NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
United Community Financial Corp. (United Community or the Company) was incorporated under Ohio law in February 1998 by The Home Savings and
Loan Company of Youngstown, Ohio (Home Savings) in connection with the conversion of Home Savings from an Ohio mutual savings and loan association to an Ohio capital stock savings association (the Conversion). Upon consummation of the Conversion on
July 8, 1998, United Community became the unitary thrift holding company for Home Savings. Home Savings, a state-chartered savings bank, conducts business from its main office located in Youngstown, Ohio, 33 full-service branches and nine loan
production offices located throughout Ohio and western Pennsylvania.
The accompanying consolidated financial statements of United Community have been
prepared in accordance with instructions relating to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (U.S. GAAP) for complete financial statements. However, such
information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair statement of results for the interim periods.
The results of operations for the three and six months ended June 30, 2014, are not necessarily indicative of the results to be expected for the year
ending December 31, 2014. The consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes contained in United Communitys Form 10-K for the year ended December 31,
2013.
Some items in the prior year financial statements were reclassified to conform to the current presentation. These reclassifications had no effect
on prior period net income or shareholders equity.
2. REGULATORY ENFORCEMENT ACTION
United Community is a unitary thrift holding company regulated by the Board of Governors of the Federal Reserve System (FRB). On
August 8, 2008, the board of directors of United Community approved a Stipulation and Consent to the Issuance of an Order with the Office of Thrift Supervision (OTS), the predecessor regulator of United Community (the Holding Company Order).
The Holding Company Order required United Community to obtain FRB approval prior to: (i) incurring or increasing its debt position; (ii) repurchasing any United Community stock; or (iii) paying any dividends. The Holding Company Order
also required United Community to develop a debt reduction plan and submit the plan to the OTS for approval. The Holding Company Order, as subsequently amended was terminated on July 2, 2013. On July 9, 2013, United Community entered into
a Memorandum of Understanding (the Holding Company MOU) with the FRB, under which United Community agreed not to pay dividends, repurchase shares, or take on debt without the FRBs prior approval.
The Holding Company MOU was terminated on January 8, 2014.
3. RECENT ACCOUNTING DEVELOPMENTS
In July 2013, the Financial Accounting Standards Board amended existing guidance related to the presentation of an unrecognized tax benefit
when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. These amendments provide that an unrecognized tax benefit, or a portion thereof, be presented in the financial statements as a reduction to a deferred
tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except to the extent that a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date
to settle any additional income taxes that would result from disallowance of a tax position, or the tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, then the unrecognized tax
benefit should be presented as a liability. These amendments are effective for interim and annual reporting periods beginning after December 15, 2013. Early adoption and retrospective application was permitted. The effect of adopting this
standard did not have a material effect on the Companys operating results or financial condition.
In January 2014, FASB issued Accounting Standards
Update 2014-04,
ReceivablesTroubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task
Force).
The ASU clarifies when an in-substance repossession or foreclosure occurs and a creditor is considered to have received physical possession of real estate property collateralizing a consumer mortgage loan. Specifically, the new ASU
requires a creditor to reclassify a collateralized consumer mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender
to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. Additional disclosures are required detailing the amount of foreclosed residential real estate property held by the creditor and the recorded investment in
consumer mortgages collateralized by real estate property that are in the process of foreclosure. The new guidance is effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014.
The adoption of this guidance will not have a material impact on the Companys consolidated financial statements, but will result in additional disclosures.
In May 2014, FASB issued Accounting Standards Update 2014-09,
Revenue from Contracts with Customers (Topic 606)
. The ASU creates a new topic, Topic
606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity
should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are
required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and
interim reporting periods within those annual periods, beginning after December 15, 2016. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Companys consolidated financial
statements.
7
4. STOCK COMPENSATION
Stock Options:
On
April 26, 2007, shareholders approved the United Community Financial Corp. 2007 Long-Term Incentive Plan (as amended, the 2007 Plan). The purpose of the 2007 Plan is to promote and advance the interests of United Community and its shareholders
by enabling United Community to attract, retain and reward directors, directors emeritus, managerial and other key employees of United Community, including Home Savings, by facilitating their purchase of an ownership interest in United Community.
The 2007 Plan provides for the issuance of up to 2,000,000 shares that are to be used for awards of restricted stock, stock options, performance awards, stock appreciation rights (SARs), or other forms of stock-based incentive awards. There were
3,623 stock options granted in 2014 and there were 17,787 stock options granted in 2013 under the 2007 Plan. The options must be exercised within 10 years from the date of grant.
On July 12, 1999, shareholders approved the United Community Financial Corp. 1999 Long-Term Incentive Plan (as amended, the 1999 Plan). The purpose of
the 1999 Plan was the same as the 2007 Plan. The 1999 Plan terminated on May 20, 2009, although the 1999 Plan survives so long as options issued under the 1999 Plan remain outstanding and exercisable.
The 1999 Plan provided for the grant of either incentive or nonqualified stock options. Options were awarded at exercise prices that were not less than the
fair market value of the share at the grant date. The maximum number of common shares that could be issued under the 1999 Plan was 3,569,766. Because the 1999 Plan terminated, no additional options may be issued under it. All of the options awarded
became exercisable on the date of grant except that options granted in 2009 became exercisable over three years beginning on December 31, 2009. All options expire 10 years from the date of grant.
Expenses related to stock option grants are included with salaries and employee benefits. The Company recognized $6,193 in stock option expenses for the three
months ended June 30, 2014. The Company recognized $12,551 in stock option expenses for the six months ended June 30, 2014. The Company recognized $5,720 in stock option expenses for the three months ended June 30, 2013. The Company
recognized $9,469 in stock option expenses for the six months ended June 30, 2013. The Company expects to recognize additional expense of $10,989 for the remainder of 2014, $15,786 in 2015 and $468 in 2016.
A summary of activity in the plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2014
|
|
|
|
Shares
|
|
|
Weighted
average
exercise price
|
|
|
Aggregate
intrinsic value
(in thousands)
|
|
Outstanding at beginning of year
|
|
|
948,690
|
|
|
$
|
5.44
|
|
|
|
|
|
Granted
|
|
|
3,623
|
|
|
|
3.77
|
|
|
|
|
|
Exercised
|
|
|
(80,000
|
)
|
|
|
2.02
|
|
|
|
|
|
Forfeited and expired
|
|
|
(284,864
|
)
|
|
|
12.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of period
|
|
|
587,449
|
|
|
$
|
2.53
|
|
|
$
|
1,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at end of period
|
|
|
566,528
|
|
|
$
|
2.49
|
|
|
$
|
1,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information related to the stock option plans for the six months ended June 30, 2014 follows:
|
|
|
|
|
|
|
June 30, 2014
|
|
Intrinsic value of options exercised
|
|
$
|
135,800
|
|
Cash received from option exercises
|
|
|
162,000
|
|
Tax benefit realized from option exercises
|
|
|
10,267
|
|
Weighted average fair value of options granted, per share
|
|
$
|
1.70
|
|
As of June 30, 2014, there was approximately $27,000 of total unrecognized compensation cost related to nonvested stock
options granted under the 2007 Plan. The cost is expected to be recognized over a weighted-average period of 2.0 years.
8
The fair value of options granted during the second quarter of 2014 was determined using the following
weighted-average assumptions as of the grant date:
|
|
|
|
|
April 3, 2014
|
Risk-free interest rate
|
|
1.76%
|
Expected term (years)
|
|
5
|
Expected stock volatility
|
|
64.98%
|
Dividend yield
|
|
%
|
Outstanding stock options have a weighted average remaining life of 5.68 years and may be exercised in the range of $1.20 to
$5.89.
Restricted Stock Awards:
The
2007 Plan permits the issuance of restricted stock awards to employees and nonemployee directors. Nonvested shares at June 30, 2014 aggregated 332,370, of which 117,435 will vest during 2014, 94,609 will vest in 2015, 60,163 will vest in 2016
and 60,163 will vest in 2017. Expenses related to restricted stock awards are charged to salaries and employee benefits and are recognized over the vesting period of the awards based on the market value of the shares at the grant date. The Company
recognized approximately $58,000 in restricted stock award expenses for the three months ended June 30, 2014. The Company recognized approximately $236,000 in restricted stock award expenses for the six months ended June 30, 2014. The
Company recognized approximately $88,000 in restricted stock award expenses for the three months ended June 30, 2013 and approximately $179,000 in restricted stock award expenses for the six months ended June 30, 2013. The Company expects
to recognize additional expenses of approximately $222,000 in 2014, $363,000 in 2015, $295,000 in 2016 and $79,000 in 2017.
A summary of changes in the
Companys nonvested restricted shares for the first six months of 2014 is as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
average grant
date fair value
|
|
Nonvested shares at January 1, 2014
|
|
|
192,937
|
|
|
$
|
3.49
|
|
Granted
|
|
|
241,969
|
|
|
|
3.85
|
|
Vested
|
|
|
(50,061
|
)
|
|
|
3.54
|
|
Forfeited
|
|
|
(52,475
|
)
|
|
|
3.55
|
|
|
|
|
|
|
|
|
|
|
Nonvested shares at March 31, 2014
|
|
|
332,370
|
|
|
$
|
3.74
|
|
|
|
|
|
|
|
|
|
|
9
5. SECURITIES
Components of the available for sale portfolio are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
|
|
Amortized
cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
unrealized
losses
|
|
|
Fair
value
|
|
|
|
(Dollars in thousands)
|
|
Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and government sponsored entities securities
|
|
$
|
242,314
|
|
|
$
|
|
|
|
$
|
(10,717
|
)
|
|
$
|
231,597
|
|
Equity securities
|
|
|
100
|
|
|
|
352
|
|
|
|
|
|
|
|
452
|
|
Mortgage-backed GSE securities: residential
|
|
|
290,363
|
|
|
|
185
|
|
|
|
(5,960
|
)
|
|
|
284,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
532,777
|
|
|
$
|
537
|
|
|
$
|
(16,677
|
)
|
|
$
|
516,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
|
|
Amortized
cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
unrealized
losses
|
|
|
Fair
value
|
|
|
|
(Dollars in thousands)
|
|
Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and government sponsored entities securities
|
|
$
|
247,863
|
|
|
$
|
|
|
|
$
|
(25,570
|
)
|
|
$
|
222,293
|
|
Equity securities
|
|
|
101
|
|
|
|
344
|
|
|
|
|
|
|
|
445
|
|
Mortgage-backed GSE securities: residential
|
|
|
303,435
|
|
|
|
31
|
|
|
|
(15,198
|
)
|
|
|
288,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
551,399
|
|
|
$
|
375
|
|
|
$
|
(40,768
|
)
|
|
$
|
511,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities available for sale by contractual maturity, repricing or expected call date are shown below:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
|
|
(Dollars in thousands)
|
|
|
|
Amortized
Cost
|
|
|
Fair
Value
|
|
Due in one year or less
|
|
$
|
500
|
|
|
$
|
500
|
|
Due after one year through five years
|
|
|
|
|
|
|
|
|
Due after five years through ten years
|
|
|
183,967
|
|
|
|
176,757
|
|
Due after ten years through fifteen years
|
|
|
57,847
|
|
|
|
54,340
|
|
Mortgage-backed GSE securities: residential
|
|
|
290,363
|
|
|
|
284,588
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
532,677
|
|
|
$
|
516,185
|
|
|
|
|
|
|
|
|
|
|
The Company expects to realize all interest and principal on these securities and has the ability and intent to hold these
securities until maturity. Recognizing equity securities do not have a contractual maturity, they are excluded from the table above.
The Company had no
securities pledged for the Companys participation in the VISA payment processing program at June 30, 2014 and December 31, 2013. Securities pledged for participation in the Ohio Linked Deposit Program were approximately $400,000 at
June 30, 2014 and $382,000 at December 31, 2013.
10
Securities available for sale that have been in an unrealized loss position for less than twelve months or twelve
months or more are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
|
|
(Dollars in thousands)
|
|
|
|
Less Than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
U.S. Treasury and government sponsored entities securities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
231,097
|
|
|
$
|
(10,717)
|
|
|
$
|
231,097
|
|
|
$
|
(10,717)
|
|
Mortgage-backed GSE securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
residential
|
|
|
4,023
|
|
|
|
(7)
|
|
|
|
240,899
|
|
|
|
(5,953)
|
|
|
|
244,922
|
|
|
|
(5,960)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,023
|
|
|
$
|
(7)
|
|
|
$
|
471,996
|
|
|
$
|
(16,670)
|
|
|
$
|
476,019
|
|
|
$
|
(16,677)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
|
|
(Dollars in thousands)
|
|
|
|
Less Than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
U.S. Treasury and government sponsored entities securities
|
|
$
|
193,746
|
|
|
$
|
(21,360)
|
|
|
$
|
28,046
|
|
|
$
|
(4,210)
|
|
|
$
|
221,792
|
|
|
$
|
(25,570)
|
|
Mortgage-backed GSE securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
residential
|
|
|
240,201
|
|
|
|
(10,680)
|
|
|
|
47,319
|
|
|
|
(4,518)
|
|
|
|
287,520
|
|
|
|
(15,198)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
433,947
|
|
|
$
|
(32,040)
|
|
|
$
|
75,365
|
|
|
$
|
(8,728)
|
|
|
$
|
509,312
|
|
|
$
|
(40,768)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All of the U.S. Treasury and government sponsored entities (GSE) and mortgage-backed securities that were temporarily impaired
at June 30, 2014 and December 31, 2013, were impaired due to the level of interest rates at that time. Unrealized losses on U.S. Treasury and government sponsored entities and mortgage-backed securities have not been recognized into income
as of June 30, 2014 and December 31, 2013 because the issuers securities are of high credit quality (rated AA or higher), management does not intend to sell, and it is likely that management will not be required to sell, the
securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. From April 30, 2013 to December 31, 2013, the 10-year treasury yield rose from 1.70% to
3.04% which caused the securities portfolio to lose value. Since the year ended, the 10-year treasury yield has fallen to 2.53% resulting in an increase in the value of the portfolio. The duration of the securities portfolio was approximately 6.2
years at June 30, 2014. There is risk that longer term rates could rise further resulting in greater unrealized losses. Management continues to allow the portfolio to decline as no new investment purchases are being
considered. In addition, the Company can look for opportunities to sell securities to reduce the portfolio or change the duration characteristics. All of the securities are GSE issued debt or mortgage-backed securities and carry the same rating
as the U.S. Government. The Company expects to realize all interest and principal on these securities and has the ability and intent to hold these securities until maturity.
At June 30, 2014 and December 31, 2013, all of the mortgage-backed securities held by the Company were issued by U.S. government sponsored agencies,
primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the
Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be
other-than-temporarily impaired at June 30, 2014 and December 31, 2013. The Company expects to realize all interest and principal on these securities and has the ability and intent to hold these securities until maturity.
Proceeds from sales of securities available for sale were $5.0 million and $69.2 million for the three months ended June 30, 2014 and 2013, respectively.
Gross gains of $31,000 and $1.9 million were realized on these sales during the second quarter of 2014 and 2013, respectively.
Proceeds from sales of
securities available for sale were $5.0 million and $97.1 million for the six months ended June 30, 2014 and 2013, respectively. Gross gains of $34,000 and $2.6 million were realized on these sales during the first six months of 2014 and 2013,
respectively.
11
6. LOANS
Portfolio loans consist of the following:
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in thousands)
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
645,211
|
|
|
$
|
585,025
|
|
Multi-family residential
|
|
|
52,938
|
|
|
|
54,485
|
|
Nonresidential
|
|
|
122,066
|
|
|
|
131,251
|
|
Land
|
|
|
9,635
|
|
|
|
9,683
|
|
Construction:
|
|
|
|
|
|
|
|
|
One-to four-family residential and land development
|
|
|
51,974
|
|
|
|
53,349
|
|
Multi-family and nonresidential
|
|
|
1,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
882,834
|
|
|
|
833,793
|
|
Consumer
|
|
|
|
|
|
|
|
|
Home equity
|
|
|
155,083
|
|
|
|
159,795
|
|
Auto
|
|
|
4,869
|
|
|
|
5,669
|
|
Marine
|
|
|
4,088
|
|
|
|
4,308
|
|
Recreational vehicles
|
|
|
15,983
|
|
|
|
17,347
|
|
Other
|
|
|
2,004
|
|
|
|
2,112
|
|
|
|
|
|
|
|
|
|
|
Total consumer
|
|
|
182,027
|
|
|
|
189,231
|
|
Commercial
|
|
|
|
|
|
|
|
|
Secured
|
|
|
39,001
|
|
|
|
25,714
|
|
Unsecured
|
|
|
126
|
|
|
|
427
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
39,127
|
|
|
|
26,141
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
|
1,103,988
|
|
|
|
1,049,165
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
|
18,264
|
|
|
|
21,116
|
|
Deferred loan costs, net
|
|
|
(1,047
|
)
|
|
|
(1,143
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
17,217
|
|
|
|
19,973
|
|
|
|
|
|
|
|
|
|
|
Loans, net
|
|
$
|
1,086,771
|
|
|
$
|
1,029,192
|
|
|
|
|
|
|
|
|
|
|
Loan commitments are agreements to lend to a customer as long as there is no violation of any condition established in the
contract. Commitments extend over various periods of time with the majority of such commitments disbursed within a sixty-day period. Commitments generally have fixed expiration dates or other termination clauses, may require payment of a fee and may
expire unused. Commitments to extend credit at fixed rates expose Home Savings to some degree of interest rate risk. Home Savings evaluates each customers creditworthiness on a case-by-case basis. The type or amount of collateral obtained
varies and is based on managements credit evaluation of the potential borrower. Home Savings normally has a number of outstanding commitments to extend credit.
12
The following tables present the balance in the allowance for loan losses and the recorded investment in loans by
portfolio segment and are based on impairment method as of June 30, 2014 and December 31, 2013 and activity for the three and six months ended June 30, 2014 and 2013.
Allowance For Loan Losses
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
Real
Estate
Loans
|
|
|
Construction
Loans
|
|
|
Consumer
Loans
|
|
|
Commercial
Loans
|
|
|
Total
|
|
For the three months ended June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance (03/31/14)
|
|
$
|
13,626
|
|
|
$
|
2,027
|
|
|
$
|
3,895
|
|
|
$
|
1,006
|
|
|
$
|
20,554
|
|
Provision
|
|
|
(1,013
|
)
|
|
|
(533
|
)
|
|
|
199
|
|
|
|
(267
|
)
|
|
|
(1,614
|
)
|
Chargeoffs
|
|
|
(415
|
)
|
|
|
(330
|
)
|
|
|
(447
|
)
|
|
|
|
|
|
|
(1,192
|
)
|
Recoveries
|
|
|
155
|
|
|
|
|
|
|
|
143
|
|
|
|
218
|
|
|
|
516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance (06/30/14)
|
|
$
|
12,353
|
|
|
$
|
1,164
|
|
|
$
|
3,790
|
|
|
$
|
957
|
|
|
$
|
18,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance (12/31/13)
|
|
$
|
13,794
|
|
|
$
|
2,281
|
|
|
$
|
4,302
|
|
|
$
|
739
|
|
|
$
|
21,116
|
|
Provision (recovery)
|
|
|
(761
|
)
|
|
|
(708
|
)
|
|
|
25
|
|
|
|
(137
|
)
|
|
|
(1,581
|
)
|
Chargeoffs
|
|
|
(1,027
|
)
|
|
|
(430
|
)
|
|
|
(854
|
)
|
|
|
(45
|
)
|
|
|
(2,356
|
)
|
Recoveries
|
|
|
347
|
|
|
|
21
|
|
|
|
317
|
|
|
|
400
|
|
|
|
1,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance (06/30/14)
|
|
$
|
12,353
|
|
|
$
|
1,164
|
|
|
$
|
3,790
|
|
|
$
|
957
|
|
|
$
|
18,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end amount allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated for impairment
|
|
$
|
2,330
|
|
|
$
|
202
|
|
|
$
|
1,090
|
|
|
$
|
3
|
|
|
$
|
3,625
|
|
Loans collectively evaluated for impairment
|
|
|
10,023
|
|
|
|
962
|
|
|
|
2,700
|
|
|
|
954
|
|
|
|
14,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
12,353
|
|
|
$
|
1,164
|
|
|
$
|
3,790
|
|
|
$
|
957
|
|
|
$
|
18,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end balances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated for impairment
|
|
$
|
27,007
|
|
|
$
|
2,550
|
|
|
$
|
13,491
|
|
|
$
|
4,032
|
|
|
$
|
47,080
|
|
Loans collectively evaluated for impairment
|
|
|
802,843
|
|
|
|
50,434
|
|
|
|
168,536
|
|
|
|
35,095
|
|
|
|
1,056,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
829,850
|
|
|
$
|
52,984
|
|
|
$
|
182,027
|
|
|
$
|
39,127
|
|
|
$
|
1,103,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
Allowance For Loan Losses
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
Real Estate
Loans
|
|
|
Construction
Loans
|
|
|
Consumer
Loans
|
|
|
Commercial
Loans
|
|
|
Total
|
|
For the three months ended June 30, 2013
|
|
|
|
|
|
|
|
|
|
Beginning balance (03/31/13)
|
|
$
|
14,907
|
|
|
$
|
1,443
|
|
|
$
|
4,254
|
|
|
$
|
1,223
|
|
|
$
|
21,827
|
|
Provision
|
|
|
749
|
|
|
|
464
|
|
|
|
335
|
|
|
|
(435
|
)
|
|
|
1,113
|
|
Chargeoffs
|
|
|
(3,937
|
)
|
|
|
(139
|
)
|
|
|
(514
|
)
|
|
|
0
|
|
|
|
(4,590
|
)
|
Recoveries
|
|
|
410
|
|
|
|
35
|
|
|
|
127
|
|
|
|
115
|
|
|
|
687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance (06/30/13)
|
|
$
|
12,129
|
|
|
$
|
1,803
|
|
|
$
|
4,202
|
|
|
$
|
903
|
|
|
$
|
19,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance (12/31/12)
|
|
$
|
13,819
|
|
|
$
|
1,404
|
|
|
$
|
4,459
|
|
|
$
|
1,448
|
|
|
$
|
21,130
|
|
Provision
|
|
|
2,778
|
|
|
|
446
|
|
|
|
573
|
|
|
|
(620
|
)
|
|
|
3,177
|
|
Chargeoffs
|
|
|
(5,143
|
)
|
|
|
(365
|
)
|
|
|
(1,114
|
)
|
|
|
(128
|
)
|
|
|
(6,750
|
)
|
Recoveries
|
|
|
675
|
|
|
|
318
|
|
|
|
284
|
|
|
|
203
|
|
|
|
1,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance (06/30/13)
|
|
$
|
12,129
|
|
|
$
|
1,803
|
|
|
$
|
4,202
|
|
|
$
|
903
|
|
|
$
|
19,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end amount allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated for impairment
|
|
$
|
1,786
|
|
|
$
|
680
|
|
|
$
|
859
|
|
|
$
|
|
|
|
$
|
3,325
|
|
Loans collectively evaluated for impairment
|
|
|
12,008
|
|
|
|
1,601
|
|
|
|
3,443
|
|
|
|
739
|
|
|
|
17,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
13,794
|
|
|
$
|
2,281
|
|
|
$
|
4,302
|
|
|
$
|
739
|
|
|
$
|
21,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end balances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated for impairment
|
|
$
|
27,224
|
|
|
$
|
3,092
|
|
|
$
|
13,821
|
|
|
$
|
4,044
|
|
|
$
|
48,181
|
|
Loans collectively evaluated for impairment
|
|
|
753,220
|
|
|
|
50,257
|
|
|
|
175,410
|
|
|
|
22,097
|
|
|
|
1,000,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
780,444
|
|
|
$
|
53,349
|
|
|
$
|
189,231
|
|
|
$
|
26,141
|
|
|
$
|
1,049,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The unpaid principal balance is the total amount of the loan that is due to Home Savings. The recorded investment includes the
unpaid principal balance less any chargeoffs or partial chargeoffs applied to specific loans. The unpaid principal balance and the recorded investment both exclude accrued interest receivable and deferred loan costs, both of which are immaterial.
14
The following table presents loans individually evaluated for impairment by class of loans as of and for the six
months ended June 30, 2014:
Impaired Loans
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Allowance
for Loan
Losses
Allocated
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Cash Basis
Income
Recognized
|
|
With no specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
7,571
|
|
|
$
|
6,020
|
|
|
$
|
|
|
|
$
|
8,558
|
|
|
$
|
29
|
|
|
$
|
148
|
|
Multifamily residential
|
|
|
185
|
|
|
|
86
|
|
|
|
|
|
|
|
347
|
|
|
|
|
|
|
|
|
|
Nonresidential
|
|
|
5,304
|
|
|
|
3,684
|
|
|
|
|
|
|
|
4,536
|
|
|
|
|
|
|
|
20
|
|
Land
|
|
|
3,958
|
|
|
|
532
|
|
|
|
|
|
|
|
498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
17,018
|
|
|
|
10,322
|
|
|
|
|
|
|
|
13,939
|
|
|
|
29
|
|
|
|
168
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
1,741
|
|
|
|
739
|
|
|
|
|
|
|
|
824
|
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,741
|
|
|
|
739
|
|
|
|
|
|
|
|
824
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
2,509
|
|
|
|
1,998
|
|
|
|
|
|
|
|
4,517
|
|
|
|
3
|
|
|
|
46
|
|
Auto
|
|
|
94
|
|
|
|
79
|
|
|
|
|
|
|
|
57
|
|
|
|
|
|
|
|
5
|
|
Marine
|
|
|
156
|
|
|
|
156
|
|
|
|
|
|
|
|
159
|
|
|
|
|
|
|
|
5
|
|
Recreational vehicle
|
|
|
544
|
|
|
|
323
|
|
|
|
|
|
|
|
255
|
|
|
|
3
|
|
|
|
12
|
|
Other
|
|
|
6
|
|
|
|
6
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,309
|
|
|
|
2,562
|
|
|
|
|
|
|
|
4,990
|
|
|
|
6
|
|
|
|
68
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
3,945
|
|
|
|
3,708
|
|
|
|
|
|
|
|
3,948
|
|
|
|
|
|
|
|
2
|
|
Unsecured
|
|
|
3,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,728
|
|
|
|
3,708
|
|
|
|
|
|
|
|
3,948
|
|
|
|
|
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
29,796
|
|
|
$
|
17,331
|
|
|
$
|
|
|
|
$
|
23,701
|
|
|
$
|
35
|
|
|
$
|
295
|
|
15
(Continued)
Impaired Loans
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Allowance
for Loan
Losses
Allocated
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Cash Basis
Income
Recognized
|
|
With a specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
15,252
|
|
|
$
|
15,252
|
|
|
$
|
2,246
|
|
|
$
|
11,761
|
|
|
$
|
292
|
|
|
$
|
305
|
|
Multifamily residential
|
|
|
73
|
|
|
|
48
|
|
|
|
6
|
|
|
|
326
|
|
|
|
|
|
|
|
|
|
Nonresidential
|
|
|
1,865
|
|
|
|
1,385
|
|
|
|
78
|
|
|
|
1,015
|
|
|
|
2
|
|
|
|
7
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
17,190
|
|
|
|
16,685
|
|
|
|
2,330
|
|
|
|
13,102
|
|
|
|
294
|
|
|
|
312
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
3,436
|
|
|
|
1,811
|
|
|
|
202
|
|
|
|
2,140
|
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,436
|
|
|
|
1,811
|
|
|
|
202
|
|
|
|
2,140
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
10,348
|
|
|
|
10,160
|
|
|
|
949
|
|
|
|
7,568
|
|
|
|
246
|
|
|
|
260
|
|
Auto
|
|
|
8
|
|
|
|
8
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
761
|
|
|
|
761
|
|
|
|
141
|
|
|
|
743
|
|
|
|
11
|
|
|
|
11
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
11,117
|
|
|
|
10,929
|
|
|
|
1,090
|
|
|
|
8,315
|
|
|
|
257
|
|
|
|
271
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
324
|
|
|
|
324
|
|
|
|
3
|
|
|
|
162
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
324
|
|
|
|
324
|
|
|
|
3
|
|
|
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
32,067
|
|
|
$
|
29,749
|
|
|
$
|
3,625
|
|
|
$
|
23,719
|
|
|
$
|
551
|
|
|
$
|
583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
61,863
|
|
|
$
|
47,080
|
|
|
$
|
3,625
|
|
|
$
|
47,420
|
|
|
$
|
586
|
|
|
$
|
878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
The following tables present loans individually evaluated for impairment by class of loans as of and for the six
months ended June 30, 2013:
Impaired Loans
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Allowance
for Loan
Losses
Allocated
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Cash Basis
Income
Recognized
|
|
With no specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
19,608
|
|
|
$
|
17,484
|
|
|
$
|
|
|
|
$
|
16,870
|
|
|
$
|
305
|
|
|
$
|
323
|
|
Multifamily residential
|
|
|
755
|
|
|
|
660
|
|
|
|
|
|
|
|
734
|
|
|
|
2
|
|
|
|
4
|
|
Nonresidential
|
|
|
6,461
|
|
|
|
5,313
|
|
|
|
|
|
|
|
8,688
|
|
|
|
10
|
|
|
|
27
|
|
Land
|
|
|
3,913
|
|
|
|
487
|
|
|
|
|
|
|
|
2,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
30,737
|
|
|
|
23,944
|
|
|
|
|
|
|
|
29,243
|
|
|
|
317
|
|
|
|
354
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
13,409
|
|
|
|
2,081
|
|
|
|
|
|
|
|
2,435
|
|
|
|
|
|
|
|
2
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13,409
|
|
|
|
2,081
|
|
|
|
|
|
|
|
2,435
|
|
|
|
|
|
|
|
2
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
11,041
|
|
|
|
10,423
|
|
|
|
|
|
|
|
8,053
|
|
|
|
232
|
|
|
|
255
|
|
Auto
|
|
|
65
|
|
|
|
44
|
|
|
|
|
|
|
|
44
|
|
|
|
1
|
|
|
|
2
|
|
Marine
|
|
|
186
|
|
|
|
186
|
|
|
|
|
|
|
|
184
|
|
|
|
|
|
|
|
5
|
|
Recreational vehicle
|
|
|
1,252
|
|
|
|
1,110
|
|
|
|
|
|
|
|
835
|
|
|
|
16
|
|
|
|
17
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
12,544
|
|
|
|
11,763
|
|
|
|
|
|
|
|
9,120
|
|
|
|
249
|
|
|
|
279
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
5,380
|
|
|
|
4,512
|
|
|
|
|
|
|
|
2,061
|
|
|
|
|
|
|
|
33
|
|
Unsecured
|
|
|
4,371
|
|
|
|
1
|
|
|
|
|
|
|
|
199
|
|
|
|
1
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,751
|
|
|
|
4,513
|
|
|
|
|
|
|
|
2,260
|
|
|
|
1
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
66,441
|
|
|
$
|
42,301
|
|
|
$
|
|
|
|
$
|
43,058
|
|
|
$
|
567
|
|
|
$
|
696
|
|
17
(Continued)
Impaired Loans
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Allowance
for Loan
Losses
Allocated
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Cash Basis
Income
Recognized
|
|
With a specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
17
|
|
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
370
|
|
|
$
|
|
|
|
$
|
|
|
Multifamily residential
|
|
|
185
|
|
|
|
85
|
|
|
|
25
|
|
|
|
785
|
|
|
|
|
|
|
|
|
|
Nonresidential
|
|
|
2,326
|
|
|
|
1,994
|
|
|
|
325
|
|
|
|
6,477
|
|
|
|
5
|
|
|
|
35
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,528
|
|
|
|
2,089
|
|
|
|
351
|
|
|
|
9,288
|
|
|
|
5
|
|
|
|
35
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
3,921
|
|
|
|
2,316
|
|
|
|
685
|
|
|
|
4,280
|
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,921
|
|
|
|
2,316
|
|
|
|
685
|
|
|
|
4,280
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
571
|
|
|
|
204
|
|
|
|
10
|
|
|
|
314
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
571
|
|
|
|
204
|
|
|
|
10
|
|
|
|
314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,020
|
|
|
|
4,609
|
|
|
|
1,046
|
|
|
|
13,891
|
|
|
|
5
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
73,461
|
|
|
$
|
46,910
|
|
|
$
|
1,046
|
|
|
$
|
56,949
|
|
|
$
|
572
|
|
|
$
|
731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
The following table present loans individually evaluated for impairment by class of loans as of December 31,
2013:
Impaired Loans
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Allowance
for Loan
Losses
Allocated
|
|
With no specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
13,321
|
|
|
$
|
11,309
|
|
|
$
|
|
|
Multifamily residential
|
|
|
662
|
|
|
|
567
|
|
|
|
|
|
Nonresidential
|
|
|
6,451
|
|
|
|
5,311
|
|
|
|
|
|
Land
|
|
|
3,913
|
|
|
|
487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
24,347
|
|
|
|
17,674
|
|
|
|
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
1,433
|
|
|
|
825
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,433
|
|
|
|
825
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
6,458
|
|
|
|
5,808
|
|
|
|
|
|
Auto
|
|
|
83
|
|
|
|
66
|
|
|
|
|
|
Marine
|
|
|
160
|
|
|
|
160
|
|
|
|
|
|
Recreational vehicle
|
|
|
429
|
|
|
|
386
|
|
|
|
|
|
Other
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,132
|
|
|
|
6,422
|
|
|
|
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
4,414
|
|
|
|
4,044
|
|
|
|
|
|
Unsecured
|
|
|
4,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8,481
|
|
|
|
4,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
41,393
|
|
|
$
|
28,965
|
|
|
$
|
|
|
19
(Continued)
Impaired Loans
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Allowance
for Loan
Losses
Allocated
|
|
With a specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
8,897
|
|
|
$
|
8,897
|
|
|
$
|
1,675
|
|
Multifamily residential
|
|
|
185
|
|
|
|
85
|
|
|
|
25
|
|
Nonresidential
|
|
|
908
|
|
|
|
568
|
|
|
|
86
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,990
|
|
|
|
9,550
|
|
|
|
1,786
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
3,895
|
|
|
|
2,267
|
|
|
|
680
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,895
|
|
|
|
2,267
|
|
|
|
680
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
6,743
|
|
|
|
6,743
|
|
|
|
719
|
|
Auto
|
|
|
|
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
656
|
|
|
|
656
|
|
|
|
140
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,399
|
|
|
|
7,399
|
|
|
|
859
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
21,284
|
|
|
$
|
19,216
|
|
|
$
|
3,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,677
|
|
|
$
|
48,181
|
|
|
$
|
3,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
The following tables present loans individually evaluated for impairment by class of loans as of and for the
three months ended June 30, 2014:
Impaired Loans
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Cash Basis
Income
Recognized
|
|
With no specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
5,226
|
|
|
$
|
13
|
|
|
$
|
84
|
|
Multifamily residential
|
|
|
88
|
|
|
|
|
|
|
|
1
|
|
Nonresidential
|
|
|
3,802
|
|
|
|
|
|
|
|
10
|
|
Land
|
|
|
510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,626
|
|
|
|
13
|
|
|
|
95
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
690
|
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
690
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
1,875
|
|
|
|
2
|
|
|
|
21
|
|
Auto
|
|
|
65
|
|
|
|
|
|
|
|
2
|
|
Marine
|
|
|
157
|
|
|
|
|
|
|
|
2
|
|
Recreational vehicle
|
|
|
195
|
|
|
|
1
|
|
|
|
4
|
|
Other
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,296
|
|
|
|
3
|
|
|
|
29
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
3,710
|
|
|
|
|
|
|
|
1
|
|
Unsecured
|
|
|
|
|
|
|
9
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,710
|
|
|
|
9
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
16,322
|
|
|
$
|
25
|
|
|
$
|
148
|
|
21
Impaired Loans
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Cash Basis
Income
Recognized
|
|
With a specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
15,742
|
|
|
$
|
145
|
|
|
$
|
148
|
|
Multifamily residential
|
|
|
567
|
|
|
|
|
|
|
|
|
|
Nonresidential
|
|
|
1,404
|
|
|
|
1
|
|
|
|
3
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
17,713
|
|
|
|
146
|
|
|
|
151
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
2,026
|
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,026
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
10,399
|
|
|
|
124
|
|
|
|
131
|
|
Auto
|
|
|
9
|
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
794
|
|
|
|
7
|
|
|
|
7
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
11,202
|
|
|
|
131
|
|
|
|
138
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
324
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
31,265
|
|
|
$
|
277
|
|
|
$
|
289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
47,587
|
|
|
$
|
302
|
|
|
$
|
437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
The following tables present loans individually evaluated for impairment by class of loans as of and for the
three months ended June 30, 2013:
Impaired Loans
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Cash Basis
Income
Recognized
|
|
With no specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
17,469
|
|
|
$
|
148
|
|
|
$
|
155
|
|
Multifamily residential
|
|
|
671
|
|
|
|
|
|
|
|
1
|
|
Nonresidential
|
|
|
5,485
|
|
|
|
2
|
|
|
|
5
|
|
Land
|
|
|
2,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
25,719
|
|
|
|
150
|
|
|
|
161
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
1,804
|
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,804
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
9,649
|
|
|
|
107
|
|
|
|
119
|
|
Auto
|
|
|
41
|
|
|
|
|
|
|
|
1
|
|
Marine
|
|
|
187
|
|
|
|
|
|
|
|
2
|
|
Recreational vehicle
|
|
|
1,055
|
|
|
|
5
|
|
|
|
6
|
|
Other
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
10,936
|
|
|
|
112
|
|
|
|
128
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
2,827
|
|
|
|
|
|
|
|
15
|
|
Unsecured
|
|
|
357
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,184
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
41,643
|
|
|
$
|
262
|
|
|
$
|
310
|
|
23
Impaired Loans
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Cash Basis
Income
Recognized
|
|
With a specific allowance recorded Permanent real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
373
|
|
|
$
|
|
|
|
$
|
|
|
Multifamily residential
|
|
|
575
|
|
|
|
|
|
|
|
|
|
Nonresidential
|
|
|
7,045
|
|
|
|
|
|
|
|
17
|
|
Land
|
|
|
1,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,057
|
|
|
|
|
|
|
|
17
|
|
Construction loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
2,864
|
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,864
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto
|
|
|
|
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
204
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
12,125
|
|
|
$
|
|
|
|
$
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
53,768
|
|
|
$
|
262
|
|
|
$
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
The following table presents the recorded investment in nonaccrual and loans past due over 90 days and still on
accrual by class of loans as of June 30, 2014:
Nonaccrual Loans and Loans Past Due Over 90 Days and Still Accruing
As of June 30, 2014
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual
|
|
|
Loans past due
over 90 days
and still
accruing
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
5,380
|
|
|
$
|
|
|
Multifamily residential
|
|
|
134
|
|
|
|
|
|
Nonresidential
|
|
|
4,902
|
|
|
|
|
|
Land
|
|
|
532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
10,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
2,550
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
2,224
|
|
|
|
|
|
Auto
|
|
|
64
|
|
|
|
|
|
Marine
|
|
|
127
|
|
|
|
|
|
Recreational vehicle
|
|
|
242
|
|
|
|
|
|
Other
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
Secured
|
|
|
4,023
|
|
|
|
|
|
Unsecured
|
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
20,312
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
25
The following table presents the recorded investment in nonaccrual and loans past due over 90 days and still on
accrual by class of loans as of December 31, 2013:
Nonaccrual Loans and Loans Past Due Over 90 Days and Still Accruing
As of December 31, 2013
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual
|
|
|
Loans past due
over 90 days
and still
accruing
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
6,356
|
|
|
$
|
|
|
Multifamily residential
|
|
|
641
|
|
|
|
|
|
Nonresidential
|
|
|
5,560
|
|
|
|
|
|
Land
|
|
|
496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
3,084
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
2,726
|
|
|
|
45
|
|
Auto
|
|
|
110
|
|
|
|
|
|
Marine
|
|
|
136
|
|
|
|
|
|
Recreational vehicle
|
|
|
263
|
|
|
|
|
|
Other
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,248
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
Secured
|
|
|
4,028
|
|
|
|
|
|
Unsecured
|
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
23,543
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
26
The following table presents an age analysis of past-due loans, segregated by class of loans as of June 30,
2014:
Past Due Loans
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59
Days Past
Due
|
|
|
60-89
Days Past
Due
|
|
|
Greater
than 90
Days Past
Due
|
|
|
Total Past
Due
|
|
|
Current
Loans
|
|
|
Total Loans
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
1,325
|
|
|
$
|
419
|
|
|
$
|
2,795
|
|
|
$
|
4,539
|
|
|
$
|
640,672
|
|
|
$
|
645,211
|
|
Multifamily residential
|
|
|
|
|
|
|
|
|
|
|
133
|
|
|
|
133
|
|
|
|
52,805
|
|
|
|
52,938
|
|
Nonresidential
|
|
|
|
|
|
|
|
|
|
|
4,852
|
|
|
|
4,852
|
|
|
|
117,214
|
|
|
|
122,066
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
532
|
|
|
|
532
|
|
|
|
9,103
|
|
|
|
9,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,325
|
|
|
|
419
|
|
|
|
8,312
|
|
|
|
10,056
|
|
|
|
819,794
|
|
|
|
829,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
|
|
|
|
|
|
|
|
2,553
|
|
|
|
2,553
|
|
|
|
49,421
|
|
|
|
51,974
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,010
|
|
|
|
1,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
2,553
|
|
|
|
2,553
|
|
|
|
50,431
|
|
|
|
52,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
905
|
|
|
|
103
|
|
|
|
1,440
|
|
|
|
2,448
|
|
|
|
152,635
|
|
|
|
155,083
|
|
Auto
|
|
|
|
|
|
|
|
|
|
|
30
|
|
|
|
30
|
|
|
|
4,839
|
|
|
|
4,869
|
|
Marine
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
60
|
|
|
|
4,028
|
|
|
|
4,088
|
|
Recreational vehicle
|
|
|
282
|
|
|
|
477
|
|
|
|
150
|
|
|
|
909
|
|
|
|
15,074
|
|
|
|
15,983
|
|
Other
|
|
|
2
|
|
|
|
9
|
|
|
|
1
|
|
|
|
12
|
|
|
|
1,992
|
|
|
|
2,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,249
|
|
|
|
589
|
|
|
|
1,621
|
|
|
|
3,459
|
|
|
|
178,568
|
|
|
|
182,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
|
|
|
|
4,023
|
|
|
|
4,023
|
|
|
|
34,978
|
|
|
|
39,001
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
128
|
|
|
|
128
|
|
|
|
(2
|
)
|
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
4,151
|
|
|
|
4,151
|
|
|
|
34,976
|
|
|
|
39,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,574
|
|
|
$
|
1,008
|
|
|
$
|
16,637
|
|
|
$
|
20,219
|
|
|
$
|
1,083,769
|
|
|
$
|
1,103,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
The following table presents an age analysis of past-due loans, segregated by class of loans as of
December 31, 2013:
Past Due Loans
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59
Days Past
Due
|
|
|
60-89
Days Past
Due
|
|
|
Greater
than 90
Days Past
Due
|
|
|
Total Past
Due
|
|
|
Current
Loans
|
|
|
Total
Loans
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
1,482
|
|
|
$
|
379
|
|
|
$
|
4,687
|
|
|
$
|
6,548
|
|
|
$
|
578,477
|
|
|
$
|
585,025
|
|
Multifamily residential
|
|
|
359
|
|
|
|
|
|
|
|
190
|
|
|
|
549
|
|
|
|
53,936
|
|
|
|
54,485
|
|
Nonresidential
|
|
|
13
|
|
|
|
|
|
|
|
5,456
|
|
|
|
5,469
|
|
|
|
125,782
|
|
|
|
131,251
|
|
Land
|
|
|
|
|
|
|
36
|
|
|
|
496
|
|
|
|
532
|
|
|
|
9,151
|
|
|
|
9,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,854
|
|
|
|
415
|
|
|
|
10,829
|
|
|
|
13,098
|
|
|
|
767,346
|
|
|
|
780,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
|
|
|
|
|
|
|
|
3,084
|
|
|
|
3,084
|
|
|
|
50,265
|
|
|
|
53,349
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
3,084
|
|
|
|
3,084
|
|
|
|
50,265
|
|
|
|
53,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
541
|
|
|
|
452
|
|
|
|
2,111
|
|
|
|
3,104
|
|
|
|
156,691
|
|
|
|
159,795
|
|
Auto
|
|
|
5
|
|
|
|
|
|
|
|
49
|
|
|
|
54
|
|
|
|
5,615
|
|
|
|
5,669
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,308
|
|
|
|
4,308
|
|
Recreational vehicle
|
|
|
117
|
|
|
|
199
|
|
|
|
3
|
|
|
|
319
|
|
|
|
17,028
|
|
|
|
17,347
|
|
Other
|
|
|
1
|
|
|
|
7
|
|
|
|
10
|
|
|
|
18
|
|
|
|
2,094
|
|
|
|
2,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
664
|
|
|
|
658
|
|
|
|
2,173
|
|
|
|
3,495
|
|
|
|
185,736
|
|
|
|
189,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
11
|
|
|
|
4,017
|
|
|
|
4,028
|
|
|
|
21,686
|
|
|
|
25,714
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
130
|
|
|
|
130
|
|
|
|
297
|
|
|
|
427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
11
|
|
|
|
4,147
|
|
|
|
4,158
|
|
|
|
21,983
|
|
|
|
26,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,518
|
|
|
$
|
1,084
|
|
|
$
|
20,233
|
|
|
$
|
23,835
|
|
|
$
|
1,025,330
|
|
|
$
|
1,049,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
The following table presents loans by class modified as troubled debt restructurings that occurred during the
three months ended June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
loans
|
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
|
Post-
Modification
Recorded
Investment
|
|
|
|
(Dollars in thousands)
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family
|
|
|
11
|
|
|
$
|
922
|
|
|
$
|
969
|
|
Multifamily residential
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
11
|
|
|
|
922
|
|
|
|
969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
|
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
9
|
|
|
|
465
|
|
|
|
450
|
|
Auto
|
|
|
|
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9
|
|
|
|
465
|
|
|
|
450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Restructured Loans
|
|
|
20
|
|
|
$
|
1,387
|
|
|
$
|
1,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The troubled debt restructurings described above increased the allowance for loan losses by $59,000 and resulted in
charge-offs of $3,000 during the three months ended June 30, 2014.
29
The following table presents loans by class modified as troubled debt restructurings that occurred during the six
months ended June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
loans
|
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
|
Post-
Modification
Recorded
Investment
|
|
|
|
(
Dollars in thousands
)
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family
|
|
|
20
|
|
|
$
|
1,491
|
|
|
$
|
1,545
|
|
Multifamily residential
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonresidential
|
|
|
1
|
|
|
|
120
|
|
|
|
120
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
21
|
|
|
|
1,611
|
|
|
|
1,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
|
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
19
|
|
|
|
1,017
|
|
|
|
1,009
|
|
Auto
|
|
|
|
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
19
|
|
|
|
1,017
|
|
|
|
1,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Restructured Loans
|
|
|
40
|
|
|
$
|
2,628
|
|
|
$
|
2,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The troubled debt restructurings described above increased the allowance for loan losses by $116,000 and resulted in
charge-offs of $3,000 during the six months ended June 30, 2014.
30
The following table presents loans by class modified as troubled debt restructurings that occurred during the
three months ended June 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
loans
|
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
|
Post-
Modification
Recorded
Investment
|
|
|
|
(
Dollars in thousands
)
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family
|
|
|
9
|
|
|
$
|
1,099
|
|
|
$
|
844
|
|
Multifamily residential
|
|
|
1
|
|
|
|
469
|
|
|
|
469
|
|
Nonresidential
|
|
|
1
|
|
|
|
41
|
|
|
|
41
|
|
Land
|
|
|
2
|
|
|
|
3,913
|
|
|
|
487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13
|
|
|
|
5,522
|
|
|
|
1,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
1
|
|
|
|
1,161
|
|
|
|
823
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1
|
|
|
|
1,161
|
|
|
|
823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
37
|
|
|
|
1,655
|
|
|
|
1,660
|
|
Auto
|
|
|
|
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
37
|
|
|
|
1,655
|
|
|
|
1,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Restructured Loans
|
|
|
51
|
|
|
$
|
8,338
|
|
|
$
|
4,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The troubled debt restructurings described above increased the allowance for loan losses by $199,000, and resulted in
charge-offs of $1.8 million during the three months ended June 30, 2013.
31
The following table presents loans by class modified as troubled debt restructurings that occurred during the six
months ended June 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
loans
|
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
|
Post-
Modification
Recorded
Investment
|
|
|
|
(
Dollars in thousands
)
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family
|
|
|
22
|
|
|
$
|
1,842
|
|
|
$
|
1,606
|
|
Multifamily residential
|
|
|
1
|
|
|
|
469
|
|
|
|
469
|
|
Nonresidential
|
|
|
1
|
|
|
|
41
|
|
|
|
41
|
|
Land
|
|
|
2
|
|
|
|
3,913
|
|
|
|
487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
26
|
|
|
|
6,265
|
|
|
|
2,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
1
|
|
|
|
1,161
|
|
|
|
823
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1
|
|
|
|
1,161
|
|
|
|
823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
63
|
|
|
|
2,526
|
|
|
|
2,537
|
|
Auto
|
|
|
|
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
4
|
|
|
|
791
|
|
|
|
804
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
67
|
|
|
|
3,317
|
|
|
|
3,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Restructured Loans
|
|
|
94
|
|
|
$
|
10,743
|
|
|
$
|
6,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The troubled debt restructurings described above increased the allowance for loan losses by $572,000, and resulted in
charge-offs of $1.8 million during the six months ended June 30, 2013.
32
The following table presents loans by class modified as troubled debt restructurings for which there was a
payment default within a twelve month cycle following the modification as June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
Number of
loans
|
|
|
Recorded
Investment
|
|
|
|
(Dollars in thousands)
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
One-to four-family
|
|
|
2
|
|
|
$
|
74
|
|
Multifamily residential
|
|
|
|
|
|
|
|
|
Nonresidential
|
|
|
|
|
|
|
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2
|
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
|
|
|
|
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
4
|
|
|
|
172
|
|
Auto
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4
|
|
|
|
172
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Restructured Loans
|
|
|
6
|
|
|
$
|
246
|
|
|
|
|
|
|
|
|
|
|
The troubled debt restructurings that subsequently defaulted described above resulted in no charge-offs during the three
months ended June 30, 2014, and had no effect on the provision for loan losses.
33
The following table presents loans by class modified as troubled debt restructurings for which there was a
payment default within a twelve month cycle following the modification as of December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
Number of loans
|
|
|
Recorded Investment
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
One-to four-family
|
|
|
4
|
|
|
$
|
576
|
|
Multifamily residential
|
|
|
1
|
|
|
|
463
|
|
Nonresidential
|
|
|
|
|
|
|
|
|
Land
|
|
|
2
|
|
|
|
487
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7
|
|
|
|
1,526
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
1
|
|
|
|
623
|
|
Multifamily and nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1
|
|
|
|
623
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
6
|
|
|
|
207
|
|
Auto
|
|
|
|
|
|
|
|
|
Marine
|
|
|
|
|
|
|
|
|
Recreational vehicle
|
|
|
2
|
|
|
|
184
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8
|
|
|
|
391
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Restructured Loans
|
|
|
16
|
|
|
$
|
2,540
|
|
|
|
|
|
|
|
|
|
|
A troubled debt restructuring is considered to be in payment default once it is 30 days contractually past due under the
modified terms.
The troubled debt restructurings described above that subsequently defaulted resulted in no charge-offs during the twelve months ended
December 31, 2013, and had no effect on the provision for loan losses.
The terms of certain other loans were modified during the periods ended
June 30, 2014 and December 31, 2013, but they did not meet the definition of a troubled debt restructuring. These loans have a total recorded investment as of June 30, 2014 of $8.6 million and at December 31, 2013 of $66.4
million. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.
In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in
payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Companys internal underwriting policy.
Credit Quality Indicators:
The Company categorizes loans
into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends among
other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes homogeneous loans past due 90 cumulative days, and all non-homogeneous loans including commercial loans and commercial real
estate loans. Smaller balance homogeneous loans are primarily monitored by payment status.
34
Asset quality ratings are divided into two groups: Pass (unclassified) and Classified. Within the unclassified
group, certain loans that display potential weakness are risk rated as special mention. In addition, there are three classified risk ratings: substandard, doubtful and loss. These specific credit risk categories are defined as follows:
Special Mention.
Loans classified as special mention have potential weakness that deserves managements close attention. If left
uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institutions credit position at some future date. Loans may be housed in this category for no longer than 12 months during
which time information is obtained to determine if the credit should be downgraded to the substandard category.
Substandard.
Loans
classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of
the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful.
Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added
characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
Loss.
Loans classified as loss are considered uncollectible and of such little value, that continuance as assets is not warranted.
Although there may be a chance of recovery on these assets, it is not practical or desirable to defer writing off the asset.
The Company monitors loans
on a monthly basis to determine if they should be included in one of the categories listed above. All impaired non-homogeneous credits classified as Substandard, Doubtful or Loss are analyzed on an individual basis for a specific reserve
requirement. This analysis is performed on each individual credit at least annually or more frequently if warranted.
35
As of June 30, 2014 and December 31, 2013, and based on the most recent analysis
performed, the risk category of loans by class of loans is as follows:
Loans
June 30, 2014
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unclassified
|
|
|
Classified
|
|
|
|
|
|
|
Unclassified
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Loss
|
|
|
Total
Classified
|
|
|
Total Loans
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
636,679
|
|
|
$
|
1,556
|
|
|
$
|
6,976
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,976
|
|
|
$
|
645,211
|
|
Multifamily residential
|
|
|
47,655
|
|
|
|
2,599
|
|
|
|
2,684
|
|
|
|
|
|
|
|
|
|
|
|
2,684
|
|
|
|
52,938
|
|
Nonresidential
|
|
|
92,480
|
|
|
|
8,605
|
|
|
|
20,981
|
|
|
|
|
|
|
|
|
|
|
|
20,981
|
|
|
|
122,066
|
|
Land
|
|
|
9,148
|
|
|
|
|
|
|
|
487
|
|
|
|
|
|
|
|
|
|
|
|
487
|
|
|
|
9,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
785,962
|
|
|
|
12,760
|
|
|
|
31,128
|
|
|
|
|
|
|
|
|
|
|
|
31,128
|
|
|
|
829,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
|
49,423
|
|
|
|
|
|
|
|
2,551
|
|
|
|
|
|
|
|
|
|
|
|
2,551
|
|
|
|
51,974
|
|
Multifamily and nonresidential
|
|
|
1,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
50,433
|
|
|
|
|
|
|
|
2,551
|
|
|
|
|
|
|
|
|
|
|
|
2,551
|
|
|
|
52,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
152,467
|
|
|
|
27
|
|
|
|
2,589
|
|
|
|
|
|
|
|
|
|
|
|
2,589
|
|
|
|
155,083
|
|
Auto
|
|
|
4,790
|
|
|
|
4
|
|
|
|
75
|
|
|
|
|
|
|
|
|
|
|
|
75
|
|
|
|
4,869
|
|
Marine
|
|
|
3,932
|
|
|
|
|
|
|
|
156
|
|
|
|
|
|
|
|
|
|
|
|
156
|
|
|
|
4,088
|
|
Recreational vehicle
|
|
|
15,715
|
|
|
|
|
|
|
|
268
|
|
|
|
|
|
|
|
|
|
|
|
268
|
|
|
|
15,983
|
|
Other
|
|
|
1,990
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
2,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
178,894
|
|
|
|
31
|
|
|
|
3,102
|
|
|
|
|
|
|
|
|
|
|
|
3,102
|
|
|
|
182,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
32,173
|
|
|
|
2,030
|
|
|
|
4,798
|
|
|
|
|
|
|
|
|
|
|
|
4,798
|
|
|
|
39,001
|
|
Unsecured
|
|
|
10
|
|
|
|
|
|
|
|
116
|
|
|
|
|
|
|
|
|
|
|
|
116
|
|
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
32,183
|
|
|
|
2,030
|
|
|
|
4,914
|
|
|
|
|
|
|
|
|
|
|
|
4,914
|
|
|
|
39,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,047,472
|
|
|
$
|
14,821
|
|
|
$
|
41,695
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
41,695
|
|
|
$
|
1,103,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
Loans
December 31, 2013
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unclassified
|
|
|
Classified
|
|
|
|
|
|
|
Unclassified
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Loss
|
|
|
Total
Classified
|
|
|
Total Loans
|
|
Real Estate Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family residential
|
|
$
|
575,903
|
|
|
$
|
404
|
|
|
$
|
8,718
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,718
|
|
|
$
|
585,025
|
|
Multifamily Residential
|
|
|
48,918
|
|
|
|
2,962
|
|
|
|
2,605
|
|
|
|
|
|
|
|
|
|
|
|
2,605
|
|
|
|
54,485
|
|
Nonresidential
|
|
|
90,115
|
|
|
|
12,222
|
|
|
|
28,914
|
|
|
|
|
|
|
|
|
|
|
|
28,914
|
|
|
|
131,251
|
|
Land
|
|
|
9,069
|
|
|
|
127
|
|
|
|
487
|
|
|
|
|
|
|
|
|
|
|
|
487
|
|
|
|
9,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
724,005
|
|
|
|
15,715
|
|
|
|
40,724
|
|
|
|
|
|
|
|
|
|
|
|
40,724
|
|
|
|
780,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family Residential
|
|
|
50,257
|
|
|
|
|
|
|
|
3,092
|
|
|
|
|
|
|
|
|
|
|
|
3,092
|
|
|
|
53,349
|
|
Multifamily and Nonresidential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
50,257
|
|
|
|
|
|
|
|
3,092
|
|
|
|
|
|
|
|
|
|
|
|
3,092
|
|
|
|
53,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity
|
|
|
156,841
|
|
|
|
46
|
|
|
|
2,954
|
|
|
|
|
|
|
|
|
|
|
|
2,954
|
|
|
|
159,841
|
|
Auto
|
|
|
5,507
|
|
|
|
5
|
|
|
|
116
|
|
|
|
|
|
|
|
|
|
|
|
116
|
|
|
|
5,628
|
|
Marine
|
|
|
4,143
|
|
|
|
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
160
|
|
|
|
4,303
|
|
Recreational vehicle
|
|
|
17,066
|
|
|
|
|
|
|
|
281
|
|
|
|
|
|
|
|
|
|
|
|
281
|
|
|
|
17,347
|
|
Other
|
|
|
2,099
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
2,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
185,656
|
|
|
|
51
|
|
|
|
3,524
|
|
|
|
|
|
|
|
|
|
|
|
3,524
|
|
|
|
189,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
19,714
|
|
|
|
190
|
|
|
|
5,810
|
|
|
|
|
|
|
|
|
|
|
|
5,810
|
|
|
|
25,714
|
|
Unsecured
|
|
|
68
|
|
|
|
|
|
|
|
359
|
|
|
|
|
|
|
|
|
|
|
|
359
|
|
|
|
427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
19,782
|
|
|
|
190
|
|
|
|
6,169
|
|
|
|
|
|
|
|
|
|
|
|
6,169
|
|
|
|
26,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
979,700
|
|
|
$
|
15,956
|
|
|
$
|
53,509
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
53,509
|
|
|
$
|
1,049,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
7. MORTGAGE BANKING ACTIVITIES
Mortgage loans serviced for others, which are not reported in United Communitys assets, totaled $1.1 billion as of June 30, 2014
and December 31, 2013. Mortgage banking income is comprised of gains recognized on the sale of loans and changes in fair value of mortgage banking derivatives.
Mortgage loans serviced for others are not reported as assets. The principal balances of these loans are as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
|
December 31, 2013
|
|
|
|
(Dollars in thousands)
|
|
Mortgage loan portfolios serviced for:
|
|
|
|
|
|
|
|
|
FHLMC
|
|
$
|
816,370
|
|
|
$
|
827,146
|
|
FNMA
|
|
|
272,639
|
|
|
|
283,340
|
|
Escrow balances are maintained at the Federal Home Loan Bank (FHLB) in connection with serviced loans totaling $866,000 and
$1.3 million at June 30, 2014 and December 31, 2013, respectively.
Activity for capitalized mortgage servicing rights, included in other
assets, was as follows:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2014
|
|
|
Six Months Ended
June 30, 2013
|
|
|
|
(Dollars in thousands)
|
|
Balance, beginning of year
|
|
$
|
5,941
|
|
|
$
|
5,506
|
|
Originations
|
|
|
541
|
|
|
|
1,791
|
|
Amortized to expense
|
|
|
(824
|
)
|
|
|
(1,230
|
)
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
|
5,658
|
|
|
|
6,067
|
|
Less valuation allowance
|
|
|
(6
|
)
|
|
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
Net balance
|
|
$
|
5,652
|
|
|
$
|
6,033
|
|
|
|
|
|
|
|
|
|
|
Activity in the valuation allowance for mortgage servicing rights was as follows:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2014
|
|
|
Six Months Ended
June 30, 2013
|
|
|
|
(Dollars in thousands)
|
|
Balance, beginning of year
|
|
$
|
|
|
|
$
|
(680
|
)
|
Impairment charges
|
|
|
(6
|
)
|
|
|
|
|
Recoveries
|
|
|
|
|
|
|
646
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
(6
|
)
|
|
$
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
The fair value of mortgage servicing rights as of June 30, 2014, was approximately $9.7 million and at December 31,
2013, the fair value was approximately $10.2 million.
Key economic assumptions in measuring the value of mortgage servicing rights at June 30, 2014,
and December 31, 2013, were as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
|
December 31, 2013
|
|
Weighted average prepayment rate
|
|
|
195 PSA
|
|
|
|
182 PSA
|
|
Weighted average life (in years)
|
|
|
3.74
|
|
|
|
3.94
|
|
Weighted average discount rate
|
|
|
8.00
|
%
|
|
|
8.00
|
%
|
38
8. OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS
Real estate owned and other repossessed assets at June 30, 2014 and June 30, 2013 were as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
June 30,
2013
|
|
|
|
(Dollars in thousands)
|
|
Real estate owned and other repossessed assets
|
|
$
|
8,111
|
|
|
$
|
17,864
|
|
Valuation allowance
|
|
|
(3,563
|
)
|
|
|
(6,505
|
)
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
4,548
|
|
|
$
|
11,359
|
|
|
|
|
|
|
|
|
|
|
Activity in the valuation allowance was as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
June 30,
2013
|
|
|
|
(Dollars in thousands)
|
|
Beginning of year
|
|
$
|
4,059
|
|
|
$
|
6,796
|
|
Additions charged to expense
|
|
|
438
|
|
|
|
1,337
|
|
Reductions due to sales
|
|
|
(934
|
)
|
|
|
(1,628
|
)
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
3,563
|
|
|
$
|
6,505
|
|
|
|
|
|
|
|
|
|
|
Expenses related to foreclosed and repossessed assets include:
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
2014
|
|
|
Three Months
Ended
June 30,
2013
|
|
|
|
(Dollars in thousands)
|
|
Net (gain) loss on sales
|
|
$
|
(104
|
)
|
|
$
|
126
|
|
Provision for unrealized losses, net
|
|
|
146
|
|
|
|
1,014
|
|
Operating expenses, net of rental income
|
|
|
137
|
|
|
|
293
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
$
|
179
|
|
|
$
|
1,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
2014
|
|
|
Six Months
Ended
June 30,
2013
|
|
|
|
(Dollars in thousands)
|
|
Net (gain) loss on sales
|
|
$
|
(13
|
)
|
|
$
|
234
|
|
Provision for unrealized losses, net
|
|
|
438
|
|
|
|
1,337
|
|
Operating expenses, net of rental income
|
|
|
350
|
|
|
|
786
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
$
|
775
|
|
|
$
|
2,357
|
|
|
|
|
|
|
|
|
|
|
39
9. OTHER POSTRETIREMENT BENEFIT PLANS
Home Savings sponsors a defined benefit health care plan that was curtailed in 2000, but continues to provide post-retirement medical
benefits for employees who had worked 20 years and attained a minimum age of 60 by September 1, 2000, while in service with Home Savings. The plan is contributory and contains minor cost-sharing features such as deductibles and coinsurance. In
addition, post-retirement life insurance coverage is provided for employees who were participants prior to December 10, 1976. The life insurance plan is non-contributory. Home Savings policy is to pay premiums monthly, with no
pre-funding.
Components of net periodic benefit cost are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in thousands)
|
|
Service cost
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Interest cost
|
|
|
14
|
|
|
|
13
|
|
|
|
28
|
|
|
|
26
|
|
Expected return on plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amortization of prior service cost
|
|
|
(19
|
)
|
|
|
(19
|
)
|
|
|
(39
|
)
|
|
|
(38
|
)
|
Recognized net actuarial gain
|
|
|
(36
|
)
|
|
|
(28
|
)
|
|
|
(71
|
)
|
|
|
(56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost/(gain)
|
|
$
|
(41
|
)
|
|
$
|
(34
|
)
|
|
$
|
(82
|
)
|
|
$
|
(68
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions used in the valuations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average discount rate
|
|
|
3.95
|
%
|
|
|
3.00
|
%
|
|
|
3.95
|
%
|
|
|
3.00
|
%
|
10. FAIR VALUE MEASUREMENT
Fair value is the exchange price that would be received for an asset if paid to transfer a liability (exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the
measurement date.
Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entitys own beliefs about the assumptions that market participants
would use in pricing an asset or liability.
United Community uses the following methods and significant assumptions to estimate the fair value of each
type of financial instrument:
Available for sale securities
: The fair values of securities available for sale are determined by obtaining quoted
prices on nationally recognized securities exchanges (Level 1 inputs). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).
Impaired loans:
At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value
generally receive specific allocations of the allowance for loan losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of
approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments
are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrowers financial statements, or aging
reports, adjusted or discounted based on managements historical knowledge, changes in market conditions from the time of the valuation, and managements expertise and knowledge of the client and clients business, resulting in a
Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.
40
Other real estate owned:
Assets acquired through or instead of loan foreclosure are initially recorded at
fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These
appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences
between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Real estate owned properties are individually evaluated at
least annually for additional impairment and adjusted accordingly.
Appraisals for both collateral-dependent impaired loans and other real estate owned
are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by Home Savings. Once received, a member of
the Special Assets Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with the independent data sources such as recent market data or industry-wide statistics. On an
annual basis, Home Savings compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value. At the time a
property is acquired and classified as real estate owned, the fair value is determined utilizing the most appropriate method. A fair value in excess of $250,000 will be supported by an appraisal. After determination of fair value, each property will
be recorded at the lower of cost (i.e., recorded investment in the loan) or the estimated net realizable value on the date of transfer to real estate owned. In determining net realizable value, reductions to fair market value may be taken for
estimated costs of sale, conditions that must be remedied immediately upon acquisition, and other factors that negatively impact the marketability and prompt sale of the property.
Mortgage servicing rights:
On a quarterly basis, loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared
to carrying amount. If the carrying amount of an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at fair value. Fair value is determined at a tranche level, based on market prices
for comparable mortgage servicing contracts (Level 1), when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model utilizes assumptions that market
participants would use in estimating future net servicing income and that can be validated against available market data (Level 2).
Loans held for
sale:
Loans held for sale are carried at the lower of cost or fair value, which is evaluated on a pool-level basis. The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of
that loan or other observable market data, such as outstanding commitments from third party investors (Level 2).
Interest rate caps:
Home Savings
uses an independent third party that performs a market valuation analysis for interest rate caps. The methodology used consists of a discounted cash flow model, all future floating cash flows are projected and both floating and fixed cash flows are
discounted to the valuation date. The yield curve utilized for discounting and projecting is built by obtaining publicly available third party market quotes from Reuters, which handle up to 30-year swap maturities (Level 3). Assumptions used in the
valuation of interest rate caps are back-tested for reasonableness on a quarterly basis using an independent source along with a third party service.
Purchased and written certificate of deposit option:
Home Savings periodically enters into written and purchased option derivative instruments to
facilitate the Power CD. The written and purchased options are mirror derivative instruments which are carried at fair value on the consolidated balance sheets. Home Savings uses an independent third party that performs a market valuation analysis
for purchased and written certificate of deposit options. (Level 2).
41
Assets and Liabilities Measured on a Recurring Basis:
Assets and liabilities measured at fair value on a
recurring basis are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2014 Using:
|
|
|
|
June 30,
|
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Unobservable
Inputs
|
|
|
|
2014
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
(Dollars in thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and government sponsored entities securities
|
|
$
|
231,597
|
|
|
$
|
|
|
|
$
|
231,597
|
|
|
$
|
|
|
Equity securities
|
|
|
452
|
|
|
|
452
|
|
|
|
|
|
|
|
|
|
Mortgage-backed GSE securities: residential
|
|
|
284,588
|
|
|
|
|
|
|
|
284,588
|
|
|
|
|
|
Mortgage servicing assets
|
|
|
157
|
|
|
|
|
|
|
|
157
|
|
|
|
|
|
Interest rate caps
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
|
214
|
|
Purchased certificate of deposit option
|
|
|
489
|
|
|
|
|
|
|
|
489
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written certificate of deposit option
|
|
|
489
|
|
|
|
|
|
|
|
489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2013 Using:
|
|
|
|
December 31,
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Unobservable
Inputs
|
|
|
|
2013
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
(Dollars in thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and government sponsored entities securities
|
|
$
|
222,293
|
|
|
$
|
|
|
|
$
|
222,293
|
|
|
$
|
|
|
Equity securities
|
|
|
445
|
|
|
|
445
|
|
|
|
|
|
|
|
|
|
Mortgage-backed GSE securities: residential
|
|
|
288,268
|
|
|
|
|
|
|
|
288,268
|
|
|
|
|
|
Interest rate caps
|
|
|
546
|
|
|
|
|
|
|
|
|
|
|
|
546
|
|
Purchased certificate of deposit option
|
|
|
155
|
|
|
|
|
|
|
|
155
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written certificate of deposit option
|
|
|
155
|
|
|
|
|
|
|
|
155
|
|
|
|
|
|
There were no transfers between Level 1 and Level 2 during 2014 or 2013.
42
The table below presents a reconciliation of all assets measured at fair value on a recurring basis using
significant unobservable inputs (Level 3) for the three months ended June 30, 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Caps
|
|
|
|
Six Months Ended
June 30, 2014
|
|
|
Six Months Ended
June 30, 2013
|
|
|
|
(Dollars in thousands)
|
|
Balance of recurring Level 3 assets at beginning of period
|
|
$
|
546
|
|
|
$
|
436
|
|
Total gains (losses) for the period
|
|
|
|
|
|
|
|
|
Included in other income
|
|
|
(73
|
)
|
|
|
700
|
|
Included in other comprehensive income
|
|
|
|
|
|
|
|
|
Purchases
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
(259
|
)
|
|
|
(259
|
)
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance of recurring Level 3 assets at end of period
|
|
$
|
214
|
|
|
$
|
877
|
|
|
|
|
|
|
|
|
|
|
There were no transfers between Level 2 and Level 3 during 2014 or 2013.
The following table presents quantitative information about recurring Level 3 fair value measurements at June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Valuation
Technique(s)
|
|
|
Unobservable
Input(s)
|
|
|
Range
|
|
|
|
(Dollars in thousands)
|
|
Interest rate caps
|
|
$
|
214
|
|
|
|
Discounted
cash flow
|
|
|
|
Discount rate
|
|
|
|
0.40
|
%-1.18%
|
The following table presents quantitative information about recurring Level 3 fair value measurements at
December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Valuation
Technique(s)
|
|
|
Unobservable
Input(s)
|
|
|
Range
|
|
|
|
(Dollars in thousands)
|
|
Interest rate caps
|
|
$
|
546
|
|
|
|
Discounted
cash flow
|
|
|
|
Discount rate
|
|
|
|
0.35
|
%-1.18%
|
The fair value of interest rate caps was determined using proprietary models from third-party sources taking into account such
factors as size of the transaction, the lack of a quoted market and the custom-tailored nature of the transaction. The fair value is inclusive of interest accruals, as applicable.
43
Assets and Liabilities Measured on a Non-Recurring Basis
: Assets and liabilities measured at fair value on
a non-recurring basis are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2014 Using:
|
|
|
|
June 30,
|
|
|
Quoted Prices
in Active
Markets for
Identical Assets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Unobservable
Inputs
|
|
|
|
2014
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
(Dollars in thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent real estate loans
|
|
$
|
1,062
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,062
|
|
Construction loans
|
|
|
1,997
|
|
|
|
|
|
|
|
|
|
|
|
1,997
|
|
Consumer loans
|
|
|
163
|
|
|
|
|
|
|
|
|
|
|
|
163
|
|
Other real estate owned, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent real estate
|
|
|
1,366
|
|
|
|
|
|
|
|
|
|
|
|
1,366
|
|
Construction
|
|
|
1,848
|
|
|
|
|
|
|
|
|
|
|
|
1,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2013 Using:
|
|
|
|
December 31,
|
|
|
Quoted Prices
in Active
Markets for
Identical Assets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Unobservable
Inputs
|
|
|
|
2013
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
(Dollars in thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent real estate loans
|
|
$
|
2,219
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,219
|
|
Construction loans
|
|
|
1,587
|
|
|
|
|
|
|
|
|
|
|
|
1,587
|
|
Consumer loans
|
|
|
339
|
|
|
|
|
|
|
|
|
|
|
|
339
|
|
Other real estate owned, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent real estate loans
|
|
|
1,939
|
|
|
|
|
|
|
|
|
|
|
|
1,939
|
|
Construction loans
|
|
|
2,310
|
|
|
|
|
|
|
|
|
|
|
|
2,310
|
|
Impaired loans with specific allocations of the allowance for loan losses, carried at fair value, which are measured for
impairment using the fair value of the collateral for collateral dependent loans, had a net carrying amount of $3.2 million at June 30, 2014, that includes a specific valuation allowance of $277,000. This resulted in a decrease of the provision
for loan losses of $30,000 during the three months ended June 30, 2014 and an increase in the provision for loan losses of $439,000 during the six months ended June 30, 2014. Impaired loans with specific allocations of the allowance for
loan losses, carried at fair value, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a net carrying amount of $3.6 million at June 30, 2013, which includes a specific valuation
allowance of $1.0 million. This resulted in a decrease in the provision for loan losses of $1.7 million during the three months ended June 30, 2013 and an increase in the provision for loan losses of $2.3 million during the six months ended
June 30, 2013. Impaired loans with specific allocations of the allowance for loan losses, carried at fair value, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a net carrying amount
of $4.1 million at December 31, 2013, that includes a specific valuation allowance of $792,000. This resulted in an increase of the provision for loan losses of $1.5 million during the twelve months ended December 31, 2013.
The significant unobservable (Level 3) inputs used in the fair value measurement of collateral for collateral dependent impaired loans included in the above
table primarily relate to the adjustment between carrying values versus appraised value. During the reported periods, discounts applied to appraisals for estimated selling costs were 10%.
44
At June 30, 2014, mortgage servicing rights carried at fair value were $157,000, resulting in a net
valuation allowance of $6,000 for the six months ended June 30, 2014. At June 30, 2013, mortgage servicing rights, carried at fair value, totaled $632,000, which is made up of the outstanding balance of $666,000, net of a valuation
allowance of $34,000. At December 31, 2013, mortgage servicing rights carried at fair value of $0, resulting in a net recovery of $680,000 for the year ended December 31, 2013. Mortgage servicing rights are valued by an independent third
party that is active in purchasing and selling these instruments. The value reflects the characteristics of the underlying loans discounted at a market multiple.
At June 30, 2014, other real estate owned, carried at fair value, which is measured for impairment using the fair value of the property less estimated
selling costs and had a net carrying amount of $3.2 million, with a valuation allowance of $3.6 million. This resulted in additional expenses of $146,000 during the three months ended June 30, 2014 and additional expenses of $438,000 during the
six months ended June 30, 2014. At June 30, 2013, other real estate owned had a net carrying amount of $7.2 million with a valuation allowance of $6.6 million. This resulted in additional expenses of $1.1 million during the three months
ended June 30, 2013 and additional expenses of $1.3 million during the six months ended June 30, 2013. At December 31, 2013, other real estate owned had a net carrying amount of $4.2 million, with a valuation allowance of $4.1
million. This resulted in additional expenses of $2.0 million during the twelve months ended December 31, 2013.
The following table presents
quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Valuation Technique(s)
|
|
Unobservable Input(s)
|
|
Range (Average)
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
Permanent real estate loans
|
|
$
|
1,062
|
|
|
Sales comparison approach
Income approach
|
|
Adjustment for differences
between comparable sales
Adjustment for differences
in net
operating income
Capitalization rate
|
|
0.00%-56.90%
(11.78%)
3.95%-14.62%
(9.41%)
|
Construction loans
|
|
|
1,997
|
|
|
Sales comparison approach
|
|
Adjustment for differences
between comparable sales
|
|
0.00%-25.00%
(11.90%)
|
Consumer loans
|
|
|
163
|
|
|
Sales comparison approach
|
|
Adjustment for differences
between comparable sales
|
|
0.00%-25.00%
(11.90%)
|
Other real estate owned, net:
|
|
|
|
|
|
|
|
|
|
|
Permanent real estate loans
|
|
|
1,366
|
|
|
Sales comparison approach
|
|
Adjustment for differences
between comparable sales
|
|
6.00%-46.53%
(17.76%)
|
Construction loans
|
|
|
1,848
|
|
|
Sales comparison approach
|
|
Adjustment for differences
between comparable sales
|
|
6.54%-26.63%
(9.24%)
|
45
The following table presents quantitative information about Level 3 fair value measurements for financial
instruments measured at fair value on a nonrecurring basis at December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Valuation Technique(s)
|
|
Unobservable Input(s)
|
|
Range (Average)
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
Permanent real estate loans
|
|
$
|
2,219
|
|
|
Sales comparison approach
Income approach
|
|
Adjustment for differences
between comparable sales
Adjustment for differences
in net
operating income
Capitalization rate
|
|
0.00%-56.90%
(11.78%)
3.95%-14.62%
(9.41%)
|
Construction loans
|
|
|
1,587
|
|
|
Sales comparison approach
|
|
Adjustment for differences
between comparable sales
|
|
0.00%-25.00%
(11.90%)
|
Consumer loans
|
|
|
339
|
|
|
Sales comparison approach
|
|
Adjustment for differences
between comparable sales
|
|
0.00%-10.00%
(5.00%)
|
Other real estate owned, net:
|
|
|
|
|
|
|
|
|
|
|
Permanent real estate loans
|
|
|
1,939
|
|
|
Sales comparison approach
|
|
Adjustment for differences
between comparable sales
|
|
6.00%-46.53%
(17.76%)
|
Construction loans
|
|
|
2,310
|
|
|
Sales comparison approach
|
|
Adjustment for differences
between comparable sales
|
|
6.54%-26.63%
(9.24%)
|
In accordance with U.S. GAAP, the carrying value and estimated fair values of financial instruments at June 30, 2014 and
December 31, 2013, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2014 Using:
|
|
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
(Dollars in thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
43,590
|
|
|
$
|
43,590
|
|
|
$
|
|
|
|
$
|
|
|
Available for sale securities
|
|
|
516,637
|
|
|
|
452
|
|
|
|
516,185
|
|
|
|
|
|
Loans held for sale
|
|
|
9,290
|
|
|
|
|
|
|
|
9,507
|
|
|
|
|
|
Loans, net
|
|
|
1,086,771
|
|
|
|
|
|
|
|
|
|
|
|
1,096,670
|
|
FHLB stock
|
|
|
18,068
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Accrued interest receivable
|
|
|
5,762
|
|
|
|
|
|
|
|
2,513
|
|
|
|
3,249
|
|
Interest rate caps
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
|
214
|
|
Purchased certificate of deposit option
|
|
|
489
|
|
|
|
|
|
|
|
489
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Checking, savings and money market accounts
|
|
|
(923,552
|
)
|
|
|
(923,552
|
)
|
|
|
|
|
|
|
|
|
Certificates of deposit
|
|
|
(451,922
|
)
|
|
|
|
|
|
|
(457,181
|
)
|
|
|
|
|
FHLB advances
|
|
|
(65,000
|
)
|
|
|
|
|
|
|
(69,647
|
)
|
|
|
|
|
Repurchase agreements and other
|
|
|
(90,567
|
)
|
|
|
|
|
|
|
(96,904
|
)
|
|
|
|
|
Advance payments by borrowers for taxes and insurance
|
|
|
(12,708
|
)
|
|
|
|
|
|
|
(12,708
|
)
|
|
|
|
|
Accrued interest payable
|
|
|
(573
|
)
|
|
|
|
|
|
|
(573
|
)
|
|
|
|
|
Written certificate of deposit option
|
|
|
(489
|
)
|
|
|
|
|
|
|
(489
|
)
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2013
|
|
|
Fair Value Measurements at December 31, 2013 Using:
|
|
|
|
Carrying Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
(Dollars in thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
77,331
|
|
|
$
|
77,331
|
|
|
$
|
|
|
|
$
|
|
|
Available for sale securities
|
|
|
511,006
|
|
|
|
445
|
|
|
|
510,561
|
|
|
|
|
|
Loans held for sale
|
|
|
4,838
|
|
|
|
|
|
|
|
4,866
|
|
|
|
|
|
Loans, net
|
|
|
1,029,192
|
|
|
|
|
|
|
|
|
|
|
|
1,031,491
|
|
FHLB stock
|
|
|
26,464
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Accrued interest receivable
|
|
|
5,694
|
|
|
|
|
|
|
|
2,584
|
|
|
|
3,110
|
|
Interest rate caps
|
|
|
546
|
|
|
|
|
|
|
|
|
|
|
|
546
|
|
Purchased certificate of deposit option
|
|
|
155
|
|
|
|
|
|
|
|
155
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Checking, savings and money market accounts
|
|
|
(899,481
|
)
|
|
|
(899,481
|
)
|
|
|
|
|
|
|
|
|
Certificates of deposit
|
|
|
(492,271
|
)
|
|
|
|
|
|
|
(500,651
|
)
|
|
|
|
|
FHLB advances
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
(55,327
|
)
|
|
|
|
|
Repurchase agreements and other
|
|
|
(90,578
|
)
|
|
|
|
|
|
|
(98,462
|
)
|
|
|
|
|
Advance payments by borrowers for taxes and insurance
|
|
|
(20,060
|
)
|
|
|
|
|
|
|
(20,060
|
)
|
|
|
|
|
Accrued interest payable
|
|
|
(550
|
)
|
|
|
|
|
|
|
(550
|
)
|
|
|
|
|
Written certificate of deposit option
|
|
|
(155
|
)
|
|
|
|
|
|
|
(155
|
)
|
|
|
|
|
The methods and assumptions, not previously presented, used to estimate fair values are described as follows:
(a) Cash and Cash Equivalents
The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.
(b) FHLB Stock
It
is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.
(c) Loans
Fair values of loans, excluding loans held for sale, are estimated as follows: for variable rate loans that reprice frequently and
with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification; fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered
for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification; and impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of
loans do not necessarily represent an exit price.
The fair value of loans held for sale is estimated based upon binding contracts and
quotes from third party investors resulting in a Level 2 classification.
(d) Deposits
The fair values disclosed for demand deposits (e.g., interest and non-interest checking, savings, and certain types of money market accounts)
are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate, fixed-term money market accounts approximate their fair
values at the reporting date resulting in a Level 1 classification. Fair values for fixed and variable rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on
certificates of deposit to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.
47
(e) Short-term Borrowings
The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing
within 90 days, approximate their fair values resulting in a Level 2 classification.
(f) Other Borrowings
The fair values of Home Savings long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for
similar types of borrowing arrangements resulting in a Level 2 classification.
(g) Accrued Interest Receivable/Payable
The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification, depending on the
classification of the underlying asset or liability.
(h) Off-balance Sheet Instruments
Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements and the counterparties credit standing. The fair value of commitments is not material.
11. STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE
Supplemental disclosures of cash flow information are summarized below.
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
2014
|
|
|
Six Months Ended
June 30,
2013
|
|
|
|
(Dollars in thousands)
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid (received) during the period for:
|
|
|
|
|
|
|
|
|
Interest on deposits and borrowings
|
|
$
|
6,150
|
|
|
$
|
6,836
|
|
Income taxes
|
|
|
|
|
|
|
150
|
|
Supplemental schedule of noncash activities:
|
|
|
|
|
|
|
|
|
Transfers from loans to real estate owned and other repossessed assets
|
|
|
853
|
|
|
|
1,053
|
|
Amortization of preferred stock discount
|
|
|
|
|
|
|
6,751
|
|
Conversion of preferred stock to common stock
|
|
|
|
|
|
|
21,841
|
|
48
12. EARNINGS PER SHARE
The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities. As
such, earnings per share is computed using the two-class method as required by ASC 206-10-45. Basic earnings per common share is computed by dividing net income allocated to common shareholders by the weighted average number of common shares
outstanding during the period which excludes the participating securities. Diluted earnings per common share includes the dilutive effect of additional potential common shares from stock compensation awards, but also excludes awards considered
participating securities. Stock options for 87,315 shares were anti-dilutive for the three months ended June 30, 2014 and stock options for 380,946 shares were anti-dilutive for the three months ended June 30, 2013. Stock options for
87,315 shares were anti-dilutive for the six months ended June 30, 2014 and stock options for 380,946 shares were anti-dilutive for the six months ended June 30, 2013.
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
2014
|
|
|
Three months ended
June 30,
2013
|
|
|
|
(Dollars in thousands, except per share data)
|
|
Net income per consolidated statements of income
|
|
$
|
42,404
|
|
|
$
|
3,389
|
|
Net income allocated to participating securities
|
|
|
(235
|
)
|
|
|
(9
|
)
|
Amortization of discount on preferred stock
|
|
|
|
|
|
|
(5,930
|
)
|
|
|
|
|
|
|
|
|
|
Net income allocated to common stock
|
|
$
|
42,169
|
|
|
$
|
(2,550
|
)
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share computation:
|
|
|
|
|
|
|
|
|
Distributed earnings allocated to common stock
|
|
$
|
|
|
|
$
|
|
|
Undistributed earnings allocated to common stock
|
|
|
42,169
|
|
|
|
(2,550
|
)
|
|
|
|
|
|
|
|
|
|
Net income allocated to common stock
|
|
$
|
42,169
|
|
|
$
|
(2,550
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, including shares considered participating securities
|
|
|
50,554
|
|
|
|
43,276
|
|
Less: Average participating securities
|
|
|
(280
|
)
|
|
|
(116
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
|
|
|
50,274
|
|
|
|
13,160
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
|
$
|
0.84
|
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share computation:
|
|
|
|
|
|
|
|
|
Net income allocated to common stock
|
|
$
|
42,169
|
|
|
$
|
(2,550
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding for basic earnings per common share
|
|
|
50,274
|
|
|
|
43,160
|
|
Add: Dilutive effects of assumed exercises of stock options
|
|
|
222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares and dilutive potential common shares
|
|
|
50,496
|
|
|
|
43,160
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
$
|
0.84
|
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
2014
|
|
|
Six months ended
June 30,
2013
|
|
|
|
(Dollars in thousands, except per share data)
|
|
Net income per consolidated statements of income
|
|
$
|
44,498
|
|
|
$
|
6,071
|
|
Net income allocated to participating securities
|
|
|
(232
|
)
|
|
|
(19
|
)
|
Amortization of discount on preferred stock
|
|
|
|
|
|
|
(6,751
|
)
|
|
|
|
|
|
|
|
|
|
Net income allocated to common stock
|
|
$
|
44,266
|
|
|
$
|
(699
|
)
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share computation:
|
|
|
|
|
|
|
|
|
Distributed earnings allocated to common stock
|
|
$
|
|
|
|
$
|
|
|
Undistributed earnings allocated to common stock
|
|
|
44,266
|
|
|
|
(699
|
)
|
|
|
|
|
|
|
|
|
|
Net income allocated to common stock
|
|
$
|
44,266
|
|
|
$
|
(699
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, including shares considered participating securities
|
|
|
50,481
|
|
|
|
38,509
|
|
Less: Average participating securities
|
|
|
(263
|
)
|
|
|
(121
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
|
|
|
50,218
|
|
|
|
38,388
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
|
$
|
0.88
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share computation:
|
|
|
|
|
|
|
|
|
Net income allocated to common stock
|
|
$
|
44,266
|
|
|
$
|
(699
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding for basic earnings per common share
|
|
|
50,218
|
|
|
|
38,388
|
|
Add: Dilutive effects of assumed exercises of stock options
|
|
|
221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares and dilutive potential common shares
|
|
|
50,439
|
|
|
|
38,388
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
$
|
0.88
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
As previously announced and described under Note 16 below, United Community sold 7,942 preferred shares to various investors.
In accordance with U.S. GAAP, United Community recorded a beneficial conversion feature (BCF) related to the issuance of these preferred shares because they contain a conversion feature at a fixed rate that was in-the-money when issued.
A BCF is in-the-money when the investor is deemed to be able to obtain the underlying common shares at a below-market price upon conversion of the preferred shares. The BCF was recognized in United Communitys Shareholders
Equity and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The effective purchase price of the common shares into which the preferred shares were convertible was deemed to
be $2.75, which was used to compute the intrinsic value. The intrinsic value was calculated as the difference between the deemed purchase price of the common shares ($2.75 per share) and the market value ($3.60 per share) on the date the preferred
shares were issued (March 22, 2013), multiplied by the number of shares into which the preferred shares were convertible. The BCF resulting from the issuance of the preferred shares of United Community is calculated as follows:
|
|
|
|
|
Total common shares that may be issued upon conversion of preferred shares
|
|
|
7,942,000
|
|
Intrinsic value (difference between consideration allocated to preferred stock upon conversion at $2.75 per share and market price of
$3.60 per share on March 22, 2013)
|
|
$
|
0.85
|
|
|
|
|
|
|
Beneficial conversion feature
|
|
$
|
6,750,700
|
|
|
|
|
|
|
The BCF has no effect on net income. The BCF calculated above is deemed to be an implied dividend for purposes of determining
earnings per common share in accordance with U.S. GAAP, and is amortized over the period the preferred shares were outstanding. The preferred shares converted to common shares upon shareholder approval which was obtained in the second quarter 2013.
This amortization resulted in a reduction to retained earnings and thus net income available to common shareholders for earnings per common share purposes. Therefore, United Community took into account the BCF discount when computing earnings per
common share in 2013.
50
13. OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) included in the Consolidated Statements of Shareholders Equity consists of unrealized gains and
losses on available for sale securities and reflects no change in unrealized gains and losses on postretirement liability. The change includes $31,000 reclassification of gains on sales of securities and no impairment charges for the three months
ended June 30, 2014, and gains on sales of securities of $1.9 million and no impairment charges for the three months ended June 30, 2013. The change includes $34,000 reclassification of gains on sales of securities and no impairment
charges for the six months ended June 30, 2014, and gains on sales of securities of $2.6 million and no impairment charges for the six months ended June 30, 2013.
Other comprehensive income (loss) components and related tax effects for the three and six month periods are as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in thousands)
|
|
Unrealized holding gain (loss) on securities available for sale
|
|
$
|
11,716
|
|
|
$
|
(31,065
|
)
|
Unrealized holding gain (loss) on postretirement benefits
|
|
|
|
|
|
|
|
|
Reclassification adjustment for (gains) losses realized in income
|
|
|
(31
|
)
|
|
|
(1,857
|
)
|
|
|
|
|
|
|
|
|
|
Net unrealized gains
|
|
|
11,685
|
|
|
|
(32,922
|
)
|
Tax effect, including tax effect attributable to reversal of prior quarters deferred tax valuation allowance
|
|
|
(8,489
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of tax amount
|
|
$
|
3,196
|
|
|
$
|
(32,922
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in thousands)
|
|
Unrealized holding gain (loss) on securities available for sale
|
|
$
|
24,287
|
|
|
$
|
(33,307
|
)
|
Unrealized holding gain (loss) on postretirement benefits
|
|
|
|
|
|
|
|
|
Reclassification adjustment for (gains) losses realized in income
|
|
|
(34
|
)
|
|
|
(2,578
|
)
|
|
|
|
|
|
|
|
|
|
Net unrealized gains
|
|
|
24,253
|
|
|
|
(35,885
|
)
|
Tax effect
|
|
|
(8,489
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of tax amount
|
|
$
|
15,764
|
|
|
$
|
(35,885
|
)
|
|
|
|
|
|
|
|
|
|
The following is a summary of accumulated other comprehensive income (loss) balances, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31,
2013
|
|
|
Current
Period
Change
|
|
|
Balance at
June 30,
2014
|
|
Unrealized gains (losses) on securities available for sale
|
|
$
|
(43,364
|
)
|
|
$
|
15,764
|
|
|
$
|
(27,600
|
)
|
Unrealized gains (losses) on post-retirement benefits
|
|
|
1,699
|
|
|
|
|
|
|
|
1,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(41,665
|
)
|
|
$
|
15,764
|
|
|
$
|
(25,901
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31,
2012
|
|
|
Current
Period
Change
|
|
|
Balance at
June 30,
2013
|
|
Unrealized gains (losses) on securities available for sale
|
|
$
|
5,082
|
|
|
$
|
(35,885
|
)
|
|
$
|
(30,803
|
)
|
Unrealized gains (losses) on post-retirement benefits
|
|
|
1,600
|
|
|
|
|
|
|
|
1,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,682
|
|
|
$
|
(35,885
|
)
|
|
$
|
(29,203
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
As of June 30, 2014, management concluded it was more likely than not that the Companys net deferred tax
asset (DTA) would be realized and accordingly determined a full deferred tax valuation allowance was no longer required. Upon reversal of the former full deferred tax valuation allowance as of June 30, 2014, certain disproportionate tax effects are
retained in accumulated other comprehensive income (loss) totaling approximately a ($16.6) million loss. Almost the entire disproportionate tax effect is attributable to valuation allowance expense recorded through other comprehensive income (loss)
on the tax benefit of losses sustained on the available for sale securities portfolio while the Company was in a full deferred tax valuation allowance. This valuation allowance was appropriately reversed through continuing operations at June 30,
2014, leaving the original expense in accumulated other comprehensive income (loss), where it will remain in accordance with the Companys election of the portfolio approach, until such time as the Company would cease to have an
available for sale security portfolio.
The following is a summary of each component of accumulated other comprehensive income (loss) that was
reclassified into net income during the three and six months ended June 30, 2014, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/losses on
Available for Sale
Securities
|
|
|
Postretirement
Benefits
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
Beginning balance (03/31/2014)
|
|
$
|
(30,796
|
)
|
|
$
|
1,699
|
|
|
$
|
(29,097
|
)
|
Other comprehensive income before reclassification, net of tax
|
|
|
3,216
|
|
|
|
|
|
|
|
3,216
|
|
Amounts reclassified from accumulated other compressive income, net of tax
|
|
|
(20
|
)
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income, net of tax
|
|
|
3,196
|
|
|
|
|
|
|
|
3,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance (06/30/2014)
|
|
$
|
(27,600
|
)
|
|
$
|
1,699
|
|
|
$
|
(25,901
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/losses on
Available for Sale
Securities
|
|
|
Postretirement
Benefits
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
Beginning balance (12/31/2013)
|
|
$
|
(43,364
|
)
|
|
$
|
1,699
|
|
|
$
|
(41,665
|
)
|
Other comprehensive income before reclassification, net of tax
|
|
|
15,786
|
|
|
|
|
|
|
|
15,786
|
|
Amounts reclassified from accumulated other compressive income, net of tax
|
|
|
(22
|
)
|
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income, net of tax
|
|
|
15,764
|
|
|
|
|
|
|
|
15,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance (06/30/2014)
|
|
$
|
(27,600
|
)
|
|
$
|
1,699
|
|
|
$
|
(25,901
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
The following is a summary of each component of accumulated other comprehensive income (loss) that was
reclassified into net income during the three and six months ended June 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/losses on
Available for Sale
Securities
|
|
|
Postretirement
Benefits
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
Beginning balance (03/31/2013)
|
|
$
|
2,119
|
|
|
$
|
1,600
|
|
|
$
|
3,719
|
|
Other comprehensive income before reclassification
|
|
|
(31,065
|
)
|
|
|
|
|
|
|
(31,065
|
)
|
Amounts reclassified from accumulated other compressive income
|
|
|
(1,857
|
)
|
|
|
|
|
|
|
(1,857
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income
|
|
|
(32,922
|
)
|
|
|
|
|
|
|
(32,922
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance (06/30/2013)
|
|
$
|
(30,803
|
)
|
|
$
|
1,600
|
|
|
$
|
(29,203
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/losses on
Available for Sale
Securities
|
|
|
Postretirement
Benefits
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
Beginning balance (12/31/2013)
|
|
$
|
5,082
|
|
|
$
|
1,600
|
|
|
$
|
6,682
|
|
Other comprehensive income before reclassification
|
|
|
(33,307
|
)
|
|
|
|
|
|
|
(33,307
|
)
|
Amounts reclassified from accumulated other compressive income
|
|
|
(2,578
|
)
|
|
|
|
|
|
|
(2,578
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income
|
|
|
(35,885
|
)
|
|
|
|
|
|
|
(35,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance (06/30/2013)
|
|
$
|
(30,803
|
)
|
|
$
|
1,600
|
|
|
$
|
(29,203
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following are significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the
three months ended June 30, 2014:
|
|
|
|
|
|
|
Details About Accumulated Other Comprehensive
Income Components
|
|
Amount Reclassified
From Accumulated
Other Comprehensive
Income
|
|
|
Affected Line Item on
the Statement Where
Net Income is
Presented
|
|
|
(Dollars in thousands)
|
|
|
|
Realized net gains on the sale of available for sale securities
|
|
$
|
(31
|
)
|
|
Net gains on securities available for sale
|
|
|
|
11
|
|
|
Tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
|
Net of tax
|
Total reclassification during the period
|
|
$
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
53
The following is significant amounts reclassified out of each component of accumulated comprehensive income
(loss) for the three months ended June 30, 2013:
|
|
|
|
|
|
|
Details About Accumulated Other Comprehensive
Income Components
|
|
Amount Reclassified
From Accumulated
Other Comprehensive
Income
|
|
|
Affected Line Item on
the Statement Where
Net Income is
Presented
|
(Dollars in thousands)
|
Realized net gains on the sale of available for sale securities
|
|
$
|
(1,857
|
)
|
|
Net gains on securities available for sale
|
|
|
|
|
|
|
Tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
|
(1,857
|
)
|
|
Net of tax
|
Total reclassification during the period
|
|
$
|
(1,857
|
)
|
|
|
|
|
|
|
|
|
|
The following is significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the six
months ended June 30, 2014:
|
|
|
|
|
|
|
Details About Accumulated Other Comprehensive
Income Components
|
|
Amount Reclassified
From Accumulated
Other Comprehensive
Income
|
|
|
Affected Line Item on
the Statement Where
Net Income is
Presented
|
(
Dollars in thousands
)
|
Realized net gains on the sale of available for sale securities
|
|
$
|
(34
|
)
|
|
Net gains on securities available for sale
|
|
|
|
12
|
|
|
Tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
|
(22
|
)
|
|
Net of tax
|
Total reclassification during the period
|
|
$
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
The following is significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the six
months ended June 30, 2013:
|
|
|
|
|
|
|
Details About Accumulated Other Comprehensive
Income Components
|
|
Amount Reclassified
From Accumulated
Other Comprehensive
Income
|
|
|
Affected Line Item on
the Statement Where
Net Income is
Presented
|
(
Dollars in thousands
)
|
Realized net gains on the sale of available for sale securities
|
|
$
|
(2,578
|
)
|
|
Net gains on securities available for sale
|
|
|
|
|
|
|
Tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
|
(2,578
|
)
|
|
Net of tax
|
Total reclassification during the period
|
|
$
|
(2,578
|
)
|
|
|
|
|
|
|
|
|
|
14. REGULATORY CAPITAL REQUIREMENTS
Home Savings is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Home Savings and United Community. The regulations require Home Savings to
meet specific capital adequacy guidelines in keeping with the regulatory framework for prompt corrective action that involve quantitative measures of Home Savings assets, liabilities, and certain off balance sheet items as calculated under
regulatory accounting practices. Home Savings capital classification is also subject to qualitative judgments by the regulators about components of capital, risk weightings, and other factors.
54
Quantitative measures established by regulation for capital adequacy require Home Savings to maintain minimum
ratios of Tier 1 (or Core) capital (as defined in the regulations) to average total assets (as defined) and of total risk-based capital (as defined) to risk-weighted assets (as defined). Actual and regulatory required capital ratios for Home
Savings, along with the dollar amount of capital implied by such ratios, are presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2014
|
|
|
|
Actual
|
|
|
Minimum Capital
Requirements Per
Regulation
|
|
|
To Be Well Capitalized
Under Prompt
Corrective Action
Provisions
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
|
(In thousands)
|
|
Total risk-based capital to risk-weighted assets
|
|
$
|
223,734
|
|
|
|
21.26
|
%
|
|
$
|
84,201
|
|
|
|
8.00
|
%
|
|
$
|
105,251
|
|
|
|
10.00
|
%
|
Tier 1 capital to risk-weighted assets
|
|
|
210,515
|
|
|
|
20.00
|
%
|
|
|
*
|
|
|
|
*
|
|
|
|
63,151
|
|
|
|
6.00
|
%
|
Tier 1 capital to average total assets**
|
|
|
210,515
|
|
|
|
12.05
|
%
|
|
|
69,872
|
|
|
|
4.00
|
%
|
|
|
87,340
|
|
|
|
5.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2013
|
|
|
|
Actual
|
|
|
Minimum Capital
Requirements Per
Regulation
|
|
|
To Be Well Capitalized
Under Prompt
Corrective Action
Provisions
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
|
(In thousands)
|
|
Total risk-based capital to risk-weighted assets
|
|
$
|
200,835
|
|
|
|
19.76
|
%
|
|
$
|
81,293
|
|
|
|
8.00
|
%
|
|
$
|
101,616
|
|
|
|
10.00
|
%
|
Tier 1 capital to risk-weighted assets
|
|
|
188,029
|
|
|
|
18.50
|
%
|
|
|
*
|
|
|
|
*
|
|
|
|
60,969
|
|
|
|
6.00
|
%
|
Tier 1 capital to average total assets**
|
|
|
188,029
|
|
|
|
10.50
|
%
|
|
|
71,611
|
|
|
|
4.00
|
%
|
|
|
89,514
|
|
|
|
5.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Ratio is not required under regulations
|
**
|
Tier 1 Leverage Capital Ratio
|
As of June 30, 2014 and December 31, 2013, Home Savings was
considered well capitalized.
55
15. INCOME TAXES
Significant components of the deferred tax assets and liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
December 31,
2013
|
|
|
|
(Dollars in thousands)
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Loan loss reserves
|
|
$
|
6,393
|
|
|
$
|
7,391
|
|
Postretirement benefits
|
|
|
1,113
|
|
|
|
1,162
|
|
Other real estate owned valuation
|
|
|
1,247
|
|
|
|
1,421
|
|
Tax credits carryforward
|
|
|
529
|
|
|
|
339
|
|
Securities impairment charges
|
|
|
150
|
|
|
|
153
|
|
Unrealized loss on securities available for sale
|
|
|
5,649
|
|
|
|
14,138
|
|
Interest on nonaccrual loans
|
|
|
910
|
|
|
|
758
|
|
Net operating loss carryforward
|
|
|
23,558
|
|
|
|
26,708
|
|
Purchase accounting adjustment
|
|
|
76
|
|
|
|
70
|
|
Accrued bonuses
|
|
|
149
|
|
|
|
456
|
|
Other
|
|
|
686
|
|
|
|
295
|
|
Less: Valuation allowance
|
|
|
(2,481
|
)
|
|
|
(42,802
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
37,979
|
|
|
|
10,089
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Deferred loan fees
|
|
|
378
|
|
|
|
405
|
|
Federal Home Loan Bank stock dividends
|
|
|
4,585
|
|
|
|
6,715
|
|
Mortgage servicing rights
|
|
|
1,978
|
|
|
|
2,079
|
|
Postretirement benefits accrual
|
|
|
640
|
|
|
|
640
|
|
Prepaid expenses
|
|
|
206
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
7,787
|
|
|
|
10,089
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
30,192
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2014, the net deferred tax asset (DTA) was $30.2 million, and as of December 31, 2013, the net DTA
(prior to any valuation allowance) was $42.8 million. Management recorded a valuation allowance against the net deferred tax assets at December 31, 2013 based on consideration of, but not limited to, its cumulative pre-tax losses during the
past three years, the composition of recurring and non-recurring income from operations over the past several years and the magnitude of recent taxable income as compared to net operating loss carryforwards.
As of June 30, 2014, the Company had reversed $40.3 million of the valuation allowance on its net DTA. $1.6 million of the reversal is due to current
year-to-date operating income; the remaining $38.7 million reversal is due to managements change in judgment regarding the ability to realize deferred tax assets in future years. The remaining $2.5 million of valuation allowance is expected to
reverse due to operating income projected for the remainder of 2014. The realization of a DTA is assessed and a valuation allowance is recorded if it is more likely than not that all or a portion of the DTA will not be realized.
More likely than not is defined as the DTA being more than 50% likely of being realized. All available evidence, both positive and negative is considered to determine whether, based on the weight of that evidence, a valuation allowance
against the net DTA is required. In assessing the need for a valuation allowance, the Company considered all available evidence about the realization of the DTA both positive and negative, that could be objectively verified.
56
Positive evidence considered included (1) the Companys recent history of quarterly pre-tax earnings (ten
out of the last eleven quarters with the most recent quarterly loss being recorded for the quarter ended September 30, 2012), (2) expectations for sustained and continued profitability with sufficient taxable income to fully utilize the remaining
net deferred tax benefits (3) significant reductions in the level of non-performing assets since their peak, which was the primary source of the losses generated in prior periods (4) resolution to executive searches placed on key management
positions (5) evaluation of core earnings (6) adequacy of capital to fund balance sheet and future growth and (7) cost-saving initiatives triggered during the second quarter of 2014.
Negative evidence considered was (1) the uncertainty about the potential impact on future earnings from nonperforming assets along with (2) former
pre-tax losses reported by the Company. As the number of consecutive periods of profitability increased and the level of profits are indicative of on-going results, the weight of cumulative losses as negative evidence decreased. A reduction in the
weight given to such losses is further validated given that the source of the losses was due to an elevated level of problem assets and related credit costs, which have since been significantly reduced due to the bulk asset sale in 2012 and as
evidenced by the improvements in the Companys asset quality metrics.
After weighing both the positive and negative evidence, management determined
that a valuation allowance on the net DTA was no longer warranted as of June 30, 2014. For a more detailed discussion of the Companys tax calculation, see Note 14 to the consolidated financial statements, included in Item 8 of the
Companys Form 10-K.
Net operating loss carryforwards will begin to expire in the year ending December 31, 2030.
The Companys ultimate realization of the DTA is dependent upon the generation of future taxable income during the periods in which temporary differences
become deductible. Management considers the nature and amount of historical and projected future taxable income, the scheduled reversal of deferred tax assets and liabilities, and available tax planning strategies in making this assessment. The
amount of deferred taxes recognized could be impacted by changes to any of these variables.
16. CAPITAL RAISE
On January 11, 2013, United Community entered into securities purchase agreements with 28 accredited investors, pursuant to which the
investors agreed to invest an aggregate of approximately $39.9 million in United Community for 6,574,272 newly issued common shares of United Community at a purchase price of $2.75 per share, and 7,942 newly created and issued perpetual mandatorily
convertible non-cumulative preferred shares of United Community at a purchase price of $2,750 per share. On March 22, 2013, United Community received $39.9 million from the completion of this portion of the private placement of the capital
raise. Upon receipt of United Community shareholder approval, each of the preferred shares automatically converted into 1,000 United Community common shares. Shareholder approval was obtained at a special meeting of shareholders held on May 28,
2013. The preferred shares did not pay any preferred dividends.
Also on January 11, 2013, United Community entered into subscription agreements with
certain of United Communitys directors, officers and their affiliates pursuant to which these insider investors agreed to invest an aggregate of approximately $2.1 million in United Community for 755,820 newly issued common shares, at the same
purchase price of $2.75 per share. The issuance and sale of common shares to the insider investors, pursuant to the subscription agreements, was subject to United Community shareholder approval, which was obtained on May 28, 2013.
On April 26, 2013, United Community issued a prospectus for the purpose of offering existing shareholders the right to purchase up to $5.0 million of
United Community common shares at $2.75 per share. The rights offering closed on May 28, 2013 and United Community issued 1,818,181 shares to existing shareholders that elected to participate.
Legal, investment banking and other consulting expenses incurred by United Community to complete the capital raise were approximately $4.6 million in the
aggregate. The increase in equity from the capital raise was reduced by these expenses.
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