Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Forward Looking Statements
This Quarterly Report on Form 10-Q contains certain “forward looking statements” within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward looking statements may be identified by reference to a future period or periods, or by use of forward looking terminology, such as “may,” “will,” “believe,”
“expect,” “estimate,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward looking statements are subject to numerous risks and uncertainties. Factors that may cause actual results to
differ materially from those contemplated by such forward-looking statements in addition to those risk factors disclosed in Oritani Financial Corp's (the Company's) Annual Report on Form 10-K for the year ended June 30, 2018, include, but are not
limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations
affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial
and securities markets and the availability of and costs associated with sources of liquidity.
The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only
as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or
statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions, which may be made to any forward looking
statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Overview
The Company is a Delaware corporation that was incorporated in March 2010. The Company is the stock holding company of
Oritani Bank (the "Bank"). The Company owns 100% of the outstanding shares of common stock of the Bank. The Company has engaged primarily in the business of holding the common stock of the Bank. The Company had previously engaged in limited
lending to the real estate investment properties in which (either directly or through a subsidiary) it maintained an ownership interest. The Company no longer has any lending activities or ownership of investment properties.
The Bank’s principal business consists of attracting retail, commercial and municipal bank deposits from the general
public and investing those deposits, together with funds generated from operations and borrowed funds, in multifamily and commercial real estate loans, one- to four-family residential mortgage loans as well as in second mortgage and equity loans,
construction loans, business loans, other consumer loans, and investment securities. The Bank originates loans primarily for investment and holds such loans in its portfolio. Occasionally, the Bank will also purchase loans or enter into loan
participations. The Bank’s primary sources of funds are deposits, borrowings, investment maturities and principal and interest payments on loans and securities. The Bank’s revenues are derived principally from interest on loans and
securities. The Bank also generates revenue from fees, service charges and other income. The Bank’s results of operations depend significantly on its net interest income; which is the difference between the interest earned on interest-earning
assets and the interest paid on interest-bearing liabilities. The Bank’s net interest income is primarily affected by the market interest rate environment, the shape of the U.S. Treasury yield curve, the timing of the re-pricing of
interest-earning assets and interest-bearing liabilities, and the prepayment rate on its mortgage-related assets. Provisions for loan losses and asset valuation charges can also have a significant impact on results of operations. Other factors
that may affect the Bank’s results of operations are general and local economic and competitive conditions, government policies and actions of regulatory authorities.
The Bank’s business strategy is to operate as a well-capitalized and profitable financial institution dedicated to
providing exceptional personal service to its individual, business, and municipal customers. The Bank’s primary focus has been, and will continue to be, organic growth in multifamily and commercial real estate lending.
In December 2017, Oritani Bank (the "Bank"), the wholly owned subsidiary of Oritani Financial Corp. (the "Company"), entered into an
informal agreement ("Informal Agreement") with the Federal Deposit Insurance Corporation ("FDIC") and the New Jersey Department of Banking and Insurance ("NJDOBI") with regard to Bank Secrecy Act ("BSA") and Anti-Money Laundering ("AML") compliance
matters. The Company has incurred expenses associated with the remediation of these matters. Such expenses totaled $156,000 in the three months ended March 31, 2018, $1.5 million for the nine months ended March 31, 2019 and $269,000 for the nine
months ended March 31, 2018. These costs are included in other expenses. However, the Company had no professional fees related to the remediation of the compliance matters in the quarter ended March 31, 2019. The Company believes significant
progress has been made regarding the remediation of these matters and the majority of the associated costs have been expended and expensed.
Comparison of Financial Condition at March
31, 2019 and June 30, 2018
Total Assets.
Total
assets decreased $92.3 million to $4.07 billion at March 31, 2019, from $4.17 billion at June 30, 2018. The primary contributor to the decreased asset level was the contraction in loan balances, cash and other assets.
Cash and Cash Equivalents
.
Cash and cash equivalents (which include fed funds and short term investments) decreased $17.4 million to $17.5 million at March 31, 2019, from $34.8 million at June
30, 2018.
Net Loans.
Loans, net decreased $45.5 million to $3.50 billion at March 31, 2019, from $3.54 billion at June 30, 2018. The Company’s primary strategic business objective remains the organic growth of multifamily and
commercial real estate loans. As discussed in the Company's Form 10-Q for the period ended September 30, 2018, the market to originate such loans has been particularly challenging in recent periods. These market conditions have persisted and,
arguably, worsened. The multifamily market in New York is concerned about proposed changes to rent regulations and their potentially negative impact on future revenue. The sales volume of multifamily properties in the New York metropolitan area
were down in the first calendar quarter of 2019 as compared to recent quarterly periods. In addition, the competitive environment and the decreased external interest rate environment have decreased the market rates on new multifamily and
commercial real estate loan originations.
Despite present conditions, the Company’s loan balances increased slightly ($12.2 million) over the quarter ended March 31, 2019. While
originations were somewhat below expectations ($89.0 million), principal repayment decreased significantly (to $73.9 million) versus the levels realized in recent periods. In addition, there were $4.6 million of loan participations purchased and
an $8.1 million loan (which was 60-89 days past due), was sold at par plus accrued interest. The average balance of the loan portfolio increased $44.3 million for the three months ended March 31, 2019 versus the three months ended December 31,
2018. Loan originations, purchases and principal payments totaled $107.6 million, $114.4 million and $241.7 million, respectively, for the three months ended December 31, 2018. The Company’s loan pipeline was $167.1 million at March 31, 2019
versus $106.3 million as of December 31, 2018. The average balance of the loan portfolio decreased $95.9 million for the three months ended March 31, 2019 versus the comparable 2018 period. Loan originations and principal payments totaled $92.2
million and $112.2 million, respectively, for the three months ended March 31, 2018. There were no loan purchases in that period. The average balance of the loan portfolio decreased $83.0 million for the nine months ended March 31, 2019 versus the
comparable 2018 period. Loan originations, purchases, sales and principal payments for the nine months ended March 31, 2019 totaled $278.7 million, $119.1 million, $8.1 million and $439.0 million, respectively. Loan originations, purchases and
principal payments for the nine months ended March 31, 2018 totaled $349.0 million, $52.8 million and $403.5 million, respectively. There were no sales in the 2018 period. Delinquency and non performing asset information is provided below:
|
|
3/31/2019
|
|
|
12/31/2018
|
|
|
9/30/2018
|
|
|
6/30/2018
|
|
|
3/31/2018
|
|
|
|
(Dollars in thousands)
|
|
Delinquency Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30—59 days past due
|
|
$
|
1,648
|
|
|
$
|
2,890
|
|
|
$
|
15,261
|
|
|
$
|
5,253
|
|
|
$
|
9,772
|
|
60—89 days past due
|
|
|
975
|
|
|
|
8,431
|
|
|
|
356
|
|
|
|
171
|
|
|
|
472
|
|
Nonaccrual
|
|
|
10,184
|
|
|
|
10,706
|
|
|
|
9,083
|
|
|
|
7,877
|
|
|
|
11,887
|
|
Total
|
|
$
|
12,807
|
|
|
$
|
22,027
|
|
|
$
|
24,700
|
|
|
$
|
13,301
|
|
|
$
|
22,131
|
|
Non Performing Asset Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans, per above
|
|
$
|
10,184
|
|
|
$
|
10,706
|
|
|
$
|
9,083
|
|
|
$
|
7,877
|
|
|
$
|
11,887
|
|
Real Estate Owned
|
|
|
636
|
|
|
|
636
|
|
|
|
1,564
|
|
|
|
1,564
|
|
|
|
636
|
|
Total
|
|
$
|
10,820
|
|
|
$
|
11,342
|
|
|
$
|
10,647
|
|
|
$
|
9,441
|
|
|
$
|
12,523
|
|
Nonaccrual loans to total loans
|
|
|
0.29
|
%
|
|
|
0.30
|
%
|
|
|
0.26
|
%
|
|
|
0.22
|
%
|
|
|
0.33
|
%
|
Delinquent loans to total loans
|
|
|
0.36
|
%
|
|
|
0.63
|
%
|
|
|
0.70
|
%
|
|
|
0.37
|
%
|
|
|
0.61
|
%
|
Non performing assets to total assets
|
|
|
0.27
|
%
|
|
|
0.28
|
%
|
|
|
0.26
|
%
|
|
|
0.23
|
%
|
|
|
0.30
|
%
|
Overall, non-performing asset totals and charge-offs continue to illustrate minimal credit issues at the Company. During the quarter ended
March 31, 2019, an $8.1 million loan was sold at par plus accrued interest. This loan was included in the 60-89 days past due total at December 31, 2018.
Debt Securities
available for sale.
Debt securities AFS decreased $8.1 million to $35.0 million at March 31, 2019, from $43.1 million at June 30, 2018. The decrease is primarily due to principal payments.
Debt Securities held to
maturity.
Debt securities HTM were essentially stable at $335.6 million at March 31, 2019 and $335.4 million at June 30, 2018. Purchases have been approximately equal to principal payments.
Federal Home Loan Bank of
New York (“FHLB”) stock.
FHLB stock decreased $4.3 million to $26.1 million at March 31, 2019, from $30.4 million at June 30, 2018. FHLB stock holdings are required depending on several factors, including the level of borrowings with
the FHLB. As FHLB borrowings decreased over the period, excess FHLB stock was redeemed.
Deposits.
Deposits decreased $16.5 million to $2.90 billion at March 31, 2019, from $2.92 billion at June 30, 2018. Strong deposit growth remains a strategic objective of the Company. As discussed in the Company’s
Form 10-Q for the period ended December 31, 2018 and prior periods, deposit growth has been particularly difficult to attain in the current environment. The Company has increased the rates of interest offered on various deposit products in order
to maintain balances. However, the Company has remained cognizant of the cost of alternative sources of funds, and has been unwilling to increase the interest rates on deposit products above these levels. The Company has been largely successful
in minimizing the outflow of deposits, but sizeable growth was not obtained. As compared to the quarter ended December 31, 2018, the average balance of deposits decreased $10.6 million and period end balances decreased $4.6 million and the cost of
deposits increased 13 basis points. The increase in deposit cost is due to the increased interest rates offered on various deposit products and customer migration toward products with a greater return. The Company’s loan to deposit ratio was 120.6%
at March 31, 2019.
Borrowings.
Borrowings decreased $47.6 million to $548.8 million at March 31, 2019, from $596.4 million at June 30, 2018. The decrease is primarily a function of the Company’s decreased total assets at March 31, 2019, particularly decreased loan balances.
Stockholders’ Equity
. Stockholders’
equity decreased $28.6 million to $530.7 million at March 31, 2019, from $559.3 million at June 30, 2018. The decrease was primarily due to dividends and stock repurchases, partially offset by net income and the release of treasury shares in
conjunction with stock option exercises. There were no stock repurchases during the quarter ended March 31, 2019. Based on our March 31, 2019 closing price of $16.63 per share, the Company stock was trading at 141.3% of book value.
Average Balance Sheet for the Three and Nine Months ended March 31, 2019 and 2018
The following tables present certain information regarding Oritani Financial Corp.’s financial condition and net interest income for the
three and nine months ended March 31, 2019 and 2018. The tables present the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing
annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods indicated. Interest income
includes fees that we consider adjustments to yields, including prepayment penalties.
|
|
Average Balance Sheet and Yield/Rate Information
For the Three Months Ended (unaudited)
|
|
|
|
March 31, 2019
|
|
|
March 31, 2018
|
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
Earned/Paid
|
|
|
Average
Yield/Rate
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
Earned/
Paid
|
|
|
Average
Yield/Rate
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
Loans
(1)
|
|
$
|
3,472,390
|
|
|
$
|
35,323
|
|
|
|
4.07
|
%
|
|
$
|
3,568,280
|
|
|
$
|
35,398
|
|
|
|
3.97
|
%
|
Federal Home Loan Bank Stock
|
|
|
26,872
|
|
|
|
467
|
|
|
|
6.95
|
%
|
|
|
26,228
|
|
|
|
432
|
|
|
|
6.59
|
%
|
Equity securities
|
|
|
1,378
|
|
|
|
15
|
|
|
|
4.35
|
%
|
|
|
1,516
|
|
|
|
10
|
|
|
|
2.64
|
%
|
Debt securities available for sale
|
|
|
36,464
|
|
|
|
211
|
|
|
|
2.31
|
%
|
|
|
49,515
|
|
|
|
274
|
|
|
|
2.21
|
%
|
Debt securities held to maturity
|
|
|
347,748
|
|
|
|
2,178
|
|
|
|
2.51
|
%
|
|
|
282,059
|
|
|
|
1,419
|
|
|
|
2.01
|
%
|
Federal funds sold and short term investments
|
|
|
5,083
|
|
|
|
29
|
|
|
|
2.28
|
%
|
|
|
7,111
|
|
|
|
28
|
|
|
|
1.58
|
%
|
Total interest-earning assets
|
|
|
3,889,935
|
|
|
|
38,223
|
|
|
|
3.93
|
%
|
|
|
3,934,709
|
|
|
|
37,561
|
|
|
|
3.82
|
%
|
Non-interest-earning assets
|
|
|
185,227
|
|
|
|
|
|
|
|
|
|
|
|
198,051
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,075,162
|
|
|
|
|
|
|
|
|
|
|
$
|
4,132,760
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings deposits
|
|
|
347,919
|
|
|
|
965
|
|
|
|
1.11
|
%
|
|
|
186,459
|
|
|
|
119
|
|
|
|
0.26
|
%
|
Money market
|
|
|
634,179
|
|
|
|
1,745
|
|
|
|
1.10
|
%
|
|
|
811,897
|
|
|
|
2,209
|
|
|
|
1.09
|
%
|
Checking accounts
|
|
|
704,953
|
|
|
|
2,440
|
|
|
|
1.38
|
%
|
|
|
784,017
|
|
|
|
1,292
|
|
|
|
0.66
|
%
|
Time deposits
|
|
|
1,223,001
|
|
|
|
5,677
|
|
|
|
1.86
|
%
|
|
|
1,175,513
|
|
|
|
4,267
|
|
|
|
1.45
|
%
|
Total deposits
|
|
|
2,910,052
|
|
|
|
10,827
|
|
|
|
1.49
|
%
|
|
|
2,957,886
|
|
|
|
7,887
|
|
|
|
1.07
|
%
|
Borrowings
|
|
|
538,810
|
|
|
|
3,287
|
|
|
|
2.44
|
%
|
|
|
525,159
|
|
|
|
2,721
|
|
|
|
2.07
|
%
|
Total interest-bearing liabilities
|
|
|
3,448,862
|
|
|
|
14,114
|
|
|
|
1.64
|
%
|
|
|
3,483,045
|
|
|
|
10,608
|
|
|
|
1.22
|
%
|
Non-interest-bearing liabilities
|
|
|
95,291
|
|
|
|
|
|
|
|
|
|
|
|
96,104
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,544,153
|
|
|
|
|
|
|
|
|
|
|
|
3,579,149
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
531,009
|
|
|
|
|
|
|
|
|
|
|
|
553,611
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
4,075,162
|
|
|
|
|
|
|
|
|
|
|
$
|
4,132,760
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
$
|
24,109
|
|
|
|
|
|
|
|
|
|
|
$
|
26,953
|
|
|
|
|
|
Net interest rate spread
(2)
|
|
|
|
|
|
|
|
|
|
|
2.29
|
%
|
|
|
|
|
|
|
|
|
|
|
2.60
|
%
|
Net interest-earning assets
(3)
|
|
$
|
441,073
|
|
|
|
|
|
|
|
|
|
|
$
|
451,664
|
|
|
|
|
|
|
|
|
|
Net interest margin
(4)
|
|
|
|
|
|
|
|
|
|
|
2.48
|
%
|
|
|
|
|
|
|
|
|
|
|
2.74
|
%
|
Average of interest-earning assets to interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
112.79
|
%
|
|
|
|
|
|
|
|
|
|
|
112.97
|
%
|
|
(1)
|
Average Outstanding Balance includes nonaccrual loans and interest earned includes prepayment income.
|
|
(2)
|
Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
|
|
(3)
|
Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
|
|
(4)
|
Net interest margin represents net interest income divided by average total interest-earning assets.
|
|
|
Average Balance Sheet and Yield/Rate Information
For the Nine Months Ended (unaudited)
|
|
|
|
March 31, 2019
|
|
|
March 31, 2018
|
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
Earned/Paid
|
|
|
Average
Yield/
Rate
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
Earned/
Paid
|
|
|
Average
Yield/
Rate
|
|
|
|
(Dollars in thousands)
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
(1)
|
|
$
|
3,475,890
|
|
|
$
|
107,360
|
|
|
|
4.12
|
%
|
|
|
3,558,872
|
|
|
$
|
107,126
|
|
|
|
4.01
|
%
|
Federal Home Loan Bank Stock
|
|
|
27,128
|
|
|
|
1,396
|
|
|
|
6.86
|
%
|
|
|
27,532
|
|
|
|
1,368
|
|
|
|
6.63
|
%
|
Equity securities
|
|
|
1,440
|
|
|
|
37
|
|
|
|
3.43
|
%
|
|
|
1,529
|
|
|
|
34
|
|
|
|
2.96
|
%
|
Debt securities available for sale
|
|
|
39,069
|
|
|
|
673
|
|
|
|
2.30
|
%
|
|
|
76,312
|
|
|
|
1,203
|
|
|
|
2.10
|
%
|
Debt securities held to maturity
|
|
|
339,170
|
|
|
|
6,109
|
|
|
|
2.40
|
%
|
|
|
253,261
|
|
|
|
3,663
|
|
|
|
1.93
|
%
|
Federal funds sold and short term investments
|
|
|
19,550
|
|
|
|
331
|
|
|
|
2.26
|
%
|
|
|
13,974
|
|
|
|
139
|
|
|
|
1.33
|
%
|
Total interest-earning assets
|
|
|
3,902,247
|
|
|
|
115,906
|
|
|
|
3.96
|
%
|
|
|
3,931,480
|
|
|
|
113,533
|
|
|
|
3.85
|
%
|
Non-interest-earning assets
|
|
|
199,180
|
|
|
|
|
|
|
|
|
|
|
|
204,433
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,101,427
|
|
|
|
|
|
|
|
|
|
|
$
|
4,135,913
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings deposits
|
|
|
277,032
|
|
|
|
1,796
|
|
|
|
0.86
|
%
|
|
|
180,919
|
|
|
|
324
|
|
|
|
0.24
|
%
|
Money market
|
|
|
690,691
|
|
|
|
5,665
|
|
|
|
1.09
|
%
|
|
|
837,081
|
|
|
|
6,944
|
|
|
|
1.11
|
%
|
Checking accounts
|
|
|
721,790
|
|
|
|
6,215
|
|
|
|
1.15
|
%
|
|
|
749,947
|
|
|
|
3,376
|
|
|
|
0.60
|
%
|
Time deposits
|
|
|
1,224,047
|
|
|
|
16,127
|
|
|
|
1.76
|
%
|
|
|
1,166,888
|
|
|
|
12,384
|
|
|
|
1.42
|
%
|
Total deposits
|
|
|
2,913,560
|
|
|
|
29,803
|
|
|
|
1.36
|
%
|
|
|
2,934,835
|
|
|
|
23,028
|
|
|
|
1.05
|
%
|
Borrowings
|
|
|
542,454
|
|
|
|
9,672
|
|
|
|
2.38
|
%
|
|
|
544,124
|
|
|
|
8,300
|
|
|
|
2.03
|
%
|
Total interest-bearing liabilities
|
|
|
3,456,014
|
|
|
|
39,475
|
|
|
|
1.52
|
%
|
|
|
3,478,959
|
|
|
|
31,328
|
|
|
|
1.20
|
%
|
Non-interest-bearing liabilities
|
|
|
99,524
|
|
|
|
|
|
|
|
|
|
|
|
94,957
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,555,538
|
|
|
|
|
|
|
|
|
|
|
|
3,573,916
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
545,889
|
|
|
|
|
|
|
|
|
|
|
|
561,997
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
4,101,427
|
|
|
|
|
|
|
|
|
|
|
$
|
4,135,913
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
$
|
76,431
|
|
|
|
|
|
|
|
|
|
|
$
|
82,205
|
|
|
|
|
|
Net interest rate spread
(2)
|
|
|
|
|
|
|
|
|
|
|
2.44
|
%
|
|
|
|
|
|
|
|
|
|
|
2.65
|
%
|
Net interest-earning assets
(3)
|
|
$
|
446,233
|
|
|
|
|
|
|
|
|
|
|
$
|
452,521
|
|
|
|
|
|
|
|
|
|
Net interest margin
(4)
|
|
|
|
|
|
|
|
|
|
|
2.61
|
%
|
|
|
|
|
|
|
|
|
|
|
2.79
|
%
|
Average of interest-earning assets to interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
112.91
|
%
|
|
|
|
|
|
|
|
|
|
|
113.01
|
%
|
|
(1)
|
Average Outstanding Balance includes nonaccrual loans and interest earned includes prepayment income.
|
|
(2)
|
Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
|
|
(3)
|
Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
|
|
(4)
|
Net interest margin represents net interest income divided by average total interest-earning assets.
|
Comparison of Operating Results for the Three
Months ended March 31, 2019 December 31, 2018 and 2018
Net Income.
Net
income decreased $975,000 to $12.5 million for the quarter ended March 31, 2019, from $13.4 million for the corresponding 2018 quarter. The most significant factor contributing to the decreased quarterly income was increased interest expense.
Total Interest Income.
Total
interest income increased $662,000 to $38.2 million for the three months ended March 31, 2019, from $37.6 million for the three months ended March 31, 2018. Interest income on loans decreased $75,000 to $35.3 million for the three months ended
March 31, 2019, from $35.4 million for the three months ended March 31, 2018. The decrease in the average balance of loans, as discussed in “Comparison of Financial Condition at March 31, 2019 and June 30, 2018, Net Loans,” impacted loan
interest income.
The yield on the loan portfolio increased 10 basis points for the quarter ended March 31, 2019 versus the comparable 2018 period. On a
linked quarter basis (March 31, 2019 versus December 31, 2018), the yield on the loan portfolio decreased 14 basis points. The level of prepayment income impacted these results. Exclusive of prepayment penalties, the yield on the loan portfolio
increased 13 basis points versus the quarter ended March 31, 2018 and 3 basis points versus the December 31, 2018 quarter. Prepayment penalties totaled $275,000, $1.7 million and $553,000 for the quarters ended March 31, 2019, December 31, 2018
and March 31, 2018, respectively. In addition to prepayment penalties, the prepayment level also effects the loan yield through the realization of deferred loan fees. While loan fees are regularly amortized into income, loan prepayments
accelerate the recognition of these fees as income. Deferred loan fees recognized as interest income totaled $438,000, $687,000 and $543,000 for the quarters ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively.
Interest income on debt securities AFS decreased $63,000 to $211,000 for the three months ended March 31, 2019, from $274,000 for the three
months ended March 31, 2018. Interest income on debt securities HTM increased $759,000 to $2.2 million for the three months ended March 31, 2019, from $1.4 million for the three months ended March 31, 2018. The average balance of debt securities
available for sale decreased $13.1 million for the three months ended March 31, 2019 versus the comparable 2018 period, while the average balance of debt securities held to maturity increased $65.7 million over the same period. The Company has
been classifying the majority of new purchases as held to maturity.
Total Interest Expense.
Total interest expense increased $3.5 million to $14.1 million for the three months ended March 31, 2019, from $10.6 million for the three months ended March 31, 2018. The average balance of
deposits, as discussed in “Comparison of Financial Condition at March 31, 2019 and June 30, 2018, Deposits,” impacted interest expense on deposits. The average balance of brokered deposits decreased $52.2 million between the periods. The average
balance of municipal deposits, which can be subject to significant fluctuation, decreased $34.5 million between the periods. The overall cost of deposits increased 42 basis points for the quarter ended March 31, 2019 versus the comparable 2018
period. The increased costs are primarily due to the impact of market pressures. Customer migration is largely responsible for some of the significant shifts in the average balances of our deposit products. The Company’s highest yielding core
deposit account is currently a savings account. Many money market accounts have shifted to the higher yielding savings account. The decreased checking account balances are partially attributable to decreased municipal account balances as well as
customer migration. Interest expense on borrowings increased $566,000 to $3.3 million for the three months ended March 31, 2019, from $2.7 million for the three months ended March 31, 2018. The cost of borrowings increased 37 basis points. The
cost of borrowings has been impacted by the overall increase in interest rates, particularly overnight and short term borrowings, and the maturities of certain lower cost borrowings.
Net Interest Income
Before Provision for Loan Losses.
Net interest income decreased by $2.8 million to $24.1 million for the three months ended March 31, 2019, from $27.0 million for the three months ended March 31, 2018. The Company’s net interest
income, spread and margin over the period are detailed in the chart below.
|
Net Interest Income Before
|
|
|
Prepayment Penalty
|
|
|
Net Interest Income Before Provision, Excluding Prepayment
|
|
|
Including Prepayment Penalties
|
|
|
Excluding Prepayment Penalties
|
|
Quarter Ended
|
Provision
|
|
|
Income
|
|
|
Penalties
|
|
|
Spread
|
|
|
Margin
|
|
|
Spread
|
|
|
Margin
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
$
|
24,109
|
|
|
$
|
275
|
|
|
$
|
23,834
|
|
|
|
2.29
|
%
|
|
|
2.48
|
%
|
|
|
2.26
|
%
|
|
|
2.45
|
%
|
December 31, 2018
|
|
|
26,027
|
|
|
|
1,727
|
|
|
|
24,300
|
|
|
|
2.51
|
%
|
|
|
2.68
|
%
|
|
|
2.33
|
%
|
|
|
2.51
|
%
|
September 30, 2018
|
|
|
26,295
|
|
|
|
1,154
|
|
|
|
25,141
|
|
|
|
2.51
|
%
|
|
|
2.67
|
%
|
|
|
2.40
|
%
|
|
|
2.55
|
%
|
June 30, 2018
|
|
|
27,721
|
|
|
|
1,836
|
|
|
|
25,885
|
|
|
|
2.65
|
%
|
|
|
2.81
|
%
|
|
|
2.47
|
%
|
|
|
2.63
|
%
|
March 31, 2018
|
|
|
26,953
|
|
|
|
553
|
|
|
|
26,400
|
|
|
|
2.60
|
%
|
|
|
2.74
|
%
|
|
|
2.54
|
%
|
|
|
2.68
|
%
|
The Company’s spread and margin have been significantly impacted by prepayment penalties. Due to this situation, the chart above details
results with and without the impact of prepayment penalties. Net interest income before provision for loan losses, excluding prepayment penalties, is a non-GAAP financial measure since it excludes a component (prepayment penalty income) of net
interest income and therefore differs from the most directly comparable measure calculated in accordance with GAAP. The Company believes the presentation of this non-GAAP financial measure is useful because it provides information to assess the
underlying performance of the loan portfolio since prepayment penalty income can be expected to change as interest rates change. While prepayment penalty income is expected to continue, fluctuations in the level of prepayment income are also
expected. The level of prepayment income is generally expected to decrease as external interest rates increase since borrowers would have less of an incentive to refinance existing loans. However, the time period when these events could occur may
not align, and the specific behavior of borrowers is difficult to predict. Borrowers can be driven to prepay their loans based on factors other than interest rates. The level of loan prepayments and prepayment income experienced by the Company
has been elevated (versus historical levels) despite generally increased interest rates during the majority of the period.
The Company’s spread and margin have been under pressure due to several factors, including a flat and partially inverted treasury yield
curve, modifications of loans within the existing loan portfolio, prepayments of higher yielding loans and investments, and increased funding costs. While spread and margin have been under pressure for an extended period, the competitive market for
deposits increased substantially in fiscal 2019. Although the Company has realized increases in both the cost of funds and the yield on interest earning assets, the increase in cost of funds has outpaced the increase in yield on assets. The cost
increase incurred in the most recent quarter is largely due to existing customers transferring to higher yielding accounts from lower yielding accounts, and the opening of new higher yielding accounts. The Company has not increased its deposit
rates on any consequential account offering in over four months. While the above trend regarding customer behavior can be expected to continue, the impact on the rate of increase in the cost of deposits can be expected to subside assuming rates
remain stable (or decrease).
The Company’s net interest income and net interest rate spread were both negatively impacted in all periods due to the reversal of accrued
interest income on loans delinquent more than 90 days. The total of such income reversed was $100,000 and $4,000 for the three months ended March 31, 2019 and 2018, respectively.
Provision for Loan Losses.
The Company recorded no provision for loan losses for the three months ended March 31, 2019 and March 31, 2018. A rollforward of the allowance for loan losses for the three months ended March 31, 2019 and 2018 is presented below:
|
|
Three Months ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(Dollars in thousands)
|
|
Balance at beginning of period
|
|
$
|
28,639
|
|
|
$
|
30,402
|
|
Provisions charged to operations
|
|
|
—
|
|
|
|
—
|
|
Recoveries of loans previously charged off
|
|
|
16
|
|
|
|
166
|
|
Loans charged off
|
|
|
(65
|
)
|
|
|
(95
|
)
|
Balance at end of period
|
|
$
|
28,590
|
|
|
$
|
30,473
|
|
Allowance for loan losses to total loans
|
|
|
0.81
|
%
|
|
|
0.85
|
%
|
Net charge-offs (annualized) to average loans outstanding
|
|
|
0.01
|
%
|
|
|
(0.01
|
)%
|
Non-interest Income.
Non-interest income increased $114,000 to $1.1 million for the three months ended March 31, 2019, from $981,000 for the three months ended March 31, 2018. The increase is primarily due to $87,000 increase in fair value of equity securities held
by the Company.
Non-interest Expenses.
Non-interest expenses decreased $621,000 to $9.1 million for the three months ended March 31, 2019, from $9.8 million for the three months ended March 31, 2018. The decrease was primarily due to compensation, payroll taxes and fringe benefits,
which decreased $319,000 to $6.0 million for the three months ended March 31, 2019, from $6.3 million for the three months ended March 31, 2018. The decrease was largely due to decreased accrual costs associated with non-qualified benefit plans.
Other expenses decreased $258,000 to $1.4 million for the three months ended March 31, 2019, from $1.7 million for the three months ended March 31, 2018. The decrease is primarily due to decreased professional fees associated with the remediation
of Bank Secrecy Act and Anti-Money Laundering compliance matters as (discussed in previous filings) and the recovery of problem loan expenses that were expensed in a prior period. The Company had no professional fees related to the remediation of
the compliance matters in the quarter ended March 31, 2019, and incurred such expenses totaling $156,000 in the three months ended March 31, 2018.
Income Tax Expense.
Income tax expense for the three months ended March 31, 2019 was $3.6
million on pre-tax income of $16.1 million, resulting in an effective tax rate of 22.5%. Income tax expense for the three months ended March 31, 2018 was $4.7 million. The actual expenses for the three month period ending March 31, 2019, was also
affected by a refund of an item that was expensed in a prior period and the exercise of nonqualified stock options. Income tax expense for the three months ended March 31, 2018 was $4.7 million on pre-tax income of $18.2 million, resulting in an
effective rate of 26.1%.
Comparison of Operating Results for the Nine
Months ended March 31, 2019 and 2018
Net Income.
Net income increased $9.9 million to $39.3 million for the nine months ended March 31, 2019, from $29.4 million for the corresponding 2018 period. The most significant factor resulting in the increased
income in the nine-month period is changes in income tax expense. Results for the nine months ended March 31, 2018 were negatively impacted by the Tax Cuts and Jobs Act (the “Act”). The Act required the Company to revalue its deferred tax assets
and deferred tax liabilities to account for the future impact of lower corporate tax rates on these deferred amounts. The revaluation resulted in a one-time charge of $10.2 million.
Total Interest Income.
Total interest income increased $2.4 million to $115.9 million for the nine months ended March 31, 2019, from $113.5 million for the nine months ended March 31, 2018. The explanations provided in
"Comparison of Operating Results for the Three Months ended March 31, 2019 and 2018, Total Interest Income" and “Comparison of Financial Condition at March 31, 2019 and June 30, 2018, Net Loans,” largely describe the changes applicable to the nine
month period comparison. Prepayment penalties totaled $3.2 million for the nine months ended March 31, 2019 and $3.5 million for the nine months ended March 31, 2018. Prepayment penalties increased annualized loan yield by 12 basis points in the
2019 period versus 13 basis points in the 2018 period.
Total Interest Expense.
Total interest expense increased $8.1 million to $39.5 million for the nine months ended March 31, 2019, from $31.3 million for the nine months ended March 31, 2018. The explanations provided in
“Comparison of Operating Results for the Three Months ended March 31, 2019 and 2018, Total Interest Expense" and “Comparison of Financial Condition at March 31, 2019 and June 30, 2018, Deposits,” largely describe the changes applicable to the nine
month period comparison.
Net Interest Income
Before Provision for Loan Losses.
Net interest income decreased by $5.8 million to $76.4 million for the nine months ended March 31, 2019, from $82.2 million for the nine months ended March 31, 2018. The explanations and information
contained in "Comparison of Operating Results for the Three Months ended March 31, 2019 and 2018, Net Interest Income Before Provision for Loan Losses" are also applicable to the nine month comparison. The total reversal of accrued interest income
on loans delinquent 90 days or more was $235,000 and $210,000 for the nine months ended March 31, 2019 and 2018, respectively.
Provision for Loan
Losses.
The Company recorded a reversal of provision for loan losses of $2.0 million for the nine months ended March 31, 2019 and no provision for loan losses for the nine months ended March 31, 2018. A rollforward of the allowance for
loan losses for the nine months ended March 31, 2019 and 2018 is presented below:
|
|
Nine Months ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(Dollars in thousands)
|
|
Balance at beginning of period
|
|
$
|
30,562
|
|
|
$
|
30,272
|
|
Provisions charged to operations
|
|
|
(2,000
|
)
|
|
|
—
|
|
Recoveries of loans previously charged off
|
|
|
93
|
|
|
|
318
|
|
Loans charged off
|
|
|
(65
|
)
|
|
|
(117
|
)
|
Balance at end of period
|
|
$
|
28,590
|
|
|
$
|
30,473
|
|
Allowance for loan losses to total loans
|
|
|
0.81
|
%
|
|
|
0.85
|
%
|
Net charge-offs (annualized) to average loans outstanding
|
|
|
—
|
|
|
|
(0.01
|
)%
|
The $2.0 million reversal of provision for loan losses recorded for the nine month period ended March 31, 2019 was due primarily to loan
portfolio contraction and reduced qualitative factors within the allowance calculation as determined as part of our quarterly reassessment.
See also delinquency information contained in “Comparison of Financial Condition at March 31, 2019 and June 30, 2018, Net Loans” and footnote
6 of the consolidated financial statements.
Non-interest Income.
Non-interest income increased $979,000 to $3.6 million for the nine months ended March 31, 2019 from $2.6 million for the nine months ended March 31, 2018. The increase is primarily due to a gain
of $855,000 on the sale of a foreclosed property. This increase was partially offset by a $187,000 decrease in fair value of equity securities held by the Company. Despite the increase in value of equity securities described for the three month
period comparison, there was an overall decrease in value in the nine month period. Results for the 2018 period were reduced by a loss of $324,000 on the sale of certain AFS investment securities. There were no sales of securities in the 2019
period.
Non-interest Expense.
Non-interest expenses were essentially stable at $29.5 million for both the nine months ended March 31, 2019 and 2018, though there were fluctuations within the various categories. Compensation,
payroll taxes and fringe benefits decreased $2.1 million to $17.5 million for the nine months ended March 31, 2019, from $19.6 million for the nine months ended March 31, 2018. The decrease was primarily due to decreased ESOP related expenses as
well as decreased costs associated with the incentive and non-qualified benefit plans. Other expenses increased $2.2 million to $6.9 million for the nine months ended March 31, 2019, from $4.7 million for the nine months ended March 31, 2018.
The increase is primarily due to professional fees associated with the remediation of compliance matters. Such fees totaled $1.5 million for the 2019 period versus $269,000 for the 2018 period. The nine month period comparison was also impacted
by an additional pension contribution that was expensed in fiscal 2019.
Income Tax Expense.
Income
tax expense for the nine months ended March 31, 2019, was $13.2 million on pre-tax income of $52.5 million, resulting in an effective tax rate of 25.2%. The Company's estimated effective tax rate for the fiscal year ending June 30, 2019 is 25%.
This estimated effective rate is lower than prior fiscal years primarily as a result of the Act. The actual expenses for the nine month period ending March 31, 2019, was affected by a refund of an item that was expensed in a prior period and the
exercise of nonqualified stock options. In addition, the nine month period ending March 31, 2019 was also impacted by New Jersey ("NJ") tax legislation enacted on July 1, 2018. The legislation required, among other consequences, a revaluation of
our deferred tax assets/liabilities based on the rates at which they are expected to reverse in the future. The revaluation of the Company's deferred tax balances resulted in a one-time non-cash charge of $477,000 which is included in income tax
expense for the nine months ended March 31, 2019. Income tax expense for the nine month period ended March 31, 2018 was $25.9 million. Income tax expense for the nine month period ended March 31, 2018 was significantly impacted by the Act, as
previously discussed in "Comparison of Operating Results for the Nine Months ended March 31, 2019 and 2018, Net Income."
Liquidity and Capital Resources
The Company’s primary sources of funds are deposits, principal and interest payments on loans and mortgage-backed securities, FHLB
borrowings, and investment maturities. While scheduled amortization of loans is a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The
Company has other sources of liquidity if a need for additional funds arises, including advances from the FHLB and Federal Reserve Bank of New York.
At March 31, 2019 and June 30, 2018, the Company had $55.0 million and $99.0 million in overnight borrowings, respectively. The Company had
total borrowings of $548.8 million at March 31, 2019 and $596.4 million at June 30, 2018. The Company’s total borrowings at March 31, 2019 include $493.8 million in longer term borrowings, $469.6 million with the FHLB and $24.2 million with
another financial institution.
In the normal course of business, the Company routinely enters into various commitments, primarily relating to the origination of loans. At
March 31, 2019, outstanding commitments to originate loans totaled $66.8 million and outstanding commitments to extend credit totaled $30.1 million. The Company expects to have sufficient funds available to meet current commitments in the normal
course of business.
Time deposits scheduled to mature in one year or less totaled $856.7 million at March 31, 2019. Based upon historical experience, management
estimates that a large portion of such deposits will remain with the Company. The portion that remains will be significantly impacted by the renewal rates offered by the Company.
The management of liquidity described in the above paragraphs primarily pertains to Oritani Bank. The Company, on an unconsolidated basis,
also has liquidity sources and uses. The Company’s primary, recurring source of funds has been dividends from Oritani Bank. As a wholly owned subsidiary of the Company, the Bank will typically distribute its net income to the Company as a
dividend. Under the New Jersey Banking Act, a stock savings bank may declare and pay a dividend on its capital stock only to the extent that the payment of the dividend would not impair the capital stock of the savings bank. In addition, a stock
savings bank may not pay a dividend unless the savings bank would, after the payment of the dividend, have a surplus of not less than 50% of its capital stock, or alternatively, the payment of the dividend would not reduce the surplus.
Additionally, Oritani Bank must notify the Federal Reserve Board thirty days before declaring any dividend to the Company. The Federal Reserve Board may object to the payment of the dividend if it deems it to be unsafe or unsound or a violation of
a law, regulation or order or if the institution will be undercapitalized after the dividend. An inability of Oritani Bank to pay dividends may restrict the Company's ability to pay dividends.
The Company’s primary use of funds has been dividends to shareholders and repurchases of common stock. The declarations of such dividends
are at the discretion of the Company and the dividend amount could be reduced or eliminated if the payment of a dividend to shareholders would result in a liquidity concern. At March 31, 2019 and June 30, 2018, the Company, on an unconsolidated
basis, had cash and cash equivalents of $35.0 million and $56.6 million, respectively.
The Federal Reserve has adopted capital adequacy guidelines that are used to assess the adequacy of capital in supervising a bank holding
company. The federal banking agencies implemented final rules (“Final Rules”) to establish a new comprehensive regulatory capital framework (Basel III) with a phase-in period beginning on January 1, 2015 and ending on January 1, 2019. The Final
Rules implemented certain regulatory amendments based on the recommendation of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and substantially amended the
regulatory risk-based capital rules applicable to the Company. The Final Rules require the Company and Bank to hold a 2.5 percent capital conservation buffer designed to absorb losses during periods of economic stress. As of March 31, 2019,
management believes the Company and Bank meet all capital adequacy requirements to which they are subject and there are no conditions or events subsequent to this date that management believes have changed the Company’s or Bank’s risk-based capital
category.
As of March 31, 2019 and June 30, 2018, the Company and Bank exceeded all regulatory capital requirements, including the currently applicable
capital conservation buffer of 2.50%, as follows:
|
March 31, 2019
|
|
|
Actual
|
|
Required
|
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
|
(Dollars in thousands)
|
|
Company:
|
|
|
|
|
|
|
|
|
Common Equity Tier 1 (CET1) (to risk-weighted assets)
|
|
$
|
526,704
|
|
|
|
14.46
|
%
|
|
$
|
163,873
|
|
|
|
4.50
|
%
|
Tier 1capital (to risk-weighted assets)
|
|
|
526,704
|
|
|
|
14.46
|
%
|
|
|
218,497
|
|
|
|
6.00
|
%
|
Total capital (to risk-weighted assets)
|
|
|
555,295
|
|
|
|
15.25
|
%
|
|
|
291,330
|
|
|
|
8.00
|
%
|
Tier 1 leverage capital (to average assets)
|
|
|
526,704
|
|
|
|
12.92
|
%
|
|
|
163,033
|
|
|
|
4.00
|
%
|
Capital Conservation Buffer
|
|
|
263,965
|
|
|
|
7.25
|
%
|
|
|
91,041
|
|
|
|
2.500
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
Actual
|
|
Required
|
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
|
(Dollars in thousands)
|
|
Company:
|
|
|
|
|
|
|
|
|
Common Equity Tier 1 (CET1) (to risk-weighted assets)
|
|
$
|
548,122
|
|
|
|
14.82
|
%
|
|
$
|
166,458
|
|
|
|
4.50
|
%
|
Tier 1 capital (to risk-weighted assets)
|
|
|
548,122
|
|
|
|
14.82
|
%
|
|
|
221,945
|
|
|
|
6.00
|
%
|
Total capital (to risk-weighted assets)
|
|
|
578,685
|
|
|
|
15.64
|
%
|
|
|
295,926
|
|
|
|
8.00
|
%
|
Tier 1 leverage capital (to average assets)
|
|
|
548,122
|
|
|
|
13.25
|
%
|
|
|
165,465
|
|
|
|
4.00
|
%
|
Capital Conservation Buffer
|
|
|
282,759
|
|
|
|
7.64
|
%
|
|
|
69,358
|
|
|
|
1.875
|
%
|
|
|
March 31, 2019
|
|
|
|
Actual
|
|
|
Required
|
|
|
Well-Capitalized
|
|
|
|
Amount
|
|
|
Rate
|
|
|
Amount
|
|
|
Rate
|
|
|
Amount
|
|
|
Rate
|
|
|
|
(Dollars in thousands)
|
|
Bank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1 ("CET1") (to risk weighted assets)
|
|
$
|
472,201
|
|
|
|
12.97
|
%
|
|
$
|
163,848
|
|
|
|
4.50
|
%
|
|
$
|
236,669
|
|
|
|
6.50
|
%
|
Tier 1 capital (to risk-weighted assets)
|
|
|
472,201
|
|
|
|
12.97
|
%
|
|
|
218,464
|
|
|
|
6.00
|
%
|
|
|
291,285
|
|
|
|
8.00
|
%
|
Total capital (to risk-weighted assets)
|
|
|
500,791
|
|
|
|
13.75
|
%
|
|
|
291,285
|
|
|
|
8.00
|
%
|
|
|
364,106
|
|
|
|
10.00
|
%
|
Tier 1 Leverage capital (to average assets)
|
|
|
472,201
|
|
|
|
11.59
|
%
|
|
|
163,005
|
|
|
|
4.00
|
%
|
|
|
203,756
|
|
|
|
5.00
|
%
|
Capital conservation buffer
|
|
|
209,506
|
|
|
|
5.75
|
%
|
|
|
91,027
|
|
|
|
2.500
|
%
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
|
Actual
|
|
|
Required
|
|
|
Well-Capitalized
|
|
|
|
Amount
|
|
|
Rate
|
|
|
Amount
|
|
|
Rate
|
|
|
Amount
|
|
|
Rate
|
|
|
|
(Dollars in thousands)
|
|
Bank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1 ("CET1") (to risk weighted assets)
|
|
$
|
470,857
|
|
|
|
12.73
|
%
|
|
$
|
166,431
|
|
|
|
4.50
|
%
|
|
$
|
240,401
|
|
|
|
6.50
|
%
|
Tier 1 capital (to risk-weighted assets)
|
|
|
470,857
|
|
|
|
12.73
|
%
|
|
|
221,908
|
|
|
|
6.00
|
%
|
|
|
295,878
|
|
|
|
8.00
|
%
|
Total capital (to risk-weighted assets)
|
|
|
501,419
|
|
|
|
13.56
|
%
|
|
|
295,878
|
|
|
|
8.00
|
%
|
|
|
369,847
|
|
|
|
10.00
|
%
|
Tier 1 Leverage capital (to average assets)
|
|
|
470,857
|
|
|
|
11.38
|
%
|
|
|
165,438
|
|
|
|
4.00
|
%
|
|
|
206,797
|
|
|
|
5.00
|
%
|
Capital conservation buffer
|
|
|
205,541
|
|
|
|
5.56
|
%
|
|
|
69,346
|
|
|
|
1.875
|
%
|
|
|
|
|
|
|
|
|
Critical Accounting Policies