairment include payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due. Loans that experience insignificant payment
delays and payment shortfalls generally are not classified as impaired. Management determines the
significance of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower, including the length
of the delay, the reasons for the delay, the borrowers prior payment record, and the amount of the
shortfall in relation to the principal and interest owed.
The Company periodically may agree to modify the contractual terms of loans. When a loan is
modified and a concession is made to a borrower experiencing financial difficulty, the modification
is considered a troubled debt restructuring (TDR). All TDRs are initially classified as impaired.
Unallocated Component
: An unallocated component is maintained to cover uncertainties that
could affect managements estimate of probable losses. The unallocated component of the allowance
reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies
for estimating allocated and general reserves in the portfolio.
The Company also maintains a reserve for unfunded credit commitments to provide for the risk of
loss inherent in these arrangements. This reserve is determined using a methodology similar to the
analysis of the allowance for loan losses, taking into consideration probabilities of future
funding requirements. This reserve for unfunded commitments is included in other liabilities and
amounted to $266,000 and $269,000 at March 31, 2011 and December 31, 2010, respectively.
The following is a summary of past due and non-accrual loans, by class, at March 31, 2011 and
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past due 90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater
|
|
|
|
|
|
|
days or more
|
|
|
Loan on
|
|
|
|
30-59 Days
|
|
|
60-89 Days
|
|
|
Than 90
|
|
|
Total Past
|
|
|
and still
|
|
|
non-
|
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Days
|
|
|
Due
|
|
|
accruing
|
|
|
accrual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
1,424
|
|
|
$
|
|
|
|
$
|
3,524
|
|
|
$
|
4,948
|
|
|
$
|
|
|
|
$
|
3,524
|
|
Land notes
|
|
|
248
|
|
|
|
82
|
|
|
|
313
|
|
|
|
643
|
|
|
|
|
|
|
|
313
|
|
Home equity
|
|
|
930
|
|
|
|
14
|
|
|
|
277
|
|
|
|
1,221
|
|
|
|
|
|
|
|
277
|
|
Commercial
|
|
|
2,166
|
|
|
|
|
|
|
|
6,485
|
|
|
|
8,651
|
|
|
|
|
|
|
|
6,485
|
|
Commercial Construction
|
|
|
|
|
|
|
|
|
|
|
1,589
|
|
|
|
1,589
|
|
|
|
|
|
|
|
1,589
|
|
Other Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
245
|
|
|
|
108
|
|
|
|
183
|
|
|
|
536
|
|
|
|
|
|
|
|
183
|
|
Consumer and other
|
|
|
13
|
|
|
|
1
|
|
|
|
2
|
|
|
|
16
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,026
|
|
|
$
|
205
|
|
|
$
|
12,373
|
|
|
$
|
17,604
|
|
|
$
|
|
|
|
$
|
12,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past due 90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater
|
|
|
|
|
|
|
days or more
|
|
|
Loan on
|
|
|
|
30-59 Days
|
|
|
60-89 Days
|
|
|
Than 90
|
|
|
Total Past
|
|
|
and still
|
|
|
non-
|
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Days
|
|
|
Due
|
|
|
accruing
|
|
|
accrual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
1,400
|
|
|
$
|
799
|
|
|
$
|
3,445
|
|
|
$
|
5,644
|
|
|
$
|
|
|
|
$
|
3,445
|
|
Land notes
|
|
|
139
|
|
|
|
89
|
|
|
|
422
|
|
|
|
650
|
|
|
|
|
|
|
|
422
|
|
Home equity
|
|
|
178
|
|
|
|
14
|
|
|
|
120
|
|
|
|
312
|
|
|
|
|
|
|
|
120
|
|
Commercial
|
|
|
|
|
|
|
125
|
|
|
|
7,247
|
|
|
|
7,372
|
|
|
|
|
|
|
|
7,247
|
|
Commercial Construction
|
|
|
|
|
|
|
|
|
|
|
1,190
|
|
|
|
1,190
|
|
|
|
|
|
|
|
1,190
|
|
Other Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
415
|
|
|
|
166
|
|
|
|
315
|
|
|
|
896
|
|
|
|
|
|
|
|
315
|
|
Consumer and other
|
|
|
290
|
|
|
|
1
|
|
|
|
5
|
|
|
|
296
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,422
|
|
|
$
|
1,194
|
|
|
$
|
12,744
|
|
|
$
|
16,360
|
|
|
$
|
|
|
|
$
|
12,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
The following is a summary of impaired loans, by class, at March 31, 2011 and December 31,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
|
At March 31, 2011
|
|
|
March 31, 2011
|
|
|
|
|
|
|
|
Unpaid
|
|
|
|
|
|
|
Average
|
|
|
Interest
|
|
|
|
Recorded
|
|
|
Principal
|
|
|
Related
|
|
|
Recorded
|
|
|
Income
|
|
|
|
Investment
|
|
|
Balance
|
|
|
Allowance
|
|
|
Investment
|
|
|
Recognized
|
|
Impaired loans without a valuation allowance:
|
Residential real estate
|
|
$
|
2,576
|
|
|
$
|
2,576
|
|
|
$
|
|
|
|
$
|
3,275
|
|
|
$
|
23
|
|
Land notes
|
|
|
266
|
|
|
|
266
|
|
|
|
|
|
|
|
266
|
|
|
|
|
|
Home equity
|
|
|
313
|
|
|
|
313
|
|
|
|
|
|
|
|
385
|
|
|
|
|
|
Commercial real estate
|
|
|
6,838
|
|
|
|
9,918
|
|
|
|
|
|
|
|
7,364
|
|
|
|
46
|
|
Commercial construction
|
|
|
1,589
|
|
|
|
6,035
|
|
|
|
|
|
|
|
1,236
|
|
|
|
|
|
Commercial
|
|
|
145
|
|
|
|
367
|
|
|
|
|
|
|
|
150
|
|
|
|
7
|
|
Consumer and other
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
11,729
|
|
|
|
19,477
|
|
|
|
|
|
|
|
12,684
|
|
|
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans with a valuation allowance:
|
Residential real estate
|
|
$
|
1,066
|
|
|
$
|
1,066
|
|
|
$
|
164
|
|
|
$
|
887
|
|
|
$
|
|
|
Land notes
|
|
|
313
|
|
|
|
313
|
|
|
|
313
|
|
|
|
313
|
|
|
|
|
|
Home equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
1,981
|
|
|
|
1,981
|
|
|
|
266
|
|
|
|
1,985
|
|
|
|
26
|
|
Commercial construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
103
|
|
|
|
103
|
|
|
|
69
|
|
|
|
104
|
|
|
|
2
|
|
Consumer and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,463
|
|
|
|
3,463
|
|
|
|
812
|
|
|
|
3,289
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
15,192
|
|
|
$
|
22,940
|
|
|
$
|
812
|
|
|
$
|
15,973
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010
|
|
|
|
|
|
|
|
Unpaid
|
|
|
|
|
|
|
Recorded
|
|
|
Principal
|
|
|
Related
|
|
|
|
Investment
|
|
|
Balance
|
|
|
Allowance
|
|
Impaired loans without a valuation allowance:
|
Residential real estate
|
|
$
|
2,912
|
|
|
$
|
2,963
|
|
|
$
|
|
|
Land notes
|
|
|
356
|
|
|
|
356
|
|
|
|
|
|
Home equity
|
|
|
120
|
|
|
|
120
|
|
|
|
|
|
Commercial real estate
|
|
|
7,324
|
|
|
|
10,235
|
|
|
|
|
|
Commercial construction
|
|
|
1,190
|
|
|
|
5,636
|
|
|
|
|
|
Commercial
|
|
|
433
|
|
|
|
690
|
|
|
|
|
|
Consumer and other
|
|
|
5
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
12,340
|
|
|
|
20,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans with a valuation allowance:
|
Residential real estate
|
|
$
|
533
|
|
|
$
|
533
|
|
|
$
|
75
|
|
Land notes
|
|
|
422
|
|
|
|
422
|
|
|
|
422
|
|
Home equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
3,424
|
|
|
|
3,424
|
|
|
|
496
|
|
Commercial construction
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
112
|
|
|
|
112
|
|
|
|
69
|
|
Consumer and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,491
|
|
|
|
4,491
|
|
|
|
1,062
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
16,831
|
|
|
$
|
24,496
|
|
|
$
|
1,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2010, the average balance of impaired loans was $26.4
million. No additional funds are committed to be advanced in connection with impaired loans. The
$15.2 million of impaired loans at March 31, 2011 include $12.4 million of non-accrual loans and
$811,000 of accruing troubled debt restructured loans as of March 31, 2011. The remaining $2
million are loans that the Company believes based on current information and events it is probable
that the Company will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement.
15
The Company utilizes a seven grade internal loan rating system for commercial real estate and
commercial loans as follows:
Loans rated 1-3A
: Loans in these categories are considered pass rated loans with low to
average risk.
Loans rated 4
: Loans in this category are considered special mention. These loans are
starting to show signs of potential weakness and are being closely monitored by management. If
not corrected or mitigated, the weakness may expose the bank to an increased risk of loss.
Loans rated 5
: Loans in this category are considered substandard. Generally, a loan is
considered substandard if it is inadequately protected by the current net worth and paying
capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the
Company will sustain some loss if the weakness is not corrected.
Loans rated 6
: Loans in this category are considered doubtful. Weaknesses in these
credits or relationships are so significant that the bank has identified a probable loss of
principal. Loans classified as doubtful have all the weaknesses inherent in those classified
substandard with the added characteristic that the weaknesses make collection or liquidation in
full, on the basis of currently existing facts, highly questionable and improbable. These
credits must be placed on non-accrual if not already classified as such.
Loans rated 7
: Loans in this category are considered uncollectible (loss) and of such
little value that their continuance as loans is not warranted. Weaknesses in these credits are so
severe collection of any amount is unlikely and the loan shall no longer be carried as an asset
on the banks books. These loans are charged to the Allowance for Loan and Lease Loss.
On at least an annual basis, the Bank formally reviews the ratings on all commercial real estate
and commercial loans. Semi-annually, the Bank engages an independent third-party to review a
significant portion of loans within these segments. Management uses the results of these reviews
as part of its annual review process.
The following table presents the Companys loans by risk rating at March 31, 2011 and December 31,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
|
December 31, 2010
|
|
|
|
Commercial
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
Real Estate
|
|
|
Commercial
|
|
|
Real Estate
|
|
|
Commercial
|
|
|
Loans rated 1-3A
|
|
$
|
182,296
|
|
|
$
|
24,458
|
|
|
$
|
177,985
|
|
|
$
|
20,474
|
|
Loans rated 4
|
|
|
15,959
|
|
|
|
2,251
|
|
|
|
17,900
|
|
|
|
1,988
|
|
Loans rated 5
|
|
|
22,556
|
|
|
|
2,869
|
|
|
|
29,142
|
|
|
|
5,603
|
|
Loans rated 6
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
58
|
|
Loans rated 7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
220,811
|
|
|
$
|
29,629
|
|
|
$
|
225,027
|
|
|
$
|
28,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10. Fair Values of Assets and Liabilities
|
|
|
The Company groups its assets and liabilities measured at fair value in three levels, based on the
markets in which the assets and liabilities are traded and the reliability of the assumptions used
to determine fair value, as follows:
|
Level 1 Valuation is based on quoted prices in active markets for identical assets or
liabilities. Valuations are obtained from readily available pricing sources for market
transactions involving identical assets or liabilities.
Level 2 Valuation is based on 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 for substantially the full term of the assets or liabilities.
Level 3 Valuation is based on unobservable inputs that are supported by little or no
market activity and that are significant to the fair value of the assets or liabilities.
Level 3 assets and liabilities include financial instruments whose value is determined
using unobservable inputs to pricing models, discounted cash flow methodologies, or
similar techniques, as well as instruments for which the determination of fair value
requires significant management judgment or estimation.
The following methods and assumptions were used by the Company in estimating fair value
disclosures:
Cash and cash equivalents
The carrying amounts of cash and short-term instruments
approximate fair values based on the short-term nature of the assets.
Securities available for sale
The securities measured at fair value in Level 1
are based on quoted market prices in an active exchange market. These securities include
marketable equity securities. Securities measured at fair value in Level 2 are based on
unadjusted independent market-based prices received from a third-party pricing service who
utilizes pricing models that consider
16
standard input factors such as observable market data,
benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new
issue data. These securities include debt and mortgage-backed securities issued by
government-sponsored enterprises including Federal Home Loan Mortgage Corporation (FHLMC),
Federal National Mortgage Association (FNMA) and Government National Mortgage Association
(GNMA) bonds, municipal bonds and corporate and other securities. The Company does not have
any available-for-sale securities measured at fair value in Level 3 as of March 31, 2011 or
December 31, 2010.
Federal Home Loan Bank stock
The fair value is based upon the redemption value of
the stock which equates to its carrying value.
Restricted equity securities and other investments
The carrying value of
restricted equity securities represents redemption value and, therefore, approximates fair
value. The fair value of other non-marketable equity securities is estimated based on
consideration of credit exposure. Investments measured at fair value in Level 3 include the
Banks investment in certain real estate partnerships, the values of which are based on an
analysis of the financial statements of the partnerships and underlying real estate
projects, and adjusted by management to recognize unobservable inputs for specific
characteristics of the investments, including, but not limited to, the investments
liquidity and marketability, the Banks ownership percentage, and the nature and type of
underlying investments within the funds.
Loans receivable
Fair values for certain mortgage loans (e.g., one-to-four family
residential) are based on quoted market prices of similar loans sold in conjunction with
securitization transactions adjusted for differences in loan characteristics. Fair values
for other loans (e.g., commercial real estate and investment property mortgage loans,
commercial and industrial loans and consumer loans) are estimated using discounted cash flow
analyses using market interest rates currently being offered for loans and similar terms to
borrowers of similar credit quality. Non-performing loans are assumed to be carried at
current fair value.
Deposit liabilities
The fair values disclosed for demand deposits (e.g., interest
and non-interest checking, passbook savings, and certain types of money market accounts)
are, by definition, equal to the amount payable on demand at the reporting date (i.e., their
carrying amounts). The carrying amounts of certificates of deposit (CD) originated by the
company are valued using a replacement cost funds approach and are discounted to a 12
district FHLB average curve. Fair values for brokered time deposits are also valued using a
replacement cost of funds approach and are discounted to the brokered CD curve.
Short-term borrowings
For short-term borrowings maturing within ninety days,
carrying values approximate fair values. Fair values of other short-term borrowings are
estimated using discounted cash flow analyses based on the current incremental borrowing
rates in the market for similar types of borrowing arrangements.
Long-term borrowings
The fair values of the Companys long-term borrowings are
estimated using discounted cash flow analyses based on the current incremental borrowing
rates in the market for similar types of borrowing arrangements.
Accrued interest
The carrying amounts of accrued interest approximate fair value.
Assets measured at fair value on a recurring basis are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Fair Value
|
|
|
|
(Dollars in thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSE)
|
|
$
|
|
|
|
$
|
143,937
|
|
|
$
|
|
|
|
$
|
143,937
|
|
Municipal bonds
|
|
|
|
|
|
|
1,615
|
|
|
|
|
|
|
|
1,615
|
|
GSE residential mortgage-backed
|
|
|
|
|
|
|
6,003
|
|
|
|
|
|
|
|
6,003
|
|
U.S. Government guaranteed residential mortgage-backed
|
|
|
|
|
|
|
39,832
|
|
|
|
|
|
|
|
39,832
|
|
Marketable equity securities
|
|
|
466
|
|
|
|
|
|
|
|
|
|
|
|
466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale
|
|
|
466
|
|
|
|
191,387
|
|
|
|
|
|
|
|
191,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
466
|
|
|
$
|
191,387
|
|
|
$
|
|
|
|
$
|
191,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Fair Value
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSE)
|
|
$
|
|
|
|
$
|
131,624
|
|
|
$
|
|
|
|
$
|
131,624
|
|
Municipal bonds
|
|
|
|
|
|
|
3,145
|
|
|
|
|
|
|
|
3,145
|
|
Corporate bonds and other obligations
|
|
|
|
|
|
|
402
|
|
|
|
|
|
|
|
402
|
|
GSE residential mortgage-backed
|
|
|
|
|
|
|
6,594
|
|
|
|
|
|
|
|
6,594
|
|
U.S. Government guaranteed residential mortgage-backed
|
|
|
|
|
|
|
42,967
|
|
|
|
|
|
|
|
42,967
|
|
Marketable equity securities
|
|
|
956
|
|
|
|
|
|
|
|
|
|
|
|
956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale
|
|
|
956
|
|
|
|
184,732
|
|
|
|
|
|
|
|
185,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
956
|
|
|
$
|
184,732
|
|
|
$
|
|
|
|
$
|
185,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
There were no transfers to or from Levels 1 and 2 during the three months ended March 31, 2011.
There were no liabilities measured at fair value at March 31, 2011 or December 31, 2010.
Also, the Company may be required, from time to time, to measure certain other assets or
liabilities on a nonrecurring basis in accordance with GAAP. These adjustments to fair value
usually result from application of lower-of-cost-or-market accounting or write-downs of individual
assets. The following table summarizes the fair value hierarchy used to determine each adjustment
and the carrying value of the related individual assets as of March 31, 2011 and 2010. The gains
or losses represent the amount of the write-down recorded during the periods noted on the assets
held at period end.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31, 2011
|
|
|
March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Gains/(Losses)
|
|
|
|
(Dollars in thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
|
|
|
$
|
|
|
|
$
|
10,861
|
|
|
$
|
20
|
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
4,132
|
|
|
|
(36
|
)
|
Foreclosed assets
|
|
|
|
|
|
|
|
|
|
|
2,365
|
|
|
|
(213
|
)
|
|
|
|
|
|
|
Total assets
|
|
$
|
|
|
|
$
|
|
|
|
$
|
17,358
|
|
|
$
|
(229
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31, 2010
|
|
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Gains/(Losses)
|
|
|
|
(Dollars in thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
|
|
|
$
|
|
|
|
$
|
16,380
|
|
|
$
|
(2,103
|
)
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
4,449
|
|
|
|
(299
|
)
|
Foreclosed assets
|
|
|
|
|
|
|
|
|
|
|
1,781
|
|
|
|
(75
|
)
|
|
|
|
|
|
|
Total assets
|
|
$
|
|
|
|
$
|
|
|
|
$
|
22,610
|
|
|
$
|
(2,477
|
)
|
|
|
|
|
|
|
Impaired loans:
Certain impaired loans held for investment were written down to the
fair value, less costs to sell, of the underlying collateral securing these loans of $10.8 million.
Most of these writedowns occurred in prior periods. For the three month period ended March 31,
2011, adjustments related to these loans resulted in a net recovery of $20,000 which was recognized
in earnings through the provision for loan losses. The fair value of the collateral used by the
Company represents that amount expected to be received from the sale of the property as determined
by an independent, licensed or certified appraiser in accordance with Uniform Standards of
Professional Appraisal Practice, using observable market data and discounted as considered
necessary by management based on the date of valuation and new information deemed relevant to the
valuation.
Other investments:
The Bank maintains an equity investment in several commercial real
estate funds. These funds invest in various types of commercial real estate throughout the country
with the intent of generating an above-average rate of return. In 2010 these equity investments
were deemed impaired and adjusted to fair value based on an analysis of the funds financial
statements and underlying real estate projects. The values provided by the funds financial
statements were adjusted by management to recognize unobservable inputs for specific
characteristics of the investments, including, but not limited to, the investments liquidity and
marketability, the Banks ownership percentage, and the nature and type of underlying investments
within the funds. This adjustment is highly judgmental and resulted in a loss of $36,000 for the
three month period ended March 31, 2011 which was recognized through OTTI charges.
Foreclosed assets:
Certain properties in foreclosed assets were adjusted to fair value less
costs to sell through either the provision for loan losses or other expenses as a loss on other
real estate owned. The fair value of foreclosed assets is that amount expected to be received from
the sale of the property as determined by an independent, licensed or certified appraiser in
accordance with Uniform Standards of Professional Appraisal Practice, using observable market data.
If necessary, these appraised values were adjusted by management to recognize unobservable inputs
for specific characteristics of the properties.
Summary of Fair Values of Financial Instruments
The estimated fair values, and related carrying or notional amounts, of the Companys financial
instruments are as follows. Certain financial instruments and all nonfinancial instruments are
excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented
herein may not necessarily represent the underlying fair value of the Company.
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
December 31, 2010
|
|
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
|
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
27,627
|
|
|
$
|
27,627
|
|
|
$
|
27,092
|
|
|
$
|
27,092
|
|
Securities Available for sale
|
|
|
191,853
|
|
|
|
191,853
|
|
|
|
185,688
|
|
|
|
185,688
|
|
Securities Held to maturity
|
|
|
97
|
|
|
|
97
|
|
|
|
97
|
|
|
|
97
|
|
Federal Home Loan Bank of
Boston stock
|
|
|
10,932
|
|
|
|
10,932
|
|
|
|
10,932
|
|
|
|
10,932
|
|
Savings Bank Life Insurance stock
|
|
|
1,709
|
|
|
|
1,709
|
|
|
|
1,709
|
|
|
|
1,709
|
|
Other investments
|
|
|
4,222
|
|
|
|
4,222
|
|
|
|
3,905
|
|
|
|
3,905
|
|
Loans and loans held for sale
|
|
|
593,524
|
|
|
|
607,248
|
|
|
|
610,941
|
|
|
|
626,967
|
|
Accrued interest receivable
|
|
|
2,577
|
|
|
|
2,577
|
|
|
|
2,631
|
|
|
|
2,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
676,795
|
|
|
|
682,351
|
|
|
|
685,245
|
|
|
|
691,501
|
|
Repurchase agreements
|
|
|
3,671
|
|
|
|
3,671
|
|
|
|
5,329
|
|
|
|
5,329
|
|
FHLB advances
|
|
|
105,385
|
|
|
|
112,081
|
|
|
|
105,388
|
|
|
|
112,882
|
|
Mortgagors escrow accounts
|
|
|
1,006
|
|
|
|
1,006
|
|
|
|
1,211
|
|
|
|
1,211
|
|
Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
The following analysis discusses the changes in financial position and results of operations of
Legacy Bancorp, Inc. and subsidiaries, and should be read in conjunction with both the unaudited
consolidated interim financial statements and the notes thereto, appearing in Part I, Item 1 of
this report, as well as the Managements Discussion and Analysis section included in the
Companys most recent Annual Report on Form 10-K filed by the Company with the Securities and
Exchange Commission for the year ended December 31, 2010.
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10Q that are not statements of
historical fact constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the Act), notwithstanding that such statements are not
specifically identified as such. In addition, certain statements may be contained in our future
filings with the SEC, in press releases, and in oral and written statements made by us or with our
approval that are not statements of historical fact and constitute forward-looking statements
within the meaning of the Act. Examples of forward-looking statements include, but are not limited
to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment
or nonpayment of dividends, capital structure and other financial items; (ii) statements of our
plans, objectives and expectations or those of our management or Board of Directors, including
those relating to products or services; (iii) statements of future economic performance; and (iv)
statements of assumptions underlying such statements. Words such as believes, anticipates,
expects, intends, targeted, continue, remain, will, should, may and other similar
expressions are intended to identify forward-looking statements but are not the exclusive means of
identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ
materially from those in such statements. Factors that could cause actual results to differ from
those discussed in the forward-looking statements include, but are not limited to: local, regional,
national and international economic conditions and the impact they may have on us and our customers
and our assessment of that impact, changes in the level of non-performing assets and charge-offs;
changes in estimates of future reserve requirements based upon the periodic review thereof under
relevant regulatory and accounting requirements; the effects of and changes in trade and monetary
and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board;
inflation, interest rate, securities market and monetary fluctuations; political instability; acts
of war or terrorism; the timely development and acceptance of new products and services and
perceived overall value of these products and services by users; changes in consumer spending,
borrowings and savings habits; changes in the financial performance and/or condition of our
borrowers; technological changes; acquisitions and integration of acquired businesses; the ability
to increase market share and control expenses; changes in the competitive environment among
financial holding companies and other financial service providers; the quality and composition of
our loan or investment portfolio; the effect of changes in laws and regulations (including laws and
regulations concerning taxes, banking, securities and insurance) with which we and our subsidiaries
must comply; the effect of changes in accounting policies and practices, as may be adopted by the
regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial
Accounting Standards Board and other accounting standard setters; changes in our organization,
compensation and benefit plans; the costs and effects of legal and regulatory developments,
including the resolution of legal proceedings or regulatory or other governmental inquiries and the
results of regulatory examinations or reviews; greater than expected costs or difficulties related
to the opening of new branch offices or the integration of new products and lines of business, or
both; and/or our success at managing the risk involved in the foregoing items.
19
Critical Accounting Policies
Critical accounting policies are those that involve significant judgments and assessments by
management, and which could potentially result in materially different results under different
assumptions and conditions. We consider the following to be critical accounting policies:
Allowance for Loan Losses
: The allowance for loan losses is established as losses are estimated to
have occurred through a provision for loan losses charged to earnings. Loan losses are charged
against the allowance when management believes the uncollectibility of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is
evaluated on a regular basis by management. This evaluation is inherently subjective as it requires
estimates that are susceptible to significant revision as more information becomes available.
Please refer to note 9:
Loans
within Item 1 for a more detailed discussion of the allowance for
loan losses.
Income Taxes:
The Company uses the asset and liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. A valuation allowance related to deferred tax assets is
established when, in managements judgment, it is more likely than not that all or a portion of
such deferred tax assets will not be realized.
In determining whether a valuation allowance is necessary, the Company considers the level of
taxable income in prior years to the extent that carrybacks are permitted under current tax law, as
well as estimates of future pre-tax and taxable income and tax planning strategies that would, if
necessary, be implemented. The Company expects to realize the remaining deferred tax assets over
the allowable carryback period or in future years. However, if an unanticipated event occurred that
materially changed pre-tax and taxable income in future periods, an increase in the valuation
allowance may become necessary.
Other-Than-Temporary Impairment (OTTI):
Marketable equity securities are evaluated for OTTI based
on the severity and duration of the impairment and, if deemed to be other than temporary, the
declines in fair value are reflected in earnings as realized losses. For debt securities, OTTI is
required to be recognized (1) if the Company intends to sell the security; (2) if it is more
likely than not that the Company will be required to sell the security before recovery of its
amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover
the entire amortized cost basis. For all impaired debt securities that the Company intends to sell,
or more likely than not will be required to sell, the full amount of the depreciation is recognized
as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized
through earnings. Non-credit related OTTI for such debt securities is recognized in other
comprehensive income, net of applicable taxes.
Fair Values of Assets and Liabilities:
The Company groups its assets and liabilities generally
measured at fair value in three levels, based on the markets in which the assets and liabilities
are traded and the reliability of the assumptions used to determine fair value. Please refer to
note 10:
Fair Values of Assets and Liabilities
within Item 1 for a more detailed discussion of fair
value.
Goodwill:
Goodwill results from business acquisitions and represents the excess of the purchase
price over the fair value of acquired tangible assets and liabilities and identifiable intangible
assets. The Company recorded goodwill in connection with the purchase of a financial institution in
1997. Additionally, the Company recorded goodwill in connection with the purchase of branch
offices in December 2007 and in March 2009. Most recently, in the second quarter of 2010, the
Company recorded goodwill in connection with the acquisition of a wealth management company located
in Pittsfield, Massachusetts. The total book value of goodwill is approximately $11.6 million and
$9.7 million as of March 31, 2011 and 2010, respectively.
Generally, financial information is to be reported on the basis that is used internally for
evaluating segment performance and deciding how to allocate resources to segments. The Company
evaluates its performance and allocates resources based on a single segment concept. Accordingly,
there are no separately identified material operating segments for which discrete financial
information is available. The Company does not derive revenues from, or have assets located in
foreign countries, nor does it derive revenues from any single customer that represents 10% or more
of its total revenues. Therefore, all of the Companys operations are considered by management to
be aggregated in one reportable segment, and the entire amount of goodwill is allocated to this one
reporting segment.
The fair value of goodwill is analyzed at least annually and this analysis utilizes three separate
methodologies. First, a market approach is used which incorporates a review of comparable market
transactions for peer companies, relying on recent merger and acquisition data from these
comparable transactions to estimate the price multiple at which the Company would be acquired in a
hypothetical market transaction. The second approach used is the asset approach, or replacement
cost approach which entails stating the recorded assets and liabilities of the Company on a fair
market value basis, and the value of the Companys equity is determined as the difference between
the total fair value amounts for assets and liabilities. The third approach utilized is the income
approach which constructs a discounted cash flow model from financial projections. The concluded
fair value is calculated by weighting the values obtained based on the relevance of the methodology
based on the facts and circumstances for the Company on the valuation date. The greatest weight,
50%, is placed on the market approach given the amount of data obtainable on comparable
transactions. A 30% weight is applied to the asset approach due to the precision of the fair value
estimates provided. Lastly, a 20% weight is applied to the income approach/discounted cash flow
model due to the inherent uncertainty in forecasting future performance, and the appropriate market
discount rate. Impairment, if any, identified under this analysis is recognized in the period
identified. If an impairment loss is recorded, it will have little or no impact on the tangible
book value of our common shares or our regulatory capital levels.
20
This discussion has highlighted those accounting policies that management considers to be
critical; however all accounting policies are important. See the discussion of each of the
policies included in Note 1 to the consolidated financial statements in the most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission to gain a better
understanding of how our financial performance is measured and reported.
Comparison of Financial Condition at March 31, 2011 and December 31, 2010
Overview:
Total assets have decreased $11.3 million, or 1.2%, from $916.9 million at December 31,
2010 to $905.6 million at March 31, 2011. Within the overall balance sheet, investment securities
increased while net loans decreased. On the liability side, the Company had an overall decrease in
deposits of $8.5 million, as well as smaller decreases in repurchase agreements and other accrued
liabilities, as discussed below.
Investment Activities
: Cash and short-term investments increased by $535,000, or 2.0%, from $27.1
million at December 31, 2010 to $27.6 million at March 31, 2011. Available for sale securities
increased $6.2 million, or 3.3%, from $185.7 million at December 31, 2010 to $191.9 million, or
21.2% of total assets, at March 31, 2011. The portfolio consists primarily of debt obligations
issued by certain government-sponsored agencies, including municipalities. Additionally, the
portfolio includes mortgage-backed securities with a fair value of $45.8 million, all of which are
issued or backed by the Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage
Association (FNMA), Government National Mortgage Association (GNMA) or other government-sponsored
agencies. Restricted equity securities and other investments totaled $16.9 million at March 31,
2011 and consisted primarily of stock in the Federal Home Loan Bank of Boston (FHLBB) totaling
$10.9 million, which must be held as a condition of membership in the Federal Home Loan Bank System
and as a condition to Legacy Banks borrowing under the FHLBB advance program. Other investments
also include interests in certain commercial real estate investment partnerships of $4.1 million.
At March 31, 2011 the Company had potential additional capital calls of approximately $3.9 million
related to these partnership investments. The remaining $1.8 million consisted of investments in
Savings Bank Life Insurance of Massachusetts, the Community Investment Fund, Depositors Insurance
Fund and other investments. The following table sets forth at the dates indicated information
regarding the amortized cost and fair values of the Companys investment securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2011
|
|
|
At December 31, 2010
|
|
|
|
Amortized
|
|
|
|
|
|
|
Amortized
|
|
|
|
|
|
|
Cost
|
|
|
Fair Value
|
|
|
Cost
|
|
|
Fair Value
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSE)
|
|
$
|
144,881
|
|
|
$
|
143,937
|
|
|
$
|
132,221
|
|
|
$
|
131,624
|
|
Municipal bonds
|
|
|
1,599
|
|
|
|
1,615
|
|
|
|
3,145
|
|
|
|
3,145
|
|
Corporate bonds and other obligations
|
|
|
|
|
|
|
|
|
|
|
401
|
|
|
|
402
|
|
GSE residential mortgage-backed
|
|
|
5,775
|
|
|
|
6,003
|
|
|
|
6,370
|
|
|
|
6,594
|
|
U.S. Government guaranteed residential mortgage-backed
|
|
|
39,702
|
|
|
|
39,832
|
|
|
|
42,775
|
|
|
|
42,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
191,957
|
|
|
|
191,387
|
|
|
|
184,912
|
|
|
|
184,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable equity securities
|
|
|
365
|
|
|
|
466
|
|
|
|
888
|
|
|
|
956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
|
192,322
|
|
|
|
191,853
|
|
|
|
185,800
|
|
|
|
185,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other bonds and obligations
|
|
|
97
|
|
|
|
97
|
|
|
|
97
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted equity securities and other investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank of Boston stock
|
|
|
10,932
|
|
|
|
10,932
|
|
|
|
10,932
|
|
|
|
10,932
|
|
Savings Bank Life Insurance
|
|
|
1,709
|
|
|
|
1,709
|
|
|
|
1,709
|
|
|
|
1,709
|
|
Real estate partnerships
|
|
|
4,132
|
|
|
|
4,132
|
|
|
|
3,815
|
|
|
|
3,815
|
|
Other investments
|
|
|
90
|
|
|
|
90
|
|
|
|
90
|
|
|
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total restricted equity securities
and other investments
|
|
|
16,863
|
|
|
|
16,863
|
|
|
|
16,546
|
|
|
|
16,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities
|
|
$
|
209,282
|
|
|
$
|
208,813
|
|
|
$
|
202,443
|
|
|
$
|
202,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lending Activities:
Total net loans, excluding loans held for sale, at March 31, 2011 were
$592.7 million, a decrease of $14.3 million, or 2.4%, from $607.1 million at December 31, 2010.
Residential mortgages decreased $9.1 million, or 3.4% as the majority of the residential mortgage
activity was in the 15 and 30 year fixed rate categories, products which the Bank generally sells
in the secondary market with servicing retained. Commercial real estate loans decreased $4.1
million, or 1.9%, during the quarter primarily due to loan payoffs. This decrease was offset
somewhat by a $1.5 million, or 5.4% increase in other commercial loans. Please refer to note 9:
Loans
within Item 1 for a more detailed discussion of the loan balances.
21
Non-performing Assets:
The table below sets forth the amounts and categories of our non-performing
assets at the dates indicated. If the non-accrual loans had been current, the gross interest
income that would have been recorded was approximately $204,000 for the three month period ended
March 31, 2011. At March 31, 2011 the Bank had nine loans totaling $3.3 million considered to be
troubled debt restructurings (a loan for which a portion of interest or principal has been forgiven
or the loan is modified at an interest rate less than current market rates). Of this amount,
approximately $2.5 million is included as part of the $12.4 million of non-performing loans as of
March 31, 2011. At December 31, 2010 Legacy Banks had fourteen loans totaling $4.5 million
considered to be troubled debt restructurings.
|
|
|
|
|
|
|
|
|
|
|
At March 31,
|
|
|
At December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Non-accrual loans:
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
$
|
3,524
|
|
|
$
|
3,445
|
|
Land notes
|
|
|
313
|
|
|
|
422
|
|
Home equity
|
|
|
277
|
|
|
|
120
|
|
Commercial real estate
|
|
|
6,485
|
|
|
|
7,247
|
|
Commercial construction
|
|
|
1,589
|
|
|
|
1,190
|
|
Commercial
|
|
|
183
|
|
|
|
315
|
|
Consumer and other
|
|
|
2
|
|
|
|
5
|
|
|
|
|
|
|
|
|
Total non-accrual loans
|
|
|
12,373
|
|
|
|
12,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans greater than 90 days delinquent and still
accruing:
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
|
|
|
|
|
|
Land notes
|
|
|
|
|
|
|
|
|
Home equity
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
|
|
|
|
|
|
Commercial construction
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
Consumer and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans 90 days delinquent and still accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing loans
|
|
|
12,373
|
|
|
|
12,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned
|
|
|
2,365
|
|
|
|
2,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing assets (NPAs)
|
|
$
|
14,738
|
|
|
$
|
14,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Troubled debt restructurings included in NPAs
|
|
$
|
2,492
|
|
|
$
|
2,451
|
|
Troubled debt restructurings not included in NPAs
|
|
|
811
|
|
|
|
2,098
|
|
|
|
|
|
|
|
|
Total troubled debt restructurings
|
|
$
|
3,303
|
|
|
$
|
4,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios:
|
|
|
|
|
|
|
|
|
Non-performing loans to total loans
|
|
|
2.06
|
%
|
|
|
2.07
|
%
|
Non-performing assets to total assets
|
|
|
1.63
|
%
|
|
|
1.63
|
%
|
Overall nonperforming loans (NPLs) were $12.4 million at March 31, 2011, a decrease of $371,000
as compared to December 31, 2010. Collateral dependent loans are adjusted to fair value less
selling costs by partial charge-offs once the loss is confirmed on a case by case basis after
considering factors such as the borrowers resources, expectation of foreclosure and alternative
sources of recovery. The Bank continues to monitor all loans very closely and analyze their
balance to the value of any underlying collateral, with the establishment of a specific reserve
against the loan if deemed necessary. Loans are generally placed on non-accrual status either when
reasonable doubt exists as to the full timely collection of interest and principal, or when a loan
becomes 90 days past due.
Allowance for Loan Losses
:
While the Bank believes that it has established adequate allocated and
general allowances for losses on loans, adjustments to the allowance may be necessary if future
conditions differ substantially from the information used in making the evaluations. In addition,
as an integral part of their examination process, the Banks regulators periodically review the
allowance for loan losses. These regulatory agencies may require the Bank to recognize additions
to the allowance based on their judgments of information available to them at the time of their
examination, thereby negatively affecting the Banks financial condition and earnings. Please
refer to note 9:
Loans
within Item 1 for a more detailed discussion of the allowance for loan
losses. The following table sets forth summary activity in the Banks allowance for loan losses
for the periods indicated:
22
|
|
|
|
|
|
|
|
|
|
|
At or for the three months
|
|
|
|
ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
9,010
|
|
|
$
|
11,089
|
|
|
|
|
|
|
|
|
|
|
Total charge-offs
|
|
|
(436
|
)
|
|
|
(5,430
|
)
|
Total recoveries
|
|
|
79
|
|
|
|
19
|
|
|
|
|
|
|
|
|
Net recoveries (charge-offs)
|
|
|
(357
|
)
|
|
|
(5,411
|
)
|
Provision for loan losses
|
|
|
41
|
|
|
|
2,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
8,694
|
|
|
$
|
8,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios:
|
|
|
|
|
|
|
|
|
Net
recoveries (charge-offs) to average loans outstanding 12 month rolling average
|
|
|
(1.16
|
%)
|
|
|
(0.88
|
%)
|
Allowance for loan losses to non-performing loans at end of period
|
|
|
70.27
|
%
|
|
|
66.56
|
%
|
Allowance for loan losses to total loans at end of period
|
|
|
1.45
|
%
|
|
|
1.25
|
%
|
Mortgage Servicing Rights
: The Company had $776,000 of mortgage servicing rights on its
balance sheet as of March 31, 2011 as compared to $737,000 at December 31, 2010. The Company
recorded servicing fee income of $39,000 for the three month period ended March 31, 2011. The
amount of mortgages serviced by the Company for others amounted to approximately $112.5 million as
of March 31, 2011.
Deposits
: The following table sets forth the Banks deposit accounts (excluding escrow deposits)
at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2011
|
|
|
At December 31, 2010
|
|
|
|
Balance
|
|
|
Percent
|
|
|
Balance
|
|
|
Percent
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit type:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
$
|
78,115
|
|
|
|
11.54
|
%
|
|
$
|
75,116
|
|
|
|
10.96
|
%
|
Regular savings
|
|
|
54,610
|
|
|
|
8.07
|
|
|
|
53,504
|
|
|
|
7.81
|
|
Relationship savings
|
|
|
144,431
|
|
|
|
21.34
|
|
|
|
142,110
|
|
|
|
20.74
|
|
Money market deposits
|
|
|
62,701
|
|
|
|
9.26
|
|
|
|
68,611
|
|
|
|
10.01
|
|
NOW deposits
|
|
|
47,243
|
|
|
|
6.98
|
|
|
|
48,197
|
|
|
|
7.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transaction accounts
|
|
|
387,100
|
|
|
|
57.20
|
|
|
|
387,538
|
|
|
|
56.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term certificates less
than $100,000
|
|
|
156,416
|
|
|
|
23.11
|
|
|
|
162,408
|
|
|
|
23.70
|
|
Term certificates
$100,000 or more
|
|
|
133,279
|
|
|
|
19.69
|
|
|
|
135,299
|
|
|
|
19.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total certificate accounts
|
|
|
289,695
|
|
|
|
42.80
|
|
|
|
297,707
|
|
|
|
43.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits
|
|
$
|
676,795
|
|
|
|
100.00
|
%
|
|
$
|
685,245
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits decreased $8.5 million, or 1.2%, from $685.2 million at December 31, 2010 to $676.8
million at March 31, 2011. Deposits decreased primarily in money market accounts and certificate
of deposits (CDS) which decreased $5.9 million, or 8.6%, and $8.0 million, or 2.7%, respectively.
These decreases were partially offset by increases in demand accounts, relationship savings and
regular savings accounts. At March 31, 2011, CDs represented 42.8% of total deposits.
Borrowings:
Advances from the Federal Home Loan Bank of Boston and securities sold under agreements
to repurchase have decreased $1.7 million, or 1.5%, to $109.1 million at March 31, 2011.
Stockholders Equity:
Overall stockholders equity increased by $255,000, or 0.2%, during the first
quarter of 2011. Total equity was impacted by net income of $723,000 and the amortization of
unearned compensation. These increases to equity were partially offset by an increase in the
unrealized loss on available-for-sale investment securities as well as the declaration of a
dividend of $0.05 per share during the first quarter of 2011.
Comparison of Operating Results for the Three Months Ended March 31, 2011 and 2010
Net income for the three months ended March 31, 2011 was $723,000, as compared to a net loss of
$1.2 million for the same period in 2010. The improvement to net income included a decrease in the
provision for loan losses charges, improved non-interest income and lower operating expenses,
offset somewhat by a decrease in net interest income, as discussed below.
23
Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning assets and expense
on interest-bearing liabilities. Net interest income depends upon the relative amounts of
interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on
them.
The following table sets forth average balance sheets, average yields and costs, and certain other
information for the periods indicated. All average balances are daily average balances. The
yields set forth below include the effect of deferred fees, and discounts and premiums that are
amortized or accreted to interest income or expense. The Bank does not accrue interest on loans on
non-accrual status, however, the balance of these loans is included in the total average balance,
which has the effect of lowering average loan yields.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2011
|
|
|
Three Months Ended March 31, 2010
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
Interest
|
|
|
Yield/ Rate
(1)
|
|
|
Balance
|
|
|
Interest
|
|
|
Yield/ Rate
(1)
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans net (2)
|
|
$
|
601,640
|
|
|
$
|
8,018
|
|
|
|
5.33
|
%
|
|
$
|
647,710
|
|
|
$
|
9,296
|
|
|
|
5.74
|
%
|
Investment securities
|
|
|
205,265
|
|
|
|
890
|
|
|
|
1.73
|
%
|
|
|
190,406
|
|
|
|
1,352
|
|
|
|
2.84
|
%
|
Short-term investments
|
|
|
9,722
|
|
|
|
4
|
|
|
|
0.16
|
%
|
|
|
15,743
|
|
|
|
6
|
|
|
|
0.15
|
%
|
|
|
|
|
|
Total interest-earning assets
|
|
|
816,627
|
|
|
|
8,912
|
|
|
|
4.37
|
%
|
|
|
853,859
|
|
|
|
10,654
|
|
|
|
4.99
|
%
|
Non-interest-earning assets
|
|
|
82,124
|
|
|
|
|
|
|
|
|
|
|
|
78,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
898,751
|
|
|
|
|
|
|
|
|
|
|
$
|
932,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings deposits
|
|
$
|
52,035
|
|
|
|
27
|
|
|
|
0.21
|
%
|
|
$
|
50,232
|
|
|
|
33
|
|
|
|
0.26
|
%
|
Relationship savings
|
|
|
141,340
|
|
|
|
181
|
|
|
|
0.51
|
%
|
|
|
128,198
|
|
|
|
324
|
|
|
|
1.01
|
%
|
Money market
|
|
|
63,938
|
|
|
|
68
|
|
|
|
0.43
|
%
|
|
|
64,336
|
|
|
|
131
|
|
|
|
0.81
|
%
|
NOW accounts
|
|
|
46,054
|
|
|
|
26
|
|
|
|
0.23
|
%
|
|
|
44,208
|
|
|
|
34
|
|
|
|
0.31
|
%
|
Certificates of deposit
|
|
|
294,141
|
|
|
|
1,542
|
|
|
|
2.10
|
%
|
|
|
289,174
|
|
|
|
1,917
|
|
|
|
2.65
|
%
|
|
|
|
|
|
Total interest-bearing deposits
|
|
|
597,508
|
|
|
|
1,844
|
|
|
|
1.23
|
%
|
|
|
576,148
|
|
|
|
2,439
|
|
|
|
1.69
|
%
|
Borrowed funds
|
|
|
110,720
|
|
|
|
1,021
|
|
|
|
3.69
|
%
|
|
|
160,469
|
|
|
|
1,459
|
|
|
|
3.64
|
%
|
|
|
|
|
|
Total interest-bearing
liabilities
|
|
|
708,228
|
|
|
|
2,865
|
|
|
|
1.62
|
%
|
|
|
736,617
|
|
|
|
3,898
|
|
|
|
2.12
|
%
|
Non-interest-bearing liabilities
|
|
|
77,985
|
|
|
|
|
|
|
|
|
|
|
|
71,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
786,213
|
|
|
|
|
|
|
|
|
|
|
|
808,533
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
112,538
|
|
|
|
|
|
|
|
|
|
|
|
123,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
898,751
|
|
|
|
|
|
|
|
|
|
|
$
|
932,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
$
|
6,047
|
|
|
|
|
|
|
|
|
|
|
$
|
6,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate spread (3)
|
|
|
|
|
|
|
|
|
|
|
2.75
|
%
|
|
|
|
|
|
|
|
|
|
|
2.87
|
%
|
Net interest-earning assets (4)
|
|
$
|
108,399
|
|
|
|
|
|
|
|
|
|
|
$
|
117,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (5)
|
|
|
|
|
|
|
|
|
|
|
2.96
|
%
|
|
|
|
|
|
|
|
|
|
|
3.16
|
%
|
Average interest-earning assets
to interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
115.31
|
%
|
|
|
|
|
|
|
|
|
|
|
115.92
|
%
|
|
|
|
(1)
|
|
Yields and rates are annualized.
|
|
(2)
|
|
Includes loans held for sale and non-accrual loans.
|
|
(3)
|
|
Net interest rate spread represents the difference between
the yield on total average interest-earning assets and the cost of total average interest-bearing liabilities.
|
|
(4)
|
|
Net interest-earning assets represents total interest-earning assets less total
interest-bearing liabilities.
|
|
(5)
|
|
Net interest margin represents net interest income divided by average total interest-earning
assets.
|
The following table presents the dollar amount of changes in interest income and interest
expense for the major categories of the Banks interest-earning assets and interest-bearing
liabilities. Information is provided for each category of interest-earning assets and
interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e.,
changes in average balances multiplied by the prior-period average rate) and (ii) changes
attributable to rate (i.e., changes in average rate multiplied by prior-period average balances).
The changes attributable to the combined impact of volume and rate have been allocated
proportionately to the changes due to volume and the changes due to rate.
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2011 vs. 2010
|
|
|
Increase
|
|
Total
|
|
|
(Decrease) Due to
|
|
Increase
|
|
|
Volume
|
|
Rate
|
|
(Decrease)
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans net
|
|
$
|
(638
|
)
|
|
$
|
(640
|
)
|
|
$
|
(1,278
|
)
|
Investment securities
|
|
|
115
|
|
|
|
(577
|
)
|
|
|
(462
|
)
|
Short-term investments
|
|
|
(2
|
)
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets
|
|
|
(525
|
)
|
|
|
(1,217
|
)
|
|
|
(1,742
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings deposits
|
|
|
1
|
|
|
|
(7
|
)
|
|
|
(6
|
)
|
Relationship savings
|
|
|
37
|
|
|
|
(180
|
)
|
|
|
(143
|
)
|
Money market
|
|
|
(1
|
)
|
|
|
(62
|
)
|
|
|
(63
|
)
|
NOW accounts
|
|
|
1
|
|
|
|
(9
|
)
|
|
|
(8
|
)
|
Certificates of deposit
|
|
|
34
|
|
|
|
(409
|
)
|
|
|
(375
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits
|
|
|
72
|
|
|
|
(667
|
)
|
|
|
(595
|
)
|
Borrowed funds
|
|
|
(458
|
)
|
|
|
20
|
|
|
|
(438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities
|
|
|
(386
|
)
|
|
|
(647
|
)
|
|
|
(1,033
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in net interest income
|
|
$
|
(139
|
)
|
|
$
|
(570
|
)
|
|
$
|
(709
|
)
|
|
|
|
Net interest income
for the three months ended March 31, 2011 was $6.0 million, a decrease of
$709,000, or 10.5%, over the same period of 2010. This decrease was a result of both the
difference in net interest margin in each period as well as a decrease in the net loan portfolio,
as outlined below.
Interest income
for the three months ended March 31, 2011 decreased $1.7 million, or 16.4%, to $8.9
million as compared to $10.7 million in the same period of 2010. This decrease was driven by both
an overall decrease in the Companys yield on interest-earning assets as well as a decrease in the
net loan portfolio. The yield on interest-earning assets was 4.37% for the quarter, a decrease of
62 basis points from a yield of 4.99% in the first quarter of 2010, resulting in a decrease in
interest income of $1.2 million. Average outstanding net loans decreased $46.1 million, or 7.1%,
primarily due to commercial loan sales, payoffs and charge-offs, as well as the volume of
refinancing of fixed-rate residential mortgages, which the Bank sells into the secondary market.
Some of the cash flow from the refinancing and sale of these mortgages was reinvested into
investment securities, resulting in an increase of $14.9 million, or 7.8% in their average balance
for the quarter as compared to the same period in 2010. This overall change in volume of earning
assets resulted in a decrease in interest income of $525,000.
Interest expense
decreased $1.0 million, or 26.5%, to $2.9 million for the three months ended March
31, 2011 as compared to $3.9 million during the same period in 2010. Average interest-bearing
liabilities decreased $28.4 million, or 3.9%, in the first quarter of 2010 as compared to the same
quarter of 2010, resulting in a decrease in interest expense of $386,000. The average cost of
funds decreased to 1.62% for the three month period ended March 31, 2011, a decrease of 50 basis
points from a cost of funds of 2.12% for the same period in 2010, resulting in a decrease in
interest expense of $647,000.
Provision for loan losses
decreased $2.4 million to $41,000 for the three months ended March 31,
2011 as compared to a provision expense of $2.4 million for the three months ended March 31, 2010,
primarily reflecting managements analysis, workout and charge-off of potential problem credits
during the prior year. These actions, coupled with generally stable credit conditions during the
first quarter of 2011 allowed for this significant reduction in the loan loss provision. The
allowance for loan losses to total loans was 1.45% at March 31, 2011, as compared to 1.47% at
December 31, 2010 and 1.25% at March 31, 2010.
Non-interest income
for the first quarter of 2011 was $1.6 million, an increase of $553,000 as
compared to $1.0 million in the same period of 2010, primarily due to higher portfolio management
fees as well as a decrease in the amount of writedowns taken on investments deemed to be OTTI.
Portfolio management fees increased $263,000, or 93.9%, in the first quarter of 2011 as compared to
the same period of 2010 as a result of the Banks acquisition of substantially all of the assets of
the Renaissance Investment Group in April 2010. The Bank incurred $36,000 of OTTI losses on
certain limited partnership investments during the first quarter of 2011 as compared to a charge of
$299,000 on the same investments in the first quarter of 2010. In 2011, the Bank also had
increases in gains on the sale of mortgages.
Non-interest expense
decreased $660,000, or 9.2%, to $6.5 million for the three months ended March
31, 2011 as compared to the same period of 2010. Salaries and benefits decreased $649,000, or
18.7% primarily as a result of the termination of certain employee benefits,
25
including the employee
stock ownership plan (ESOP) and retiree post-retirement benefits. Decreases in advertising and
professional fees were partially offset by increases in occupancy, deposit insurance and expenses
related to other real estate owned (OREO), which is included in other general and administrative
expenses.
Income tax
expense was $372,000 in the first quarter of 2011 as compared to a tax benefit of
$545,000 in the same period in 2010. The Company had an effective tax rate of 34.0% in 2011 as
compared to 30.5% a year earlier. The increase in the effective rate is primarily due to the
Companys reduction of tax-exempt municipal investments within the past 12 months.
Minimum Regulatory Capital Requirements:
As of March 31, 2011, the most recent notification from
the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, an institution must maintain minimum
total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following
table. There are no conditions or events since that notification that management believes have
changed the Banks category. The Banks capital amounts and ratios as of March 31, 2011 and
December 31, 2010 are presented in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum To Be Well
|
|
|
|
|
|
|
|
|
|
|
Minimum
|
|
Capitalized Under
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
Prompt Corrective
|
|
|
Actual
|
|
Requirement
|
|
Action Provisions
|
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
March 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk weighted assets
|
|
$
|
74,344
|
|
|
|
12.6
|
%
|
|
$
|
47,384
|
|
|
|
8.0
|
%
|
|
$
|
59,230
|
|
|
|
10.0
|
%
|
Tier 1 capital to risk weighted
assets:
|
|
|
66,880
|
|
|
|
11.3
|
|
|
|
23,692
|
|
|
|
4.0
|
|
|
|
35,538
|
|
|
|
6.0
|
|
Tier 1 capital to average assets:
|
|
|
66,880
|
|
|
|
7.8
|
|
|
|
34,463
|
|
|
|
4.0
|
|
|
|
43,079
|
|
|
|
5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk weighted assets:
|
|
$
|
72,341
|
|
|
|
12.0
|
%
|
|
$
|
48,249
|
|
|
|
8.0
|
%
|
|
$
|
60,311
|
|
|
|
10.0
|
%
|
Tier 1 capital to risk weighted
assets:
|
|
|
64,754
|
|
|
|
10.7
|
|
|
|
24,124
|
|
|
|
4.0
|
|
|
|
36,187
|
|
|
|
6.0
|
|
Tier 1 capital to average assets:
|
|
|
64,754
|
|
|
|
7.2
|
|
|
|
36,155
|
|
|
|
4.0
|
|
|
|
45,194
|
|
|
|
5.0
|
|
Contractual Obligations
. Additional information relating to payments due under contractual
obligations is presented in the Annual Report on Form 10-K filed by the Company with the Securities
and Exchange Commission for the year ended December 31, 2010. The following table presents
information indicating various contractual obligations and commitments of the Company as of March
31, 2011 and the respective maturity dates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
More than
|
|
More than
|
|
|
|
|
|
|
|
|
|
|
|
|
One Year
|
|
Three Years
|
|
|
|
|
|
|
|
|
One Year
|
|
through
|
|
through
|
|
Over Five
|
|
|
Total
|
|
or Less
|
|
Three Years
|
|
Five Years
|
|
Years
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank of Boston advances
|
|
$
|
105,385
|
|
|
$
|
2,000
|
|
|
$
|
43,000
|
|
|
$
|
22,200
|
|
|
$
|
38,185
|
|
Securities sold under agreements to repurchase
|
|
|
3,671
|
|
|
|
3,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations
|
|
$
|
109,056
|
|
|
$
|
5,671
|
|
|
$
|
43,000
|
|
|
$
|
22,200
|
|
|
$
|
38,185
|
|
|
|
|
Off-Balance Sheet Arrangements:
Other than loan commitments and other contingencies shown
below, the Company does not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future material effect on its financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital resources. Commitments
to extend credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract and generally have fixed expiration dates or other
termination clauses. The following table presents certain information about the Banks loan
commitments and other contingencies outstanding as of March 31, 2011:
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
More than
|
|
|
More than
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Year
|
|
|
Years Three
|
|
|
|
|
|
|
|
|
|
|
One Year
|
|
|
through
|
|
|
Through
|
|
|
Over Five
|
|
|
|
Total
|
|
|
or Less
|
|
|
Three Years
|
|
|
Five Years
|
|
|
years
|
|
|
|
(Dollars in thousands)
|
|
Commitments to grant loans
(1)
|
|
$
|
10,581
|
|
|
$
|
10,581
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Commercial loan lines-of-credit
|
|
|
21,254
|
|
|
|
21,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused portion of home equity loans
(2)
|
|
|
67,560
|
|
|
|
2,977
|
|
|
|
10,297
|
|
|
|
15,393
|
|
|
|
38,893
|
|
Unused portion of construction loans
(3)
|
|
|
1,448
|
|
|
|
1,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused portion of overdraft lines-of-credit
(4)
|
|
|
4,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,333
|
|
Unused portion of personal lines-of-credit
(5)
|
|
|
689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
689
|
|
Standby letters of credit
(6)
|
|
|
2,871
|
|
|
|
2,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other commitments and contingencies
(7)
|
|
|
3,934
|
|
|
|
|
|
|
|
3,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loan and other commitments
|
|
$
|
112,670
|
|
|
$
|
39,131
|
|
|
$
|
14,231
|
|
|
$
|
15,393
|
|
|
$
|
43,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Commitments for loans are extended to customers for up to 60 days after which they expire.
|
|
(2)
|
|
Unused portions of home equity loans are available to the borrower for up to 10 years.
|
|
(3)
|
|
Unused portions of residential construction loans are available to the borrower for up to one
year. Commercial construction loans maturities may be longer than one year.
|
|
(4)
|
|
Unused portion of checking overdraft lines-of-credit are available to customers in good
standing indefinitely.
|
|
(5)
|
|
Unused portion of personal lines-of-credit are available to customers in good standing
indefinitely.
|
|
(6)
|
|
Standby letters of credit are generally available for less than one year.
|
|
(7)
|
|
Other commitments relate primarily to potential additional capital calls the Company is
committed to contribute as part of its investment in certain real estate limited
partnerships.
|
Item 3: Quantitative and Qualitative Disclosures about Market Risks
There has been no material change in the Companys market risk during the three months ended March
31, 2011. See the discussion and analysis of quantitative and qualitative disclosures about market
risk provided in the Companys Annual Report on Form 10-K for the year ended December 31, 2010 for
a general discussion of the qualitative aspects of market risk and discussion of the simulation
model used by the Bank to measure its interest rate risk.
Item 4: Controls and Procedures
Disclosure Controls and Procedures: The Companys management, under the supervision and with the
participation of the Companys Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the design and operation of the Companys disclosure controls and procedures (as
defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
Exchange Act)), as of the end of the period covered by this report. Based on such evaluation,
the Companys Chief Executive Officer and Chief Financial Officer concluded that as of end of the
period covered by this report, the Companys disclosure controls and procedures were effective in
recording, processing, summarizing and reporting, on a timely basis, information required to be
disclosed by the Company in the reports that it files or submits under the Exchange Act.
Internal Control Over Financial Reporting: There were no changes in the Companys internal control
over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during
the fiscal quarter to which this report relates that have materially affected, or are reasonably
likely to materially affect, the Companys internal control over financial reporting.
27
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not involved in any pending legal proceedings other than routine legal proceedings
occurring in the ordinary course of business. Such routine legal proceedings, in the aggregate,
are believed by management to be immaterial to the financial condition and results of operations
of the Company.
Item 1A. Risk Factors
There have been no material changes in the Companys risk factors during the three months ended
March 31, 2011. See the discussion and analysis of risk factors provided in the Companys Annual
Report on Form 10-K for the year ended December 31, 2010. Additional risks not presently known to
us, or that we currently deem immaterial, may also adversely affect our business, financial
condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
(a)
|
|
Unregistered Sales of Equity Securities Not applicable
|
|
|
(b)
|
|
Use of Proceeds Not applicable
|
|
|
(c)
|
|
Repurchase of Our Equity Securities None
|
Item 3. Defaults Upon Senior Securities
None
Item 4. (Removed and Reserved)
Item 5 Other Information
None
28
Item 6
:
Exhibits
|
|
|
3.1
|
|
Certificate of Incorporation of Legacy Bancorp, Inc.(1)
|
3.2
|
|
Bylaws of Legacy Bancorp, Inc. (as amended) (1)
|
10.1
|
|
Legacy Banks ESOP Trust Agreement(2)
|
10.2
|
|
ESOP Plan Document (2)
|
10.3
|
|
ESOP Loan Documents (2)
|
10.4.1
|
|
Employment Agreement between Legacy Banks and J. Williar Dunlaevy (2)
|
10.4.2
|
|
Employment Agreement between Legacy Banks and Michael A. Christopher (2)
|
10.4.3
|
|
Employment Agreement between Legacy Banks and Steven F. Pierce (2)
|
10.4.4
|
|
Employment Agreement between Legacy Banks and Stephen M. Conley (2)
|
10.4.5
|
|
Employment Agreement between Legacy Banks and Richard M. Sullivan (2)
|
10.5.1
|
|
Employment Agreement between Legacy Bancorp, Inc. and J. Williar Dunlaevy (2)
|
10.5.2
|
|
Employment Agreement between Legacy Bancorp, Inc. and Michael A. Christopher (2)
|
10.5.3
|
|
Employment Agreement between Legacy Bancorp, Inc. and Steven F. Pierce (2)
|
10.5.4
|
|
Employment Agreement between Legacy Bancorp, Inc. and Stephen M. Conley (2)
|
10.5.5
|
|
Employment Agreement between Legacy Bancorp, Inc. and Richard M. Sullivan (2)
|
10.5.6
|
|
Separation Agreement and General Release dated as of November 5, 2007 between Legacy Bancorp,
Inc., Legacy Banks and Michael A. Christopher (4)
|
10.5.7
|
|
Separation Agreement and General Release dated as of December 21, 2007 between Legacy Bancorp,
Inc., Legacy Banks and Stephen M. Conley (5)
|
10.5.8
|
|
Consulting Agreement dated as of November 5, 2007 between Legacy Bancorp, Inc., Legacy Banks and
Michael A. Christopher (4)
|
10.5.9
|
|
Purchase Agreement by and between First Niagara Bank and Legacy Banks dated as of July 25, 2007 (6)
|
10.5.10
|
|
Change In Control Agreement between Legacy Bancorp, Inc. and Paul H. Bruce (7)
|
10.5.11
|
|
Change In Control Agreement between Legacy Bancorp, Inc. and Kimberly A. Mathews (7)
|
10.5.12
|
|
Purchase Agreement by and between The Bank of Western Massachusetts and Legacy Banks dated as of
December 15, 2008 (8)
|
10.5.13
|
|
Amended and Restated Employment Agreement effective as of November 20, 2008 by and between Legacy
Bancorp, Inc., Legacy Banks and J. Williar Dunlaevy (9)
|
10.5.14
|
|
Amended and Restated Employment Agreement effective as of November 20, 2008 by and between Legacy
Bancorp, Inc., Legacy Banks and Steven F. Pierce (9)
|
10.5.15
|
|
Amended and Restated Employment Agreement effective as of November 20, 2008 by and between Legacy
Bancorp, Inc., Legacy Banks and Richard M. Sullivan (9)
|
10.5.16
|
|
Amended and Restated Supplemental Executive Retirement Agreement effective as of November 20, 2008
by and between Legacy Bancorp, Inc., Legacy Banks and J. Williar Dunlaevy (9)
|
10.5.17
|
|
Employment Agreement effective as of April, 2010 by and between Legacy Bancorp, Inc., Legacy Banks
and Patrick J. Sullivan (10)
|
10.5.18
|
|
Separation Agreement and General Release dated as of May 11, 2010 between Legacy Bancorp, Inc.,
Legacy Banks and Steven F. Pierce (11)
|
10.5.19
|
|
Change In Control Agreement between Legacy Bancorp, Inc. and Richard M. Sullivan (12)
|
10.5.20
|
|
Definitive Merger Agreement between Legacy Bancorp, Inc. and Berkshire Hills Bancorp (13)
|
10.11
|
|
Amended and Restated 2006 Equity Incentive Plan (13)
|
11.0
|
|
Statement re: Computation of Per Share Earnings is incorporated herein by reference to
Notes to
Consolidated Financial Statements
within Part I, Financial Statements
|
31.1
|
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of J. Williar Dunlaevy
|
31.2
|
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of Paul H. Bruce
|
32
|
|
Certification pursuant to 18 U.S.C. Section 1350
|
|
|
|
(1)
|
|
Incorporated by reference from the Registrants Quarterly Report on Form 10-Q for the Quarter
Ended March 31, 2005 filed October 27, 2005.
|
|
(2)
|
|
Incorporated by reference from the Registration Statement on Form S-1 (No. 333-126481) filed
July 8, 2005, as amended.
|
|
(3)
|
|
Incorporated by reference from the Registrants Definitive Proxy Statement on Form DEF 14A
filed September 28, 2006
|
|
(4)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed November 5,
2007.
|
|
(5)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed December 21,
2007.
|
|
(6)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed July 25,
2007.
|
|
(7)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed October 30,
2008.
|
|
(8)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed December 16,
2008.
|
|
(9)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed November 25,
2008.
|
|
(10)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed March 4,
2010.
|
|
(11)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed May 11,
2010.
|
|
(12)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed November 1,
2010.
|
|
(13)
|
|
Incorporated by reference from the Registrants Current Report on Form 8-K filed December 22,
2010.
|
29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
LEGACY BANCORP, INC.
|
|
Date: May 10, 2011
|
/s/ J. Williar Dunlaevy
|
|
|
J. Williar Dunlaevy
|
|
|
Chief Executive Officer and
Chairman of the Board
|
|
|
|
|
|
Date: May 10, 2011
|
/s/ Paul H. Bruce
|
|
|
Paul H. Bruce
|
|
|
Senior Vice President, Chief Financial Officer and
Treasurer (Principal Financial and Accounting Officer)
|
|
|
30
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