Attached files
file | filename |
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EX-31.2 - EXHIBIT 31.2 - ABINGTON BANCORP, INC./PA | c13879exv31w2.htm |
EX-31.1 - EXHIBIT 31.1 - ABINGTON BANCORP, INC./PA | c13879exv31w1.htm |
EX-23.0 - EXHIBIT 23.0 - ABINGTON BANCORP, INC./PA | c13879exv23w0.htm |
EX-32.0 - EXHIBIT 32.0 - ABINGTON BANCORP, INC./PA | c13879exv32w0.htm |
Table of Contents
SECURITIES AND EXCHANGE COMMISSION
þ | Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Pennsylvania | 20-8613037 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) |
180 Old York Road, Jenkintown, Pennsylvania | 19046 | |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock (par value $0.01 per share) | The Nasdaq Stock Market, LLC |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
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Exhibit 23.0 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.0 |
Table of Contents
ITEM 1. | BUSINESS |
Table of Contents
| statements of goals, intentions and expectations; |
| statements regarding prospects and business strategy; |
| statements regarding asset quality and market risk; and |
| estimates of future costs, benefits and results. |
| general economic conditions, either nationally or in our market area, that are worse than expected; |
| changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments; |
| increased competitive pressures among financial services companies; |
| changes in consumer spending, borrowing and savings habits; |
| legislative or regulatory changes that adversely affect our business; |
| adverse changes in the securities markets; |
| our ability to successfully manage our growth; and |
| changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the SEC or the Financial Accounting Standards Board. |
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December 31, | ||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||||||||||||||||||
Real estate loans: |
||||||||||||||||||||||||||||||||||||||||
One- to four-family residential |
$ | 393,435 | 53.79 | % | $ | 432,004 | 52.13 | % | $ | 452,923 | 55.00 | % | $ | 424,141 | 57.28 | % | $ | 375,744 | 57.55 | % | ||||||||||||||||||||
Commercial real estate and
multi-family residential |
141,091 | 19.29 | 135,483 | 16.35 | 102,089 | 12.40 | 77,138 | 10.42 | 92,428 | 14.16 | ||||||||||||||||||||||||||||||
Construction |
138,558 | 18.94 | 203,642 | 24.58 | 219,542 | 26.66 | 168,711 | 22.79 | 134,976 | 20.67 | ||||||||||||||||||||||||||||||
Home equity lines of credit |
41,213 | 5.63 | 36,274 | 4.38 | 27,119 | 3.30 | 33,091 | 4.47 | 33,953 | 5.20 | ||||||||||||||||||||||||||||||
Total real estate loans |
714,297 | 97.65 | 807,403 | 97.44 | 801,673 | 97.36 | 703,081 | 94.96 | 637,101 | 97.58 | ||||||||||||||||||||||||||||||
Non-real estate loans: |
||||||||||||||||||||||||||||||||||||||||
Commercial business |
16,327 | 2.23 | 18,877 | 2.28 | 18,967 | 2.30 | 29,374 | 3.97 | 11,416 | 1.75 | ||||||||||||||||||||||||||||||
Consumer non-real estate |
870 | 0.12 | 2,358 | 0.28 | 2,811 | 0.34 | 7,914 | 1.07 | 4,400 | 0.67 | ||||||||||||||||||||||||||||||
Total non-real estate loans |
17,197 | 2.35 | 21,235 | 2.56 | 21,778 | 2.64 | 37,288 | 5.04 | 15,816 | 2.42 | ||||||||||||||||||||||||||||||
Total loans |
731,494 | 100.00 | % | 828,638 | 100.00 | % | 823,451 | 100.00 | % | 740,369 | 100.00 | % | 652,917 | 100.00 | % | |||||||||||||||||||||||||
Less: |
||||||||||||||||||||||||||||||||||||||||
Undisbursed portion of
construction
loans in process |
30,065 | 54,199 | 54,798 | 55,799 | 45,338 | |||||||||||||||||||||||||||||||||||
Deferred loan fees, net |
714 | 789 | 504 | 721 | 913 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses |
4,272 | 9,090 | 11,597 | 1,811 | 1,603 | |||||||||||||||||||||||||||||||||||
Net loans |
$ | 696,444 | $ | 764,560 | $ | 756,552 | $ | 682,038 | $ | 605,063 | ||||||||||||||||||||||||||||||
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Commercial | ||||||||||||||||||||||||||||
One- to | Real Estate and | Home Equity | Consumer | |||||||||||||||||||||||||
Four-Family | Multi-Family | Lines of | Commercial | non-real | ||||||||||||||||||||||||
Residential | Residential | Construction | Credit | Business | estate | Total | ||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
Amounts due after December 31, 2010
in: |
||||||||||||||||||||||||||||
One year or less |
$ | 910 | $ | 48,507 | $ | 111,360 | $ | 32,261 | $ | 6,380 | $ | 432 | $ | 199,850 | ||||||||||||||
After one year through two years |
1,150 | 297 | 17,365 | | 1,455 | 51 | 20,318 | |||||||||||||||||||||
After two years through three years |
1,916 | 2,612 | 4,858 | | 4,107 | 100 | 13,593 | |||||||||||||||||||||
After three years through five years |
5,578 | 11,711 | 4,975 | | 900 | 96 | 23,260 | |||||||||||||||||||||
After five years through ten years |
40,396 | 17,417 | | 8,952 | 2,230 | 191 | 69,186 | |||||||||||||||||||||
After ten years through fifteen years |
59,864 | 13,032 | | | 1,255 | | 74,151 | |||||||||||||||||||||
After fifteen years |
283,621 | 47,515 | | | | | 331,136 | |||||||||||||||||||||
Total |
$ | 393,435 | $ | 141,091 | $ | 138,558 | $ | 41,213 | $ | 16,327 | $ | 870 | $ | 731,494 | ||||||||||||||
Floating or | Total at | |||||||||||
Fixed-Rate | Adjustable-Rate | December 31, 2010 | ||||||||||
(In Thousands) | ||||||||||||
One- to four-family residential |
$ | 353,140 | $ | 39,385 | $ | 392,525 | ||||||
Commercial real estate and
multi-family residential |
80,543 | 12,041 | 92,584 | |||||||||
Construction |
2,387 | 24,811 | 27,198 | |||||||||
Home equity lines of credit |
| 8,952 | 8,952 | |||||||||
Commercial business |
9,323 | 624 | 9,947 | |||||||||
Consumer non-real estate |
146 | 292 | 438 | |||||||||
Total |
$ | 445,539 | $ | 86,105 | $ | 531,644 | ||||||
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In Thousands) | ||||||||||||
Loan originations: |
||||||||||||
One- to four-family residential |
$ | 45,550 | $ | 75,539 | $ | 81,055 | ||||||
Commercial real estate and
multi-family residential |
4,081 | 42,712 | 7,102 | |||||||||
Construction |
482 | 29,550 | 67,792 | |||||||||
Home equity lines of credit |
17,652 | 21,200 | 11,068 | |||||||||
Commercial business |
7,964 | 6,640 | 36,536 | |||||||||
Consumer non-real estate |
546 | 304 | 263 | |||||||||
Total loan originations |
76,275 | 175,945 | 203,816 | |||||||||
Loans purchased: |
||||||||||||
Whole loans |
| | | |||||||||
Participation interests |
| 14,467 | 50,387 | |||||||||
Total loans purchased |
| 14,467 | 50,387 | |||||||||
Loans sold: |
||||||||||||
Whole loans |
| | | |||||||||
Participation interests |
(1,625 | ) | (7,500 | ) | (10,725 | ) | ||||||
Total loans sold |
(1,625 | ) | (7,500 | ) | (10,725 | ) | ||||||
Loan principal repayments |
(161,153 | ) | (152,141 | ) | (159,237 | ) | ||||||
Total loans sold and principal repayments |
(162,778 | ) | (159,641 | ) | (169,962 | ) | ||||||
Increase (decrease) due to other items,
net (1) |
18,387 | (22,763 | ) | (9,727 | ) | |||||||
Net (decrease) increase in loan portfolio |
$ | (68,116 | ) | $ | 8,008 | $ | 74,514 | |||||
(1) | Other items consist of loans in process, deferred fees, the allowance for loan losses and the transfer of loans to real estate owned. |
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Allowance | ||||||||||||||||||||||||||||||||||||||||||||||||
Accruing | for Loan | |||||||||||||||||||||||||||||||||||||||||||||||
Type | Loan Classification | Loans 90 | Losses | |||||||||||||||||||||||||||||||||||||||||||||
Total | One- to | Days or | Allocated to | |||||||||||||||||||||||||||||||||||||||||||||
No. of | Balance | Land | Four- | Multi- | Special | More Past | Construction | |||||||||||||||||||||||||||||||||||||||||
Range | Loans | Outstanding | Only | Family | Family | Commercial | Doubtful | Substandard | Mention | Non-Accrual(1) | Due | Loans | ||||||||||||||||||||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
Loans over $10.0 million |
1 | $ | 19,703 | $ | | $ | | $ | 19,703 | $ | | $ | | $ | | $ | 19,703 | $ | | $ | | $ | | |||||||||||||||||||||||||
Loans $5.0 million to $10.0
million |
4 | 27,496 | | 13,057 | | 14,439 | | 8,664 | 5,433 | | | 865 | ||||||||||||||||||||||||||||||||||||
Loans $2.5 million to $5.0 million |
10 | 36,094 | 3,446 | 15,550 | 4,975 | 12,123 | | 3,445 | 9,232 | | | 770 | ||||||||||||||||||||||||||||||||||||
Loans $1.0 million to $2.5 million |
13 | 20,959 | 4,466 | 11,611 | | 4,882 | | 11,351 | 1,255 | 4,344 | | 865 | ||||||||||||||||||||||||||||||||||||
Loans under $1.0 million |
12 | 4,241 | 1,155 | 1,967 | 1,119 | | | 1,773 | 910 | 1,320 | 14 | 240 | ||||||||||||||||||||||||||||||||||||
Total construction loans |
40 | $ | 108,493 | $ | 9,067 | $ | 42,185 | $ | 25,797 | $ | 31,444 | $ | | $ | 25,233 | $ | 36,533 | $ | 5,664 | $ | 14 | $ | 2,740 | |||||||||||||||||||||||||
(1) | All of the $5.7 million of non-accrual construction loans at December 31, 2010 were classified substandard at such date. |
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At December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In Thousands) | ||||||||||||
Substandard assets |
$ | 46,969 | $ | 49,762 | $ | 22,272 | ||||||
Doubtful assets |
| 8,653 | 23,569 | |||||||||
Loss assets |
| | | |||||||||
Total |
$ | 46,969 | $ | 58,415 | $ | 45,841 | ||||||
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December 31, 2010 | December 31, 2009 | December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||
30-89 | 90 or More Days | 30-89 | 90 or More Days | 30-89 | 90 or More Days | |||||||||||||||||||||||||||||||||||||||||||
Days Overdue | Overdue | Days Overdue | Overdue | Days Overdue | Overdue | |||||||||||||||||||||||||||||||||||||||||||
Number | Principal | Number | Principal | Number | Principal | Number | Principal | Number | Principal | Number | Principal | |||||||||||||||||||||||||||||||||||||
of Loans | Balance | of Loans | Balance | of Loans | Balance | of Loans | Balance | of Loans | Balance | of Loans | Balance | |||||||||||||||||||||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
One- to four-family
residential |
18 | $ | 2,983 | 6 | $ | 1,211 | 23 | $ | 3,623 | 4 | $ | 347 | 12 | $ | 1,431 | 4 | $ | 311 | ||||||||||||||||||||||||||||||
Commercial real estate and
multi-family residential |
5 | 986 | 2 | 725 | 4 | 3,394 | 1 | 261 | 4 | 2,691 | 6 2,597 | |||||||||||||||||||||||||||||||||||||
Construction |
1 | 2,230 | 7 | 5,678 | 2 | 1,278 | 10 | 21,796 | 2 | 6,634 | 5 | 20,594 | ||||||||||||||||||||||||||||||||||||
Home equity lines of credit |
4 | 44 | 3 | 76 | 2 | 75 | 4 | 141 | 3 | 74 | | | ||||||||||||||||||||||||||||||||||||
Commercial business |
| | | | 1 | 2,260 | | | | | | | ||||||||||||||||||||||||||||||||||||
Consumer non-real estate |
| | | | | | | | 2 | 2 | | | ||||||||||||||||||||||||||||||||||||
Total delinquent loans |
28 | $ | 6,243 | 18 | $ | 7,690 | 32 | $ | 10,630 | 19 | $ | 22,545 | 23 | $ | 10,832 | 15 | $ | 23,502 | ||||||||||||||||||||||||||||||
Delinquent loans to total
net loans |
0.90 | % | 1.10 | % | 1.39 | % | 2.95 | % | 1.43 | % | 3.11 | % | ||||||||||||||||||||||||||||||||||||
Delinquent loans to total
loans |
0.85 | % | 1.05 | % | 1.28 | % | 2.72 | % | 1.32 | % | 2.85 | % | ||||||||||||||||||||||||||||||||||||
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December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
Non-accruing loans: |
||||||||||||||||||||
One- to four-family residential |
$ | | $ | 237 | $ | | $ | | $ | | ||||||||||
Commercial real estate and
multi-family residential(1) |
1,348 | 4,801 | 2,597 | 1,277 | 1,270 | |||||||||||||||
Construction |
5,664 | 23,303 | 20,594 | 168 | 1,077 | |||||||||||||||
Home equity lines of credit |
| | | | | |||||||||||||||
Commercial business |
| | | | | |||||||||||||||
Consumer non-real estate |
| | | | | |||||||||||||||
Total non-accruing loans |
7,012 | 28,341 | 23,191 | 1,445 | 2,347 | |||||||||||||||
Accruing loans 90 days or more past due: |
||||||||||||||||||||
One- to four-family residential |
1,211 | 110 | 311 | 105 | 210 | |||||||||||||||
Multi-family residential and
commercial real estate |
725 | | | | | |||||||||||||||
Construction |
14 | 5,998 | | | | |||||||||||||||
Home equity lines of credit |
| 141 | | | | |||||||||||||||
Commercial business |
76 | | | | | |||||||||||||||
Consumer non-real estate |
| | | | | |||||||||||||||
Total accruing loans 90 days or more
past due |
2,026 | 6,249 | 311 | 105 | 210 | |||||||||||||||
Total non-performing loans(2) |
9,038 | 34,590 | 23,502 | 1,550 | 2,557 | |||||||||||||||
Real estate owned, net |
23,588 | 22,819 | 1,740 | 1,558 | | |||||||||||||||
Total non-performing assets |
32,626 | 57,409 | 25,242 | 3,108 | 2,557 | |||||||||||||||
Performing troubled debt restructurings: |
||||||||||||||||||||
One- to four-family residential |
583 | | | | | |||||||||||||||
Multi-family residential and
commercial real estate |
8,417 | | | | | |||||||||||||||
Construction |
| | | | | |||||||||||||||
Home equity lines of credit |
| | | | | |||||||||||||||
Commercial business |
| | | | | |||||||||||||||
Consumer non-real estate |
| | | | | |||||||||||||||
Total performing troubled debt
restructurings |
9,000 | | | | | |||||||||||||||
Total non-performing assets and
performing troubled debt
restructurings |
$ | 41,626 | $ | 57,409 | $ | 25,242 | $ | 3,108 | $ | 2,557 | ||||||||||
Total non-performing loans as a percentage
of loans |
1.29 | % | 4.47 | % | 3.06 | % | 0.23 | % | 0.42 | % | ||||||||||
Total non-performing loans as a percentage
of total assets |
0.72 | % | 2.79 | % | 1.98 | % | 0.14 | % | 0.28 | % | ||||||||||
Total non-performing assets as a percentage
of total assets |
2.62 | % | 4.64 | % | 2.12 | % | 0.29 | % | 0.28 | % | ||||||||||
(1) | Included in this category of non-accruing loans at December 31, 2010 and 2009 was one troubled debt restructuring with a balance of $1.3 million and $2.5 million, respectively. See Note 6 in the Notes to the Consolidate Financial Statements included in Item 8 herein. | |
(2) | Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past due. |
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December 31, 2010 | December 31, 2009 | December 31, 2008 | ||||||||||||||||||||||
No. of | Carrying | No. of | Carrying | No. of | Carrying | |||||||||||||||||||
Type of Property | Properties | Value | Properties | Value | Properties | Value | ||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
Land |
5 | $ | 13,216 | 4 | $ | 9,982 | 1 | $ | 182 | |||||||||||||||
One- to four-family residential |
| | 4 | 1,240 | 3 | 1,558 | ||||||||||||||||||
Multi-family residential |
| | 1 | 8,405 | | | ||||||||||||||||||
Commercial real estate |
3 | 10,372 | 1 | 3,192 | | | ||||||||||||||||||
Total real estate owned |
8 | $ | 23,588 | 10 | $ | 22,819 | 4 | $ | 1,740 | |||||||||||||||
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At or For the Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
Total loans outstanding at end of period |
$ | 700,715 | $ | 773,650 | $ | 768,149 | $ | 683,849 | $ | 606,666 | ||||||||||
Average loans outstanding |
719,172 | 755,279 | 703,496 | 646,467 | 570,850 | |||||||||||||||
Allowance for loan losses, beginning of period |
$ | 9,090 | $ | 11,597 | $ | 1,811 | $ | 1,603 | $ | 1,455 | ||||||||||
Provision for loan losses |
977 | 18,737 | 9,760 | 457 | 186 | |||||||||||||||
Charge-offs: |
||||||||||||||||||||
One- to four-family residential |
| | | | | |||||||||||||||
Commercial real estate and
multi-family residential |
1,314 | 178 | | 50 | | |||||||||||||||
Construction |
5,733 | 21,146 | | 147 | | |||||||||||||||
Home equity lines of credit |
| | | | | |||||||||||||||
Commercial business |
| | | | | |||||||||||||||
Consumer non-real estate |
29 | 71 | 64 | 79 | 56 | |||||||||||||||
Total charge-offs |
7,076 | 21,395 | 64 | 276 | 56 | |||||||||||||||
Recoveries on loans previously charged-off |
1,281 | 151 | 90 | 27 | 18 | |||||||||||||||
Allowance for loan losses, end of period |
$ | 4,272 | $ | 9,090 | $ | 11,597 | $ | 1,811 | $ | 1,603 | ||||||||||
Allowance for loan losses as a percent of
non-performing loans |
47.27 | % | 26.28 | % | 49.35 | % | 116.84 | % | 62.69 | % | ||||||||||
Ratio of net charge-offs during the
period to average loans outstanding during
the
period |
0.81 | % | 2.81 | % | n/m | * | 0.04 | % | 0.01 | % | ||||||||||
* | Not meaningful |
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December 31, | ||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||
Loan | Loan | Loan | Loan | Loan | ||||||||||||||||||||||||||||||||||||
Category | Category | Category | Category | Category | ||||||||||||||||||||||||||||||||||||
Amount | as a % | Amount | as a % | Amount | as a % | Amount | as a % | Amount | as a % | |||||||||||||||||||||||||||||||
of | of Total | of | of Total | of | of Total | of | of Total | of | of Total | |||||||||||||||||||||||||||||||
Allowance | Loans | Allowance | Loans | Allowance | Loans | Allowance | Loans | Allowance | Loans | |||||||||||||||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||||||||||||||||||
One- to four-family residential |
$ | 528 | 53.79 | % | $ | 433 | 52.13 | % | $ | 455 | 55.00 | % | $ | 425 | 57.28 | % | $ | 378 | 57.55 | % | ||||||||||||||||||||
Commercial real estate and
multi-family residential |
841 | 19.29 | 1,809 | 16.35 | 969 | 12.40 | 379 | 10.42 | 507 | 14.16 | ||||||||||||||||||||||||||||||
Construction |
2,740 | 18.94 | 6,664 | 24.58 | 9,882 | 26.66 | 564 | 22.79 | 486 | 20.67 | ||||||||||||||||||||||||||||||
Home equity lines of credit |
82 | 5.63 | 74 | 4.38 | 54 | 3.30 | 66 | 4.47 | 68 | 5.20 | ||||||||||||||||||||||||||||||
Commercial business |
75 | 2.23 | 95 | 2.28 | 205 | 2.30 | 294 | 3.97 | 114 | 1.75 | ||||||||||||||||||||||||||||||
Consumer non-real estate |
6 | 0.12 | 15 | 0.28 | 32 | 0.34 | 83 | 1.07 | 48 | 0.67 | ||||||||||||||||||||||||||||||
Unallocated |
| | | | | | | | 2 | | ||||||||||||||||||||||||||||||
Total |
$ | 4,272 | 100.00 | % | $ | 9,090 | 100.00 | % | $ | 11,597 | 100.00 | % | $ | 1,811 | 100.00 | % | $ | 1,603 | 100.00 | % | ||||||||||||||||||||
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December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||
Cost | Value | Cost | Value | Cost | Value | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
Mortgage-backed securities |
$ | 221,505 | $ | 226,511 | $ | 211,067 | $ | 215,926 | $ | 231,694 | $ | 233,331 | ||||||||||||
U.S. government and agency
obligations |
99,365 | 99,313 | 55,864 | 56,460 | 41,962 | 43,122 | ||||||||||||||||||
Corporate bonds |
3,535 | 3,558 | 3,123 | 3,121 | 1,979 | 1,882 | ||||||||||||||||||
Municipal obligations |
39,065 | 40,127 | 41,625 | 42,842 | 41,463 | 42,143 | ||||||||||||||||||
Investment certificates of deposit |
| | 99 | 99 | 288 | 288 | ||||||||||||||||||
Mutual funds |
2,664 | 2,712 | 2,580 | 2,582 | 2,479 | 2,479 | ||||||||||||||||||
FHLB stock |
13,877 | 13,877 | 14,608 | 14,608 | 14,608 | 14,608 | ||||||||||||||||||
Total investment and
mortgage-backed securities
and FHLB stock |
$ | 380,011 | $ | 386,098 | $ | 328,966 | $ | 335,638 | $ | 334,473 | $ | 337,853 | ||||||||||||
24
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Amounts at December 31, 2010 Which Mature In | ||||||||||||||||||||||||||||||||
Over One | ||||||||||||||||||||||||||||||||
Weighted | Year | Weighted | Over Five | Weighted | Over | Weighted | ||||||||||||||||||||||||||
One Year | Average | Through | Average | Through | Average | Ten | Average | |||||||||||||||||||||||||
or Less | Yield | Five Years | Yield | Ten Years | Yield | Years | Yield | |||||||||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||||||||||
Bonds and other debt
securities: |
||||||||||||||||||||||||||||||||
U.S. government and
agency obligations |
$ | | | % | $ | 99,365 | 1.86 | % | $ | | | % | $ | | | % | ||||||||||||||||
Corporate bonds |
997 | 0.39 | 2,538 | 3.56 | | | | | ||||||||||||||||||||||||
Municipal
obligations |
2,373 | 3.34 | 10,653 | 3.65 | 21,954 | 4.02 | 4,085 | 4.12 | ||||||||||||||||||||||||
Mortgage-backed
securities |
1,619 | 4.75 | 10,745 | 1.83 | 63,577 | 3.02 | 145,564 | 3.87 | ||||||||||||||||||||||||
Total |
$ | 4,989 | 3.21 | % | $ | 123,301 | 2.05 | % | $ | 85,531 | 3.28 | % | $ | 149,649 | 3.88 | % | ||||||||||||||||
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December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
Certificate accounts: |
||||||||||||||||||||||||
0.00% - 1.99% |
$ | 224,984 | 25.00 | % | $ | 254,067 | 29.88 | % | $ | 66,315 | 9.97 | % | ||||||||||||
2.00% - 2.99% |
53,188 | 5.91 | 59,465 | 6.99 | 12,178 | 1.83 | ||||||||||||||||||
3.00% - 3.99% |
63,456 | 7.05 | 50,585 | 5.95 | 253,162 | 38.07 | ||||||||||||||||||
4.00% - 4.99% |
84,945 | 9.44 | 82,835 | 9.74 | 68,025 | 10.23 | ||||||||||||||||||
5.00% - 5.99% |
5,360 | 0.59 | 9,741 | 1.15 | 11,567 | 1.74 | ||||||||||||||||||
6.00% - 6.99% |
77 | 0.01 | 81 | 0.01 | 77 | 0.01 | ||||||||||||||||||
7.00% or more |
6 | | | | | | ||||||||||||||||||
Total certificate accounts |
432,016 | 48.00 | 456,774 | 53.72 | 411,324 | 61.86 | ||||||||||||||||||
Transaction accounts: |
||||||||||||||||||||||||
Savings and money market |
326,060 | 36.23 | 265,488 | 31.23 | 148,089 | 22.27 | ||||||||||||||||||
Checking: |
||||||||||||||||||||||||
Interest bearing |
92,175 | 10.24 | 82,792 | 9.74 | 68,343 | 10.28 | ||||||||||||||||||
Non-interest bearing |
49,808 | 5.53 | 45,146 | 5.31 | 37,194 | 5.59 | ||||||||||||||||||
Total transaction accounts |
468,043 | 52.00 | 393,426 | 46.28 | 253,626 | 38.14 | ||||||||||||||||||
Total deposits |
$ | 900,059 | 100.00 | % | $ | 850,200 | 100.00 | % | $ | 664,950 | 100.00 | % | ||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||||
Average | Interest | Average Rate | Average | Interest | Average Rate | Average | Interest | Average Rate | ||||||||||||||||||||||||||||
Balance | Expense | Paid | Balance | Expense | Paid | Balance | Expense | Paid | ||||||||||||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||||||||||||||
Savings and money
market |
$ | 295,800 | $ | 2,495 | 0.84 | % | $ | 200,576 | $ | 2,547 | 1.27 | % | $ | 119,082 | $ | 1,913 | 1.61 | % | ||||||||||||||||||
Checking |
83,975 | 36 | 0.04 | 73,708 | 38 | 0.05 | 63,310 | 20 | 0.03 | |||||||||||||||||||||||||||
Certificates of deposit |
457,412 | 10,143 | 2.22 | 449,508 | 12,855 | 2.86 | 414,086 | 15,092 | 3.64 | |||||||||||||||||||||||||||
Total interest-bearing
deposits |
837,187 | 12,674 | 1.51 | 723,792 | 15,440 | 2.13 | 596,478 | 17,025 | 2.85 | |||||||||||||||||||||||||||
Total deposits |
$ | 881,594 | $ | 12,674 | 1.44 | % | $ | 765,924 | $ | 15,440 | 2.02 | % | $ | 636,759 | $ | 17,025 | 2.67 | % | ||||||||||||||||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In Thousands) | ||||||||||||
Total deposits |
$ | 4,237,090 | $ | 4,258,616 | $ | 4,170,653 | ||||||
Total withdrawals |
4,200,609 | 4,089,463 | 4,133,143 | |||||||||
Interest credited |
13,377 | 16,097 | 17,828 | |||||||||
Total increase in deposits |
$ | 49,858 | $ | 185,250 | $ | 55,338 | ||||||
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Balance at December 31, 2010 | ||||||||||||||||||||
Maturing in the 12 Months Ending December 31, | ||||||||||||||||||||
Certificates of Deposit | 2011 | 2012 | 2013 | Thereafter | Total | |||||||||||||||
(In Thousands) | ||||||||||||||||||||
Less than 2.00% |
$ | 195,588 | $ | 27,588 | $ | 1,663 | $ | 145 | $ | 224,984 | ||||||||||
2.00% - 2.99% |
25,264 | 10,384 | 9,836 | 7,704 | 53,188 | |||||||||||||||
3.00% - 3.99% |
4,647 | 3,761 | 434 | 54,614 | 63.456 | |||||||||||||||
4.00% - 4.99% |
11,757 | 3,408 | 10,767 | 59.013 | 84,945 | |||||||||||||||
5.00% - 5.99% |
1,241 | 236 | | 3,883 | 5,360 | |||||||||||||||
6.00% - 6.99% |
| | 77 | | 77 | |||||||||||||||
7.00% or more |
6 | | | | 6 | |||||||||||||||
Total certificate accounts |
$ | 238,503 | $ | 45,377 | $ | 22,777 | $ | 125,359 | $ | 432,016 | ||||||||||
At December 31, 2010 | ||||||||
Weighted | ||||||||
Quarter Ending: | Amount | Average Rate | ||||||
(Dollars in Thousands) | ||||||||
March 31, 2011 |
$ | 52,608 | 1.53 | % | ||||
June 30, 2011 |
20,034 | 1.25 | ||||||
September 30, 2011 |
40,509 | 1.51 | ||||||
December 31, 2011 |
14,791 | 1.25 | ||||||
After December 31, 2011 |
92,540 | 3.47 | ||||||
Total certificates of deposit with
balances of $100,000 or more |
$ | 220,482 | 2.30 | % | ||||
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At or For the Year | ||||||||||||
Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in Thousands) | ||||||||||||
FHLB advances: |
||||||||||||
Average balance outstanding |
$ | 126,626 | $ | 180,939 | $ | 209,498 | ||||||
Maximum amount outstanding at any
month-end during the period |
144,744 | 255,516 | 257,051 | |||||||||
Balance outstanding at end of period |
109,875 | 146,739 | 257,051 | |||||||||
Average interest rate during the period |
4.16 | % | 4.10 | % | 4.35 | % | ||||||
Weighted average interest rate at end
of period |
2.67 | % | 4.28 | % | 3.39 | % | ||||||
Other borrowed money: |
||||||||||||
Average balance outstanding |
$ | 22,561 | $ | 23,271 | $ | 19,887 | ||||||
Maximum amount outstanding at any
month-end during the period |
29,023 | 30,631 | 25,888 | |||||||||
Balance outstanding at end of period |
15,881 | 16,673 | 17,610 | |||||||||
Average interest rate during the period |
0.32 | % | 0.31 | % | 1.80 | % | ||||||
Weighted average interest rate at end
of period |
0.42 | % | 0.34 | % | 0.31 | % |
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| A new independent consumer financial protection bureau will be established within the Federal Reserve Board, empowered to exercise broad regulatory, supervisory and enforcement authority with respect to both new and existing consumer financial protection laws. Smaller financial institutions, like the Bank, will be subject to the supervision and enforcement of their primary federal banking regulator with respect to the federal consumer financial protection laws. |
| Tier 1 capital treatment for hybrid capital items like trust preferred securities is eliminated subject to various grandfathering and transition rules. |
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| The current prohibition on payment of interest on demand deposits was repealed, effective July 21, 2011. |
| Deposit insurance is permanently increased to $250,000 and unlimited deposit insurance for noninterest-bearing transaction accounts is provided through the end of 2012. |
| The deposit insurance assessment base calculation will equal the depository institutions total assets minus the sum of its average tangible equity during the assessment period. |
| The minimum reserve ratio of the Deposit Insurance Fund increased to 1.35 percent of estimated annual insured deposits or assessment base; however, the Federal Deposit Insurance Corporation is directed to offset the effect of the increased reserve ratio for insured depository institutions with total consolidated assets of less than $10 billion. |
| Authority over savings and loan holding companies will transfer to the Federal Reserve Board. |
| Leverage capital requirements and risk based capital requirements applicable to depository institutions and bank holding companies will be extended to thrift holding companies. |
| The Federal Deposit Insurance Act was amended to direct federal regulators to require depository institution holding companies to serve as a source of strength for their depository institution subsidiaries. |
| The Securities and Exchange Commission is authorized to adopt rules requiring public companies to make their proxy materials available to shareholders for nomination of their own candidates for election to the board of directors. |
| Public companies will be required to provide their shareholders with a non-binding vote: (i) at least once every three years on the compensation paid to executive officers, and (ii) at least once every six years on whether they should have a say on pay vote every one, two or three years. |
| A separate, non-binding shareholder vote will be required regarding golden parachutes for named executive officers when a shareholder vote takes place on mergers, acquisitions, dispositions or other transactions that would trigger the parachute payments. |
| Securities exchanges will be required to prohibit brokers from using their own discretion to vote shares not beneficially owned by them for certain significant matters, which include votes on the election of directors, executive compensation matters, and any other matter determined to be significant. |
| Stock exchanges will be prohibited from listing the securities of any issuer that does not have a policy providing for (i) disclosure of its policy on incentive compensation payable on the basis of financial information reportable under the securities laws, and (ii) the recovery from current or former executive officers, following an accounting restatement triggered by material noncompliance with securities law reporting requirements, of any incentive compensation paid erroneously during the three-year period preceding the date on which the restatement was required that exceeds the amount that would have been paid on the basis of the restated financial information. |
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| Disclosure in annual proxy materials will be required concerning the relationship between the executive compensation paid and the financial performance of the issuer. |
| Item 402 of Regulation S-K will be amended to require companies to disclose the ratio of the Chief Executive Officers annual total compensation to the median annual total compensation of all other employees. |
| Smaller reporting companies are exempt from complying with the internal control auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. |
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| the institution may not engage in any new activity or make any new investment, directly or indirectly, unless such activity or investment is permissible for a national bank; |
| the branching powers of the institution shall be restricted to those of a national bank; and |
| payment of dividends by the institution shall be subject to the rules regarding payment of dividends by a national bank. |
32
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33
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| the Federal Deposit Insurance Corporation determines the activity or investment does not pose a significant risk of loss to the Deposit Insurance Fund; and |
| Abington Bank meets all applicable capital requirements. |
34
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35
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36
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37
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ITEM 1A. | RISK FACTORS |
38
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39
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40
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41
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ITEM 1B. | UNRESOLVED STAFF COMMENTS |
42
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ITEM 2. | PROPERTIES |
Date of Lease | Net Book Value | Amount of | ||||||||||||||
Description/Address | Leased/Owned | Expiration | of Property | Deposits | ||||||||||||
(In Thousands) | ||||||||||||||||
Main Office |
Owned | N/A | $ | 1,038 | $ | 173,194 | ||||||||||
180 Old York Road Jenkintown, PA 19046 |
||||||||||||||||
Loan Processing Office |
Owned | N/A | 902 | N/A | ||||||||||||
179 Washington Lane Jenkintown, PA 19046 |
||||||||||||||||
Glenside Branch |
Bldg. Owned | 12/31/19 | 406 | 90,577 | ||||||||||||
273 Keswick Avenue |
Ground Leased | |||||||||||||||
Glenside, PA 19038 |
||||||||||||||||
Abington Branch |
Leased | 1/31/19 | 148 | 41,132 | ||||||||||||
990 Old York Road Abington, PA 19001 |
||||||||||||||||
Willow Grove Branch |
Owned | N/A | 1,375 | 99,908 | ||||||||||||
275 Moreland Road Willow Grove, PA 19090 |
||||||||||||||||
Horsham Branch |
Leased | 5/31/13 | 85 | 33,032 | ||||||||||||
Rt 611 & County Line Road Horsham, PA 19044 |
||||||||||||||||
Huntingdon Valley Branch |
Leased | 12/31/13 | 38 | 55,892 | ||||||||||||
667 Welsh Road Huntingdon Valley, PA 19006 |
||||||||||||||||
Fort Washington Branch |
Leased | 8/15/13 | 75 | 52,296 | ||||||||||||
101 Fort Washington Avenue Fort Washington, PA 19034 |
||||||||||||||||
Montgomeryville Branch |
Leased | 3/31/16 | 3 | 26,370 | ||||||||||||
521 Stump Road North Wales, PA 19454 |
||||||||||||||||
Warrington Branch |
Leased | 6/30/15 | 843 | 54,167 | ||||||||||||
1111 Easton Road Warrington, PA 18976 |
||||||||||||||||
Lansdale Branch |
Leased | 1/31/17 | 60 | 21,994 | ||||||||||||
407 S. Broad Street Lansdale, PA 19446 |
||||||||||||||||
Chalfont Branch |
Leased | 6/14/14 | 1,086 | 17,106 | ||||||||||||
329 N. Main Street Chalfont, PA 18914 |
43
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Date of Lease | Net Book Value | Amount of | ||||||||||||||
Description/Address | Leased/Owned | Expiration | of Property | Deposits | ||||||||||||
(In Thousands) | ||||||||||||||||
Spring House Branch |
Owned | N/A | $ | 2,318 | $ | 42,048 | ||||||||||
800 N. Bethlehem Pike Spring House, PA 19477 |
||||||||||||||||
Hatboro Branch |
Leased | N/A | 341 | 34,356 | ||||||||||||
420 S. York Road Hatboro, PA 19040 |
||||||||||||||||
Rydal Park Limited Service Office |
Leased | 5/21/11 | | 15,299 | ||||||||||||
1515 The Fairway Rydal, PA 19046 |
||||||||||||||||
Centennial Station Limited Service Office |
Leased | 7/31/11 | | 6,829 | ||||||||||||
12106-B Centennial Station Warminster, PA 18974 |
||||||||||||||||
Regency Towers Limited Service Office |
Leased | 10/31/13 | | 10,877 | ||||||||||||
1003 Easton Road Willow Grove, PA 19090 |
||||||||||||||||
Anns Choice Limited Service Office |
Leased | 5/31/12 | 9 | 69,037 | ||||||||||||
10000 Anns Choice Way Warminster, PA 18974 |
||||||||||||||||
Anns Choice Limited Service Office #2 |
Leased | 5/31/12 | | 16,022 | ||||||||||||
3000 Anns Choice Way Warminster, PA 18974 |
||||||||||||||||
Maris Grove Limited Service Office |
Leased | 9/30/16 | 1 | 32,616 | ||||||||||||
100 Maris Grove Way Glen Mills, PA 19342 |
||||||||||||||||
Whitemarsh Limited Service Office |
Leased | 3/31/12 | 16 | 7,307 | ||||||||||||
4000 Fox Hound Drive Lafayette Hill, PA 19444 |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | (REMOVED AND RESERVED) |
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ITEM 5. | MARKET FOR REGISTRANTS COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
(a) | Abington Bancorp, Inc. common stock trades on the Nasdaq Global Market under the trading symbol ABBC. At the close of business on December 31, 2010, there were 4,551 shareholders of record. |
The following table sets forth the high and low sales prices of the Companys common stock as reported by the Nasdaq Global Market during the periods presented. |
Year Ended December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
High | Low | High | Low | |||||||||||||
First Quarter |
$ | 8.50 | $ | 6.60 | $ | 9.33 | $ | 5.88 | ||||||||
Second Quarter |
$ | 10.20 | $ | 7.90 | $ | 9.40 | $ | 7.52 | ||||||||
Third Quarter |
$ | 10.59 | $ | 8.63 | $ | 9.00 | $ | 7.50 | ||||||||
Fourth Quarter |
$ | 12.41 | $ | 10.32 | $ | 8.00 | $ | 6.28 |
The following table summarizes the cash dividends per share of common stock paid by the Company during the periods indicated. |
Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
First Quarter |
$ | 0.050 | $ | 0.050 | ||||
Second Quarter |
$ | 0.050 | $ | 0.050 | ||||
Third Quarter |
$ | 0.050 | $ | 0.050 | ||||
Fourth Quarter |
$ | 0.060 | $ | 0.050 |
45
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The following graph demonstrates comparison of the cumulative total returns for the common stock of Abington Bancorp, the NASDAQ Composite Index and the SNL Securities Thrift Index for the periods indicated. The graph includes adjustments to reflect the reorganization we completed on June 27, 2007 and assumes that an investor originally purchased shares of our predecessor mid-tier company on December 31, 2005 and exchanged his or her shares in June 2007 pursuant to the exchange ratio for our second step conversion. The graph below represents $100 invested in our common stock at its closing price on December 31, 2005. The cumulative total returns include the payment of dividends by Abington Bancorp. |
Period Ending | ||||||||||||||||||||||||
Index | 12/31/05 | 12/31/06 | 12/31/07 | 12/31/08 | 12/31/09 | 12/31/10 | ||||||||||||||||||
Abington Bancorp, Inc. |
$ | 100.00 | $ | 150.10 | $ | 119.68 | $ | 120.16 | $ | 91.95 | $ | 162.73 | ||||||||||||
NASDAQ Composite |
100.00 | 110.39 | 122.15 | 73.32 | 106.57 | 125.91 | ||||||||||||||||||
SNL Thrift Index |
100.00 | 116.57 | 69.93 | 44.50 | 41.50 | 43.37 |
* | Source: SNL Financial LC |
The Company did not sell any of its equity securities during 2010 that were not registered under the Securities Act of 1933. |
For information regarding the Companys equity compensation plans see Item 12. |
(b) | Not applicable. |
46
Table of Contents
(c) | Purchases of Equity Securities |
The Companys repurchases of its common stock made during the quarter are set forth in the following table. |
Total Number of | Maximum Number | |||||||||||||||
Total | Shares Purchased | of Shares that May | ||||||||||||||
Number of | Average | as Part of Publicly | Yet be Purchased | |||||||||||||
Shares | Price Paid | Announced Plans | Under the Plan or | |||||||||||||
Period | Purchased(1) | per Share | or Programs | Programs(2) | ||||||||||||
October 1, October 31, 2010 |
| $ | | | 265,824 | |||||||||||
November 1, November 30, 2010 |
266 | 11.91 | | 265,824 | ||||||||||||
December 1, December 31, 2010 |
1,000 | 11.92 | | 265,824 | ||||||||||||
Total |
1,266 | $ | 11.92 | | 265,824 | |||||||||||
(1) | All 1,266 shares purchased during the quarter were purchased as permitted by the tax withholding provisions of the Companys recognition and retention plan. In conjunction with the plan, participants may elect to have a portion of their awarded shares withheld upon vesting solely to pay for any related tax liabilities on these awards. | |
(2) | On January 14, 2010, the Company announced a stock repurchase program to repurchase up to 5% of its outstanding shares, or 1,048,603 shares. This purchase program terminated January 14, 2011 with no additional purchases made. |
ITEM 6. | SELECTED FINANCIAL DATA |
At December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
Selected Financial and Other Data: |
||||||||||||||||||||
Total assets |
$ | 1,247,098 | $ | 1,238,112 | $ | 1,189,753 | $ | 1,079,669 | $ | 925,186 | ||||||||||
Cash and cash equivalents |
77,687 | 44,714 | 31,863 | 68,055 | 44,565 | |||||||||||||||
Investment securities: |
||||||||||||||||||||
Held-to-maturity |
20,385 | 20,387 | 20,389 | 20,391 | 20,393 | |||||||||||||||
Available-for-sale |
124,904 | 84,317 | 69,324 | 98,781 | 74,489 | |||||||||||||||
Mortgage-backed securities: |
||||||||||||||||||||
Held-to-maturity |
56,872 | 77,150 | 83,093 | 46,892 | 56,144 | |||||||||||||||
Available-for-sale |
168,173 | 138,629 | 151,629 | 94,124 | 78,023 | |||||||||||||||
Loans receivable, net |
696,444 | 764,560 | 756,552 | 682,038 | 605,063 | |||||||||||||||
FHLB stock |
13,877 | 14,608 | 14,608 | 10,959 | 11,241 | |||||||||||||||
Deposits |
900,059 | 850,200 | 664,950 | 609,613 | 587,002 | |||||||||||||||
FHLB advances |
109,875 | 146,739 | 257,051 | 189,558 | 196,293 | |||||||||||||||
Other borrowed money |
15,881 | 16,673 | 17,610 | 17,453 | 17,781 | |||||||||||||||
Stockholders equity |
211,910 | 214,182 | 238,101 | 249,915 | 114,102 | |||||||||||||||
Banking offices |
20 | 20 | 20 | 18 | 14 |
47
Table of Contents
Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollars in Thousands, except per share data) | ||||||||||||||||||||
Selected Operating Data: |
||||||||||||||||||||
Total interest income |
$ | 51,318 | $ | 53,745 | $ | 56,262 | $ | 56,811 | $ | 49,818 | ||||||||||
Total interest expense |
18,009 | 22,936 | 26,498 | 31,064 | 27,268 | |||||||||||||||
Net interest income |
33,309 | 30,809 | 29,764 | 25,747 | 22,550 | |||||||||||||||
Provision for loan losses |
977 | 18,737 | 9,760 | 457 | 186 | |||||||||||||||
Net interest income after provision for
loan losses |
32,332 | 12,072 | 20,004 | 25,290 | 22,364 | |||||||||||||||
Total non-interest income (loss) |
2,640 | (1,495 | ) | 3,055 | 3,177 | 2,876 | ||||||||||||||
Total non-interest expense |
24,737 | 23,069 | 21,218 | 18,685 | 15,746 | |||||||||||||||
Income (loss) before income taxes |
10,235 | (12,492 | ) | 1,841 | 9,782 | 9,494 | ||||||||||||||
Income taxes (benefit) |
2,545 | (5,299 | ) | (278 | ) | 2,715 | 2,692 | |||||||||||||
Net income (loss) |
$ | 7,690 | $ | (7,193 | ) | $ | 2,119 | $ | 7,067 | $ | 6,802 | |||||||||
Basic earnings (loss) per share (1) |
$ | 0.41 | $ | (0.36 | ) | $ | 0.10 | $ | 0.31 | $ | 0.29 | |||||||||
Diluted earnings (loss) per share (1) |
$ | 0.39 | $ | (0.36 | ) | $ | 0.09 | $ | 0.30 | $ | 0.28 | |||||||||
Cash dividends per share (1) |
$ | 0.21 | $ | 0.20 | $ | 0.20 | $ | 0.17 | $ | 0.14 |
Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Selected Operating Ratios(2): |
||||||||||||||||||||
Average yield on interest-earning assets |
4.55 | % | 4.90 | % | 5.42 | % | 6.02 | % | 5.93 | % | ||||||||||
Average rate on interest-bearing liabilities |
1.83 | 2.47 | 3.21 | 4.08 | 3.80 | |||||||||||||||
Average interest rate spread(3) |
2.72 | 2.43 | 2.21 | 1.94 | 2.13 | |||||||||||||||
Net interest margin(3) |
2.95 | 2.81 | 2.87 | 2.73 | 2.68 | |||||||||||||||
Average interest-earning assets to average
interest-bearing liabilities |
114.32 | 118.21 | 125.66 | 123.84 | 117.21 | |||||||||||||||
Net interest income after provision
for loan losses to non-interest expense |
130.70 | 52.33 | 94.28 | 135.35 | 142.03 | |||||||||||||||
Total non-interest expense to average assets |
1.97 | 1.91 | 1.88 | 1.86 | 1.78 | |||||||||||||||
Efficiency ratio(4) |
68.81 | 78.70 | 64.65 | 64.60 | 61.93 | |||||||||||||||
Return on average assets |
0.61 | (0.59 | ) | 0.19 | 0.70 | 0.77 | ||||||||||||||
Return on average equity |
3.60 | (3.15 | ) | 0.86 | 3.79 | 5.94 | ||||||||||||||
Average equity to average assets |
17.00 | 18.85 | 21.86 | 18.56 | 12.94 |
At or For the | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Asset Quality Ratios(5): |
||||||||||||||||||||
Non-performing loans as a percent of
total loans receivable(6) |
1.29 | % | 4.47 | % | 3.06 | % | 0.23 | % | 0.42 | % | ||||||||||
Non-performing assets as a percent of
total assets(6) |
2.62 | 4.64 | 2.12 | 0.14 | 0.28 | |||||||||||||||
Allowance for loan losses as a percent of
non-performing loans |
47.27 | 26.28 | 49.35 | 116.84 | 62.69 | |||||||||||||||
Net charge-offs/(recoveries) to average
loans receivable |
0.81 | 2.81 | (0.00 | ) | 0.04 | 0.01 | ||||||||||||||
Capital Ratios(7): |
||||||||||||||||||||
Tier 1 leverage ratio |
13.84 | % | 13.14 | % | 14.20 | % | 15.45 | % | 10.54 | % | ||||||||||
Tier 1 risk-based capital ratio |
23.31 | 20.04 | 22.06 | 24.22 | 16.49 | |||||||||||||||
Total risk-based capital ratio |
23.89 | 21.16 | 24.49 | 24.49 | 16.77 |
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(1) | Earnings per share and cash dividends per share for the prior periods have been adjusted to reflect the impact of the second-step conversion and reorganization of the Company, which occurred on June 27, 2007. | |
(2) | With the exception of end of period ratios, all ratios are based on average monthly balances during the indicated periods. | |
(3) | Average interest rate spread represents the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities, and net interest margin represents net interest income as a percentage of average interest-earning assets. | |
(4) | The efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and non-interest income. | |
(5) | Asset quality ratios are end of period ratios, except for net charge-offs to average loans receivable. | |
(6) | Non-performing assets consist of non-performing loans and real estate owned. Non-performing loans consist of all accruing loans 90 days or more past due and all non-accruing loans. It is our policy, with certain limited exceptions, to cease accruing interest on single-family residential mortgage loans 120 days or more past due and all other loans 90 days or more past due. Real estate owned consists of real estate acquired through foreclosure and real estate acquired by acceptance of a deed-in-lieu of foreclosure. | |
(7) | Capital ratios are end of period ratios and are calculated for Abington Bank per regulatory requirements. |
ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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| Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets. |
| Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. |
| Level 3 Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Companys own estimates of assumptions that market participants would use in pricing the asset. |
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Actual Ratios At | ||||||||||||||||
December 31, | December 31, | Regulatory | To Be Well | |||||||||||||
2010 | 2009 | Minimum | Capitalized | |||||||||||||
Capital Ratios: |
||||||||||||||||
Tier 1 leverage ratio |
13.84 | % | 13.14 | % | 4.00 | 5.00 | % | |||||||||
Tier 1 risk-based capital ratio |
23.31 | 20.04 | 4.00 | 6.00 | ||||||||||||
Total risk-based capital ratio |
23.89 | 21.16 | 8.00 | 10.00 |
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Amount of Commitment Expiration - Per Period | ||||||||||||||||||||
After One to | After Three | |||||||||||||||||||
Total Amounts | Within | Three | to Five | After Five | ||||||||||||||||
Committed | One Year | Years | Years | Years | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
Letters of credit |
$ | 48,322 | $ | 22,005 | $ | 26,161 | $ | | $ | 156 | ||||||||||
Recourse obligations on loans
sold |
185 | | | | 185 | |||||||||||||||
Commitments to originate loans |
2,855 | 2,855 | | | | |||||||||||||||
Unused portion of home equity
lines of credit |
30,177 | | | | 30,177 | |||||||||||||||
Unused portion of commercial
lines of credit |
51,822 | 51,822 | | | | |||||||||||||||
Undisbursed portion of
construction loans in process |
30,065 | 22,107 | 7,958 | | | |||||||||||||||
Total commitments |
$ | 163,426 | $ | 98,789 | $ | 34,119 | $ | | $ | 30,518 | ||||||||||
Payments Due By Period | ||||||||||||||||||||
Within | After One to Three | After Three to Five | After Five | |||||||||||||||||
Total | One Year | Years | Years | Years | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
Certificates of deposit |
$ | 432,016 | $ | 238,504 | $ | 68,153 | $ | 60,393 | $ | 64,966 | ||||||||||
FHLB advances |
109,875 | 24,885 | 35,077 | 40,463 | 9,450 | |||||||||||||||
Repurchase agreements |
15,881 | 15,881 | | | | |||||||||||||||
Total debt |
125,756 | 40,766 | 35,077 | 40,463 | 9,450 | |||||||||||||||
Operating lease obligations |
4,546 | 901 | 1,675 | 1,044 | 926 | |||||||||||||||
Total contractual obligations |
$ | 562,318 | $ | 280,171 | $ | 104,905 | $ | 101,900 | $ | 75,342 | ||||||||||
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Years Ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||||
Balance | Interest | Yield/Rate | Balance | Interest | Yield/Rate | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Investment securities(1) |
$ | 129.297 | $ | 3,435 | 2.66 | % | $ | 89,026 | $ | 3,226 | 3.62 | % | ||||||||||||
Mortgage-backed securities |
213,729 | 8,599 | 4.02 | 214,716 | 10,158 | 4.73 | ||||||||||||||||||
Loans receivable(2) |
719,172 | 39,203 | 5.45 | 755,279 | 40,320 | 5.34 | ||||||||||||||||||
Other interest-earning assets |
65,406 | 81 | 0.12 | 37,956 | 41 | 0.11 | ||||||||||||||||||
Total interest-earning assets |
1,127,604 | 51,318 | 4.55 | 1,096,977 | 53,745 | 4.90 | ||||||||||||||||||
Cash and non-interest bearing
balances |
21,556 | 23,046 | ||||||||||||||||||||||
Other non-interest-earning assets |
108,539 | 90,445 | ||||||||||||||||||||||
Total assets |
$ | 1,257.699 | $ | 1,210,468 | ||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||
Savings and money market accounts |
$ | 295,800 | 2,495 | 0.84 | $ | 200,576 | 2,547 | 1.27 | ||||||||||||||||
Checking accounts |
83,975 | 36 | 0.04 | 73,708 | 38 | 0.05 | ||||||||||||||||||
Certificate accounts |
457,412 | 10,143 | 2.22 | 449,508 | 12,855 | 2.86 | ||||||||||||||||||
Total deposits |
837,187 | 12,674 | 1.51 | 723,792 | 15,440 | 2.13 | ||||||||||||||||||
FHLB advances |
126,626 | 5,262 | 4.16 | 180,939 | 7,423 | 4.10 | ||||||||||||||||||
Other borrowings |
22,561 | 73 | 0.32 | 23,271 | 73 | 0.31 | ||||||||||||||||||
Total interest-bearing liabilities |
986,374 | 18,009 | 1.83 | 928,002 | 22,936 | 2.47 | ||||||||||||||||||
Non-interest-bearing liabilities: |
||||||||||||||||||||||||
Non-interest-bearing demand
accounts |
44,407 | 42,132 | ||||||||||||||||||||||
Real estate tax escrow accounts |
3,118 | 3,283 | ||||||||||||||||||||||
Other liabilities |
9,951 | 8,938 | ||||||||||||||||||||||
Total liabilities |
1,043,850 | 982,355 | ||||||||||||||||||||||
Stockholders equity |
213,849 | 228,113 | ||||||||||||||||||||||
Total liabilities and stockholders
equity |
$ | 1,257,699 | $ | 1,210,468 | ||||||||||||||||||||
Net interest-earning assets |
$ | 141,230 | $ | 168,975 | ||||||||||||||||||||
Net interest income; average
interest rate spread |
$ | 33,309 | 2.72 | % | $ | 30,809 | 2.43 | % | ||||||||||||||||
Net interest margin(3) |
2.95 | % | 2.81 | % | ||||||||||||||||||||
(1) | Investment securities for the 2010 period include 133 tax-exempt municipal bonds with an aggregate average balance of $40.1 million and an average yield of 4.0%. Investment securities for the 2009 period include 134 tax-exempt municipal bonds with an aggregate average balance of $41.8 million and an average yield of 3.9%. The tax-exempt income from such securities has not been calculated on a tax equivalent basis. | |
(2) | Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for loan losses. The impact of loan fee income has an immaterial effect on this analysis. | |
(3) | Equals net interest income divided by average interest-earning assets. |
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2010 vs. 2009 | ||||||||||||||||
Increase (Decrease) Due to | Total | |||||||||||||||
Rate/ | Increase | |||||||||||||||
Rate | Volume | Volume | (Decrease) | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Interest income: |
||||||||||||||||
Investment securities(1) |
$ | (861 | ) | $ | 1,459 | $ | (389 | ) | $ | 209 | ||||||
Mortgage-backed
securities |
(1,519 | ) | (47 | ) | 7 | (1,559 | ) | |||||||||
Loans receivable, net |
851 | (1,927 | ) | (41 | ) | (1,117 | ) | |||||||||
Other interest-
earning assets |
6 | 30 | 4 | 40 | ||||||||||||
Total interest-
earning assets |
(1,523 | ) | (485 | ) | (419 | ) | (2,427 | ) | ||||||||
Interest expense: |
||||||||||||||||
Savings accounts |
(855 | ) | 1,209 | (406 | ) | (52 | ) | |||||||||
Checking accounts |
(6 | ) | 5 | (1 | ) | (2 | ) | |||||||||
Certificate accounts |
(2,887 | ) | 226 | (51 | ) | (2,712 | ) | |||||||||
Total deposits |
(3,748 | ) | 1,440 | (458 | ) | (2,766 | ) | |||||||||
FHLB advances |
96 | (2,228 | ) | (29 | ) | (2,161 | ) | |||||||||
Other borrowed money |
2 | (2 | ) | | | |||||||||||
Total interest-
bearing liabilities |
(3,650 | ) | (790 | ) | (487 | ) | (4,927 | ) | ||||||||
Increase in net interest
income |
$ | 2,127 | $ | 305 | $ | 68 | $ | 2,500 | ||||||||
(1) | Investment securities for the 2010 period include 133 tax-exempt municipal bonds with an aggregate average balance of $40.1 million and an average yield of 4.0%. Investment securities for the 2009 period include 134 tax-exempt municipal bonds with an aggregate average balance of $41.8 million and an average yield of 3.9%. The tax-exempt income from such securities has not been calculated on a tax equivalent basis. |
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Years Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||||
Balance | Interest | Yield/Rate | Balance | Interest | Yield/Rate | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Investment securities(1) |
$ | 89,026 | $ | 3,226 | 3.62 | % | $ | 104,685 | $ | 4,698 | 4.49 | % | ||||||||||||
Mortgage-backed securities |
214,716 | 10,158 | 4.73 | 183,589 | 8,538 | 4.65 | ||||||||||||||||||
Loans receivable(2) |
755,279 | 40,320 | 5.34 | 703,496 | 41,941 | 5.96 | ||||||||||||||||||
Other interest-earning assets |
37,956 | 41 | 0.11 | 46,039 | 1,085 | 2.36 | ||||||||||||||||||
Total interest-earning assets |
1,096,977 | 53,745 | 4.90 | 1,037,809 | 56,262 | 5.42 | ||||||||||||||||||
Cash and non-interest bearing
balances |
23,046 | 22,293 | ||||||||||||||||||||||
Other non-interest-earning assets |
90,445 | 66,379 | ||||||||||||||||||||||
Total assets |
$ | 1,210,468 | $ | 1,126,481 | ||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||
Savings and money market accounts |
$ | 200,576 | 2,547 | 1.27 | $ | 119,082 | 1,913 | 1.61 | ||||||||||||||||
Checking accounts |
73,708 | 38 | 0.05 | 63,310 | 20 | 0.03 | ||||||||||||||||||
Certificate accounts |
449,508 | 12,855 | 2.86 | 414,086 | 15,092 | 3.64 | ||||||||||||||||||
Total deposits |
723,792 | 15,440 | 2.13 | 596,478 | 17,025 | 2.85 | ||||||||||||||||||
FHLB advances |
180,939 | 7,423 | 4.10 | 209,498 | 9,115 | 4.35 | ||||||||||||||||||
Other borrowings |
23,271 | 73 | 0.31 | 19,887 | 358 | 1.80 | ||||||||||||||||||
Total interest-bearing liabilities |
928,002 | 22,936 | 2.47 | 825,863 | 26,498 | 3.21 | ||||||||||||||||||
Non-interest-bearing liabilities: |
||||||||||||||||||||||||
Non-interest-bearing demand
accounts |
42,132 | 40,281 | ||||||||||||||||||||||
Real estate tax escrow accounts |
3,283 | 3,247 | ||||||||||||||||||||||
Other liabilities |
8,938 | 10,811 | ||||||||||||||||||||||
Total liabilities |
982,355 | 880,202 | ||||||||||||||||||||||
Stockholders equity |
228,113 | 246,279 | ||||||||||||||||||||||
Total liabilities and stockholders
equity |
$ | 1,210,468 | $ | 1,126,481 | ||||||||||||||||||||
Net interest-earning assets |
$ | 168,975 | $ | 211,946 | ||||||||||||||||||||
Net interest income; average
interest rate spread |
$ | 30,809 | 2.43 | % | $ | 29,764 | 2.21 | % | ||||||||||||||||
Net interest margin(3) |
2.81 | % | 2.87 | % | ||||||||||||||||||||
(1) | Investment securities for the 2009 period include 134 tax-exempt municipal bonds with an aggregate average balance of $41.8 million and an average yield of 3.9%. Investment securities for the 2008 period include 132 tax-exempt municipal bonds with an aggregate average balance of $35.8 million and an average yield of 3.9%. The tax-exempt income from such securities has not been calculated on a tax equivalent basis. | |
(2) | Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for loan losses. The impact of loan fee income has an immaterial effect on this analysis. | |
(3) | Equals net interest income divided by average interest-earning assets. |
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2009 vs. 2008 | ||||||||||||||||
Increase (Decrease) Due to | Total | |||||||||||||||
Rate/ | Increase | |||||||||||||||
Rate | Volume | Volume | (Decrease) | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Interest income: |
||||||||||||||||
Investment securities(1) |
$ | (905 | ) | $ | (703 | ) | $ | 136 | $ | (1,472 | ) | |||||
Mortgage-backed
securities |
147 | 1,448 | 25 | 1,620 | ||||||||||||
Loans receivable, net |
(4,385 | ) | 3,087 | (323 | ) | (1,621 | ) | |||||||||
Other interest-
earning assets |
(1,035 | ) | (190 | ) | 181 | (1,044 | ) | |||||||||
Total interest-
earning assets |
(6,178 | ) | 3,642 | 19 | (2,517 | ) | ||||||||||
Interest expense: |
||||||||||||||||
Savings accounts |
(401 | ) | 1,309 | (274 | ) | 634 | ||||||||||
Checking accounts |
13 | 3 | 2 | 18 | ||||||||||||
Certificate accounts |
(3,250 | ) | 1,291 | (278 | ) | (2,237 | ) | |||||||||
Total deposits |
(3,638 | ) | 2,603 | (550 | ) | (1,585 | ) | |||||||||
FHLB advances |
(520 | ) | (1,243 | ) | 71 | (1,692 | ) | |||||||||
Other borrowed money |
(296 | ) | 61 | (50 | ) | (285 | ) | |||||||||
Total interest-
bearing liabilities |
(4,454 | ) | 1,421 | (529 | ) | (3,562 | ) | |||||||||
Increase in net interest
income |
$ | (1,724 | ) | $ | 2,221 | $ | 548 | $ | 1,045 | |||||||
(1) | Investment securities for the 2009 period include 134 tax-exempt municipal bonds with an aggregate average balance of $41.8 million and an average yield of 3.9%. Investment securities for the 2008 period include 132 tax-exempt municipal bonds with an aggregate average balance of $35.8 million and an average yield of 3.9%. The tax-exempt income from such securities has not been calculated on a tax equivalent basis. |
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ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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More than | More than | More than | ||||||||||||||||||||||
6 Months | 6 Months | 1 Year | 3 Years | More than | Total | |||||||||||||||||||
or Less | to 1 Year | to 3 Years | to 5 Years | 5 Years | Amount | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
Interest-earning assets (1): |
||||||||||||||||||||||||
Loans receivable (2) |
$ | 235,196 | $ | 41,965 | $ | 127,922 | $ | 105,980 | $ | 178,369 | $ | 689,432 | ||||||||||||
Mortgage-backed
securities |
45,184 | 34,417 | 82,639 | 48,588 | 10,677 | 221,505 | ||||||||||||||||||
Investment securities |
6,745 | 1,180 | 59,555 | 75,300 | 1,850 | 144,630 | ||||||||||||||||||
Other interest-earning
assets |
73,647 | | | | | 73,647 | ||||||||||||||||||
Total interest-earning
assets |
360,772 | 77,562 | 270,116 | 229,868 | 190,896 | 1,129,214 | ||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Savings and money market
accounts |
$ | 76,969 | $ | 60,666 | $ | 85,152 | $ | 56,340 | $ | 46,933 | $ | 326,060 | ||||||||||||
Checking accounts |
| | | | 92,175 | 92,175 | ||||||||||||||||||
Certificate accounts |
141,254 | 99,148 | 66,257 | 60,392 | 64,965 | 432,016 | ||||||||||||||||||
FHLB advances |
38,850 | 11,798 | 27,888 | 27,916 | 3,423 | 109,875 | ||||||||||||||||||
Other borrowed money |
15,881 | | | | | 15,881 | ||||||||||||||||||
Total interest-bearing
liabilities |
272,954 | 171,612 | 179,297 | 144,648 | 207,496 | 976,007 | ||||||||||||||||||
Interest-earning assets less
interest-bearing liabilities |
$ | 87,818 | $ | (94,050 | ) | $ | 90,819 | $ | 85,220 | $ | (16,600 | ) | $ | 153,207 | ||||||||||
Cumulative interest-rate
sensitivity gap (3) |
$ | 87,818 | $ | (6,232 | ) | $ | 84,587 | $ | 169,807 | $ | 153,207 | |||||||||||||
Cumulative interest-rate
gap
as a percentage of total
assets at December 31, 2010 |
7.04 | % | (0.50 | )% | 6.78 | % | 13.62 | % | 12.29 | % | ||||||||||||||
Cumulative interest-earning
assets as a percentage of
cumulative interest-bearing
liabilities at December 31,
2010 |
132.17 | % | 98.60 | % | 113.56 | % | 122.10 | % | 115.70 | % | ||||||||||||||
(1) | Interest-earning assets are included in the period in which the balances are expected to be redeployed and/or repriced as a result of anticipated prepayments, scheduled rate adjustments and contractual maturities. | |
(2) | For purposes of the gap analysis, loans receivable includes non-performing loans net of the allowance for loan losses, undisbursed loan funds, unamortized discounts and deferred loan fees. | |
(3) | Interest-rate sensitivity gap represents the difference between net interest-earning assets and interest-bearing liabilities. |
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Change in | ||||||||||||||||||||
Interest Rates | NPV as % of Portfolio | |||||||||||||||||||
In Basis Points | Net Portfolio Value | Value of Assets | ||||||||||||||||||
(Rate Shock) | Amount | $ Change | % Change | NPV Ratio | Change | |||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
200bp |
$ | 174,565 | $ | (19,120 | ) | (9.87 | )% | 14.71 | % | (73 | )bp | |||||||||
100 |
185,599 | (8,086 | ) | (4.17 | ) | 15.19 | (25 | ) | ||||||||||||
Static |
193,686 | | | 15.44 | | |||||||||||||||
(100) |
196,222 | 2,537 | 1.31 | 15.30 | (14 | ) | ||||||||||||||
(200) |
183,153 | (10,532 | ) | (5.44 | ) | 14.18 | (126 | ) |
Change in Interest Rates in Basis | ||||||||||||
Points (Rate Shock) | Net Interest Income | $ Change | % Change | |||||||||
(Dollars in Thousands) | ||||||||||||
200bp |
$ | 36,003 | $ | 373 | 1.05 | % | ||||||
100 |
35,909 | 280 | 0.79 | |||||||||
Static |
35,630 | | | |||||||||
(100) |
34,314 | (1,316 | ) | (3.69 | ) | |||||||
(200) |
31,692 | (3,938 | ) | (11.05 | ) |
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ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
/s/ ParenteBeard LLC |
March 14, 2011
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December 31, 2010 | December 31, 2009 | |||||||
ASSETS |
||||||||
Cash and due from banks |
$ | 17,917,261 | $ | 18,941,066 | ||||
Interest-bearing deposits in other banks |
59,769,447 | 25,773,173 | ||||||
Total cash and cash equivalents |
77,686,708 | 44,714,239 | ||||||
Investment securities held to maturity (estimated fair
value2010, $20,806,340; 2009, $20,787,269) |
20,384,781 | 20,386,944 | ||||||
Investment securities available for sale (amortized cost
2010, $124,245,038; 2009, $82,905,101) |
124,903,901 | 84,317,271 | ||||||
Mortgage-backed securities held to maturity (estimated fair
value2010, $58,338,548; 2009, $77,297,497) |
56,872,188 | 77,149,936 | ||||||
Mortgage-backed securities available for sale (amortized cost
2010, $164,632,654; 2009, $133,916,731) |
168,172,796 | 138,628,592 | ||||||
Loans receivable, net of allowance for loan losses
(2010, $4,271,618; 2009, $9,090,353) |
696,443,502 | 764,559,941 | ||||||
Accrued interest receivable |
4,102,984 | 4,279,032 | ||||||
Federal Home Loan Bank stockat cost |
13,877,300 | 14,607,700 | ||||||
Cash surrender value bank owned life insurance |
42,744,766 | 40,983,202 | ||||||
Property and equipment, net |
9,751,694 | 10,423,190 | ||||||
Real estate owned |
23,588,139 | 22,818,856 | ||||||
Deferred tax asset |
3,631,218 | 4,711,447 | ||||||
Prepaid expenses and other assets |
4,938,037 | 10,531,771 | ||||||
TOTAL ASSETS |
$ | 1,247,098,014 | $ | 1,238,112,121 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
LIABILITIES: |
||||||||
Deposits: |
||||||||
Noninterest-bearing |
$ | 49,807,778 | $ | 45,146,650 | ||||
Interest-bearing |
850,251,190 | 805,053,843 | ||||||
Total deposits |
900,058,968 | 850,200,493 | ||||||
Advances from Federal Home Loan Bank |
109,874,674 | 146,739,435 | ||||||
Other borrowed money |
15,881,449 | 16,673,480 | ||||||
Accrued interest payable |
912,321 | 1,807,334 | ||||||
Advances from borrowers for taxes and insurance |
2,956,425 | 3,142,470 | ||||||
Accounts payable and accrued expenses |
5,504,215 | 5,366,909 | ||||||
Total liabilities |
1,035,188,052 | 1,023,930,121 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
STOCKHOLDERS EQUITY |
||||||||
Preferred stock, $0.01 par value, 20,000,000 shares authorized
none issued |
| | ||||||
Common stock, $0.01 par value, 80,000,000 shares authorized;
24,460,240 shares issued; outstanding: 20,166,742 shares in 2010,
21,049,025 shares in 2009 |
244,602 | 244,602 | ||||||
Additional paid-in capital |
202,517,175 | 201,922,651 | ||||||
Treasury stockat cost, 4,293,498 shares in 2010,
3,411,215 shares in 2009 |
(34,949,051 | ) | (27,446,596 | ) | ||||
Unallocated common stock held by: |
||||||||
Employee Stock Ownership Plan (ESOP) |
(13,460,338 | ) | (14,299,378 | ) | ||||
Recognition & Retention Plan Trust (RRP) |
(2,589,310 | ) | (3,918,784 | ) | ||||
Deferred compensation plans trust |
(1,045,153 | ) | (995,980 | ) | ||||
Retained earnings |
58,519,670 | 54,804,913 | ||||||
Accumulated other comprehensive income |
2,672,367 | 3,870,572 | ||||||
Total stockholders equity |
211,909,962 | 214,182,000 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 1,247,098,014 | $ | 1,238,112,121 | ||||
74
Table of Contents
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
INTEREST INCOME: |
||||||||||||
Interest on loans |
$ | 39,202,997 | $ | 40,320,206 | $ | 41,940,531 | ||||||
Interest and dividends on investment and
mortgage-backed securities |
||||||||||||
Taxable |
10,480,194 | 11,779,255 | 11,833,507 | |||||||||
Tax-exempt |
1,554,400 | 1,604,606 | 1,403,069 | |||||||||
Interest and dividends on other interest-earning assets |
80,682 | 41,076 | 1,084,898 | |||||||||
Total interest income |
51,318,273 | 53,745,143 | 56,262,005 | |||||||||
INTEREST EXPENSE: |
||||||||||||
Interest on deposits |
12,674,506 | 15,439,913 | 17,024,229 | |||||||||
Interest on Federal Home Loan Bank advances |
5,261,704 | 7,422,856 | 9,115,346 | |||||||||
Interest on other borrowed money |
72,939 | 73,767 | 358,312 | |||||||||
Total interest expense |
18,009,149 | 22,936,536 | 26,497,887 | |||||||||
NET INTEREST INCOME |
33,309,124 | 30,808,607 | 29,764,118 | |||||||||
PROVISION FOR LOAN LOSSES |
976,550 | 18,736,847 | 9,759,936 | |||||||||
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES |
32,332,574 | 12,071,760 | 20,004,182 | |||||||||
NON-INTEREST INCOME (LOSS): |
||||||||||||
Service charges |
1,201,750 | 1,587,440 | 1,645,537 | |||||||||
Income on bank owned life insurance |
1,761,564 | 1,798,313 | 1,886,763 | |||||||||
Net loss on real estate owned |
(1,033,438 | ) | (5,542,750 | ) | (149,744 | ) | ||||||
Net gain on sale of securities |
| 5,102 | 146,375 | |||||||||
Impairment charge on investment securities |
| | (869,194 | ) | ||||||||
Other income |
709,787 | 656,754 | 394,778 | |||||||||
Total non-interest income (loss) |
2,639,663 | (1,495,141 | ) | 3,054,515 | ||||||||
NON-INTEREST EXPENSES: |
||||||||||||
Salaries and employee benefits |
11,963,396 | 11,335,543 | 11,295,243 | |||||||||
Occupancy |
2,724,441 | 2,394,930 | 2,149,662 | |||||||||
Depreciation |
889,851 | 906,581 | 832,779 | |||||||||
Professional services |
1,902,382 | 1,323,161 | 1,214,869 | |||||||||
Data processing |
1,771,521 | 1,606,529 | 1,495,742 | |||||||||
Deposit insurance premium |
1,911,391 | 1,827,672 | 507,587 | |||||||||
Advertising and promotions |
545,816 | 442,076 | 496,130 | |||||||||
Director compensation |
739,758 | 900,795 | 853,807 | |||||||||
Other |
2,288,681 | 2,331,321 | 2,371,697 | |||||||||
Total non-interest expenses |
24,737,237 | 23,068,608 | 21,217,516 | |||||||||
INCOME (LOSS) BEFORE INCOME TAXES |
10,235,000 | (12,491,989 | ) | 1,841,181 | ||||||||
PROVISION (BENEFIT) FOR INCOME TAXES |
2,545,224 | (5,299,167 | ) | (278,424 | ) | |||||||
NET INCOME (LOSS) |
$ | 7,689,776 | $ | (7,192,822 | ) | $ | 2,119,605 | |||||
BASIC EARNINGS (LOSS) PER COMMON SHARE |
$ | 0.41 | $ | (0.36 | ) | $ | 0.10 | |||||
DILUTED EARNINGS (LOSS) PER COMMON SHARE |
$ | 0.39 | $ | (0.36 | ) | $ | 0.09 | |||||
BASIC AVERAGE COMMON SHARES OUTSTANDING: |
18,684,819 | 19,805,868 | 21,899,094 | |||||||||
DILUTED AVERAGE COMMON SHARES OUTSTANDING: |
19,929,404 | 19,805,868 | 22,630,136 |
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Common | Accumulated | |||||||||||||||||||||||||||||||
Stock | Other | |||||||||||||||||||||||||||||||
Common | Additional | Acquired by | Comprehensive | Total | ||||||||||||||||||||||||||||
Stock | Common | Paid-in | Treasury | Benefit | Retained | Income | Stockholders | |||||||||||||||||||||||||
Shares | Stock | Capital | Stock | Plans | Earnings | (Loss) | Equity | |||||||||||||||||||||||||
BALANCEJANUARY 1, 2008 |
24,460,240 | $ | 244,602 | $ | 200,634,467 | $ | (104,997 | ) | $ | (18,994,133 | ) | $ | 68,360,520 | $ | (225,399 | ) | $ | 249,915,060 | ||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||
Net income |
| | | | | 2,119,605 | | 2,119,605 | ||||||||||||||||||||||||
Net unrealized holding gain on
available for sale securities
arising during the period, net
of tax expense of $1,450,809 |
| | | | | | 2,816,276 | 2,816,276 | ||||||||||||||||||||||||
Amortization of unrecognized
deferred costs on defined
benefit pension plan, net
of tax benefit of $168,812 |
327,699 | 327,699 | ||||||||||||||||||||||||||||||
Comprehensive income |
5,263,580 | |||||||||||||||||||||||||||||||
Treasury stock purchased |
| | | (10,953,623 | ) | | | | (10,953,623 | ) | ||||||||||||||||||||||
Cash dividends declared,
($0.20 per share) |
| | | | | (4,472,987 | ) | | (4,472,987 | ) | ||||||||||||||||||||||
Exercise of stock options |
| | (111,758 | ) | 533,520 | | | | 421,762 | |||||||||||||||||||||||
Excess tax benefit on stock-based
compensation |
| | 50,902 | | | | | 50,902 | ||||||||||||||||||||||||
Stock options expense |
| | 859,940 | | | | | 859,940 | ||||||||||||||||||||||||
Common stock released from
benefit plans |
| | (55,086 | ) | | 2,479,272 | | | 2,424,186 | |||||||||||||||||||||||
Common stock acquired by
benefit plans |
| | | | (5,408,235 | ) | | | (5,408,235 | ) | ||||||||||||||||||||||
BALANCE
DECEMBER 31, 2008 |
24,460,240 | $ | 244,602 | $ | 201,378,465 | $ | (10,525,100 | ) | $ | (21,923,096 | ) | $ | 66,007,138 | $ | 2,918,576 | $ | 238,100,585 | |||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||
Net loss |
| | | | | (7,192,822 | ) | | (7,192,822 | ) | ||||||||||||||||||||||
Net unrealized holding gain on
available for sale securities
arising during the period, net
of tax expense of $528,825 |
| | | | | | 1,026,542 | 1,026,542 | ||||||||||||||||||||||||
Amortization of unrecognized
deferred benefits on defined
benefit pension plan, net
of tax expense of $38,402 |
(74,546 | ) | (74,546 | ) | ||||||||||||||||||||||||||||
Comprehensive income |
(6,240,826 | ) | ||||||||||||||||||||||||||||||
Treasury stock purchased |
| | | (16,988,633 | ) | | | | (16,988,633 | ) | ||||||||||||||||||||||
Cash dividends declared,
($0.20 per share) |
| | | | | (4,009,403 | ) | | (4,009,403 | ) | ||||||||||||||||||||||
Exercise of stock options |
| | (16,520 | ) | 67,137 | | | | 50,617 | |||||||||||||||||||||||
Excess tax liability on stock-based
compensation |
| | (58,722 | ) | | | | | (58,722 | ) | ||||||||||||||||||||||
Stock options expense |
| | 879,623 | | | | | 879,623 | ||||||||||||||||||||||||
Common stock released from
benefit plans |
| | (260,195 | ) | | 2,761,348 | | | 2,501,153 | |||||||||||||||||||||||
Common stock acquired by
benefit plans |
| | | | (52,394 | ) | | | (52,394 | ) | ||||||||||||||||||||||
BALANCE
DECEMBER 31, 2009 |
24,460,240 | $ | 244,602 | $ | 201,922,651 | $ | (27,446,596 | ) | $ | (19,214,142 | ) | $ | 54,804,913 | $ | 3,870,572 | $ | 214,182,000 | |||||||||||||||
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Table of Contents
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (continued)
Common | Accumulated | |||||||||||||||||||||||||||||||
Stock | Other | |||||||||||||||||||||||||||||||
Common | Additional | Acquired by | Comprehensive | Total | ||||||||||||||||||||||||||||
Stock | Common | Paid-in | Treasury | Benefit | Retained | Income | Stockholders | |||||||||||||||||||||||||
Shares | Stock | Capital | Stock | Plans | Earnings | (Loss) | Equity | |||||||||||||||||||||||||
BALANCEJANUARY 1, 2010 |
24,460,240 | $ | 244,602 | $ | 201,922,651 | $ | (27,446,596 | ) | $ | (19,214,142 | ) | $ | 54,804,913 | $ | 3,870,572 | $ | 214,182,000 | |||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||
Net income |
| | | | | 7,689,776 | | 7,689,776 | ||||||||||||||||||||||||
Net unrealized holding loss on
available for sale securities
arising during the period, net
of tax benefit of $654,509 |
| | | | | | (1,270,517 | ) | (1,270,517 | ) | ||||||||||||||||||||||
Amortization of unrecognized
deferred benefits on defined
benefit pension plan, net
of tax expense of $37,252 |
72,312 | 72,312 | ||||||||||||||||||||||||||||||
Comprehensive income |
6,491,571 | |||||||||||||||||||||||||||||||
Treasury stock purchased |
| | | (7,655,713 | ) | | | | (7,655,713 | ) | ||||||||||||||||||||||
Cash dividends declared,
($0.21 per share) |
| | | | | (3,975,019 | ) | | (3,975,019 | ) | ||||||||||||||||||||||
Exercise of stock options |
| | (27,842 | ) | 153,258 | | | | 125,416 | |||||||||||||||||||||||
Excess tax liability on stock-based
compensation |
| | (24,658 | ) | | | | | (24,658 | ) | ||||||||||||||||||||||
Stock options expense |
| | 712,574 | | | | | 712,574 | ||||||||||||||||||||||||
Common stock released from
benefit plans |
| | (65,550 | ) | | 2,178,914 | | | 2,113,364 | |||||||||||||||||||||||
Common stock acquired by
benefit plans |
| | | | (59,573 | ) | | | (59,573 | ) | ||||||||||||||||||||||
BALANCE
DECEMBER 31, 2010 |
24,460,240 | $ | 244,602 | $ | 202,517,175 | $ | (34,949,051 | ) | $ | (17,094,801 | ) | $ | 58,519,670 | $ | 2,672,367 | $ | 211,909,962 | |||||||||||||||
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Table of Contents
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
OPERATING ACTIVITIES: |
||||||||||||
Net income (loss) |
$ | 7,689,776 | $ | (7,192,822 | ) | $ | 2,119,605 | |||||
Adjustments to reconcile net income (loss) to net cash provided
by operating activities: |
||||||||||||
Provision for loan losses |
976,550 | 18,736,847 | 9,759,936 | |||||||||
Depreciation |
889,851 | 906,581 | 832,779 | |||||||||
Share-based compensation expense |
2,815,538 | 3,133,505 | 3,273,726 | |||||||||
Net loss on real estate owned |
605,536 | 4,340,710 | 149,744 | |||||||||
Impairment charge on investment securities |
| | 869,194 | |||||||||
Net gain on sale of investment and mortgage-backed securities |
| (5,102 | ) | (146,375 | ) | |||||||
Deferred income tax expense (benefit) |
1,697,486 | (745,767 | ) | (4,183,673 | ) | |||||||
Amortization of: |
||||||||||||
Deferred loan fees |
(1,515,255 | ) | (1,331,976 | ) | (826,921 | ) | ||||||
Premiums and discounts, net |
(220,423 | ) | (209,903 | ) | (63,990 | ) | ||||||
Income from bank owned life insurance |
(1,761,564 | ) | (1,798,313 | ) | (1,886,763 | ) | ||||||
Changes in assets and liabilities which (used) provided cash: |
||||||||||||
Accrued interest receivable |
176,048 | 577,675 | 121,202 | |||||||||
Prepaid expenses and other assets |
5,593,734 | (9,543,711 | ) | 954,394 | ||||||||
Accrued interest payable |
(895,013 | ) | (810,387 | ) | (880,514 | ) | ||||||
Accounts payable and accrued expenses |
197,697 | (699,775 | ) | (49,466 | ) | |||||||
Net cash provided by operating activities |
16,249,961 | 5,357,562 | 10,042,878 | |||||||||
INVESTING ACTIVITIES: |
||||||||||||
Loan principal repayments (disbursements), net |
58,014,144 | (50,995,278 | ) | (84,606,621 | ) | |||||||
Purchases of: |
||||||||||||
Mortgage-backed securities held to maturity |
| (20,309,905 | ) | (44,779,804 | ) | |||||||
Mortgage-backed securities available for sale |
(91,606,777 | ) | (31,722,080 | ) | (85,084,087 | ) | ||||||
Investment securities available for sale |
(178,682,295 | ) | (57,105,135 | ) | (33,639,071 | ) | ||||||
Federal Home Loan Bank stock |
| | (6,601,700 | ) | ||||||||
Property and equipment |
(218,355 | ) | (259,229 | ) | (1,143,522 | ) | ||||||
Additions to real estate owned, net |
(575,699 | ) | (1,129,046 | ) | (699,618 | ) | ||||||
Proceeds from: |
||||||||||||
Sales and maturities of mortgage-backed securities held to maturity |
266,916 | | | |||||||||
Sales and maturities of mortgage-backed securities available for sale |
4,143,389 | 4,159,572 | 10,123,775 | |||||||||
Sales and maturities of investment securities available for sale |
137,304,000 | 41,999,102 | 63,271,425 | |||||||||
Principal repayments of mortgage-backed securities held to maturity |
19,944,618 | 26,163,936 | 8,516,941 | |||||||||
Principal repayments of mortgage-backed securities available for sale |
57,074,623 | 42,536,321 | 20,952,903 | |||||||||
Redemption of Federal Home Loan Bank stock |
730,400 | | 2,952,700 | |||||||||
Sales of real estate owned |
9,841,880 | 1,291,897 | 1,527,642 | |||||||||
Net cash provided by (used in) investing activities |
16,236,844 | (45,369,845 | ) | (149,209,037 | ) | |||||||
FINANCING ACTIVITIES: |
||||||||||||
Net increase in demand deposits and savings accounts |
74,615,975 | 139,799,765 | 58,656,524 | |||||||||
Net (decrease) increase in certificate accounts |
(24,757,500 | ) | 45,450,294 | (3,318,791 | ) | |||||||
Net (decrease) increase in other borrowed money |
(792,031 | ) | (936,157 | ) | 156,577 | |||||||
Advances from Federal Home Loan Bank |
20,935,000 | 33,740,000 | 140,935,000 | |||||||||
Repayments of advances from Federal Home Loan Bank |
(57,799,761 | ) | (144,051,768 | ) | (73,441,369 | ) | ||||||
Net (decrease) increase in advances from borrowers for taxes and insurance |
(186,045 | ) | (132,815 | ) | 296,635 | |||||||
Excess tax (liability) benefit from stock-based compensation |
(24,658 | ) | (58,722 | ) | 50,902 | |||||||
Acquisition of stock for benefit plans |
| | (5,356,588 | ) | ||||||||
Proceeds from exercise of stock options |
125,416 | 50,617 | 421,762 | |||||||||
Purchase of treasury stock |
(7,655,713 | ) | (16,988,633 | ) | (10,953,623 | ) | ||||||
Payment of cash dividends |
(3,975,019 | ) | (4,009,403 | ) | (4,472,987 | ) | ||||||
Net cash provided by financing activities |
485,664 | 52,863,178 | 102,974,042 | |||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
32,972,469 | 12,850,895 | (36,192,117 | ) | ||||||||
CASH AND CASH EQUIVALENTSBeginning of year |
44,714,239 | 31,863,344 | 68,055,461 | |||||||||
CASH AND CASH EQUIVALENTSEnd of year |
$ | 77,686,708 | $ | 44,714,239 | $ | 31,863,344 | ||||||
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Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
||||||||||||
Cash paid during the year: |
||||||||||||
Interest on deposits and other borrowings |
$ | 18,904,162 | $ | 23,746,926 | $ | 27,378,401 | ||||||
Income taxes |
$ | 1,000,000 | $ | 805,000 | $ | 3,300,000 | ||||||
Transfer of loans receivable to real estate owned |
$ | 10,641,000 | $ | 25,582,818 | $ | 1,159,367 | ||||||
Release of stock from deferred compensation plans trust |
$ | 10,400 | $ | 247,271 | $ | 10,400 | ||||||
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Table of Contents
1. | NATURE OF OPERATIONS |
Abington Bancorp, Inc. (the Company) is a Pennsylvania corporation which was organized to be the stock holding company for Abington Savings Bank in connection with our second-step conversion and reorganization completed on June 27, 2007, which is discussed further below. Abington Savings Bank is a Pennsylvania-chartered, FDIC-insured savings bank, which conducts business under the name Abington Bank (the Bank or Abington Bank). As a result of the Banks election pursuant to Section 10(l) of the Home Owners Loan Act, the Company is a savings and loan holding company regulated by the Office of Thrift Supervision (the OTS). The Bank is a wholly owned subsidiary of the Company. The Companys results of operations are primarily dependent on the results of the Bank and the Banks wholly owned subsidiaries that include ASB Investment Co. and certain limited purpose LLCs. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. |
The Banks executive offices are in Jenkintown, Pennsylvania, with twelve additional full service branch offices and seven limited service banking offices located in Montgomery, Bucks and Delaware Counties, Pennsylvania. The Bank is principally engaged in the business of accepting customer deposits and investing these funds in loans that include residential mortgage, commercial, consumer and construction loans. The principal business of ASB Investment Co. is to hold certain investment securities for the Bank. The principal business of the LLCs is to own and manage certain properties that were acquired as real estate owned. Keswick Services II, and its wholly owned subsidiaries, and Abington Corp. are currently inactive subsidiaries of the Bank. |
On January 26, 2011, the Company and Susquehanna Bancshares, Inc., (Susquehanna) announced the signing of a definitive Agreement and Plan of Merger under which Susquehanna will acquire all outstanding shares of common stock of the Company in a stock-for-stock transaction. Under the terms of the agreement, shareholders of the Company will receive 1.32 shares of Susquehannas common stock for each share of common stock of the Company. The proposed transaction is expected to be completed during the third quarter of 2011. For further information on this transaction, see Note 18. |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Financial Statement PresentationThe Company follows accounting standards set by the Financial Accounting Standards Board (the FASB). The FASB sets generally accepted accounting principles (GAAP) that we follow to ensure we consistently report our financial condition, results of operations and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification (the Codification or the ASC). The FASB established the Codification as the source of authoritative accounting principles effective for interim and annual periods ended on or after September 15, 2009. The Company adopted the Codification as of September 30, 2009. The adoption did not have an impact on our financial position or results of operations. |
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Table of Contents
In accordance with the subsequent events topic of the ASC, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements. The effect of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of December 31, 2010. |
Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. |
Use of Estimates in the Preparation of Financial StatementsThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The Companys most significant estimates are the allowance for loan losses, the assessment of other-than-temporary impairment of investment and mortgage-backed securities and deferred income taxes. |
Cash and Cash EquivalentsFor purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and interest-bearing deposits with banks, commercial paper and liquid money market funds with original maturities of three months or less. |
Investment and Mortgage-Backed SecuritiesDebt and equity securities are classified and accounted for as follows: |
Held to MaturityDebt securities that management has the positive intent and ability to hold until maturity are classified as held to maturity and are carried at their remaining unpaid principal balances, net of unamortized premiums or unaccreted discounts. Premiums are amortized and discounts are accreted using the interest method over the estimated remaining term of the underlying security. |
Available for SaleDebt and equity securities that will be held for indefinite periods of time, including securities that may be sold in response to changes in market interest or prepayment rates, needs for liquidity, and changes in the availability of and in the yield of alternative investments, are classified as available for sale. These assets are carried at fair value. Fair value is determined using published quotes as of the close of business. Unrealized gains and losses are excluded from earnings and are reported net of tax as a separate component of stockholders equity until realized. Realized gains and losses on the sale of investment and mortgage-backed securities are reported in the consolidated statements of income and determined using the adjusted cost of the specific security sold. |
Other-Than-Temporary Impairment of SecuritiesSecurities are evaluated on at least a quarterly basis, and more frequently when market conditions warrant such an evaluation, to determine whether a decline in their value is other-than-temporary. To determine whether a loss in value is other-than-temporary, management utilizes criteria such as the reasons underlying the decline, the magnitude and duration of the decline and whether or not management intends to sell or expects that it is more likely than not that it will be required to sell the security prior to an anticipated recovery of the fair value. The term other-than-temporary is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value for a debt security is determined to be other-than-temporary, the other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income. For equity securities, the full amount of the other-than-temporary impairment is recognized in earnings. No impairment charges were recognized during the years ended December 31, 2010 or 2009. During the year ended December 31, 2008, the Company recognized impairment charges aggregating approximately $869,000 to write-down the book value of an investment in a mortgage-backed security based mutual fund to its fair value of $2.5 million at December 31, 2008. |
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Allowance for Loan LossesThe allowance for loan losses is increased by charges to income through the provision for loan losses and decreased by charge-offs (net of recoveries). The allowance is maintained at a level that management considers adequate to provide for losses based upon evaluation of the known and inherent risks in the loan portfolio. Managements periodic evaluation of the adequacy of the allowance is based on the Companys past loan loss experience, the volume and composition of lending conducted by the Company, adverse situations that may affect a borrowers ability to repay, the estimated value of any underlying collateral, current economic conditions and other factors affecting the known and inherent losses in the portfolio. This evaluation is inherently subjective as it requires material estimates including, among others, the amount and timing of expected future cash flows on impacted loans, exposure at default, value of collateral, and estimated losses on our loan portfolio. All of these estimates may be susceptible to significant change. |
The allowance consists of specifically identified amounts for impaired loans, a general allowance, or in some cases a specific allowance, on all classified loans which are not impaired and a general allowance on the remainder of the portfolio. Although we determine the amount of each element of the allowance separately, the entire allowance for loan losses is available for the entire portfolio. |
A loan is classified as a troubled debt restructuring (TDR) if the Company, for economic or legal reasons related to a debtors financial difficulties, grants a concession to the debtor that it would not otherwise consider. Concessions granted under a TDR typically involve a temporary or permanent reduction in payments or interest rate or an extension of a loans stated maturity date at less than a current market rate of interest. Loans classified as TDRs are designated as impaired. |
We establish an allowance on impaired loans for the amount by which the present value of expected future cash flows discounted at the loans effective interest rate, observable market price or fair value of collateral, if the loan is collateral dependent, is lower than the carrying value of the loan. Impairment losses are included in the provision for loan losses. A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. An insignificant delay or insignificant shortfall in amount of payments does not necessarily result in the loan being identified as impaired. For this purpose, delays less than 90 days are generally considered to be insignificant, although 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. Impairment is measured on a loan by loan basis for all construction loans and most commercial real estate loans, including all such loans that are classified or criticized. Large groups of smaller balance, homogeneous loans are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring and certain classified or criticized loans. Loans collectively evaluated for impairment include smaller balance commercial real estate loans, residential real estate loans and consumer loans. Further detail of loans identified as impaired is included in Note 6. The determination of fair value for the collateral underlying a loan is more fully described in Note 16. |
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We typically establish a general valuation allowance on classified and criticized loans which are not impaired. In establishing the general valuation allowance, we segregate these loans by category. The categories used by the Company include doubtful, substandard and special mention. For commercial and construction loans, the determination of the category for each loan is based on periodic reviews of each loan by our lending officers as well as an independent, third-party consultant. The reviews include a consideration of such factors as recent payment history, current financial data and cash flow projections, collateral evaluations, and current economic and business conditions. Categories for mortgage and consumer loans are determined through a similar review. Placement of a loan within a category is based on identified weaknesses that increase the credit risk of loss on the loan. Each category carries a general rate for the allowance percentage to be assigned to the loans within that category. The general allowance percentage is determined based on inherent losses associated with each type of lending as determined through consideration of our loss history with each type of loan, trends in credit quality and collateral values, and an evaluation of current economic and business conditions. Although the placement of a loan within a given category assists us in our analysis of the risk of loss, the actual allowance percentage assigned to each loan within a category is adjusted for the specific circumstances of each loan, including an evaluation of the appraised value of the specific collateral for the loan, and will often differ from the general rate for the category. These classified and criticized loans, in the aggregate, represent an above-average credit risk and it is expected that more of these loans will prove to be uncollectible compared to loans in the general portfolio. |
We establish a general allowance on non-classified and non-criticized loans to recognize the inherent losses associated with lending activities, but which, unlike amounts which have been specifically identified with respect to particular classified and criticized loans, is not established on an individual loan-by-loan basis. This general valuation allowance is determined by segregating the loans by portfolio segments and assigning allowance percentages to each segment. An evaluation of each segment is made to determine the need to further segregate the loans by a more focused class of financing receivable. For our residential mortgage and consumer loan portfolios, we identified similar characteristics throughout the portfolio including credit scores, loan-to-value ratios and collateral. These portfolios generally have high credit scores and strong loan-to-value ratios (typically below 80% at origination), and have not been significantly impacted by recent housing price depreciation. For our commercial real estate loan portfolio, although the loans are less uniform than with our residential mortgage and consumer loan portfolios, a review of our loss history does not suggest significant benefits from further segregation of the segment. With our construction loan portfolio, however, a further analysis is made in which we segregate the loans by class based on the purpose of the loan and the collateral properties securing the loan. Various risk factors are then considered for each class of loan, including the impact of general economic and business conditions, collateral value trends, credit quality trends and historical loss experience. Based on a consideration of our loss history in recent periods in comparison to the aging of our loan portfolio, we evaluated our loss experience using a time period of three years. In choosing this time period, our goal was to select a period that was sufficiently short so as to capture the recent economic environment, but long enough to fairly reflect the age of our loans at the time when losses began to occur. We believe that a three-year period appropriately reflects the life cycle of a loan that is indicative of the risk of loss. |
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The allowance is adjusted for significant other factors that, in managements judgment, affect the collectibility of the portfolio as of the evaluation date. These significant factors, many of which have been previously discussed, may include changes in lending policies and procedures, changes in existing general economic and business conditions affecting our primary lending areas, credit quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio, loss experience in particular segments of the portfolio, duration of the current business cycle, and bank regulatory examination results. The applied loss factors are reevaluated each reporting period to ensure their relevance in the current economic environment. Although we review key ratios, such as the allowance for loan losses as a percentage of non-performing loans and total loans receivable, in order to help us understand the trends in our loan portfolio, we do not try to maintain any specific target range with respect to such ratios. |
Loans Held for Sale and Loans SoldThe Company originates mortgage loans held for investment and for sale. At origination, the mortgage loan is identified as either held for sale or for investment. Mortgage loans held for sale are carried at the lower of cost or forward committed contracts (which approximates market), determined on a net aggregate basis. The Company had no loans classified as held for sale at December 31, 2010 or 2009. |
The Company assesses the retained interest in the servicing asset or liability associated with the sold loans based on the relative fair values. The servicing asset or liability is amortized in proportion to and over the period during which estimated net servicing income or net servicing loss, as appropriate, will be received. Assessment of the fair value of the retained interest is performed on a continual basis. At December 31, 2010 and 2009, mortgage servicing rights of $26,000 and $32,000, respectively, were included in other assets. No valuation allowance was deemed necessary for any of the periods presented. |
Amortization of the servicing asset totaled approximately $6,000, $11,000 and $6,000, respectively, for each of the years ended December 31, 2010, 2009 and 2008. |
Federal Home Loan Bank StockFederal Home Loan Bank (FHLB) stock is a restricted investment security that is generally viewed as a long-term investment. FHLB stock is carried at cost and evaluated for impairment. When evaluating FHLB stock for impairment, its value is determined based on the ultimate recoverability of the par value of the stock. We evaluate our holdings of FHLB stock for impairment each period. No impairment charges were recognized on FHLB stock during the years ended December 31, 2010, 2009 or 2008. Dividends received on FHLB stock are recognized as interest income, however, during the fourth quarter of 2008, the FHLB of Pittsburgh announced a decision to suspend the dividend on shares of its stock. As a result of the FHLBs suspension of dividends, which is continuing, no interest income was recognized on our FHLB stock during 2010 or 2009. |
Real Estate OwnedReal estate properties acquired through foreclosure are initially recorded at the fair value of the property at the date of foreclosure, establishing a new cost basis. Losses arising from foreclosure transactions are charged against the allowance for loan losses. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of cost or fair value less estimated costs to sell. Development costs associated with foreclosed property under construction are capitalized and considered in determining the fair value of the property. Net revenue and expenses from operations and changes to the valuation allowance are included in net gain or loss on real estate owned. |
Property and EquipmentProperty and equipment is recorded at cost. Depreciation is computed using the straight-line method over the expected useful lives of the related assets, which range from 5 years for software, computer equipment and automobiles to 45 years for buildings. The costs of maintenance and repairs are expensed as they are incurred, and renewals and betterments are capitalized. |
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Bank Owned Life Insurance (BOLI)The Company purchases bank owned life insurance as a mechanism for funding various employee benefit costs. The Company is the beneficiary of these policies that insure the lives of certain officers of its subsidiaries. The Company has recognized the cash surrender value under the insurance policies as an asset in the consolidated statements of financial condition. Changes in the cash surrender value are recorded in non-interest income in the consolidated statements of income. |
Other Borrowed MoneyThe Company enters into overnight repurchase agreements with commercial checking account customers. These agreements are treated as financings, and the obligations to repurchase securities sold are reflected as a liability in the consolidated statements of financial condition. Securities pledged as collateral under agreements to repurchase are reflected as assets in the consolidated statements of financial condition. |
Loan Origination and Commitment FeesThe Company defers loan origination and commitment fees, net of certain direct loan origination costs. The balance is accreted into income as a yield adjustment over the life of the loan using the level-yield method. |
Interest on LoansThe Company recognizes interest on loans on the accrual basis. Income recognition is generally discontinued on single-family residential mortgage loans when a loan becomes 120 days or more delinquent and not well secured and in the process of collection or on all other loans when a loan becomes 90 days or more delinquent and not well secured and in the process of collection. In all cases, loans must be placed on non-accrual or charged off at an earlier date if collection of principal or interest is considered doubtful. Any interest previously accrued is deducted from interest income. Such interest ultimately collected is credited to income when collection of principal and interest is no longer in doubt. |
Income TaxesDeferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Interest and penalties incurred in relation to payment of income tax liabilities are recognized in the provision for income taxes in the income statement in the period in which they occur. No interest or penalties for income taxes were recognized during the years ended December 31, 2010, 2009 or 2008. |
In accordance with the income taxes topic of the ASC, the Company analyzes each tax position taken in its tax returns and determines the likelihood that that position will be realized. Only tax positions that are more-likely-than-not to be realized are recognized in an entitys financial statements. For tax positions that do not meet this recognition threshold, we will record an unrecognized tax benefit for the difference between the position taken on the tax return and the amount recognized in the financial statements. The Company did not have any unrecognized tax benefits at December 31, 2010 or 2009 or during the years then ended. No unrecognized tax benefits are expected to arise within the twelve months ending December 31, 2011. |
Comprehensive IncomeThe Company presents as a component of comprehensive income the amounts from transactions and other events which currently are excluded from the consolidated statements of operations and are recorded directly to stockholders equity. These amounts consist of unrealized holding gains on available for sale securities and unrecognized deferred costs of the Companys defined benefit pension plan. |
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The components of other comprehensive (loss) income are as follows: |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net unrealized (loss) gain on securities arising
during the year |
$ | (1,270,517 | ) | $ | 1,029,909 | $ | 2,339,215 | |||||
Plus: reclassification adjustment for net (gains) losses
included in net income, net of tax expense of $1,735 in
2009 and tax benefit of $245,758 in 2008 |
| (3,367 | ) | 477,061 | ||||||||
Net unrealized (loss) gain on securities |
$ | (1,270,517 | ) | $ | 1,026,542 | $ | 2,816,276 | |||||
Amortization of unrecognized deferred costs (benefits)
on supplemental retirement plan, net of tax (benefit)
expense of $(37,252) in 2010, $38,402 in 2009 and
$(168,812) in 2008 |
72,312 | (74,546 | ) | 327,699 | ||||||||
Total other comprehensive (loss) income |
$ | (1,198,205 | ) | $ | 951,996 | $ | 3,143,975 | |||||
The components of accumulated other comprehensive income are as follows: |
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net unrealized gain on securities, net of tax |
$ | 2,771,343 | $ | 4,041,860 | $ | 3,015,317 | ||||||
Unrecognized deferred costs of supplemental
retirment plan, net of tax |
(98,976 | ) | (171,288 | ) | (96,741 | ) | ||||||
Total accumulated other comprehensive income |
$ | 2,672,367 | $ | 3,870,572 | $ | 2,918,576 | ||||||
Treasury Stock and Unallocated Common StockStock held in treasury by the Company, including unallocated stock held by certain benefit plans, is accounted for using the cost method which treats stock held in treasury as a reduction to total stockholders equity. The cost basis for subsequent sales of treasury shares is determined using a first-in first-out method. |
Share-Based CompensationThe Company accounts for its share-based compensation awards in accordance with the stock compensation topic of the ASC. Under ASC Topic 718, Compensation Stock Compensation (ASC 718), the Company recognizes the cost of employee services received in share-based payment transactions and measures the cost based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award. |
At December 31, 2010, the Company had four share-based compensation plans, the 2005 and the 2007 Recognition and Retention Plans and the 2005 and 2007 Stock Option Plans. Share awards were first issued under the 2005 plans in July 2005. Share awards were first issued under the 2007 plans in January 2008. These plans are more fully described in Note 13. |
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The Company also has an employee stock ownership plan (ESOP). This plan is more fully described in Note 13. Shares held under the ESOP are also accounted for under ASC 718. As ESOP shares are committed to be released and allocated among participants, the Company recognizes compensation expense equal to the average market price of the shares over the period earned. For purposes of computing basic and diluted earnings per share, ESOP shares that have been committed to be released are considered outstanding. ESOP shares that have not been committed to be released are not considered outstanding. Dividends paid on unallocated shares are used to pay debt service. |
Earnings per shareEarnings per share (EPS) consists of two separate components, basic EPS and diluted EPS. Basic EPS is computed based on the weighted average number of shares of common stock outstanding for each period presented. Diluted EPS is calculated based on the weighted average number of shares of common stock outstanding plus dilutive common stock equivalents (CSEs). CSEs consist of shares that are assumed to have been purchased with the proceeds from the exercise of stock options, as well as unvested common stock awards. CSEs which are considered antidilutive are not included for the purposes of this calculation. For the years ended December 31, 2010, 2009 and 2008, there were 1,248,480, 2,198,888 and 1,277,240 antidilutive CSEs, respectively. Due to the net loss recognized for the year ended December 31, 2009, the inclusion of any CSEs would decrease the amount of net loss per share for the year and be antidilutive. Consequently, basic and diluted weighted average shares outstanding are equal for the year ended December 31, 2009. Earnings (loss) per share were calculated as follows: |
Year Ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||||||||
Net income (loss) |
$ | 7,689,776 | $ | 7,689,776 | $ | (7,192,822 | ) | $ | (7,192,822 | ) | $ | 2,119,605 | $ | 2,119,605 | ||||||||||
Weighted average
shares outstanding |
18,684,819 | 18,684,819 | 19,805,868 | 19,805,868 | 21,899,094 | 21,899,094 | ||||||||||||||||||
Effect of CSEs |
| 1,244,585 | | | | 731,042 | ||||||||||||||||||
Adjusted weighted
average shares used
in earnings per share
computation |
18,684,819 | 19,929,404 | 19,805,868 | 19,805,868 | 21,899,094 | 22,630,136 | ||||||||||||||||||
Earnings (loss) per
share |
$ | 0.41 | $ | 0.39 | $ | (0.36 | ) | $ | (0.36 | ) | $ | 0.10 | $ | 0.09 | ||||||||||
Recent Accounting PronouncementsIn January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06, Improving Disclosures about Fair Value Measurements, which updates ASC 820, Fair Value Measurements and Disclosures. The updated guidance added new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarified existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The amended guidance in ASU 2010-06 was effective for the first interim or annual reporting period beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchase, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010. The Company adopted the amended guidance, except for the requirement effective for fiscal years beginning after December 15, 2010, on January 1, 2010. The Company adopted the additional requirement on January 1, 2011. The adoptions did not have any impact on our financial position or results of operations. |
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In July 2010, the FASB issued ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, which updated ASC 310, Receivables. The updated guidance requires more robust and disaggregated disclosures about the credit quality of an entitys financing receivables and its allowance for credit losses, including a rollforward schedule of the allowance for credit losses for the period on a portfolio segment basis, as well as additional information about the aging and credit quality of receivables by class of financing receivables as of the end of the period. The new and amended disclosures that relate to information as of the end of a reporting period were effective for the Company as of December 31, 2010, except for disclosures relating to TDRs as discussed further below. The disclosures that include information for activity that occurs during a reporting period will be effective for the first interim reporting period beginning after December 31, 2010. The Company adopted the required disclosures as of December 31, 2010. The adoptions did not have any impact on our financial position or results of operations. The Company is continuing to evaluate the guidance relating to disclosures that include information for activity that occurs during a reporting period. While the guidance will impact the presentation of certain disclosures within our financial statements, we do not expect that this guidance will have any impact on our financial position or results of operations. |
In January of 2011, the FASB issued ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. This update temporarily delays the effective date of additional disclosures relating to TDRs required by ASU 2010-20. The delay is intended to allow the FASB time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about TDRs for public entities and the guidance for determining what constitutes a TDR will then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. The Company is continuing to evaluate this guidance. |
In December 2010, the FASB issues ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations, which updates ASC 805, Business Combinations. ASC 805 requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The updated guidance specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this ASU also expand the supplemental pro forma disclosures under ASC 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments in this ASU are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 31, 2010. The Company is continuing to evaluate this guidance. |
ReclassificationsCertain items in the 2009 and 2008 consolidated financial statements have been reclassified to conform to the presentation in the 2010 consolidated financial statements. Such reclassifications did not have any impact on our financial position or results of operations. |
3. | RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS |
The Bank is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31, 2010 and 2009, these reserve balances amounted to $2.7 million and $4.3 million, respectively. |
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4. | INVESTMENT SECURITIES |
The amortized cost and estimated fair value of investment securities are summarized as follows: |
Held to Maturity | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Debt securities: |
||||||||||||||||
Municipal bonds |
$ | 20,384,781 | $ | 436,457 | $ | (14,898 | ) | $ | 20,806,340 | |||||||
Total debt
securities |
$ | 20,384,781 | $ | 436,457 | $ | (14,898 | ) | $ | 20,806,340 | |||||||
Available for Sale | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Debt securities: |
||||||||||||||||
Agency bonds |
$ | 99,365,386 | $ | 812,591 | $ | (865,277 | ) | $ | 99,312,700 | |||||||
Corporate bonds and
commercial paper |
3,535,415 | 24,245 | (1,365 | ) | 3,558,295 | |||||||||||
Municipal bonds |
18,680,054 | 640,846 | | 19,320,900 | ||||||||||||
Total debt securities |
121,580,855 | 1,477,682 | (866,642 | ) | 122,191,895 | |||||||||||
Equity securities: |
||||||||||||||||
Mutual funds |
2,664,183 | 47,823 | | 2,712,006 | ||||||||||||
Total equity
securities |
2,664,183 | 47,823 | 2,712,006 | |||||||||||||
Total |
$ | 124,245,038 | $ | 1,525,505 | $ | (866,642 | ) | $ | 124,903,901 | |||||||
Held to Maturity | ||||||||||||||||
December 31, 2009 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Debt securities: |
||||||||||||||||
Municipal bonds |
$ | 20,386,944 | $ | 400,325 | $ | | $ | 20,787,269 | ||||||||
Total debt
securities |
$ | 20,386,944 | $ | 400,325 | $ | | $ | 20,787,269 | ||||||||
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Available for Sale | ||||||||||||||||
December 31, 2009 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Debt securities: |
||||||||||||||||
Agency bonds |
$ | 55,863,999 | $ | 691,337 | $ | (95,669 | ) | $ | 56,459,667 | |||||||
Corporate bonds and
commercial paper |
3,123,496 | 6,286 | (8,342 | ) | 3,121,440 | |||||||||||
Municipal bonds |
21,238,185 | 817,838 | (848 | ) | 22,055,175 | |||||||||||
Certificates of deposit |
99,000 | | | 99,000 | ||||||||||||
Total debt securities |
80,324,680 | 1,515,461 | (104,859 | ) | 81,735,282 | |||||||||||
Equity securities: |
||||||||||||||||
Common stock |
10 | | (1 | ) | 9 | |||||||||||
Mutual funds |
2,580,411 | 1,569 | | 2,581,980 | ||||||||||||
Total equity
securities |
2,580,421 | 1,569 | (1 | ) | 2,581,989 | |||||||||||
Total |
$ | 82,905,101 | $ | 1,517,030 | $ | (104,860 | ) | $ | 84,317,271 | |||||||
There were no sales of debt or equity securities during the year ended December 31, 2010. During the year ended December 31, 2009, a gross gain of approximately $5,000 was recognized on the sale of one municipal bond. Proceeds from this sale were approximately $305,000. During the year ended December 31, 2008, a gross gain of approximately $74,000 was recognized on the sale of certain agency bonds. Proceeds from these sales were approximately $4.6 million. |
No impairment charges were recognized on investment securities during the years ended December 31, 2010 or 2009. Impairment charges aggregating approximately $869,000 were recognized during the year ended December 31, 2008. These impairment charges were taken to write-down the book value of our investment in a mortgage-backed security based mutual fund to its fair value of $2.5 million at December 31, 2008, based on our determination that the investment was other-than-temporarily impaired. This determination for the fund, the AMF Ultra Short Mortgage Fund, was made, in part, based on credit rating downgrades in certain of the private label mortgage-backed securities held by the fund, as well as an analysis of the overall status of the fund. We continue to hold this fund. |
All municipal bonds included in debt securities are bank-qualified municipal bonds. |
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The amortized cost and estimated fair value of debt securities by contractual maturity are shown below. 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. |
December 31, 2010 | ||||||||||||||||
Available for Sale | Held to Maturity | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
Due in one year or less |
$ | 3,370,139 | $ | 3,397,980 | $ | | $ | | ||||||||
Due after one year through
five years |
112,556,471 | 112,964,472 | | | ||||||||||||
Due after five years
through ten years |
5,654,245 | 5,829,443 | 16,299,717 | 16,697,517 | ||||||||||||
Due after ten years |
| | 4,085,064 | 4,108,823 | ||||||||||||
Total |
$ | 121,580,855 | $ | 122,191,895 | $ | 20,384,781 | $ | 20,806,340 | ||||||||
The table below sets forth investment securities which had unrealized loss positions as of December 31, 2010: |
Less than 12 months | More than 12 months | |||||||||||||||
Gross | Estimated | Gross | Estimated | |||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
Securities held to maturity: |
||||||||||||||||
Municipal bonds |
$ | (14,898 | ) | $ | 2,119,768 | $ | | $ | | |||||||
Total securities held to maturity |
(14,898 | ) | 2,119,768 | | | |||||||||||
Securities available for sale: |
||||||||||||||||
Agency bonds |
(865,277 | ) | 54,612,715 | | | |||||||||||
Corporate bonds and
commercial paper |
(1,365 | ) | 489,115 | | | |||||||||||
Total securities
available for sale |
(866,642 | ) | 55,101,830 | | | |||||||||||
Total |
$ | (881,540 | ) | $ | 57,221,598 | $ | | $ | | |||||||
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The table below sets forth investment securities which had unrealized loss positions as of December 31, 2009: |
Less than 12 months | More than 12 months | |||||||||||||||
Gross | Estimated | Gross | Estimated | |||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
Securities available for sale: |
||||||||||||||||
Agency bonds |
$ | (95,669 | ) | $ | 18,299,480 | $ | | $ | | |||||||
Corporate bonds and
commercial paper |
(8,342 | ) | 1,127,220 | | | |||||||||||
Municipal bonds |
(848 | ) | 251,938 | | | |||||||||||
Equity securities |
(1 | ) | 9 | | | |||||||||||
Total
securities available for
sale |
$ | (104,860 | ) | $ | 19,678,647 | $ | | $ | | |||||||
On a quarterly basis, management of the Company reviews the securities in its investment portfolio to identify any securities that might have an other-than-temporary impairment. At December 31, 2010, no investment securities were in a gross unrealized loss position for 12 months or longer. Investment securities in a gross unrealized loss position for less than 12 months at December 31, 2010, consisted of 24 securities having an aggregate depreciation of 1.5% from the Companys amortized cost basis. The securities included 17 agency bonds, four municipal bonds and one corporate bond. Management has concluded that, as of December 31, 2010, the unrealized losses above were temporary in nature. The unrealized losses on these securities are not related to the underlying credit quality of the issuers, and they are on securities that have a contractual maturity date. The principal and interest payments on these securities have been made as scheduled, and there is no evidence that the issuers will not continue to do so. In managements opinion, the future principal payments will be sufficient to recover the current amortized cost of the securities. The unrealized losses above are primarily related to the current interest rate environment. The Company does not currently have plans to sell any these securities, nor does it anticipate that it will be required to sell any these securities prior to a recovery of their cost basis. |
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5. | MORTGAGE-BACKED SECURITIES |
The amortized cost and estimated fair value of mortgage-backed securities are summarized as follows: |
Held to Maturity | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
GNMA pass-through
certificates |
$ | 13,854,013 | $ | 485,257 | $ | | $ | 14,339,270 | ||||||||
FNMA pass-through
certificates |
20,044,999 | 1,217,065 | | 21,262,064 | ||||||||||||
FHLMC pass-through
certificates |
9,665,262 | 354,111 | | 10,019,373 | ||||||||||||
Collateralized mortgage
obligations |
13,307,914 | 8 | (590,081 | ) | 12,717,841 | |||||||||||
Total |
$ | 56,872,188 | $ | 2,056,441 | $ | (590,081 | ) | $ | 58,338,548 | |||||||
Available for Sale | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
GNMA pass-through
certificates |
$ | 1,929 | $ | 77 | $ | | $ | 2,006 | ||||||||
FNMA pass-through
certificates |
30,005,032 | 1,923,275 | | 31,928,307 | ||||||||||||
FHLMC pass-through
certificates |
26,843,006 | 1,805,146 | 28,648,152 | |||||||||||||
Collateralized
mortgage
obligations |
107,782,687 | 648,305 | (836,661 | ) | 107,594,331 | |||||||||||
Total |
$ | 164,632,654 | $ | 4,376,803 | $ | (836,661 | ) | $ | 168,172,796 | |||||||
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Held to Maturity | ||||||||||||||||
December 31, 2009 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
GNMA pass-through
certificates |
$ | 18,607,580 | $ | 374,179 | $ | (198,784 | ) | $ | 18,782,975 | |||||||
FNMA pass-through
certificates |
27,817,665 | 1,031,598 | | 28,849,263 | ||||||||||||
FHLMC pass-through
certificates |
13,242,317 | 258,707 | (26,483 | ) | 13,474,541 | |||||||||||
Collateralized
mortgage
obligations |
17,482,374 | | (1,291,656 | ) | 16,190,718 | |||||||||||
Total |
$ | 77,149,936 | $ | 1,664,484 | $ | (1,516,923 | ) | $ | 77,297,497 | |||||||
Available for Sale | ||||||||||||||||
December 31, 2009 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
GNMA pass-through
certificates |
$ | 2,464 | $ | 369 | $ | | $ | 2,833 | ||||||||
FNMA pass-through
certificates |
45,813,997 | 2,265,098 | | 48,079,095 | ||||||||||||
FHLMC pass-through
certificates |
48,863,220 | 2,363,183 | (24,953 | ) | 51,201,450 | |||||||||||
Collateralized mortgage
obligations |
39,237,050 | 354,656 | (246,492 | ) | 39,345,214 | |||||||||||
Total |
$ | 133,916,731 | $ | 4,983,306 | $ | (271,445 | ) | $ | 138,628,592 | |||||||
There were no sales of mortgage-backed securities during the years ended December 31, 2010 or 2009. During the year ended December 31, 2008, a gross gain of approximately $100,000 and a gross loss of approximately $28,000 were recognized on the sale of certain mortgage-backed securities. Proceeds from these sales were approximately $5.1 million. |
No impairment charge was recognized on mortgage-backed securities during the years ended December 31, 2010, 2009 or 2008. |
Our collateralized mortgage obligations (CMOs) are issued by the FNMA, the FHLMC and the GNMA as well as certain AAA rated private issuers. At December 31, 2010 and 2009, $6.6 million and $8.4 million of our CMOs were issued by private issuers. |
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The table below sets forth mortgage-backed securities which had unrealized loss positions as of December 31, 2010: |
Less than 12 months | More than 12 months | |||||||||||||||
Gross | Estimated | Gross | Estimated | |||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
Securities held to maturity: |
||||||||||||||||
Collateralized mortgage
obligations |
$ | | $ | | $ | (590,081 | ) | $ | 9,529,808 | |||||||
Total securities held
to maturity |
| | (590,081 | ) | 9,529,808 | |||||||||||
Securities available for sale: |
||||||||||||||||
Collateralized mortgage
obligations |
(836,661 | ) | 59,786,355 | | | |||||||||||
Total securities
available for sale |
(836,661 | ) | 59,786,355 | | | |||||||||||
Total |
$ | (836,661 | ) | $ | 59,786,355 | $ | (590,081 | ) | $ | 9,529,808 | ||||||
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The table below sets forth mortgage-backed securities which had unrealized loss positions as of December 31, 2009: |
Less than 12 months | More than 12 months | |||||||||||||||
Gross | Estimated | Gross | Estimated | |||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
Securities held to maturity: |
||||||||||||||||
GNMA pass-through
certificates |
$ | (198,784 | ) | $ | 10,122,441 | $ | | $ | | |||||||
FHLMC pass-through
certificates |
(26,483 | ) | 4,787,594 | | | |||||||||||
Collateralized mortgage
obligations |
(322,627 | ) | 8,755,414 | (969,029 | ) | 7,435,304 | ||||||||||
Total securities held to maturity |
(547,894 | ) | 23,665,449 | (969,029 | ) | 7,435,304 | ||||||||||
Securities available for sale: |
||||||||||||||||
FHLMC pass-through
certificates |
(21,372 | ) | 2,060,797 | (3,581 | ) | 1,225,716 | ||||||||||
Collateralized mortgage
obligations |
(194,886 | ) | 13,186,239 | (51,606 | ) | 3,340,759 | ||||||||||
Total securities available for
sale |
(216,258 | ) | 15,247,036 | (55,187 | ) | 4,566,475 | ||||||||||
Total |
$ | (764,152 | ) | $ | 38,912,485 | $ | (1,024,216 | ) | $ | 12,001,779 | ||||||
On a quarterly basis, management of the Company reviews the securities in its investment portfolio to identify any securities that might have an other-than-temporary impairment. At December 31, 2010, mortgage-backed securities in a gross unrealized loss position for 12 months or longer consisted of three securities having an aggregate depreciation of 5.8% from the Companys amortized cost basis. All three securities were CMOs, two of which were issued by private issuers. The two CMOs from private issuers, which had an aggregate principal balance of approximately $3.4 million at December 31, 2010, that had declines of approximately 8.8% and 19.5% from their amortized cost basis at such date. The third security, with a principal balance of approximately $6.7 million at December 31, 2010, had a decline of approximately 0.3% from its amortized cost basis at such date. Mortgage-backed securities in a gross unrealized loss position for less than 12 months at December 31, 2010, consisted of 24 securities having an aggregate depreciation of 1.4% from the Companys amortized cost basis. All of these securities were CMOs issued by government agencies. Management has concluded that, as of December 31, 2010, the unrealized losses above were temporary in nature. There is no exposure to subprime loans with these CMOs. The losses are not related to the underlying credit quality of the issuers, all of whom remain AAA rated, including the private issuers, and they are on securities that have contractual maturity dates. The principal and interest payments on these CMOs have been made as scheduled, and there is no evidence that the issuers will not continue to do so. In managements opinion, the future principal payments will be sufficient to recover the current amortized cost of the securities. The unrealized losses above are primarily related to the current market environment. The Company does not currently have plans to sell any these securities, nor does it anticipate that it will be required to sell any these securities prior to a recovery of their cost basis. |
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6. | LOANS RECEIVABLE AND REAL ESTATE OWNED |
Loans receivable consist of the following: |
December 31, | ||||||||
2010 | 2009 | |||||||
One-to four-family residential |
$ | 393,434,519 | $ | 432,004,572 | ||||
Multi-family residential and commercial |
141,090,844 | 135,482,758 | ||||||
Construction |
138,558,368 | 203,642,336 | ||||||
Home equity lines of credit |
41,213,274 | 36,273,685 | ||||||
Commercial business loans |
16,326,982 | 18,876,987 | ||||||
Consumer non-real estate loans |
870,406 | 2,358,063 | ||||||
Total loans |
731,494,393 | 828,638,401 | ||||||
Less: |
||||||||
Construction loans in process |
(30,065,072 | ) | (54,198,647 | ) | ||||
Deferred loan fees, net |
(714,201 | ) | (789,460 | ) | ||||
Allowance for loan losses |
(4,271,618 | ) | (9,090,353 | ) | ||||
Loans receivablenet |
$ | 696,443,502 | $ | 764,559,941 | ||||
Our one- to four-family residential loans also include some loans to local businessmen for a commercial purpose, but which are secured by liens on the borrowers residence as well as fixed-rate consumer loans which are secured by liens on the borrowers residence. |
The Bank grants loans primarily to customers in its local market area. The ultimate repayment of these loans is dependent to a certain degree on the local economy and real estate market. |
The Bank has sold and was servicing loans for others in the amounts of approximately $16.0 million and $18.2 million at December 31, 2010 and 2009, respectively. These loan balances are excluded from the Companys consolidated financial statements. At December 31, 2010 and 2009, mortgage servicing rights of $26,000 and $32,000, respectively, were included in other assets. No valuation allowance was deemed necessary for any of the periods presented. |
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Certain officers and directors and their affiliates have loans with the Bank. The aggregate dollar amount of these loans outstanding to related parties along with an analysis of the activity is summarized as follows: |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Balancebeginning of year |
$ | 3,266,307 | $ | 3,079,941 | $ | 2,210,318 | ||||||
Additions |
121,648 | 377,772 | 1,368,125 | |||||||||
Repayments |
(159,048 | ) | (191,406 | ) | (498,502 | ) | ||||||
Balanceend of year |
$ | 3,228,907 | $ | 3,266,307 | $ | 3,079,941 | ||||||
Following is a summary of changes in the allowance for loan losses: |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Balancebeginning of year |
$ | 9,090,353 | $ | 11,596,784 | $ | 1,811,121 | ||||||
Provision for loan losses |
976,550 | 18,736,847 | 9,759,936 | |||||||||
Charge-offs |
(7,076,332 | ) | (21,394,378 | ) | (63,788 | ) | ||||||
Recoveries |
1,281,047 | 151,100 | 89,515 | |||||||||
(Charge-offs)/recoveriesnet |
(5,795,285 | ) | (21,243,278 | ) | 25,727 | |||||||
Balanceend of year |
$ | 4,271,618 | $ | 9,090,353 | $ | 11,596,784 | ||||||
The provision for loan losses is charged to expense to maintain the allowance for loan losses at a level that management considers adequate to provide for losses based upon an evaluation of the loan portfolio. Factors considered in determining the appropriate level for the allowance for loan losses are discussed in detail in Note 2. |
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The following table presents the classes of the loan portfolio summarized by the aggregate pass rating, the criticized rating of special mention and the classified ratings of substandard and doubtful within the Companys internal risk rating system as of December 31, 2010: |
Special | ||||||||||||||||||||
Pass | Mention | Substandard | Doubtful | Total | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
One-to four-family residential |
$ | 391,903 | $ | 12 | $ | 1,520 | $ | | $ | 393,435 | ||||||||||
Multi-family residential and
commercial |
113,589 | 7,286 | 20,216 | | 141,091 | |||||||||||||||
Construction: |
||||||||||||||||||||
Land only |
3,212 | 1,810 | 4,045 | | 9,067 | |||||||||||||||
One-to four-family residential |
18,107 | 15,020 | 9,058 | | 42,185 | |||||||||||||||
Multi-family residential |
5,677 | 19,703 | 417 | | 25,797 | |||||||||||||||
Commercial |
19,731 | | 11,713 | | 31,444 | |||||||||||||||
Total construction |
46,727 | 36,533 | 25,233 | | 108,493 | |||||||||||||||
Home equity lines of credit |
41,198 | 15 | | | 41,213 | |||||||||||||||
Commercial business loans |
14,882 | 1,445 | | | 16,327 | |||||||||||||||
Consumer non-real estate loans |
870 | | | | 870 | |||||||||||||||
Total |
$ | 609,169 | $ | 45,291 | $ | 46,969 | $ | | $ | 701,429 | ||||||||||
A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan. An insignificant delay or insignificant shortfall in amount of payments does not necessarily result in the loan being identified as impaired. For this purpose, delays less than 90 days are generally considered to be insignificant. During the periods presented, loan impairment was evaluated based on the fair value of the loans collateral. Impairment losses are included in the provision for loan losses. Impairment is measured on a loan by loan basis for all construction loans and most commercial real estate loans, including all such loans that are classified or criticized. Large groups of smaller balance, homogeneous loans are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring and certain classified or criticized loans. Loans collectively evaluated for impairment include smaller balance commercial real estate loans, residential real estate loans and consumer loans. The determination of fair value for the collateral underlying a loan is more fully described in Note 16. |
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The following table summarizes information in regards to impaired loans by loan portfolio class as of December 31, 2010: |
Unpaid | Average | Interest | ||||||||||||||||||
Recorded | Principal | Related | Recorded | Income | ||||||||||||||||
Investment | Balance | Allowance | Investment | Recognized | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
With an allowance recorded: |
||||||||||||||||||||
One-to four-family residential |
$ | | $ | | $ | | $ | | $ | | ||||||||||
Multi-family residential and
commercial |
| | | | | |||||||||||||||
Construction: |
||||||||||||||||||||
Land only |
| | | | | |||||||||||||||
One-to four-family residential |
304 | 452 | 34 | 2,252 | | |||||||||||||||
Multi-family residential |
| | | | | |||||||||||||||
Commercial |
1,670 | 1,852 | 272 | 5,556 | | |||||||||||||||
Total construction |
1,974 | 2,304 | 306 | 7,808 | | |||||||||||||||
Home equity lines of credit |
| | | | | |||||||||||||||
Commercial business loans |
| | | | | |||||||||||||||
Consumer non-real estate loans |
| | | | | |||||||||||||||
With no related allowance recorded: |
||||||||||||||||||||
One-to four-family residential |
$ | 583 | $ | 583 | $ | | $ | 506 | $ | 29 | ||||||||||
Multi-family residential and
commercial |
9,765 | 10,840 | | 6,088 | 114 | |||||||||||||||
Construction |
||||||||||||||||||||
Land only |
600 | 1,100 | | 2,879 | | |||||||||||||||
One-to four-family residential |
1,294 | 3,549 | | 3,881 | | |||||||||||||||
Multi-family residential |
417 | 417 | | 668 | | |||||||||||||||
Commercial |
1,379 | 1,584 | | 1,318 | | |||||||||||||||
Total construction |
3,690 | 6,650 | | 8,746 | | |||||||||||||||
Home equity lines of credit |
| | | | | |||||||||||||||
Commercial business loans |
| | | | | |||||||||||||||
Consumer non-real estate loans |
| | | | | |||||||||||||||
Total: |
||||||||||||||||||||
One-to four-family residential |
$ | 583 | $ | 583 | $ | | $ | 506 | $ | 29 | ||||||||||
Multi-family residential and
commercial |
9,765 | 10,840 | | 6,088 | 114 | |||||||||||||||
Construction |
||||||||||||||||||||
Land only |
600 | 1,100 | | 2,879 | | |||||||||||||||
One-to four-family residential |
1,598 | 4,001 | 34 | 6,133 | | |||||||||||||||
Multi-family residential |
417 | 417 | | 668 | | |||||||||||||||
Commercial |
3,049 | 3,436 | 272 | 6,874 | | |||||||||||||||
Total construction |
5,664 | 8,954 | 306 | 16,554 | | |||||||||||||||
Home equity lines of credit |
| | | | | |||||||||||||||
Commercial business loans |
| | | | | |||||||||||||||
Consumer non-real estate loans |
| | | | |
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As of December 31, 2009 and 2008, the recorded investment in loans that are considered to be impaired was as follows: |
2009 | 2008 | |||||||
(In Thousands) | ||||||||
Impaired collateral-dependent loans with
an allowance |
$ | 18,111 | $ | 22,439 | ||||
Impaired collateral-dependent loans with
no allowance |
10,237 | 752 | ||||||
Total Impaired collateral-dependent loans |
$ | 28,348 | $ | 23,191 | ||||
Average impaired loan balance |
$ | 23,575 | $ | 11,949 | ||||
Allowance on impaired loans |
$ | 3,606 | $ | 7,455 | ||||
Interest income recognized on impaired loans |
$ | | $ | 279 |
The following table summarizes our recorded investment in financing receivables as of December 31, 2010: |
Individually | Collectively | |||||||||||
Evaluated | Evaluated | |||||||||||
for | for | |||||||||||
Total | Impairment | Impairment | ||||||||||
(In Thousands) | ||||||||||||
One-to four-family residential |
$ | 393,435 | $ | 583 | $ | 392,852 | ||||||
Multi-family residential and
commercial |
141,091 | 9,765 | 131,326 | |||||||||
Construction: |
||||||||||||
Land only |
9,067 | 600 | 8,467 | |||||||||
One-to four-family residential |
42,185 | 1,598 | 40,587 | |||||||||
Multi-family residential |
25,797 | 417 | 25,380 | |||||||||
Commercial |
31,444 | 3,049 | 28,395 | |||||||||
Total construction |
108,493 | 5,664 | 102,829 | |||||||||
Home equity lines of credit |
41,213 | | 41,213 | |||||||||
Commercial business loans |
16,327 | | 16,327 | |||||||||
Consumer non-real estate loans |
870 | | 870 | |||||||||
Total |
$ | 701,429 | $ | 16,012 | $ | 685,417 | ||||||
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The following table summarizes the distribution of our allowance for loan losses in relation to our recorded investment in financing receivables as of December 31, 2010: |
Allowance | Allowance | |||||||||||||||
Allocated to | Allocated to | |||||||||||||||
Loans | Loans | |||||||||||||||
Total | Individually | Collectively | ||||||||||||||
Total | Allowance | Evaluated | Evaluated | |||||||||||||
Financing | for Loan | for | for | |||||||||||||
Receivable | Losses | Impairment | Impairment | |||||||||||||
(In Thousands) | ||||||||||||||||
One-to four-family residential |
$ | 393,435 | $ | 528 | $ | | $ | 528 | ||||||||
Multi-family residential and
commercial |
141,091 | 841 | | 841 | ||||||||||||
Construction: |
||||||||||||||||
Land only |
9,067 | 362 | | 362 | ||||||||||||
One-to four-family residential |
42,185 | 1,100 | 34 | 1,066 | ||||||||||||
Multi-family residential |
25,797 | 28 | | 28 | ||||||||||||
Commercial |
31,444 | 1,250 | 272 | 978 | ||||||||||||
Total construction |
108,493 | 2,740 | 306 | 2,434 | ||||||||||||
Home equity lines of credit |
41,213 | 82 | | 82 | ||||||||||||
Commercial business loans |
16,327 | 75 | | 75 | ||||||||||||
Consumer non-real estate loans |
870 | 6 | | 6 | ||||||||||||
Total |
$ | 701,429 | $ | 4,272 | $ | 306 | $ | 3,966 | ||||||||
Loans are charged off when the loan is deemed uncollectible. Loans that are not charged off are placed on non-accrual status when collection of principal or interest is considered doubtful. One- to four-family residential loans are typically placed on non-accrual at the time the loan is 120 days delinquent, and all other loans are typically placed on non-accrual at the time the loan is 90 days delinquent unless the credit is well secured and in the process of collection. In all cases, loans must be placed on non-accrual or charged off at an earlier date if collection of principal or interest is considered doubtful. |
Interest payments on impaired loans and non-accrual loans are typically applied to principal unless the ability to collect the principal amount is fully assured, in which case interest is recognized on the cash basis. For the years ended December 31, 2010, 2009 and 2008, approximately $143,000, $0 and $279,000 in interest income was recognized on non-accrual loans. Interest income foregone on non-accrual loans was $783,000, $489,000 and $561,000 for years ended December 31, 2010, 2009, and 2008, respectively. |
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The following table presents non-accrual loans by classes of the loan portfolio as of December 31, 2010: |
2010 | ||||
(In Thousands) | ||||
One-to four-family residential |
$ | | ||
Multi-family residential and commercial |
1,348 | |||
Construction: |
||||
Land only |
600 | |||
One-to four-family residential |
1,597 | |||
Multi-family residential |
417 | |||
Commercial |
3,050 | |||
Total construction |
5,664 | |||
Home equity lines of credit |
| |||
Commercial business loans |
| |||
Consumer non-real estate loans |
| |||
Total |
$ | 7,012 | ||
Non-accrual loans amounted to $7.0 million and $28.3 million, respectively, at December 31, 2010 and 2009. Non-performing loans, which consist of non-accruing loans plus accruing loans 90 days or more past due, amounted to $9.0 million and $34.6 million, respectively, at December 31, 2010 and 2009. For the delinquent loans in our portfolio, we have considered our ability to collect the past due interest, as well as the principal balance of the loan, in order to determine whether specific loans should be placed on non-accrual status. In cases where our evaluations have determined that the principal and interest balances are collectible, we have continued to accrue interest. |
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The following table presents the classes of the loan portfolio summarized by past due status as of December 31, 2010: |
Recorded | ||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||
90 Days | Total | 90 Days or | ||||||||||||||||||||||||||
30-59 Days | 60-89 Days | or More | Total | Financing | More and | |||||||||||||||||||||||
Past Due | Past Due | Past Due | Past Due | Current | Receivables | Accruing | ||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
One-to four-family residential |
$ | 2,674 | $ | 309 | $ | 1,211 | $ | 4,194 | $ | 389,241 | $ | 393,435 | $ | 1,211 | ||||||||||||||
Multi-family residential and
commercial |
3,216 | | 725 | 3,941 | 137,150 | 141,091 | 725 | |||||||||||||||||||||
Construction: |
||||||||||||||||||||||||||||
Land only |
| | 600 | 600 | 8,467 | 9,067 | | |||||||||||||||||||||
One-to four-family residential |
| | 1,611 | 1,611 | 40,574 | 42,185 | 14 | |||||||||||||||||||||
Multi-family residential |
| | 417 | 417 | 25,380 | 25,797 | | |||||||||||||||||||||
Commercial |
| | 3,050 | 3,050 | 28,394 | 31,444 | | |||||||||||||||||||||
Total construction |
| | 5,678 | 5,678 | 102,815 | 108,493 | 14 | |||||||||||||||||||||
Home equity lines of credit |
20 | 24 | 76 | 120 | 41,093 | 41,213 | 76 | |||||||||||||||||||||
Commercial business loans |
| | | | 16,327 | 16,327 | | |||||||||||||||||||||
Consumer non-real estate loans |
| | | | 870 | 870 | | |||||||||||||||||||||
Total |
$ | 5,910 | $ | 333 | $ | 7,690 | $ | 13,933 | $ | 687,496 | $ | 701,429 | $ | 2,026 | ||||||||||||||
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A loan is classified as a TDR if the Company, for economic or legal reasons related to a debtors financial difficulties, grants a concession to the debtor that it would not otherwise consider. We had six loans classified as TDRs at December 31, 2010, with an aggregate outstanding balance of $10.3 million at such date. The $10.3 million of total TDRs consisted of four multi-family residential and commercial real estate loans with an aggregate outstanding balance of $9.8 million and two one- to four-family residential mortgage loans with an aggregate outstanding balance of $583,000 at December 31, 2010. Except for one one- to four-family residential mortgage loan that was 30 days past due, none of the TDRs were delinquent at December 31, 2010. Of the six TDRs, one commercial real estate loan with an outstanding balance of $1.3 million at December 31, 2010 was classified as non-accrual. No specific allowance was reserved on any of the TDRs at such date. The loans are deemed to be TDRs due to concessions made to borrowers considered to be experiencing financial difficulties and we have reduced either the monthly payments or interest rate from the original contractual terms. We have no commitments to lend additional funds to the borrowers under any of these loans. We had one TDR at December 31, 2009 with an outstanding balance of $2.5 million at such date. This loan is the commercial real estate loan with an outstanding balance of $1.3 million at December 31, 2010 that was classified as non-accrual at such date. This loan was also classified as non-accrual at December 31, 2009. |
Following is a summary of changes in the balance of real estate owned: |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Balancebeginning of year |
$ | 22,818,856 | $ | 1,739,599 | $ | 1,558,000 | ||||||
Additions |
10,641,000 | 25,582,818 | 1,159,367 | |||||||||
Capitalized improvements |
575,699 | 1,129,046 | 699,618 | |||||||||
Valuation adjustments |
(350,981 | ) | (4,501,580 | ) | | |||||||
Dispositions |
(10,096,435 | ) | (1,131,027 | ) | (1,677,386 | ) | ||||||
Balanceend of year |
$ | 23,588,139 | $ | 22,818,856 | $ | 1,739,599 | ||||||
7. | ACCRUED INTEREST RECEIVABLE |
Accrued interest receivable consists of the following: |
December 31, | ||||||||
2010 | 2009 | |||||||
Investments and interest-bearing deposits |
$ | 749,008 | $ | 616,135 | ||||
Mortgage-backed securities |
702,759 | 872,174 | ||||||
Loans receivable |
2,651,217 | 2,790,723 | ||||||
Total |
$ | 4,102,984 | $ | 4,279,032 | ||||
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8. | PROPERTY AND EQUIPMENT |
Property and equipment is summarized by major classifications as follows: |
December 31, | ||||||||
2010 | 2009 | |||||||
Land and buildings |
$ | 6,676,982 | $ | 6,669,937 | ||||
Leasehold improvements |
5,962,355 | 5,940,929 | ||||||
Furniture and fixtures |
6,872,711 | 6,695,298 | ||||||
Total |
19,512,048 | 19,306,164 | ||||||
Accumulated depreciation |
(9,760,354 | ) | (8,882,974 | ) | ||||
Total property and equipment, net of
accumulated depreciation |
$ | 9,751,694 | $ | 10,423,190 | ||||
Certain office facilities and equipment are leased under various operating leases. The leases range in terms from one year to 20 years, some of which include renewal options as well as specific provisions relating to rent increases. Rent expense on those lease agreements that contain incremental increases in rent is recognized on a straight-line basis over the life of the lease. Rental expense under operating leases was approximately $930,000, $917,000, and $871,000 for the years ended December 31, 2010, 2009, and 2008, respectively. |
Future minimum annual rental payments required under non-cancelable operating leases are as follows: |
December 31, | ||||
2010 | ||||
2011 |
$ | 900,583 | ||
2012 |
874,667 | |||
2013 |
800,384 | |||
2014 |
550,024 | |||
2015 |
494,271 | |||
Thereafter |
926,259 | |||
$ | 4,546,188 | |||
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9. | DEPOSITS |
Deposits consist of the following major classifications: |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Type of Account | Amount | Percent | Amount | Percent | ||||||||||||
Certificates |
$ | 432,016,478 | 48.0 | % | $ | 456,773,978 | 53.8 | % | ||||||||
Passbook and MMDA |
326,060,212 | 36.2 | 265,487,994 | 31.2 | ||||||||||||
NOW |
92,174,500 | 10.3 | 82,791,871 | 9.7 | ||||||||||||
DDA |
49,807,778 | 5.5 | 45,146,650 | 5.3 | ||||||||||||
Total |
$ | 900,058,968 | 100.0 | % | $ | 850,200,493 | 100.0 | % | ||||||||
Interest expense for each major classification of deposit account is as follows: |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Certificates |
$ | 10,143,069 | $ | 12,855,180 | $ | 15,090,905 | ||||||
Passbook and MMDA |
2,495,067 | 2,546,999 | 1,912,965 | |||||||||
NOW |
36,370 | 37,734 | 20,359 | |||||||||
Total |
$ | 12,674,506 | $ | 15,439,913 | $ | 17,024,229 | ||||||
The weighted average rate paid on deposits at December 31, 2010 and 2009, was 1.23% and 1.50%, respectively. Deposits in amounts greater than $100,000 were approximately $220.5 million and $246.0 million in the aggregate at December 31, 2010 and 2009, respectively, of which approximately $127.9 million and $186.9 million were due in one year or less at December 31, 2010 and 2009, respectively. Historically, deposit amounts in excess of $100,000 were generally not federally insured, however, beginning in 2008 Congress enacted legislation to temporarily increase FDIC deposit insurance limits from $100,000 to $250,000 per depositor. In 2010, Congress made this increased limit permanent. |
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A summary of certificates by maturities is as follows: |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Amount | Percent | Amount | Percent | |||||||||||||
One year or less |
$ | 238,503,547 | 55.2 | % | $ | 328,567,514 | 71.9 | % | ||||||||
One through two years |
45,376,964 | 10.5 | 37,415,798 | 8.2 | ||||||||||||
Two through three years |
22,776,002 | 5.2 | 11,547,995 | 2.5 | ||||||||||||
Three through four
years |
34,877,776 | 8.1 | 11,433,828 | 2.5 | ||||||||||||
Four through five years |
25,515,522 | 6.0 | 27,942,524 | 6.1 | ||||||||||||
Over five years |
64,966,667 | 15.0 | 39,866,319 | 8.8 | ||||||||||||
Total |
$ | 432,016,478 | 100.0 | % | $ | 456,773,978 | 100.0 | % | ||||||||
10. | ADVANCES FROM FEDERAL HOME LOAN BANK |
Advances from Federal Home Loan Bank consist of the following: |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Interest | Interest | |||||||||||||||
Maturing Period | Amount | Rate | Amount | Rate | ||||||||||||
One year or less |
$ | 24,885,319 | 3.19 | % | $ | 35,082,340 | 5.62 | % | ||||||||
One through two years |
1,733,395 | 2.99 | 20,427,753 | 5.32 | ||||||||||||
Two through three years |
33,343,671 | 2.74 | 2,988,928 | 2.99 | ||||||||||||
Three through four
years |
10,211,069 | 4.71 | 43,704,478 | 2.71 | ||||||||||||
Four through five years |
30,251,573 | 4.27 | 10,270,719 | 4.72 | ||||||||||||
Over five years |
9,449,647 | 2.35 | 34,265,217 | 4.25 | ||||||||||||
Total |
$ | 109,874,674 | 2.67 | % | $ | 146,739,435 | 4.28 | % | ||||||||
The advances are collateralized by all of the Federal Home Loan Bank stock we hold and substantially all of our qualifying first mortgage loans and certain mortgage-backed securities. The weighted average interest rate on FHLB advances was 2.67% and 4.28% at December 31, 2010 and 2009, respectively. The average balance outstanding was approximately $126.6 million and $180.9 million for the years ended December 31, 2010 and 2009 respectively. The maximum amount outstanding at any month-end was $144.7 million and $255.5 million for the years ended December 31, 2010 and 2009, respectively. |
11. | OTHER BORROWED MONEY |
During the years ended December 31, 2010 and 2009 the Bank entered into overnight repurchase agreements with commercial checking account customers. At December 31, 2010 and 2009, the amounts outstanding were $15.9 million and $16.7 million, respectively. Interest expense on customer repurchase agreements was $73,000, $74,000, and $358,000 for the years ended December 31, 2010, 2009 and 2008, respectively. Collateral for customer repurchase agreements was mortgage-backed securities. The market value of the collateral was approximately equal to the amounts outstanding. The weighted average interest rate on other borrowed money was 0.42% and 0.34% at December 31, 2010 and 2009, respectively. The average balance outstanding was approximately $22.6 million and $23.3 million for the years ended December 31, 2010 and 2009, respectively. The maximum amount outstanding at any month-end was approximately $29.0 million and $30.6 million, respectively, for the years ended December 31, 2010 and 2009. |
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12. | INCOME TAXES |
The income tax provision (benefit) consists of the following: |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Current: |
||||||||||||
Federal |
$ | 847,758 | $ | (4,557,689 | ) | $ | 3,904,700 | |||||
State |
| 4,288 | 550 | |||||||||
Total current |
847,758 | (4,553,401 | ) | 3,905,250 | ||||||||
Deferredfederal |
1,697,486 | (745,766 | ) | (4,183,674 | ) | |||||||
Total income tax provision
(benefit) |
$ | 2,545,244 | $ | (5,299,167 | ) | $ | (278,424 | ) | ||||
The following table presents a reconciliation between the reported income tax expense and the income tax expense which would be computed by applying the normal federal income tax rate of 34% to income before income taxes: |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
At statutory rate |
$ | 3,479,900 | $ | (4,247,276 | ) | $ | 626,002 | |||||
Adjustments resulting from: |
||||||||||||
State taxnet of federal tax benefit |
| 2,830 | 363 | |||||||||
Tax-exempt loan and investment income |
(528,496 | ) | (546,056 | ) | (488,077 | ) | ||||||
Income on bank owned life insurance |
(598,932 | ) | (611,426 | ) | (641,499 | ) | ||||||
Other |
192,752 | 102,761 | 224,787 | |||||||||
Total |
$ | 2,545,224 | $ | (5,299,167 | ) | $ | (278,424 | ) | ||||
Effective income tax rate |
24.9 | % | 42.4 | % | (15.1 | )% | ||||||
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Items that gave rise to significant portions of the deferred tax accounts are as follows: |
December 31, | ||||||||
2010 | 2009 | |||||||
Deferred tax assets: |
||||||||
Allowance for loan losses |
$ | 1,452,350 | $ | 3,090,720 | ||||
Deferred compensation |
2,097,730 | 2,048,647 | ||||||
Write-down of impaired investments |
295,529 | 295,526 | ||||||
Write-down of real estate owned |
164,158 | 1,530,537 | ||||||
Property and equipment |
219,098 | | ||||||
Alternative minimum tax refund |
837,440 | | ||||||
Other assets |
365,883 | 181,702 | ||||||
Total deferred tax assets |
5,432,188 | 7,147,132 | ||||||
Deferred tax liabilities: |
||||||||
Unrealized gain on securities
available-for-sale |
(1,427,662 | ) | (2,082,171 | ) | ||||
Deferred loan fees |
(364,331 | ) | (333,723 | ) | ||||
Property and equipment |
| (8,875 | ) | |||||
Other liabilities |
(8,977 | ) | (10,916 | ) | ||||
Total deferred tax liabilities |
(1,800,970 | ) | (2,435,685 | ) | ||||
Net deferred tax asset |
$ | 3,631,218 | $ | 4,711,447 | ||||
The Bank uses the specific charge-off method for computing reserves for bad debts. The bad debt deduction allowable under this method is available to large banks with assets greater than $500 million. Generally, this method allows the Bank to deduct an annual addition to the reserve for bad debts equal to its net charge-offs. Retained earnings at December 31, 2010 and 2009 include approximately $3,250,000 representing bad debt deductions for which no deferred income tax has been provided. This amount represents the Banks bad debt reserve as of the base year and is not subject to recapture as long as the Bank continues to carry on the business of banking. |
13. | PENSION AND PROFIT SHARING PLANS |
Deferred Compensation Plans |
The Company maintains an executive deferred compensation plan for selected executive officers under which the Board of Directors may elect to contribute a portion of the Companys net profits. In December 2005, the Board of Directors elected to freeze this plan retroactive to January 1, 2005, such that no further contributions will be made on behalf of the executive officers under the plan. The Board of Directors took this action upon its review of the total compensation programs available to the Companys executive officers, including the increased benefits available as a result of the equity compensation plans adopted by the Companys shareholders in June 2005. The Company also maintains a board of directors deferred compensation plan into which the Board of Directors may elect to contribute a percentage of their board fees. The expense relating to these plans was approximately $0 for each of the years ended December 31, 2010, 2009, and 2008. The liability for these plans at December 31, 2010 and 2009 was approximately $1.1 million and $1.0 million, respectively. |
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Supplemental Retirement Plan |
The Company maintains a nonqualified, unfunded, defined benefit, supplemental retirement plan (SERP) for the Board of Directors and certain officers. The funded status of the plan is as follows: |
December 31, | ||||||||
2010 | 2009 | |||||||
Fair value of plan assets |
$ | | $ | | ||||
Benefit obligations |
2,874,018 | 2,727,418 | ||||||
Funded status |
$ | (2,874,018 | ) | $ | (2,727,418 | ) | ||
Net amount recognized |
$ | (2,874,018 | ) | $ | (2,727,418 | ) | ||
As benefit payments come due under the plan, the Company will make contributions to the plan in an amount sufficient to fund the payments. During 2010, the Company paid approximately $73,000 in benefits to participants of the plan. Future benefit payments scheduled to be paid to participants under the plan as of December 31, 2010 are as follows: |
2011 |
$ | 73,350 | ||
2012 |
73,350 | |||
2013 |
55,950 | |||
2014 |
55,950 | |||
2015 |
37,200 | |||
2016 - 2019 |
96,600 | |||
$ | 392,400 | |||
Amounts related to the plan have been recognized in the balance sheet in accumulated other comprehensive income, net of tax, as follows: |
December 31, | ||||||||
2010 | 2009 | |||||||
Amount recognized in accumulated
other comprehensive loss for: |
||||||||
Net actuarial (gain) loss |
$ | (38,191 | ) | $ | (44,884 | ) | ||
Prior service cost |
137,167 | 216,172 | ||||||
Total recognized in accumulated
other comprehensive loss |
$ | 98,976 | $ | 171,288 | ||||
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The components of net periodic pension cost and other changes in the amounts recognized in accumulated other comprehensive income (loss) are as follows: |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Components of net periodic plan cost: |
||||||||||||
Service cost |
$ | 74,853 | $ | 87,993 | $ | 120,652 | ||||||
Interest cost |
134,956 | 150,480 | 128,905 | |||||||||
Expected return on assets |
| | | |||||||||
Amortization of prior service cost |
119,705 | 121,925 | 121,925 | |||||||||
Amortization of net actuarial gain |
| (37,094 | ) | (215,894 | ) | |||||||
Net periodic plan cost |
329,514 | 323,304 | 155,588 | |||||||||
Other changes in plan assets and benefit
obligations recognized in accumulated
other comprehensive income (loss): |
||||||||||||
Net loss (gain) |
10,141 | 197,779 | (590,480 | ) | ||||||||
Amortization of prior service costs |
(119,705 | ) | (121,925 | ) | (121,925 | ) | ||||||
Amortization of net actuarial gain |
| 37,094 | 215,894 | |||||||||
Total recognized in accumulated other
comprehensive income (loss) |
(109,564 | ) | 112,948 | (496,511 | ) | |||||||
Total recognized in net periodic plan cost and
accumulated other comprehensive income (loss) |
$ | 219,950 | $ | 436,252 | $ | (340,923 | ) | |||||
The following weighted average assumptions were used in calculating the net periodic pension cost: |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Discount rate |
5.03 | % | 6.45 | % | 5.89 | % | ||||||
Rate of return on assets |
n/a | n/a | n/a | |||||||||
Rate of increase in future
board fees/salary levels |
3.00 | % | 4.00 | % | 4.00 | % |
The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2011 are as follows: |
Prior service cost |
$ | (116,368 | ) | |
Net actuarial gain |
| |||
Total amount recognized |
$ | (116,368 | ) | |
401(k) Plan |
The Company also maintains a 401(k) retirement plan for substantially all of its employees. Certain senior officers of the Bank have been designated as Trustees of the 401(k) plan. The Company matches 50% of an employees contribution up to 6% of the employees annual gross compensation. The expense incurred for this plan was approximately $126,000, $120,000, and $130,000 for the years ended December 31, 2010, 2009, and 2008, respectively. |
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Employee Stock Ownership Plan |
In 2004, the Bank established an employee stock ownership plan (ESOP) for substantially all of its full-time employees. Certain senior officers of the Bank have been designated as Trustees of the ESOP. Shares of the Companys common stock purchased by the ESOP are held in a suspense account until released for allocation to participants. Shares released are allocated to each eligible participant based on the ratio of each such participants base compensation to the total base compensation of all eligible plan participants. As the unearned shares are committed to be released and allocated among participants, the Company recognizes compensation expense equal to the average market price of the shares. Under this plan, during 2004 and 2005 the ESOP acquired 914,112 shares (as adjusted for the exchange ratio as part of the June 2007 second-step conversion) of common stock for approximately $7.4 million, an average price of $8.06 per share (as adjusted). These shares are scheduled to be released over a 15-year period. In June 2007, the ESOP acquired an additional 1,042,771 shares of the Companys common stock for approximately $10.4 million, an average price of $10.00 per share. These shares are scheduled to be released over a 30-year period. No additional purchases are expected to be made by the ESOP. At December 31, 2010, the ESOP held approximately 1.5 million unallocated shares of Company common stock with a fair value of $17.3 million of which approximately 96,000 shares were committed to be released. At December 31, 2010, the ESOP also held approximately 482,000 allocated shares with a fair value of $5.7 million. During the year ended December 31, 2010, approximately 96,000 shares were committed to be released to participants, resulting in recognition of approximately $902,000 in compensation expense. These shares were subsequently released to participants accounts in the first quarter of 2011. During the year ended December 31, 2009 and 2008, approximately 96,000 shares were committed to be released to participants in each year, resulting in recognition of approximately $751,000 and $945,000 in compensation expense, respectively. These shares were subsequently released to participants accounts in the first quarters of 2010 and 2009, respectively. Due to the Companys announced merger with Susquehanna Bancshares, it is expected that during the third quarter of 2011 the remaining unallocated shares will be sold to repay the then outstanding balances of the loans obtained to acquire the ESOP shares, with any excess shares distributed to participants in accordance with the provisions of the ESOP. See Note 18 for further details of the proposed merger with Susquehanna. |
Rabbi Trust |
During 2004, the Company established a rabbi trust to fund certain benefit plans. An officer of the Bank has been designated as Trustee of the trust. In addition to cash balances, the trust holds shares of Company common stock that were purchased for the benefit of certain officers and directors that acquired shares through our deferred compensation plans. Participants may acquire additional shares through the Companys dividend reinvestment plan or through purchases with cash balances held by the trust. Distributions are made to participants as payments are required under certain benefit plans of the Company. Distributions are made in cash, to the extent cash is available, or in shares of Company stock when the trust does not hold a sufficient cash balance for the benefiting participant. Company stock is not sold by the trust to make cash distributions. Approximately 2,000 and 39,000 shares, respectively, were distributed by the trust in 2010 and 2009. As of December 31, 2010, the trust holds approximately 161,000 shares of the Companys common stock as well as an additional $10,000 in cash. The assets of the trust are sufficient to cover the liabilities of the Companys executive deferred compensation plan and board of directors deferred compensation plan. |
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Recognition and Retention Plans |
In June 2005, the shareholders of Abington Community Bancorp approved the adoption of the 2005 Recognition and Retention Plan (the 2005 RRP). As a result of the second-step conversion, the 2005 RRP became a stock benefit plan of the Company and the shares of Abington Community Bancorp held by the 2005 RRP were converted to shares of Company common stock. Certain senior officers of the Bank have been designated as Trustees of the 2005 RRP. The 2005 RRP provides for the grant of shares of common stock of the Company to certain officers, employees and directors of the Company. In order to fund the 2005 RRP, the 2005 Recognition Plan Trust (the 2005 Trust) acquired 457,056 shares (adjusted for the second-step conversion exchange ratio) of common stock in the open market for approximately $3.7 million, an average price of $8.09 per share (as adjusted). The Company made sufficient contributions to the 2005 Trust to fund the purchase of these shares. No additional purchases are expected to be made by the 2005 Trust under this plan. Pursuant to the terms of the plan, all 457,056 shares acquired by the 2005 Trust have been granted to certain officers, employees and directors of the Company, however, due to the forfeiture of shares by certain officers of the Company, 4,416 shares remain available for future grant at December 31, 2010. 2005 RRP shares generally vest at the rate of 20% per year over five years. |
In January 2008, the shareholders of the Company approved the adoption of the 2007 Recognition and Retention Plan (the 2007 RRP). In order to fund the 2007 RRP, the 2007 Recognition Plan Trust (the 2007 Trust) acquired 520,916 shares of the Companys common stock in the open market for approximately $5.4 million, an average price of $10.28 per share. The Company made sufficient contributions to the 2007 Trust to fund the purchase of these shares. Pursuant to the terms of the plan, 543,700 shares acquired by the 2007 Trust were granted to certain officers, employees and directors of the Company beginning in January 2008. Due to the forfeiture of shares by certain officers of the Company in addition to unawarded shares, 25,416 shares remain available for future grant at December 31, 2010. 2007 RRP shares generally vest at the rate of 20% per year over five years. |
A summary of the status of the shares under the 2005 and 2007 RRP as of December 31, 2010, 2009 and 2008, and changes during the years ended December 31, 2010, 2009 and 2008 are presented below. The number of shares and weighted average grant date fair value for all periods have been adjusted for the exchange ratio as a result of our second-step conversion: |
Year Ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
average | average | average | ||||||||||||||||||||||
Number of | grant date | Number of | grant date | Number of | grant date | |||||||||||||||||||
shares | fair value | shares | fair value | shares | fair value | |||||||||||||||||||
Nonvested at the
beginning of the year |
481,272 | $ | 8.79 | 661,763 | $ | 8.72 | 274,874 | $ | 7.54 | |||||||||||||||
Granted |
19,000 | 11.89 | 12,500 | 6.72 | 524,200 | 9.12 | ||||||||||||||||||
Vested |
(180,736 | ) | 8.37 | (182,751 | ) | 8.39 | (91,411 | ) | 7.54 | |||||||||||||||
Forfeited |
(8,476 | ) | 8.91 | (10,240 | ) | 8.89 | (45,900 | ) | 8.61 | |||||||||||||||
Nonvested at the
end of the year |
311,060 | $ | 9.21 | 481,272 | $ | 8.79 | 661,763 | $ | 8.72 | |||||||||||||||
Compensation expense on RRP shares granted is recognized ratably over the five year vesting period in an amount which totals the market price of the Companys stock at the date of grant. During the years ended December 31, 2010, 2009 and 2008, approximately 139,000, 179,000 and 177,000 shares, respectively, were amortized to expense, based on the proportional vesting of the awarded shares. During years ended December 31, 2010, 2009 and 2008, approximately $1.2 million, $1.5 million and $1.5 million, respectively, was recognized in compensation expense for the plans. During the years ended December 31, 2010, 2009, and 2008, a tax benefit of approximately $384,000, $452,000 and $550,000, respectively, was recognized from the plans. As of December 31, 2010, approximately $2.1 million in additional compensation expense is scheduled to be recognized over the remaining lives of the RRP awards. At December 31, 2010, the weighted average remaining lives of the RRP awards was approximately 2.3 years. Under the terms of the 2005 RRP and 2007 RRP, any unvested RRP awards will become fully vested upon a change in control, such as the proposed merger with Susquehanna, resulting in the full recognition of any unrecognized expense. |
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Stock Options |
In June 2005, the shareholders of Abington Community Bancorp also approved the adoption of the 2005 Stock Option Plan (the 2005 Option Plan). As a result of the second-step conversion, the 2005 Option Plan became a stock benefit plan of the Company. Unexercised options which were previously granted under the 2005 Option Plan were adjusted by the 1.6 exchange ratio as a result of the second-step conversion and have been converted into options to acquire Company common stock. The 2005 Option Plan authorizes the grant of stock options to officers, employees and directors of the Company to acquire shares of common stock with an exercise price equal to the fair market value of the common stock on the grant date. Options generally become vested and exercisable at the rate of 20% per year over five years and are generally exercisable for a period of ten years after the grant date. As of December 31, 2010, a total of 1,142,640 shares of common stock have been reserved for future issuance pursuant to the 2005 Option Plan of which 16,696 shares remain available for grant. |
In January 2008, the shareholders of the Company also approved the adoption of the 2007 Stock Option Plan (the 2007 Option Plan). As with the 2005 Option Plan, under the 2007 Option Plan options generally become vested and exercisable at the rate of 20% per year over five years and are generally exercisable for a period of ten years after the grant date. As of December 31, 2010, a total of 1,302,990 shares of common stock have been reserved for future issuance pursuant to the 2007 Option Plan of which 182,290 shares remain available for grant. |
Any remaining unvested SOP awards will become fully vested in accordance with the provisions of the Plans upon a change in control, such as the proposed merger with Susquehanna, resulting in the full recognition of any unrecognized expense. See Note 18 for further details of the proposed merger with Susquehanna. |
A summary of the status of the Companys stock options under the 2005 and 2007 Option Plans as of December 31, 2010, 2009 and 2008, and changes during the years ended December 31, 2010, 2009 and 2008 are presented below. The number of options and weighted average exercise price for all prior periods have been adjusted for the exchange ratio as a result of our second-step conversion: |
Year Ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Number of | Exercise | Number of | Exercise | Number of | Exercise | |||||||||||||||||||
shares | Price | shares | Price | shares | Price | |||||||||||||||||||
Outstanding at the
beginning of the
year |
2,198,888 | $ | 8.47 | 2,206,296 | $ | 8.48 | 1,135,180 | $ | 7.74 | |||||||||||||||
Granted |
| | 16,000 | 6.72 | 1,272,500 | 9.12 | ||||||||||||||||||
Exercised |
(16,048 | ) | 7.82 | (6,736 | ) | 7.51 | (56,160 | ) | 7.51 | |||||||||||||||
Forfeited |
(15,140 | ) | 8.56 | (16,672 | ) | 9.04 | (145,224 | ) | 8.67 | |||||||||||||||
Outstanding at the
end of the year |
2,167,700 | $ | 8.47 | 2,198,888 | $ | 8.47 | 2,206,296 | $ | 8.48 | |||||||||||||||
Exercisable at the
end of the year |
1,442,672 | $ | 8.15 | 1,022,468 | $ | 8.00 | 589,100 | $ | 7.64 | |||||||||||||||
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The following table summarizes all stock options outstanding under the 2005 and 2007 Option Plans as of December 31, 2010: |
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted | Weighted Average | Weighted | ||||||||||||||||||
Number of | Average | Remaining | Number of | Average | ||||||||||||||||
Exercise Price | Shares | Exercise Price | Contractual Life | Shares | Exercise Price | |||||||||||||||
(in years) | ||||||||||||||||||||
$6.00 - $7.00 | 12,500 | $ | 6.72 | 9.0 | 2,500 | $ | 6.72 | |||||||||||||
7.01 - 8.00 | 899,520 | 7.51 | 4.5 | 899,520 | 7.51 | |||||||||||||||
8.01 - 9.00 | 7,200 | 8.35 | 4.9 | 7,200 | 8.35 | |||||||||||||||
9.01 - 10.00 | 1,209,200 | 9.15 | 7.1 | 501,900 | 9.17 | |||||||||||||||
Over 10.00 | 39,280 | 10.18 | 5.9 | 31,552 | 10.18 | |||||||||||||||
Total | 2,167,700 | $ | 8.47 | 6.0 | 1,442,672 | $ | 8.15 | |||||||||||||
Intrinsic value |
$ | 7,454,203 | $ | 5,467,101 | ||||||||||||||||
No options were granted during 2010. The estimated fair value of options granted during 2009 and 2008 was $1.67 and 2.13 per share, respectively. The fair value was estimated on the date of grant in accordance with ASC 718 using the Black-Scholes Single Option Pricing Model with the following weighted average assumptions used: |
Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
Dividend yield |
2.98 | % | 1.88 | % | ||||
Expected volatility |
32.88 | % | 23.25 | % | ||||
Risk-free interest rate |
2.33 | % | 3.13 - 3.49 | % | ||||
Expected life of options |
6 years | 4 - 7 years |
The dividend yield was calculated based on the dividend amount and stock price existing at the grant date taking into consideration expected increases in the dividend and stock price over the lives of the options. The actual dividend yield may differ from this assumption. The risk-free interest rate used was based on the rates of treasury securities with maturities equal to the expected lives of the options. |
As the Company has a limited history of granting option awards, management made certain assumptions regarding the exercise behavior of recipients without the use of any reliable prior exercise behavior as a basis. Assumptions of exercise behavior were made on an individual basis for directors and executive officers and general assumptions were made for the remainder of employees. |
In making these assumptions, management considered the age and financial status of recipients in addition to other qualitative factors. |
The expected volatility was based on and calculated from the historical volatility of our stock, as it was determined that this would be the most reliable estimate of future stock volatility. The actual future volatility may differ from our historical volatility. |
During the years ended December 31, 2010, 2009 and 2008, approximately $713,000, $880,000 and $860,000, respectively, was recognized in compensation expense for the Option Plans. During the years ended December 31, 2010, 2009 and 2008, a tax benefit of approximately $74,000, $90,000 and $122,000, respectively, was recognized from the plans. During 2010, 2009 and 2008, approximately $4,000, $2,000 and $38,000, respectively, of the tax benefit was due to the exercise of approximately 16,000, 7,000 and 56,000 options, respectively, for which the Company received proceeds of approximately $125,000, $51,000 and $422,000, respectively. At December 31, 2010, approximately $1.1 million in additional compensation expense for awarded options remained unrecognized. The weighted average period over which this expense is scheduled to be recognized is approximately 1.0 years. |
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14. | COMMITMENTS AND CONTINGENCIES |
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the loan agreement. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customers creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on managements credit evaluation of the customer. The amount and type of collateral required varies, but may include accounts receivable, inventory, equipment, real estate and income-producing commercial properties. At December 31, 2010 and 2009, commitments to originate loans and commitments under unused lines of credit, including undisbursed portions of construction loans in process, for which the Bank was obligated amounted to approximately $114.9 million and $125.9 million, respectively, in the aggregate. |
The Bank had approximately $2.9 million in outstanding mortgage loan commitments at December 31, 2010. The commitments are expected to be funded within 90 days with all $2.9 million in fixed rates of interest ranging from 4.125% to 4.875%. These loans were not originated for resale. Also outstanding at December 31, 2010 were unused home equity lines of credit totaling approximately $30.2 million and unused commercial lines of credit totaling approximately $51.8 million. The unused portion of our construction loans in process at December 31, 2010 amounted to approximately $30.1 million. |
The Bank had approximately $2.1 million in outstanding mortgage loan commitments at December 31, 2009. The commitments generally were funded within 90 days with $2.1 million in fixed rates of interest ranging from 4.875% to 5.50%. These loans were not originated for resale. Also outstanding at December 31, 2009 were unused home equity lines of credit totaling approximately $27.6 million and unused commercial lines of credit totaling approximately $42.0 million. The unused portion of our construction loans in process at December 31, 2009 amounted to approximately $54.2 million. |
Letters of credit are conditional commitments issued by the Bank guaranteeing payments of drafts in accordance with the terms of the letter of credit agreements. Commercial letters of credit are used primarily to facilitate trade or commerce and are also issued to support public and private borrowing arrangements, bond financings and similar transactions. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Collateral may be required to support letters of credit based upon managements evaluation of the creditworthiness of each customer. The credit risk involved in issuing letters of credit is substantially the same as that involved in extending loan facilities to customers. Most letters of credit expire within one year. At December 31, 2010 and December 31, 2009, the Bank had letters of credit outstanding of approximately $48.3 million and $48.5 million, respectively, of which $47.5 million and $47.6 million, respectively, were standby letters of credit. At December 31, 2010 and 2009, the uncollateralized portion of the letters of credit extended by the Bank was approximately $7,000 and $219,000, respectively, all of which was for standby letters of credit in both years. The current amount of the liability for guarantees under letters of credit was not material as of December 31, 2010 and 2009. |
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The Company is subject to various pending claims and contingent liabilities arising in the normal course of business which are not reflected in the accompanying consolidated financial statements. Management considers that the aggregate liability, if any, resulting from such matters will not be material to our financial position or results of operations. |
Among the Companys contingent liabilities, are exposures to limited recourse arrangements with respect to the sales of whole loans and participation interests. At December 31, 2010, the exposure, which represents a portion of credit risk associated with the sold interests, amounted to $185,000. The exposure is for the life of the related loans and payable, on our proportional share, as losses are incurred. |
15. | REGULATORY CAPITAL REQUIREMENTS |
The Bank is subject to various regulatory capital requirements administered by federal and state banking agencies. As a savings and loan holding company, the Company is not subject to any regulatory capital requirements. Failure to meet minimum capital requirements can initiate certain mandatoryand possibly additional discretionaryactions by regulators, that, if undertaken, could have a direct material effect on the Companys consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. |
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). As of December 31, 2010 and 2009, the Bank met all capital adequacy requirements to which it was subject. |
As of December 31, 2010, 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, the Bank must maintain minimum Tier I risk-based, total risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Banks category. |
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The Banks actual capital amounts and ratios are presented in the table below: |
To Be Well Capitalized | ||||||||||||||||||||||||
Required for | Under Prompt | |||||||||||||||||||||||
Capital Adequacy | Corrective Action | |||||||||||||||||||||||
Actual | Purposes | Provisions | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
As of December 31, 2010: |
||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) |
$ | 177,432 | 23.89 | % | $ | 1,000 | 8.00 | % | $ | 74,000 | 10.00 | % | ||||||||||||
Tier I Capital (to Risk Weighted Assets) |
173,138 | 23.31 | 30,000 | 4.00 | 45,000 | 6.00 | ||||||||||||||||||
Tier I Capital (to Average Assets) |
173,138 | 13.84 | 50,000 | 4.00 | 63,000 | 5.00 | ||||||||||||||||||
As of December 31, 2009: |
||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) |
$ | 171,757 | 21.16 | % | $ | 1,000 | 8.00 | % | $ | 81,000 | 10.00 | % | ||||||||||||
Tier I Capital (to Risk Weighted Assets) |
162,666 | 20.04 | 32,000 | 4.00 | 49,000 | 6.00 | ||||||||||||||||||
Tier I Capital (to Average Assets) |
162,666 | 13.14 | 50,000 | 4.00 | 62,000 | 5.00 |
The following table reconciles the Banks GAAP capital to its regulatory capital as of the dates indicated: |
December 31, | ||||||||
2010 | 2009 | |||||||
(In Thousands) | ||||||||
Total equity capital |
$ | 175,813 | $ | 166,540 | ||||
LESS: |
||||||||
Net unrealized gain on AFS securities |
2,771 | 4,042 | ||||||
Net unrecognized deferred compensation costs |
(99 | ) | (171 | ) | ||||
Disallowed servicing assets |
3 | 3 | ||||||
Tier 1 Capital |
$ | 173,138 | $ | 162,666 | ||||
Allowance for loan losses includable
in Tier 2 capital |
4,272 | 9,090 | ||||||
Unrealized gain on AFS equity securities
includable in Tier 2 capital |
22 | 1 | ||||||
Total risk-based capital |
$ | 177,432 | $ | 171,757 | ||||
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16. | FAIR VALUE MEASUREMENTS |
The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Investment and mortgage-backed securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans, real estate owned and certain other assets. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets. |
In accordance with ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820), the Company groups its assets at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are: |
| Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets. |
| Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. |
| Level 3 Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Companys own estimates of assumptions that market participants would use in pricing the asset. |
In accordance with ASC 820, the Company bases its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy in ASC 820. |
Fair value measurements for assets where there exists limited or no observable market data and, therefore, are based primarily upon the Companys or other third-partys estimates, are often calculated based on the characteristics of the asset, the economic and competitive environment and other such factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, that could significantly affect the results of current or future valuations. At December 31, 2010 and December 31, 2009, the Company did not have any assets that were measured at fair value on a recurring basis that use Level 3 measurements. |
Following is a description of valuation methodologies used in determining the fair value for our assets and liabilities. |
Cash and Cash EquivalentsThese assets are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization. |
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Investment and Mortgage-backed Securities Available for SaleInvestment and mortgage-backed securities available for sale are recorded at fair value on a recurring basis. Fair value measurements for these securities are typically obtained from independent pricing services that we have engaged for this purpose. When available, we, or our independent pricing service, use quoted market prices to measure fair value. If market prices are not available, fair value measurement is based upon models that incorporate available trade, bid and other market information and for structured securities, cash flow and, when available, loan performance data. Because many fixed income securities do not trade on a daily basis, our independent pricing services applications apply available information as applicable through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations. For each asset class, pricing applications and models are based on information from market sources and integrate relevant credit information. All of our securities available for sale are valued using either of the foregoing methodologies to determine fair value adjustments recorded to our financial statements. Level 1 securities include equity securities such as common stock and mutual funds traded on active exchanges. Level 2 securities include corporate bonds, agency bonds, municipal bonds, certificates of deposit, mortgage-backed securities, and collateralized mortgage obligations. Investment and mortgage-backed securities held to maturity are carried at amortized cost. |
Loans ReceivableWe do not record loans at fair value on a recurring basis. As such, valuation techniques discussed herein for loans are primarily for estimating fair value for footnote disclosure purposes. However, from time to time, we record nonrecurring fair value adjustments to loans to reflect partial write-downs for impairment or the full charge-off of the loan carrying value. The valuation of impaired loans is discussed below. The fair value estimate for footnote disclosure purposes differentiates loans based on their financial characteristics, such as product classification, loan category, pricing features and remaining maturity. Prepayment and credit loss estimates are evaluated by loan type and rate. The fair value of one- to four-family residential mortgage loans is estimated by discounting contractual cash flows using discount rates based on current industry pricing, adjusted for prepayment and credit loss estimates. The fair value of loans is estimated by discounting contractual cash flows using discount rates based on our current pricing for loans with similar characteristics, adjusted for prepayment and credit loss estimates. |
Impaired Loans A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan. An insignificant delay or insignificant shortfall in the amount of payments does not necessarily result in the loan being identified as impaired. We establish an allowance on certain impaired loans for the amount by which the discounted cash flows, observable market price or fair value of collateral, if the loan is collateral dependent, is lower than the carrying value of the loan. Fair value is generally based upon independent market prices or appraised value of the collateral less estimated cost to sell. During the periods presented, loan impairment was evaluated based on the fair value of the loans collateral. Our appraisals are typically performed by independent third party appraisers, and are obtained as soon as practicable once indicators of possible impairment are identified. We obtained current appraisals of the collateral underlying all of our impaired loans for the periods presented. For appraisals of commercial and construction properties, comparable properties within the area may not be available. In such circumstances, our appraisers will rely on certain judgments in determining how a specific property compares in value to other properties that are not identical in design or in geographic area. Our impaired loans at December 31, 2010 and 2009 that were recorded at fair value are secured by commercial and construction properties for which there are no comparable properties available and, accordingly, all of these impaired loans were classified as Level 3 assets at such dates. |
Accrued Interest ReceivableThis asset is carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization. |
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FHLB Stock Although Federal Home Loan Bank (FHLB) stock is an equity interest in the FHLB, it is carried at cost because it does not have a readily determinable fair value as its ownership is restricted and it lacks a market. The estimated fair value approximates the carrying amount. FHLB stock is evaluated for impairment based on the ultimate recoverability of the par value of the security. We have evaluated our FHLB stock for impairment, and we have determined that the stock was not impaired at December 31, 2010. |
Real Estate Owned Real estate owned includes foreclosed properties securing commercial and construction loans. Real estate properties acquired through foreclosure are initially recorded at the fair value of the property at the date of foreclosure. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of cost or fair value less estimated costs to sell. As is the case for collateral of impaired loans, fair value is generally based upon independent market prices or appraised value of the collateral. Our appraisal process for real estate owned is identical to our appraisal process for the collateral of impaired loans. Our current portfolio of real estate owned is comprised of commercial and construction properties for which comparable properties within the area are not available. Our appraisers have relied on certain judgments in determining how our specific properties compare in value to other properties that are not identical in design or in geographic area and, accordingly, we classify real estate owned as a Level 3 asset. |
DepositsDeposit liabilities are carried at cost. As such, valuation techniques discussed herein for deposits are primarily for estimating fair value for footnote disclosure purposes. The fair value of deposits is discounted based on rates available for borrowings of similar maturities. A decay rate is estimated for non-time deposits. The discount rate for non-time deposits is adjusted for servicing costs based on industry estimates. |
Advances from Federal Home Loan BankAdvances from the FHLB are carried at amortized cost. However, we are required to estimate the fair value of this debt for footnote disclosure purposes. The fair value is based on the contractual cash flows, which are discounted using rates currently offered for new notes with similar remaining maturities. |
Other Borrowed MoneyThese liabilities are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization. |
Accrued Interest PayableThis liability is carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization. |
Commitments to Extend Credit and Letters of CreditThe majority of the Banks commitments to extend credit and letters of credit carry current market interest rates if converted to loans. Because commitments to extend credit and letters of credit are generally unassignable by either the Bank or the borrower, they only have value to the Bank and the borrower. The estimated fair value approximates the recorded deferred fee amounts, which are not significant. |
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The table below presents the balances of asset measured at fair value on a recurring basis: |
December 31, 2010 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Investment securities
available for sale: |
||||||||||||||||
Debt securities: |
||||||||||||||||
Agency bonds |
$ | 99,312,700 | $ | | $ | 99,312,700 | $ | | ||||||||
Corporate bonds and
commercial paper |
3,558,295 | | 3,558,295 | | ||||||||||||
Municipal bonds |
19,320,900 | | 19,320,900 | | ||||||||||||
Equity securities: |
||||||||||||||||
Mutual funds |
2,712,006 | 2,712,006 | | | ||||||||||||
Total investment securities
available for sale |
124,903,901 | 2,712,006 | 122,191,895 | | ||||||||||||
Mortgage-backed securities
available for sale: |
||||||||||||||||
GNMA pass-through
certificates |
$ | 2,006 | $ | | $ | 2,006 | $ | | ||||||||
FNMA pass-through
certificates |
31,928,307 | | 31,928,307 | | ||||||||||||
FHLMC pass-through
certificates |
28,648,152 | | 28,648,152 | | ||||||||||||
Collateralized mortgage
obligations |
107,594,331 | | 107,594,331 | | ||||||||||||
Total mortgage-backed
securities available for sale |
168,172,796 | | 168,172,796 | | ||||||||||||
Total |
$ | 293,076,697 | $ | 2,712,006 | $ | 290,364,691 | $ | | ||||||||
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December 31, 2009 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Investment securities
available for sale: |
||||||||||||||||
Debt securities: |
||||||||||||||||
Agency bonds |
$ | 56,459,667 | $ | | $ | 56,459,667 | $ | | ||||||||
Corporate bonds and
commercial paper |
3,121,440 | | 3,121,440 | | ||||||||||||
Municipal bonds |
22,055,175 | | 22,055,175 | | ||||||||||||
Certificates of deposit |
99,000 | | 99,000 | | ||||||||||||
Equity securities: |
||||||||||||||||
Common stock |
9 | 9 | | | ||||||||||||
Mutual funds |
2,581,980 | 2,581,980 | | | ||||||||||||
Total investment securities
available for sale |
84,317,271 | 2,581,989 | 81,735,282 | | ||||||||||||
Mortgage-backed securities
available for sale: |
||||||||||||||||
GNMA pass-through
certificates |
$ | 2,833 | $ | | $ | 2,833 | $ | | ||||||||
FNMA pass-through
certificates |
48,079,095 | | 48,079,095 | | ||||||||||||
FHLMC pass-through
certificates |
51,201,450 | | 51,201,450 | | ||||||||||||
Collateralized mortgage
obligations |
39,345,214 | | 39,345,214 | | ||||||||||||
Total mortgage-backed
securities available for
sale |
138,628,592 | | 138,628,592 | | ||||||||||||
Total |
$ | 222,945,863 | $ | 2,581,989 | $ | 220,363,874 | $ | | ||||||||
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For assets measured at fair value on a nonrecurring basis that were still held at the end of the period, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the related individual assets or portfolios at December 31, 2010 and 2009: |
December 31, 2010 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Impaired loans: |
||||||||||||||||
Multi-family
residential and
commerical |
$ | 1,348,304 | $ | | $ | | $ | 1,348,304 | ||||||||
Construction |
5,357,844 | | | 5,357,844 | ||||||||||||
Total impaired loans |
6,706,148 | | | 6,706,148 | ||||||||||||
Real estate owned |
23,588,139 | | | 23,588,139 | ||||||||||||
Total |
$ | 30,294,287 | $ | | $ | | $ | 30,294,287 | ||||||||
December 31, 2009 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Impaired loans: |
||||||||||||||||
Multi-family
residential and
commerical |
$ | 3,646,396 | $ | | $ | | $ | 3,646,396 | ||||||||
Construction |
10,859,266 | | | 10,859,266 | ||||||||||||
Total impaired loans |
14,505,662 | | | 14,505,662 | ||||||||||||
Real estate owned |
22,818,856 | | | 22,818,856 | ||||||||||||
Total |
$ | 37,324,518 | $ | | $ | | $ | 37,324,518 | ||||||||
The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies as described above. However, considerable judgment is necessarily required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. |
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 77,687 | $ | 77,687 | $ | 44,714 | $ | 44,714 | ||||||||
Investment securities |
145,289 | 145,710 | 104,704 | 105,105 | ||||||||||||
Mortgage-backed
securities |
225,045 | 226,511 | 215,779 | 215,926 | ||||||||||||
Loans receivablenet |
696,444 | 702,343 | 764,560 | 769,058 | ||||||||||||
FHLB stock |
13,877 | 13,877 | 14,608 | 14,608 | ||||||||||||
Accrued interest
receivable |
4,103 | 4,103 | 4,279 | 4,279 | ||||||||||||
Liabilities: |
||||||||||||||||
Deposits |
$ | 900,059 | $ | 886,873 | $ | 850,200 | $ | 836,176 | ||||||||
Advances from Federal |
||||||||||||||||
Home Loan Bank |
109,875 | 114,772 | 146,739 | 152,773 | ||||||||||||
Other borrowed money |
15,881 | 15,881 | 16,673 | 16,673 | ||||||||||||
Accrued interest payable |
912 | 912 | 1,807 | 1,807 | ||||||||||||
Off balance sheet
financial
instruments |
| | | |
The fair value estimates presented herein are based on pertinent information available to management as of December 31, 2010 and 2009. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since December 31, 2010 and 2009 and, therefore, current estimates of fair value may differ significantly from the amounts presented herein. |
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17. | ABINGTON BANCORP, INC. (PARENT COMPANY ONLY) |
Certain condensed financial information follows: |
December 31, 2010 | December 31, 2009 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 21,326,996 | $ | 32,443,052 | ||||
Investment in Abington Bank |
175,813,155 | 166,539,607 | ||||||
Loans receivable |
14,728,503 | 15,265,847 | ||||||
Other assets |
41,318 | 39,062 | ||||||
TOTAL ASSETS |
$ | 211,909,972 | $ | 214,287,568 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
LIABILITIES: |
||||||||
Accounts payable and accrued expenses |
$ | 10 | $ | 105,568 | ||||
STOCKHOLDERS EQUITY |
||||||||
Total stockholders equity |
211,909,962 | 214,182,000 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY |
$ | 211,909,972 | $ | 214,287,568 | ||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
INCOME: |
||||||||||||
Interest on loans |
$ | 1,058,580 | $ | 1,088,613 | $ | 1,116,913 | ||||||
Total income |
1,058,580 | 1,088,613 | 1,116,913 | |||||||||
EXPENSES: |
||||||||||||
Professional services |
502,308 | 500,100 | 533,899 | |||||||||
Other |
617,282 | 585,152 | 591,880 | |||||||||
Total expenses |
1,119,590 | 1,085,252 | 1,125,779 | |||||||||
(LOSS) INCOME BEFORE INCOME TAXES
AND
EQUITY IN UNDISTRIBUTED NET INCOME
(LOSS) OF SUBSIDIARY |
(61,010 | ) | 3,361 | (8,866 | ) | |||||||
EQUITY IN UNDISTRIBUTED NET
INCOME (LOSS) OF SUBSIDIARY |
7,730,045 | (7,192,211 | ) | 2,140,825 | ||||||||
(BENEFIT) PROVISION FOR INCOME TAXES |
(20,741 | ) | 3,972 | 12,354 | ||||||||
NET INCOME (LOSS) |
$ | 7,689,776 | $ | (7,192,822 | ) | $ | 2,119,605 | |||||
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
OPERATING ACTIVITIES: |
||||||||||||
Net income (loss) |
$ | 7,689,776 | $ | (7,192,822 | ) | $ | 2,119,605 | |||||
Adjustments to reconcile net income to net cash
provided by (used in) operating activities: |
||||||||||||
Undistributed (income) loss of subsidiary |
(7,730,045 | ) | 7,192,211 | (2,140,825 | ) | |||||||
Changes in assets and liabilities which (used) provided
cash: |
||||||||||||
Other assets |
(2,257 | ) | (27,318 | ) | 149,514 | |||||||
Accounts payable and accrued expenses |
(105,558 | ) | (308,119 | ) | 374,187 | |||||||
Net cash (used in) provided by operating activities |
(148,084 | ) | (336,048 | ) | 502,481 | |||||||
INVESTING ACTIVITIES: |
||||||||||||
Principal collected on loans |
537,344 | 507,310 | 479,011 | |||||||||
Disbursements for loans |
| | | |||||||||
Investment in Abington Bank |
| | | |||||||||
Net cash provided by investing activities |
537,344 | 507,310 | 479,011 | |||||||||
FINANCING ACTIVITIES: |
||||||||||||
Proceeds from stock issuance, net |
| | | |||||||||
Proceeds from exercise of stock options |
125,416 | 50,617 | 421,762 | |||||||||
Purchases of treasury stock |
(7,655,713 | ) | (16,988,633 | ) | (10,953,623 | ) | ||||||
Payment of cash dividends |
(3,975,019 | ) | (4,009,403 | ) | (4,472,987 | ) | ||||||
Net cash used in financing activities |
(11,505,316 | ) | (20,947,419 | ) | (15,004,848 | ) | ||||||
NET DECREASE INCREASE IN CASH AND
CASH EQUIVALENTS |
(11,116,056 | ) | (20,776,157 | ) | (14,023,356 | ) | ||||||
CASH AND CASH EQUIVALENTSBeginning of period |
32,443,052 | 53,219,209 | 67,242,565 | |||||||||
CASH AND CASH EQUIVALENTSEnd of period |
$ | 21,326,996 | $ | 32,443,052 | $ | 53,219,209 | ||||||
18. | MERGER AGREEMENT WITH SUSQUEHANNA BANCSHARES, INC. |
On January 26, 2011, the Company and Susquehanna entered into an Agreement and Plan of Merger (the Merger Agreement) pursuant to which the Company will merge with and into Susquehanna (the Merger). Promptly following consummation of the Merger, it is expected that the Bank will merge with and into Susquehanna Bank (the Bank Merger). The Merger is expected to be completed during the third quarter of 2011. |
Under the terms of the Merger Agreement, upon consummation of the Merger, shareholders of the Company will receive 1.32 shares (the Exchange Ratio) of Susquehanna common stock for each share of common stock they own. The Merger Agreement also provides that all options to purchase Company stock which are outstanding and unexercised immediately prior to the closing (Continuing Options) under the Companys Amended and Restated 2005 Stock Option Plan and its 2007 Stock Option Plan, shall become fully vested and exercisable and be converted into fully vested and exercisable options to purchase shares of Susquehanna stock. |
At the closing of the Merger, Susquehanna and Susquehanna Bank will appoint Mr. Robert W. White, the Companys Chairman, President and Chief Executive Officer, as a director of each of Susquehanna and Susquehanna Bank. In the event that Mr. White is unable or unwilling to serve as a director of Susquehanna and Susquehanna Bank pursuant to the terms of the Merger Agreement, another director of Abington, as mutually agreed upon by the Company and Susquehanna, shall be substituted for Mr. White, to serve as a member of the Susquehanna and Susquehanna Bank boards of directors. Mr. White also will become an Executive Vice President of Susquehanna Bank. |
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The Merger Agreement contains (a) customary representations and warranties of the Company and Susquehanna, including, among others, with respect to corporate organization, capitalization, corporate authority, third party and governmental consents and approvals, financial statements, and compliance with applicable laws, (b) covenants of the Company to conduct its business in the ordinary course until the Merger is completed; and (c) covenants of the Company and Susquehanna not to take certain actions. The Company has also agreed not to (i) solicit proposals relating to alternative business combination transactions or (ii) subject to certain exceptions, enter into discussions concerning, or provide confidential information in connection with, any alternative transactions. |
Consummation of the Merger is subject to certain conditions, including, among others, approval of the Merger by shareholders of both the Company and Susquehanna, governmental filings and regulatory approvals and expiration of applicable waiting periods, accuracy of specified representations and warranties of the other party, effectiveness of the registration statement to be filed with the SEC to register shares of Susquehanna common stock to be offered to shareholders of the Company, absence of a material adverse effect, and receipt of tax opinions. |
The Merger Agreement also contains certain termination rights for the Company and Susquehanna, as the case may be, applicable upon the occurrence or non-occurrence of certain events. If the Merger is not consummated under certain circumstances, the Company has agreed to pay Susquehanna a termination fee of $11.0 million. |
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Three Months Ended: | December 31, | September 30, | June 30, | March 31, | ||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||
2010 |
||||||||||||||||
Total interest income |
$ | 12,348 | $ | 12,970 | $ | 12,898 | $ | 13,101 | ||||||||
Total interest expense |
3,983 | 4,502 | 4,667 | 4,857 | ||||||||||||
Net interest income |
8,365 | 8,468 | 8,231 | 8,244 | ||||||||||||
Provision for loan losses |
413 | | | 563 | ||||||||||||
Net interest income after provision for
loan losses |
7,952 | 8,468 | 8,231 | 7,681 | ||||||||||||
Total non-interest income |
867 | 611 | 806 | 355 | ||||||||||||
Total non-interest expense |
6,212 | 6,160 | 6,397 | 5,968 | ||||||||||||
Income before income taxes |
2,607 | 2,919 | 2,640 | 2,068 | ||||||||||||
Income taxes |
663 | 754 | 668 | 460 | ||||||||||||
Net income |
$ | 1,944 | $ | 2,165 | $ | 1,972 | $ | 1,608 | ||||||||
Basic earnings per share |
$ | 0.11 | $ | 0.12 | $ | 0.10 | $ | 0.08 | ||||||||
Diluted earnings per share |
$ | 0.09 | $ | 0.11 | $ | 0.10 | $ | 0.08 | ||||||||
2009 |
||||||||||||||||
Total interest income |
$ | 13,434 | $ | 13,017 | $ | 13,568 | $ | 13,725 | ||||||||
Total interest expense |
5,207 | 5,616 | 5,972 | 6,140 | ||||||||||||
Net interest income |
8,227 | 7,401 | 7,596 | 7,585 | ||||||||||||
Provision for loan losses |
6,413 | 8,803 | 3,405 | 117 | ||||||||||||
Net interest income after provision for
loan losses |
1,814 | (1,402 | ) | 4,191 | 7,468 | |||||||||||
Total non-interest income (loss) |
503 | (4,146 | ) | 1,132 | 1,016 | |||||||||||
Total non-interest expense |
5,707 | 5,517 | 6,254 | 5,590 | ||||||||||||
(Loss) income before income taxes |
(3,390 | ) | (11,065 | ) | (931 | ) | 2,894 | |||||||||
Income taxes (benefit) |
(1,399 | ) | (4,089 | ) | (553 | ) | 742 | |||||||||
Net (loss) income |
$ | (1,991 | ) | $ | (6,976 | ) | $ | (378 | ) | $ | 2,152 | |||||
Basic (loss) earnings per share |
$ | (0.10 | ) | $ | (0.36 | ) | $ | (0.02 | ) | $ | 0.10 | |||||
Diluted (loss) earnings per share |
$ | (0.10 | ) | $ | (0.36 | ) | $ | (0.02 | ) | $ | 0.10 |
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ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Not Applicable. |
ITEM 9A. | CONTROLS AND PROCEDURES |
(a) Disclosure Controls and Procedures |
Based on their evaluation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)), the Companys principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Annual Report on Form 10-K such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to the Companys management, including the principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosures. |
(b) Internal Control over Financial Reporting |
1. | Managements Annual Report on Internal Control Over Financial Reporting |
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act of 1934 Rules 13(a)-15(f). The Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. |
Management, including the chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of the Companys internal control over financial reporting based on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control Integrated Framework, we concluded that the Companys internal control over financial reporting was effective as of December 31, 2010. |
The Companys internal control over financial reporting as of December 31, 2010 has been audited by ParenteBeard LLC, an independent registered public accounting firm, as stated in their report which is included in the following pages. |
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2. | Attestation Report of Independent Registered Public Accounting Firm |
To the Board of Directors and Stockholders of Abington Bancorp, Inc. and subsidiaries Jenkintown, Pennsylvania |
We have audited Abington Bancorp, Inc.s (the Company) internal control over financial
reporting as of December 31, 2010, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Companys management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Managements Annual
Report on Internal Control over Financial Reporting. Our responsibility is to express an
opinion on the Companys internal control over financial reporting based on our audit. |
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion. |
A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the companys assets that could have a material effect on the financial
statements. |
Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may
deteriorate. |
In our opinion, Abington Bancorp, Inc. maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2010, based on criteria
established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). |
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We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated statements of financial condition and the
related
consolidated statements of operations, stockholders equity and cash flows of Abington
Bancorp, Inc. and its subsidiaries, and our report dated March 14, 2011, expressed an
unqualified opinion. |
/s/ ParenteBeard LLC |
Malvern, Pennsylvania March 14, 2011 |
3. | Changes in Internal Control over Financial Reporting |
During the last quarter of the year under report, there was no change in the Companys internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting. |
ITEM 9B. | OTHER INFORMATION |
Not applicable. |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Age and Principal Occupation During the Past Five Years/ | ||
Name | Public Directorships | |
Douglas S. Callantine
|
President of Grosvenor Investment Management US, Inc., a privately owned property group, since 2006, following Grosvenors acquisition of Legg Mason Real Estate Services, where he had been President since 1987. Age 59. Director since 2007. | |
Mr. Callantine brings a wealth of real estate management and investment expertise to the Board from his service with an international property development and investment group and his prior service as President of Legg Mason Real Estate Services for nearly 20 years. |
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Age and Principal Occupation During the Past Five Years/ | ||
Name | Public Directorships | |
Michael F. Czerwonka,
III, CPA
|
Partner, Fitzpatrick & Czerwonka, Certified Public Accountants, Abington, Pennsylvania, since 1988 and Treasurer of Abington School District, Abington, Pennsylvania from July, 2004 to June, 2005. Mr. Czerwonka is a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants. Age 57. | |
As a certified public accountant, Mr. Czerwonka brings a wealth of financial expertise and practical knowledge to the Board. Mr. Czerwonka owns and oversees a professional accounting firm and has extensive knowledge of Abington Bank through his tenure as a director since 1998. | ||
Jane Margraff Kieser
|
Retired. Formerly, Senior Vice President, Operations and Human Resources, Abington Bank from 1980 to December 2001. Age 75. Director since 2002. | |
Ms. Kieser brings valuable banking and institutional knowledge to the Board having served as our Senior Vice President of Operation and Human Resources for more than 20 years. | ||
Robert J. Pannepacker, Sr.
|
President, Pennys Flowers, a florist in Glenside, Pennsylvania since 1966. Age 62. | |
Mr. Pannepacker brings significant business and management expertise to the Board as the President and owner of a family operated business serving the greater Philadelphia area. Mr. Pannepacker has extensive knowledge of Abington Bank through his tenure as a director since 1991. | ||
Jack J. Sandoski, CPA
|
Director since 2010. Senior Vice President and Chief Financial Officer of Abington Bancorp since June 2004; Senior Vice President of Abington Bank since 1997 and Chief Financial Officer and Treasurer since 1988. Age 67. | |
As a certified public accountant, Mr. Sandoski brings a wealth of financial expertise to the Board. Mr. Sandoski has gained valuable banking and institutional knowledge from his years of service as our Chief Financial Officer. | ||
Robert W. White
|
Chairman of the Board, President and Chief Executive Officer of Abington Bancorp since June 2004; Chairman of the Board and Chief Executive Officer of Abington Bank since 1994 and President since 1991. Age 66. Director since 1977. | |
Mr. White brings valuable insight and knowledge to the Board of Abington Bancorp due to his service as its President and Chief Executive Officer and as the longest serving member of the Board since 1977. Mr. White also has gained valuable banking and institutional knowledge from his years of service in the financial institutions industry and his long-standing ties to the local business and legal community in the greater Philadelphia area. | ||
G. Price Wilson, Jr.
|
Partner, Quinn & Wilson, Inc., Realtors in Abington, Pennsylvania. Age 68. Director since 2006. | |
Mr. Wilson possesses a vast amount of knowledge regarding the real estate market through his more than 40 years of experience in the residential and commercial real estate market in the greater Philadelphia area. |
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Name | Age and Principal Occupation During the Past Five Years | |
Frank Kovalcheck
|
Senior Vice President and Secretary of Abington Bancorp and Abington Bank since October 1, 2008; previously, Senior Vice President of Abington Bancorp since June 2004 and Senior Vice President of Abington Bank since June 2001; prior thereto, Senior Vice President and Assistant Secretary, First Federal Savings and Loan Association of Bucks County, Bristol, Pennsylvania from 1976 to 2001. Age 53. | |
Eric L. Golden, CPA
|
Vice President and Controller of Abington Bancorp since April 2006; Assistant Vice President and Assistant Controller of Abington Bancorp from July 2004 to April 2006; previously, senior accountant, Deloitte & Touche LLP. Age 36. | |
Thomas J. Wasekanes
|
Senior Vice President of Abington Bancorp and Senior Vice President and Chief Lending Officer of Abington Bank since August 2008; previously, Vice President Mortgage Lending of Abington Bank since 1988. Age 54. |
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ITEM 11. | EXECUTIVE COMPENSATION |
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| To attract, retain and motivate an experienced, competent executive management team; | ||
| To reward the executive management team for the enhancement of shareholder value based on our annual earnings performance and the market price of our stock; | ||
| To ensure that compensation rewards are adequately balanced between short-term and long-term considerations so as not to expose the company to undue financial risk; | ||
| To encourage ownership of our common stock through grants of stock options and restricted stock awards to bank management; and | ||
| To maintain compensation levels that are competitive with other financial institutions particularly those of executive officers at peer institutions based on asset size and market area. |
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Members of the Compensation Committee | ||
Robert J. Pannepacker, Sr., Chairman | ||
Douglas S. Callantine | ||
Jane Margraff Kieser |
Change in | ||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||
and Nonqualified | All | |||||||||||||||||||||||||||||||
Deferred | Other | |||||||||||||||||||||||||||||||
Stock | Option | Compensation | Compen- | |||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary(1) | Bonus | Awards(2) | Awards(2) | Earnings(3) | sation(4) | Total | ||||||||||||||||||||||||
Robert W. White |
2010 | $ | 313,000 | $ | 108,372 | | | $ | 31,886 | $ | 107,359 | $ | 560,617 | |||||||||||||||||||
Chairman of the Board, President and |
2009 | 313,000 | | | | 209,208 | 83,717 | 605,925 | ||||||||||||||||||||||||
Chief Executive Officer |
2008 | 304,000 | | 1,138,750 | 661,540 | 32,088 | 76,938 | 2,213,316 | ||||||||||||||||||||||||
Jack J. Sandoski |
2010 | 161,500 | 55,917 | | | 33,756 | 42,308 | 293,481 | ||||||||||||||||||||||||
Senior Vice President, Chief |
2009 | 157,000 | | | | 57,542 | 29,086 | 243,628 | ||||||||||||||||||||||||
Financial Officer and Treasurer |
2008 | 152,500 | 13,725 | 286,965 | 224,070 | 57,814 | 31,475 | 766,549 | ||||||||||||||||||||||||
Frank Kovalcheck |
2010 | 141,000 | 48,819 | | | 36,340 | 37,530 | 263,689 | ||||||||||||||||||||||||
Senior Vice President and |
2009 | 137,000 | | | | 41,665 | 25,754 | 204,419 | ||||||||||||||||||||||||
Corporate Secretary |
2008 | 133,000 | 11,970 | 286,965 | 238,980 | 8,378 | 27,476 | 706,769 | ||||||||||||||||||||||||
Thomas J. Wasekanes |
2010 | 128,500 | 75,000 | 59,450 | | 28,528 | 29,786 | 321,264 | ||||||||||||||||||||||||
Senior Vice President and Chief |
2009 | 121,000 | | 33,600 | | 19,864 | 19,442 | 193,906 | ||||||||||||||||||||||||
Lending Officer (since August 2008) |
2008 | 101,375 | 9,123 | 140,290 | 84,211 | | 19,723 | 354,722 | ||||||||||||||||||||||||
Eric L. Golden |
2010 | 91,000 | 10,920 | 11,890 | | | 18,690 | 132,500 | ||||||||||||||||||||||||
Vice President and Controller |
2009 | 87,000 | | | | | 13,271 | 100,771 | ||||||||||||||||||||||||
2008 | 85,000 | 7,650 | 63,770 | 25,236 | | 15,749 | 133,635 |
(1) | Amounts disclosed in this column include contributions by the named executive officer to the Abington Bank 401(k) plan. |
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(2) | Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 with respect to restricted stock awards and grants of stock options during the fiscal year. The fair value was estimated on the date of grant using the Black-Scholes Single Option Pricing Model with the following weighted average assumptions used. |
Year Ended December 31, 2008 | ||||
Dividend yield |
2.19 | % | ||
Expected volatility |
23.27 | % | ||
Risk-free interest rate |
3.30 3.49 | % | ||
Expected life of options |
6 7 years |
(3) | Messrs. White, Sandoski and Kovalcheck are participants in Abington Banks frozen executive deferred compensation plan and supplemental executive retirement plan (SERP). Mr. Wasekanes became a participant in the SERP in 2009. The amounts for Messrs. White, Sandoski, Kovalcheck and Wasekanes reflect increases in the actuarial present value of SERP benefits. There are no above-market or preferential earnings paid on the named executive officers accounts under the deferred compensation plan. | |
(4) | Includes employer matching contributions of $7,350, $4,845, $4,229, $3,885, and $787 allocated in 2010 to the accounts of Messrs. White, Sandoski, Kovalcheck, Wasekanes and Golden, respectively, under Abington Banks 401(k) plan and split-dollar life insurance premiums paid by Abington Bank of $768, $848, $312, $370 and $104 for Messrs. White, Sandoski, Kovalcheck, Wasekanes and Golden, respectively in fiscal 2010. Also includes the fair market value at December 31, 2010 of the shares of common stock allocated pursuant to the employee stock ownership plan in 2010, representing $43,318, $28,560, $24,934, $22,715 and $16,094 for each of Messrs. White, Sandoski, Kovalcheck, Wasekanes and Golden, respectively, and dividends paid on shares awarded pursuant to the Recognition and Retention Plans that vested during 2010. Includes $6,800 of country club dues and Abington Banks cost of providing an automobile of $17,000 for Mr. White in 2010. |
All Other Stock Awards: | Grant Date Fair Value | |||||||||||
Grant | Number of Shares of | of Stock and Option | ||||||||||
Name | Date | Stock or Units(1) | Awards(2) | |||||||||
Thomas J. Wasekanes |
12/08/10 | 5,000 | $ | 59,450 | ||||||||
Eric L. Golden |
12/08/10 | 1,000 | $ | 11,890 |
(1) | The shares of restricted stock become vested at the rate of 20% per year commencing on December 8, 2011. Dividends paid on the restricted stock will be paid to the recipient as the award vests. | |
(2) | The grant date fair value of the restricted stock award is computed in accordance with FASB ASC Topic 718 using the per share price of $11.89 on the date of grant. |
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Stock Awards | ||||||||||||||||||||||||
Option Awards | Number of Shares | Market Value of | ||||||||||||||||||||||
Number of Securities Underlying | Option | or Units of Stock | Shares or Units of | |||||||||||||||||||||
Unexercised Options(1) | Exercise | Expiration | That Have Not | Stock That Have | ||||||||||||||||||||
Name | Unexercisable | Exercisable | Price | Date | Vested | Not Vested | ||||||||||||||||||
Robert W. White |
| 280,800 | $ | 7.51 | 7/5/2015 | 75,000 | $ | 894,750 | ||||||||||||||||
186,000 | 124,000 | 9.11 | 1/30/2018 | |||||||||||||||||||||
Jack J. Sandoski |
| 93,600 | 7.51 | 7/5/2015 | 18,900 | 225,477 | ||||||||||||||||||
63,000 | 42,000 | 9.11 | 1/30/2018 | |||||||||||||||||||||
Frank Kovalcheck |
| 93,600 | 7.51 | 7/5/2015 | 18,900 | 225,477 | ||||||||||||||||||
63,000 | 42,000 | 9.11 | 1/30/2018 | |||||||||||||||||||||
Thomas J. Wasekanes |
| 6,960 | 7.51 | 7/5/2015 | 18,000 | 214,740 | ||||||||||||||||||
320 | 1,280 | 10.18 | 11/17/2016 | |||||||||||||||||||||
800 | 1,200 | 9.63 | 8/22/2017 | |||||||||||||||||||||
7,200 | 4,800 | 9.11 | 1/30/2018 | |||||||||||||||||||||
15,000 | 10,000 | 9.63 | 8/25/2018 | |||||||||||||||||||||
Eric L. Golden |
| 3,200 | 7.51 | 7/5/2015 | 5,200 | 62,036 | ||||||||||||||||||
320 | 1,280 | 10.18 | 11/17/2016 | |||||||||||||||||||||
800 | 1,200 | 9.63 | 8/22/2017 | |||||||||||||||||||||
7,200 | 4,800 | 9.11 | 1/30/2018 |
(1) | Stock options are vesting at a rate of 20% per year commencing on the first anniversary of the date of grant. |
Option Awards | Stock Awards | |||||||||||||||
Number of Shares | Value Realized | Number of Shares Acquired | Value Realized | |||||||||||||
Name | Acquired on Exercise | on Exercise | on Vesting | on Vesting | ||||||||||||
Robert W. White |
| $ | | 47,400 | $ | 374,052 | ||||||||||
Jack J. Sandoski |
| | 11,900 | 93,870 | ||||||||||||
Frank Kovalcheck |
| | 11,900 | 93,870 | ||||||||||||
Thomas J. Wasekanes |
| | 5,440 | 37,995 | ||||||||||||
Eric L. Golden |
| | 2,360 | 18,376 |
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| Salary and other compensation payable to Mr. White will be shared by Abington Bancorp and Abington Bank on a proportional basis. |
| In the event Mr. Whites employment is involuntarily terminated, other than for cause, disability, retirement or death, or by Mr. White for good reason, as defined, prior to a change in control, he will be entitled to a lump sum payment equal three times his current base salary plus highest bonus received in the prior three years, plus the continuation of certain employee benefits for a period up to the remaining term of the agreement. |
| In the event Mr. Whites employment is terminated concurrently with or within 12 months following a change in control, Mr. White will be entitled to a lump sum payment equal to 2.99 times his base amount as defined under Section 280G of the Internal Revenue Code, subject to reduction in the amended and restated agreement with Abington Bank, plus the continuation of certain employee benefits for up to three years. Under his agreement with Abington Bancorp, Abington Bancorp will reimburse Mr. White for any excise tax liability incurred pursuant to Sections 280G and 4999 of the Internal Revenue Code and for any additional taxes incurred as a result of such reimbursement. |
| In the event of Mr. Whites disability, he will be entitled to receive aggregate annual disability benefits at least equal to 60% of his then current salary through his 70th birthday. |
| A death benefit equal to three times Mr. Whites base salary. |
| The agreements contain non-competition and arbitration provisions substantially similar to those currently in place with Mr. White. |
| If the executives employment is terminated by Abington Bank, other than for cause, disability, retirement or death, or is terminated by the executive for good reason, as defined, prior to a change in control, the executive will be entitled to a lump sum payment equal to two times his current base salary (one times base salary in the case of Mr. Golden) and any bonus received in the prior year, plus continuation of certain employee benefits for up to two years. |
| If the executives employment is terminated concurrently with or within 12 months following a change in control, the executive will be entitled, with certain exceptions, to a lump sum payment equal to three times his current base salary (two times in the case of Mr. Golden) and bonus for the prior year plus continuation of certain employee benefits for up to three years, subject to reduction in the event such payments or benefits would constitute a parachute payment under Section 280G of the Internal Revenue Code. |
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Involuntary | ||||||||||||||||||||||||
Termination Without | ||||||||||||||||||||||||
Cause or Termination | Change in | |||||||||||||||||||||||
by the Executive for | Control With | |||||||||||||||||||||||
Voluntary | Termination | Good Reason Absent a | Termination of | Death or | ||||||||||||||||||||
Payments and Benefits | Termination | for Cause | Change in Control | Employment | Disability (m) | Retirement (n) | ||||||||||||||||||
Severance payments and benefits: (a) |
||||||||||||||||||||||||
Cash severance (b) |
$ | | $ | | $ | 1,219,500 | $ | 1,637,415 | $ | 681,378 | (o) | $ | | |||||||||||
Medical and dental benefits (c) |
| | 58,525 | 58,525 | | | ||||||||||||||||||
Other welfare benefits (d) |
| | 9,597 | 9,597 | | | ||||||||||||||||||
Club dues (e) |
| | 13,000 | 19,500 | | | ||||||||||||||||||
Automobile expenses (f) |
| | 32,128 | 48,192 | | | ||||||||||||||||||
SERP benefits (g) |
| | | | | | ||||||||||||||||||
§280G tax gross-up (h) |
| | | 694,623 | | | ||||||||||||||||||
Equity awards (i): |
||||||||||||||||||||||||
Unvested stock options (j) |
| | | 524,520 | 524,520 | 524,520 | ||||||||||||||||||
Unvested restricted stock awards (k) |
| | | 938,250 | 938,250 | 938,250 | ||||||||||||||||||
Total payments and benefits (l) |
$ | | $ | | $ | 1,332,750 | $ | 3,930,622 | $ | 2,144,148 | $ | 1,462,770 | ||||||||||||
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Involuntary Termination | ||||||||||||||||||||||||
Without Cause or | ||||||||||||||||||||||||
Termination by the | ||||||||||||||||||||||||
Executive for Good Reason | Change in Control | |||||||||||||||||||||||
Voluntary | Termination | Absent a Change in | With Termination | Death or | ||||||||||||||||||||
Payments and Benefits | Termination | for Cause | Control | of Employment | Disability (m) | Retirement (n) | ||||||||||||||||||
Severance payments and benefits: (a) |
||||||||||||||||||||||||
Cash severance (b) |
$ | | $ | | $ | 323,000 | $ | 484,500 | $ | | $ | | ||||||||||||
Medical and dental benefits (c) |
| | 37,207 | 58,525 | | | ||||||||||||||||||
Other welfare benefits (d) |
| | 921 | 1,448 | | | ||||||||||||||||||
Club dues (e) |
| | | | | | ||||||||||||||||||
Automobile expenses (f) |
| | | | | | ||||||||||||||||||
SERP benefits (g) |
| | | | | | ||||||||||||||||||
§280G cut-back (h) |
| | | | | | ||||||||||||||||||
Equity awards (i): |
||||||||||||||||||||||||
Unvested stock options (j) |
| | | 177,660 | 177,660 | 177,660 | ||||||||||||||||||
Unvested restricted stock awards (k) |
| | | 236,439 | 236,439 | 236,439 | ||||||||||||||||||
Total payments and benefits (l) |
$ | | $ | | $ | 361,128 | $ | 958,572 | $ | 414,099 | $ | 414,099 | ||||||||||||
Involuntary Termination | ||||||||||||||||||||||||
Without Cause or | ||||||||||||||||||||||||
Termination by the | ||||||||||||||||||||||||
Executive for Good Reason | Change in Control | |||||||||||||||||||||||
Voluntary | Termination | Absent a Change in | With Termination | Death or | ||||||||||||||||||||
Payments and Benefits | Termination | for Cause | Control | of Employment | Disability (m) | Retirement (n) | ||||||||||||||||||
Severance payments and benefits: (a) |
||||||||||||||||||||||||
Cash severance (b) |
$ | | $ | | $ | 282,000 | $ | 423,000 | $ | | $ | | ||||||||||||
Medical and dental benefits (c) |
| | 47,425 | 74,598 | | | ||||||||||||||||||
Other welfare benefits (d) |
| | 921 | 1,448 | | | ||||||||||||||||||
Club dues (e) |
| | | | | | ||||||||||||||||||
Automobile expenses (f) |
| | | | | | ||||||||||||||||||
SERP benefits (g) |
| | | 149,922 | ||||||||||||||||||||
§280G cut-back (h) |
| | | (108,674 | ) | | | |||||||||||||||||
Equity awards (i): |
||||||||||||||||||||||||
Unvested stock options (j) |
| | | 177,660 | 177,660 | | ||||||||||||||||||
Unvested restricted stock awards (k) |
| | | 236,439 | 236,439 | | ||||||||||||||||||
Total payments and benefits (l) |
$ | | $ | | $ | 330,346 | $ | 954,393 | $ | 414,099 | $ | | ||||||||||||
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Involuntary | ||||||||||||||||||||||||
Termination Without Cause | ||||||||||||||||||||||||
or Termination | Change in | |||||||||||||||||||||||
by the Executive for Good | Control With | |||||||||||||||||||||||
Voluntary | Termination | Reason Absent a Change in | Termination of | Death or | ||||||||||||||||||||
Payments and Benefits | Termination | for Cause | Control | Employment | Disability (m) | Retirement (n) | ||||||||||||||||||
Severance payments and benefits: (a) |
||||||||||||||||||||||||
Cash severance (b) |
$ | | $ | | $ | 257,000 | $ | 385,500 | $ | | $ | | ||||||||||||
Medical and dental benefits (c) |
| | 47,425 | 74,598 | | | ||||||||||||||||||
Other welfare benefits (d) |
| | 921 | 1,448 | | | ||||||||||||||||||
Club dues (e) |
| | | | | | ||||||||||||||||||
Automobile expenses (f) |
| | | | | | ||||||||||||||||||
SERP benefits (g) |
| | | 48,300 | | | ||||||||||||||||||
§280G cut-back (h) |
| | | (236,341 | ) | | | |||||||||||||||||
Equity awards (i): |
||||||||||||||||||||||||
Unvested stock options (j) |
| | | 57,204 | 57,204 | | ||||||||||||||||||
Unvested restricted stock awards (k) |
| | | 220,506 | 220,506 | | ||||||||||||||||||
Total payments and benefits (l) |
$ | | $ | | $ | 305,346 | $ | 551,215 | $ | 277,710 | $ | | ||||||||||||
Involuntary | ||||||||||||||||||||||||
Termination Without Cause | ||||||||||||||||||||||||
or Termination | Change in | |||||||||||||||||||||||
by the Executive for Good | Control With | |||||||||||||||||||||||
Voluntary | Termination | Reason Absent a Change in | Termination of | Death or | ||||||||||||||||||||
Payments and Benefits | Termination | for Cause | Control | Employment | Disability (m) | Retirement (n) | ||||||||||||||||||
Severance payments and benefits: (a) |
||||||||||||||||||||||||
Cash severance (b) |
$ | | $ | | $ | 91,000 | $ | 182,000 | $ | | $ | | ||||||||||||
Medical and dental benefits (c) |
| | 20,880 | 43,684 | | | ||||||||||||||||||
Other welfare benefits (d) |
| | 406 | 850 | | | ||||||||||||||||||
Club dues (e) |
| | | | | | ||||||||||||||||||
Automobile expenses (f) |
| | | | | | ||||||||||||||||||
SERP benefits (g) |
| | | | | | ||||||||||||||||||
§280G cut-back (h) |
| | | | | | ||||||||||||||||||
Equity awards (i): |
||||||||||||||||||||||||
Unvested stock options (j) |
| | | 22,704 | 22,704 | | ||||||||||||||||||
Unvested restricted stock awards (k) |
| | | 64,472 | 64,472 | | ||||||||||||||||||
Total payments and benefits (l) |
$ | | $ | | $ | 112,286 | $ | 313,710 | $ | 87,176 | $ | | ||||||||||||
(a) | These severance payments and benefits are payable if the executives employment is terminated prior to a change in control either (i) by the Company or the Bank for any reason other than cause, disability, retirement or death or (ii) by the executive if the Company or the Bank takes certain adverse actions (a good reason termination). The severance payments and benefits are also payable if an executives employment is terminated during the term of the executives employment agreement following a change in control. | |
(b) | For Mr. White, the amount in the Involuntary Termination column represents a lump sum payment equal to three times the sum of his current base salary from the Company and the Bank and his highest bonus paid in the prior three calendar years, while the amount in the Change in Control column represents 2.99 times his average taxable income from the Company and the Bank for the five years preceding the year in which the date of termination occurs. For each other executive, the amount in the Involuntary Termination column represents two times (one time for Mr. Golden) the sum of the executives current base salary and bonus for the prior calendar year, while the amount in the Change in Control column represents a lump sum cash payment equal to three times (two times for Mr. Golden) the sum of the executives current base salary and bonus for the prior calendar year. |
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(c) | In the Involuntary Termination column, represents the estimated present value cost of providing continued medical and dental coverage to each of the executives for the remaining term of Mr. Whites employment agreement or for an additional 24 months (12 months for Mr. Golden) for each of the other executives. In the Change in Control column, represents the estimated present value cost of providing continued medical and dental coverage to each of the executives for an additional 36 months (24 months for Mr. Golden). In each case, the benefits will be discontinued if the executive obtains full-time employment with a subsequent employer which provides substantially similar benefits. The estimated costs assume the current insurance premiums or costs increase by 10% in each of 2012 and 2013. | |
(d) | In the Involuntary Termination column, represents the estimated present value cost of providing continued life, accidental death and long-term disability coverage to each of the executives for the remaining term of Mr. Whites employment agreement or for an additional 24 months (12 months for Mr. Golden) for each of the other executives. In the Change in Control column, represents the estimated present value cost of providing such benefits to each of the executives for an additional 36 months (24 months for Mr. Golden). In each case, the benefits will be discontinued if the executive obtains full-time employment with a subsequent employer which provides substantially similar benefits. The estimated costs assume the current insurance premiums or costs increase by 10% in each of 2012 and 2013. | |
(e) | Represents the estimated costs of paying club dues to Mr. White for an assumed additional 24 months in the Involuntary Termination column (36 months in the Change in Control column), based on the amounts paid in 2009. The amounts have not been discounted to present value. | |
(f) | Represents the estimated costs of paying automobile leases and related expenses to Mr. White for an assumed additional 24 months in the Involuntary Termination Column (36 months in the Change in Control column), based on the amounts paid in 2009. The amounts have not been discounted to present value. | |
(g) | Represents the incremental increase in the present value of the benefits payable under the Banks Supplemental Executive Retirement Plan (the SERP). If a participant in the SERP has a separation from service on or after his normal retirement date of age 65, he is entitled to receive supplemental retirement benefits for 10 years. The annual supplemental retirement benefit is equal to 50% of the participants average base compensation for the highest three years during the 10 years preceding his separation from service, with the annual benefit payable in quarterly installments. In the event of a change in control, a participant becomes 100% vested in all amounts then accrued for his benefit under the SERP, and the vested benefits are paid in a lump sum on the first day of the month following the lapse of six months after the participants separation from service. At December 31, 2010, Messrs. White and Sandoski had reached at least age 65 and were fully vested in their SERP benefits. The amounts shown in the tables for Messrs. Kovalcheck and Wasekanes represent their accrued SERP benefits, discounted to present value from the date of payment to December 31, 2010. Mr. Golden does not participate in the SERP. | |
(h) | The payments and benefits to Mr. White in the Change in Control column are subject to a 20% excise tax to the extent the parachute amounts associated therewith under Section 280G of the Code equal or exceed three times his average taxable income for the five years preceding the year in which the change in control occurs. His payments exceed this threshold. If a change in control was to occur, the Company believes that the Section 280G gross-up payments could be reduced or even eliminated if tax planning was done in connection with the change in control. However, if the excise tax cannot be avoided, then the Company has agreed in its employment agreement with Mr. White to pay the 20% excise tax and the additional federal, state and local income taxes and excise taxes on such reimbursement in order to place him in the same after-tax position he would have been in if the excise tax had not been imposed. If the parachute amounts associated with the payments and benefits to Messrs. Sandoski, Kovalcheck and Golden equal or exceed three times their average taxable income for the five years preceding the year in which the change in control occurs, such payments and benefits in the event of a change in control will be reduced by the minimum amount necessary so that they do not trigger the 20% excise tax. The applicable amount of the reductions for each of such officers is shown in the tables. If the timing of the change in control permitted tax planning to be done, the Company believes that the amount of the cut-backs could be reduced or even eliminated. | |
(i) | The vested stock options held by Messrs. White, Sandoski, Kovalcheck, Wasekanes and Golden had a value of approximately $1.6 million, $532,000, $532,000, $72,000 and $33,000, respectively, based on the December 31, 2010 closing price of $11.93 per share. Such value can be obtained in the event of termination due to voluntary termination, death, disability, retirement or cause only if the executive actually exercises the vested options in the manner provided for by the relevant option plan and subsequently sells the shares received for $11.93 per share. In the event of a termination of employment, each executive (or his or her estate in the event of death) will have the right to exercise vested stock options for the period specified in his or her option grant agreement. If the termination of employment occurs following a change in control, each executive can exercise the vested stock options for the remainder of the original ten-year term of the option. |
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(j) | Represents the amount by which the December 31, 2010 closing price of $11.93 per share of our common stock exceeds the exercise price per share of the unvested stock options held by Messrs. White, Sandoski, Kovalcheck, Wasekanes and Golden. All unvested stock options will become fully vested upon an executives death, disability or retirement after age 65 or upon a change in control. None of the executives except Messrs. White and Sandoski had reached age 65 as of December 31, 2009. | |
(k) | If an executives employment is terminated as a result of death or disability, unvested restricted stock awards are deemed fully earned. In addition, in the event of a change in control of the Company or the Bank, the unvested restricted stock awards are deemed fully earned. Amounts include the value of cash dividends accrued on the unvested restricted stock awards. | |
(l) | Does not include the value of the vested benefits to be paid under our tax-qualified 401(k) plan and ESOP or under our SERP and our Executive Deferred Compensation Plan. See the Pension Benefits table and the Nonqualified Deferred Compensation table under - Benefit Plans below. Also does not include the value of vested stock options set forth in Note (i) above, earned but unpaid salary and bonus, accrued but unused vacation leave, reimbursable expenses and any additional amounts that would be allocated to ESOP participants in the event of a change in control. | |
(m) | If the employment of any of the executives had terminated on December 31, 2010 due to death, such executives beneficiaries or estate would have received life insurance proceeds of $400,000 ($650,000 if the death was due to an accident) under our bank owned life insurance policies. For Mr. White, this amount is in addition to the continuation of his base salary in the event of his death as described in Note (n) below. The life insurance coverage is based on three times base salary, subject to a cap of $250,000, plus an additional $150,000 for each executive for a total benefit of $400,000 ($650,000 if the death was due to an accident). If the employment of any of the executives had terminated on December 31, 2010 due to disability, they would each have received disability benefits equal to 65% of their base salary for up to the first six months, after a four-week waiting period. If the executive is still disabled after six months, he would then receive disability benefits equal to 60% of his base salary, subject to a benefit cap of $5,000 per month, until the executive reaches his normal retirement age of 65, minus Social Security disability benefits. Mr. White will also receive supplemental disability benefits as described in Note (n) below. In addition, each executives unvested stock options and unvested restricted stock awards will become fully vested upon death or disability. The SERP benefits discussed in Note (n) below will also become payable following death or disability. | |
(n) | The Company has a SERP covering each executive other than Mr. Golden. Under the SERP, the normal retirement benefits in the event of retirement, death or disability on or after age 65 is an annual benefit equal to 50% of the executives salary for the highest three of the last 10 years, with the annual benefit payable for 10 years in quarterly installments. If the executive dies before age 65, his beneficiary or estate will receive a lump sum payment equal to the present value of the aggregate retirement benefit accrued by us. If the executive becomes disabled before age 65, then his 40 quarterly installments will begin as of the first day of the first full quarter following his 65th birthday. See the Pension Benefits table under - Benefit Plans below. | |
(o) | Represents the estimated present value of the supplemental disability benefits that Mr. White would be entitled to receive under his employment agreement if he remained disabled until age 70. In the event of disability, he is entitled to receive supplemental disability benefits equal to the difference between 60% of his base salary and the disability benefits otherwise payable to him, as described in Note (m) above. If Mr. White had died as of December 31, 2010, his spouse or his estate would have received a lump sum cash payment of approximately $934,000, representing the present value of his base salary for 36 months. |
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Number of Years | Present Value of | Payments During Last | ||||||||||||||
Name | Plan Name | Credited Service | Accumulated Benefit(1) | Fiscal Year | ||||||||||||
Robert W. White |
Supplemental Executive Retirement Plan | n/a | $ | 1,235,494 | | |||||||||||
Jack J. Sandoski |
Supplemental Executive Retirement Plan | n/a | 637,484 | | ||||||||||||
Frank Kovalcheck |
Supplemental Executive Retirement Plan | n/a | 150,206 | | ||||||||||||
Thomas J. Wasekanes |
Supplemental Executive Retirement Plan | n/a | 48,392 | |
(1) | Reflects value as of December 31, 2010. |
Executive | Registrant | Aggregate | ||||||||||||||||||
Contributions | Contributions | Earnings | Aggregate | Aggregate | ||||||||||||||||
in 2010 Fiscal | in 2010 Fiscal | in 2010 Fiscal | Withdrawals/ | Balance at | ||||||||||||||||
Name | Year(1) | Year(1) | Year(1) | Distributions | December 31, 2010 | |||||||||||||||
Robert W. White |
$ | | $ | | $ | 471,420 | $ | | $ | 1,089,972 | ||||||||||
Jack J. Sandoski |
| | 218,256 | | 499,601 | |||||||||||||||
Frank Kovalcheck |
| | 51,489 | | 119,120 |
(1) | The executive deferred compensation plan was frozen in 2005 and no contributions have been made since that date. We have established a rabbi trust to fund the executive deferred compensation plan and certain other benefit plans. The aggregate earnings amounts in 2010 in the table above reflect the increase in value of assets held in the rabbi trust, which include our common stock. Messrs. Golden and Wasekanes do not participate in the executive deferred compensation plan. |
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Change in Pension | ||||||||||||||||||||||||
Fees | Value and Nonqualified | |||||||||||||||||||||||
Earned | Deferred | All Other | ||||||||||||||||||||||
or Paid | Stock | Option | Compensation | Compen- | ||||||||||||||||||||
Name | in Cash | Awards(1) | Awards(1) | Earnings(2) | sation(3) | Total | ||||||||||||||||||
Douglas S. Callantine |
$ | 30,000 | (2) | $ | | $ | | $ | 77,639 | $ | 2,427 | $ | 110,066 | |||||||||||
Michael F. Czerwonka, III |
32,400 | | | 6,848 | 5,854 | 45,102 | ||||||||||||||||||
Jane Margraff Kieser |
30,000 | | | 34,760 | 5,854 | 70,614 | ||||||||||||||||||
Robert J. Pannepacker, Sr. |
32,300 | | | 10,060 | 5,854 | 48,214 | ||||||||||||||||||
G. Price Wilson, Jr. |
30,800 | | | 14,241 | 2,427 | 47,468 |
(1) | At December 31, 2010, each non-employee director held the following amount of unvested stock awards under our 2005 and 2007 Recognition and Retention Plans and outstanding options under our 2005 and 2007 Stock Option Plans: |
Name | Unvested Stock Awards | Option Awards | ||||||
Douglas S. Callantine |
15,000 | 60,000 | ||||||
Michael F. Czerwonka, III |
15,000 | 108,000 | ||||||
Jane Margraff Kieser |
15,000 | 108,000 | ||||||
Robert J. Pannepacker, Sr. |
15,000 | 108,000 | ||||||
G. Price Wilson, Jr. |
15,000 | 66,400 |
(2) | Our non-employee directors participate in the board of directors deferred compensation plan and board retirement plan. In addition, Ms. Margraff Kieser maintains an account in the executive deferred compensation plan with respect to amounts deferred while she served as an executive officer. The amounts represent the changes in the actuarial present value of accumulated pension benefits under the retirement plan. The amount for Ms. Margraff Kieser is net of aggregate distributions paid to her during 2010 of $21,026. There are no above-market or preferential earnings paid on the accounts under the deferred compensation plan. Mr. Callantine deferred all of his board fees in 2010 to the deferred compensation plan. | |
(3) | Consists of dividends paid on shares awarded pursuant to our Recognition and Retention Plans that vested during 2010. |
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ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Number of securities remaining | ||||||||||||
Number of securities to be | Weighted-average | available for future issuance | ||||||||||
issued upon exercise of | exercise price of | under equity compensation | ||||||||||
outstanding options, warrants | outstanding options, | plans (excluding securities | ||||||||||
and rights | warrants and rights | reflected in column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans
approved by security holders |
2,478,760 | (1) | $ | 8.47 | (1) | 228,818 | ||||||
Equity compensation plans
not approved by security
holders |
| | | |||||||||
Total |
2,478,760 | $ | 8.47 | 228,818 | ||||||||
(1) | Includes 311,060 shares subject to restricted stock grants which were not vested as of December 31, 2010. The weighted-average exercise price excludes such restricted stock grants. |
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Amount and Nature of Beneficial | ||||||||
Ownership as of | Percent of | |||||||
Name of Beneficial Owner or Number of Persons in Group | March 1, 2011(1) | Common Stock | ||||||
Abington Bank Employee Stock Ownership Plan Trust |
1,933,959 | (2) | 9.6 | % | ||||
180 York Road Jenkintown, Pennsylvania 19046 |
||||||||
Dimensional Fund Advisors LP |
1,382,192 | (3) | 6.9 | |||||
Palisades West, Building One 6300 Bee Cave Road Austin, Texas 78746 |
||||||||
Wellington Management Company, LLP |
1,030,206 | (4) | 5.1 | |||||
75 State Street Boston, Massachusetts 02109 |
||||||||
Directors and Director Nominees: |
||||||||
Douglas S. Callantine |
73,832 | (5)(6) | * | |||||
Michael F. Czerwonka, III |
159,120 | (5)(7) | * | |||||
Jane Margraff Kieser |
182,800 | (5)(8) | * | |||||
Robert J. Pannepacker, Sr. |
249,608 | (5)(9) | 1.2 | |||||
Jack J. Sandoski |
321,456 | (5)(10) | 1.6 | |||||
Robert W. White |
809,386 | (5)(11) | 3.9 | |||||
G. Price Wilson, Jr. |
69,526 | (5)(12) | * | |||||
Other Executive Officers: |
||||||||
Frank Kovalcheck |
260,222 | (5)(13) | 1.3 | |||||
Thomas J. Wasekanes |
171,010 | (5)(14) | * | |||||
Eric L. Golden |
24,456 | (5)(15) | * | |||||
All Directors and Executive Officers as a Group (10 persons) |
2,311,048 | (5) | 10.8 | % |
* | Represents less than 1% of our outstanding common stock. | |
(1) | Based upon filings made pursuant to the Securities Exchange Act of 1934 and information furnished by the respective individuals. Under regulations promulgated pursuant to the Securities Exchange Act of 1934, shares of common stock are deemed to be beneficially owned by a person if he or she directly or indirectly has or shares (i) voting power, which includes the power to vote or to direct the voting of the shares, or (ii) investment power, which includes the power to dispose or to direct the disposition of the shares. Unless otherwise indicated, the named beneficial owner has sole voting and dispositive power with respect to the shares. | |
Under applicable regulations, a person is deemed to have beneficial ownership of any shares of common stock which may be acquired within 60 days of the record date pursuant to the exercise of outstanding stock options. Shares of common stock which are subject to stock options are deemed to be outstanding for the purpose of computing the percentage of outstanding common stock owned by such person or group but not deemed outstanding for the purpose of computing the percentage of common stock owned by any other person or group. | ||
(2) | Messrs. Robert W. White, Jack J. Sandoski and Frank Kovalcheck act as trustees of the Abington Bancorp, Inc. Employee Stock Ownership Plan Trust. As of February 22, 2011, 481,758 shares held in the plan trust were allocated to the accounts of participating employees and 1,452,201 shares were held, unallocated, for allocation in future years. In general, the allocated shares held in the plan trust, will be voted by the plan trustees in accordance with the instructions of the participants. Any unallocated shares are generally required to be voted by the plan trustees in the same manner that the majority of the shares which have been allocated to participants are directed to be voted, subject to each case to the fiduciary duties of the plan trustees and applicable law. The amount of our common stock beneficially owned by officers who serve as plan trustees and by all directors and executive officers as a group does not include the shares held by the plan trust other than shares specifically allocated to the individual officers account. |
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(3) | Based on a Schedule 13G, filed on February 11, 2011 with the SEC by Dimensional Fund Advisors LP, in its capacity as investment advisor, reporting sole voting power of 1,335,074 shares of common stock and sole dispositive power over the 1,382,192 shares of common stock. | |
(4) | Based on a Schedule 13G/A, filed February 14, 2011 with the SEC by Wellington Management Company, LLP. Wellington Management Company, LLP, in its capacity as investment advisor, reports shared dispositive power and shared voting power over 1,030,206 shares of common stock. | |
(5) | Includes shares over which the directors and officers may provide voting instructions which have been granted pursuant to the Abington Bancorp 2005 and 2007 Recognition and Retention Plans and are held in the associated trusts; and stock options granted pursuant to the Abington Bancorp 2005 and 2007 Stock Option Plans which are exercisable within 60 days. |
Recognition | Stock | |||||||
Name | Plan Trust | Option Plan | ||||||
Douglas S. Callantine |
10,000 | 36,000 | ||||||
Michael F. Czerwonka, III |
10,000 | 84,000 | ||||||
Jane Margraff Kieser |
10,000 | 84,000 | ||||||
Robert J. Pannepacker, Sr. |
10,000 | 84,000 | ||||||
Jack J. Sandoski |
12,600 | 156,600 | ||||||
Robert W. White |
50,000 | 466,800 | ||||||
G. Price Wilson, Jr. |
10,000 | 41,120 | ||||||
Frank Kovalcheck |
12,600 | 156,600 | ||||||
Thomas J. Wasekanes |
16,400 | 26,640 | ||||||
Eric L. Golden |
3,800 | 12,880 | ||||||
All Directors and Executive Officers as a Group (10 persons) |
145,400 | 1,148,640 | ||||||
(6) | Includes 2,820 shares held jointly with Mr. Callantines spouse and 10,012 shares held in the Deferred Compensation Plan over which Mr. Callantine disclaims beneficial ownership. | |
(7) | Includes 14,400 shares held jointly with Mr. Czerwonkas spouse, 25,600 shares held by Mr. Czerwonkas spouse and 6,120 shares held in Mr. Czerwonkas individual retirement account. An aggregate of 40,000 of such shares are pledged as security. | |
(8) | Includes 10,022 shares held in the Deferred Compensation Plan over which Ms. Margraff Kieser disclaims beneficial ownership and 3,555 shares held in the Abington Bank 401(k) Plan. | |
(9) | Includes 45,190 shares held by Mr. Pannepackers spouse, 38,501 shares held by Mr. Pannepackers mother for whom he has power of attorney, and over which he disclaims beneficial ownership and 4,196 shares held jointly with Mr. Pannepackers spouse. Include an aggregate of 82,752 shares pledged as security. | |
(10) | Includes 48,005 shares held in Abington Banks 401(k) Plan, 41,160 shares held in the Deferred Compensation Plan over which Mr. Sandoski disclaims beneficial ownership, 16,000 shares held by Mr. Sandoskis mother for whom he has power of attorney and over which he disclaims beneficial ownership and 14,106 shares allocated to Mr. Sandoskis account in the employee stock ownership plan, over which Mr. Sandoski shares voting power. | |
(11) | Includes 25,307 shares held in the Abington Bank 401(k) Plan, 91,011 shares held in the Deferred Compensation Plan Trust over which Mr. White disclaims beneficial ownership and 21,547 shares allocated to Mr. Whites account in the employee stock ownership plan, over which Mr. White shares voting power. | |
(12) | Includes 1,677 shares held in Mr. Wilsons individual retirement account. | |
(13) | Includes 12,288 shares held jointly with Mr. Kovalchecks spouse, 15,691 shares held by Mr. Kovalchecks spouse, 14,180 shares held in the Abington Bank 401(k) Plan, 9,948 shares held in the Deferred Compensation Plan Trust over which Mr. Kovalcheck disclaims beneficial ownership and 12,193 shares allocated to Mr. Kovalchecks account in the employee stock ownership plan over which Mr. Kovalcheck shares voting power. Includes an aggregate of 25,835 shares pledged as security. | |
(14) | Includes 40,000 shares held by Mr. Wasekaness spouse, 28,462 shares held in Abington Banks 401(k) Plan and 9,553 shares allocated to Mr. Wasekaness account in the employee stock ownership plan, over which Mr. Wasekanes shares voting power. | |
(15) | Includes 7,776 shares allocated to Mr. Goldens account in the employee stock ownership plan, over which Mr. Golden shares voting power. |
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ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
Audit fees(1) |
$ | 170,972 | $ | 159,682 | ||||
Audit-related fees(2) |
24,974 | 24,069 | ||||||
Tax fees(3) |
22,864 | 20,957 | ||||||
All other fees |
| | ||||||
Total |
$ | 218,810 | $ | 204,708 | ||||
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(1) | Includes professional services rendered for the audit of Abington Bancorps annual consolidated financial statements, effectiveness of internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act, and review of consolidated financial statements included in Forms 10-Q, including out-of-pocket expenses. | |
(2) | Includes audit-related services provided for the annual audit of our tax-qualified benefit plans. | |
(3) | Includes assistance with corporate tax matters and preparation of state and federal tax returns. |
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
Financial Statements: The Consolidated Financial Statements of Abington Bancorp, Inc. and the Reports of Independent Registered Public Accounting Firm thereon, as listed below, have been filed under Item 8, Financial Statements and Supplementary Data. |
73 | ||||
74 | ||||
75 | ||||
76 | ||||
78 | ||||
80 |
No. | Description | Location | ||||||
2.1 | Agreement and Plan of Merger, dated as of January 26, 2011, by
and between Susquehanna Bancshares, Inc. and Abington
Bancorp, Inc.
|
(1) | ||||||
3.1 | Articles of Incorporation of Abington Bancorp, Inc.
|
(2) | ||||||
3.2 | Bylaws of Abington Bancorp, Inc.
|
(2) | ||||||
4.0 | Form of Stock Certificate of Abington Bancorp, Inc.
|
(3) | ||||||
10.1 | * | Amended and Restated Employment Agreement between Abington
Bancorp, Inc. and Robert W. White
|
(4) |
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No. | Description | Location | ||||||
10.2 | * | Amended and Restated Employment Agreement between Abington
Savings Bank and Robert W. White
|
(4) | |||||
10.3 | * | Amended and Restated Employment Agreement between Abington
Savings Bank and Jack J. Sandoski
|
(4) | |||||
10.4 | * | Employment Agreement between Abington Savings Bank and
Thomas J. Wasekanes
|
(5) | |||||
10.5 | * | Amended and Restated Employment Agreement between Abington
Savings Bank and Frank Kovalcheck
|
(4) | |||||
10.6 | * | Amended and Restated Employment Agreement between Abington
Savings Bank and Eric L. Golden
|
(4) | |||||
10.7 | * | Abington Savings Bank Amended and Restated Executive Deferred
Compensation Plan
|
(4) | |||||
10.8 | * | Abington Savings Bank Amended and Restated Directors Deferred
Compensation Plan
|
(4) | |||||
10.9 | * | Abington Savings Bank Amended and Restated Board of Directors
Retirement Plan
|
(1) | |||||
10.10 | * | Abington Savings Bank Amended and Restated Supplemental
Executive Retirement Plan
|
(1) | |||||
10.11 | * | Abington Bancorp, Inc. Amended and Restated 2005 Stock Option
Plan
|
(4) | |||||
10.12 | * | Abington Bancorp, Inc. Amended and Restated 2005 Stock
Recognition and Retention Plan and Trust Agreement
|
(4) | |||||
10.13 | * | Form of Split Dollar Insurance Agreement between Abington
Bank and each of Robert W. White, Thomas J. Wasekanes, Frank
Kovalcheck, Jack J. Sandoski and Eric L. Golden
|
(6) | |||||
10.14 | * | Abington Bancorp, Inc. 2007 Stock Option Plan
|
(7) | |||||
10.15 | * | Abington Bancorp, Inc. 2007 Recognition and Retention Plan
and Trust Agreement
|
(7) | |||||
23.0 | Consent of ParenteBeard LLC
|
Filed Herewith | ||||||
31.1 | Rule 13(a)-14(a) Certification of the Chief Executive Officer
|
Filed Herewith | ||||||
31.2 | Rule 13(a)-14(a) Certification of the Chief Financial Officer
|
Filed Herewith | ||||||
32.0 | Section 1350 Certifications
|
Filed Herewith |
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* | Denotes a management contract or compensatory plan or arrangement | |
(1) | Incorporated by reference from Abington Bancorps Current Report on Form 8-K dated as of January 25, 2011 and filed with the SEC on January 27, 2011 (File No. 0-52705). | |
(2) | Incorporated by reference from the registration statement on Form S-1 of Abington Bancorp, Inc., as amended (File No. 333-142543), as filed on May 2, 2007. | |
(3) | Incorporated by reference from the registration statement on Form S-1 of Abington Bancorp, Inc. (File No. 333-142543) as filed on May 2, 2007. | |
(4) | Incorporated by reference from Abington Bancorps Current Report on Form 8-K dated as of November 28, 2007 and filed with the SEC on December 3, 2007 (File No. 0-52705). | |
(5) | Incorporated by reference from Exhibit 10.1 to Abington Bancorps Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 and filed with the SEC on August 10, 2009 (File No. 0-52705). | |
(6) | Incorporated by reference from the Quarterly Report on Form 10-Q for Abington Bancorp, Inc. for the quarter ended September 30, 2007 and filed with the SEC on November 14, 2007 (File No. 0-52705). | |
(7) | Incorporated by reference to the definitive proxy statement filed by Abington Bancorp, Inc. with the SEC on December 26, 2007 (File No. 0-52705). |
All schedules have been omitted as the required information is not applicable or is presented in the consolidated financial statements or related notes included in Item 8 hereof. |
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Abington Bancorp, Inc. |
||||
By: | /s/ Robert W. White | Date: March 14, 2011 | ||
Robert W. White | ||||
Chairman, President and Chief Executive Officer |
Name | Title | Date | ||
/s/ Robert W. White
|
Chairman of the
Board, President
and Chief Executive Officer |
March 14, 2011 | ||
/s/ Jack J. Sandoski
|
Director, Senior
Vice President and Chief Financial Officer (principal financial officer and principal accounting officer) |
March 14, 2011 | ||
/s/ Douglas S. Callantine
|
Director | March 14, 2011 | ||
/s/ Michael F. Czerwonka, III
|
Director | March 14, 2011 | ||
/s/ Jane Margraff Kieser
|
Director | March 14, 2011 | ||
/s/ Robert John Pannepacker, Sr.
|
Director | March 14, 2011 | ||
/s/ G. Price Wilson, Jr.
|
Director | March 14, 2011 |
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