Attached files
| file | filename |
|---|---|
| EX-32 - EXHIBIT 32 - Oritani Financial Corp | exhibit32.htm |
| EX-31.2 - EXHIBIT 31.2 - Oritani Financial Corp | exhibit31_2.htm |
| EX-31.1 - EXHIBIT31.1 - Oritani Financial Corp | exhibit31_1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
______________________________
| |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended December 31, 2016
OR
| |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
Commission File No. 001-34786
|
|
Oritani Financial Corp.
(Exact name of registrant as specified in its charter)
|
|
|
Delaware
|
|
30-0628335
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
370 Pascack Road, Township of Washington, New Jersey 07676
(Address of Principal Executive Offices)
(201) 664-5400
(Registrant's telephone number)
N/A
(Former name or former address, if changed since last report)
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days.
YES NO
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer
|
|
|
|
Accelerated filer
|
|
|
|
Non-accelerated filer
|
|
(Do not check if a smaller reporting company)
|
|
Smaller Reporting company
|
|
|
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES NO
As of February 8, 2017, there were 56,245,065 shares of the Registrant's common stock, par value $0.01 per share, issued and 45,864,066 shares outstanding.
Oritani Financial Corp.
FORM 10-Q
|
|
|
|
|
|
Part I. Financial Information
|
Page
|
|
|
|
|
|
Item 1.
|
3
|
|
|
|
|
|
|
|
Consolidated Balance Sheets as of December 31, 2016 (unaudited) and June 30, 2016
|
3
|
|
|
|
|
|
|
Consolidated Statements of Income for the Three and Six Months Ended December 31, 2016 and 2015 (unaudited)
|
4
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended December 31, 2016 and 2015 (unaudited)
|
5
|
|
|
|
|
|
Consolidated Statements of Stockholders' Equity for the Six Months Ended December 31, 2016 and 2015 (unaudited)
|
6
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2016 and 2015 (unaudited)
|
8
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
Item 2.
|
36
|
|
|
|
|
|
|
Item 3.
|
50
|
|
|
|
|
|
|
Item 4.
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 1.
|
52
|
|
|
|
|
|
|
Item 1A.
|
52
|
|
|
|
|
|
|
Item 2.
|
52
|
|
|
|
|
|
|
Item 3.
|
52
|
|
|
|
|
|
|
Item 4.
|
52
|
|
|
|
|
|
|
Item 5.
|
52
|
|
|
|
|
|
|
Item 6.
|
53
|
|
|
|
|
|
|
|
54
|
Part I. Financial Information
Oritani Financial Corp. and Subsidiaries
(In thousands, except share data)
|
|
December 31, 2016
|
June 30, 2016
|
||||||
|
|
(unaudited)
|
(audited)
|
||||||
|
Assets
|
||||||||
|
Cash on hand and in banks
|
$
|
29,533
|
$
|
16,243
|
||||
|
Federal funds sold and short term investments
|
2,849
|
328
|
||||||
|
Cash and cash equivalents
|
32,382
|
16,571
|
||||||
|
Loans, net
|
3,383,198
|
3,131,957
|
||||||
|
Securities available for sale, at fair value
|
180,194
|
141,850
|
||||||
|
Securities held to maturity, fair value of $198,685 and $170,706, respectively.
|
201,813
|
168,107
|
||||||
|
Bank Owned Life Insurance (at cash surrender value)
|
94,672
|
93,327
|
||||||
|
Federal Home Loan Bank of New York stock ("FHLB"), at cost
|
38,878
|
38,003
|
||||||
|
Accrued interest receivable
|
10,247
|
9,943
|
||||||
|
Investments in real estate joint ventures, net
|
4,364
|
4,307
|
||||||
|
Real estate owned
|
266
|
487
|
||||||
|
Office properties and equipment, net
|
13,939
|
14,338
|
||||||
|
Deferred tax assets, net
|
40,328
|
47,360
|
||||||
|
Other assets
|
11,888
|
3,088
|
||||||
|
Total Assets
|
$
|
4,012,169
|
$
|
3,669,338
|
||||
|
Liabilities
|
||||||||
|
Deposits
|
$
|
2,591,074
|
$
|
2,260,003
|
||||
|
Borrowings
|
800,635
|
781,623
|
||||||
|
Advance payments by borrowers for taxes and insurance
|
20,372
|
21,415
|
||||||
|
Other liabilities
|
61,624
|
71,097
|
||||||
|
Total Liabilities
|
3,473,705
|
3,134,138
|
||||||
|
Stockholders' Equity
|
||||||||
|
Common stock, $0.01 par value; 150,000,000 shares authorized; 56,245,065 shares issued;
45,860,066 shares outstanding at December 31, 2016 and 45,247,420 shares outstanding at June 30, 2016.
|
562
|
562
|
||||||
|
Additional paid-in capital
|
511,487
|
513,177
|
||||||
|
Non-vested restricted stock awards
|
(483
|
)
|
(4,242
|
)
|
||||
|
Treasury stock, at cost; 10,384,999 shares at December 31, 2016 and 10,997,645 shares at June 30, 2016.
|
(138,280
|
)
|
(146,173
|
)
|
||||
|
Unallocated common stock held by the employee stock ownership plan
|
(19,099
|
)
|
(20,481
|
)
|
||||
|
Retained earnings
|
186,485
|
202,429
|
||||||
|
Accumulated other comprehensive loss, net of tax
|
(2,208
|
)
|
(10,072
|
)
|
||||
|
Total Stockholders' Equity
|
538,464
|
535,200
|
||||||
|
Total Liabilities and Stockholders' Equity
|
$
|
4,012,169
|
$
|
3,669,338
|
||||
See accompanying notes to unaudited consolidated financial statements.
Oritani Financial Corp. and Subsidiaries
(In thousands, except per share data)
|
|
Three months ended December 31,
|
Six months ended December 31,
|
||||||||||||||
|
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
|
|
(unaudited)
|
|||||||||||||||
|
Interest income:
|
||||||||||||||||
|
Interest on loans
|
$
|
33,135
|
$
|
31,148
|
$
|
65,108
|
$
|
61,937
|
||||||||
|
Interest on securities available for sale
|
826
|
1,154
|
1,652
|
2,357
|
||||||||||||
|
Interest on securities held to maturity
|
871
|
663
|
1,674
|
1,234
|
||||||||||||
|
Dividends on FHLB stock
|
417
|
391
|
874
|
792
|
||||||||||||
|
Interest on federal funds sold and short term investments
|
2
|
1
|
3
|
2
|
||||||||||||
|
Total interest income
|
35,251
|
33,357
|
69,311
|
66,322
|
||||||||||||
|
Interest expense:
|
||||||||||||||||
|
Deposits
|
5,964
|
4,456
|
11,703
|
8,118
|
||||||||||||
|
Borrowings
|
3,058
|
3,607
|
6,079
|
8,761
|
||||||||||||
|
Total interest expense
|
9,022
|
8,063
|
17,782
|
16,879
|
||||||||||||
|
Net interest income before provision for loan losses
|
26,229
|
25,294
|
51,529
|
49,443
|
||||||||||||
|
Provision for loan losses
|
—
|
—
|
—
|
—
|
||||||||||||
|
Net interest income after provision for loan losses
|
26,229
|
25,294
|
51,529
|
49,443
|
||||||||||||
|
Other income:
|
||||||||||||||||
|
Service charges
|
176
|
208
|
358
|
466
|
||||||||||||
|
Real estate operations, net
|
—
|
36
|
—
|
271
|
||||||||||||
|
Income from investments in real estate joint ventures
|
260
|
311
|
576
|
718
|
||||||||||||
|
Bank-owned life insurance
|
666
|
678
|
1,345
|
1,374
|
||||||||||||
|
Net gain on sale of assets
|
—
|
25,554
|
—
|
29,866
|
||||||||||||
|
Net gain on sale of securities
|
—
|
604
|
—
|
604
|
||||||||||||
|
Other income
|
81
|
91
|
162
|
168
|
||||||||||||
|
Total other income
|
1,183
|
27,482
|
2,441
|
33,467
|
||||||||||||
|
Other expenses:
|
||||||||||||||||
|
Compensation, payroll taxes and fringe benefits
|
8,207
|
10,056
|
15,565
|
17,759
|
||||||||||||
|
Advertising
|
125
|
90
|
215
|
180
|
||||||||||||
|
Office occupancy and equipment expense
|
781
|
689
|
1,581
|
1,407
|
||||||||||||
|
Data processing service fees
|
559
|
496
|
1,103
|
1,014
|
||||||||||||
|
Federal insurance premiums
|
300
|
399
|
750
|
798
|
||||||||||||
|
Net expense from real estate operations
|
69
|
11
|
124
|
341
|
||||||||||||
|
FHLBNY prepayment fees
|
—
|
13,873
|
—
|
13,873
|
||||||||||||
|
Other expenses
|
1,017
|
1,315
|
1,988
|
2,294
|
||||||||||||
|
Total operating expenses
|
11,058
|
26,929
|
21,326
|
37,666
|
||||||||||||
|
Income before income tax expense
|
16,354
|
25,847
|
32,644
|
45,244
|
||||||||||||
|
Income tax expense
|
4,978
|
9,470
|
10,657
|
16,252
|
||||||||||||
|
Net income
|
$
|
11,376
|
$
|
16,377
|
$
|
21,987
|
$
|
28,992
|
||||||||
|
Earnings per basic common share
|
$
|
0.26
|
$
|
0.39
|
$
|
0.51
|
$
|
0.70
|
||||||||
|
Earnings per diluted common share
|
$
|
0.26
|
$
|
0.38
|
$
|
0.50
|
$
|
0.68
|
||||||||
See accompanying notes to unaudited consolidated financial statements.
Oritani Financial Corp. and Subsidiaries
(In thousands)
|
|
Three months ended December 31,
|
Six months ended December 31,
|
||||||||||||||
|
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
|
|
(unaudited)
|
|||||||||||||||
|
Net of tax:
|
||||||||||||||||
|
Net income
|
$
|
11,376
|
$
|
16,377
|
$
|
21,987
|
$
|
28,992
|
||||||||
|
Other comprehensive income (loss):
|
||||||||||||||||
|
Change in unrealized holding loss on securities available for sale
|
(1,062
|
)
|
(1,650
|
)
|
(1,454
|
)
|
(1,204
|
)
|
||||||||
|
Reclassification adjustment for security gains included in net income
|
—
|
(343
|
)
|
—
|
(343
|
)
|
||||||||||
|
Amortization related to post-retirement obligations
|
57
|
31
|
130
|
64
|
||||||||||||
|
Net change in unrealized gain (loss) on interest rate swaps
|
7,889
|
1,468
|
9,188
|
(896
|
)
|
|||||||||||
|
Total other comprehensive income (loss)
|
6,884
|
(494
|
)
|
7,864
|
(2,379
|
)
|
||||||||||
|
Total comprehensive income
|
$
|
18,260
|
$
|
15,883
|
$
|
29,851
|
$
|
26,613
|
||||||||
See accompanying notes to unaudited consolidated financial statements.
Oritani Financial Corp. and Subsidiaries
Six months ended December 31, 2016 and 2015 (unaudited)
(In thousands, except share data)
|
|
Shares Outstanding
|
Common stock
|
Additional paid-in capital
|
Non-vested restricted stock awards
|
Treasury stock
|
Unallocated common stock held by ESOP
|
Retained income
|
Accumulated other comprehensive income (loss), net of tax
|
Total stockholders' equity
|
|||||||||||||||||||||||||||
|
Balance at June 30, 2015
|
44,012,239
|
$
|
562
|
$
|
508,999
|
$
|
(8,088
|
)
|
$
|
(162,344
|
)
|
$
|
(22,803
|
)
|
$
|
203,192
|
$
|
(1,848
|
)
|
$
|
517,670
|
|||||||||||||||
|
Net income
|
—
|
—
|
—
|
—
|
—
|
—
|
28,992
|
—
|
28,992
|
|||||||||||||||||||||||||||
|
Other comprehensive loss, net of tax
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(2,379
|
)
|
(2,379
|
)
|
|||||||||||||||||||||||||
|
Cash dividends declared
|
—
|
—
|
—
|
—
|
—
|
—
|
(35,229
|
)
|
—
|
(35,229
|
)
|
|||||||||||||||||||||||||
|
Purchase of treasury stock
|
(100,978
|
)
|
—
|
—
|
—
|
(1,593
|
)
|
—
|
—
|
—
|
(1,593
|
)
|
||||||||||||||||||||||||
|
Issuance of restricted stock awards
|
10,000
|
—
|
—
|
(133
|
)
|
133
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||
|
Compensation cost for stock options and restricted stock
|
—
|
—
|
2,996
|
—
|
—
|
—
|
—
|
—
|
2,996
|
|||||||||||||||||||||||||||
|
ESOP shares allocated or committed to be released
|
—
|
—
|
1,430
|
—
|
—
|
1,645
|
—
|
—
|
3,075
|
|||||||||||||||||||||||||||
|
Exercise of stock options
|
482,436
|
—
|
—
|
—
|
6,411
|
—
|
(1,106
|
)
|
—
|
5,305
|
||||||||||||||||||||||||||
|
Vesting of restricted stock awards
|
—
|
—
|
(3,887
|
)
|
3,906
|
—
|
—
|
(19
|
)
|
—
|
—
|
|||||||||||||||||||||||||
|
Forfeiture of restricted stock awards
|
(6,000
|
)
|
—
|
—
|
73
|
(73
|
)
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||
|
Cumulative effect of change in accounting principle-adoption of ASU 2016-09
|
—
|
—
|
—
|
—
|
—
|
—
|
(33
|
)
|
—
|
(33
|
)
|
|||||||||||||||||||||||||
|
Balance at December 31, 2015
|
44,397,697
|
$
|
562
|
$
|
509,538
|
$
|
(4,242
|
)
|
$
|
(157,466
|
)
|
$
|
(21,158
|
)
|
$
|
195,797
|
$
|
(4,227
|
)
|
$
|
518,804
|
|||||||||||||||
Continued on next page
|
|
Shares Outstanding
|
Common stock
|
Additional paid-in capital
|
Non-vested restricted stock awards
|
Treasury stock
|
Unallocated common stock held by ESOP
|
Retained income
|
Accumulated other comprehensive income (loss), net of tax
|
Total stockholders' equity
|
|||||||||||||||||||||||||||
|
Balance at June 30, 2016
|
45,247,420
|
$
|
562
|
$
|
513,177
|
$
|
(4,242
|
)
|
$
|
(146,173
|
)
|
$
|
(20,481
|
)
|
$
|
202,429
|
$
|
(10,072
|
)
|
$
|
535,200
|
|||||||||||||||
|
Net income
|
—
|
—
|
—
|
—
|
—
|
—
|
21,987
|
—
|
21,987
|
|||||||||||||||||||||||||||
|
Other comprehensive loss, net of tax
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
7,864
|
7,864
|
|||||||||||||||||||||||||||
|
Cash dividends declared
|
—
|
—
|
—
|
—
|
—
|
—
|
(36,598
|
)
|
—
|
(36,598
|
)
|
|||||||||||||||||||||||||
|
Purchase of treasury stock
|
(98,655
|
)
|
—
|
—
|
—
|
(1,574
|
)
|
—
|
—
|
—
|
(1,574
|
)
|
||||||||||||||||||||||||
|
Issuance of restricted stock awards
|
10,000
|
—
|
—
|
(133
|
)
|
133
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||
|
Compensation cost for stock options and restricted stock
|
—
|
—
|
849
|
—
|
—
|
—
|
—
|
—
|
849
|
|||||||||||||||||||||||||||
|
ESOP shares allocated or committed to be released
|
—
|
—
|
1,340
|
—
|
—
|
1,382
|
—
|
—
|
2,722
|
|||||||||||||||||||||||||||
|
Exercise of stock options
|
701,301
|
—
|
—
|
—
|
9,334
|
—
|
(1,320
|
)
|
—
|
8,014
|
||||||||||||||||||||||||||
|
Vesting of restricted stock awards
|
—
|
—
|
(3,879
|
)
|
3,892
|
—
|
—
|
(13
|
)
|
—
|
—
|
|||||||||||||||||||||||||
|
Balance at December 31, 2016
|
45,860,066
|
$
|
562
|
$
|
511,487
|
$
|
(483
|
)
|
$
|
(138,280
|
)
|
$
|
(19,099
|
)
|
$
|
186,485
|
$
|
(2,208
|
)
|
$
|
538,464
|
|||||||||||||||
See accompanying notes to unaudited consolidated financial statements.
Oritani Financial Corp. and Subsidiaries
(In thousands)
|
|
Six months ended December 31,
|
|||||||
|
|
2016
|
2015
|
||||||
|
|
(unaudited)
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net income
|
$
|
21,987
|
$
|
28,992
|
||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
ESOP and stock-based compensation expense
|
3,571
|
6,071
|
||||||
|
Tax benefit from stock-based compensation
|
1,286
|
959
|
||||||
|
Depreciation of premises and equipment
|
454
|
447
|
||||||
|
Net amortization and accretion of premiums and discounts on securities
|
625
|
594
|
||||||
|
Amortization and accretion of deferred loan fees, net
|
(1,129
|
)
|
(1,836
|
)
|
||||
|
Decrease (increase) in deferred taxes
|
1,082
|
(1,842
|
)
|
|||||
|
Gain on sale of investment securities
|
—
|
(604
|
)
|
|||||
|
Gain on sale of real estate joint ventures and real estate investments
|
—
|
(29,538
|
)
|
|||||
|
Gain on sale of real estate owned
|
—
|
(328
|
)
|
|||||
|
Writedown of real estate owned
|
89
|
250
|
||||||
|
Proceeds from sale of real estate owned
|
132
|
3,967
|
||||||
|
Increase in cash surrender value of bank owned life insurance
|
(1,345
|
)
|
(1,374
|
)
|
||||
|
Increase in accrued interest receivable
|
(304
|
)
|
(451
|
)
|
||||
|
Decrease in other assets
|
7,554
|
3,872
|
||||||
|
(Decrease) increase in other liabilities
|
(9,185
|
)
|
5,884
|
|||||
|
Net cash provided by operating activities
|
24,817
|
15,063
|
||||||
|
Cash flows from investing activities:
|
||||||||
|
Net increase in loans receivable
|
(184,187
|
)
|
(116,396
|
)
|
||||
|
Purchase of loans
|
(65,925
|
)
|
(37,341
|
)
|
||||
|
Purchase of securities available for sale
|
(66,222
|
)
|
(42,213
|
)
|
||||
|
Purchase of securities held to maturity
|
(49,649
|
)
|
(58,960
|
)
|
||||
|
Proceeds from payments, calls and maturities of securities available for sale
|
25,004
|
35,193
|
||||||
|
Proceeds from payments, calls and maturities of securities held to maturity
|
15,637
|
9,194
|
||||||
|
Proceeds from sales of securities available for sale
|
—
|
38,985
|
||||||
|
Net (increase) decrease in Federal Home Loan Bank of New York stock
|
(875
|
)
|
137
|
|||||
|
Proceeds from sales of real estate joint ventures and real estate investments
|
—
|
29,638
|
||||||
|
Net increase in real estate held for investment
|
—
|
(1
|
)
|
|||||
|
Net (increase) decrease in real estate joint ventures
|
(57
|
)
|
389
|
|||||
|
Purchase of fixed assets
|
(40
|
)
|
(583
|
)
|
||||
|
Net cash used in investing activities
|
(326,314
|
)
|
(141,958
|
)
|
||||
|
Cash flows from financing activities:
|
||||||||
|
Net increase in deposits
|
331,071
|
157,739
|
||||||
|
Purchase of treasury stock
|
(1,574
|
)
|
(1,593
|
)
|
||||
|
Dividends paid to shareholders
|
(36,598
|
)
|
(35,229
|
)
|
||||
|
Exercise of stock options
|
8,014
|
5,305
|
||||||
|
Decrease in advance payments by borrowers for taxes and insurance
|
(1,043
|
)
|
(439
|
)
|
||||
|
Proceeds from borrowed funds
|
19,500
|
182,435
|
||||||
|
Repayment of borrowed funds
|
(488
|
)
|
(185,000
|
)
|
||||
|
Payment of employee taxes withheld from shared-based awards
|
(1,574
|
)
|
(1,593
|
)
|
||||
|
Net cash provided by financing activities
|
317,308
|
121,625
|
||||||
|
Net increase (decrease) in cash and cash equivalents
|
15,811
|
(5,270
|
)
|
|||||
|
Cash and cash equivalents at beginning of period
|
16,571
|
15,129
|
||||||
|
Cash and cash equivalents at end of period
|
$
|
32,382
|
$
|
9,859
|
||||
|
Supplemental cash flow information:
|
||||||||
|
Cash paid during the period for:
|
||||||||
|
Interest
|
$
|
17,746
|
$
|
17,409
|
||||
|
Income taxes
|
$
|
15,787
|
$
|
12,383
|
||||
|
Noncash transfer
|
||||||||
|
Loans receivable transferred to real estate owned
|
$
|
—
|
$
|
317
|
||||
See accompanying notes to unaudited consolidated financial statements.
8
The consolidated financial statements are composed of the accounts of Oritani Financial Corp., its wholly owned subsidiary, Oritani Bank (the "Bank") and the wholly owned subsidiaries of Oritani Bank; Oritani Finance Company, Ormon LLC ("Ormon"), and Oritani Investment Corp., as well as its wholly owned subsidiary, Oritani Asset Corporation (a real estate investment trust), (collectively, the "Company"). Intercompany balances and transactions have been eliminated in consolidation.
In the opinion of management, all of the adjustments (consisting of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the unaudited periods presented have been included. The results of operations and other data presented for the three and six month periods ended December 31, 2016 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending June 30, 2017.
Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for the preparation of the Form 10-Q. The consolidated financial statements presented should be read in conjunction with the Company's audited consolidated financial statements and notes to consolidated financial statements included in the Company's June 30, 2016 Annual Report on Form 10-K, filed with the SEC on September 13, 2016.
The consolidated financial statements have been prepared in conformity with GAAP. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities presented in the Consolidated Balance Sheets at December 31, 2016 and June 30, 2016 and in the Consolidated Statements of Income for the three and six months ended December 31, 2016 and 2015. Actual results could differ significantly from those estimates.
A material estimate that is particularly susceptible to significant changes relates to the determination of the allowance for loan losses. The allowance for loan losses represents management's best estimate of losses known and inherent in the portfolio that are both probable and reasonable to estimate. While management uses the most current information available to estimate losses on loans, actual losses are dependent on future events and, as such, increases in the allowance for loan losses may be necessary.
In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance for loan losses. Such agencies may require the Bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.
9
2. Earnings Per Share ("EPS")
Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. The weighted average common shares outstanding includes the average number of shares of common stock outstanding and allocated or committed to be released Employee Stock Ownership Plan shares.
Diluted earnings per share is computed using the same method as basic earnings per share, but reflects the potential dilution that could occur if stock options were exercised and converted into common stock. These potentially dilutive shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method. When applying the treasury stock method, we add the assumed proceeds from option exercises and the average unamortized compensation costs related to stock options. We then divide this sum by our average stock price to calculate shares assumed to be repurchased. The excess of the number of shares issuable over the number of shares assumed to be repurchased is added to basic weighted average common shares to calculate diluted EPS.
The following is a summary of the Company's earnings per share calculations and reconciliation of basic to diluted earnings per share.
|
|
Three months ended December 31,
|
Six months ended December 31,
|
||||||||||||||
|
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
|
|
(In thousands, except per share data)
|
|||||||||||||||
|
Net income
|
$
|
11,376
|
$
|
16,377
|
$
|
21,987
|
$
|
28,992
|
||||||||
|
Weighted average common shares outstanding—basic
|
43,024
|
41,504
|
42,899
|
41,380
|
||||||||||||
|
Effect of dilutive stock options outstanding
|
1,294
|
1,545
|
1,216
|
1,440
|
||||||||||||
|
Weighted average common shares outstanding—diluted
|
44,318
|
43,049
|
44,115
|
42,820
|
||||||||||||
|
Earnings per share-basic
|
$
|
0.26
|
$
|
0.39
|
$
|
0.51
|
$
|
0.70
|
||||||||
|
Earnings per share-diluted
|
$
|
0.26
|
$
|
0.38
|
$
|
0.50
|
$
|
0.68
|
||||||||
For the three months ended December 31, 2016 and 2015 there were 787 and 4,705 option shares, respectively, that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for those periods. Anti-dilutive shares for the six months ended December 31, 2016 and 2015 were 2,733 and 6,114, respectively.
3. Stock Repurchase Program
On March 4, 2015, the Board of Directors of the Company authorized a fourth stock repurchase plan pursuant to which the Company is authorized to repurchase up to 5% of the outstanding shares, or 2,205,451 shares. At December 31, 2016, there are 1,888,851 shares yet to be purchased under the current plan. At December 31, 2016, a total of 13,277,681 shares had been acquired under repurchase programs at a weighted average cost of $13.30 per share. The timing of the repurchases depend on certain factors, including but not limited to, market conditions and prices, the Company's liquidity and capital requirements, and alternative uses of capital. Repurchased shares will be held as treasury stock and will be available for general corporate purposes. The Company may conduct repurchases in accordance with a Rule 10b5-1 trading plan.
10
4. Equity Incentive Plans
The 2007 Equity Incentive Plan ("the 2007 Equity Plan") was approved by the Company's stockholders on April 22, 2008, which authorized the issuance of up to 4,172,817 shares of Company common stock pursuant to grants of incentive and non-statutory stock options, stock appreciation rights, and restricted stock awards. The 2011 Equity Incentive Plan ("2011 Equity Plan") was approved by the Company's stockholders on July 26, 2011. The 2011 Equity Plan authorized the issuance of up to 5,790,849 shares of the Company's common stock pursuant to grants of stock options, restricted stock awards and restricted stock units, with no more than 1,654,528 of the shares issued as restricted stock awards or restricted stock units. Employees and outside directors of the Company or Oritani Bank are eligible to receive awards under the Equity Plans.
Stock options are granted at an exercise price equal to the market price of our common stock on the grant date, based on quoted market prices. Stock options generally vest over a five-year service period and expire ten years from issuance. The vesting of the options accelerate upon death or disability, retirement or a change in control and expire 90 days after termination of service, excluding disability or retirement. The Company recognizes compensation expense for all option grants over the awards' respective requisite service periods. Management estimated the fair values of all option grants using the Black-Scholes option-pricing model. Management estimated the expected life of the options using the simplified method. The Treasury yield in effect at the time of the grant provides the risk-free rate for periods within the contractual life of the option. The Company classified share-based compensation for employees and outside directors within "compensation, payroll taxes and fringe benefits" in the consolidated statements of income to correspond with the same line item as the cash compensation paid.
The fair value of options issued during the six months ended December 31, 2016 and 2015 was estimated using the Black-Scholes options-pricing model with the assumptions in the following table.
|
Six months ended December 31,
|
|||||
|
|
2016
|
2015
|
|||
|
Option shares granted
|
20,000
|
20,000
|
|||
|
Expected dividend yield
|
5.35%
|
6.75%
|
|||
|
Expected volatility
|
20.81%
|
26.10%
|
|||
|
Risk-free interest rate
|
1.39%
|
2.03%
|
|||
|
Expected option life
|
6.5
|
|
6.5
|
||
The following is a summary of the Company's stock option activity and related information as of December 31, 2016 and changes therein during the six months then ended:
|
|
Number of Stock Options
|
Weighted Average Grant Date Fair Value
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Life (years)
|
||||||||||||
|
Outstanding at June 30, 2016
|
4,568,005
|
$
|
2.59
|
$
|
11.65
|
5.3
|
||||||||||
|
Granted
|
20,000
|
1.34
|
15.65
|
10.0
|
||||||||||||
|
Exercised
|
(701,301
|
)
|
2.57
|
11.43
|
3.6
|
|||||||||||
|
Forfeited
|
—
|
—
|
—
|
—
|
||||||||||||
|
Outstanding at December 31, 2016
|
3,886,704
|
$
|
2.59
|
$
|
11.71
|
3.9
|
||||||||||
|
Exercisable at December 31, 2016
|
3,808,831
|
$
|
2.60
|
$
|
11.63
|
3.9
|
||||||||||
The Company recorded $17,000 and $523,000 of share based compensation expense related to options for the three months ended December 31, 2016 and 2015, respectively. The Company recorded $283,000 and $1.1 million of share based compensation expense related to options for the six months ended December 31, 2016 and 2015, respectively. Expected future expense related to the non-vested options outstanding at December 31, 2016 is $131,000 over a weighted average period of 2.8 years. Upon exercise of vested options, management expects to draw on treasury stock as the source of the shares.
11
Restricted stock shares vest over a five-year service period on the anniversary date of the grant. Vesting of the restricted stock shares accelerate upon death or disability, retirement or a change in control. The product of the number of shares granted and the grant date market price of the Company's common stock determines the fair value of restricted shares under the Company's restricted stock plan. The Company recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period.
The following is a summary of the status of the Company's restricted stock shares as of December 31, 2016 and changes therein during the six months then ended:
|
|
Number of Shares Awarded
|
Weighted Average Grant Date Fair Value
|
||||||
|
Non-vested at June 30, 2016
|
347,487
|
$
|
12.37
|
|||||
|
Granted
|
10,000
|
15.65
|
||||||
|
Vested
|
(318,553
|
)
|
12.08
|
|||||
|
Forfeited
|
—
|
—
|
||||||
|
Non-vested at December 31, 2016
|
38,934
|
$
|
15.46
|
|||||
The Company recorded $60,000 and $962,000 of share based compensation expense related to the restricted stock shares for the three months ended December 31, 2016 and 2015, respectively. The Company recorded $569,000 and $1.9 million of share based compensation expense related to the restricted stock shares for the six months ended December 31, 2016 and 2015, respectively. Expected future expense related to the non-vested restricted shares at December 31, 2016 is $524,000 over a weighted average period of 2.5 years.
5. Post-retirement Benefits
The Company provides several post-retirement benefit plans to directors and to certain active and retired employees. The Company has a nonqualified Directors' Retirement Plan ("Retirement Plan"), a nonqualified Benefit Equalization Plan ("BEP Plan"), which provides benefits to employees who are disallowed certain benefits under the Company's qualified benefit plans, and a Post Retirement Medical Plan ("Medical Plan") for directors and certain eligible employees.
Net periodic benefit costs for the three and six months ended December 31, 2016 and 2015 are presented in the following tables.
|
|
Retirement Plan
|
BEP Plan
|
Medical Plan
|
|||||||||||||||||||||
|
|
Three months ended December 31,
|
|||||||||||||||||||||||
|
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||
|
Service cost
|
$
|
38
|
$
|
43
|
$
|
—
|
$
|
—
|
$
|
14
|
$
|
19
|
||||||||||||
|
Interest cost
|
45
|
57
|
10
|
12
|
59
|
59
|
||||||||||||||||||
|
Amortization of unrecognized:
|
||||||||||||||||||||||||
|
Net loss
|
—
|
7
|
13
|
10
|
87
|
39
|
||||||||||||||||||
|
Total
|
$
|
83
|
$
|
107
|
$
|
23
|
$
|
22
|
$
|
160
|
$
|
117
|
||||||||||||
|
|
Six months ended December 31,
|
|||||||||||||||||||||||
|
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||
|
Service cost
|
$
|
76
|
$
|
87
|
$
|
—
|
$
|
—
|
$
|
29
|
$
|
39
|
||||||||||||
|
Interest cost
|
91
|
113
|
20
|
24
|
117
|
118
|
||||||||||||||||||
|
Amortization of unrecognized:
|
||||||||||||||||||||||||
|
Net loss
|
—
|
15
|
26
|
20
|
174
|
77
|
||||||||||||||||||
|
Total
|
$
|
167
|
$
|
215
|
$
|
46
|
$
|
44
|
$
|
320
|
$
|
234
|
||||||||||||
12
6. Loans, net
Loans, net are summarized as follows:
|
|
December 31, 2016
|
June 30, 2016
|
||||||
|
|
(In thousands)
|
|||||||
|
Residential
|
$
|
238,861
|
$
|
223,701
|
||||
|
Residential commercial real estate
|
1,808,344
|
1,596,876
|
||||||
|
Credit/grocery retail commercial real estate
|
519,780
|
457,058
|
||||||
|
Other commercial real estate
|
852,076
|
887,443
|
||||||
|
Construction and land loans
|
2,361
|
4,810
|
||||||
|
Total loans
|
3,421,422
|
3,169,888
|
||||||
|
Less:
|
||||||||
|
Deferred loan fees, net
|
8,347
|
7,980
|
||||||
|
Allowance for loan losses
|
29,877
|
29,951
|
||||||
|
Loans, net
|
$
|
3,383,198
|
$
|
3,131,957
|
||||
The Company's allowance for loan losses is analyzed quarterly and many factors are considered, including growth in the portfolio, delinquencies, nonaccrual loan levels, and other environmental factors. There have been no material changes to the allowance for loan loss methodology as disclosed in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 13, 2016.
The activity in the allowance for loan losses for the three and six months ended December 31, 2016 and 2015 is summarized as follows:
|
|
Three months ended December 31,
|
Six months ended December 31,
|
||||||||||||||
|
|
(In thousands)
|
|||||||||||||||
|
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
|
Balance at beginning of period
|
$
|
29,878
|
$
|
30,634
|
$
|
29,951
|
$
|
30,889
|
||||||||
|
Provisions for loan losses
|
—
|
—
|
—
|
—
|
||||||||||||
|
Recoveries of loans previously charged off
|
—
|
1
|
2
|
1
|
||||||||||||
|
Loans charged off
|
(1
|
)
|
—
|
(76
|
)
|
(255
|
)
|
|||||||||
|
Balance at end of period
|
$
|
29,877
|
$
|
30,635
|
$
|
29,877
|
$
|
30,635
|
||||||||
13
The following table provides the three and six month activity in the allowance for loan losses allocated by loan category at December 31, 2016 and 2015. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.
|
|
Three months ended December 31, 2016
|
|||||||||||||||||||||||
|
|
Residential
|
Residential commercial real estate
|
Credit/grocery retail commercial real estate
|
Other commercial real estate
|
Construction and land loans
|
Total
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
|
Allowance for loan losses:
|
||||||||||||||||||||||||
|
Beginning balance
|
$
|
1,794
|
$
|
13,610
|
$
|
3,472
|
$
|
10,843
|
$
|
159
|
$
|
29,878
|
||||||||||||
|
Charge-offs
|
—
|
—
|
—
|
(1
|
)
|
—
|
(1
|
)
|
||||||||||||||||
|
Recoveries
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
Provisions
|
(168
|
)
|
814
|
(145
|
)
|
(476
|
)
|
(25
|
)
|
—
|
||||||||||||||
|
Ending balance
|
$
|
1,626
|
$
|
14,424
|
$
|
3,327
|
$
|
10,366
|
$
|
134
|
$
|
29,877
|
||||||||||||
|
|
Six months ended December 31, 2016
|
|||||||||||||||||||||||
|
|
Residential
|
Residential commercial real estate
|
Credit/grocery retail commercial real estate
|
Other commercial real estate
|
Construction and land loans
|
Total
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
|
Allowance for loan losses:
|
||||||||||||||||||||||||
|
Beginning balance
|
$
|
1,300
|
$
|
12,837
|
$
|
3,646
|
$
|
11,850
|
$
|
318
|
$
|
29,951
|
||||||||||||
|
Charge-offs
|
(75
|
)
|
—
|
—
|
(1
|
)
|
—
|
(76
|
)
|
|||||||||||||||
|
Recoveries
|
—
|
—
|
—
|
2
|
—
|
2
|
||||||||||||||||||
|
Provisions
|
401
|
1,587
|
(319
|
)
|
(1,485
|
)
|
(184
|
)
|
—
|
|||||||||||||||
|
Ending balance
|
$
|
1,626
|
$
|
14,424
|
$
|
3,327
|
$
|
10,366
|
$
|
134
|
$
|
29,877
|
||||||||||||
|
|
Three months ended December 31, 2015
|
|||||||||||||||||||||||
|
|
Residential
|
Residential commercial real estate
|
Credit/grocery retail commercial real estate
|
Other commercial real estate
|
Construction and land loans
|
Total
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
|
Allowance for loan losses:
|
||||||||||||||||||||||||
|
Beginning balance
|
$
|
1,680
|
$
|
10,606
|
$
|
4,612
|
$
|
13,048
|
$
|
688
|
$
|
30,634
|
||||||||||||
|
Charge-offs
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
Recoveries
|
—
|
—
|
—
|
1
|
—
|
1
|
||||||||||||||||||
|
Provisions
|
(162
|
)
|
287
|
(958
|
)
|
809
|
24
|
—
|
||||||||||||||||
|
Ending balance
|
$
|
1,518
|
$
|
10,893
|
$
|
3,654
|
$
|
13,858
|
$
|
712
|
$
|
30,635
|
||||||||||||
|
|
Six months ended December 31, 2015
|
|||||||||||||||||||||||
|
|
Residential
|
Residential commercial real estate
|
Credit/grocery retail commercial real estate
|
Other commercial real estate
|
Construction and land loans
|
Total
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
|
Allowance for loan losses:
|
||||||||||||||||||||||||
|
Beginning balance
|
$
|
1,521
|
$
|
10,814
|
$
|
4,042
|
$
|
13,943
|
$
|
569
|
$
|
30,889
|
||||||||||||
|
Charge-offs
|
(98
|
)
|
—
|
—
|
(157
|
)
|
—
|
(255
|
)
|
|||||||||||||||
|
Recoveries
|
—
|
—
|
—
|
1
|
—
|
1
|
||||||||||||||||||
|
Provisions
|
95
|
79
|
(388
|
)
|
71
|
143
|
—
|
|||||||||||||||||
|
Ending balance
|
$
|
1,518
|
$
|
10,893
|
$
|
3,654
|
$
|
13,858
|
$
|
712
|
$
|
30,635
|
||||||||||||
14
The following table details the amount of loans receivables that are evaluated individually, and collectively, for impairment, and the related portion of allowance for loan loss that is allocated to each loan portfolio segment at December 31, 2016 and June 30, 2016.
|
At December 31, 2016
|
||||||||||||||||||||||||
|
|
Residential
|
Residential commercial real estate
|
Credit/grocery retail commercial real estate
|
Other commercial real estate
|
Construction and land loans
|
Total
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
|
Allowance for loan losses:
|
||||||||||||||||||||||||
|
Individually evaluated for impairment
|
$
|
20
|
$
|
—
|
$
|
—
|
$
|
68
|
$
|
20
|
$
|
108
|
||||||||||||
|
Collectively evaluated for impairment
|
1,606
|
14,424
|
3,327
|
10,298
|
114
|
29,769
|
||||||||||||||||||
|
Total
|
$
|
1,626
|
$
|
14,424
|
$
|
3,327
|
$
|
10,366
|
$
|
134
|
$
|
29,877
|
||||||||||||
|
Loans receivable:
|
||||||||||||||||||||||||
|
Individually evaluated for impairment
|
$
|
3,686
|
$
|
—
|
$
|
—
|
$
|
9,912
|
$
|
20
|
$
|
13,618
|
||||||||||||
|
Collectively evaluated for impairment
|
235,175
|
1,808,344
|
519,780
|
842,164
|
2,341
|
3,407,804
|
||||||||||||||||||
|
Total
|
$
|
238,861
|
$
|
1,808,344
|
$
|
519,780
|
$
|
852,076
|
$
|
2,361
|
$
|
3,421,422
|
||||||||||||
|
|
||||||||||||||||||||||||
|
At June 30, 2016
|
||||||||||||||||||||||||
|
|
Residential
|
Residential commercial real estate
|
Credit/grocery retail commercial real estate
|
Other commercial real estate
|
Construction
and land loans
|
Total
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
|
Allowance for loan losses:
|
||||||||||||||||||||||||
|
Individually evaluated for impairment
|
$
|
20
|
$
|
—
|
$
|
—
|
$
|
51
|
$
|
47
|
$
|
118
|
||||||||||||
|
Collectively evaluated for impairment
|
1,280
|
12,837
|
3,646
|
11,799
|
271
|
29,833
|
||||||||||||||||||
|
Total
|
$
|
1,300
|
$
|
12,837
|
$
|
3,646
|
$
|
11,850
|
$
|
318
|
$
|
29,951
|
||||||||||||
|
Loans receivable:
|
||||||||||||||||||||||||
|
Individually evaluated for impairment
|
$
|
3,631
|
$
|
310
|
$
|
—
|
$
|
9,154
|
$
|
56
|
$
|
13,151
|
||||||||||||
|
Collectively evaluated for impairment
|
220,070
|
1,596,566
|
457,058
|
878,289
|
4,754
|
3,156,737
|
||||||||||||||||||
|
Total
|
$
|
223,701
|
$
|
1,596,876
|
$
|
457,058
|
$
|
887,443
|
$
|
4,810
|
$
|
3,169,888
|
||||||||||||
15
The Company continuously monitors the credit quality of its loan portfolio. In addition to internal staff, the Company utilizes the services of a third party loan review firm to evaluate the credit quality ratings of its loan receivables. Credit quality is monitored by reviewing certain credit quality indicators. Assets classified as "Satisfactory" are deemed to possess average to superior credit quality, requiring no more than normal attention. Assets classified as "Pass/Watch" have generally acceptable asset quality yet possess higher risk characteristics/circumstances than satisfactory assets. Such characteristics may include strained liquidity, slow pay, stale financial statements or other circumstances requiring greater attention from bank staff. We classify an asset as "Special Mention" if the asset has a potential weakness that warrants management's close attention. Such weaknesses, if left uncorrected, may result in the deterioration of the repayment prospects of the asset. An asset is considered "Substandard" if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Assets classified as "Doubtful" have all of the weaknesses inherent in those classified substandard, with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Included in the Substandard caption are all loans that were past due 90 days (or more) and all impaired loans.
The following table provides information about the loan credit quality at December 31, 2016 and June 30, 2016:
|
|
At December 31, 2016
|
|||||||||||||||||||||||
|
|
Satisfactory
|
Pass/Watch
|
Special Mention
|
Substandard
|
Doubtful
|
Total
|
||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||
|
Residential
|
$
|
214,800
|
$
|
1,840
|
$
|
17,882
|
$
|
4,339
|
$
|
—
|
$
|
238,861
|
||||||||||||
|
Residential commercial real estate
|
1,788,183
|
18,143
|
2,018
|
—
|
—
|
1,808,344
|
||||||||||||||||||
|
Credit/grocery retail commercial real estate
|
509,488
|
10,292
|
—
|
—
|
—
|
519,780
|
||||||||||||||||||
|
Other commercial real estate
|
740,627
|
72,753
|
18,974
|
19,722
|
—
|
852,076
|
||||||||||||||||||
|
Construction and land loans
|
2,341
|
—
|
—
|
20
|
—
|
2,361
|
||||||||||||||||||
|
Total
|
$
|
3,255,439
|
$
|
103,028
|
$
|
38,874
|
$
|
24,081
|
$
|
—
|
$
|
3,421,422
|
||||||||||||
|
|
At June 30, 2016
|
|||||||||||||||||||||||
|
|
Satisfactory
|
Pass/Watch
|
Special Mention
|
Substandard
|
Doubtful
|
Total
|
||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||
|
Residential
|
$
|
199,911
|
$
|
18,882
|
$
|
531
|
$
|
4,377
|
$
|
—
|
$
|
223,701
|
||||||||||||
|
Residential commercial real estate
|
1,583,686
|
9,563
|
3,317
|
310
|
—
|
1,596,876
|
||||||||||||||||||
|
Credit/grocery retail commercial real estate
|
438,562
|
15,523
|
2,973
|
—
|
—
|
457,058
|
||||||||||||||||||
|
Other commercial real estate
|
798,457
|
51,567
|
17,553
|
19,866
|
—
|
887,443
|
||||||||||||||||||
|
Construction and land loans
|
4,754
|
—
|
—
|
56
|
—
|
4,810
|
||||||||||||||||||
|
Total
|
$
|
3,025,370
|
$
|
95,535
|
$
|
24,374
|
$
|
24,609
|
$
|
—
|
$
|
3,169,888
|
||||||||||||
16
The following table provides information about loans past due at December 31, 2016 and June 30, 2016:
|
|
At December 31, 2016
|
|||||||||||||||||||||||||||
|
|
30-59 Days Past Due
|
60-89 Days Past Due
|
90 days or More Past Due
|
Total Past Due
|
Current
|
Total Loans
|
Nonaccrual (1)
|
|||||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||||||
|
Residential
|
$
|
1,840
|
$
|
833
|
$
|
879
|
$
|
3,552
|
$
|
235,309
|
$
|
238,861
|
$
|
893
|
||||||||||||||
|
Residential commercial real estate
|
246
|
—
|
—
|
246
|
1,808,098
|
1,808,344
|
—
|
|||||||||||||||||||||
|
Credit/grocery retail commercial real estate
|
—
|
—
|
—
|
—
|
519,780
|
519,780
|
—
|
|||||||||||||||||||||
|
Other commercial real estate
|
1,047
|
377
|
2,962
|
4,386
|
847,690
|
852,076
|
9,480
|
|||||||||||||||||||||
|
Construction and land loans
|
—
|
—
|
20
|
20
|
2,341
|
2,361
|
20
|
|||||||||||||||||||||
|
Total
|
$
|
3,133
|
$
|
1,210
|
$
|
3,861
|
$
|
8,204
|
$
|
3,413,218
|
$
|
3,421,422
|
$
|
10,393
|
||||||||||||||
|
|
At June 30, 2016
|
|||||||||||||||||||||||||||
|
|
30-59 Days Past Due
|
60-89 Days Past Due
|
90 days or More Past Due
|
Total Past Due
|
Current
|
Total Loans
|
Nonaccrual (2)
|
|||||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||||||
|
Residential
|
$
|
1,745
|
$
|
531
|
$
|
684
|
$
|
2,960
|
$
|
220,741
|
$
|
223,701
|
$
|
931
|
||||||||||||||
|
Residential commercial real estate
|
3,601
|
1,166
|
—
|
4,767
|
1,592,109
|
1,596,876
|
310
|
|||||||||||||||||||||
|
Credit/grocery retail commercial real estate
|
—
|
—
|
—
|
—
|
457,058
|
457,058
|
—
|
|||||||||||||||||||||
|
Other commercial real estate
|
3,746
|
—
|
1,641
|
5,387
|
882,056
|
887,443
|
8,671
|
|||||||||||||||||||||
|
Construction and land loans
|
—
|
—
|
56
|
56
|
4,754
|
4,810
|
56
|
|||||||||||||||||||||
|
Total
|
$
|
9,092
|
$
|
1,697
|
$
|
2,381
|
$
|
13,170
|
$
|
3,156,718
|
$
|
3,169,888
|
$
|
9,968
|
||||||||||||||
|
(1)
|
Included in nonaccrual loans at December 31, 2016 are residential loans totaling $14,000 that were 60-89 days past due and other commercial real estate loans totaling $6.5 million that were current.
|
|
(2)
|
Included in nonaccrual loans at June 30, 2016 are residential loans totaling $180,000 that were 30-59 days past due; residential loans totaling $66,000, residential commercial real estate loans totaling $310,000 and other commercial real estate loans totaling $7.0 million that were current.
|
17
The Company defines an impaired loan as a loan for which it is probable, based on current information, that the Company will not collect all amounts due under the contractual terms of the loan agreement. Loans we individually classify as impaired include multifamily, commercial mortgage and construction loans with balances of $1.0 million or more, unless a condition exists for loans less than $1.0 million that would increase the Bank's potential loss exposure. At December 31, 2016 impaired loans were primarily collateral-dependent and totaled $13.6 million, of which $848,000 had a related allowance for credit losses of $108,000 and $12.8 million of impaired loans had no related allowance for credit losses. At June 30, 2016 impaired loans were primarily collateral-dependent and totaled $13.2 million, of which $487,000 had a related allowance for credit losses of $118,000 and $12.7 million of impaired loans had no related allowance for credit losses.
The following table provides information about the Company's impaired loans at December 31, 2016 and June 30, 2016:
|
At December 31, 2016
|
At June 30, 2016
|
|||||||||||||||||||||||
|
Recorded Investment
|
Unpaid Principal Balance
|
Allowance
|
Recorded Investment
|
Unpaid Principal Balance
|
Allowance
|
|||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
|
With no related allowance recorded:
|
||||||||||||||||||||||||
|
Residential
|
$
|
3,505
|
$
|
3,505
|
$
|
—
|
$
|
3,447
|
$
|
3,447
|
$
|
—
|
||||||||||||
|
Residential commercial real estate
|
—
|
—
|
—
|
310
|
310
|
—
|
||||||||||||||||||
|
Other commercial real estate
|
9,265
|
9,265
|
—
|
8,907
|
8,907
|
—
|
||||||||||||||||||
|
Construction and land loans
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
|
12,770
|
12,770
|
—
|
12,664
|
12,664
|
—
|
||||||||||||||||||
|
With an allowance recorded:
|
||||||||||||||||||||||||
|
Residential
|
$
|
161
|
$
|
181
|
$
|
20
|
$
|
164
|
$
|
184
|
$
|
20
|
||||||||||||
|
Residential commercial real estate
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
Other commercial real estate
|
579
|
647
|
68
|
196
|
247
|
51
|
||||||||||||||||||
|
Construction and land loans
|
—
|
20
|
20
|
9
|
56
|
47
|
||||||||||||||||||
|
|
740
|
848
|
108
|
369
|
487
|
118
|
||||||||||||||||||
|
Total:
|
||||||||||||||||||||||||
|
Residential
|
$
|
3,666
|
$
|
3,686
|
$
|
20
|
$
|
3,611
|
$
|
3,631
|
$
|
20
|
||||||||||||
|
Residential commercial real estate
|
—
|
—
|
—
|
310
|
310
|
—
|
||||||||||||||||||
|
Other commercial real estate
|
9,844
|
9,912
|
68
|
9,103
|
9,154
|
51
|
||||||||||||||||||
|
Construction and land loans
|
—
|
20
|
20
|
9
|
56
|
47
|
||||||||||||||||||
|
|
$
|
13,510
|
$
|
13,618
|
$
|
108
|
$
|
13,033
|
$
|
13,151
|
$
|
118
|
||||||||||||
18
The following tables present the average recorded investment and interest income recognized on impaired loans for the three and six months ended December 31, 2016 and 2015:
|
Three months ended December 31,
|
||||||||||||||||
|
2016
|
2015
|
|||||||||||||||
|
Average Recorded Investment
|
Interest Income Recognized
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||||||||||
|
(In thousands)
|
||||||||||||||||
|
With no related allowance recorded:
|
||||||||||||||||
|
Residential
|
$
|
3,505
|
$
|
34
|
$
|
3,533
|
$
|
59
|
||||||||
|
Residential commercial real estate
|
—
|
—
|
—
|
—
|
||||||||||||
|
Other commercial real estate
|
9,356
|
146
|
4,241
|
80
|
||||||||||||
|
Construction and land loans
|
—
|
—
|
—
|
—
|
||||||||||||
|
|
12,861
|
180
|
7,774
|
139
|
||||||||||||
|
With an allowance recorded:
|
||||||||||||||||
|
Residential
|
$
|
162
|
$
|
2
|
$
|
166
|
$
|
—
|
||||||||
|
Residential commercial real estate
|
—
|
—
|
292
|
—
|
||||||||||||
|
Other commercial real estate
|
587
|
—
|
4,941
|
—
|
||||||||||||
|
Construction and land loans
|
2
|
—
|
87
|
—
|
||||||||||||
|
|
751
|
2
|
5,486
|
—
|
||||||||||||
|
Total:
|
||||||||||||||||
|
Residential
|
$
|
3,667
|
$
|
36
|
$
|
3,699
|
$
|
59
|
||||||||
|
Residential commercial real estate
|
—
|
—
|
292
|
—
|
||||||||||||
|
Other commercial real estate
|
9,943
|
146
|
9,182
|
80
|
||||||||||||
|
Construction and land loans
|
2
|
—
|
87
|
—
|
||||||||||||
|
|
$
|
13,612
|
$
|
182
|
$
|
13,260
|
$
|
139
|
||||||||
|
Cash basis interest income
|
$
|
158
|
$
|
114
|
||||||||||||
|
Six months ended December 31,
|
||||||||||||||||
|
2016
|
2015
|
|||||||||||||||
|
Average Recorded Investment
|
Interest Income Recognized
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||||||||||
|
(In thousands
|
||||||||||||||||
|
With no related allowance recorded:
|
||||||||||||||||
|
Residential
|
$
|
3,480
|
$
|
69
|
$
|
3,558
|
$
|
71
|
||||||||
|
Residential commercial real estate
|
—
|
—
|
—
|
—
|
||||||||||||
|
Other commercial real estate
|
8,954
|
267
|
4,519
|
105
|
||||||||||||
|
Construction and land loans
|
—
|
—
|
—
|
—
|
||||||||||||
|
|
12,434
|
336
|
8,077
|
176
|
||||||||||||
|
With an allowance recorded:
|
||||||||||||||||
|
Residential
|
$
|
163
|
$
|
4
|
$
|
167
|
$
|
—
|
||||||||
|
Residential commercial real estate
|
—
|
—
|
292
|
—
|
||||||||||||
|
Other commercial real estate
|
597
|
—
|
5,045
|
—
|
||||||||||||
|
Construction and land loans
|
5
|
—
|
122
|
—
|
||||||||||||
|
|
765
|
4
|
5,626
|
—
|
||||||||||||
|
Total:
|
||||||||||||||||
|
Residential
|
$
|
3,643
|
$
|
73
|
$
|
3,725
|
$
|
71
|
||||||||
|
Residential commercial real estate
|
—
|
—
|
292
|
—
|
||||||||||||
|
Other commercial real estate
|
9,551
|
267
|
9,564
|
105
|
||||||||||||
|
Construction and land loans
|
5
|
—
|
122
|
—
|
||||||||||||
|
|
$
|
13,199
|
$
|
340
|
$
|
13,703
|
$
|
176
|
||||||||
|
Cash basis interest income
|
$
|
291
|
$
|
126
|
||||||||||||
19
Troubled debt restructured loans ("TDRs") are those loans whose terms have been modified because of deterioration in the financial condition of the borrower. The Company has selectively modified certain borrower's loans to enable the borrower to emerge from delinquency and keep their loans current. The eligibility of a borrower for a TDR modification depends upon the facts and circumstances of each transaction, which may change from period to period, and involve judgment by management regarding the likelihood that the modification will result in the maximum recovery by the Company. Modifications could include extension of the terms of the loan, reduced interest rates, and forgiveness of accrued interest and/or principal. Once an obligation has been restructured because of such credit problems, it continues to be considered restructured until paid in full or, if the obligation yields a market rate (a rate equal to or greater than the rate the Company was willing to accept at the time of the restructuring for a new loan with comparable risk), until the year subsequent to the year in which the restructuring takes place, provided the borrower has performed under the modified terms for a six month period. Management classifies all TDRs as impaired loans. Included in impaired loans at December 31, 2016 are $4.3 million of loans which are deemed TDRs. At June 30, 2016, TDRs totaled $4.6 million.
The following table presents additional information regarding the Company's TDRs as of December 31, 2016 and June 30, 2016:
|
|
Troubled Debt Restructurings at December 31, 2016
|
|||||||||||
|
|
Performing
|
Nonperforming
|
Total
|
|||||||||
|
|
(In thousands)
|
|||||||||||
|
Residential
|
$
|
—
|
$
|
181
|
$
|
181
|
||||||
|
Other commercial real estate
|
370
|
3,743
|
4,113
|
|||||||||
|
Construction and land loans
|
—
|
20
|
20
|
|||||||||
|
Total
|
$
|
370
|
$
|
3,944
|
$
|
4,314
|
||||||
|
Allowance
|
$
|
—
|
$
|
108
|
$
|
108
|
||||||
|
|
||||||||||||
|
|
Troubled Debt Restructurings at June 30, 2016
|
|||||||||||
|
|
Performing
|
Nonperforming
|
Total
|
|||||||||
|
|
(In thousands)
|
|||||||||||
|
Residential
|
$
|
—
|
$
|
184
|
$
|
184
|
||||||
|
Residential commercial real estate
|
—
|
310
|
310
|
|||||||||
|
Other commercial real estate
|
386
|
3,703
|
4,089
|
|||||||||
|
Construction and land loans
|
—
|
56
|
56
|
|||||||||
|
Total
|
$
|
386
|
$
|
4,253
|
$
|
4,639
|
||||||
|
Allowance
|
$
|
—
|
$
|
118
|
$
|
118
|
||||||
There were no loan relationships modified in a troubled debt restructuring during the three months ended December 31, 2016 and 2015.
|
|
Six months ended December 31,
|
|||||||||||||||||||||||
|
|
2016
|
2015
|
||||||||||||||||||||||
|
|
Number of
Relationships
|
Pre-Modification
Outstanding
Recorded
Investment
|
Post-Modification
Outstanding
Recorded
Investment
|
Number of
Relationships
|
Pre-Modification
Outstanding
Recorded
Investment
|
Post-Modification
Outstanding
Recorded
Investment
|
||||||||||||||||||
|
|
(Dollars in thousands)
|
(Dollars in thousands)
|
||||||||||||||||||||||
|
Other commercial real estate
|
—
|
—
|
—
|
1
|
3,385
|
2,307
|
||||||||||||||||||
|
Total
|
—
|
$
|
—
|
$
|
—
|
1
|
$
|
3,385
|
$
|
2,307
|
||||||||||||||
There were no loan relationships modified in a troubled debt restructuring during the six months ended December 31, 2016. The relationship modified during the six months ended December 31, 2015, was granted an extended maturity in conjunction with a principal paydown.
There have been no loans that were modified as TDR during the last twelve months that have subsequently defaulted (90 days or more past due) during the current quarter ended December 31, 2016.
20
7. Investment Securities
Securities Held to Maturity
The following is a comparative summary of securities held to maturity at December 31, 2016 and June 30, 2016:
|
|
At December 31, 2016
|
|||||||||||||||
|
|
Amortized cost
|
Gross
unrealized gains
|
Gross
unrealized losses
|
Fair value
|
||||||||||||
|
|
(In thousands)
|
|||||||||||||||
|
U.S. Government and federal agency obligations
|
||||||||||||||||
|
Due in one to five years
|
$
|
6,750
|
$
|
—
|
$
|
89
|
$
|
6,661
|
||||||||
|
Mortgage-backed securities:
|
||||||||||||||||
|
FHLMC
|
20,896
|
72
|
502
|
20,466
|
||||||||||||
|
FNMA
|
86,877
|
114
|
1,463
|
85,528
|
||||||||||||
|
GNMA
|
1,335
|
56
|
—
|
1,391
|
||||||||||||
|
CMO
|
85,955
|
—
|
1,316
|
84,639
|
||||||||||||
|
|
$
|
201,813
|
$
|
242
|
$
|
3,370
|
$
|
198,685
|
||||||||
|
|
At June 30, 2016
|
|||||||||||||||
|
|
Amortized cost
|
Gross
unrealized gains
|
Gross
unrealized losses
|
Fair value
|
||||||||||||
|
|
(In thousands)
|
|||||||||||||||
|
U.S. Government and federal agency obligations
|
||||||||||||||||
|
Due in one to five years
|
$
|
6,750
|
$
|
4
|
$
|
2
|
$
|
6,752
|
||||||||
|
Mortgage-backed securities:
|
||||||||||||||||
|
FHLMC
|
9,129
|
162
|
—
|
9,291
|
||||||||||||
|
FNMA
|
83,112
|
1,588
|
11
|
84,689
|
||||||||||||
|
GNMA
|
1,398
|
66
|
—
|
1,464
|
||||||||||||
|
CMO
|
67,718
|
792
|
—
|
68,510
|
||||||||||||
|
|
$
|
168,107
|
$
|
2,612
|
$
|
13
|
$
|
170,706
|
||||||||
The contractual maturities of mortgage-backed securities held to maturity generally exceed 20 years; however, the effective lives are expected to be shorter due to anticipated prepayments and, in the case of CMOs, cash flow priorities. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
The Company did not sell any securities held to maturity during the three and six months ended December 31, 2016 and 2015. Securities with fair values of $78.3 million and $86.6 million at December 31, 2016 and June 30, 2016, respectively, were pledged as collateral for advances. The fair value of securities held to maturity pledged as collateral for cash flow hedge interest rate swaps totaled $6.1 million and $20.3 million at December 31, 2016 and June 30, 2016, respectively. The Company did not record other-than-temporary impairment charges on securities held to maturity during the three and six months ended December 31, 2016 and 2015.
21
Gross unrealized losses on securities held to maturity and the fair value of the related securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2016 and June 30, 2016 were as follows:
|
|
At December 31, 2016
|
|||||||||||||||||||||||
|
|
Less than 12 months
|
Greater than 12 months
|
Total
|
|||||||||||||||||||||
|
|
Fair value
|
Gross
unrealized
losses
|
Fair value
|
Gross
unrealized
losses
|
Fair value
|
Gross
unrealized
losses
|
||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||
|
U.S. Government and federal agency obligations
|
$
|
6,661
|
$
|
89
|
$
|
—
|
$
|
—
|
$
|
6,661
|
$
|
89
|
||||||||||||
|
Mortgage-backed securities:
|
||||||||||||||||||||||||
|
FHLMC
|
19,337
|
502
|
—
|
—
|
19,337
|
502
|
||||||||||||||||||
|
FNMA
|
71,119
|
1,377
|
1,921
|
86
|
73,040
|
1,463
|
||||||||||||||||||
|
CMO
|
84,640
|
1,316
|
—
|
—
|
84,640
|
1,316
|
||||||||||||||||||
|
|
$
|
181,757
|
$
|
3,284
|
$
|
1,921
|
$
|
86
|
$
|
183,678
|
$
|
3,370
|
||||||||||||
|
|
At June 30, 2016
|
|||||||||||||||||||||||
|
|
Less than 12 months
|
Greater than 12 months
|
Total
|
|||||||||||||||||||||
|
|
Fair value
|
Gross
unrealized
losses
|
Fair value
|
Gross
unrealized
losses
|
Fair value
|
Gross
unrealized
losses
|
||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||
|
U.S. Government and federal agency obligations
|
$
|
4,998
|
$
|
2
|
$
|
—
|
$
|
—
|
$
|
4,998
|
$
|
2
|
||||||||||||
|
Mortgage-backed securities:
|
||||||||||||||||||||||||
|
FNMA
|
—
|
—
|
3,267
|
11
|
3,267
|
11
|
||||||||||||||||||
|
|
$
|
4,998
|
$
|
2
|
$
|
3,267
|
$
|
11
|
$
|
8,265
|
$
|
13
|
||||||||||||
Management evaluated the securities in the above tables and concluded that none of the securities with losses has impairments that are other-than-temporary. The unrealized losses on investments in mortgage-backed securities were caused by interest rate changes and market conditions. Because the decline in fair value is attributable to changes in interest rates and market conditions and not credit quality, and because the Company has no intent to sell and believes it is not more than likely than not that it will be required to sell these investments until a market price recovery or maturity, these investments are not considered other-than-temporarily impaired.
22
Securities Available for Sale
The following is a comparative summary of securities available for sale at December 31, 2016 and June 30, 2016:
|
|
At December 31, 2016
|
|||||||||||||||
|
|
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Fair value
|
||||||||||||
|
|
(In thousands)
|
|||||||||||||||
|
Equity securities
|
$
|
601
|
$
|
1,011
|
$
|
—
|
$
|
1,612
|
||||||||
|
Mortgage-backed securities:
|
||||||||||||||||
|
FHLMC
|
606
|
26
|
—
|
632
|
||||||||||||
|
FNMA
|
13,240
|
294
|
—
|
13,534
|
||||||||||||
|
GNMA
|
51,197
|
—
|
677
|
50,520
|
||||||||||||
|
CMO
|
114,494
|
265
|
863
|
113,896
|
||||||||||||
|
|
$
|
180,138
|
$
|
1,596
|
$
|
1,540
|
$
|
180,194
|
||||||||
|
|
At June 30, 2016
|
|||||||||||||||
|
|
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Fair value
|
||||||||||||
|
|
(In thousands)
|
|||||||||||||||
|
Equity securities
|
$
|
601
|
$
|
524
|
$
|
—
|
$
|
1,125
|
||||||||
|
Mortgage-backed securities:
|
||||||||||||||||
|
FHLMC
|
815
|
34
|
—
|
849
|
||||||||||||
|
FNMA
|
14,650
|
535
|
—
|
15,185
|
||||||||||||
|
CMO
|
123,173
|
1,548
|
30
|
124,691
|
||||||||||||
|
|
$
|
139,239
|
$
|
2,641
|
$
|
30
|
$
|
141,850
|
||||||||
The contractual maturities of mortgage-backed securities available for sale generally exceed 20 years; however, the effective lives are expected to be shorter due to anticipated prepayments and, in the case of CMOs, cash flow priorities. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
The Company did not sell any securities available for sale for the three and six months ended December 31, 2016. Proceeds from the sale of securities available for sale for both the three and six months ended December 31, 2015 were $39.0 million on securities with an amortized cost of $38.4 million, resulting in gross gains and gross losses of $607,000 and $3,000, respectively. The Equity securities caption relates to holdings of shares in financial institutions common stock. Available for sale securities with fair values of $66.6 million and $78.4 million at December 31, 2016 and June 30, 2016, respectively, were pledged as collateral for advances. There were no available for sale securities pledged as collateral for cash flow hedge interest rate swaps at December 31, 2016. The fair value of available for sale securities pledged as collateral for cash flow hedge interest rate swaps totaled $1.2 million at June 30, 2016. There were no other-than-temporary impairment charges on available for sale securities for the three and six months ended December 31, 2016 and 2015.
23
Gross unrealized losses on securities available for sale and the fair value of the related securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2016 and June 30, 2016 were as follows:
|
|
At December 31, 2016
|
|||||||||||||||||||||||
|
|
Less than 12 months
|
Greater than 12 months
|
Total
|
|||||||||||||||||||||
|
|
Fair value
|
Gross
unrealized
losses
|
Fair value
|
Gross
unrealized
losses
|
Fair value
|
Gross
unrealized
losses
|
||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||
|
Mortgage-backed securities:
|
||||||||||||||||||||||||
|
GNMA
|
$
|
50,521
|
$
|
677
|
$
|
—
|
$
|
—
|
$
|
50,521
|
$
|
677
|
||||||||||||
|
CMO
|
75,243
|
732
|
4,383
|
131
|
79,626
|
863
|
||||||||||||||||||
|
|
$
|
125,764
|
$
|
1,409
|
$
|
4,383
|
$
|
131
|
$
|
130,147
|
$
|
1,540
|
||||||||||||
|
|
At June 30, 2016
|
|||||||||||||||||||||||
|
|
Less than 12 months
|
Greater than 12 months
|
Total
|
|||||||||||||||||||||
|
|
Fair value
|
Gross
unrealized
losses
|
Fair value
|
Gross
unrealized
losses
|
Fair value
|
Gross
unrealized
losses
|
||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||
|
Mortgage-backed securities:
|
||||||||||||||||||||||||
|
CMO
|
$
|
—
|
$
|
—
|
$
|
5,112
|
$
|
30
|
$
|
5,112
|
$
|
30
|
||||||||||||
|
|
$
|
—
|
$
|
—
|
$
|
5,112
|
$
|
30
|
$
|
5,112
|
$
|
30
|
||||||||||||
Management evaluated the securities in the above tables and concluded that none of the securities with losses has impairments that are other-than-temporary. The unrealized losses on investments in mortgage-backed securities were caused by interest rate changes and market conditions. Because the decline in fair value is attributable to changes in interest rates and market conditions and not credit quality, and because the Company has no intent to sell and believes it is not more than likely than not that it will be required to sell these investments until a market price recovery or maturity, these investments are not considered other-than-temporarily impaired.
24
8. Deposits
Deposits include checking (non-interest and interest-bearing demand deposits), money market, savings and time deposits. We had brokered deposits totaling $386.3 million and $253.2 million at December 31, 2016 and June 30, 2016, respectively. As of December 31, 2016 and June 30, 2016, the aggregate amount of outstanding time deposits in amounts greater than $250,000 was $196.6 million and $190.9 million, respectively.
Deposit balances are summarized as follows:
|
|
December 31, 2016
|
June 30, 2016
|
||||||
|
|
(In thousands)
|
|||||||
|
Checking accounts
|
$
|
676,989
|
$
|
453,136
|
||||
|
Money market deposit accounts
|
752,460
|
681,710
|
||||||
|
Savings accounts
|
172,725
|
165,623
|
||||||
|
Time deposits
|
988,900
|
959,534
|
||||||
|
|
$
|
2,591,074
|
$
|
2,260,003
|
||||
9. Derivatives and Hedging Activities
Oritani is exposed to certain risks regarding its ongoing business operations. Derivative instruments are used to offset a portion of the Company's interest rate risk. Specifically, the Company has utilized interest rate swaps to partially offset the interest rate risk inherent in the Company's balance sheet. Oritani recognizes interest rate swaps as either assets or liabilities at fair value in the statement of financial condition with an offset recorded in Other Comprehensive Income and any ineffectiveness is recorded in earnings. The interest rate swaps have been designed as cash flow hedges. For all cash flow hedges that are currently effective, the balance sheet item that has been hedged is brokered deposits. For all cash flow hedges that are are not yet effective, it is anticipated that the balance sheet item that will be hedged is brokered deposits.
Oritani is exposed to credit-related losses in the event of nonperformance by the counterparties to the agreements. Oritani controls the credit risk through monitoring procedures and does not expect the counterparty to fail their obligations. Oritani only deals with primary dealers and believes that the credit risk inherent in these contracts was not significant during and at period end. Oritani has the right to demand that the counterparty post collateral to cover any market value shortfall of the counterparty regarding the transaction.
At December 31, 2016, Oritani had entered into twenty one interest rate swap agreements with a total notional outstanding of $430.0 million. These agreements all feature exchanges of fixed for variable payments covering various hedging periods maturing between January 2017 and July 2024. The Company is paying fixed rates on these swaps ranging from 0.44% to 3.67%, in exchange for receiving variable payments linked to one month LIBOR.
The following table presents amounts included in the consolidated balance sheets related to the fair value of derivative financial instruments at December 31, 2016 and June 30, 2016.
|
At December 31, 2016
|
At June 30, 2016
|
||||||||||||||||
|
text
|
Balance Sheet Line Item
|
Notional Amount
|
Fair Value
|
Notional Amount
|
Fair Value
|
||||||||||||
|
Cash flow hedge interest rate swaps
|
|||||||||||||||||
|
Gross unrealized gain
|
Other Assets
|
$
|
280,000
|
$
|
5,291
|
$
|
25,000
|
$
|
3
|
||||||||
|
Gross unrealized loss
|
Other Liabilities
|
150,000
|
(6,603
|
)
|
405,000
|
(17,495
|
)
|
||||||||||
|
Gross notional / net fair value
|
$
|
430,000
|
$
|
(1,312
|
)
|
$
|
430,000
|
$
|
(17,492
|
)
|
|||||||
25
Gains (losses) included in the consolidated statements of income and in comprehensive income, on a pre-tax basis, related to cash flow hedge interest rate swaps are as follows:
|
Three months ended December 31,
|
Six months ended December 31,
|
|||||||||||||||
|
2016
|
2015
|
2016
|
2015
|
|||||||||||||
|
(in thousands)
|
||||||||||||||||
|
Amount of loss reclassified from accumulated other comprehensive loss to interest expense
|
$
|
(620
|
)
|
$
|
(303
|
)
|
$
|
(1,247
|
)
|
$
|
(303
|
)
|
||||
|
Amount of gain (loss) recognized in other comprehensive income
|
13,289
|
2,278
|
14,933
|
(1,879
|
)
|
|||||||||||
Ineffectiveness recognized during the three and six months ended December 31, 2016 and 2015 was immaterial. The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $756,000 and $9.9 million at December 31, 2016 and June 30, 2016, respectively. Amounts reported in accumulated other comprehensive loss related to cash flow interest rate swaps are reclassified to interest expense as interest payments are made. The fair value of securities pledged as collateral for the swaps at December 31, 2016 and June 30, 2016 was $6.1 million and $21.5 million, respectively.
10. Income Taxes
The Company files income tax returns in the United States federal jurisdiction and in New Jersey, Pennsylvania and New York state and local jurisdictions.
The Company is no longer subject to federal and state income tax examinations by tax authorities for years prior to 2013. The Company's federal return for the tax year ended December 31, 2012 was audited during fiscal 2016. Our state and city tax returns are not currently under audit and have not been subject to an audit during the past five years. The Company did not have any uncertain tax positions at December 31, 2016 and June 30, 2016. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, where applicable, in income tax expense.
11. Real Estate Joint Ventures, net and Real Estate Held for Investment
The Company accounts for investments in joint ventures under the equity method. The balance reflects the cost basis of investments, plus the Company's share of income earned on the joint venture operations, less cash distributions, including excess cash distributions, and the Company's share of losses on joint venture operations. Cash received in excess of the Company's recorded investment in a joint venture is recorded as unearned revenue in other liabilities. As of September 30, 2016 and June 30, 2016, the Company has ownership interest in one joint venture entity that owns an income-producing commercial rental property. This remaining property is currently under contract for sale. The book value of this joint venture is $4.4 million and $4.3 million at December 31, 2016 and June 30, 2016, respectively. All other joint ventures investments were sold during fiscal 2016 and 2015. There were no sales for the three and six months ended December 31, 2016. Proceeds from the sale of joint investments for the three months ended December 31, 2015 were $9.1 million resulting in gains of $9.3 million. Proceeds from the sale of joint investments for the six months ended December 31, 2015 were $13.7 million resulting in gains of $13.5 million.
Real estate held for investment included the Company's undivided interest in real estate properties accounted for under the equity method and properties held for investment purposes. Cash received in excess of the Company's recorded investment for an undivided interest in real estate property was recorded as unearned revenue in other liabilities. The operations of the properties held for investment purposes were reflected in the financial results of the Company and included in the Other Income caption in the Income Statement. Properties held for investment purposes were carried at cost less accumulated depreciation. As of June 30, 2016, all real estate investments were sold during fiscal 2016 and 2015. Proceeds from the sale of real estate held for investment for the three and six months ended December 31, 2015 were $16.0 million resulting in gains of $16.0 million.
26
12. Fair Value Measurements
The Company adopted FASB ASC 820, "Fair Value Measurements and Disclosures," on July 1, 2008. Under ASC 820, fair value measurements are not adjusted for transaction costs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described below:
Basis of Fair Value Measurement:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability;
Level 3: Price or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).
A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
Following are descriptions of the valuation methodologies and key inputs used to measure assets recorded at fair value, as well as a description of the methods and significant assumptions used to estimate fair value disclosures for financial instruments not recorded at fair value in their entirety on a recurring basis. The descriptions include an indication of the level of the fair value hierarchy in which the assets or liabilities are classified.
Cash and Cash Equivalents
Due to their short-term nature, the carrying amount of these instruments approximates fair value.
Securities
The Company records securities held to maturity at amortized cost and securities available for sale at fair value on a recurring basis. The majority of the Company's securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. The estimated fair values for securities are obtained from an independent nationally recognized third-party pricing service. Our independent pricing service provides us with prices which are primarily categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the majority of securities in our portfolio. Pricing services may employ modeling techniques in determining pricing. Inputs to these models include market spreads, dealer quotes, prepayment speeds, credit information and the instrument's terms and conditions, among other things. Management compares the pricing to a second independent pricing source for reasonableness. Equity securities are reported at Level 1 based on quoted market prices for identical securities in active markets.
FHLB of New York Stock
FHLB of New York Stock is recorded at cost (par value) and evaluated for impairment based on the ultimate recoverability of the par value. There is no active market for this stock and no significant observable market data is available for this instrument. The Company considers the profitability and asset quality of FHLB, dividend payment history and recent redemption experience, when determining the ultimate recoverability of the par value. The Company believes its investment in FHLB stock is ultimately recoverable at par. The carrying amount of FHLB stock approximates fair value, since this is the amount for which it could be redeemed.
27
Loans
The Company does not record loans at fair value on a recurring basis. However, periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements. The estimated fair value for significant nonperforming loans and impaired loans are valued utilizing independent appraisals of the collateral securing such loans that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments to comparable assets based on the appraisers' market knowledge and experience. The appraisals may be adjusted downward by management (0-20% adjustment rate and 0-10% risk premium rate), as necessary, for changes in relevant valuation factors subsequent to the appraisal date and the timing of anticipated cash flows (0-8% discount rate). The Company classifies impaired loans as Level 3.
Fair value for loans held for investment is estimated using portfolios of loans with similar financial characteristics. Loans are segregated by type such as residential, multifamily, commercial real estate, construction, land and consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and nonperforming/impaired categories. Fair value of performing loans is estimated using a discounted cash flow model that employs a discount rate that reflects the current market pricing for loans with similar characteristics and remaining maturity, adjusted by an amount for estimated credit losses inherent in the portfolio at the balance sheet date. The rates take into account the expected yield curve. Fair values estimated in this manner do not fully incorporate an exit-price approach to fair value. The Company classifies the estimated fair value of loans held for investment as Level 3.
Real Estate Owned
Assets acquired through foreclosure or deed in lieu of foreclosure are recorded at fair value less estimated selling costs when acquired, thus establishing a new cost basis. Subsequently, real estate owned is carried at the lower of cost or fair value, less estimated selling costs. Fair value is generally based on independent appraisals. These appraisals include adjustments to comparable assets based on the appraisers' market knowledge and experience, and are considered Level 3. When an asset is acquired, the excess of the loan balance over fair value, less estimated liquidation costs (5%-20% discount rate), is charged to the allowance for loan losses. If the estimated fair value of the asset declines, a write-down is recorded through expense. The valuation of foreclosed assets is subjective in nature and may be adjusted in the future because of changes in the economic conditions.
Deposit Liabilities
The estimated fair value of deposits with no stated maturity, such as checking, savings, and money market accounts, is equal to the amount payable on demand at the balance sheet date. The estimated fair value of term deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The Company classifies the estimated fair value of term deposits as Level 2.
Borrowings
The book value of overnight borrowings approximates the estimated fair value. The estimated fair value of term borrowings is calculated based on the discounted cash flow of contractual amounts due, using market rates currently available for borrowings of similar amount and remaining maturity. The Company classifies the estimated fair value of term borrowings as Level 2.
Derivatives
The fair value of our interest rate swaps was estimated using Level 2 inputs. The fair value was determined using third party prices that are based on discounted cash flow analyses using observed market interest rate curves and volatilities.
Commitments to Extend Credit and to Purchase or Sell Securities
The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of commitments to purchase or sell securities is estimated based on bid quotations received from securities dealers. The fair value of off-balance-sheet commitments approximates book value.
28
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The following tables present the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and June 30, 2016 by level within the fair value hierarchy. There were no transfers between levels within the fair value hierarchy during the six months ended December 31, 2016.
|
|
Fair Value as of December 31, 2016
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Unobservable
Inputs
(Level 3)
|
||||||||||||
|
|
(In thousands)
|
|||||||||||||||
|
Assets:
|
||||||||||||||||
|
Equity Securities
|
$
|
1,612
|
$
|
1,612
|
$
|
—
|
$
|
—
|
||||||||
|
Mortgage-backed securities available for sale
|
||||||||||||||||
|
FHLMC
|
632
|
—
|
632
|
—
|
||||||||||||
|
FNMA
|
13,534
|
—
|
13,534
|
—
|
||||||||||||
|
GNMA
|
50,520
|
—
|
50,520
|
—
|
||||||||||||
|
CMO
|
113,896
|
—
|
113,896
|
—
|
||||||||||||
|
Total securities available for sale
|
180,194
|
1,612
|
178,582
|
—
|
||||||||||||
|
Interest rate swaps
|
5,291
|
—
|
5,291
|
—
|
||||||||||||
|
Total assets
|
$
|
185,485
|
$
|
1,612
|
$
|
183,873
|
$
|
—
|
||||||||
|
|
||||||||||||||||
|
Liabilities:
|
||||||||||||||||
|
Interest rate swaps
|
$
|
(6,603
|
)
|
$
|
—
|
$
|
(6,603
|
)
|
$
|
—
|
||||||
|
|
Fair Value as of June 30, 2016
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Unobservable
Inputs
(Level 3)
|
||||||||||||
|
|
(In thousands)
|
|||||||||||||||
|
Assets:
|
||||||||||||||||
|
Equity Securities
|
$
|
1,125
|
$
|
1,125
|
$
|
—
|
$
|
—
|
||||||||
|
Mortgage-backed securities available for sale
|
||||||||||||||||
|
FHLMC
|
849
|
—
|
849
|
—
|
||||||||||||
|
FNMA
|
15,185
|
—
|
15,185
|
—
|
||||||||||||
|
CMO
|
124,691
|
—
|
124,691
|
—
|
||||||||||||
|
Total securities available for sale
|
$
|
141,850
|
$
|
1,125
|
$
|
140,725
|
$
|
—
|
||||||||
|
Interest rate swap
|
3
|
—
|
3
|
—
|
||||||||||||
|
Total assets measured on a recurring basis
|
141,853
|
1,125
|
140,728
|
—
|
||||||||||||
|
Liabilities:
|
||||||||||||||||
|
Interest rate swaps
|
$
|
(17,495
|
)
|
$
|
—
|
$
|
(17,495
|
)
|
$
|
—
|
||||||
29
Assets Recorded at Fair Value on a Nonrecurring Basis
The Company may be required, from time to time, to measure the fair value of certain other financial assets on a nonrecurring basis in accordance with U.S. GAAP. The adjustments to fair value usually result from the application of lower-of-cost-or-fair value accounting or write downs of individual assets.
The following tables present the recorded amount of assets measured at fair value on a nonrecurring basis as of December 31, 2016 and June 30, 2016 by level within the fair value hierarchy.
|
Fair Value as of December 31, 2016
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Unobservable
Inputs
(Level 3)
|
|||||||||||||
|
(In thousands)
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Impaired loans:
|
||||||||||||||||
|
Residential
|
$
|
220
|
$
|
—
|
$
|
—
|
$
|
220
|
||||||||
|
Other commercial real estate
|
3,532
|
—
|
—
|
3,532
|
||||||||||||
|
Total impaired loans
|
3,752
|
—
|
—
|
3,752
|
||||||||||||
|
Real estate owned
|
||||||||||||||||
|
Other commercial real estate
|
266
|
—
|
—
|
266
|
||||||||||||
|
Total real estate owned
|
266
|
—
|
—
|
266
|
||||||||||||
|
Total assets measured on a non-recurring basis
|
$
|
4,018
|
$
|
—
|
$
|
—
|
$
|
4,018
|
||||||||
|
Fair Value as of June 30, 2016
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Unobservable
Inputs
(Level 3)
|
|||||||||||||
|
(In thousands)
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Impaired loans:
|
||||||||||||||||
|
Residential
|
$
|
164
|
$
|
—
|
$
|
—
|
$
|
164
|
||||||||
|
Other commercial real estate
|
3,269
|
—
|
—
|
3,269
|
||||||||||||
|
Construction and land loans
|
9
|
—
|
—
|
9
|
||||||||||||
|
Total impaired loans
|
3,442
|
—
|
—
|
3,442
|
||||||||||||
|
Real estate owned
|
||||||||||||||||
|
Other commercial real estate
|
487
|
—
|
—
|
487
|
||||||||||||
|
Total real estate owned
|
487
|
—
|
—
|
487
|
||||||||||||
|
Total assets measured on a non-recurring basis
|
$
|
3,929
|
$
|
—
|
$
|
—
|
$
|
3,929
|
||||||||
30
Estimated Fair Value of Financial Instruments
The following tables present the carrying amount, estimated fair value, and placement in the fair value hierarchy of financial instruments not recorded at fair values in their entirety on a recurring basis on the Company's balance sheet at December 31, 2016 and June 30, 2016. These tables exclude financial instruments for which the carrying amount approximates fair value. Financial instruments for which the carrying amount approximates fair value include cash and cash equivalents, FHLB stock, non-maturity deposits, and overnight borrowings.
|
|
December 31, 2016
|
|||||||||||||||||||
|
|
Carrying Amount
|
Fair Value
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Unobservable
Inputs
(Level 3)
|
|||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||
|
Financial assets:
|
||||||||||||||||||||
|
Securities held to maturity
|
$
|
201,813
|
$
|
198,685
|
$
|
—
|
$
|
198,685
|
$
|
—
|
||||||||||
|
Loans, net (1)
|
3,383,198
|
3,388,180
|
—
|
—
|
3,388,180
|
|||||||||||||||
|
Financial liabilities:
|
||||||||||||||||||||
|
Time deposits
|
988,900
|
999,086
|
—
|
999,086
|
—
|
|||||||||||||||
|
Term borrowings
|
476,135
|
475,875
|
—
|
475,875
|
—
|
|||||||||||||||
_____________
| (1) |
Comprised of loans (including impaired loans), net of deferred loan fees and the allowance for loan losses.
|
|
|
June 30, 2016
|
|||||||||||||||||||
|
|
Carrying Amount
|
Fair Value
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Unobservable
Inputs
(Level 3)
|
|||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||
|
Financial assets:
|
||||||||||||||||||||
|
Securities held to maturity
|
$
|
168,107
|
$
|
170,706
|
$
|
—
|
$
|
170,706
|
$
|
—
|
||||||||||
|
Loans, net (1)
|
3,131,957
|
3,169,724
|
—
|
—
|
3,169,724
|
|||||||||||||||
|
Financial liabilities:
|
||||||||||||||||||||
|
Time deposits
|
959,534
|
969,320
|
—
|
969,320
|
—
|
|||||||||||||||
|
Term borrowings
|
464,623
|
474,843
|
—
|
474,843
|
—
|
|||||||||||||||
______________
| (1) |
Comprised of loans (including impaired loans), net of deferred loan fees and the allowance for loan losses.
|
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include the mortgage banking operation, deferred tax assets, and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
31
13. Other Comprehensive Income
The components of comprehensive income, both gross and net of tax, are presented for the periods below (in thousands):
|
|
Three months ended December 31,
|
Six months ended December 31,
|
||||||||||||||
|
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
|
Gross:
|
||||||||||||||||
|
Net income
|
$
|
16,354
|
$
|
25,847
|
$
|
32,644
|
$
|
45,244
|
||||||||
|
Other comprehensive income (loss):
|
||||||||||||||||
|
Change in unrealized holding loss on securities available for sale
|
(1,866
|
)
|
(2,876
|
)
|
(2,555
|
)
|
(2,156
|
)
|
||||||||
|
Reclassification adjustment for security gains included in net income
|
—
|
(604
|
)
|
—
|
(604
|
)
|
||||||||||
|
Amortization related to post-retirement obligations
|
100
|
56
|
200
|
112
|
||||||||||||
|
Net change in unrealized gain (loss) on interest rate swaps
|
13,909
|
2,581
|
16,180
|
(1,576
|
)
|
|||||||||||
|
Total other comprehensive income (loss)
|
12,143
|
(843
|
)
|
13,825
|
(4,224
|
)
|
||||||||||
|
Total comprehensive income
|
28,497
|
25,004
|
46,469
|
41,020
|
||||||||||||
|
Tax applicable to:
|
||||||||||||||||
|
Net income
|
4,978
|
9,470
|
10,657
|
16,252
|
||||||||||||
|
Other comprehensive income (loss):
|
||||||||||||||||
|
Change in unrealized holding loss on securities available for sale
|
(804
|
)
|
(1,226
|
)
|
(1,101
|
)
|
(952
|
)
|
||||||||
|
Reclassification adjustment for security gains included in net income
|
—
|
(261
|
)
|
—
|
(261
|
)
|
||||||||||
|
Amortization related to post-retirement obligations
|
43
|
25
|
70
|
48
|
||||||||||||
|
Net change in unrealized gain (loss) on interest rate swaps
|
6,020
|
1,113
|
6,992
|
(680
|
)
|
|||||||||||
|
Total other comprehensive income (loss)
|
5,259
|
(349
|
)
|
5,961
|
(1,845
|
)
|
||||||||||
|
Total comprehensive income
|
10,237
|
9,121
|
16,618
|
14,407
|
||||||||||||
|
Net of tax:
|
||||||||||||||||
|
Net income
|
11,376
|
16,377
|
21,987
|
28,992
|
||||||||||||
|
Other comprehensive income (loss):
|
||||||||||||||||
|
Change in unrealized holding loss on securities available for sale
|
(1,062
|
)
|
(1,650
|
)
|
(1,454
|
)
|
(1,204
|
)
|
||||||||
|
Reclassification adjustment for security gains included in net income
|
—
|
(343
|
)
|
—
|
(343
|
)
|
||||||||||
|
Amortization related to post-retirement obligations
|
57
|
31
|
130
|
64
|
||||||||||||
|
Net change in unrealized gain (loss) on interest rate swaps
|
7,889
|
1,468
|
9,188
|
(896
|
)
|
|||||||||||
|
Total other comprehensive income (loss)
|
6,884
|
(494
|
)
|
7,864
|
(2,379
|
)
|
||||||||||
|
Total comprehensive income
|
$
|
18,260
|
$
|
15,883
|
$
|
29,851
|
$
|
26,613
|
||||||||
32
The following table presents the changes in the components of accumulated other comprehensive (loss) income, net of tax, for the six months ended December 31, 2016 and 2015 (in thousands):
|
|
Unrealized Holding Loss on Securities Available for Sale
|
Post Retirement Obligations
|
Unrealized Holding Loss on Interest Rate Swaps
|
Accumulated Other Comprehensive (Loss), Net of Tax
|
||||||||||||
|
Balance at June 30, 2016
|
$
|
1,529
|
$
|
(1,657
|
)
|
$
|
(9,944
|
)
|
$
|
(10,072
|
)
|
|||||
|
Net change
|
(1,454
|
)
|
130
|
9,188
|
7,864
|
|||||||||||
|
Balance at December 31, 2016
|
$
|
75
|
$
|
(1,527
|
)
|
$
|
(756
|
)
|
$
|
(2,208
|
)
|
|||||
|
|
||||||||||||||||
|
Balance at June 30, 2015
|
$
|
1,496
|
$
|
(1,316
|
)
|
$
|
(2,028
|
)
|
$
|
(1,848
|
)
|
|||||
|
Net change
|
(1,547
|
)
|
64
|
(896
|
)
|
(2,379
|
)
|
|||||||||
|
Balance at December 31, 2015
|
$
|
(51
|
)
|
$
|
(1,252
|
)
|
$
|
(2,924
|
)
|
$
|
(4,227
|
)
|
||||
The following table sets forth information about the amount reclassified from accumulated other comprehensive income (loss) to the consolidated statement of income and the affected line item in the statement where net income is presented (in thousands).
|
Three months ended December 31,
|
Six months ended December 31,
|
||||||||||||||||
|
Accumulated Other Comprehensive Income (Loss) Component
|
Affected line item in the Consolidated Statement of Income
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
|
Reclassification adjustment for security gains included in net income
|
Net gain on sale of securities available for sale
|
$
|
—
|
$
|
(604
|
)
|
$
|
—
|
$
|
(604
|
)
|
||||||
|
|
|
||||||||||||||||
|
Amortization related to post-retirement obligations (1)
|
|
||||||||||||||||
|
Net loss
|
|
100
|
56
|
200
|
112
|
||||||||||||
|
Compensation, payroll taxes and fringe benefits
|
100
|
56
|
200
|
112
|
|||||||||||||
|
|
|
||||||||||||||||
|
Total before tax
|
100
|
(548
|
)
|
200
|
(492
|
)
|
|||||||||||
|
Income tax benefit (expense)
|
43
|
(236
|
)
|
70
|
(213
|
)
|
|||||||||||
|
Net of tax
|
57
|
(312
|
)
|
130
|
(279
|
)
|
|||||||||||
(1) These accumulated other comprehensive income (loss) components are included in the computations of net periodic benefit cost. See Note 5. Postretirement Benefits.
33
14. Recent Accounting Pronouncements
In October 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory". This update requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This update is effective for fiscal years beginning after December 31, 2017, including interim periods within that year. The Company does not expect the adoption of this guidance will have a significant impact on the Company's consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, "Statement of Cashflows (Topic 230): Classification of Certain Cash Receipts and Cash Payments". This update addresses eight specific cash flow issue with the objective of reducing existing diversity in practice. This update is effective for fiscal years beginning after December 31, 2017, including interim periods within that year. The Company does not expect the adoption of this guidance will have a significant impact on the Company's consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments". This update revises the methodology for estimating credit losses on loans receivable, held-to-maturity debt securities, unfunded loan commitments, and certain other financial assets measured at amortized cost. Under ASU 2016-13, the current expected credit losses ("CECL") model is based on lifetime expected losses, rather than incurred losses, and requires the recognition of credit loss expense in the statement of income and a related allowance for credit losses on the balance sheet at the time of origination or purchase of a loan receivable or held-to-maturity debt security. Subsequent changes in this estimate are recorded through credit loss expense and related allowance. The CECL model requires the use of not only relevant historical experience and current conditions, but also reasonable and supportable forecasts of future events and circumstances, thus incorporating a broad range of information in developing credit loss estimates, which could result in significant changes to both the timing and amount of credit loss expense and allowance. Under ASU 2016-13, available-for-sale debt securities are evaluated for impairment if fair value is less than amortized cost. Estimated credit losses are recorded through a credit loss expense and an allowance, rather than a write-down of the investment. Changes in fair value that are not credit-related will continue to be recorded in other comprehensive income. Certain additional disclosures are required, including further disaggregation of credit quality indicators for loans receivable by year of origination. This update is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Entities will apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company is evaluating the impact of this update on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-07, "Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting". This ASU requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments in this Update require that an entity that has an available for sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The ASU is effective for all entities in fiscal years, and interim periods in those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied prospectively to changes in ownership (or influence) after the adoption date. The Company does not expect the adoption of this guidance will have a significant impact on the Company's consolidated financial statements.
34
In March 2016, the FASB issued ASU 2016-05, "Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force))". This ASU clarifies that a change in the counterparty to a derivative instrument (novation), that has been designated as a hedging instrument does not, on its own, require dedesignation of that hedge accounting relationship provided that all other hedge accounting criteria continue to be met. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods therein. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of this guidance will have a significant impact on the Company's consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)". This ASU requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to current accounting treatment. This ASU changes the guidance on sale-leaseback transactions, initial direct costs and lease execution costs, and, for lessors, modifies the classification criteria and the accounting for sales-type and direct financing leases. For public business entities, this ASU is effective for annual periods beginning after December 15, 2018, and interim periods therein. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the impact of the adoption of this guidance on the Company's consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities", which is intended to improve the recognition and measurement of financial instruments. The ASU revises an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company does not expect the adoption of this guidance will have a significant impact on the Company's consolidated financial statements.
In January 2015, the FASB issued ASU 2015-01, "Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items", which eliminates from U.S. GAAP the concept of an extraordinary item. The Board released the new guidance as part of its simplification initiative, which, as explained in the ASU, is intended to "identify, evaluate and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements". To be considered an extraordinary item under existing U.S. GAAP, an event or transaction must be unusual in nature and must occur infrequently. As a result, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; and (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, the ASU does not affect the reporting and disclosure requirements for an event that is unusual in nature or that occurs infrequently. For all entities, the ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods. Entities may apply the guidance prospectively or retrospectively to all prior periods presented in the financial statements. If an entity chooses to apply the guidance prospectively, it must disclose whether amounts included in income from continuing operations after adoption of the ASU are related to events and transactions previously recognized and classified as extraordinary items before the date of adoption. Early adoption is permitted if the guidance is applied as of the beginning of the annual period of adoption. We adopted this guidance on July 1, 2016 with no significant impact on the Company's consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." The objective of this amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS. This update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are in the scope of other standards. In August 2015, the FASB issued ASU 2015-14 to defer for one year the effective date of the new revenue standard. The requirements are effective for annual periods and interim periods within fiscal years beginning after December 15, 2017. During 2016, the FASB issued further implementation guidance regarding revenue recognition. This additional guidance included clarification on certain principal versus agent considerations within the implementation of the guidance as well as clarification related to identifying performance obligations and licensing, assessing collectibility, presenting sales taxes, measuring noncash consideration, and certain transition matters. The Company does not expect the adoption of this guidance will have a significant impact on the Company's consolidated financial statements.
Forward Looking Statements
This Quarterly Report contains certain "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward looking statements may be identified by reference to a future period or periods, or by use of forward looking terminology, such as "may," "will," "believe," 'expect," "estimate," 'anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward looking statements are subject to numerous risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements in addition to those risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2016, include, but are not limited to, those related to the economic environment, particularly in the market areas in which Oritani Financial Corp. (the "Company") operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions, which may be made to any forward looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Overview
The Company is a Delaware corporation that was incorporated in March 2010. The Company is the stock holding company of Oritani Bank (the "Bank"). The Company owns 100% of the outstanding shares of common stock of the Bank. The Company has engaged primarily in the business of holding the common stock of the Bank and two limited liability companies that own a variety of real estate investments. In addition, the Company has engaged in limited lending to the real estate investment properties in which (either directly or through one of its subsidiaries) it maintains an ownership interest. The Bank's principal business consists of attracting retail, commercial and municipal bank deposits from the general public and investing those deposits, together with funds generated from operations and borrowed funds, in multifamily and commercial real estate loans, one- to four-family residential mortgage loans as well as in second mortgage and equity loans, construction loans, business loans, other consumer loans, and investment securities. The Bank originates loans primarily for investment and holds such loans in its portfolio. Occasionally, the Bank will also enter into loan participations. The Bank's primary sources of funds are deposits, borrowings, investment maturities and principal and interest payments on loans and securities. The Bank's revenues are derived principally from interest on loans and securities as well as our investments in real estate and real estate joint ventures. The Bank also generates revenue from fees and service charges and other income. The Bank's results of operations depend significantly on its net interest income; which is the difference between the interest earned on interest-earning assets and the interest paid on interest-bearing liabilities. The Bank's net interest income is primarily affected by the market interest rate environment, the shape of the U.S. Treasury yield curve, the timing of the re-pricing of interest-earning assets and interest-bearing liabilities, and the prepayment rate on its mortgage-related assets. Provisions for loan losses and asset impairment charges can also have a significant impact on results of operations. Other factors that may affect the Bank's results of operations are general and local economic and competitive conditions, government policies and actions of regulatory authorities.
The Bank's business strategy is to operate as a well-capitalized and profitable financial institution dedicated to providing exceptional personal service to its individual, business, and municipal customers. The Bank's primary focus has been, and will continue to be, organic growth in multifamily and commercial real estate lending.
Comparison of Financial Condition at December 31, 2016 and June 30, 2016
Total Assets. Total assets increased $342.8 million to $4.01 billion at December 31, 2016, from $3.67 billion at June 30, 2016. The annualized asset growth rate for fiscal 2017 was 18.7%.
Cash and Cash Equivalents. Cash and cash equivalents (which include fed funds and short term investments) increased $15.8 million to $32.4 million at December 31, 2016, from $16.6 million at June 30, 2016.
Net Loans. Loans, net increased $251.2 million, or 8.0%, to $3.38 billion at December 31, 2016, from $3.13 billion at June 30, 2016. The annualized growth rate was 16.0%. The increase in loans was primarily in residential commercial real estate (multifamily) which increased $93.7 million over the period. The Company's primary strategic business objective remains the organic growth of multifamily and commercial real estate loans. Loan originations and purchases totaled $226.0 million and $39.3 million, respectively, for the three months ended December 31, 2016. This compares to loan originations and purchases of $221.1 million and $37.9 million, respectively, for the comparable 2015 period. Loan growth continues to be impacted by principal payments. Loan principal payments totaled $91.7 million and $113.0 million for the three months ended December 31, 2016 and 2015, respectively.
Delinquency and non performing asset information is provided below:
|
|
12/31/2016
|
9/30/2016
|
6/30/2016
|
3/31/2016
|
12/31/2015
|
|||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
|
Delinquency Totals
|
||||||||||||||||||||
|
30—59 days past due
|
$
|
3,133
|
$
|
1,686
|
$
|
8,912
|
$
|
2,930
|
$
|
6,320
|
||||||||||
|
60—89 days past due
|
1,196
|
1,060
|
1,698
|
1,184
|
404
|
|||||||||||||||
|
Nonaccrual
|
10,393
|
10,537
|
9,968
|
9,989
|
10,880
|
|||||||||||||||
|
Total
|
$
|
14,722
|
$
|
13,283
|
$
|
20,578
|
$
|
14,103
|
$
|
17,604
|
||||||||||
|
Non Performing Asset Totals
|
||||||||||||||||||||
|
Nonaccrual loans, per above
|
$
|
10,393
|
$
|
10,537
|
$
|
9,968
|
$
|
9,989
|
$
|
10,880
|
||||||||||
|
Real Estate Owned
|
266
|
449
|
487
|
487
|
487
|
|||||||||||||||
|
Total
|
$
|
10,659
|
$
|
10,986
|
$
|
10,455
|
$
|
10,476
|
$
|
11,367
|
||||||||||
|
Nonaccrual loans to total loans
|
0.30
|
%
|
0.32
|
%
|
0.31
|
%
|
0.33
|
%
|
0.37
|
%
|
||||||||||
|
Delinquent loans to total loans
|
0.43
|
%
|
0.41
|
%
|
0.65
|
%
|
0.46
|
%
|
0.60
|
%
|
||||||||||
|
Non performing assets to total assets
|
0.27
|
%
|
0.29
|
%
|
0.28
|
%
|
0.29
|
%
|
0.32
|
%
|
||||||||||
Delinquent loan and non performing asset totals continue to illustrate minimal credit issues at the Company. In addition, $6.5 million of the $10.4 million in loans classified as nonaccrual at December 31, 2016, were fully current.
Securities Available For Sale ("AFS"). Securities AFS increased $38.3 million to $180.2 million at December 31, 2016, from $141.9 million at June 30, 2016. Although the Company had been classifying the majority of new purchases as held to maturity, the Company has purchased $66.2 million of adjustable rate mortgage backed securities in fiscal 2017 that have been classified as AFS.
Securities Held To Maturity ("HTM"). Securities HTM increased $33.7 million to $201.8 million at December 31, 2016, from $168.1 million at June 30, 2016.
Investments in real estate joint ventures, net and real estate held for investment. The Company previously announced its intention to investigate the sale of the properties and interests in these portfolios. As of December 31, 2016, all but one such property had been sold and closed. This remaining property is currently under contract for sale. Management will provide additional updates when the sale closes.
Federal Home Loan Bank of New York ("FHLB") stock. FHLB stock increased $875,000 to $38.9 million at December 31, 2016, from $38.0 million at June 30, 2016. FHLB stock holdings are required depending on several factors, including the level of borrowings with the FHLB
Deposits. Deposits increased $331.1 million to $2.59 billion at December 31, 2016, from $2.26 billion at June 30, 2016. Strong deposit growth remains a strategic objective of the Company. The balance of deposits increased $158.4 million and $94.8 million when measured versus the average and period end balances for the three months ended September 30, 2016, respectively.
Borrowings. Borrowings increased $19.0 million to $800.6 million at December 31, 2016, from $781.6 million at June 30, 2016. Increases in deposit balances have allowed the Company to fund asset growth with minimal impact on the total amount of borrowings. Despite this, there was an increase in period end borrowing balances at December 31, 2016. Borrowings increased $133.0 million to $800.6 million at December 31, 2016, from $667.6 million at September 30, 2016. The Company realized substantial loan originations and purchases in the month of December 2016, which necessitated the increase in borrowings.
Stockholders' Equity. Stockholders' equity increased $3.3 million to $538.5 million at December 31, 2016, from $535.2 million at June 30, 2016. The increase was primarily due to net income, the net impact of the amortization of stock based compensation plans and a decrease in other comprehensive loss, partially offset by dividends and repurchases. The dividends paid include regular quarterly dividends of $0.175 per share paid on August 19, 2016 and November 18, 2016, as well as a special dividend of $0.50 per share paid on December 23, 2016. During the six months ended December 31, 2016, 98,655 shares of stock were repurchased at a total cost of $1.6 million and an average cost of $15.95 per share. The shares repurchased were shares redeemed by employees, in lieu of payroll taxes due, in conjunction with the vesting of stock awards from the 2011 Equity Plan. Based on our December 31, 2016 closing price of $18.75 per share, the Company stock was trading at 159.7% of book value.
Average Balance Sheet for the Three and Six months ended December 31, 2016 and 2015
The following tables present certain information regarding Oritani Financial Corp.'s financial condition and net interest income for the three and six months ended December 31, 2016 and 2015. The tables present the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods indicated. Interest income includes fees that we consider adjustments to yields, including prepayment penalties.
|
|
Average Balance Sheet and Yield/Rate Information
For the Three Months Ended (unaudited)
|
|||||||||||||||||||||||
|
|
December 31, 2016
|
December 31, 2015
|
||||||||||||||||||||||
|
|
Average
Outstanding
Balance
|
Interest
Earned/Paid
|
Average
Yield/Rate
|
Average
Outstanding
Balance
|
Interest
Earned/
Paid
|
Average
Yield/Rate
|
||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||
|
Interest-earning assets:
|
||||||||||||||||||||||||
|
Loans (1)
|
$
|
3,263,994
|
$
|
33,135
|
4.06
|
%
|
$
|
2,812,491
|
$
|
31,148
|
4.43
|
%
|
||||||||||||
|
Federal Home Loan Bank Stock
|
33,053
|
417
|
5.05
|
%
|
34,155
|
391
|
4.58
|
%
|
||||||||||||||||
|
Securities available for sale
|
182,548
|
826
|
1.81
|
%
|
233,061
|
1,154
|
1.98
|
%
|
||||||||||||||||
|
Securities held to maturity
|
190,524
|
871
|
1.83
|
%
|
136,653
|
663
|
1.94
|
%
|
||||||||||||||||
|
Federal funds sold and short term investments
|
1,255
|
2
|
0.64
|
%
|
1,600
|
1
|
0.25
|
%
|
||||||||||||||||
|
Total interest-earning assets
|
3,671,374
|
35,251
|
3.84
|
%
|
3,217,960
|
33,357
|
4.15
|
%
|
||||||||||||||||
|
Non-interest-earning assets
|
199,784
|
181,344
|
||||||||||||||||||||||
|
Total assets
|
$
|
3,871,158
|
$
|
3,399,304
|
||||||||||||||||||||
|
Interest-bearing liabilities:
|
||||||||||||||||||||||||
|
Savings deposits
|
170,291
|
97
|
0.23
|
%
|
157,025
|
94
|
0.24
|
%
|
||||||||||||||||
|
Money market
|
733,343
|
1,895
|
1.03
|
%
|
670,240
|
1,347
|
0.80
|
%
|
||||||||||||||||
|
Checking accounts
|
666,155
|
728
|
0.44
|
%
|
448,086
|
418
|
0.37
|
%
|
||||||||||||||||
|
Time deposits
|
993,114
|
3,244
|
1.31
|
%
|
839,997
|
2,597
|
1.24
|
%
|
||||||||||||||||
|
Total deposits
|
2,562,903
|
5,964
|
0.93
|
%
|
2,115,348
|
4,456
|
0.84
|
%
|
||||||||||||||||
|
Borrowings
|
671,350
|
3,058
|
1.82
|
%
|
668,983
|
3,607
|
2.16
|
%
|
||||||||||||||||
|
Total interest-bearing liabilities
|
3,234,253
|
9,022
|
1.12
|
%
|
2,784,331
|
8,063
|
1.16
|
%
|
||||||||||||||||
|
Non-interest-bearing liabilities
|
91,404
|
80,764
|
||||||||||||||||||||||
|
Total liabilities
|
3,325,657
|
2,865,095
|
||||||||||||||||||||||
|
Stockholders' equity
|
545,501
|
534,209
|
||||||||||||||||||||||
|
Total liabilities and stockholders' equity
|
$
|
3,871,158
|
$
|
3,399,304
|
||||||||||||||||||||
|
Net interest income
|
$
|
26,229
|
$
|
25,294
|
||||||||||||||||||||
|
Net interest rate spread (2)
|
2.72
|
%
|
2.99
|
%
|
||||||||||||||||||||
|
Net interest-earning assets (3)
|
$
|
437,121
|
$
|
433,629
|
||||||||||||||||||||
|
Net interest margin (4)
|
2.86
|
%
|
3.14
|
%
|
||||||||||||||||||||
|
Average of interest-earning assets to interest-bearing liabilities
|
113.52
|
%
|
115.57
|
%
|
||||||||||||||||||||
| (1) |
Average Outstanding Balance includes nonaccrual loans and interest earned includes prepayment income.
|
| (2) |
Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
|
| (3) |
Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
|
| (4) |
Net interest margin represents net interest income divided by average total interest-earning assets.
|
|
|
Average Balance Sheet and Yield/Rate Information
For the Six Months Ended (unaudited)
|
|||||||||||||||||||||||
|
|
December 31, 2016
|
December 31, 2015
|
||||||||||||||||||||||
|
|
Average
Outstanding
Balance
|
Interest
Earned/Paid
|
Average
Yield/
Rate
|
Average
Outstanding
Balance
|
Interest
Earned/
Paid
|
Average
Yield/
Rate
|
||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||
|
Interest-earning assets:
|
||||||||||||||||||||||||
|
Loans (1)
|
$
|
3,207,754
|
$
|
65,108
|
4.06
|
%
|
2,785,918
|
$
|
61,937
|
4.45
|
%
|
|||||||||||||
|
Federal Home Loan Bank Stock
|
33,110
|
874
|
5.28
|
%
|
36,012
|
792
|
4.40
|
%
|
||||||||||||||||
|
Securities available for sale
|
174,703
|
1,652
|
1.89
|
%
|
242,252
|
2,357
|
1.95
|
%
|
||||||||||||||||
|
Securities held to maturity
|
181,214
|
1,674
|
1.85
|
%
|
124,166
|
1,234
|
1.99
|
%
|
||||||||||||||||
|
Federal funds sold and short term investments
|
1,032
|
3
|
0.58
|
%
|
1,630
|
2
|
0.25
|
%
|
||||||||||||||||
|
Total interest-earning assets
|
3,597,813
|
69,311
|
3.85
|
%
|
3,189,978
|
66,322
|
4.16
|
%
|
||||||||||||||||
|
Non-interest-earning assets
|
193,229
|
180,870
|
||||||||||||||||||||||
|
Total assets
|
$
|
3,791,042
|
$
|
3,370,848
|
||||||||||||||||||||
|
Interest-bearing liabilities:
|
||||||||||||||||||||||||
|
Savings deposits
|
168,627
|
194
|
0.23
|
%
|
157,956
|
188
|
0.24
|
%
|
||||||||||||||||
|
Money market
|
723,849
|
3,779
|
1.04
|
%
|
644,928
|
2,186
|
0.68
|
%
|
||||||||||||||||
|
Checking accounts
|
608,520
|
1,277
|
0.42
|
%
|
442,274
|
814
|
0.37
|
%
|
||||||||||||||||
|
Time deposits
|
982,725
|
6,453
|
1.31
|
%
|
810,822
|
4,930
|
1.22
|
%
|
||||||||||||||||
|
Total deposits
|
2,483,721
|
11,703
|
0.94
|
%
|
2,055,980
|
8,118
|
0.79
|
%
|
||||||||||||||||
|
Borrowings
|
672,719
|
6,079
|
1.81
|
%
|
710,119
|
8,761
|
2.47
|
%
|
||||||||||||||||
|
Total interest-bearing liabilities
|
3,156,440
|
17,782
|
1.13
|
%
|
2,766,099
|
16,879
|
1.22
|
%
|
||||||||||||||||
|
Non-interest-bearing liabilities
|
92,637
|
76,991
|
||||||||||||||||||||||
|
Total liabilities
|
3,249,077
|
2,843,090
|
||||||||||||||||||||||
|
Stockholders' equity
|
541,965
|
527,758
|
||||||||||||||||||||||
|
Total liabilities and stockholders' equity
|
$
|
3,791,042
|
$
|
3,370,848
|
||||||||||||||||||||
|
Net interest income
|
$
|
51,529
|
$
|
49,443
|
||||||||||||||||||||
|
Net interest rate spread (2)
|
2.72
|
%
|
2.94
|
%
|
||||||||||||||||||||
|
Net interest-earning assets (3)
|
$
|
441,373
|
$
|
423,879
|
||||||||||||||||||||
|
Net interest margin (4)
|
2.86
|
%
|
3.10
|
%
|
||||||||||||||||||||
|
Average of interest-earning assets to interest-bearing liabilities
|
113.98
|
%
|
115.32
|
%
|
||||||||||||||||||||
| (1) |
Average Outstanding Balance includes nonaccrual loans and interest earned includes prepayment income.
|
| (2) |
Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
|
| (3) |
Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
|
| (4) |
Net interest margin represents net interest income divided by average total interest-earning assets.
|
Comparison of Operating Results for the Three months ended December 31, 2016 and 2015
Net Income. Net income decreased $5.0 million to $11.4 million for the three months ended December 31, 2016, from $16.4 million for the corresponding 2015 period. The primary cause of the decrease was profits on the sale of investments in real estate joint ventures, partially offset by fees on the prepayment of FHLB advances, in the 2015 periods. Our annualized return on average assets was 1.18% for the three months ended December 31, 2016, and 1.93% for the three months ended December 31, 2015.
Interest Income. Total interest income increased $1.9 million to $35.3 million for the three months ended December 31, 2016, from $33.4 million for the three months ended December 31, 2015. The components of interest income for the three months ended December 31, 2016 and 2015, changed as follows:
|
|
Three months ended December 31,
|
Increase / (decrease)
|
||||||||||||||||||||||||||
|
|
2016
|
2015
|
||||||||||||||||||||||||||
|
|
Interest Income
|
Yield
|
Interest Income
|
Yield
|
Interest Income
|
Average
Balance
|
Yield
|
|||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||
|
Interest on loans
|
$
|
33,135
|
4.06
|
%
|
$
|
31,148
|
4.43
|
%
|
$
|
1,987
|
$
|
451,503
|
(0.37
|
)%
|
||||||||||||||
|
Dividends on FHLB stock
|
417
|
5.05
|
%
|
391
|
4.58
|
%
|
26
|
(1,102
|
)
|
0.47
|
%
|
|||||||||||||||||
|
Interest on securities AFS
|
826
|
1.81
|
%
|
1,154
|
1.98
|
%
|
(328
|
)
|
(50,513
|
)
|
(0.17
|
)%
|
||||||||||||||||
|
Interest on securities HTM
|
871
|
1.83
|
%
|
663
|
1.94
|
%
|
208
|
53,871
|
(0.11
|
)%
|
||||||||||||||||||
|
Interest on federal funds sold and short term investments
|
2
|
0.64
|
%
|
1
|
0.25
|
%
|
1
|
(345
|
)
|
0.39
|
%
|
|||||||||||||||||
|
Total interest income
|
$
|
35,251
|
3.84
|
%
|
$
|
33,357
|
4.15
|
%
|
$
|
1,894
|
$
|
453,414
|
(0.31
|
)%
|
||||||||||||||
The Company's primary strategic business objective remains the organic growth of multifamily and commercial real estate loans. The average balance of the loan portfolio increased $451.5 million, or 16.1%, for the three months ended December 31, 2016 versus the comparable 2015 period. On a linked quarter basis (December 31, 2016 versus September 30, 2016), the annualized growth rates of the portfolio were 14.3% and 21.7%, when measured based on average and period end balances, respectively.
The yield on the loan portfolio decreased 37 basis points for the three months ended December 31, 2016 versus the comparable 2015 period. The loan yield in both periods was impacted by prepayment penalties. Prepayment penalties totaled $1.2 million for the three months ended December 31, 2016 versus $1.6 million for the three months ended December 31, 2015. Prepayment penalties boosted annualized loan yield by 15 basis points in the 2016 period versus 22 basis points in the 2015 period. On a linked quarter basis, the yield on the loan portfolio was flat. This result was impacted by prepayment penalties, which totaled $631,000 for the quarter ended September 30, 2016 (versus $1.2 million for the quarter ended December 31, 2016). Absent the impact of the prepayment penalties, the yield on the loan portfolio decreased 6 basis points on a linked quarter basis. The decrease continues a trend of decreased yield on loans and was primarily attributable to the factors discussed in the Company's Form 10-K as of June 30, 2016 and other public filings. The increase in market rates that began in October 2016 and accelerated in November 2016 has been partially captured in the loan rates associated with the Company's originations since that time and has begun to partially mitigate the factors causing the yield to decrease.
The average balance of securities available for sale decreased $50.5 million for the three months ended December 31, 2016 versus the comparable 2015 period, while the average balance of securities held to maturity increased $53.9 million over the same period. The Company has been classifying the majority of new purchases as held to maturity.
Interest Expense. Total interest expense increased $959,000 to $9.0 million for the three months ended December 31, 2016, from $8.1 million for the three months ended December 31, 2015. The components of interest expense for the three months ended December 31, 2016 and 2015, changed as follows:
|
|
Three months ended December 31,
|
Increase / (decrease)
|
||||||||||||||||||||||||||
|
|
2016
|
2015
|
Average
|
|||||||||||||||||||||||||
|
|
Interest Expense
|
Cost
|
Interest Expense
|
Cost
|
Interest Expense
|
Balance
|
Cost
|
|||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||
|
Savings deposits
|
$
|
97
|
0.23
|
%
|
$
|
94
|
0.24
|
%
|
$
|
3
|
$
|
13,266
|
(0.01
|
)%
|
||||||||||||||
|
Money market
|
1,895
|
1.03
|
%
|
1,347
|
0.80
|
%
|
548
|
63,103
|
0.23
|
%
|
||||||||||||||||||
|
Checking accounts
|
728
|
0.44
|
%
|
418
|
0.37
|
%
|
310
|
218,069
|
0.07
|
%
|
||||||||||||||||||
|
Time deposits
|
3,244
|
1.31
|
%
|
2,597
|
1.24
|
%
|
647
|
153,117
|
0.07
|
%
|
||||||||||||||||||
|
Total deposits
|
5,964
|
0.93
|
%
|
4,456
|
0.84
|
%
|
1,508
|
447,555
|
0.09
|
%
|
||||||||||||||||||
|
Borrowings
|
3,058
|
1.82
|
%
|
3,607
|
2.16
|
%
|
(549
|
)
|
2,367
|
(0.34
|
)%
|
|||||||||||||||||
|
$
|
9,022
|
1.12
|
%
|
$
|
8,063
|
1.16
|
%
|
$
|
959
|
$
|
449,922
|
(0.04
|
)%
|
|||||||||||||||
Strong deposit growth remains a strategic objective of the Company. As detailed above, the average balance of deposits increased $447.6 million, or 21.2%, for the three months ended December 31, 2016 versus the comparable 2015 period. The balance of deposits increased $158.4 million and $94.8 million when measured versus the average and period end balances for the three months ended September 30, 2016, respectively. The overall cost of deposits increased 9 basis points for the three months ended December 31, 2016 versus the comparable 2015 period. On a linked quarter basis, the cost of deposits decreased 2 basis points.
As detailed in table above, the average balance of borrowings was relatively stable, increasing $2.4 million, or 0.4%, for the three months ended December 31, 2016 versus the comparable 2015 period, while the cost decreased 34 basis points. On a linked quarter basis, the average balance decreased $2.7 million while the cost increased 3 basis points.
As discussed in the Company's Form 10-K as of June 30, 2016 and other public filings, the Company undertook two balance sheet restructures which, amongst other effects, impacted the cost of money market deposits and borrowings.
Net Interest Income Before Provision for Loan Losses. Net interest income increased by $935,000 to $26.2 million for the three months ended December 31, 2016, from $25.3 million for the three months ended December 31, 2015. The Company's net interest income, spread and margin over the period are detailed in the chart below.
|
|
Including Prepayment Penalties
|
Excluding Prepayment Penalties*
|
||||||||||||||||||||||
|
For the Three Months Ended
|
Net Interest
Income Before
Provision
|
Spread
|
Margin
|
Net Interest
Income Before
Provision
|
Spread
|
Margin
|
||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||
|
December 31, 2016
|
$
|
26,229
|
2.72
|
%
|
2.86
|
%
|
$
|
25,030
|
2.59
|
%
|
2.73
|
%
|
||||||||||||
|
September 30, 2016
|
25,300
|
2.73
|
%
|
2.87
|
%
|
24,669
|
2.65
|
%
|
2.80
|
%
|
||||||||||||||
|
June 30, 2016
|
25,707
|
2.82
|
%
|
2.97
|
%
|
24,169
|
2.64
|
%
|
2.79
|
%
|
||||||||||||||
|
March 31, 2016
|
25,151
|
2.86
|
%
|
3.01
|
%
|
24,154
|
2.74
|
%
|
2.89
|
%
|
||||||||||||||
|
December 31, 2015
|
25,294
|
2.99
|
%
|
3.14
|
%
|
23,744
|
2.79
|
%
|
2.95
|
%
|
||||||||||||||
|
* Prepayment penalties on loans are excluded.
|
||||||||||||||||||||||||
The Company's spread and margin have been significantly impacted by prepayment penalties. Due to this situation, the chart above details results with and without the impact of prepayment penalties. While prepayment penalty income is expected to continue, significant fluctuations in the level of prepayment income are also expected.
The Company's spread and margin remain under pressure due to several factors. These factors were discussed in the Company's Form 10-K for the annual period ended June 30, 2016, and in other prior public filings. Recent changes in market interest rates will impact the Company's spread and margin. The increase in the discount rate and federal funds target rate by the Federal Open Market Committee in December, 2016 increased the cost of the Company's short term borrowings. This increase may also indirectly increase the cost of deposits. Longer term rates have also risen due to market conditions. The spread between short term and long term market interest rates has generally been increasing since October, 2016. The increase in this spread generally augments the Company's spread and margin through higher loan rates, though its positive impact may be delayed. Despite current spread and margin compression, the Company's net interest income excluding prepayment penalties has been expanding.
The Company's net interest income and net interest rate spread were both negatively impacted due to the reversal of accrued interest income on loans delinquent more than 90 days. The total of such income reversed was $76,000 for the three months ended December 31, 2016, versus $123,000 for the three months ended December 31, 2015.
.
Provision for Loan Losses. The Company recorded no provision for loan losses for the three months ended December 31, 2016 and December 31, 2015. A rollforward of the allowance for loan losses for the three months ended December 31, 2016 and 2015 is presented below:
|
|
Three months ended December 31,
|
|||||||
|
|
2016
|
2015
|
||||||
|
|
(Dollars in thousands)
|
|||||||
|
Balance at beginning of period
|
$
|
29,878
|
$
|
30,634
|
||||
|
Provisions charged to operations
|
—
|
—
|
||||||
|
Recoveries of loans previously charged off
|
—
|
1
|
||||||
|
Loans charged off
|
(1
|
)
|
—
|
|||||
|
Balance at end of period
|
$
|
29,877
|
$
|
30,635
|
||||
|
Allowance for loan losses to total loans
|
0.87
|
%
|
1.04
|
%
|
||||
|
Net charge-offs (annualized) to average loans outstanding
|
0.00
|
%
|
0.00
|
%
|
||||
Delinquency and nonaccrual trends, changes in loan risk ratings, loan growth, charge-offs and economic and business conditions continue to have a meaningful impact on the level of provision for loan losses. In addition, improvements in general economic and business conditions have also impacted the level of provisioning by decreasing the necessary level of general allowances. See additional information regarding the allowance for loan losses in Note 6 of the consolidated financial statements and "Comparison of Financial Condition at December 31, 2016 and June 30, 2016-Net Loans."
Other Income. Other income decreased $26.3 million to $1.2 million for the three months ended December 31, 2016, from $27.5 million for the three months ended December 31, 2015. In the 2015 period, the Company sold certain investments in its real estate joint ventures and real estate held for investment portfolios. The pretax gain realized on such dispositions for the three months ended December 31, 2015 was $25.3 million. There was also a gain of $225,000 on the disposition of real estate owned in the 2015 period. In addition, there was a gain of $604,000 realized on the sale of equity securities as well as the sale of investment securities sold in conjunction with the balance sheet restructure in the 2015 period. There were no comparable sales in the 2016 period. See additional information under "Comparison of Financial Condition at December 31, 2016 and June 30, 2016," regarding the sales of investments in real estate joint ventures and real estate held for investments.
Other Expenses. Other expenses decreased $15.9 million to $11.1 million for the three months ended December 31, 2016, from $26.9 million for the three months ended December 31, 2015. The decrease was primarily due to prepayment fees incurred in the 2015 period in connection with the prepayment of various FHLB advances. See the Company's Form 10-K as of June 30, 2016 and other public filings for details regarding the Company's balance sheet restructures. Compensation, payroll taxes and fringe benefits, decreased $1.8 million to $8.2 million for the three months ended December 31, 2016, from $10.1 million for the three months ended December 31, 2015. The decrease primarily pertained to the amortization cost associated with the Company's 2011 Equity Plan. The majority of the stock awards and stock options granted in conjunction with this plan fully amortized in August 2016. The 2016 period includes $74,000 of expense associated with this plan while the 2015 period includes expenses totaling $1.5 million. The balance of the change is primarily due to decreased ESOP related expenses partially offset by increased costs associated with non qualified benefit plans. Overall ESOP expense was elevated in both the 2016 and 2015 periods. In both periods, ESOP shares in excess of original projections were distributed to participants due to the level of dividends received on unallocated ESOP shares. The Company's efficiency ratio for the 2016 period was 40.3%.
Income Tax Expense. Income tax expense for the three months ended December 31, 2016 was $5.0 million on pre-tax income of $16.4 million, resulting in an effective tax rate of 30.4%. Income tax expense for the three months ended December 31, 2015 was $9.5 million on pre-tax income of $25.8 million, resulting in an effective tax rate of 36.6%. The Company adopted Accounting Standards Update 2016-09, (an update to Accounting Standards Codification 718 "Compensation—Stock Compensation,") as of June 30, 2016 and retroactive to July 1, 2015. Under this guidance, the excess tax benefit associated with the exercise or vesting of stock awards is recorded as a reduction in provision for income taxes, and this resulted in reducing the effective tax rates in all reported periods as non qualified stock options were exercised.
Comparison of Operating Results for the Six months ended December 31, 2016 and 2015
Net Income. Net income decreased $7.0 million to $22.0 million for the six months ended December 31, 2016, from $29.0 million for the corresponding 2015 period. The primary cause of the decrease was profits on the sale of investments in real estate joint ventures, partially offset by fees on the prepayment of FHLB advances, in the 2015 periods. Our annualized return on average assets was 1.16% for the six months ended December 31, 2016, and 1.72% for the six months ended December 31, 2015.
Interest Income. Total interest income increased increased $3.0 million to $69.3 million for the six months ended December 31, 2016, from $66.3 million for the six months ended December 31, 2015. The components of interest income for the six months ended December 31, 2016 and 2015, changed as follows:
|
|
Six months ended December 31,
|
Increase / (decrease)
|
||||||||||||||||||||||||||
|
|
2016
|
2015
|
||||||||||||||||||||||||||
|
|
Interest Income
|
Yield
|
Interest Income
|
Yield
|
Interest Income
|
Average
Balance
|
Yield
|
|||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||
|
Interest on loans
|
$
|
65,108
|
4.06
|
%
|
$
|
61,937
|
4.45
|
%
|
$
|
3,171
|
$
|
421,836
|
(0.39
|
)%
|
||||||||||||||
|
Dividends on FHLB stock
|
874
|
5.28
|
%
|
792
|
4.40
|
%
|
82
|
(2,902
|
)
|
0.88
|
%
|
|||||||||||||||||
|
Interest on securities AFS
|
1,652
|
1.89
|
%
|
2,357
|
1.95
|
%
|
(705
|
)
|
(67,549
|
)
|
(0.06
|
)%
|
||||||||||||||||
|
Interest on securities HTM
|
1,674
|
1.85
|
%
|
1,234
|
1.99
|
%
|
440
|
57,048
|
(0.14
|
)%
|
||||||||||||||||||
|
Interest on federal funds sold and short term investments
|
3
|
0.58
|
%
|
2
|
0.25
|
%
|
1
|
(598
|
)
|
0.33
|
%
|
|||||||||||||||||
|
$
|
69,311
|
3.85
|
%
|
$
|
66,322
|
4.16
|
%
|
$
|
2,989
|
$
|
407,835
|
(0.31
|
)%
|
|||||||||||||||
The explanations provided in "Comparison of Operating Results for the Three Months Ended December 31, 2016 and 2015, Interest Income" regarding changes for the three month period comparison are also applicable to the six month period comparison. Loan originations and purchases for the six months ended December 31, 2016 totaled $378.5 million and $65.8 million, respectively. Loan originations and purchases for the six months ended December 31, 2015 totaled $335.7 million and $37.9 million, respectively. Prepayment penalties totaled $1.8 million for the six months ended December 31, 2016 and $3.1 million for the six months ended December 31, 2015. Prepayment penalties boosted annualized loan yield by 11 basis points in the 2016 period versus 23 basis points in the 2015 period.
Interest Expense. Total interest expense increased $903,000 to $17.8 million for the six months ended December 31, 2016, from $16.9 million for the six months ended December 31, 2015. The components of interest expense for the six months ended December 31, 2016 and December 31, 2015, changed as follows:
|
|
Six months ended December 31,
|
Increase / (decrease)
|
||||||||||||||||||||||||||
|
|
2016
|
2015
|
Average
|
|||||||||||||||||||||||||
|
|
Interest Expense
|
Cost
|
Interest Expense
|
Cost
|
Interest Expense
|
Balance
|
Cost
|
|||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||
|
Savings deposits
|
$
|
194
|
0.23
|
%
|
$
|
188
|
0.24
|
%
|
$
|
6
|
$
|
10,671
|
(0.01
|
)%
|
||||||||||||||
|
Money market
|
3,779
|
1.04
|
%
|
2,186
|
0.68
|
%
|
1,593
|
78,921
|
0.36
|
%
|
||||||||||||||||||
|
Checking accounts
|
1,277
|
0.42
|
%
|
814
|
0.37
|
%
|
463
|
166,246
|
0.05
|
%
|
||||||||||||||||||
|
Time deposits
|
6,453
|
1.31
|
%
|
4,930
|
1.22
|
%
|
1,523
|
171,903
|
0.09
|
%
|
||||||||||||||||||
|
Total deposits
|
11,703
|
0.94
|
%
|
8,118
|
0.79
|
%
|
3,585
|
427,741
|
0.15
|
%
|
||||||||||||||||||
|
Borrowings
|
6,079
|
1.81
|
%
|
8,761
|
2.47
|
%
|
(2,682
|
)
|
(37,400
|
)
|
(0.66
|
)%
|
||||||||||||||||
|
$
|
17,782
|
1.13
|
%
|
$
|
16,879
|
1.22
|
%
|
$
|
903
|
$
|
390,341
|
(0.09
|
)%
|
|||||||||||||||
The explanations provided in "Comparison of Operating Results for the Three Months Ended December 31, 2016 and 2015, Interest Expense" for the three month period comparison regarding deposits and borrowings are also applicable to the six month period comparison. The impact of the balance sheet restructures is greater in the six month period of measurement.
Net Interest Income Before Provision for Loan Losses. Net interest income increased by $2.1 million to $51.5 million for the six months ended December 31, 2016, from $49.4 million for the six months ended December 31, 2015. This increase was realized despite a decrease in prepayment penalty income of $1.3 million. The Company's net interest rate spread and margin decreased to 2.72% and 2.86% for the six months ended December 31, 2016, from 2.94% and 3.10% for the six months ended December 31, 2015, respectively. The factors described in "Comparison of Operating Results for the Three Months Ended December 31, 2016 and 2015, Net Interest Income Before Provision for Loan Losses" also impacted the six month periods. The Company's net interest income and net interest rate spread were negatively impacted in both periods due to the reversal of accrued interest income on loans delinquent more than 90 days. The Company's net interest income was reduced $196,000 and $299,000 for the six months ended December 31, 2016 and 2015, respectively, due to the impact of nonaccrual loans.
Provision for Loan Losses. The Company recorded no provisions for loan losses for the six months ended December 31, 2016 and December 31, 2015. A rollforward of the allowance for loan losses for the six months ended December 31, 2016 and 2015 is presented below:
|
|
Six months ended December 31,
|
|||||||
|
|
2016
|
2015
|
||||||
|
|
(Dollars in thousands)
|
|||||||
|
Balance at beginning of period
|
$
|
29,951
|
$
|
30,889
|
||||
|
Provisions charged to operations
|
—
|
—
|
||||||
|
Recoveries of loans previously charged off
|
2
|
1
|
||||||
|
Loans charged off
|
(76
|
)
|
(255
|
)
|
||||
|
Balance at end of period
|
$
|
29,877
|
$
|
30,635
|
||||
|
Allowance for loan losses to total loans
|
0.87
|
%
|
1.04
|
%
|
||||
|
Net charge-offs (annualized) to average loans outstanding
|
0.01
|
%
|
0.02
|
%
|
||||
See discussion of the allowance for loan losses in "Comparison of Financial Condition at December 31, 2016 and June 30, 2016-Net Loans" and footnote 6 of the consolidated financial statements.
Other Income. Other income decreased $31.0 million to $2.4 million for the six months ended December 31, 2016 from $33.5 million for the six months ended December 31, 2015. The six month period was also impacted by the items described in "Comparison of Operating Results for the Three Months Ended December 31, 2016 and 2015, Other Income" regarding the sales of investments in real estate joint ventures, real estate held for investment, real estate owned and investment securities.
Other Expenses. Other expenses decreased $16.3 million to $21.3 million for the six months ended December 31, 2016, from $37.7 million for the six months ended December 31, 2015. The six month period was also affected by the items described in "Comparison of Operating Results for the Three Months Ended December 31, 2016 and 2015, Other Expenses". However, the impact of the amortization of the Company's 2011 Equity Plan was decreased in the six month period as a portion of the 2016 period included the full cost of the amortization of the 2011 Equity Plan. Such expense totaled $849,000 in the 2016 period versus $3.0 million in the 2015 period. The Company's efficiency ratio for the 2016 period was 39.5%.
Income Tax Expense. Income tax expense for the six months ended December 31, 2016, was $10.7 million, due to pre-tax income of $32.6 million, resulting in an effective tax rate of 32.6%. For the six months ended December 31, 2015, income tax expense was $16.3 million, due to pre-tax income of $45.2 million, resulting in an effective tax rate of 35.9%. The factor described in "Comparison of Operating Results for the Three Months Ended December 31, 2016 and 2015 - Income Tax Expense", the adoption of Accounting Standards Update 2016-09 impacted the effective tax rate.
.
Liquidity and Capital Resources
The Company's primary sources of funds are deposits, principal and interest payments on loans and mortgage-backed securities, FHLB borrowings and investment maturities. While scheduled amortization of loans is a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company has other sources of liquidity if a need for additional funds arises, including advances from the FHLB and Federal Reserve Bank of New York.
At December 31, 2016 and June 30, 2016, the Company had $324.5 million and $317.0 million in overnight borrowings from the FHLB, respectively. The Company had total borrowings of $800.6 million at December 31, 2016 and $781.6 million at June 30, 2016. The Company's total borrowings at December 31, 2016 include $476.1 million in longer term borrowings, $427.9 million with the FHLB and $48.2 million with other financial institutions. In the normal course of business, the Company routinely enters into various commitments, primarily relating to the origination of loans. At December 31, 2016, outstanding commitments to originate loans totaled $117.1 million and outstanding commitments to extend credit totaled $15.6 million. The Company expects to have sufficient funds available to meet current commitments in the normal course of business.
Time deposits scheduled to mature in one year or less totaled $632.4 million at December 31, 2016. Based upon historical experience, management estimates that a large portion of such deposits will remain with the Company. The portion that remains will be significantly impacted by the renewal rates offered by the Company.
The management of liquidity described in the above paragraphs primarily pertains to Oritani Bank. The Company, on an unconsolidated basis, also has liquidity sources and uses. The Company's primary, recurring source of funds has been dividends from Oritani Bank. As a wholly owned subsidiary of the Company, the Bank will typically distribute its net income to the Company as a dividend. Under the New Jersey Banking Act, a stock savings bank may declare and pay a dividend on its capital stock only to the extent that the payment of the dividend would not impair the capital stock of the savings bank. In addition, a stock savings bank may not pay a dividend unless the savings bank would, after the payment of the dividend, have a surplus of not less than 50% of its capital stock, or alternatively, the payment of the dividend would not reduce the surplus. Additionally, Oritani Bank must notify the Federal Reserve Board thirty days before declaring any dividend to the Company. The Federal Reserve Board may object to the payment of the dividend if it deems it to be unsafe or unsound or a violation of a law, regulation or order or if the institution will be undercapitalized after the dividend. An inability of Oritani Bank to pay dividends may restrict the Company's ability to pay dividends.
The Company's primary use of funds has been dividends to shareholders and repurchases of common stock. The declarations of such dividends are at the discretion of the Company and the dividend amount could be reduced or eliminated if the payment of a dividend to shareholders would result in a liquidity concern. The Company's loan portfolio was an additional source and use of funds. The Company periodically originated loans which were a significant use of funds. The principal and interest payments from these loans provided a recurring source of funds. The majority of the Company's loans were directly or indirectly related to entities in the Company's investment in real estate joint ventures and real estate held for investment portfolios. The Company announced its intention to explore the strategic disposition of the properties and interests in these portfolios. As of June 30, 2016, the properties and interests in these portfolios were disposed, the related loans were repaid and the sales activity and loan repayments were a significant, but transitory, source of funds. In addition, the Company secured external financing, a source of funds independent of the Bank. At December 31, 2016 and June 30, 2016, the Company had $12.5 million in borrowings outstanding from another financial institution. In addition, at December 31, 2016 and June 30, 2016 , the Company, on an unconsolidated basis, had cash and cash equivalents of $38.8 million and $66.2 million, respectively.
In July 2013, the Federal Reserve Board and the FDIC issued final rules implementing the Basel III regulatory capital framework and related Dodd-Frank Act changes. The rules revise minimum capital requirements and adjust prompt corrective action thresholds. Under the final rules, minimum requirements will increase for both the quantity and quality of capital held by the Company and the Bank. The rules include a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5% and a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets. The final rules also raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% and require a minimum leverage ratio of 4.0%. The final rule became effective January 1, 2015, subject to a transition period for various components of the rule that require full compliance for the Company by January 1, 2019, including a capital conservation buffer of 2.5% of risk-weighted assets for which the transitional period began at 0.625% on January 1, 2016, increased to 1.25% on January 1, 2017,and will increase to 1.875% on January 1, 2018 and 2.50% on January 1, 2019. The final capital rules impose restrictions on capital distributions and certain discretionary bonus payments if the minimum capital conservation buffer is not met.
As of December 31, 2016 and June 30, 2016, the Company and Bank exceeded all regulatory capital requirements, including the currently applicable capital conservation buffer of 0.625%, as follows:
|
December 31, 2016
|
||||||||||||||||
|
Actual
|
Required
|
|||||||||||||||
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
Company:
|
||||||||||||||||
|
Common Equity Tier 1 (CET1) (to risk-weighted assets)
|
$
|
540,672
|
15.32
|
%
|
$
|
158,834
|
4.50
|
%
|
||||||||
|
Tier 1capital (to risk-weighted assets)
|
540,672
|
15.32
|
%
|
211,779
|
6.00
|
%
|
||||||||||
|
Total capital (to risk-weighted assets)
|
570,549
|
16.16
|
%
|
282,372
|
8.00
|
%
|
||||||||||
|
Tier 1 leverage capital (to average assets)
|
540,672
|
13.99
|
%
|
154,568
|
4.00
|
%
|
||||||||||
|
Capital Conservation Buffer
|
288,178
|
8.16
|
%
|
22,060
|
0.63
|
%
|
||||||||||
|
|
June 30, 2016
|
|||||||||||||||
|
|
Actual
|
Required
|
||||||||||||||
|
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||
|
Company:
|
||||||||||||||||
|
Common Equity Tier 1 (CET1) (to risk-weighted assets)
|
$
|
545,272
|
16.77
|
%
|
$
|
146,311
|
4.50
|
%
|
||||||||
|
Tier 1 capital (to risk-weighted assets)
|
545,272
|
16.77
|
%
|
195,081
|
6.00
|
%
|
||||||||||
|
Total capital (to risk-weighted assets)
|
575,223
|
17.69
|
%
|
260,108
|
8.00
|
%
|
||||||||||
|
Tier 1 leverage capital (to average assets)
|
545,272
|
14.94
|
%
|
145,676
|
4.00
|
%
|
||||||||||
|
Capital Conservation Buffer
|
315,034
|
9.69
|
%
|
20,321
|
0.63
|
%
|
||||||||||
|
December 31, 2016
|
||||||||||||||||||||||||
|
Actual
|
Required
|
Well-Capitalized
|
||||||||||||||||||||||
|
Amount
|
Rate
|
Amount
|
Rate
|
Amount
|
Rate
|
|||||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||
|
Bank:
|
||||||||||||||||||||||||
|
Common Equity Tier 1 ("CET1") (to risk weighted assets)
|
$
|
492,578
|
13.96
|
%
|
$
|
158,829
|
4.50
|
%
|
$
|
229,420
|
6.50
|
%
|
||||||||||||
|
Tier 1 capital (to risk-weighted assets)
|
492,578
|
13.96
|
%
|
211,772
|
6.00
|
%
|
282,363
|
8.00
|
%
|
|||||||||||||||
|
Total capital (to risk-weighted assets)
|
522,455
|
14.80
|
%
|
282,363
|
8.00
|
%
|
352,954
|
10.00
|
%
|
|||||||||||||||
|
Tier 1 Leverage capital (to average assets)
|
492,578
|
12.75
|
%
|
154,539
|
4.00
|
%
|
193,174
|
5.00
|
%
|
|||||||||||||||
|
Capital conservation buffer
|
240,092
|
6.80
|
%
|
22,060
|
0.63
|
%
|
||||||||||||||||||
|
June 30, 2016
|
||||||||||||||||||||||||
|
Actual
|
Required
|
Well-Capitalized
|
||||||||||||||||||||||
|
Amount
|
Rate
|
Amount
|
Rate
|
Amount
|
Rate
|
|||||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||
|
Bank:
|
||||||||||||||||||||||||
|
Common Equity Tier 1 ("CET1") (to risk weighted assets)
|
$
|
466,987
|
14.36
|
%
|
$
|
146,288
|
4.50
|
%
|
$
|
211,305
|
6.50
|
%
|
||||||||||||
|
Tier 1 capital (to risk-weighted assets)
|
466,987
|
14.36
|
%
|
195,050
|
6.00
|
%
|
260,067
|
8.00
|
%
|
|||||||||||||||
|
Total capital (to risk-weighted assets)
|
496,938
|
15.28
|
%
|
260,067
|
8.00
|
%
|
325,084
|
10.00
|
%
|
|||||||||||||||
|
Tier 1 Leverage capital (to average assets)
|
466,987
|
12.86
|
%
|
145,255
|
4.00
|
%
|
181,569
|
5.00
|
%
|
|||||||||||||||
|
Capital conservation buffer
|
236,871
|
7.29
|
%
|
20,318
|
0.63
|
%
|
||||||||||||||||||
Critical Accounting Policies
Note 1 to the Company's Audited Consolidated Financial Statements for the year ended June 30, 2016, included in the Company's Annual Report on Form 10-K, as supplemented by this report, contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. Certain assets and liabilities are carried in the consolidated Balance Sheets at fair value or the lower of cost or fair value. Policies with respect to the methodologies used to determine the allowance for loan losses and judgments regarding the valuation of securities and derivatives as well as the valuation allowance against deferred tax assets are the most critical accounting policies because they are important to the presentation of the Company's financial condition and results of operations, involve a higher degree of complexity, and require management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition. These critical accounting policies and their application are reviewed periodically and, at least annually, with the Audit Committee of the Board of Directors. For a further discussion of the critical accounting policies of the Company, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K, for the year ended June 30, 2016.
The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has the authority and responsibility for managing interest rate risk. Oritani Bank has established an Asset/Liability Management Committee, comprised of various members of its senior management, which is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for recommending to the Board the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors. The Asset/Liability Management Committee reports its activities to the Board on a monthly basis. An interest rate risk analysis is presented to the Board on a quarterly basis.
We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. As part of our ongoing asset-liability management, we currently use the following strategies to manage our interest rate risk:
|
(i)
|
originating multifamily and commercial real estate loans that generally tend to have shorter interest duration and generally have interest rates that reset in five years or less. The chart below provides maturity/repricing information for the entire loan portfolio, the majority of which is comprised of multifamily and commercial real estate loans;
|
|
(ii)
|
investing in shorter duration securities and mortgage-backed securities;
|
|
(iii)
|
obtaining general financing through FHLB advances with a fixed long term; and
|
|
(iv)
|
utilizing interest rate swaps or other derivative instruments
|
|
Loan Portfolio by Reprice/Maturity Date
|
||||||||||||||||
|
At December 31, 2016
|
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
Repricing or Maturing Within:
|
Amount
|
Weighted Average Rate
|
% of Total Loans
|
Cumulative % of Total Loans
|
||||||||||||
|
1 Year or less
|
$
|
491,936
|
3.90
|
%
|
14.38
|
%
|
14.38
|
%
|
||||||||
|
1 - 3 years
|
1,258,781
|
3.45
|
%
|
36.79
|
%
|
51.17
|
%
|
|||||||||
|
3 - 5 years
|
890,755
|
3.66
|
%
|
26.03
|
%
|
77.20
|
%
|
|||||||||
|
5 - 7 years
|
319,006
|
3.99
|
%
|
9.32
|
%
|
86.52
|
%
|
|||||||||
|
7 to 10 years
|
113,786
|
4.55
|
%
|
3.33
|
%
|
89.85
|
%
|
|||||||||
|
Greater than 10 years
|
347,158
|
4.66
|
%
|
10.15
|
%
|
100.00
|
%
|
|||||||||
|
Total
|
$
|
3,421,422
|
3.84
|
%
|
100.00
|
%
|
||||||||||
At December 31, 2016, 51.17 % of the loan portfolio matured or repriced in 3 years or less, and 77.20% matured or repriced in 5 years or less.
Shortening the average maturity of our interest-earning assets by increasing our investments in shorter-term loans and securities, as well as loans and securities with variable rates of interest, helps to better match the maturities and interest rates of our assets and liabilities, thereby reducing the exposure of our net interest income to changes in market interest rates. In addition, if changes occur that cause the estimated duration of a security to lengthen significantly, management will consider the sale of such security. By following these strategies, we believe that we are well-positioned to react to changes in market interest rates.
Net Portfolio Value. We compute the amounts by which the net present value of cash flow from assets, liabilities and off balance sheet items (the institution's net portfolio value or "NPV") would change in the event of a range of assumed changes in market interest rates. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the "Change in Interest Rates" column below.
The table below sets forth, as of December 31, 2016, the estimated changes in our net portfolio value that would result from the designated instantaneous changes in the United States Treasury yield curve. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates and loan prepayment and deposit decay rates, and should not be relied upon as indicative of actual results.
|
Estimated Increase
(Decrease) in NPV
|
NPV as a Percentage of
Present Value of Assets (3)
|
|||||||||||||||||||||
|
Change in Interest Rates (basis points) (1)
|
Estimated
NPV (2)
|
Amount
|
Percent
|
NPV Ratio (4)
|
Increase
(Decrease)
basis points
|
|||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
|
+200
|
$
|
532,159
|
$
|
(73,572
|
)
|
(12.1
|
)%
|
13.7
|
%
|
(128
|
)
|
|||||||||||
|
+100
|
572,088
|
(33,643
|
)
|
(5.6
|
)%
|
14.5
|
%
|
(55
|
)
|
|||||||||||||
|
—
|
605,731
|
—
|
—
|
%
|
15.0
|
%
|
—
|
|||||||||||||||
|
(100
|
)
|
665,238
|
59,507
|
9.8
|
%
|
16.0
|
%
|
100
|
||||||||||||||
| (1) |
Assumes an instantaneous uniform change in interest rates at all maturities.
|
| (2) |
NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
|
| (3) |
Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
|
| (4) |
NPV Ratio represents NPV divided by the present value of assets.
|
The table above indicates that at December 31, 2016, in the event of a 100 basis point decrease in interest rates, we would experience a 9.8% increase in net portfolio value. In the event of a 200 basis point increase in interest rates, we would experience a 12.1% decrease in net portfolio value. These changes in net portfolio value are within the limitations established in our asset and liability management policies.
Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in net portfolio value require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net portfolio value table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net portfolio value table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.
Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.
There were no changes made in the Company's internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting during the period covered by this report.
The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company's financial condition or results of operations.
There have been no material changes from those risk factors previously disclosed in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 13, 2016.
| (a) |
Unregistered Sale of Equity Securities. There were no sales of unregistered securities during the period covered by this report.
|
| (b) |
Use of Proceeds. Not applicable.
|
| (c) |
Repurchase of Our Equity Securities. The following table shows the Company's repurchases of its common stock for each calendar month in the three months ended December 31, 2016 and the stock repurchase plan approved by our Board of Directors.
|
|
Period
|
Total Number of Shares Repurchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plan
|
Maximum Number of Shares That May Yet Be Purchased Under the Plan
|
||||||||||||
|
October 31, 2016
|
—
|
$
|
—
|
—
|
1,892,553
|
|||||||||||
|
November 30, 2016
|
3,702
|
17.63
|
3,702
|
1,888,851
|
||||||||||||
|
December 31, 2016
|
—
|
—
|
—
|
1,888,851
|
||||||||||||
|
|
3,702
|
$
|
17.63
|
3,702
|
||||||||||||
On March 4, 2015, the Board of Directors of the Company authorized a fourth stock repurchase plan pursuant to which the Company is authorized to repurchase up to 5% of the outstanding shares, or 2,205,451 shares. As of February 8, 2017, the Company has repurchased, under the repurchase plans approved since the second step transaction, 13,277,681 shares of its stock at an average price of $13.30 per share.
Not applicable.
Not applicable.
Not applicable.
The following exhibits are either filed as part of this report or are incorporated herein by reference:
|
3.1
|
|
Certificate of Incorporation of Oritani Financial Corp. *
|
|
3.2
|
|
Bylaws of Oritani Financial Corp. *
|
|
4
|
|
Form of Common Stock Certificate of Oritani Financial Corp. *
|
|
10.1
|
|
Employment Agreement between Oritani Financial Corp. and Kevin J. Lynch**, ****
|
|
10.2
|
|
Form of Employment Agreement between Oritani Financial Corp. and executive officers**,****
|
|
10.3
|
|
Oritani Bank Director Retirement Plan**, ****
|
|
10.4
|
|
Oritani Bank Benefit Equalization Plan**, ****
|
|
10.5
|
|
Oritani Bank Executive Supplemental Retirement Income Agreement**, ****
|
|
10.6
|
|
Form of Employee Stock Ownership Plan**, ****
|
|
10.7
|
|
Director Deferred Fee Plan**, ****
|
|
10.8
|
|
Oritani Financial Corp. 2007 Equity Incentive Plan*, ****
|
|
10.9
|
|
Oritani Financial Corp. 2011 Equity Incentive Plan***, ****
|
|
21
|
|
Subsidiaries of Registrant**
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders' Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements
|
|
101.INS
|
|
XBRL Instance Document
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
*
|
Incorporated by reference to the Registration Statement on Form S-1 of Oritani Financial Corp. (file no. 333-165226), originally filed with the Securities and Exchange Commission on March 5, 2010.
|
|
**
|
Incorporated by reference to the Registration Statement on Form S-1 of Oritani Financial Corp. (file no. 333-137309), originally filed with the Securities and Exchange Commission on September 14, 2006.
|
|
***
|
Incorporated by reference to the Company's Proxy Statement for the 2011 Special Meeting of Stockholders filed with the Securities and Exchange Commission on June 27, 2011 (file No. 001-34786).
|
|
****
|
Available on our website www.oritani.com.
|
|
*****
|
Management contract, compensatory plan or arrangement.
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
ORITANI FINANCIAL CORP.
|
|
|
|
|
|
|
|
Date:
|
February 8, 2017
|
/s/ Kevin J. Lynch
|
|
|
|
|
Kevin J. Lynch
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date:
|
February 8, 2017
|
/s/ John M. Fields, Jr.
|
|
|
|
|
John M. Fields, Jr.
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
54