Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 23, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | Georgetown Bancorp, Inc. | ||
Entity Central Index Key | 1,542,299 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 30.5 | ||
Entity Common Stock, Shares Outstanding | 1,836,250 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and due from banks | $ 2,945 | $ 1,927 |
Short-term investments | 3,184 | 5,831 |
Total cash and cash equivalents | 6,129 | 7,758 |
Securities available for sale, at fair value | 19,772 | 19,028 |
Securities held to maturity, at amortized cost (fair value of $2,490 at December 31, 2016 and $3,128 at December 31, 2015) | 2,503 | 3,112 |
Federal Home Loan Bank stock, at cost | 2,341 | 2,933 |
Bankers Bank Northeast stock, at cost | 60 | 60 |
Loans held for sale | 271 | |
Loans, net of allowance for loan losses of $2,605 at December 31, 2016 and $2,408 at December 31, 2015 | 277,371 | 253,983 |
Premises and equipment, net | 4,133 | 3,837 |
Accrued interest receivable | 816 | 799 |
Bank-owned life insurance | 3,206 | 3,101 |
Other assets | 2,030 | 1,891 |
Total assets | 318,632 | 296,502 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Deposits | 240,508 | 207,726 |
Short-term Federal Home Loan Bank advances | 17,250 | 23,500 |
Long-term Federal Home Loan Bank advances | 24,600 | 27,100 |
Mortgagors' escrow accounts | 1,633 | 1,386 |
Due to broker for investment purchase | 2,505 | |
Accrued expenses and other liabilities | 2,485 | 2,377 |
Total liabilities | 286,476 | 264,594 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share: 50,000,000 shares authorized at December 31, 2016 and December 31, 2015; none outstanding | ||
Common stock, $0.01 par value per share: 100,000,000 shares authorized, 1,840,920 shares issued at December 31, 2016 and 1,828,238 shares issued at December 31, 2015 | 18 | 18 |
Additional paid-in capital | 19,871 | 19,402 |
Retained earnings | 13,635 | 13,788 |
Accumulated other comprehensive (loss) income | (41) | 46 |
Unearned compensation - ESOP (72,405 shares unallocated at December 31, 2016 and 79,645 shares unallocated at December 31, 2015) | (753) | (835) |
Unearned compensation - Restricted stock (46,449 shares non-vested at December 31, 2016 and 44,866 shares non-vested at December 31, 2015) | (574) | (511) |
Total stockholders' equity | 32,156 | 31,908 |
Total liabilities and stockholders' equity | $ 318,632 | $ 296,502 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||
Securities held to maturity, fair value (in dollars) | $ 2,490 | $ 3,128 |
Loans, allowance for loan losses (in dollars) | $ 2,605 | $ 2,408 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 1,840,920 | 1,828,238 |
Unearned compensation - ESOP shares unallocated | 72,405 | 79,645 |
Unearned compensation - Restricted stock shares non-vested | 46,449 | 44,866 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Interest and dividend income: | ||
Loans, including fees | $ 12,201 | $ 11,292 |
Securities | 590 | 576 |
Short-term investments | 19 | 8 |
Total interest and dividend income | 12,810 | 11,876 |
Interest expense: | ||
Deposits | 1,874 | 1,079 |
Short-term Federal Home Loan Bank advances | 56 | 55 |
Long-term Federal Home Loan Bank advances | 538 | 592 |
Total interest expense | 2,468 | 1,726 |
Net interest and dividend income | 10,342 | 10,150 |
Provision for loan losses | 194 | 200 |
Net interest and dividend income, after provision for loan losses | 10,148 | 9,950 |
Non-interest income: | ||
Customer service fees | 689 | 731 |
Mortgage banking income, net | 155 | 143 |
Gain on sale of SBA loans | 15 | 116 |
Income from bank-owned life insurance | 105 | 102 |
Net gain on sale of securities | 60 | |
Other | 41 | 37 |
Total non-interest income | 1,005 | 1,189 |
Non-interest expenses: | ||
Salaries and employee benefits | 5,667 | 4,874 |
Occupancy and equipment expenses | 1,031 | 1,055 |
Data processing expenses | 687 | 623 |
Professional fees | 888 | 530 |
Merger related expenses | 499 | |
Advertising expenses | 354 | 373 |
FDIC insurance | 189 | 165 |
ATM service charge expenses | 142 | 126 |
Other general and administrative expenses | 1,085 | 944 |
Total non-interest expenses | 10,542 | 8,690 |
Income before income taxes | 611 | 2,449 |
Income tax provision | 417 | 931 |
Net income | $ 194 | $ 1,518 |
Weighted-average number of common shares outstanding: | ||
Basic (in shares) | 1,762,778 | 1,748,093 |
Diluted (in shares) | 1,779,672 | 1,756,819 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.11 | $ 0.87 |
Diluted (in dollars per share) | 0.11 | 0.86 |
Dividends paid per share (in dollars per share) | $ 0.1975 | $ 0.185 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 194,000 | $ 1,518,000 |
Net unrealized loss on securities available for sale | (137,000) | (128,000) |
Reclassification adjustment for gain realized in income (1) | (21,000) | |
Net unrealized loss on securities available for sale | (137,000) | (149,000) |
Income tax benefit | 50,000 | 52,000 |
Other comprehensive loss, net of tax | (87,000) | (97,000) |
Comprehensive income | $ 107,000 | 1,421,000 |
Provision for income tax associated with the reclassification adjustment | $ 7,000 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Unearned Compensation-ESOP | Unearned Compensation-Restricted Stock | Total |
Balance at Dec. 31, 2014 | $ 18 | $ 19,245 | $ 12,593 | $ 143 | $ (918) | $ (369) | $ 30,712 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 1,518 | 1,518 | |||||
Other comprehensive loss | (97) | (97) | |||||
Cash dividends paid | (323) | (323) | |||||
Repurchased stock related to buyback program | (315) | (315) | |||||
Common stock held by ESOP allocated or committed to be allocated | 49 | 83 | 132 | ||||
Restricted stock granted in connection with equity incentive plan | 351 | (351) | |||||
Purchased stock related to vested restricted stock | (54) | (54) | |||||
Exercise of stock options | 11 | 11 | |||||
Share based compensation - options | 90 | 90 | |||||
Share based compensation - restricted stock | 209 | 209 | |||||
Excess tax provision from share-based compensation | 25 | 25 | |||||
Balance at Dec. 31, 2015 | 18 | 19,402 | 13,788 | 46 | (835) | (511) | 31,908 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 194 | 194 | |||||
Other comprehensive loss | (87) | (87) | |||||
Cash dividends paid | (347) | (347) | |||||
Common stock held by ESOP allocated or committed to be allocated | 73 | 82 | 155 | ||||
Restricted stock granted in connection with equity incentive plan | 320 | (320) | |||||
Purchased stock related to vested restricted stock | (74) | (74) | |||||
Share based compensation - options | 124 | 124 | |||||
Share based compensation - restricted stock | 257 | 257 | |||||
Excess tax provision from share-based compensation | 26 | 26 | |||||
Balance at Dec. 31, 2016 | $ 18 | $ 19,871 | $ 13,635 | $ (41) | $ (753) | $ (574) | $ 32,156 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||
Dividends paid per share (in dollars per share) | $ 0.1975 | $ 0.185 |
Repurchased stock related to buyback program (in shares) | 17,000 | |
Common stock held by ESOP allocated or committed to be allocated (in shares) | 7,240 | 7,241 |
Restricted stock granted in connection with equity incentive plan (in shares) | 16,500 | 20,000 |
Purchased stock related to vested restricted stock (in shares) | 3,818 | 3,091 |
Exercise of stock options (in shares) | 1,198 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 194,000 | $ 1,518,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for loan losses | 194,000 | 200,000 |
Amortization of securities, net | 147,000 | 128,000 |
Net change in deferred loan fees and costs | (107,000) | 2,000 |
Depreciation and amortization expense | 422,000 | 385,000 |
Increase in accrued interest receivable | (17,000) | (47,000) |
Income from bank-owned life insurance | (105,000) | (102,000) |
Stock-based compensation expense | 536,000 | 431,000 |
Excess tax benefit on share-based compensation | (26,000) | (25,000) |
Gain on sale of loans | (23,000) | (153,000) |
Loans originated for sale | (911,000) | (2,964,000) |
Proceeds from sales of loans | 663,000 | 4,107,000 |
Gain on sale of securities available for sale | (21,000) | |
Gain on sale of securities held to maturity | (39,000) | |
Net change in other assets and liabilities | 45,000 | 1,382,000 |
Net cash provided by operating activities | 1,012,000 | 4,802,000 |
Activity in securities available for sale: | ||
Maturities, prepayments and calls | 3,538,000 | 2,580,000 |
Purchases | (4,561,000) | (2,544,000) |
Proceeds from sale of securities | 0 | 204,000 |
Maturities, prepayments and calls | 593,000 | 181,000 |
Purchases | (2,494,000) | (573,000) |
Proceeds from sale of securities | 663,000 | |
Purchase of Federal Home Loan Bank stock | (330,000) | (26,000) |
Redemption of Federal Home Loan Bank stock | 922,000 | |
Purchase of Bankers Bank Northeast stock | (60,000) | |
Loan originations, net | (3,229,000) | (10,542,000) |
Principal balance of loans purchased | (20,246,000) | (12,350,000) |
Purchase of premises and equipment | (718,000) | (480,000) |
Proceeds from sale of premises and equipment | 77,000 | |
Net cash used by investing activities | (26,525,000) | (22,870,000) |
Cash flows from financing activities: | ||
Net change in deposits | 32,782,000 | 25,372,000 |
Net change in Federal Home Loan Bank advances with maturities of three months or less | (6,750,000) | (6,500,000) |
Proceeds from Federal Home Loan Bank advances with maturities greater than three months | 3,500,000 | 5,000,000 |
Repayments of Federal Home Loan Bank advances with maturities greater than three months | (5,500,000) | (2,500,000) |
Net change in mortgagors' escrow accounts | 247,000 | 192,000 |
Repurchase of common stock | (74,000) | (369,000) |
Cash dividends paid on common stock | (347,000) | (323,000) |
Exercise of stock options | 11,000 | |
Excess tax benefit on share-based compensation | 26,000 | 25,000 |
Net cash provided by financing activities | 23,884,000 | 20,908,000 |
Net change in cash and cash equivalents | (1,629,000) | 2,840,000 |
Cash and cash equivalents at beginning of period | 7,758,000 | 4,918,000 |
Cash and cash equivalents at end of period | 6,129,000 | 7,758,000 |
Supplementary information: | ||
Interest paid on deposit accounts | 1,868,000 | 1,076,000 |
Interest paid on advances | 601,000 | 643,000 |
Income taxes paid | 647,000 | 1,266,000 |
Change in due to broker for investment purchases | $ (2,505,000) | $ 2,505,000 |
CORPORATE STRUCTURE
CORPORATE STRUCTURE | 12 Months Ended |
Dec. 31, 2016 | |
CORPORATE STRUCTURE | |
CORPORATE STRUCTURE | 1. CORPORATE STRUCTURE Georgetown Bancorp, Inc. (the “Company”) completed a “second step” conversion to a fully public stock holding company on July 11, 2012. Georgetown Bank (the “Bank”) is a wholly owned subsidiary of the Company. Georgetown Securities Corporation, established in 1995 as a Massachusetts securities corporation for the purpose of buying, selling and holding securities on its own behalf, is a wholly owned subsidiary of the Bank. On October 5, 2016, Salem Five Bancorp, a Massachusetts mutual holding company, Bright Star, Inc., a Maryland corporation and wholly-owned subsidiary of Salem Five Bancorp, and the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Bright Star, Inc. will merge with and into the Company. Consummation of the merger is subject to certain conditions and is expected to occur in the second quarter of 2017. Immediately following this, the Bank will merge with and into Salem Five Bancorp’s wholly-owned subsidiary, Salem Five Cents Savings Bank (“Salem Five Bank”). Immediately following the merger of the two banks, the Company shall dissolve and liquidate into Salem Five Bancorp. Included in these consolidated financial statements is $499,000 or merger related expenses, $490,000 of which were not deductible for income tax purposes. See Note 18 of the Notes to the Consolidated Financial Statements for additional information. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. The Bank’s financial statements include its wholly-owned subsidiary, Georgetown Securities Corporation, which engages in the buying, selling and holding of securities. All significant intercompany balances and transactions have been eliminated in consolidation. Nature of operations The Company, through the Bank, provides a variety of financial services to individuals and small businesses in the eastern Massachusetts region and southern New Hampshire. Its primary deposit products are checking, savings and term certificate accounts and its primary lending products are residential and commercial mortgage loans. Segment reporting Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments. Management evaluates the Company’s performance and allocates resources based on a single segment concept. Accordingly, there are no separately identified operating segments for which discrete financial information is available. The Company does not derive revenues from, or have assets located in, foreign countries, nor does it derive revenues from any single customer that represents 10% or more of the Company’s total revenues. Use of estimates In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the realizability of deferred tax assets. Fair value hierarchy The Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value, as follows: Level 1 - Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Level 2 - Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Reclassifications Certain amounts in the 2015 consolidated financial statements have been reclassified to conform to the 2016 presentation. Cash and cash equivalents Cash and cash equivalents include cash, amounts due from banks and short-term investments, all of which mature within 90 days, and are carried at cost. Securities Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and reflected at amortized cost. Securities classified as “available for sale” are reflected at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income/loss, net of tax effects. Purchase premiums and discounts are amortized to earnings by the interest method over the contractual lives of the securities. Gains and losses on sale of securities are recognized on the trade date and determined using the specific identification method. Each reporting period, the Company evaluates all securities classified as available-for-sale or held-to-maturity with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”). For debt securities, OTTI is required to be recognized (1) if the Company intends to sell the security; (2) if it is “more likely than not” that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. For all impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Non-credit related OTTI for such debt securities is recognized in other comprehensive income (loss), net of applicable taxes. Federal Home Loan Bank stock The Company is required to own shares of capital stock in the Federal Home Loan Bank of Boston (''FHLB'') in order to borrow from the FHLB. The stock is carried at its cost and evaluated for impairment based on the ultimate recoverability of the cost basis of the FHLB stock. Loans held for sale Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Fair value is based on committed secondary market prices. Loans The loan portfolio consists of mortgage, business and consumer loans to the Bank’s customers, principally in the eastern Massachusetts region and southern New Hampshire. The ability of the Bank’s debtors to honor their contracts is dependent upon the real estate and general economic conditions in this area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are generally reported at their outstanding unpaid principal balances adjusted for the allowance for loan losses and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination costs, net of origination fees, are deferred and recognized as an adjustment of the related loan yield using the interest method. The accrual of interest on loans, including impaired loans, is generally recognized on a simple interest basis and is generally discontinued at the time the loan is 90 days past due, unless the credit is both well secured and in the process of collection. Past due status is based on the contractual terms of the loans. Loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on non-accrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Allowance for loan losses The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a monthly basis by management and is based upon management’s monthly review of the collectability of the loans in light of known and inherent risks in the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. Additionally, as part of the evaluation of the level of the allowance for loan losses, on a quarterly basis, management analyzes several qualitative loan portfolio risk factors including, but not limited to, charge-off history, changes in management or underwriting policies, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower and results of internal and external loan reviews. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For such loans that are classified as impaired, an allowance for loan losses is established when the discounted cash flows or the fair value of the existing collateral (less cost to sell) of the impaired loan are lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component may be maintained to cover uncertainties that could affect management’s estimate of probable losses. A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The Bank periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring (“TDR”). All TDRs are initially classified as impaired. Adjustable-rate mortgage loans decrease the risk associated with changes in market interest rates by periodically repricing, but involve other risks because, as interest rates increase, the underlying payments by the borrower increase, thus increasing the potential for default by the borrower. At the same time, the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustment of the contractual interest rate is also limited by the maximum periodic and lifetime interest rate adjustments permitted by our loan documents and, therefore, the effectiveness of adjustable-rate mortgage loans may be limited during periods of rapidly rising interest rates. Loans secured by commercial real estate, multi-family and one- to four-family investment properties generally involve larger principal amounts and a greater degree of risk than one- to four-family residential mortgage loans. Because payments on loans secured by commercial real estate, including multi-family and one- to four-family investment properties, are often dependent on successful operation or management of the properties, repayment of such loans may be affected by adverse conditions in the real estate market or the economy. Unlike residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income and which are secured by real property whose value tends to be more easily ascertainable, commercial business loans generally are made on the basis of the borrower’s ability to repay the loan from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial business loans may depend substantially on the success of the business itself. Further, any collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value. Construction and development financing is generally considered to involve a higher degree of credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of construction cost proves to be inaccurate, we may be required to advance funds beyond the amount originally committed in order to protect the value of the property. Additionally, if the estimate of value proves to be inaccurate, we may be confronted with a project, when completed, having a value that is insufficient to assure full repayment. Other real estate owned and in-substance foreclosures Other real estate owned includes properties acquired through foreclosure and properties classified as in-substance foreclosures in accordance with Accounting Standards Codification (“ASC”) 310-40, “Receivables - Troubled Debt Restructurings by Creditors.” These properties are initially carried at the estimated fair value less estimated costs to sell at the date of foreclosure or transfer, establishing a new cost basis. Subsequent to foreclosure or transfer, valuations are periodically performed by management and the assets are carried at the lower of the carrying amount of fair value less estimated costs to sell. Any writedown from cost to estimated fair value required at the time of foreclosure or classification as in-substance foreclosure is charged to the allowance for loan losses. Expenses incurred in connection with maintaining these assets, subsequent writedowns and gains or losses recognized upon sale are included in other expense. The Company classifies commercial loans as in-substance repossessed or foreclosed if the Company receives physical possession of the debtor’s assets regardless of whether formal foreclosure proceedings take place. An in-substance repossession or foreclosure occurs, and the Bank is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan upon either: (1) obtaining legal title to the residential real estate property upon completion of a foreclosure; or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Loan Servicing The Bank services mortgage loans for others. Mortgage servicing assets are initially recognized at fair value, as separate assets when rights are acquired through purchase or through sale of financial assets. Initial fair value is determined using prices for similar assets with similar characteristics. Capitalized servicing rights are reported in other assets and are amortized into loan servicing fee income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant risk characteristics, such as interest rates and terms. Fair value is based on a quarterly, third-party valuation model that calculates the present value of estimated future net servicing income. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum. Changes in the valuation allowance are reported in mortgage banking income, net. Derivative financial instruments Derivative financial instruments are recognized as assets and liabilities on the consolidated balance sheets and measured at fair value. Derivative Loan Commitments Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. Loan commitments that are derivatives are recognized at fair value on the consolidated balance sheets in other assets and other liabilities with changes in their fair values recorded in mortgage banking income, net. Fair value is determined using secondary market pricing, including expected normal servicing rights. In estimating fair value, the Bank assigns a probability to a loan commitment based on an expectation that it will be exercised and the loan will be funded. Forward Loan Sale Commitments To protect against the price risk inherent in derivative loan commitments, the Bank utilizes both “mandatory delivery” and “best efforts” forward loan sale commitments to mitigate the risk of potential decreases in the value of loans that would result from the exercise of the derivative loan commitments. Mandatory delivery contracts are accounted for as derivative instruments. Generally, the Bank’s best efforts contracts meet the definition of derivative instruments when the loans to the underlying borrowers close and are accounted for as derivative instruments at that time. Accordingly, forward loan sale commitments are recognized at fair value on the consolidated balance sheets in other assets and other liabilities with changes in their fair values recorded in mortgage banking income, net. The Bank estimates the fair value of its forward loan sales commitments using a methodology similar to that used for derivative loan commitments. Premises and equipment Land is carried at cost. Buildings, leasehold improvements and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets or the expected terms of the leases, if shorter. Useful lives are dependent upon the nature and condition of the asset and range from 3 to 40 years. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured. Premise and equipment are periodically evaluated for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. Impairment exists when the expected undiscounted future cash flows of premises and equipment are less than its carrying amount. In that event, the Company records a loss for the difference between the carrying amount and the fair value of the asset based on quoted market prices, if applicable, or a discounted cash flow analysis. Bank-owned life insurance Bank-owned life insurance policies are reflected on the consolidated balance sheets at cash surrender value. Changes in cash surrender value are reflected in non-interest income on the consolidated statements of income. Transfers of financial assets Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Income taxes Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. A valuation allowance is established against deferred tax assets when, based upon the available evidence including historical and projected taxable income, it is more likely than not that some or all of the deferred tax assets will not be realized. Interest and penalties, if any, are recorded in income tax provision. Income tax benefits related to stock compensation in excess of grant date fair value less any proceeds on exercise are recognized as an increase to additional paid-in capital upon vesting or exercising and delivery of the stock. Any income tax effects related to stock compensation that are less than grant date fair value less any proceeds on exercise would be recognized as a reduction of additional paid in capital to the extent of previously recognized income tax benefits and then through income tax provision for the remaining amount. Advertising costs Advertising costs are expensed when incurred. Employee Stock Ownership Plan (ESOP) Compensation expense for the ESOP is recorded at an amount equal to the shares committed to be allocated by the ESOP multiplied by the average fair market value of the shares during the period. The Bank recognizes compensation expense ratably over the year based upon the Bank’s estimate of the number of shares expected to be allocated by the ESOP. Unearned compensation applicable to the ESOP is reflected as a reduction of stockholders’ equity in the consolidated balance sheets. The difference between the average fair market value and the cost of the shares allocated by the ESOP is recorded as an adjustment to additional paid-in capital. Share-based Compensation Plans The Company measures and recognizes compensation cost relating to share-based payment transactions based on the grant-date fair value of the equity instruments issued. Share-based compensation is recognized over the period the employee is required to provide services for the award. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options granted. Earnings per share Basic earnings per share represents net income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. If rights to dividends on unvested options/awards are non-forfeitable, these unvested awards/options are considered outstanding in the computation of basic earnings per share. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. Earnings per common share have been computed based on the following: Years Ended December 31, 2016 2015 Net income available to common stockholders $ $ Basic common shares: Weighted average shares outstanding Less: Weighted average unallocated ESOP shares Add: Weighted average unvested restricted stock shares with non-forfeitable dividend rights Basic weighted average common shares outstanding Dilutive potential common shares Diluted weighted average common shares outstanding Basic earnings per share $ $ Diluted earnings per share $ $ Options to purchase 122,775 shares, representing all outstanding options, were included in the computation of diluted earnings per share for the year ended December 31, 2016. Options to purchase 89,725 shares, representing all outstanding options, were included in the computation of diluted earnings per share for the year ended December 31, 2015. Comprehensive income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in operating results. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale, are reported as a separate component of the stockholders’ equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income. Recent accounting pronouncements In May 2014 and August 2015, respectively, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 and 2015-14, “Revenue from Contracts with Customers (Topic 606).” The objective of ASU 2014-09 is to clarify principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The guidance in ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principal 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. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, and interim periods within that period. Earlier application is permitted only as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently reviewing ASUs 2014-09 and 2015-14 to determine if they will have an impact on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The amendments in this ASU address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments and makes targeted improvements to GAAP as follows: 1. Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. 2. Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. 3. Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. 4. Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 5. Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. 6. Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. 7. Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption of item 5 above is permitted as of the fiscal years or interim periods for which financial statements have not yet been issued. Early adoption of all other amendments in this ASU is not permitted. The Company anticipates that the adoption of this ASU will not have a material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This ASU was issued to increase transparency and comparability among organizations by requiring reporting entities to recognize all leases, including operating, as lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The amendments in this ASU are effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company anticipates that the adoption of this ASU will not have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” This ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. Under this ASU, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, and APIC pools will be eliminated. The guidance also eliminates the requirement that excess tax benefits be realized before companies can recognize them. In addition, the guidance requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The guidance will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. The new guidance will also require an employer to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on its statement of cash flows (current guidance did not specify how these cash flows should be classified) and permit companies to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016. Early adoption is permitted, but all of the guidance must be adopted in the same period. The Company is currently evaluating the provisions of ASU 2016-09 to determine the potential impact the new standard will have on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This ASU includes provisions intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by the entity. In order to achieve this objective, the amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted in interim and annual reporting periods beginning after December 15, 2018. Any increase in the allowance for loan losses or expenses incurred to determine the appropriate level of allowance for loan losses may have a material adverse effect on the Company’s financial condition and results of operations. The Company is currently evaluating the provisions of ASU 2016-13 to determine the potential impact the new standard will have on its consolidated financial statements. |
RESTRICTIONS ON CASH AND AMOUNT
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS | 12 Months Ended |
Dec. 31, 2016 | |
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS | |
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS | 3. RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS The Bank is required to maintain average balances of cash on hand or with the Federal Reserve Bank. At December 31, 2016 and 2015, these reserve balances amounted to $1,413,000 and $1,373,000, respectively. |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2016 | |
SHORT-TERM INVESTMENTS | |
SHORT-TERM INVESTMENTS | 4. SHORT-TERM INVESTMENTS A summary of short-term investments, included in cash and cash equivalents, is as follows: At December 31, 2016 2015 (In thousands) FHLB Ideal Way $ $ Federal Reserve Federal funds sold Total short-term investments $ $ |
SECURITIES
SECURITIES | 12 Months Ended |
Dec. 31, 2016 | |
SECURITIES | |
SECURITIES | 5. SECURITIES A summary of securities is as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) At December 31, 2016 Securities available for sale State and municipal $ $ $ $ Residential mortgage-backed securities Total securities available for sale $ $ $ $ Securities held to maturity State and municipal $ $ — $ $ Residential mortgage-backed securities Total securities held to maturity $ $ $ $ At December 31, 2015 Securities available for sale State and municipal $ $ $ $ Residential mortgage-backed securities Total securities available for sale $ $ $ $ Securities held to maturity State and municipal $ $ $ — $ Residential mortgage-backed securities — Total securities held to maturity $ $ $ — $ All residential mortgage-backed securities have been issued by government-sponsored enterprises and government agencies. There were no sales of securities for the year ended December 31, 2016. For the year ended December 31, 2015, proceeds from the sale of securities amounted to $867,000, $204,000 from the sale of securities available for sale and $663,000 from the sale of securities held to maturity. The gain realized on the sales amounted to $60,000, $21,000 from the sale of securities available for sale and $39,000 from the sale of securities held to maturity. Income tax expense recognized related to the realized gain on sales during the year ended December 31, 2015 was $21,000. The held to maturity securities sold had a substantial portion, greater than 85%, of their principal balance collected through scheduled payments. Since a substantial portion of the principal outstanding at acquisition was collected, the sale of the held to maturity securities was considered equivalent to holding the securities to maturity, in accordance with ASC 320-10-25, and did not taint the holding of the other held to maturity securities. The scheduled maturities of debt securities at December 31, 2016 are as follows: Available for Sale Held to Maturity Amortized Fair Amortized Fair Cost Value Cost Value (In thousands) After five years through ten years $ $ $ — $ — Over ten years Residential mortgage-backed securities $ $ $ $ Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Certain securities are pledged as collateral for FHLB advances. See Note 9 — Federal Home Loan Bank Advances for further information. Information pertaining to securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows: Less Than Twelve Months Twelve Months Or Longer Gross Gross Unrealized Fair Unrealized Fair Losses Value Losses Value (In thousands) At December 31, 2016 Securities available for sale State and municipal $ $ $ — $ — Residential mortgage-backed securities — — Total securities available for sale — — Securities held to maturity State and municipal — — Residential mortgage-backed securities — — Total securities held to maturity — — Total temporarily impaired securities $ $ $ — $ — At December 31, 2015 Securities available for sale State and municipal $ — $ — $ $ Residential mortgage-backed securities Total temporarily impaired securities $ $ $ $ The unrealized losses on eleven securities in the December 31, 2016 table above were primarily caused by changes in interest rates and not by credit quality. Seven of the investments are guaranteed by the U.S. Government or its agencies and the four remaining municipal securities were issued by the city of New York, Washington State, and the school districts of Circleville and Fremont, Ohio. Management has not decided to sell these securities, nor is it likely that the Company will be required to sell the securities; as such no declines are deemed to be other than temporary. |
LOANS AND SERVICING
LOANS AND SERVICING | 12 Months Ended |
Dec. 31, 2016 | |
LOANS AND SERVICING | |
LOANS AND SERVICING | 6. LOANS AND SERVICING Loans A summary of loans is as follows: At At December 31, December 31, 2016 2015 Amount Amount (In thousands) Residential loans: One- to four-family $ $ Home equity loans and lines of credit Total residential mortgage loans Commercial loans: One- to four-family investment property Multi-family real estate Commercial real estate Commercial business Total commercial loans Construction loans: One- to four-family Multi-family Non-residential Total construction loans Consumer Total loans Other items: Net deferred loan costs Allowance for loan losses Total loans, net $ $ Information pertaining to the allowance for loan losses at and for the year ended December 31, 2016 is as follows: Residential Commercial Construction One- to four- Home equity family One- to four- loans and lines investment Multi-family Commercial Commercial One- to four- Non- family of credit property real estate real estate business family Multi-family residential Consumer Unallocated Total (In thousands) Allowance for loan losses Beginning Balance $ $ $ $ $ $ $ $ $ $ $ $ Charge-offs — — — — — — — — — — Recoveries — — — — — — — — — (Benefit) provision Ending Balance $ $ $ $ $ $ $ $ $ $ $ — $ Ending balance: individually evaluated for impairment $ — $ — $ $ — $ — $ — $ — $ — $ — $ — $ — $ Ending balance: collectively evaluated for impairment $ $ $ $ $ $ $ $ $ $ $ — $ Loans Ending Balance $ $ $ $ $ $ $ $ $ $ $ — $ Ending balance: individually evaluated for impairment $ $ $ $ — $ $ — $ — $ — $ — $ — $ — $ Ending balance: collectively evaluated for impairment $ $ $ $ $ $ $ $ $ $ $ — $ Information pertaining to the allowance for loan losses at and for the year ended December 31, 2015 is as follows: Residential Commercial Construction One- to four- Home equity family One- to four- loans and lines investment Multi-family Commercial Commercial One- to four- Non- family of credit property real estate real estate business family Multi-family residential Consumer Unallocated Total (In thousands) Allowance for loan losses Beginning Balance $ $ $ $ $ $ $ $ $ $ $ — $ Charge-offs — — — — — — — — — Recoveries — — — — — — — — — (Benefit) provision Ending Balance $ $ $ $ $ $ $ $ $ $ $ $ Ending balance: individually evaluated for impairment $ $ — $ $ — $ — $ — $ — $ — $ — $ — $ — $ Ending balance: collectively evaluated for impairment $ $ $ $ $ $ $ $ $ $ $ $ Loans Ending Balance $ $ $ $ $ $ $ $ $ $ $ — $ Ending balance: individually evaluated for impairment $ $ $ $ — $ $ — $ — $ — $ — $ — $ — $ Ending balance: collectively evaluated for impairment $ $ $ $ $ $ $ $ $ $ $ — $ The following is a summary of past-due and non-accrual loans at December 31, 2016: Loans delinquent for: 90 days 90 days Total Total Total or more Non-accrual 30 - 59 Days 60 - 89 Days or more Past Due Current Loans and accruing Loans (In thousands) Residential loans: One- to four-family $ — $ — $ $ $ $ $ — $ Home equity loans and lines of credit — Commercial loans: One- to four-family investment property — — — — — — Multi-family real estate — — — — — — Commercial real estate — — — — — — Commercial business — — — — — — Construction loans: One- to four-family — — — — — — Multi-family — — — — — — Non-residential — — — — — — Consumer — — — Total $ $ $ $ $ $ $ — $ The following is a summary of past-due and non-accrual loans at December 31, 2015: Loans delinquent for: 90 days 90 days Total Total Total or more Non-accrual 30 - 59 Days 60 - 89 Days or more Past Due Current Loans and accruing Loans (In thousands) Residential loans: One- to four-family $ — $ — $ $ $ $ $ — $ Home equity loans and lines of credit — — — — Commercial loans: One- to four-family investment property — — — — — — Multi-family real estate — — — — — — Commercial real estate — — — — — — Commercial business — — — — Construction loans: One- to four-family — — — — — — Multi-family — — — — — — Non-residential — — — — — — Consumer — — — — Total $ $ $ $ $ $ $ — $ The following is an analysis of impaired loans at and for the year ending December 31, 2016: Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized (In thousands) Impaired loans without a valuation allowance Residential loans: One- to four-family $ $ $ — $ $ Home equity loans and lines of credit — Commercial loans: One- to four-family investment property — — — — — Multi-family real estate — — — — — Commercial real estate — Commercial business — — — — — Construction loans: One- to four-family — — — — — Multi-family — — — — — Non-residential — — — — — Consumer — — — — — Total impaired with no related allowance $ $ $ — $ $ Impaired loans with a valuation allowance Residential loans: One- to four-family $ — $ — $ — $ — $ — Home equity loans and lines of credit — — — — — Commercial loans: One- to four-family investment property Multi-family real estate — — — — — Commercial real estate — — — — — Commercial business — — — — — Construction loans: One- to four-family — — — — — Multi-family — — — — — Non-residential — — — — — Consumer — — — — — Total with an allowance recorded $ $ $ $ $ No additional funds are committed to be advanced in connection with impaired loans. The following is an analysis of impaired loans at and for the year ending December 31, 2015: Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized (In thousands) Impaired loans without a valuation allowance Residential loans: One- to four-family $ $ $ — $ $ Home equity loans and lines of credit — Commercial loans: One- to four-family investment property — — — — — Multi-family real estate — — — — — Commercial real estate — Commercial business — — — Construction loans: One- to four-family — — — — — Multi-family — — — — — Non-residential — — — — — Consumer — — — — — Total impaired with no related allowance $ $ $ — $ $ Impaired loans with a valuation allowance Residential loans: One- to four-family $ $ $ $ $ Home equity loans and lines of credit — — — — — Commercial loans: One- to four-family investment property Multi-family real estate — — — — — Commercial real estate — — — — — Commercial business — — — — — Construction loans: One- to four-family — — — — — Multi-family — — — — — Non-residential — — — — — Consumer — — — — — Total with an allowance recorded $ $ $ $ $ The Company made no loan modifications that resulted in a TDR during the year ended December 31, 2016. As of December 31, 2016 there is no commitment to lend additional funds to those borrowers whose loans were previously modified as TDRs. The Company had two loan relationships that were classified as TDRs totaling $776,000 during the year ended December 31, 2015. The first relationship involved two commercial business loans totaling $235,000 guaranteed by two individuals. During the year ended December 31, 2015, the business was sold and net proceeds of $100,000 were applied to the outstanding balances leaving a combined deficiency or pre-modification balance of $135,000. The $135,000 balance was modified into two loans held individually by the personal guarantors of the original loans on a pro-rated basis based on their respective ownership percentages. The first loan had a $45,000 balance and the borrower made a $23,000 cash payment and the remaining $22,000 balance was charged off to the allowance for loan losses resulting in a post-modification balance of zero. The remaining balance was modified into a one- to four-family investment property loan with a post modification balance of $90,000. The TDR did not result in a material impact to the allowance for loan losses. The second relationship involved a one- to four-family residential loan totaling $606,000 to one individual. During the year ended December 31, 2015, the loan was modified to include a second individual and additional residential collateral was added. The loan, with a post modification balance of $606,000, was restructured into an interest-only note with maturity in 24 months. A second loan, an interest-only home equity loan with maturity in 24 months, representing the real estate taxes paid by the Company on behalf of the borrower, was established as part of the Forbearance Agreement. The home equity loan had a post modification balance of $80,000. As part of the Forbearance Agreement, the borrower 1) will be working to develop land for potential sale which is collateralizing the TDR loan and the Company will receive 100% of the net proceeds to pay down the outstanding principal balance of the TDR and/or 2) have the second individual obligor pursue the sale of an additional parcel of land which would significantly reduce the loan balance by maturity. When the loans mature, any remaining balance due must be paid in full or refinanced at that time. The TDR did not result in a material impact to the allowance for loan losses. There is no commitment to lend additional funds to the borrowers whose loans were modified during the year ended December 31, 2015. The TDRs did not result in a material impact to the allowance for loan losses. At December 31, 2016 and 2015 there were no TDR loans in default of their modified terms. The Company has two residential loans in the process of foreclosure with a combined recorded balance of $671,000 at December 31, 2016. There were no loans in process of foreclosure at December 31, 2015. The following tables present the Company’s loans by risk rating: Residential Commercial Construction One ‑ to four ‑ Home equity family One ‑ to four ‑ loans and lines investment Multi ‑ family Commercial Commercial One ‑ to four ‑ Non- family of credit property real estate real estate business family Multi ‑ family residential Consumer Total (In thousands) At December 31, 2016 Classification: Not formally rated $ $ $ — $ — $ — $ — $ — $ — $ — $ $ Pass — — — Special mention — — — — — — — — — — — Substandard — — — — — Doubtful — — — — — — — — — — — Loss — — — — — — — — — — — Total loans $ $ $ $ $ $ $ $ $ $ $ At December 31, 2015 Classification: Not formally rated $ $ $ — $ — $ — $ — $ — $ — $ — $ $ Pass — — — Special mention — — — — — — — — Substandard — — — — — — — Doubtful — — — — — — — — — — — Loss — — — — — — — — — — — Total loans $ $ $ $ $ $ $ $ $ $ $ Credit Quality Information The Bank utilizes a nine grade internal loan rating system for all commercial and construction loans as follows: Loans rated 1 - 5: Loans in these categories are considered “Pass” rated loans with low to average risk and are not formally rated. Loans rated 6: Loans in this category are considered “Special Mention.” These loans have risk profiles that are starting to show signs of potential weakness and are being closely monitored by management. Loans rated 7: Loans in this category are considered “Substandard.” These loans have a well defined weakness that jeopardizes the liquidation of the debt and is inadequately protected by the current sound worth and paying capacity of the borrower or pledged collateral. There is a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans rated 8: Loans in this category are considered “Doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Loans rated 9: Loans in this category are considered a “Loss.” The loan has been determined to be uncollectible and the chance of loss is inevitable. Loans in this category will be charged-off. On an annual basis, or more often if needed, the Bank formally reviews the ratings on all commercial and construction loans with a one-obligor exposure greater than $350,000. In addition, a complete financial review is performed for any commercial relationship (regardless of one-obligor exposure) reporting a revolving line of credit facility greater than $150,000. More frequent reviews shall be performed depending on the quality rating of the relationship. For commercial relationships which report a current one-obligor exposure equal to or less than $350,000, and have a “Pass” risk rating, the annual review shall be more limited in scope. Loans serviced for others and mortgage servicing rights Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others was $83,176,000 and $100,544,000 at December 31, 2016 and 2015, respectively. The risks inherent in the mortgage servicing assets relate primarily to changes in prepayments that result from shifts in mortgage interest rates. The fair value of mortgage servicing rights was $601,000 and $1,100,000 at December 31, 2016 and 2015, respectively, and was determined using the moving average 10-year U.S. Treasury rate plus 5.0%, adjusted to reflect the current credit spreads and conditions in the market, as a discount rate. Prepayment assumptions, which are impacted by loan rates and terms, are calculated using a moving average of prepayment data published by the Securities Industry and Financial Markets Association, an independent third party proprietary analysis of prepayment rates embedded in liquid mortgage securities markets and modeled against the serviced loan portfolio by the independent third party valuation specialist. The following summarizes mortgage servicing rights capitalized and amortized: Year Ended December 31, 2016 2015 (In thousands) Mortgage servicing rights: Balance at beginning of period $ $ Additions — Amortization Balance at end of period Valuation allowance: Balance at beginning of period Additions Reductions Balance at end of period Mortgage servicing rights, net $ $ Fair value of mortgage servicing rights $ $ |
PREMISES AND EQUIPMENT
PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
PREMISES AND EQUIPMENT | |
PREMISES AND EQUIPMENT | 7. PREMISES AND EQUIPMENT A summary of premises and equipment is as follows: At December 31, 2016 2015 (In thousands) Premises: Land $ $ Buildings and improvements Equipment Less accumulated depreciation and amortization Premises and equipment, net $ $ Depreciation and amortization expense for the years ended December 31, 2016 and 2015 amounted to $422,000 and $385,000, respectively. |
DEPOSITS
DEPOSITS | 12 Months Ended |
Dec. 31, 2016 | |
DEPOSITS | |
DEPOSITS | 8. DEPOSITS A summary of deposit balances is as follows: At December 31, 2016 2015 (In thousands) Demand $ $ On us accounts NOW Money market deposits Regular and other savings Total non-certificate accounts Term certificates less than $100,000 Term certificates of $100,000 or more Total certificate accounts Total deposits $ $ A summary of term certificate accounts by maturity is as follows: At December 31, 2016 2015 Weighted Weighted Average Average Amount Rate Amount Rate (Dollars in thousands) Within one year $ % $ % Greater than one year to two years % % Greater than two years to three years % % Greater than three years to four years % % Greater than four years to five years % % Total certificate accounts $ % $ % There were $3,326,000 and $2,828,000 of brokered certificate accounts at December 31, 2016 and 2015, respectively. There were $22,129,000 and $29,437,000 of certificate accounts obtained through a listing service at December 31, 2016 and 2015, respectively. The aggregate amount of time deposit accounts in denominations that meet or exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit of $250,000 as of December 31, 2016 and 2015 was $19,663,000 and $15,329,000, respectively. |
FEDERAL HOME LOAN BANK ADVANCES
FEDERAL HOME LOAN BANK ADVANCES | 12 Months Ended |
Dec. 31, 2016 | |
FEDERAL HOME LOAN BANK ADVANCES. | |
FEDERAL HOME LOAN BANK ADVANCES | 9. FEDERAL HOME LOAN BANK ADVANCES All FHLB of Boston advances are secured by a blanket security agreement on qualified collateral, consisting principally of first mortgage loans on owner-occupied residential property in the amount of $76,904,000 and $74,277,000 at December 31, 2016 and 2015, respectively; commercial real estate loans in the amount of $23,959,000 and $24,914,000 at December 31, 2016 and 2015, respectively; and mortgage-backed securities with a fair value of $19,308,000 and $16,590,000 at December 31, 2016 and 2015, respectively. Short-term FHLB advances Short-term FHLB advances consist of advances with an original term of nine months or less at a weighted average rate of 0.73% and 0.44% at December 31, 2016 and 2015, respectively. The Bank also has a $2,000,000 line-of-credit with the FHLB. There were no amounts outstanding at December 31, 2016 and 2015. Long-term FHLB advances Long-term, fixed-rate FHLB advances and maturities are as follows: At December 31, 2016 2015 Weighted Weighted Average Average Amount Rate Amount Rate (Dollars in thousands) Within one year $ % $ % Greater than one year to two years % % Greater than two years to three years % % Greater than three years to four years % % Greater than four years to five years — — % % Total long-term FHLB advances $ % $ % |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES | 10. INCOME TAXES Allocation of federal and state income taxes between current and deferred portions is as follows: Years Ended December 31, 2016 2015 (In thousands) Current tax provision: Federal $ $ State Deferred tax benefit: Federal State Total tax provision $ $ The differences between the statutory federal income tax rate and the effective tax rates are as follows: Years Ended December 31, 2016 2015 Statutory rate % % Increase (decrease) resulting from: State taxes, net of federal tax benefit Bank-owned life insurance Stock compensation plans Interest income from municipal securities Merger related expense, non-deductible — Other, net — Effective tax rates % % The components of the net deferred tax asset included in other assets are as follows: At December 31, 2016 2015 (In thousands) Deferred tax assets: Federal $ $ State Deferred tax liabilities: Federal State Net deferred tax asset $ $ The tax effects of each item that gives rise to deferred taxes are as follows: At December 31, 2016 2015 (In thousands) Deferred compensation $ $ Net unrealized loss (gain) on securities available for sale Depreciation and amortization Allowance for loan losses Mortgage servicing rights Other, net Net deferred tax asset $ $ A summary of the change in the net deferred tax asset is as follows: Years Ended December 31, 2016 2015 (In thousands) Balance at beginning of period $ $ Deferred tax benefit Deferred tax effects of net unrealized loss (gain) on securities available for sale Balance at end of period $ $ The federal income tax reserve for loan losses at the Company’s base year is $726,000. If any portion of the reserve is used for purposes other than to absorb loan losses, approximately 150% of the amount actually used (limited to the amount of the reserve) would be subject to taxation in the fiscal year in which it is used. As the Company intends to use the reserve solely to absorb loan losses, a deferred tax liability of $290,000 has not been provided. Uncertain tax positions It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. As of December 31, 2016 and 2015, there were no material uncertain tax positions related to federal and state income tax matters. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2013 through December 31, 2016. |
MINIMUM REGULATORY CAPITAL REQU
MINIMUM REGULATORY CAPITAL REQUIREMENTS | 12 Months Ended |
Dec. 31, 2016 | |
MINIMUM REGULATORY CAPITAL REQUIREMENTS | |
MINIMUM REGULATORY CAPITAL REQUIREMENTS | 11. The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Effective January 1, 2015 (with a phase-in period of two to four years for certain components), the Bank became subject to capital regulations adopted by the Board of Governors of the Federal Reserve System (“FRB”) and the FDIC, which implement the Basel III regulatory capital reforms and the changes required by the Dodd-Frank Act. The regulations require a common equity Tier 1 (“CET1”) capital ratio of 4.5%, a minimum Tier 1 capital to risk-weighted assets ratio of 6.0%, a minimum total capital to risk-weighted assets ratio of 8.0% and a minimum Tier 1 leverage ratio of 4.0%. CET1 generally consists of common stock and retained earnings, subject to applicable adjustments and deductions. Under new prompt corrective action regulations, in order to be considered “well capitalized,” the Bank must maintain a CET1 capital ratio of 6.5%, a Tier 1 risk based capital ratio of 8.0%, a total risk based capital ratio of 10.0% and a Tier 1 leverage ratio of 5.0%. In addition, the regulations establish a capital conservation buffer above the required capital ratios that began phasing in on January 1, 2016 at 0.625% of risk-weighted assets and increases each year by 0.625% until it is fully phased in at 2.5% effective January 1, 2019. Failure to maintain the capital conservation buffer will limit the ability of the Bank to pay dividends, repurchase shares or pay discretionary bonuses. As of December 31, 2016, the Bank exceeded the fully phased in regulatory requirement for the capital conservation buffer. Management believes, as of December 31, 2016 and 2015, that the Bank meets all capital adequacy requirements to which it is subject. As of December 31, 2016, the most recent notification from the Office of the Comptroller of the Currency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based and Tier 1 leverage capital ratios as set forth in the following tables. There are no conditions or events since that notification that management believes have changed the Bank’s category. Minimum To Be Well Minimum Capitalized Under Capital Prompt Corrective Actual Requirement Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) At December 31, 2016 Total Capital to Risk Weighted Assets $ % $ % $ % Tier 1 Capital to Risk Weighted Assets Common Equity Tier 1 Capital to Risk Weighted Assets Tier 1 Capital to Total Assets Minimum To Be Well Minimum Capitalized Under Capital Prompt Corrective Actual Requirement Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) At December 31, 2015 Total Capital to Risk Weighted Assets $ % $ % $ % Tier 1 Capital to Risk Weighted Assets Common Equity Tier 1 Capital to Risk Weighted Assets Tier 1 Capital to Total Assets Other capital restrictions Federal banking regulations place certain restrictions on dividends paid, stock repurchases and other transactions charged to the capital accounts of the Company and the Bank. Capital distributions in the form of dividends paid to the Bank’s stockholder for any one year may not exceed the Bank’s net income for the year to date plus the Bank’s retained net income for the preceding two years. In addition, dividends paid would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. The Bank and the Company may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount. See Note 17 — Liquidation Account Related to Reorganization for further information. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2016 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 12. 401(k) plan The Bank provides a savings and retirement plan for employees, which qualifies under Section 401(k) of the Internal Revenue Code. All employees who have attained age 21 and have completed one year of employment during which they worked at least 1,000 hours are eligible to participate. The plan provides for voluntary contributions by participating employees ranging from 1% to 75% of their compensation, subject to certain limitations. In addition, the Bank will make a matching contribution, equal to 50% of the employee’s contribution. The Bank’s matching contribution will not exceed 3% of an employee’s salary. In addition, the Bank may make a discretionary contribution not to exceed 3% of an employee’s salary. For the years ended December 31, 2016 and 2015, expense attributable to the plan amounted to $152,000 and $146,000, respectively. Incentive plan The Bank has an Incentive Plan whereby all employees are eligible to receive a payment if the Bank or participant meets or exceeds certain base standards of performance for its fiscal year. The structure of the Incentive Plan is to be reviewed on an annual basis by the Board of Directors. Incentive compensation expense for the years ended December 31, 2016 and 2015 amounted to $130,000 and $167,000, respectively. Executive supplemental retirement agreements The Bank has entered into supplemental retirement agreements with certain executive officers, which provide for the payment of specified benefits upon retirement or early termination, as defined in the agreements. For the years ended December 31, 2016 and 2015, total expense applicable to these agreements amounted to $181,000 and $139,000, respectively. The recorded liability for these agreements was $1,713,000 and $1,532,000 at December 31, 2016 and 2015, respectively. Employee Stock Ownership Plan The Bank established an ESOP for the benefit of each employee who has reached the age of 21 and has completed at least one year of employment with the Bank. Benefits may be paid in shares of common stock or in cash, subject to the employees’ right to demand shares. The ESOP has a loan agreement with the Company whereby $1,237,000 was borrowed for the purpose of purchasing shares of the Company’s common stock. At December 31, 2016, the loan has 10 remaining annual principal and interest payments of $104,000, all of which are due on the last business day of the respective year. The loan documents provide that the loan may be repaid over a shorter period, without penalty for prepayments. The remaining principal balance on the ESOP debt at December 31, 2016, is payable as follows: Years Ending December 31, Amount (In thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total remaining principal balance on the ESOP debt $ The Bank has committed to make contributions to the ESOP sufficient to support the debt service of the loan. The loan is secured by the shares purchased, which are held in a suspense account for allocation among the participants as the loan is paid. Total compensation expense applicable to the ESOP amounted to $155,000 and $132,000 for the years ended December 31, 2016 and 2015, respectively. Shares held by the ESOP are as follows: At December 31, 2016 2015 Allocated Committed to be allocated Unallocated Paid out to participants Total shares held by ESOP Any cash dividends received on allocated shares would be used to purchase additional shares and then allocated to participants and cash dividends received on shares held in suspense would be used to reduce the Bank’s annual contribution to the ESOP. The fair value of unallocated ESOP shares at December 31, 2016 and 2015 is $1,872,000 and $1,507,000, respectively. Share-based compensation plans In accordance with the Company’s 2009 and 2014 Equity Incentive Plans, the Company awarded 33,500 stock options and 16,500 shares of restricted stock to eligible participants on February 22, 2016. The 2009 Plan provides for total awards of 180,035 shares of the Company’s common stock pursuant to grants of restricted stock awards, incentive stock options, non-qualified stock options and stock appreciation rights; provided, however, that shares of stock used to fund stock options greater than 98,000 shares must be obtained through stock repurchases and shares of stock used to fund restricted stock awards greater than 39,200 shares must be obtained through stock repurchases. The 2014 Equity Incentive Plan provides for total awards of 154,000 shares of the Company’s common stock pursuant to grants of restricted stock awards, restricted stock unit awards, performance awards, incentive stock options and non-qualified stock options; provided, however, that no more than 44,000 shares of stock may be issued as restricted stock awards and restricted stock units, and no more than 110,000 shares may be issued or delivered in the aggregate pursuant to the exercise of stock options. The exercise price of each option will be equal to or greater than the market price of the Company’s stock on the date of grant and the maximum term of each option is ten years. Vesting periods for options and restricted stock granted to directors and officers are three years and five years, respectively, from the date of grant. The fair value of the stock options granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: 2016 2015 Expected dividends % % Expected term years years Expected volatility % % Risk-free interest rate % % The expected volatility is based on historical volatility. The risk-free interest rates for periods consistent with the expected term of the awards are based on the U.S. Treasury yield curve in effect at the time of the grant. The expected term is determined using the average of the mathematical mean of the vesting period and the full term of the option rather than estimating based on historical experience. The dividend yield assumption is based on the Company’s history, expectation of future dividend payouts and market value at the date of grant. The following tables present the activity for the 2009 and 2014 Plans as of and for the years ended December 31, 2016 and 2015: Stock Options 2016 2015 Weighted Weighted Average Average Number of Exercise Number of Exercise Shares Price Shares Price Outstanding at beginning of year $ $ Granted $ $ Exercised — $ — $ Cancelled — $ — $ Outstanding at end of period $ $ Exercisable at end of period Aggregate intrinsic value of outstanding options at end of period $ $ Weighted average fair value of options granted during the period $ $ Options Outstanding Options Exercisable Number Weighted-Average Weighted Number Weighted Outstanding Remaining Average Exercisable Average as of 12/31/2016 Contractual Life Exercise Price as of 12/31/2016 Exercise Price 3.15 Years $ $ 4.15 Years $ $ 5.15 Years $ $ 6.15 Years $ $ 7.15 Years $ $ 8.15 Years $ $ 9.15 Years $ — $ — 7.15 Years $ $ Non-vested Restricted Stock 2016 2015 Weighted Weighted Average Average Number of Grant Date Number of Grant Date Shares Value Shares Value Outstanding at beginning of year $ $ Granted $ $ Vested $ $ Outstanding at end of period $ $ As of December 31, 2016, unrecognized share-based compensation expense related to non-vested options amounted to $309,000 and the unrecognized share-based compensation expense related to non-vested restricted stock amounted to $574,000. The unrecognized expense related to the non-vested options and non-vested restricted stock will be recognized over a weighted average period of 3.1 and 3.0 years, respectively. For the year ended December 31, 2016, the Company recognized compensation expense for stock options of $124,000 with a related tax benefit of $16,000. For the year ended December 31, 2016, the Company recognized compensation expense for restricted stock awards of $257,000, with a related tax benefit of $103,000. For the year ended December 31, 2015, the Company recognized compensation expense for stock options of $90,000 with a related tax benefit of $12,000. For the year ended December 31, 2015, the Company recognized compensation expense for restricted stock awards of $209,000, with a related tax benefit of $84,000. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES Loan commitments The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the accompanying consolidated balance sheets. The Bank’s exposure to credit loss is represented by the contractual amount of the instruments. The Bank uses the same credit policies in making commitments as it does for on-balance sheet instruments. Financial instruments whose contract amounts represent credit risk consist of the following: At December 31, 2016 2015 (In thousands) Commitments to grant loans $ $ Unadvanced funds on home equity lines of credit Unadvanced funds on commercial lines of credit Unadvanced funds on construction loans Unadvanced funds on other unsecured personal lines of credit Unadvanced funds on commercial real estate loans Standby letters of credit Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for all lines of credit may expire without being drawn upon, therefore, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis. Substantially all of these financial instruments, except for unadvanced lines of credit on unsecured personal loans and commercial lines of credit, are secured by real estate. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance by a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The maximum potential amount of the Bank’s obligation for standby letters of credit was $227,000 and $62,000 as of December 31, 2016 and 2015, respectively. The Bank’s outstanding letters of credit generally have a term of less than one year. If a letter of credit is drawn upon, the Bank may seek recourse through the customer’s underlying line of credit. If the customer’s line of credit is also in default, the Bank may take possession of the collateral, if any, securing the line of credit. Lease commitments Pursuant to the terms of non-cancelable lease agreements in effect at December 31, 2016, pertaining to branch facilities, future minimum rental payments are as follows: Years Ending December 31, Payments (In thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total future minimum rental payments $ The leases contain options to extend. Two leases can extend for ten additional years, and one lease can extend for two additional five year terms. The cost of such rentals is not included above. Rental expense, including cancelable leases, amounted to $132,000 and $205,000 for the years ended December 31, 2016 and 2015, respectively. Employment agreements The Bank and Company have entered into employment agreements with its Chief Executive Officer and Chief Financial Officer, with initial terms of 36 months, that generally provide for a specified minimum annual compensation and the continuation of benefits currently received upon certain termination events, including a change in control, as defined in the agreements. The employment agreements may be terminated for cause, as defined, without incurring any continuing obligations. The Company employment agreements do not provide duplicative benefits, but rather, reinforce the obligation of the Bank by providing for the payments required under the employment agreements to the extent that such payments are not or cannot be made by the Bank. The agreements with the Company do not have an automatic reduction in benefits in the event of an excess parachute payment, but such agreements also do not provide for a tax “gross up.” In addition, certain regulatory requirements that are only required to be included in employment agreements between the executives and the Bank are not included in the employment agreements with the Company. The Bank has also entered into change in control agreements with four officers of the Bank with an initial term of 12 months, which provide for a lump sum severance payment, subject to certain conditions. These agreements are automatically renewed annually unless a notice of non-renewal is issued upon recommendation from the Board of Directors. Other contingencies Various legal claims arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Company’s consolidated financial position or results of operations. |
LOANS TO RELATED PARTIES
LOANS TO RELATED PARTIES | 12 Months Ended |
Dec. 31, 2016 | |
LOANS TO RELATED PARTIES | |
LOANS TO RELATED PARTIES | 14. LOANS TO RELATED PARTIES In the ordinary course of business, the Bank grants loans to its Executive Officers and Directors and their affiliates. Total loans to such persons and their affiliates amounted to $1,947,000 and $2,017,000 as of December 31, 2016 and 2015, respectively. During the year ended December 31, 2016, principal payments totaled $374,000 and principal advances amounted to $304,000. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2016 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 15. DERIVATIVE FINANCIAL INSTRUMENTS Mortgage loan commitments The Bank enters into commitments to originate mortgage loans for sale and uses forward commitments to sell such loans, both of which represent derivative instruments. These instruments involve both credit and market risk. Commitments to originate loans require the Bank to originate a loan at an interest rate that may or may not be fixed upon completion of various underwriting requirements. At December 31, 2016 and 2015, the Bank had no outstanding commitments to grant mortgage loans that are intended to be sold. Forward commitments to sell loans require the Bank to make delivery of loans at a specific future date, of a specified amount, at a specified price or yield. There were no such commitments at December 31, 2016 and 2015. |
FAIR VALUE OF ASSETS AND LIABIL
FAIR VALUE OF ASSETS AND LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE OF ASSETS AND LIABILITIES | |
FAIR VALUE OF ASSETS AND LIABILITIES | 16. FAIR VALUE OF ASSETS AND LIABILITIES The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine their fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Determination of fair value The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: Cash and cash equivalents : The carrying amounts of cash and short-term investments approximate fair values. Securities : Fair values for the Company’s debt securities are obtained from a third-party pricing service and are based on models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data. No further adjustments to such values are typically made by the Company. Federal Home Loan Bank stock : Fair value is based on redemption provisions of the FHLB. The FHLB stock has no quoted market value. Loans held for sale : Fair value is based on committed secondary market prices. Loans : For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. Capitalized mortgage servicing rights : Fair value is based on a quarterly, third-party valuation model that calculates the present value of estimated future net servicing income. The model utilizes a variety of assumptions, the most significant of which are loan prepayment assumptions and the discount rate used to discount future cash flows. Prepayment assumptions, which are impacted by loan rates and terms, are calculated using a moving average of prepayment data published by the Securities Industry and Financial Markets Association, third party proprietary analysis of prepayment rates embedded in liquid mortgage securities markets and modeled against the serviced loan portfolio by the third party valuation specialist. The discount rate is the moving average 10-year U.S. Treasury rate plus 5.0% and adjusted to reflect the current credit spreads and conditions in the market. Other assumptions include delinquency rates, foreclosure rates, servicing cost inflation, and annual unit loan cost. All assumptions are adjusted periodically to reflect current circumstances and all are obtained from independent market sources. Deposits : The fair values for non-certificate accounts are, by definition, equal to the amount payable on demand at the reporting date which is the carrying amount. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits. Short-term FHLB advances : The fair value of short-term FHLB advances approximate carrying value, as they generally mature within 90 days. Long-term FHLB advances : The fair value for long-term FHLB advances is estimated using discounted cash flow analyses based on current market borrowing rates for similar types of borrowing arrangements. Mortgagors’ escrow accounts: The fair values disclosed for mortgagors’ escrow accounts are equal to the amounts payable on demand at the reporting date (i.e. their carrying amounts). Accrued interest : The carrying amounts of accrued interest approximate fair value. Forward loan sale commitments and derivative loan commitments: Fair value is determined using secondary market pricing, including expected normal servicing rights. In estimating fair value, the Bank assigns a probability to a loan commitment based on an expectation that it will be exercised and the loan will be funded. 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. At December 31, 2016 and 2015, the fair value of commitments outstanding is not significant since fees charged are not material. Assets and liabilities measured at fair value on a recurring basis Assets measured at fair value on a recurring basis are summarized as follows: Total Assets Level 1 Level 2 Level 3 at Fair Value (In thousands) At December 31, 2016 Assets Securities available for sale State and municipal $ — $ $ — $ Residential mortgage-backed securities — — Total securities available for sale $ — $ $ — $ At December 31, 2015 Assets Securities available for sale State and municipal $ — $ $ — $ Residential mortgage-backed securities — — Total securities available for sale $ — $ $ — $ Assets and liabilities measured at fair value on a non-recurring basis The Company did not have any significant transfers of assets between levels 1 and 2 of the fair value hierarchy during the years ended December 31, 2016 and 2015. The Company may also be required, from time to time, to measure certain other financial assets on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. There are no liabilities measured at fair value on a non-recurring basis at December 31, 2016 and 2015. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets as of December 31, 2016 and 2015. The adjustments to fair value represent the amount of write down recorded during the years ended December 31, 2016 and 2015 on the assets held at December 31, 2016 and 2015, respectively. Assets Adjustments Level 1 Level 2 Level 3 at Fair Value to Fair Value (In thousands) At December 31, 2016 Impaired loans $ — $ — $ $ $ Assets Adjustments Level 1 Level 2 Level 3 At Fair Value to Fair Value (In thousands) At December 31, 2015 Impaired loans $ — $ — $ $ $ Fair values of impaired loans are based on the appraised value of the underlying collateral considering discounting factors, if deemed appropriate, and as adjusted for selling costs. These appraised values may be discounted based on management’s historical knowledge, expertise or changes in market conditions from time of valuation. Fair value adjustments are reflected in the provision for loan losses. Summary of fair value of financial instruments The estimated fair values and related carrying amounts of the Company’s financial instruments are as follows. Certain financial instruments and all nonfinancial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein may not necessarily represent the underlying fair value of the Company. December 31, 2016 Carrying Fair Value Amount Level 1 Level 2 Level 3 Total (In thousands) Financial assets: Cash and cash equivalents $ $ $ — $ — $ Securities available for sale — — Securities held to maturity — — FHLB stock — — BBN stock — — Loans held for sale — — Loans, net — — Accrued interest receivable — — Capitalized mortgage servicing rights — — Financial liabilities: Deposits $ $ — $ $ — $ Short-term FHLB advances — — Long-term FHLB advances — — Mortgagors’ escrow accounts — — Accrued interest payable — — December 31, 2015 Carrying Fair Value Amount Level 1 Level 2 Level 3 Total (In thousands) Financial assets: Cash and cash equivalents $ $ $ — $ — $ Securities available for sale — — Securities held to maturity — — FHLB stock — — BBN stock — — Loans, net — — Accrued interest receivable — — Capitalized mortgage servicing rights — — Financial liabilities: Deposits $ $ — $ $ — $ Short-term FHLB advances — — Long-term FHLB advances — — Mortgagors’ escrow accounts — — Accrued interest payable — — |
LIQUIDATION ACCOUNT RELATED TO
LIQUIDATION ACCOUNT RELATED TO REORGANIZATION | 12 Months Ended |
Dec. 31, 2016 | |
LIQUIDATION ACCOUNT RELATED TO REORGANIZATION | |
LIQUIDATION ACCOUNT RELATED TO REORGANIZATION | 17. LIQUIDATION ACCOUNT RELATED TO REORGANIZATION On November 28, 2011, the Boards of Directors of the Company, Georgetown Bancorp, MHC and the Bank each unanimously adopted a Plan of Conversion or Reorganization of Georgetown Bancorp, MHC (the “Plan”) pursuant to which Georgetown Bancorp, MHC undertook a “second-step” conversion and ceased to exist. Georgetown Bancorp, MHC reorganized from a two-tier mutual holding company structure to a fully public stock holding company structure effective July 11, 2012. In accordance with Board of Governors of the Federal Reserve System regulations, at the time of the reorganization, the Company substantially restricted retained earnings by establishing a liquidation account. The liquidation account is maintained for the benefit of eligible account holders who continue to maintain their accounts at the Bank after conversion. The Bank has established a parallel liquidation account to support the Company’s liquidation account in the event the Company does not have sufficient assets to fund its obligations under its liquidation account. The liquidation accounts are reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation accounts. In the event of a complete liquidation of the Bank or the Company, each account holder will be entitled to receive a distribution in an amount proportionate to the adjusted qualifying account balances then held. The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount . |
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER | 12 Months Ended |
Dec. 31, 2016 | |
AGREEMENT AND PLAN OF MERGER | |
AGREEMENT AND PLAN OF MERGER | 18. AGREEMENT AND PLAN OF MERGER On October 5, 2016, Salem Five Bancorp, a Massachusetts mutual holding company, Bright Star, Inc., a Maryland corporation and wholly-owned subsidiary of Salem Five Bancorp, and the Company entered into the Merger Agreement, pursuant to which Bright Star, Inc. will merge with and into the Company. Immediately following this, the Bank will merge with and into Salem Five Bancorp’s wholly-owned subsidiary, Salem Five Bank. Immediately following the merger of the two banks, the Company shall dissolve and liquidate into Salem Five Bancorp. Under the terms of the Merger Agreement, Salem Five Bancorp will acquire all of the Company’s outstanding common stock at a price of $26.00 per share in cash. In addition, each outstanding option to acquire shares of the Company’s common stock will be canceled in exchange for a cash payment equal to the difference, if any, between $26.00 and the exercise price of the option. Consummation of the merger is subject to certain conditions, including, among others, approval of the merger by the Company’s stockholders, the receipt of all required regulatory approvals and expiration of applicable waiting periods, accuracy of specified representations and warranties of each party, the performance in all material respects by each party of its obligations under the Merger Agreement, and the absence of any injunctions or other legal restraints. The stockholders of the Company approved the merger on February 13, 2017. The merger is expected to close in the second quarter of 2017. The Merger Agreement provides that upon termination of the Merger Agreement under certain circumstances, the Company will be obligated to pay Salem Five Bancorp a termination fee of $2.0 million. |
CONDENSED PARENT COMPANY ONLY F
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS | |
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS | 19. CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS The condensed balance sheets of the parent company only are as follows: BALANCE SHEETS At December 31, 2016 2015 (In thousands) ASSETS Non-interest bearing deposit in the Bank $ $ Loan to the Bank for ESOP Investment in subsidiary Other assets Total assets $ $ LIABILITIES AND STOCKHOLDERS’ EQUITY Other liabilities $ $ Stockholders’ equity Total liabilities and stockholders’ equity $ $ The condensed statements of net income of the parent company only are as follows: STATEMENTS OF INCOME Years Ended December 31, 2016 2015 (In thousands) Interest income on ESOP loan $ $ Non-interest expense Loss before income taxes and equity in undistributed net income of the Bank Applicable income tax benefit Loss before equity in undistributed net income of subsidiary Equity in undistributed net income of subsidiary Net income $ $ The condensed statements of cash flows of the parent company only are as follows: Years Ended December 31, 2016 2015 (In thousands) Cash flows from operating activities: Net income $ $ Adjustments to reconcile net income to net cash used by operating activities: Equity in undistributed net income of subsidiary Other, net Net cash used by operating activities Cash flows from investing activities: Repayment of ESOP loan Net cash provided by investing activities Cash flows from financing activities: Repurchase of common stock Cash dividends paid on common stock Exercise of stock options — Net cash used by financing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ $ |
QUARTERLY DATA (UNAUDITED)
QUARTERLY DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY DATA (UNAUDITED) | |
QUARTERLY DATA (UNAUDITED) | 20. QUARTERLY DATA (UNAUDITED) A summary of consolidated operating results on a quarterly basis is as follows: Years Ended December 31, 2016 2015 Fourth Third Second First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter (In thousands, except per share data) Interest and dividend income $ $ $ $ $ $ $ $ Interest expense Net interest and dividend income Provision for loan losses — — Net interest and dividend income, after provision for loan losses Non-interest income Non-interest expenses Income before income taxes Income tax provision Net (loss) income $ $ $ $ $ $ $ $ (Loss) income per share: Basic $ $ $ $ $ $ $ $ Diluted $ $ $ $ $ $ $ $ |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation and consolidation | Basis of presentation and consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. The Bank’s financial statements include its wholly-owned subsidiary, Georgetown Securities Corporation, which engages in the buying, selling and holding of securities. All significant intercompany balances and transactions have been eliminated in consolidation. |
Nature of operations | Nature of operations The Company, through the Bank, provides a variety of financial services to individuals and small businesses in the eastern Massachusetts region and southern New Hampshire. Its primary deposit products are checking, savings and term certificate accounts and its primary lending products are residential and commercial mortgage loans. |
Segment reporting | Segment reporting Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments. Management evaluates the Company’s performance and allocates resources based on a single segment concept. Accordingly, there are no separately identified operating segments for which discrete financial information is available. The Company does not derive revenues from, or have assets located in, foreign countries, nor does it derive revenues from any single customer that represents 10% or more of the Company’s total revenues. |
Use of estimates | Use of estimates In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the realizability of deferred tax assets. |
Fair value hierarchy | Fair value hierarchy The Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value, as follows: Level 1 - Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Level 2 - Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
Reclassifications | Reclassifications Certain amounts in the 2015 consolidated financial statements have been reclassified to conform to the 2016 presentation. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents include cash, amounts due from banks and short-term investments, all of which mature within 90 days, and are carried at cost. |
Securities | Securities Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and reflected at amortized cost. Securities classified as “available for sale” are reflected at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income/loss, net of tax effects. Purchase premiums and discounts are amortized to earnings by the interest method over the contractual lives of the securities. Gains and losses on sale of securities are recognized on the trade date and determined using the specific identification method. Each reporting period, the Company evaluates all securities classified as available-for-sale or held-to-maturity with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”). For debt securities, OTTI is required to be recognized (1) if the Company intends to sell the security; (2) if it is “more likely than not” that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. For all impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Non-credit related OTTI for such debt securities is recognized in other comprehensive income (loss), net of applicable taxes. |
Federal Home Loan Bank stock | Federal Home Loan Bank stock The Company is required to own shares of capital stock in the Federal Home Loan Bank of Boston (''FHLB'') in order to borrow from the FHLB. The stock is carried at its cost and evaluated for impairment based on the ultimate recoverability of the cost basis of the FHLB stock. |
Loans held for sale | Loans held for sale Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Fair value is based on committed secondary market prices. |
Loans | Loans The loan portfolio consists of mortgage, business and consumer loans to the Bank’s customers, principally in the eastern Massachusetts region and southern New Hampshire. The ability of the Bank’s debtors to honor their contracts is dependent upon the real estate and general economic conditions in this area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are generally reported at their outstanding unpaid principal balances adjusted for the allowance for loan losses and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination costs, net of origination fees, are deferred and recognized as an adjustment of the related loan yield using the interest method. The accrual of interest on loans, including impaired loans, is generally recognized on a simple interest basis and is generally discontinued at the time the loan is 90 days past due, unless the credit is both well secured and in the process of collection. Past due status is based on the contractual terms of the loans. Loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on non-accrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. |
Allowance for loan losses | Allowance for loan losses The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a monthly basis by management and is based upon management’s monthly review of the collectability of the loans in light of known and inherent risks in the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. Additionally, as part of the evaluation of the level of the allowance for loan losses, on a quarterly basis, management analyzes several qualitative loan portfolio risk factors including, but not limited to, charge-off history, changes in management or underwriting policies, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower and results of internal and external loan reviews. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For such loans that are classified as impaired, an allowance for loan losses is established when the discounted cash flows or the fair value of the existing collateral (less cost to sell) of the impaired loan are lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component may be maintained to cover uncertainties that could affect management’s estimate of probable losses. A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The Bank periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring (“TDR”). All TDRs are initially classified as impaired. Adjustable-rate mortgage loans decrease the risk associated with changes in market interest rates by periodically repricing, but involve other risks because, as interest rates increase, the underlying payments by the borrower increase, thus increasing the potential for default by the borrower. At the same time, the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustment of the contractual interest rate is also limited by the maximum periodic and lifetime interest rate adjustments permitted by our loan documents and, therefore, the effectiveness of adjustable-rate mortgage loans may be limited during periods of rapidly rising interest rates. Loans secured by commercial real estate, multi-family and one- to four-family investment properties generally involve larger principal amounts and a greater degree of risk than one- to four-family residential mortgage loans. Because payments on loans secured by commercial real estate, including multi-family and one- to four-family investment properties, are often dependent on successful operation or management of the properties, repayment of such loans may be affected by adverse conditions in the real estate market or the economy. Unlike residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income and which are secured by real property whose value tends to be more easily ascertainable, commercial business loans generally are made on the basis of the borrower’s ability to repay the loan from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial business loans may depend substantially on the success of the business itself. Further, any collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value. Construction and development financing is generally considered to involve a higher degree of credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of construction cost proves to be inaccurate, we may be required to advance funds beyond the amount originally committed in order to protect the value of the property. Additionally, if the estimate of value proves to be inaccurate, we may be confronted with a project, when completed, having a value that is insufficient to assure full repayment. |
Other real estate owned and in-substance foreclosures | Other real estate owned and in-substance foreclosures Other real estate owned includes properties acquired through foreclosure and properties classified as in-substance foreclosures in accordance with Accounting Standards Codification (“ASC”) 310-40, “Receivables - Troubled Debt Restructurings by Creditors.” These properties are initially carried at the estimated fair value less estimated costs to sell at the date of foreclosure or transfer, establishing a new cost basis. Subsequent to foreclosure or transfer, valuations are periodically performed by management and the assets are carried at the lower of the carrying amount of fair value less estimated costs to sell. Any writedown from cost to estimated fair value required at the time of foreclosure or classification as in-substance foreclosure is charged to the allowance for loan losses. Expenses incurred in connection with maintaining these assets, subsequent writedowns and gains or losses recognized upon sale are included in other expense. The Company classifies commercial loans as in-substance repossessed or foreclosed if the Company receives physical possession of the debtor’s assets regardless of whether formal foreclosure proceedings take place. An in-substance repossession or foreclosure occurs, and the Bank is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan upon either: (1) obtaining legal title to the residential real estate property upon completion of a foreclosure; or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. |
Loan Servicing | Loan Servicing The Bank services mortgage loans for others. Mortgage servicing assets are initially recognized at fair value, as separate assets when rights are acquired through purchase or through sale of financial assets. Initial fair value is determined using prices for similar assets with similar characteristics. Capitalized servicing rights are reported in other assets and are amortized into loan servicing fee income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant risk characteristics, such as interest rates and terms. Fair value is based on a quarterly, third-party valuation model that calculates the present value of estimated future net servicing income. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum. Changes in the valuation allowance are reported in mortgage banking income, net. |
Derivative financial instruments | Derivative financial instruments Derivative financial instruments are recognized as assets and liabilities on the consolidated balance sheets and measured at fair value. Derivative Loan Commitments Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. Loan commitments that are derivatives are recognized at fair value on the consolidated balance sheets in other assets and other liabilities with changes in their fair values recorded in mortgage banking income, net. Fair value is determined using secondary market pricing, including expected normal servicing rights. In estimating fair value, the Bank assigns a probability to a loan commitment based on an expectation that it will be exercised and the loan will be funded. Forward Loan Sale Commitments To protect against the price risk inherent in derivative loan commitments, the Bank utilizes both “mandatory delivery” and “best efforts” forward loan sale commitments to mitigate the risk of potential decreases in the value of loans that would result from the exercise of the derivative loan commitments. Mandatory delivery contracts are accounted for as derivative instruments. Generally, the Bank’s best efforts contracts meet the definition of derivative instruments when the loans to the underlying borrowers close and are accounted for as derivative instruments at that time. Accordingly, forward loan sale commitments are recognized at fair value on the consolidated balance sheets in other assets and other liabilities with changes in their fair values recorded in mortgage banking income, net. The Bank estimates the fair value of its forward loan sales commitments using a methodology similar to that used for derivative loan commitments. |
Premises and equipment | Premises and equipment Land is carried at cost. Buildings, leasehold improvements and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets or the expected terms of the leases, if shorter. Useful lives are dependent upon the nature and condition of the asset and range from 3 to 40 years. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured. Premise and equipment are periodically evaluated for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. Impairment exists when the expected undiscounted future cash flows of premises and equipment are less than its carrying amount. In that event, the Company records a loss for the difference between the carrying amount and the fair value of the asset based on quoted market prices, if applicable, or a discounted cash flow analysis. |
Bank-owned life insurance | Bank-owned life insurance Bank-owned life insurance policies are reflected on the consolidated balance sheets at cash surrender value. Changes in cash surrender value are reflected in non-interest income on the consolidated statements of income. |
Transfers of financial assets | Transfers of financial assets Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
Income taxes | Income taxes Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. A valuation allowance is established against deferred tax assets when, based upon the available evidence including historical and projected taxable income, it is more likely than not that some or all of the deferred tax assets will not be realized. Interest and penalties, if any, are recorded in income tax provision. Income tax benefits related to stock compensation in excess of grant date fair value less any proceeds on exercise are recognized as an increase to additional paid-in capital upon vesting or exercising and delivery of the stock. Any income tax effects related to stock compensation that are less than grant date fair value less any proceeds on exercise would be recognized as a reduction of additional paid in capital to the extent of previously recognized income tax benefits and then through income tax provision for the remaining amount. |
Advertising costs | Advertising costs Advertising costs are expensed when incurred. |
Employee Stock Ownership Plan (ESOP) | Employee Stock Ownership Plan (ESOP) Compensation expense for the ESOP is recorded at an amount equal to the shares committed to be allocated by the ESOP multiplied by the average fair market value of the shares during the period. The Bank recognizes compensation expense ratably over the year based upon the Bank’s estimate of the number of shares expected to be allocated by the ESOP. Unearned compensation applicable to the ESOP is reflected as a reduction of stockholders’ equity in the consolidated balance sheets. The difference between the average fair market value and the cost of the shares allocated by the ESOP is recorded as an adjustment to additional paid-in capital. |
Share-based Compensation Plan | Share-based Compensation Plans The Company measures and recognizes compensation cost relating to share-based payment transactions based on the grant-date fair value of the equity instruments issued. Share-based compensation is recognized over the period the employee is required to provide services for the award. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options granted. |
Earnings per share | Earnings per share Basic earnings per share represents net income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. If rights to dividends on unvested options/awards are non-forfeitable, these unvested awards/options are considered outstanding in the computation of basic earnings per share. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. Earnings per common share have been computed based on the following: Years Ended December 31, 2016 2015 Net income available to common stockholders $ $ Basic common shares: Weighted average shares outstanding Less: Weighted average unallocated ESOP shares Add: Weighted average unvested restricted stock shares with non-forfeitable dividend rights Basic weighted average common shares outstanding Dilutive potential common shares Diluted weighted average common shares outstanding Basic earnings per share $ $ Diluted earnings per share $ $ Options to purchase 122,775 shares, representing all outstanding options, were included in the computation of diluted earnings per share for the year ended December 31, 2016. Options to purchase 89,725 shares, representing all outstanding options, were included in the computation of diluted earnings per share for the year ended December 31, 2015. |
Comprehensive income | Comprehensive income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in operating results. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale, are reported as a separate component of the stockholders’ equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income. |
Recent accounting pronouncements | Recent accounting pronouncements In May 2014 and August 2015, respectively, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 and 2015-14, “Revenue from Contracts with Customers (Topic 606).” The objective of ASU 2014-09 is to clarify principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The guidance in ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principal 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. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, and interim periods within that period. Earlier application is permitted only as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently reviewing ASUs 2014-09 and 2015-14 to determine if they will have an impact on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The amendments in this ASU address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments and makes targeted improvements to GAAP as follows: 1. Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. 2. Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. 3. Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. 4. Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 5. Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. 6. Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. 7. Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption of item 5 above is permitted as of the fiscal years or interim periods for which financial statements have not yet been issued. Early adoption of all other amendments in this ASU is not permitted. The Company anticipates that the adoption of this ASU will not have a material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This ASU was issued to increase transparency and comparability among organizations by requiring reporting entities to recognize all leases, including operating, as lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The amendments in this ASU are effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company anticipates that the adoption of this ASU will not have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” This ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. Under this ASU, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, and APIC pools will be eliminated. The guidance also eliminates the requirement that excess tax benefits be realized before companies can recognize them. In addition, the guidance requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The guidance will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. The new guidance will also require an employer to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on its statement of cash flows (current guidance did not specify how these cash flows should be classified) and permit companies to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016. Early adoption is permitted, but all of the guidance must be adopted in the same period. The Company is currently evaluating the provisions of ASU 2016-09 to determine the potential impact the new standard will have on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This ASU includes provisions intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by the entity. In order to achieve this objective, the amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted in interim and annual reporting periods beginning after December 15, 2018. Any increase in the allowance for loan losses or expenses incurred to determine the appropriate level of allowance for loan losses may have a material adverse effect on the Company’s financial condition and results of operations. The Company is currently evaluating the provisions of ASU 2016-13 to determine the potential impact the new standard will have on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Common Share | |
Schedule of basis of computation of earnings per common share | Years Ended December 31, 2016 2015 Net income available to common stockholders $ $ Basic common shares: Weighted average shares outstanding Less: Weighted average unallocated ESOP shares Add: Weighted average unvested restricted stock shares with non-forfeitable dividend rights Basic weighted average common shares outstanding Dilutive potential common shares Diluted weighted average common shares outstanding Basic earnings per share $ $ Diluted earnings per share $ $ |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SHORT-TERM INVESTMENTS | |
Summary of short-term investments, included in cash and cash equivalents | At December 31, 2016 2015 (In thousands) FHLB Ideal Way $ $ Federal Reserve Federal funds sold Total short-term investments $ $ |
SECURITIES (Tables)
SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SECURITIES | |
Summary of securities | Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) At December 31, 2016 Securities available for sale State and municipal $ $ $ $ Residential mortgage-backed securities Total securities available for sale $ $ $ $ Securities held to maturity State and municipal $ $ — $ $ Residential mortgage-backed securities Total securities held to maturity $ $ $ $ At December 31, 2015 Securities available for sale State and municipal $ $ $ $ Residential mortgage-backed securities Total securities available for sale $ $ $ $ Securities held to maturity State and municipal $ $ $ — $ Residential mortgage-backed securities — Total securities held to maturity $ $ $ — $ |
Schedule of maturities of debt securities | The scheduled maturities of debt securities at December 31, 2016 are as follows: Available for Sale Held to Maturity Amortized Fair Amortized Fair Cost Value Cost Value (In thousands) After five years through ten years $ $ $ — $ — Over ten years Residential mortgage-backed securities $ $ $ $ |
Schedule of securities with gross unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous loss position | Less Than Twelve Months Twelve Months Or Longer Gross Gross Unrealized Fair Unrealized Fair Losses Value Losses Value (In thousands) At December 31, 2016 Securities available for sale State and municipal $ $ $ — $ — Residential mortgage-backed securities — — Total securities available for sale — — Securities held to maturity State and municipal — — Residential mortgage-backed securities — — Total securities held to maturity — — Total temporarily impaired securities $ $ $ — $ — At December 31, 2015 Securities available for sale State and municipal $ — $ — $ $ Residential mortgage-backed securities Total temporarily impaired securities $ $ $ $ |
LOANS AND SERVICING (Tables)
LOANS AND SERVICING (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LOANS AND SERVICING | |
Summary of loans | At At December 31, December 31, 2016 2015 Amount Amount (In thousands) Residential loans: One- to four-family $ $ Home equity loans and lines of credit Total residential mortgage loans Commercial loans: One- to four-family investment property Multi-family real estate Commercial real estate Commercial business Total commercial loans Construction loans: One- to four-family Multi-family Non-residential Total construction loans Consumer Total loans Other items: Net deferred loan costs Allowance for loan losses Total loans, net $ $ |
Schedule of information pertaining to the allowance for loan losses | Information pertaining to the allowance for loan losses at and for the year ended December 31, 2016 is as follows: Residential Commercial Construction One- to four- Home equity family One- to four- loans and lines investment Multi-family Commercial Commercial One- to four- Non- family of credit property real estate real estate business family Multi-family residential Consumer Unallocated Total (In thousands) Allowance for loan losses Beginning Balance $ $ $ $ $ $ $ $ $ $ $ $ Charge-offs — — — — — — — — — — Recoveries — — — — — — — — — (Benefit) provision Ending Balance $ $ $ $ $ $ $ $ $ $ $ — $ Ending balance: individually evaluated for impairment $ — $ — $ $ — $ — $ — $ — $ — $ — $ — $ — $ Ending balance: collectively evaluated for impairment $ $ $ $ $ $ $ $ $ $ $ — $ Loans Ending Balance $ $ $ $ $ $ $ $ $ $ $ — $ Ending balance: individually evaluated for impairment $ $ $ $ — $ $ — $ — $ — $ — $ — $ — $ Ending balance: collectively evaluated for impairment $ $ $ $ $ $ $ $ $ $ $ — $ Information pertaining to the allowance for loan losses at and for the year ended December 31, 2015 is as follows: Residential Commercial Construction One- to four- Home equity family One- to four- loans and lines investment Multi-family Commercial Commercial One- to four- Non- family of credit property real estate real estate business family Multi-family residential Consumer Unallocated Total (In thousands) Allowance for loan losses Beginning Balance $ $ $ $ $ $ $ $ $ $ $ — $ Charge-offs — — — — — — — — — Recoveries — — — — — — — — — (Benefit) provision Ending Balance $ $ $ $ $ $ $ $ $ $ $ $ Ending balance: individually evaluated for impairment $ $ — $ $ — $ — $ — $ — $ — $ — $ — $ — $ Ending balance: collectively evaluated for impairment $ $ $ $ $ $ $ $ $ $ $ $ Loans Ending Balance $ $ $ $ $ $ $ $ $ $ $ — $ Ending balance: individually evaluated for impairment $ $ $ $ — $ $ — $ — $ — $ — $ — $ — $ Ending balance: collectively evaluated for impairment $ $ $ $ $ $ $ $ $ $ $ — $ |
Summary of past-due and non-accrual loans | The following is a summary of past-due and non-accrual loans at December 31, 2016: Loans delinquent for: 90 days 90 days Total Total Total or more Non-accrual 30 - 59 Days 60 - 89 Days or more Past Due Current Loans and accruing Loans (In thousands) Residential loans: One- to four-family $ — $ — $ $ $ $ $ — $ Home equity loans and lines of credit — Commercial loans: One- to four-family investment property — — — — — — Multi-family real estate — — — — — — Commercial real estate — — — — — — Commercial business — — — — — — Construction loans: One- to four-family — — — — — — Multi-family — — — — — — Non-residential — — — — — — Consumer — — — Total $ $ $ $ $ $ $ — $ The following is a summary of past-due and non-accrual loans at December 31, 2015: Loans delinquent for: 90 days 90 days Total Total Total or more Non-accrual 30 - 59 Days 60 - 89 Days or more Past Due Current Loans and accruing Loans (In thousands) Residential loans: One- to four-family $ — $ — $ $ $ $ $ — $ Home equity loans and lines of credit — — — — Commercial loans: One- to four-family investment property — — — — — — Multi-family real estate — — — — — — Commercial real estate — — — — — — Commercial business — — — — Construction loans: One- to four-family — — — — — — Multi-family — — — — — — Non-residential — — — — — — Consumer — — — — Total $ $ $ $ $ $ $ — $ |
Schedule of analysis of impaired loans | The following is an analysis of impaired loans at and for the year ending December 31, 2016: Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized (In thousands) Impaired loans without a valuation allowance Residential loans: One- to four-family $ $ $ — $ $ Home equity loans and lines of credit — Commercial loans: One- to four-family investment property — — — — — Multi-family real estate — — — — — Commercial real estate — Commercial business — — — — — Construction loans: One- to four-family — — — — — Multi-family — — — — — Non-residential — — — — — Consumer — — — — — Total impaired with no related allowance $ $ $ — $ $ Impaired loans with a valuation allowance Residential loans: One- to four-family $ — $ — $ — $ — $ — Home equity loans and lines of credit — — — — — Commercial loans: One- to four-family investment property Multi-family real estate — — — — — Commercial real estate — — — — — Commercial business — — — — — Construction loans: One- to four-family — — — — — Multi-family — — — — — Non-residential — — — — — Consumer — — — — — Total with an allowance recorded $ $ $ $ $ No additional funds are committed to be advanced in connection with impaired loans. The following is an analysis of impaired loans at and for the year ending December 31, 2015: Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized (In thousands) Impaired loans without a valuation allowance Residential loans: One- to four-family $ $ $ — $ $ Home equity loans and lines of credit — Commercial loans: One- to four-family investment property — — — — — Multi-family real estate — — — — — Commercial real estate — Commercial business — — — Construction loans: One- to four-family — — — — — Multi-family — — — — — Non-residential — — — — — Consumer — — — — — Total impaired with no related allowance $ $ $ — $ $ Impaired loans with a valuation allowance Residential loans: One- to four-family $ $ $ $ $ Home equity loans and lines of credit — — — — — Commercial loans: One- to four-family investment property Multi-family real estate — — — — — Commercial real estate — — — — — Commercial business — — — — — Construction loans: One- to four-family — — — — — Multi-family — — — — — Non-residential — — — — — Consumer — — — — — Total with an allowance recorded $ $ $ $ $ |
Schedule of loans by risk rating | Residential Commercial Construction One ‑ to four ‑ Home equity family One ‑ to four ‑ loans and lines investment Multi ‑ family Commercial Commercial One ‑ to four ‑ Non- family of credit property real estate real estate business family Multi ‑ family residential Consumer Total (In thousands) At December 31, 2016 Classification: Not formally rated $ $ $ — $ — $ — $ — $ — $ — $ — $ $ Pass — — — Special mention — — — — — — — — — — — Substandard — — — — — Doubtful — — — — — — — — — — — Loss — — — — — — — — — — — Total loans $ $ $ $ $ $ $ $ $ $ $ At December 31, 2015 Classification: Not formally rated $ $ $ — $ — $ — $ — $ — $ — $ — $ $ Pass — — — Special mention — — — — — — — — Substandard — — — — — — — Doubtful — — — — — — — — — — — Loss — — — — — — — — — — — Total loans $ $ $ $ $ $ $ $ $ $ $ |
Schedule of mortgage servicing rights capitalized and amortized | Year Ended December 31, 2016 2015 (In thousands) Mortgage servicing rights: Balance at beginning of period $ $ Additions — Amortization Balance at end of period Valuation allowance: Balance at beginning of period Additions Reductions Balance at end of period Mortgage servicing rights, net $ $ Fair value of mortgage servicing rights $ $ |
PREMISES AND EQUIPMENT (Tables)
PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PREMISES AND EQUIPMENT | |
Summary of premises and equipment | At December 31, 2016 2015 (In thousands) Premises: Land $ $ Buildings and improvements Equipment Less accumulated depreciation and amortization Premises and equipment, net $ $ |
DEPOSITS (Tables)
DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
DEPOSITS | |
Summary of deposit balances | At December 31, 2016 2015 (In thousands) Demand $ $ On us accounts NOW Money market deposits Regular and other savings Total non-certificate accounts Term certificates less than $100,000 Term certificates of $100,000 or more Total certificate accounts Total deposits $ $ |
Summary of term certificate accounts by maturity | At December 31, 2016 2015 Weighted Weighted Average Average Amount Rate Amount Rate (Dollars in thousands) Within one year $ % $ % Greater than one year to two years % % Greater than two years to three years % % Greater than three years to four years % % Greater than four years to five years % % Total certificate accounts $ % $ % |
FEDERAL HOME LOAN BANK ADVANC36
FEDERAL HOME LOAN BANK ADVANCES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
FEDERAL HOME LOAN BANK ADVANCES. | |
Schedule of long-term, fixed-rate FHLB advances and maturities | At December 31, 2016 2015 Weighted Weighted Average Average Amount Rate Amount Rate (Dollars in thousands) Within one year $ % $ % Greater than one year to two years % % Greater than two years to three years % % Greater than three years to four years % % Greater than four years to five years — — % % Total long-term FHLB advances $ % $ % |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
Schedule of allocation of federal and state income taxes between current and deferred portions | Years Ended December 31, 2016 2015 (In thousands) Current tax provision: Federal $ $ State Deferred tax benefit: Federal State Total tax provision $ $ |
Schedule of differences between the statutory federal income tax rate and the effective tax rates | Years Ended December 31, 2016 2015 Statutory rate % % Increase (decrease) resulting from: State taxes, net of federal tax benefit Bank-owned life insurance Stock compensation plans Interest income from municipal securities Merger related expense, non-deductible — Other, net — Effective tax rates % % |
Schedule of components of net deferred tax asset included in other assets | At December 31, 2016 2015 (In thousands) Deferred tax assets: Federal $ $ State Deferred tax liabilities: Federal State Net deferred tax asset $ $ |
Schedule of tax effects of each item that gives rise to deferred taxes | At December 31, 2016 2015 (In thousands) Deferred compensation $ $ Net unrealized loss (gain) on securities available for sale Depreciation and amortization Allowance for loan losses Mortgage servicing rights Other, net Net deferred tax asset $ $ |
Summary of the change in the net deferred tax asset | Years Ended December 31, 2016 2015 (In thousands) Balance at beginning of period $ $ Deferred tax benefit Deferred tax effects of net unrealized loss (gain) on securities available for sale Balance at end of period $ $ |
MINIMUM REGULATORY CAPITAL RE38
MINIMUM REGULATORY CAPITAL REQUIREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
MINIMUM REGULATORY CAPITAL REQUIREMENTS | |
Schedule of actual capital amounts and ratios | Minimum To Be Well Minimum Capitalized Under Capital Prompt Corrective Actual Requirement Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) At December 31, 2016 Total Capital to Risk Weighted Assets $ % $ % $ % Tier 1 Capital to Risk Weighted Assets Common Equity Tier 1 Capital to Risk Weighted Assets Tier 1 Capital to Total Assets Minimum To Be Well Minimum Capitalized Under Capital Prompt Corrective Actual Requirement Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) At December 31, 2015 Total Capital to Risk Weighted Assets $ % $ % $ % Tier 1 Capital to Risk Weighted Assets Common Equity Tier 1 Capital to Risk Weighted Assets Tier 1 Capital to Total Assets |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
EMPLOYEE BENEFIT PLANS | |
Schedule of remaining principal balance payable on ESOP debt | Years Ending December 31, Amount (In thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total remaining principal balance on the ESOP debt $ |
Schedule of shares by ESOP | At December 31, 2016 2015 Allocated Committed to be allocated Unallocated Paid out to participants Total shares held by ESOP |
Schedule of weighted-average assumptions used for estimation of fair value of the stock options granted using the Black-Scholes option-pricing model | 2016 2015 Expected dividends % % Expected term years years Expected volatility % % Risk-free interest rate % % |
Schedule of activity for stock options | Stock Options 2016 2015 Weighted Weighted Average Average Number of Exercise Number of Exercise Shares Price Shares Price Outstanding at beginning of year $ $ Granted $ $ Exercised — $ — $ Cancelled — $ — $ Outstanding at end of period $ $ Exercisable at end of period Aggregate intrinsic value of outstanding options at end of period $ $ Weighted average fair value of options granted during the period $ $ |
Schedule of options outstanding and exercisable | Options Outstanding Options Exercisable Number Weighted-Average Weighted Number Weighted Outstanding Remaining Average Exercisable Average as of 12/31/2016 Contractual Life Exercise Price as of 12/31/2016 Exercise Price 3.15 Years $ $ 4.15 Years $ $ 5.15 Years $ $ 6.15 Years $ $ 7.15 Years $ $ 8.15 Years $ $ 9.15 Years $ — $ — 7.15 Years $ $ |
Schedule of activity for non-vested restricted stock | Non-vested Restricted Stock 2016 2015 Weighted Weighted Average Average Number of Grant Date Number of Grant Date Shares Value Shares Value Outstanding at beginning of year $ $ Granted $ $ Vested $ $ Outstanding at end of period $ $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of financial instruments whose contract amount represent credit risk | At December 31, 2016 2015 (In thousands) Commitments to grant loans $ $ Unadvanced funds on home equity lines of credit Unadvanced funds on commercial lines of credit Unadvanced funds on construction loans Unadvanced funds on other unsecured personal lines of credit Unadvanced funds on commercial real estate loans Standby letters of credit |
Schedule of non-cancelable lease agreements pertaining to branch facilities, future minimum rental payments | Years Ending December 31, Payments (In thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total future minimum rental payments $ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE OF ASSETS AND LIABILITIES | |
Summary of assets and liabilities measured at fair value on a recurring basis | Total Assets Level 1 Level 2 Level 3 at Fair Value (In thousands) At December 31, 2016 Assets Securities available for sale State and municipal $ — $ $ — $ Residential mortgage-backed securities — — Total securities available for sale $ — $ $ — $ At December 31, 2015 Assets Securities available for sale State and municipal $ — $ $ — $ Residential mortgage-backed securities — — Total securities available for sale $ — $ $ — $ |
Schedule of assets measured at fair value on a non-recurring basis | Assets Adjustments Level 1 Level 2 Level 3 at Fair Value to Fair Value (In thousands) At December 31, 2016 Impaired loans $ — $ — $ $ $ Assets Adjustments Level 1 Level 2 Level 3 At Fair Value to Fair Value (In thousands) At December 31, 2015 Impaired loans $ — $ — $ $ $ |
Schedule of estimated fair values and related carrying amounts of the Company's financial instruments | December 31, 2016 Carrying Fair Value Amount Level 1 Level 2 Level 3 Total (In thousands) Financial assets: Cash and cash equivalents $ $ $ — $ — $ Securities available for sale — — Securities held to maturity — — FHLB stock — — BBN stock — — Loans held for sale — — Loans, net — — Accrued interest receivable — — Capitalized mortgage servicing rights — — Financial liabilities: Deposits $ $ — $ $ — $ Short-term FHLB advances — — Long-term FHLB advances — — Mortgagors’ escrow accounts — — Accrued interest payable — — December 31, 2015 Carrying Fair Value Amount Level 1 Level 2 Level 3 Total (In thousands) Financial assets: Cash and cash equivalents $ $ $ — $ — $ Securities available for sale — — Securities held to maturity — — FHLB stock — — BBN stock — — Loans, net — — Accrued interest receivable — — Capitalized mortgage servicing rights — — Financial liabilities: Deposits $ $ — $ $ — $ Short-term FHLB advances — — Long-term FHLB advances — — Mortgagors’ escrow accounts — — Accrued interest payable — — |
CONDENSED PARENT COMPANY ONLY42
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS | |
Schedule of condensed balance sheets of parent Company | At December 31, 2016 2015 (In thousands) ASSETS Non-interest bearing deposit in the Bank $ $ Loan to the Bank for ESOP Investment in subsidiary Other assets Total assets $ $ LIABILITIES AND STOCKHOLDERS’ EQUITY Other liabilities $ $ Stockholders’ equity Total liabilities and stockholders’ equity $ $ |
Schedule of net income of parent Company | Years Ended December 31, 2016 2015 (In thousands) Interest income on ESOP loan $ $ Non-interest expense Loss before income taxes and equity in undistributed net income of the Bank Applicable income tax benefit Loss before equity in undistributed net income of subsidiary Equity in undistributed net income of subsidiary Net income $ $ |
Schedule of condensed statements of cash flows of parent Company | Years Ended December 31, 2016 2015 (In thousands) Cash flows from operating activities: Net income $ $ Adjustments to reconcile net income to net cash used by operating activities: Equity in undistributed net income of subsidiary Other, net Net cash used by operating activities Cash flows from investing activities: Repayment of ESOP loan Net cash provided by investing activities Cash flows from financing activities: Repurchase of common stock Cash dividends paid on common stock Exercise of stock options — Net cash used by financing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ $ |
QUARTERLY DATA (UNAUDITED) (Tab
QUARTERLY DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY DATA (UNAUDITED) | |
Summary of consolidated operating results on a quarterly basis | Years Ended December 31, 2016 2015 Fourth Third Second First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter (In thousands, except per share data) Interest and dividend income $ $ $ $ $ $ $ $ Interest expense Net interest and dividend income Provision for loan losses — — Net interest and dividend income, after provision for loan losses Non-interest income Non-interest expenses Income before income taxes Income tax provision Net (loss) income $ $ $ $ $ $ $ $ (Loss) income per share: Basic $ $ $ $ $ $ $ $ Diluted $ $ $ $ $ $ $ $ |
CORPORATE STRUCTURE (Details)
CORPORATE STRUCTURE (Details) | 12 Months Ended |
Dec. 31, 2016USD ($)item | |
CORPORATE STRUCTURE | |
Number of banks prior to the merger | item | 2 |
Nondeductible merger expenses | $ | $ 490,000 |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Disclosures (Details) | 12 Months Ended |
Dec. 31, 2016segment | |
Operating Segments | |
Number of operating segments | 0 |
Loans | |
Period of past due loans for discontinuance of accrual of interest on loans | 90 days |
Minimum | |
Premises and equipment | |
Estimated Useful Lives | 3 years |
Maximum | |
Premises and equipment | |
Estimated Useful Lives | 40 years |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Common Share | ||||||||||
Net income available to common stockholders | $ (73) | $ 35 | $ 152 | $ 80 | $ 480 | $ 425 | $ 363 | $ 250 | $ 194 | $ 1,518 |
Basic common shares: | ||||||||||
Weighted average shares outstanding | 1,792,853 | 1,787,909 | ||||||||
Less: Weighted average unallocated ESOP shares | (76,296) | (83,535) | ||||||||
Add: Weighted average unvested restricted stock shares with non-forfeitable dividend rights | 46,221 | 43,719 | ||||||||
Basic weighted average common shares outstanding | 1,762,778 | 1,748,093 | ||||||||
Dilutive potential common shares | 16,894 | 8,726 | ||||||||
Diluted weighted average common shares outstanding | 1,779,672 | 1,756,819 | ||||||||
Basic earnings per share (in dollars per share) | $ (0.04) | $ 0.02 | $ 0.09 | $ 0.05 | $ 0.27 | $ 0.24 | $ 0.21 | $ 0.14 | $ 0.11 | $ 0.87 |
Diluted earnings per share (in dollars per share) | $ (0.04) | $ 0.02 | $ 0.09 | $ 0.05 | $ 0.27 | $ 0.24 | $ 0.21 | $ 0.14 | $ 0.11 | $ 0.86 |
Options to purchase shares included in the computation of diluted earnings per share (in shares) | 122,775 | 89,725 | ||||||||
Parent | ||||||||||
Earnings Per Common Share | ||||||||||
Net income available to common stockholders | $ 194 | $ 1,518 |
RESTRICTIONS ON CASH AND AMOU47
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS | ||
Average reserve balances on hand or with Federal Reserve Bank | $ 1,413,000 | $ 1,373,000 |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Short-term investments | $ 3,184 | $ 5,831 |
FHLB Ideal Way | ||
Short-term investments | 1,181 | 3,566 |
Federal Reserve | ||
Short-term investments | 1,003 | 1,191 |
Federal funds sold | ||
Short-term investments | $ 1,000 | $ 1,074 |
SECURITIES - AFS and HTM (Detai
SECURITIES - AFS and HTM (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Securities available for sale | ||
Amortized Cost | $ 19,834 | $ 18,953 |
Gross Unrealized Gains | 84 | 166 |
Gross Unrealized Losses | (146) | (91) |
Securities available for sale | 19,772 | 19,028 |
Securities held to maturity | ||
Held-to-maturity Securities | 2,503 | 3,112 |
Gross Unrealized Gains | 3 | 16 |
Gross Unrealized Losses | (16) | |
Fair Value | 2,490 | 3,128 |
State and municipal | ||
Securities available for sale | ||
Amortized Cost | 2,362 | 2,410 |
Gross Unrealized Gains | 27 | 62 |
Gross Unrealized Losses | (4) | (2) |
Securities available for sale | 2,385 | 2,470 |
Securities held to maturity | ||
Held-to-maturity Securities | 570 | 573 |
Gross Unrealized Gains | 12 | |
Gross Unrealized Losses | (5) | |
Fair Value | 565 | 585 |
Residential mortgage-backed securities | ||
Securities available for sale | ||
Amortized Cost | 17,472 | 16,543 |
Gross Unrealized Gains | 57 | 104 |
Gross Unrealized Losses | (142) | (89) |
Securities available for sale | 17,387 | 16,558 |
Securities held to maturity | ||
Held-to-maturity Securities | 1,933 | 2,539 |
Gross Unrealized Gains | 3 | 4 |
Gross Unrealized Losses | (11) | |
Fair Value | $ 1,925 | $ 2,543 |
SECURITIES - AFS and HTM - Amor
SECURITIES - AFS and HTM - Amortized Cost and FV (Details) | 12 Months Ended | |
Dec. 31, 2016USD ($)security | Dec. 31, 2015USD ($) | |
Available for Sale, Amortized cost | ||
After five years through ten years | $ 528,000 | |
Over ten years | 1,834,000 | |
Total | 2,362,000 | |
Available-for-sale Securities, Amortized Cost Basis | 19,834,000 | $ 18,953,000 |
Available for Sale, Fair Value | ||
After five years through ten years | 537,000 | |
Over ten years | 1,848,000 | |
Total | 2,385,000 | |
Fair Value | 19,772,000 | 19,028,000 |
Held to maturity, Amortized Cost | ||
Over 10 years | 570,000 | |
Total | 570,000 | |
Total | 2,503,000 | 3,112,000 |
Held to Maturity, Fair Value | ||
Over 10 years | 565,000 | |
Total | 565,000 | |
Fair Value | 2,490,000 | 3,128,000 |
Available for sale securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position | ||
Less Than Twelve Months, Fair Value | 9,230,000 | 3,946,000 |
Less Than Twelve Months, Gross Unrealized Losses | 146,000 | 20,000 |
Twelve Months Or Longer, Gross Unrealized Losses | (71,000) | |
Twelve Months Or Longer, Fair Value | 3,473,000 | |
Held to maturity securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position | ||
Less than 12 months, Gross Unrealized Loss | 16,000 | |
Less than 12 months, Fair Value | 2,463,000 | |
Total temporarily impaired securities, Less than 12 months, Gross Unrealized Loss | 162,000 | |
Total temporarily impaired securities, Less than 12 months, Fair Value | 11,693,000 | |
Additional disclosures | ||
Proceeds from sale of securities | 867,000 | |
Proceeds from sale of securities | 0 | 204,000 |
Proceeds from the sale of securities held to maturity | 663,000 | |
Gain from sale of securities | 60,000 | |
Gain from sale of securities available for sale | 21,000 | |
Gain on sale of securities held to maturity | 39,000 | |
Income tax expense related to realized gains on sale | $ 21,000 | |
Number of available-for-sale securities in unrealized loss position | security | 11 | |
Number of investments guaranteed by the U.S. Government or its agencies | security | 7 | |
Minimum | ||
Additional disclosures | ||
Percentage of held to maturity securities principal balance collected | 85.00% | |
State and municipal | ||
Available for Sale, Amortized cost | ||
Available-for-sale Securities, Amortized Cost Basis | $ 2,362,000 | 2,410,000 |
Available for Sale, Fair Value | ||
Fair Value | 2,385,000 | 2,470,000 |
Held to maturity, Amortized Cost | ||
Total | 570,000 | 573,000 |
Held to Maturity, Fair Value | ||
Fair Value | 565,000 | 585,000 |
Available for sale securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position | ||
Less Than Twelve Months, Fair Value | 512,000 | |
Less Than Twelve Months, Gross Unrealized Losses | 4,000 | |
Twelve Months Or Longer, Gross Unrealized Losses | (2,000) | |
Twelve Months Or Longer, Fair Value | 244,000 | |
Held to maturity securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position | ||
Less than 12 months, Gross Unrealized Loss | 5,000 | |
Less than 12 months, Fair Value | 565,000 | |
Residential mortgage-backed securities | ||
Available for Sale, Amortized cost | ||
Securities without single maturity date | 17,472,000 | |
Available-for-sale Securities, Amortized Cost Basis | 17,472,000 | 16,543,000 |
Available for Sale, Fair Value | ||
Securities without single maturity date | 17,387,000 | |
Fair Value | 17,387,000 | 16,558,000 |
Held to maturity, Amortized Cost | ||
Securities without single maturity date | 1,933,000 | |
Total | 1,933,000 | 2,539,000 |
Held to Maturity, Fair Value | ||
Securities without single maturity date | 1,925,000 | |
Fair Value | 1,925,000 | 2,543,000 |
Available for sale securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position | ||
Less Than Twelve Months, Fair Value | 8,718,000 | 3,946,000 |
Less Than Twelve Months, Gross Unrealized Losses | 142,000 | 20,000 |
Twelve Months Or Longer, Gross Unrealized Losses | (69,000) | |
Twelve Months Or Longer, Fair Value | $ 3,229,000 | |
Held to maturity securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position | ||
Less than 12 months, Gross Unrealized Loss | 11,000 | |
Less than 12 months, Fair Value | $ 1,898,000 |
LOANS AND SERVICING - Summary o
LOANS AND SERVICING - Summary of loans (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of loans: | |||
Loans receivable | $ 279,492 | $ 256,014 | |
Other items: | |||
Net deferred loan costs | 484 | 377 | |
Allowance for loan losses | (2,605) | (2,408) | $ (2,229) |
Total loans, net | 277,371 | 253,983 | |
Residential loans: | |||
Summary of loans: | |||
Loans receivable | 106,069 | 104,735 | |
One- to four- family, residential loans | |||
Summary of loans: | |||
Loans receivable | 90,190 | 86,472 | |
Other items: | |||
Allowance for loan losses | (171) | (197) | (273) |
Home equity loans and lines of credit | |||
Summary of loans: | |||
Loans receivable | 15,879 | 18,263 | |
Other items: | |||
Allowance for loan losses | (238) | (276) | (249) |
Commercial loans: | |||
Summary of loans: | |||
Loans receivable | 148,087 | 130,664 | |
One-to-four family investment property | |||
Summary of loans: | |||
Loans receivable | 13,081 | 15,255 | |
Other items: | |||
Allowance for loan losses | (79) | (90) | (46) |
Multi-family real estate | |||
Summary of loans: | |||
Loans receivable | 30,748 | 30,709 | |
Other items: | |||
Allowance for loan losses | (234) | (233) | (113) |
Commercial real estate | |||
Summary of loans: | |||
Loans receivable | 83,583 | 67,152 | |
Other items: | |||
Allowance for loan losses | (1,262) | (1,021) | (943) |
Commercial business loan | |||
Summary of loans: | |||
Loans receivable | 20,675 | 17,548 | |
Other items: | |||
Allowance for loan losses | (364) | (305) | (311) |
Construction loans | |||
Summary of loans: | |||
Loans receivable | 25,154 | 20,378 | |
One-to-four family, construction loans | |||
Summary of loans: | |||
Loans receivable | 12,599 | 12,967 | |
Other items: | |||
Allowance for loan losses | (104) | (113) | (117) |
Multi-family | |||
Summary of loans: | |||
Loans receivable | 5,725 | 1,486 | |
Other items: | |||
Allowance for loan losses | (47) | (12) | (97) |
Non-residential | |||
Summary of loans: | |||
Loans receivable | 6,830 | 5,925 | |
Other items: | |||
Allowance for loan losses | (104) | (91) | (77) |
Consumer | |||
Summary of loans: | |||
Loans receivable | 182 | 237 | |
Other items: | |||
Allowance for loan losses | $ (2) | $ (2) | $ (3) |
LOANS AND SERVICING - Allowance
LOANS AND SERVICING - Allowance for loan losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2016 | Sep. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for loan losses | ||||||||
Beginning Balance | $ 2,408 | $ 2,229 | $ 2,408 | $ 2,229 | ||||
Charge-offs | (3) | (26) | ||||||
Recoveries | 6 | 5 | ||||||
(Benefit) provision | $ 53 | $ 67 | 74 | $ 62 | $ 111 | 27 | 194 | 200 |
Ending Balance | 2,605 | 2,408 | 2,605 | 2,408 | ||||
Ending balance: Individually evaluated for impairment | 7 | 14 | 7 | 14 | ||||
Ending balance: Collectively evaluated for impairment | 2,598 | 2,394 | 2,598 | 2,394 | ||||
Loans | ||||||||
Ending Balance: Individually evaluated for impairment | 2,052 | 2,046 | 2,052 | 2,046 | ||||
Ending Balance: Collectively evaluated for impairment | 277,440 | 253,968 | 277,440 | 253,968 | ||||
Total Loans | 279,492 | 256,014 | 279,492 | 256,014 | ||||
Residential loans: | ||||||||
Loans | ||||||||
Total Loans | 106,069 | 104,735 | 106,069 | 104,735 | ||||
One- to four- family, residential loans | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 197 | 273 | 197 | 273 | ||||
(Benefit) provision | (26) | (76) | ||||||
Ending Balance | 171 | 197 | 171 | 197 | ||||
Ending balance: Individually evaluated for impairment | 7 | 7 | ||||||
Ending balance: Collectively evaluated for impairment | 171 | 190 | 171 | 190 | ||||
Loans | ||||||||
Ending Balance: Individually evaluated for impairment | 1,543 | 1,567 | 1,543 | 1,567 | ||||
Ending Balance: Collectively evaluated for impairment | 88,647 | 84,905 | 88,647 | 84,905 | ||||
Total Loans | 90,190 | 86,472 | 90,190 | 86,472 | ||||
Home equity loans and lines of credit | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 276 | 249 | 276 | 249 | ||||
Recoveries | 2 | 1 | ||||||
(Benefit) provision | (40) | 26 | ||||||
Ending Balance | 238 | 276 | 238 | 276 | ||||
Ending balance: Collectively evaluated for impairment | 238 | 276 | 238 | 276 | ||||
Loans | ||||||||
Ending Balance: Individually evaluated for impairment | 143 | 104 | 143 | 104 | ||||
Ending Balance: Collectively evaluated for impairment | 15,736 | 18,159 | 15,736 | 18,159 | ||||
Total Loans | 15,879 | 18,263 | 15,879 | 18,263 | ||||
Commercial loans: | ||||||||
Loans | ||||||||
Total Loans | 148,087 | 130,664 | 148,087 | 130,664 | ||||
One-to-four family investment property | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 90 | 46 | 90 | 46 | ||||
(Benefit) provision | (11) | 44 | ||||||
Ending Balance | 79 | 90 | 79 | 90 | ||||
Ending balance: Individually evaluated for impairment | 7 | 7 | 7 | 7 | ||||
Ending balance: Collectively evaluated for impairment | 72 | 83 | 72 | 83 | ||||
Loans | ||||||||
Ending Balance: Individually evaluated for impairment | 85 | 88 | 85 | 88 | ||||
Ending Balance: Collectively evaluated for impairment | 12,996 | 15,167 | 12,996 | 15,167 | ||||
Total Loans | 13,081 | 15,255 | 13,081 | 15,255 | ||||
Multi-family real estate | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 233 | 113 | 233 | 113 | ||||
(Benefit) provision | 1 | 120 | ||||||
Ending Balance | 234 | 233 | 234 | 233 | ||||
Ending balance: Collectively evaluated for impairment | 234 | 233 | 234 | 233 | ||||
Loans | ||||||||
Ending Balance: Collectively evaluated for impairment | 30,748 | 30,709 | 30,748 | 30,709 | ||||
Total Loans | 30,748 | 30,709 | 30,748 | 30,709 | ||||
Commercial real estate | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 1,021 | 943 | 1,021 | 943 | ||||
(Benefit) provision | 241 | 78 | ||||||
Ending Balance | 1,262 | 1,021 | 1,262 | 1,021 | ||||
Ending balance: Collectively evaluated for impairment | 1,262 | 1,021 | 1,262 | 1,021 | ||||
Loans | ||||||||
Ending Balance: Individually evaluated for impairment | 281 | 287 | 281 | 287 | ||||
Ending Balance: Collectively evaluated for impairment | 83,302 | 66,865 | 83,302 | 66,865 | ||||
Total Loans | 83,583 | 67,152 | 83,583 | 67,152 | ||||
Commercial business loan | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 305 | 311 | 305 | 311 | ||||
Charge-offs | (22) | |||||||
(Benefit) provision | 59 | 16 | ||||||
Ending Balance | 364 | 305 | 364 | 305 | ||||
Ending balance: Collectively evaluated for impairment | 364 | 305 | 364 | 305 | ||||
Loans | ||||||||
Ending Balance: Collectively evaluated for impairment | 20,675 | 17,548 | 20,675 | 17,548 | ||||
Total Loans | 20,675 | 17,548 | 20,675 | 17,548 | ||||
Construction loans | ||||||||
Loans | ||||||||
Total Loans | 25,154 | 20,378 | 25,154 | 20,378 | ||||
One-to-four family, construction loans | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 113 | 117 | 113 | 117 | ||||
(Benefit) provision | (9) | (4) | ||||||
Ending Balance | 104 | 113 | 104 | 113 | ||||
Ending balance: Collectively evaluated for impairment | 104 | 113 | 104 | 113 | ||||
Loans | ||||||||
Ending Balance: Collectively evaluated for impairment | 12,599 | 12,967 | 12,599 | 12,967 | ||||
Total Loans | 12,599 | 12,967 | 12,599 | 12,967 | ||||
Multi-family | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 12 | 97 | 12 | 97 | ||||
(Benefit) provision | 35 | (85) | ||||||
Ending Balance | 47 | 12 | 47 | 12 | ||||
Ending balance: Collectively evaluated for impairment | 47 | 12 | 47 | 12 | ||||
Loans | ||||||||
Ending Balance: Collectively evaluated for impairment | 5,725 | 1,486 | 5,725 | 1,486 | ||||
Total Loans | 5,725 | 1,486 | 5,725 | 1,486 | ||||
Non-residential | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 91 | 77 | 91 | 77 | ||||
(Benefit) provision | 13 | 14 | ||||||
Ending Balance | 104 | 91 | 104 | 91 | ||||
Ending balance: Collectively evaluated for impairment | 104 | 91 | 104 | 91 | ||||
Loans | ||||||||
Ending Balance: Collectively evaluated for impairment | 6,830 | 5,925 | 6,830 | 5,925 | ||||
Total Loans | 6,830 | 5,925 | 6,830 | 5,925 | ||||
Consumer | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | 2 | $ 3 | 2 | 3 | ||||
Charge-offs | (3) | (4) | ||||||
Recoveries | 4 | 4 | ||||||
(Benefit) provision | (1) | (1) | ||||||
Ending Balance | 2 | 2 | 2 | 2 | ||||
Ending balance: Collectively evaluated for impairment | 2 | 2 | 2 | 2 | ||||
Loans | ||||||||
Ending Balance: Collectively evaluated for impairment | 182 | 237 | 182 | 237 | ||||
Total Loans | $ 182 | 237 | 182 | 237 | ||||
Unallocated | ||||||||
Allowance for loan losses | ||||||||
Beginning Balance | $ 68 | 68 | ||||||
(Benefit) provision | $ (68) | 68 | ||||||
Ending Balance | 68 | 68 | ||||||
Ending balance: Collectively evaluated for impairment | $ 68 | $ 68 |
LOANS AND SERVICING - Past-due
LOANS AND SERVICING - Past-due and non-accrual loans (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Past-due and non-accrual loans | ||
Past due loans | $ 1,017 | $ 938 |
Total Current | 278,475 | 255,076 |
Total Loans | 279,492 | 256,014 |
Non-accrual Loans | 953 | 776 |
Loans delinquent for: 30 - 59 Days | ||
Past-due and non-accrual loans | ||
Past due loans | 198 | |
Loans delinquent for: 60 - 89 Days | ||
Past-due and non-accrual loans | ||
Past due loans | 23 | |
Loans delinquent for: 90 days or more | ||
Past-due and non-accrual loans | ||
Past due loans | 796 | |
Residential loans: | ||
Past-due and non-accrual loans | ||
Total Loans | 106,069 | 104,735 |
One- to four- family, residential loans | ||
Past-due and non-accrual loans | ||
Past due loans | 755 | 649 |
Total Current | 89,435 | 85,823 |
Total Loans | 90,190 | 86,472 |
Non-accrual Loans | 755 | 776 |
One- to four- family, residential loans | Loans delinquent for: 90 days or more | ||
Past-due and non-accrual loans | ||
Past due loans | 755 | 649 |
Home equity loans and lines of credit | ||
Past-due and non-accrual loans | ||
Past due loans | 252 | 273 |
Total Current | 15,627 | 17,990 |
Total Loans | 15,879 | 18,263 |
Non-accrual Loans | 198 | |
Home equity loans and lines of credit | Loans delinquent for: 30 - 59 Days | ||
Past-due and non-accrual loans | ||
Past due loans | 191 | 273 |
Home equity loans and lines of credit | Loans delinquent for: 60 - 89 Days | ||
Past-due and non-accrual loans | ||
Past due loans | 20 | |
Home equity loans and lines of credit | Loans delinquent for: 90 days or more | ||
Past-due and non-accrual loans | ||
Past due loans | 41 | |
Commercial loans: | ||
Past-due and non-accrual loans | ||
Total Loans | 148,087 | 130,664 |
One-to-four family investment property | ||
Past-due and non-accrual loans | ||
Total Current | 13,081 | 15,255 |
Total Loans | 13,081 | 15,255 |
Multi-family real estate | ||
Past-due and non-accrual loans | ||
Total Current | 30,748 | 30,709 |
Total Loans | 30,748 | 30,709 |
Commercial real estate | ||
Past-due and non-accrual loans | ||
Total Current | 83,583 | 67,152 |
Total Loans | 83,583 | 67,152 |
Commercial business loan | ||
Past-due and non-accrual loans | ||
Past due loans | 12 | |
Total Current | 20,675 | 17,536 |
Total Loans | 20,675 | 17,548 |
Commercial business loan | Loans delinquent for: 30 - 59 Days | ||
Past-due and non-accrual loans | ||
Past due loans | 12 | |
Construction loans | ||
Past-due and non-accrual loans | ||
Total Loans | 25,154 | 20,378 |
One-to-four family, construction loans | ||
Past-due and non-accrual loans | ||
Total Current | 12,599 | 12,967 |
Total Loans | 12,599 | 12,967 |
Multi-family | ||
Past-due and non-accrual loans | ||
Total Current | 5,725 | 1,486 |
Total Loans | 5,725 | 1,486 |
Non-residential | ||
Past-due and non-accrual loans | ||
Total Current | 6,830 | 5,925 |
Total Loans | 6,830 | 5,925 |
Consumer | ||
Past-due and non-accrual loans | ||
Past due loans | 10 | 4 |
Total Current | 172 | 233 |
Total Loans | 182 | 237 |
Consumer | Loans delinquent for: 30 - 59 Days | ||
Past-due and non-accrual loans | ||
Past due loans | 7 | |
Consumer | Loans delinquent for: 60 - 89 Days | ||
Past-due and non-accrual loans | ||
Past due loans | $ 3 | $ 4 |
LOANS AND SERVICING - Analysis
LOANS AND SERVICING - Analysis of impaired loans (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Recorded Investment | ||
Impaired loans without a valuation allowance | $ 1,967 | $ 1,646 |
Impaired loans with a valuation allowance | 85 | 400 |
Unpaid Principal Balance | ||
Impaired loans without a valuation allowance | 1,979 | 1,646 |
Impaired loans with a valuation allowance | 85 | 400 |
Related Allowance | ||
Impaired loans with a valuation allowance | 7 | 14 |
Average Recorded Investment | ||
Impaired loans without a valuation allowance | 1,953 | 653 |
Impaired loans with a valuation allowance | 87 | 369 |
Interest Income Recognized | ||
Impaired loans without a valuation allowance | 64 | 40 |
Impaired loans with a valuation allowance | 4 | 20 |
One- to four- family, residential loans | ||
Recorded Investment | ||
Impaired loans without a valuation allowance | 1,543 | 1,255 |
Impaired loans with a valuation allowance | 312 | |
Unpaid Principal Balance | ||
Impaired loans without a valuation allowance | 1,555 | 1,255 |
Impaired loans with a valuation allowance | 312 | |
Related Allowance | ||
Impaired loans with a valuation allowance | 7 | |
Average Recorded Investment | ||
Impaired loans without a valuation allowance | 1,560 | 236 |
Impaired loans with a valuation allowance | 314 | |
Interest Income Recognized | ||
Impaired loans without a valuation allowance | 42 | 12 |
Impaired loans with a valuation allowance | 16 | |
Home equity loans and lines of credit | ||
Recorded Investment | ||
Impaired loans without a valuation allowance | 143 | 104 |
Unpaid Principal Balance | ||
Impaired loans without a valuation allowance | 143 | 104 |
Related Allowance | ||
Impaired loans without a valuation allowance | 51 | |
Average Recorded Investment | ||
Impaired loans without a valuation allowance | 109 | 2 |
Interest Income Recognized | ||
Impaired loans without a valuation allowance | 5 | |
Commercial real estate | ||
Recorded Investment | ||
Impaired loans without a valuation allowance | 281 | 287 |
Unpaid Principal Balance | ||
Impaired loans without a valuation allowance | 281 | 287 |
Average Recorded Investment | ||
Impaired loans without a valuation allowance | 284 | 292 |
Interest Income Recognized | ||
Impaired loans without a valuation allowance | 17 | 17 |
Commercial business loan | ||
Average Recorded Investment | ||
Impaired loans without a valuation allowance | 74 | |
Interest Income Recognized | ||
Impaired loans without a valuation allowance | 9 | |
One-to-four family investment property | ||
Recorded Investment | ||
Impaired loans with a valuation allowance | 85 | 88 |
Unpaid Principal Balance | ||
Impaired loans with a valuation allowance | 85 | 88 |
Related Allowance | ||
Impaired loans with a valuation allowance | 7 | 7 |
Average Recorded Investment | ||
Impaired loans with a valuation allowance | 87 | 55 |
Interest Income Recognized | ||
Impaired loans with a valuation allowance | $ 4 | $ 4 |
LOANS AND SERVICING - Loans mod
LOANS AND SERVICING - Loans modified and classified as troubled debt restructures (Details) | 12 Months Ended | |
Dec. 31, 2016USD ($)securityloan | Dec. 31, 2015USD ($)securityloanperson | |
Loans modified and classified as troubled debt restructures | ||
Number of relationships with TDR loans | loan | 2 | |
Loan modifications | $ 0 | |
Non-accrual Loans | 953,000 | $ 776,000 |
Loans receivable | $ 279,492,000 | $ 256,014,000 |
Number of TDRs in default of their modified terms | security | 0 | 0 |
Commitments to lend additional funds to borrowers with modified loans | $ 0 | $ 0 |
Residential loans: | ||
Loans modified and classified as troubled debt restructures | ||
Number of loans | loan | 2 | 0 |
Loans receivable | $ 106,069,000 | $ 104,735,000 |
Post-modification balance in recorded investment | 671,000 | |
One- to four- family, residential loans | ||
Loans modified and classified as troubled debt restructures | ||
Non-accrual Loans | 755,000 | 776,000 |
Loans receivable | 90,190,000 | $ 86,472,000 |
Number of individuals guaranteeing the loans | person | 1 | |
Pre-modification balance in recorded investment | $ 606,000 | |
Post-modification balance in recorded investment | $ 606,000 | |
Term of debt instrument | 24 months | |
Home equity loans and lines of credit | ||
Loans modified and classified as troubled debt restructures | ||
Non-accrual Loans | 198,000 | |
Loans receivable | 15,879,000 | $ 18,263,000 |
Percentage of proceeds, tdr | 100.00% | |
Post-modification balance in recorded investment | $ 80,000 | |
Term of debt instrument | 24 months | |
Commercial loans: | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | 148,087,000 | $ 130,664,000 |
One-to-four family investment property | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | 13,081,000 | 15,255,000 |
Multi-family real estate | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | 30,748,000 | 30,709,000 |
Commercial real estate | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | 83,583,000 | $ 67,152,000 |
Commercial business loan | ||
Loans modified and classified as troubled debt restructures | ||
Number of loans | loan | 2 | |
Loans receivable | 20,675,000 | $ 17,548,000 |
Number of individuals guaranteeing the loans | person | 2 | |
Sale of loans receivable | $ 100,000 | |
Number of loan modifications that resulted in the classification of TDR | loan | 2 | |
Pre-modification balance in recorded investment | $ 135,000 | |
Construction loans | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | 25,154,000 | 20,378,000 |
One-to-four family, construction loans | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | 12,599,000 | 12,967,000 |
Multi-family | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | 5,725,000 | 1,486,000 |
Non-residential | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | 6,830,000 | 5,925,000 |
Consumer | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | $ 182,000 | 237,000 |
Commercial portfolio segment | ||
Loans modified and classified as troubled debt restructures | ||
Loans receivable | 235,000 | |
Commercial business loan one | ||
Loans modified and classified as troubled debt restructures | ||
Proceeds from loans by payment of guarantor | 23,000 | |
Allowances for credit losses | 22,000 | |
Pre-modification balance in recorded investment | 45,000 | |
Post-modification balance in recorded investment | 0 | |
Commercial business loan two | ||
Loans modified and classified as troubled debt restructures | ||
Post-modification balance in recorded investment | $ 90,000 |
LOANS AND SERVICING - Internal
LOANS AND SERVICING - Internal Credit Assessment (Details) $ in Thousands | Dec. 31, 2016USD ($)grade | Dec. 31, 2015USD ($) |
Loans by risk rating | ||
Loans receivable | $ 279,492 | $ 256,014 |
Internal Loan Rating System | ||
Number of grades in internal loan rating system | grade | 9 | |
Not formally rated | ||
Loans by risk rating | ||
Loans receivable | $ 104,305 | 103,198 |
Pass | ||
Loans by risk rating | ||
Loans receivable | $ 172,297 | 150,128 |
Pass | Minimum | ||
Internal Loan Rating System | ||
Grade assigned in internal loan rating system | grade | 1 | |
Pass | Maximum | ||
Internal Loan Rating System | ||
Grade assigned in internal loan rating system | grade | 5 | |
Special mention | ||
Loans by risk rating | ||
Loans receivable | 826 | |
Internal Loan Rating System | ||
Grade assigned in internal loan rating system | grade | 6 | |
Substandard | ||
Loans by risk rating | ||
Loans receivable | $ 2,890 | 1,862 |
Internal Loan Rating System | ||
Grade assigned in internal loan rating system | grade | 7 | |
Doubtful | ||
Internal Loan Rating System | ||
Grade assigned in internal loan rating system | grade | 8 | |
Loss | ||
Internal Loan Rating System | ||
Grade assigned in internal loan rating system | grade | 9 | |
Residential loans: | ||
Loans by risk rating | ||
Loans receivable | $ 106,069 | 104,735 |
One- to four- family, residential loans | ||
Loans by risk rating | ||
Loans receivable | 90,190 | 86,472 |
One- to four- family, residential loans | Not formally rated | ||
Loans by risk rating | ||
Loans receivable | 88,522 | 84,778 |
One- to four- family, residential loans | Substandard | ||
Loans by risk rating | ||
Loans receivable | 1,668 | 1,694 |
Home equity loans and lines of credit | ||
Loans by risk rating | ||
Loans receivable | 15,879 | 18,263 |
Home equity loans and lines of credit | Not formally rated | ||
Loans by risk rating | ||
Loans receivable | 15,601 | 18,183 |
Home equity loans and lines of credit | Substandard | ||
Loans by risk rating | ||
Loans receivable | 278 | 80 |
Commercial loans: | ||
Loans by risk rating | ||
Loans receivable | 148,087 | 130,664 |
One-to-four family investment property | ||
Loans by risk rating | ||
Loans receivable | 13,081 | 15,255 |
One-to-four family investment property | Pass | ||
Loans by risk rating | ||
Loans receivable | 12,996 | 15,167 |
One-to-four family investment property | Substandard | ||
Loans by risk rating | ||
Loans receivable | 85 | 88 |
Multi-family real estate | ||
Loans by risk rating | ||
Loans receivable | 30,748 | 30,709 |
Multi-family real estate | Pass | ||
Loans by risk rating | ||
Loans receivable | 30,748 | 30,709 |
Commercial real estate | ||
Loans by risk rating | ||
Loans receivable | 83,583 | 67,152 |
Commercial real estate | Pass | ||
Loans by risk rating | ||
Loans receivable | 82,873 | 66,420 |
Commercial real estate | Special mention | ||
Loans by risk rating | ||
Loans receivable | 732 | |
Commercial real estate | Substandard | ||
Loans by risk rating | ||
Loans receivable | 710 | |
Commercial business loan | ||
Loans by risk rating | ||
Loans receivable | 20,675 | 17,548 |
Commercial business loan | Pass | ||
Loans by risk rating | ||
Loans receivable | 20,526 | 17,454 |
Commercial business loan | Special mention | ||
Loans by risk rating | ||
Loans receivable | 94 | |
Commercial business loan | Substandard | ||
Loans by risk rating | ||
Loans receivable | 149 | |
Construction loans | ||
Loans by risk rating | ||
Loans receivable | 25,154 | 20,378 |
One-to-four family, construction loans | ||
Loans by risk rating | ||
Loans receivable | 12,599 | 12,967 |
One-to-four family, construction loans | Pass | ||
Loans by risk rating | ||
Loans receivable | 12,599 | 12,967 |
Multi-family | ||
Loans by risk rating | ||
Loans receivable | 5,725 | 1,486 |
Multi-family | Pass | ||
Loans by risk rating | ||
Loans receivable | 5,725 | 1,486 |
Non-residential | ||
Loans by risk rating | ||
Loans receivable | 6,830 | 5,925 |
Non-residential | Pass | ||
Loans by risk rating | ||
Loans receivable | 6,830 | 5,925 |
Consumer | ||
Loans by risk rating | ||
Loans receivable | 182 | 237 |
Consumer | Not formally rated | ||
Loans by risk rating | ||
Loans receivable | $ 182 | $ 237 |
LOANS AND SERVICING - Servicing
LOANS AND SERVICING - Servicing Rights (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Loans serviced for others | ||
Unpaid principal balances of mortgage loans serviced for others not included in the accompanying consolidated balance sheets | $ 83,176,000 | $ 100,544,000 |
Moving average term of U.S. Treasury rate used to estimate the discount rate in order to determine the fair value of servicing rights (in years) | 10 years | |
Percentage added to the moving average 10-year U.S. Treasury rate to estimate the discount rate used to determine the fair value of servicing rights | 5.00% | |
Mortgage servicing rights capitalized and amortized | ||
Balance at beginning of period | $ 523,000 | 840,000 |
Additions | 10,000 | |
Amortization | (281,000) | (327,000) |
Balance at end of period | 242,000 | 523,000 |
Valuation allowances: | ||
Balance at beginning of period | 4,000 | 6,000 |
Additions | 13,000 | 13,000 |
Reductions | (11,000) | (15,000) |
Balance at end of period | 6,000 | 4,000 |
Mortgage servicing assets, net | 236,000 | 519,000 |
Fair value of mortgage servicing assets | $ 601,000 | $ 1,100,000 |
PREMISES AND EQUIPMENT (Details
PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of premises and equipment | ||
Premises and equipment, gross | $ 8,017 | $ 8,052 |
Less accumulated depreciation and amortization | (3,884) | (4,215) |
Premises and equipment, net | 4,133 | 3,837 |
Depreciation and amortization expense | $ 422 | 385 |
Minimum | ||
Summary of premises and equipment | ||
Estimated Useful Lives | 3 years | |
Maximum | ||
Summary of premises and equipment | ||
Estimated Useful Lives | 40 years | |
Land | ||
Summary of premises and equipment | ||
Premises and equipment, gross | $ 226 | 226 |
Buildings and improvements | ||
Summary of premises and equipment | ||
Premises and equipment, gross | 5,147 | 5,258 |
Equipment | ||
Summary of premises and equipment | ||
Premises and equipment, gross | $ 2,644 | $ 2,568 |
DEPOSITS (Details)
DEPOSITS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
DEPOSITS | ||
Demand | $ 30,773,000 | $ 27,718,000 |
On us accounts | 975,000 | 599,000 |
NOW | 32,810,000 | 30,036,000 |
Money market deposits | 66,256,000 | 61,617,000 |
Regular and other savings | 16,226,000 | 15,492,000 |
Total non-certificate accounts | 147,040,000 | 135,462,000 |
Term certificates less than $100,000 | 25,516,000 | 17,832,000 |
Term certificates of $100,000 or more | 67,952,000 | 54,432,000 |
Total certificate accounts | 93,468,000 | 72,264,000 |
Amount | ||
Within one year | 35,619,000 | 22,487,000 |
Greater than one year to two years | 32,376,000 | 22,885,000 |
Greater than two years to three years | 14,026,000 | 18,797,000 |
Greater than three years to four years | 10,009,000 | 6,238,000 |
Greater than four years to five years | 1,438,000 | 1,857,000 |
Total certificate accounts | $ 93,468,000 | $ 72,264,000 |
Weighted Average Rate | ||
Within one year (as a percent) | 1.30% | 1.02% |
Greater than one year to two years (as a percent) | 1.82% | 1.36% |
Greater than two years to three years (as a percent) | 1.69% | 1.78% |
Greater than three years to four years (as a percent) | 1.91% | 1.64% |
Greater than four years to five years (as a percent) | 2.00% | 1.74% |
Total certificate accounts (as a percent) | 1.62% | 1.40% |
Deposits. | $ 240,508,000 | $ 207,726,000 |
Brokered certificate accounts | 3,326,000 | 2,828,000 |
Certificate accounts obtained through a listing service | 22,129,000 | 29,437,000 |
Time deposit FDIC insurance denomination limit | 250,000 | |
Time deposit account insurance value | $ 19,663,000 | $ 15,329,000 |
FEDERAL HOME LOAN BANK ADVANC60
FEDERAL HOME LOAN BANK ADVANCES - Federal Home Loan Bank Advances (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Federal Home Loan Bank advances | ||
Weighted average rate (as a percent) | 0.73% | 0.44% |
Line-of-credit with FHLB | $ 2,000,000 | |
Amounts outstanding | 0 | |
Residential loans: | ||
Federal Home Loan Bank advances | ||
Amount of qualified collateral pledged on FHLB advances | 76,904,000 | $ 74,277,000 |
Mortgage-backed securities | ||
Federal Home Loan Bank advances | ||
Amount of qualified collateral pledged on FHLB advances | 19,308,000 | $ 16,590,000 |
Commercial real estate | ||
Federal Home Loan Bank advances | ||
Amount of qualified collateral pledged on FHLB advances | $ 24,914,000 |
FEDERAL HOME LOAN BANK ADVANC61
FEDERAL HOME LOAN BANK ADVANCES - Long-term, Fixed-rate FHLB Advances and Maturities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Amount | ||
Within one year | $ 8,500 | $ 5,500 |
Greater than one year to two years | 10,100 | 7,500 |
Greater than two years to three years | 4,500 | 8,600 |
Greater than three years to four years | 1,500 | 4,000 |
Greater than four years to five years | 1,500 | |
Total long-term FHLB Advances | $ 24,600 | $ 27,100 |
Weighted Average Rate | ||
Within one year (as a percent) | 1.94% | 1.88% |
Greater than one year to two years (as a percent) | 2.14% | 2.08% |
Greater than two years to three years (as a percent) | 1.90% | 2.32% |
Greater than three years to four years (as a percent) | 1.75% | 1.99% |
Greater than four years to five years (as a percent) | 1.75% | |
Total long-term FHLB Advances (as a percent) | 2.00% | 2.09% |
INCOME TAXES - Components of In
INCOME TAXES - Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current tax provision: | ||||||||||
Federal | $ 514 | $ 1,051 | ||||||||
State | 121 | 258 | ||||||||
Total current tax provision | 635 | 1,309 | ||||||||
Deferred tax benefit: | ||||||||||
Federal | (170) | (293) | ||||||||
State | (48) | (85) | ||||||||
Total deferred tax (benefit) provision | (218) | (378) | ||||||||
Total tax provision | $ 181 | $ 104 | $ 92 | $ 40 | $ 302 | $ 269 | $ 211 | $ 149 | $ 417 | $ 931 |
INCOME TAXES - Difference Betwe
INCOME TAXES - Difference Between Statutory and Effective Rates (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Difference between statutory federal income tax rate and effective tax rates | ||
Statutory rate (as a percent) | 34.00% | 34.00% |
Increase (decrease) resulting from: | ||
State taxes, net of federal tax benefit (as a percent) | 7.80% | 4.70% |
Bank-owned life insurance (as a percent) | 5.80% | 1.40% |
Stock compensation plans (as a percent) | 8.70% | 1.50% |
Interest income from municipal securities (as a percent) | (4.20%) | (0.80%) |
Merger related expense, non-deductible | 27.30% | |
Other, net (as a percent) | 0.40% | |
Effective tax rates (as a percent) | 68.20% | 38.00% |
INCOME TAXES - Deferred Tax Ass
INCOME TAXES - Deferred Tax Asset Included in Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | |||
Total deferred tax assets | $ 1,973 | $ 1,704 | |
Deferred tax liabilities: | |||
Total deferred tax liabilities | (640) | (639) | |
Net deferred tax asset | 1,333 | 1,065 | $ 635 |
State | |||
Deferred tax assets: | |||
Total deferred tax assets | 439 | 384 | |
Deferred tax liabilities: | |||
Total deferred tax liabilities | (141) | (141) | |
Federal Income Tax | |||
Deferred tax assets: | |||
Total deferred tax assets | 1,534 | 1,320 | |
Deferred tax liabilities: | |||
Total deferred tax liabilities | $ (499) | $ (498) |
INCOME TAXES - Tax Effect of De
INCOME TAXES - Tax Effect of Deferred Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Tax effects of item which gives rise to deferred taxes | ||||
Deferred compensation | $ 725 | $ 612 | ||
Net unrealized loss (gain) on securities available for sale | 21 | (29) | ||
Depreciation and amortization | (543) | (363) | ||
Allowance for loan losses | 1,042 | 964 | ||
Mortgage servicing rights | (94) | (207) | ||
Other, net | 182 | 88 | ||
Net deferred tax asset | $ 1,065 | $ 635 | $ 1,333 | $ 1,065 |
Summary of change in net deferred tax asset | ||||
Balance at beginning of period | 1,065 | 635 | ||
Deferred tax benefit | 218 | 378 | ||
Deferred tax effects of net unrealized (gain) loss on securities available for sale | 50 | 52 | ||
Balance at end of period | $ 1,333 | $ 1,065 |
INCOME TAXES - Federal Income T
INCOME TAXES - Federal Income Tax Reserve (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Deferred tax liability not provided | |
Percentage of amount actually used for purposes other than to absorb loan losses, limited to the amount of the reserve, that would be subject to taxation | 150.00% |
Deferred tax liability not provided | $ 290,000 |
Uncertain tax positions related to federal and state income tax matters | 0 |
Federal Income Tax | |
Deferred tax liability not provided | |
Federal income tax reserve for loan losses at the company's base year | $ 726,000 |
MINIMUM REGULATORY CAPITAL RE67
MINIMUM REGULATORY CAPITAL REQUIREMENTS - Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations (Details) - USD ($) $ in Thousands | Jan. 01, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Common Equity Tier 1 Capital, Amount | |||
Actual | $ 29,293 | ||
Minimum Capital Requirement | 9,968 | ||
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 14,398 | ||
Common Equity Tier 1, Ratio | |||
Actual (as a percent) | 13.20% | ||
Minimum Capital Requirement (as a percent) | 4.50% | ||
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions (as a percent) | 6.50% | ||
Other capital restrictions | |||
Number of previous years retained net income considered for dividend payment | 2 years | ||
Minimum | |||
Other capital restrictions | |||
Number Of Phase In Periods | 2 years | ||
Maximum | |||
Other capital restrictions | |||
Number Of Phase In Periods | 4 years | ||
The bank | |||
Total Capital to Risk Weighted Assets, Amount | |||
Actual | $ 33,177 | $ 31,701 | |
Minimum Capital Requirement | 19,645 | 17,721 | |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 24,556 | $ 22,151 | |
Total Capital to Risk Weighted Assets, Ratio | |||
Actual (as a percent) | 13.50% | 14.30% | |
Minimum Capital Requirement (as a percent) | 8.00% | 8.00% | |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions (as a percent) | 10.00% | 10.00% | |
Tier 1 Capital to Risk Weighted Assets, Amount | |||
Actual | $ 30,572 | $ 29,293 | |
Minimum Capital Requirement | 14,734 | 13,291 | |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 19,645 | $ 17,721 | |
Tier 1 Capital to Risk Weighted Assets, Ratio | |||
Actual (as a percent) | 12.40% | 13.20% | |
Minimum Capital Requirement (as a percent) | 6.00% | 6.00% | |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions (as a percent) | 8.00% | 8.00% | |
Common Equity Tier 1 Capital, Amount | |||
Actual | $ 30,572 | ||
Minimum Capital Requirement | 11,050 | ||
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 15,962 | ||
Common Equity Tier 1, Ratio | |||
Actual (as a percent) | 12.40% | ||
Minimum Capital Requirement (as a percent) | 4.50% | ||
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions (as a percent) | 6.50% | ||
Tier 1 Capital to Total Assets, Amount | |||
Actual | $ 30,572 | $ 29,293 | |
Minimum Capital Requirement | 12,605 | 11,754 | |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 15,756 | $ 14,693 | |
Tier 1 Capital to Total Assets, Ratio | |||
Actual (as a percent) | 9.70% | 10.00% | |
Minimum Capital Requirement (as a percent) | 4.00% | 4.00% | |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions (as a percent) | 5.00% | 5.00% | |
Other capital restrictions | |||
Tier 1 capital risk-weighted assets minimum ratio | 4.50% | ||
Tier 1 capital risk-weighted assets buffer beginning rate | 0.625% | ||
Increase in risk-weighted assets ratio | 0.625% | ||
Tier 1 capital risk-weighted assets buffer final | 2.50% |
EMPLOYEE BENEFIT PLANS - 401(k)
EMPLOYEE BENEFIT PLANS - 401(k) and ESOP Requirements (Details) | 12 Months Ended | |
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
EMPLOYEE BENEFIT PLANS | ||
Minimum employee age required to participate in the plan | item | 21 | |
Period an employee is required to be employed to participate in the plan | 1 year | |
Minimum hours an employee is required to work per year to participate in the plan | 1000 hours | |
Minimum voluntary contributions by participating employees (as a percent) | 1.00% | |
Maximum voluntary contributions by participating employees (as a percent) | 75.00% | |
Employer matching contribution (as a percent) | 50.00% | |
Percentage of base compensation matched by employer | 3.00% | |
Maximum discretionary contribution by employer as a percentage of employee's salary | 3.00% | |
Expense attributable to 401(k) plan | $ 152,000 | $ 146,000 |
Incentive compensation expense | 130,000 | 167,000 |
Expense attributable to executive supplemental retirement agreements | 181,000 | 139,000 |
Expense attributable to the plan amounted | $ 1,713,000 | $ 1,532,000 |
Employee Stock Ownership Plan | ||
Minimum employee age required to participate in the plan | item | 21 | |
Period of service to be completed to participate in the plan | 1 year | |
Amount borrowed for the purpose of purchasing shares of the entity's common stock under ESOP loan agreement | $ 1,237,000 | |
Number of remaining annual principal and interest payments | item | 10 | |
Annual principal and interest on ESOP loan agreement | $ 104,000 |
EMPLOYEE BENEFIT PLANS - ESOP R
EMPLOYEE BENEFIT PLANS - ESOP Remaining Principal Payable on Debt (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Remaining principal balance payable on the ESOP debt | ||
Years Ending 2017 | $ 75,000 | |
Years Ending 2018 | 78,000 | |
Years Ending 2019 | 80,000 | |
Years Ending 2020 | 83,000 | |
Years Ending 2021 | 86,000 | |
Thereafter | 472,000 | |
Total | 874,000 | |
Total compensation expenses applicable to ESOP | $ 155,000 | $ 132,000 |
EMPLOYEE BENEFIT PLANS - Shares
EMPLOYEE BENEFIT PLANS - Shares held by ESOP (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
EMPLOYEE BENEFIT PLANS | ||
Total compensation expenses applicable to ESOP | $ 155,000 | $ 132,000 |
Shares held by ESOP | ||
Allocated (in shares) | 82,451 | 74,624 |
Committed to be allocated (in shares) | 7,240 | 7,241 |
Unallocated (in shares) | 72,405 | 79,645 |
Paid out to participants (in shares) | (18,787) | (18,709) |
Total shares held by ESOP | 143,309 | 142,801 |
Fair value of unallocated ESOP shares | $ 1,872,000 | $ 1,507,000 |
EMPLOYEE BENEFIT PLANS - Option
EMPLOYEE BENEFIT PLANS - Options, Restricted Stock Awards and Restricted Sock Units (Details) - shares | Feb. 22, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | May 31, 2014 |
Share-based compensation plan | ||||
Maximum term of options | 10 years | |||
2009 Equity Incentive Plan | ||||
Share-based compensation plan | ||||
Shares authorized | 180,035 | |||
2014 Equity Incentive Plan | ||||
Share-based compensation plan | ||||
Shares authorized | 154,000 | |||
Stock Options | ||||
Share-based compensation plan | ||||
Options granted (in shares) | 33,500 | 30,000 | ||
Weighted-average assumptions of fair value of stock options | ||||
Expected dividends (as a percent) | 0.98% | 0.97% | ||
Expected term | 6 years 4 months 24 days | 6 years 4 months 24 days | ||
Expected volatility (as a percent) | 32.95% | 34.97% | ||
Risk-free interest rate (as a percent) | 1.47% | 1.82% | ||
Stock Options | 2009 Equity Incentive Plan | ||||
Share-based compensation plan | ||||
Options granted (in shares) | 33,500 | |||
Stock Options | 2014 Equity Incentive Plan | ||||
Share-based compensation plan | ||||
Shares authorized | 110,000 | |||
Stock Options | Directors and officers | ||||
Share-based compensation plan | ||||
Vesting period | 3 years | |||
Stock Options | Minimum | 2009 Equity Incentive Plan | ||||
Share-based compensation plan | ||||
Specified number of share awards allowed before stock repurchases are used to fund additional awards | 98,000 | |||
Restricted stock award | ||||
Share-based compensation plan | ||||
Restricted stock granted (in shares) | 16,500 | 20,000 | ||
Restricted stock award | 2009 Equity Incentive Plan | ||||
Share-based compensation plan | ||||
Restricted stock granted (in shares) | 16,500 | |||
Restricted stock award | Directors and officers | ||||
Share-based compensation plan | ||||
Vesting period | 5 years | |||
Restricted stock award | Minimum | 2009 Equity Incentive Plan | ||||
Share-based compensation plan | ||||
Specified number of share awards allowed before stock repurchases are used to fund additional awards | 39,200 | |||
Restricted stock awards and restricted stock units | 2014 Equity Incentive Plan | ||||
Share-based compensation plan | ||||
Shares authorized | 44,000 |
EMPLOYEE BENEFIT PLANS - Opti72
EMPLOYEE BENEFIT PLANS - Options (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Shares | ||
Exercised (in shares) | 1,198 | |
Stock Options | ||
Number of Shares | ||
Outstanding at beginning of year (in shares) | 89,275 | 61,681 |
Granted (in shares) | 33,500 | 30,000 |
Exercised (in shares) | 1,198 | |
Outstanding at end of period (in shares) | 122,775 | 89,275 |
Exercisable at end of period (in shares) | 51,740 | 34,417 |
Aggregate intrinsic value of outstanding options at end of period (in shares) | $ 1,272,000 | $ 438,000 |
Exercised (in dollars per share) | $ 9.48 | |
Cancelled (in dollars per share) | 9.90 | |
Weighted Average Exercise Price | ||
Outstanding at beginning of year (in dollars per share) | $ 14.02 | 12.13 |
Granted (in dollars per share) | 19.40 | 17.55 |
Exercised (in dollars per share) | $ 9.48 | |
Cancelled (in shares) | (1,208) | |
Outstanding at end of period (in dollars per share) | 15.49 | $ 14.02 |
Weighted average fair value of options granted during the period | ||
Weighted average fair value of options granted during the period (in dollars per share) | $ 6.07 | $ 5.91 |
EMPLOYEE BENEFIT PLANS - Opti73
EMPLOYEE BENEFIT PLANS - Options Outstanding and Exercisable (Details) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Options Outstanding | |
Number Outstanding at the end of the period (in shares) | 122,775 |
Weighted-Average Remaining Contractual Life | 7 years 1 month 24 days |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 15.49 |
Options Exercisable | |
Number Exercisable at the end of the period (in shares) | 51,740 |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 12.40 |
Weighted Average Exercise Price - $9.33 | |
Options Outstanding | |
Number Outstanding at the end of the period (in shares) | 8,712 |
Weighted-Average Remaining Contractual Life | 3 years 1 month 24 days |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 9.33 |
Options Exercisable | |
Number Exercisable at the end of the period (in shares) | 8,712 |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 9.33 |
Weighted Average Exercise Price - $9.55 | |
Options Outstanding | |
Number Outstanding at the end of the period (in shares) | 9,683 |
Weighted-Average Remaining Contractual Life | 4 years 1 month 24 days |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 9.55 |
Options Exercisable | |
Number Exercisable at the end of the period (in shares) | 9,683 |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 9.55 |
Weighted Average Exercise Price - $9.58 | |
Options Outstanding | |
Number Outstanding at the end of the period (in shares) | 8,570 |
Weighted-Average Remaining Contractual Life | 5 years 1 month 24 days |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 9.58 |
Options Exercisable | |
Number Exercisable at the end of the period (in shares) | 7,359 |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 9.58 |
Weighted Average Exercise Price - $14.00 | |
Options Outstanding | |
Number Outstanding at the end of the period (in shares) | 15,200 |
Weighted-Average Remaining Contractual Life | 6 years 1 month 24 days |
Options Exercisable | |
Number Exercisable at the end of the period (in shares) | 10,500 |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 14 |
Weighted Average Exercise Price - $14.98 | |
Options Outstanding | |
Number Outstanding at the end of the period (in shares) | 17,110 |
Weighted-Average Remaining Contractual Life | 7 years 1 month 24 days |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 14.98 |
Options Exercisable | |
Number Exercisable at the end of the period (in shares) | 8,286 |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 14.98 |
Weighted Average Exercise Price - $17.55 | |
Options Outstanding | |
Number Outstanding at the end of the period (in shares) | 30,000 |
Weighted-Average Remaining Contractual Life | 8 years 1 month 24 days |
Options Exercisable | |
Number Exercisable at the end of the period (in shares) | 7,200 |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 17.55 |
Weighted Average Exercise Price - $19.40 | |
Options Outstanding | |
Number Outstanding at the end of the period (in shares) | 33,500 |
Weighted-Average Remaining Contractual Life | 9 years 1 month 24 days |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 19.40 |
EMPLOYEE BENEFIT PLANS - Restri
EMPLOYEE BENEFIT PLANS - Restricted Stock and Additional Disclosures (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Shares | ||
Outstanding at beginning of year (in shares) | 44,866 | |
Outstanding at end of period (in shares) | 46,449 | 44,866 |
Stock Options | ||
Additional Disclosures | ||
Unrecognized share-based compensation expense related to non-vested options (in dollars) | $ 309,000 | |
Weighted average period for recognition of share-based compensation | 3 years 1 month 6 days | |
Share-based compensation expense recognized (in dollars) | $ 124,000 | $ 90,000 |
Tax benefit from recognized compensation expense (in dollars) | $ 16,000 | $ 12,000 |
Restricted stock award | ||
Number of Shares | ||
Outstanding at beginning of year (in shares) | 44,866 | 37,071 |
Granted (in shares) | 16,500 | 20,000 |
Vested (in shares) | (14,917) | (12,205) |
Outstanding at end of period (in shares) | 46,449 | 44,866 |
Weighted Average Grant Date Value | ||
Outstanding at beginning of year (in dollars per share) | $ 15.21 | $ 12.85 |
Granted (in dollars per share) | 19.40 | 17.55 |
Vested (in dollars per share) | 14.27 | 11.89 |
Outstanding at end of period (in dollars per share) | $ 17 | $ 15.21 |
Additional Disclosures | ||
Unrecognized share-based compensation expense related to non-vested restricted stock (in dollars) | $ 574,000 | |
Weighted average period for recognition of share-based compensation | 3 years | |
Share-based compensation expense recognized (in dollars) | $ 257,000 | $ 209,000 |
Tax benefit from recognized compensation expense (in dollars) | $ 103,000 | $ 84,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Loan commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Loan commitments | ||
Commitments to grant loans | $ 7,890 | $ 16,298 |
Home equity loans and lines of credit | ||
Loan commitments | ||
Unadvanced funds on loan | 10,349 | 8,513 |
Commercial lines of credit | ||
Loan commitments | ||
Unadvanced funds on loan | 18,218 | 14,713 |
Construction loans | ||
Loan commitments | ||
Unadvanced funds on loan | 16,264 | 12,423 |
Other unsecured personal lines of credit | ||
Loan commitments | ||
Unadvanced funds on loan | 274 | 287 |
Commercial real estate | ||
Loan commitments | ||
Unadvanced funds on loan | 5,237 | 5,618 |
Standby letters of credit | ||
Loan commitments | ||
Standby letters of credit | $ 227 | $ 62 |
Standby letters of credit | Maximum | ||
Loan commitments | ||
Term of letters of credit | 1 year |
COMMITMENTS AND CONTINGENCIES76
COMMITMENTS AND CONTINGENCIES - Lease commitments (Details) | 12 Months Ended | |
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Lease commitments | ||
2,017 | $ 132,000 | |
2,018 | 132,000 | |
2,019 | 132,000 | |
2,020 | 132,000 | |
2,021 | 137,000 | |
Thereafter | 1,288,000 | |
Total future minimum rental payments | 1,953,000 | |
Rental expense | $ 132,000 | $ 205,000 |
Lease agreement, one | ||
Lease commitments | ||
Extended additional term of operating lease | 10 years | |
Lease agreement, two | ||
Lease commitments | ||
Extended additional term of operating lease | 5 years | |
Number of additional five year terms for lease extensions | item | 2 |
COMMITMENTS AND CONTINGENCIES77
COMMITMENTS AND CONTINGENCIES - Employee Agreements and Other (Details) | 12 Months Ended |
Dec. 31, 2016item | |
Employment agreements | |
Employment agreements with Chief Executive Officer and Chief Financial Officer, initial term | 36 months |
Number of officers with whom change in control agreements are entered | 4 |
Change in control agreements, period | 12 months |
LOANS TO RELATED PARTIES (Detai
LOANS TO RELATED PARTIES (Details) - Executive Officers and Directors and their affiliates - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Loans to related parties | ||
Total loans to executive officers and directors and their affiliates | $ 1,947,000 | $ 2,017,000 |
Principal payments during the year | 374,000 | |
Principal advances during the year | $ 304,000 |
DERIVATIVE FINANCIAL INSTRUME79
DERIVATIVE FINANCIAL INSTRUMENTS (Details) | Dec. 31, 2016USD ($) |
Commitments to originate loan | |
Mortgage loan commitments | |
Derivatives amount | $ 0 |
FAIR VALUE OF ASSETS AND LIAB80
FAIR VALUE OF ASSETS AND LIABILITIES - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair value measurements | ||
Assets at Fair Value | $ 386 | |
Adjustments to Fair Value | (14) | |
Level 3 | ||
Fair value measurements | ||
Assets at Fair Value | $ 386 | |
Impaired Loans | ||
Fair value measurements | ||
Assets at Fair Value | $ 78 | |
Adjustments to Fair Value | (7) | |
Non-recurring basis | Impaired Loans | Level 3 | ||
Fair value measurements | ||
Assets at Fair Value | $ 78 |
FAIR VALUE OF ASSETS AND LIAB81
FAIR VALUE OF ASSETS AND LIABILITIES - Assets and Liabilities Measured at Fair Value on a Non-recurring Basis (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Capitalized mortgage servicing rights | ||
Moving average term of U.S. Treasury rate used to estimate the discount rate in order to determine the fair value of servicing rights (in years) | 10 years | |
Servicing Assets at Fair Value Assumptions Used to Estimate Fair Value Discount Rate Basis Spread on Variable Rate | 5.00% | |
Short-term FHLB advances | ||
Maturity period of short-term FHLB advances | 90 days | |
Securities available for sale | $ 19,772,000 | $ 19,028,000 |
Residential mortgage-backed securities | ||
Short-term FHLB advances | ||
Securities available for sale | 17,387,000 | 16,558,000 |
State and municipal | ||
Short-term FHLB advances | ||
Securities available for sale | 2,385,000 | 2,470,000 |
Total Assets at Fair Value | ||
Short-term FHLB advances | ||
Securities available for sale | 19,772,000 | 19,028,000 |
Level 2 | ||
Short-term FHLB advances | ||
Securities available for sale | 19,772,000 | 19,028,000 |
Recurring basis | ||
Short-term FHLB advances | ||
Securities available for sale | 19,772,000 | 19,028,000 |
Recurring basis | Residential mortgage-backed securities | ||
Short-term FHLB advances | ||
Securities available for sale | 17,387,000 | 16,558,000 |
Recurring basis | State and municipal | ||
Short-term FHLB advances | ||
Securities available for sale | 2,385,000 | 2,470,000 |
Recurring basis | Level 2 | ||
Short-term FHLB advances | ||
Securities available for sale | 19,772,000 | 19,028,000 |
Recurring basis | Level 2 | Residential mortgage-backed securities | ||
Short-term FHLB advances | ||
Securities available for sale | 17,387,000 | 16,558,000 |
Recurring basis | Level 2 | State and municipal | ||
Short-term FHLB advances | ||
Securities available for sale | 2,385,000 | $ 2,470,000 |
Non-recurring basis | ||
Short-term FHLB advances | ||
Liabilities at fair value | $ 0 |
FAIR VALUE OF ASSETS AND LIAB82
FAIR VALUE OF ASSETS AND LIABILITIES - Summary of Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Financial assets: | ||
Securities available for sale | $ 19,772 | $ 19,028 |
Fair Value | 2,490 | 3,128 |
Financial liabilities: | ||
Short-term FHLB advances | 17,250 | 23,500 |
Mortgagor's escrow accounts | 1,633 | 1,386 |
Carrying Amount | ||
Financial assets: | ||
Cash and cash equivalents | 6,129 | 7,758 |
Securities available for sale | 19,772 | 19,028 |
Fair Value | 2,503 | 3,112 |
FHLB stock | 2,341 | 2,933 |
Bankers Bank Northeast stock | 60 | 60 |
Loans held for sale | 271 | |
Loans, net | 277,371 | 253,983 |
Accrued interest receivable | 816 | 799 |
Capitalized mortgage servicing rights | 236 | 519 |
Financial liabilities: | ||
Deposits | 240,508 | 207,726 |
Short-term FHLB advances | 17,250 | 23,500 |
Long-term FHLB advances | 24,600 | 27,100 |
Mortgagor's escrow accounts | 1,633 | 1,386 |
Accrued interest payable | 58 | 59 |
Total Assets at Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 6,129 | 7,758 |
Securities available for sale | 19,772 | 19,028 |
Fair Value | 2,490 | 3,128 |
FHLB stock | 2,341 | 2,933 |
Bankers Bank Northeast stock | 60 | 60 |
Loans held for sale | 275 | |
Loans, net | 275,824 | 254,095 |
Accrued interest receivable | 816 | 799 |
Capitalized mortgage servicing rights | 601 | 1,100 |
Financial liabilities: | ||
Deposits | 241,264 | 207,894 |
Short-term FHLB advances | 17,250 | 23,500 |
Long-term FHLB advances | 24,699 | 27,255 |
Mortgagor's escrow accounts | 1,633 | 1,386 |
Accrued interest payable | 58 | 59 |
Level 1 | ||
Financial assets: | ||
Cash and cash equivalents | 6,129 | 7,758 |
FHLB stock | 2,341 | 2,933 |
Bankers Bank Northeast stock | 60 | 60 |
Loans held for sale | 275 | |
Accrued interest receivable | 816 | 799 |
Financial liabilities: | ||
Short-term FHLB advances | 17,250 | 23,500 |
Mortgagor's escrow accounts | 1,633 | 1,386 |
Accrued interest payable | 58 | 59 |
Level 2 | ||
Financial assets: | ||
Securities available for sale | 19,772 | 19,028 |
Fair Value | 2,490 | 3,128 |
Capitalized mortgage servicing rights | 601 | 1,100 |
Financial liabilities: | ||
Deposits | 241,264 | 207,894 |
Long-term FHLB advances | 24,699 | 27,255 |
Level 3 | ||
Financial assets: | ||
Loans, net | $ 275,824 | $ 254,095 |
AGREEMENT AND PLAN OF MERGER (D
AGREEMENT AND PLAN OF MERGER (Details) $ / shares in Units, $ in Millions | Dec. 31, 2016USD ($)item$ / shares |
Number of banks prior to the merger | item | 2 |
Bright Star Inc. | |
Share price | $ / shares | $ 26 |
Termination fee | $ | $ 2 |
CONDENSED PARENT COMPANY ONLY84
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS - Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | |||
Other assets | $ 2,030 | $ 1,891 | |
Total assets | 318,632 | 296,502 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Other liabilities | 2,485 | 2,377 | |
Stockholders' equity | 32,156 | 31,908 | $ 30,712 |
Total liabilities and stockholders' equity | 318,632 | 296,502 | |
Parent | |||
ASSETS | |||
Non-interest bearing deposit in the Bank | 604 | 1,472 | |
Loan to the Bank ESOP | 874 | 947 | |
Investment in subsidiary | 30,531 | 29,340 | |
Other assets | 266 | 191 | |
Total assets | 32,275 | 31,950 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Other liabilities | 119 | 42 | |
Stockholders' equity | 32,156 | 31,908 | |
Total liabilities and stockholders' equity | $ 32,275 | $ 31,950 |
CONDENSED PARENT COMPANY ONLY85
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS - Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed statements of operations of parent Company | ||||||||||
Non-interest expense | $ 2,718 | $ 2,586 | $ 2,601 | $ 2,637 | $ 2,167 | $ 2,127 | $ 2,142 | $ 2,254 | $ 10,542 | $ 8,690 |
Income before income taxes | 108 | 139 | 244 | 120 | 782 | 694 | 574 | 399 | 611 | 2,449 |
Applicable income tax benefit | (181) | (104) | (92) | (40) | (302) | (269) | (211) | (149) | (417) | (931) |
Net income | $ (73) | $ 35 | $ 152 | $ 80 | $ 480 | $ 425 | $ 363 | $ 250 | 194 | 1,518 |
Parent | ||||||||||
Condensed statements of operations of parent Company | ||||||||||
Interest income ESOP loan | 31 | 33 | ||||||||
Non-interest expense | 627 | 119 | ||||||||
Income before income taxes | (596) | (86) | ||||||||
Applicable income tax benefit | 48 | 34 | ||||||||
Loss before equity in undistributed net income of subsidiary | (548) | (52) | ||||||||
Equity in undistributed net income of subsidiary | 742 | 1,570 | ||||||||
Net income | $ 194 | $ 1,518 |
CONDENSED PARENT COMPANY ONLY86
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS - Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||||||||||
Net income | $ (73) | $ 35 | $ 152 | $ 80 | $ 480 | $ 425 | $ 363 | $ 250 | $ 194 | $ 1,518 |
Adjustments to reconcile net income to net cash used by operating activities: | ||||||||||
Net cash provided by operating activities | 1,012 | 4,802 | ||||||||
Cash flows from investing activities | ||||||||||
Net cash used by investing activities | (26,525) | (22,870) | ||||||||
Cash flows from financing activities: | ||||||||||
Repurchase of common stock | (74) | (369) | ||||||||
Cash dividends paid on common stock | (347) | (323) | ||||||||
Exercise of stock options | 11 | |||||||||
Net cash provided by financing activities | 23,884 | 20,908 | ||||||||
Net change in cash and cash equivalents | (1,629) | 2,840 | ||||||||
Cash and cash equivalents at beginning of period | 7,758 | 4,918 | 7,758 | 4,918 | ||||||
Cash and cash equivalents at end of period | 6,129 | 7,758 | 6,129 | 7,758 | ||||||
Parent | ||||||||||
Cash flows from operating activities: | ||||||||||
Net income | 194 | 1,518 | ||||||||
Adjustments to reconcile net income to net cash used by operating activities: | ||||||||||
Equity in undistributed income of subsidiary | (742) | (1,570) | ||||||||
Other, net | 28 | (9) | ||||||||
Net cash provided by operating activities | (520) | (61) | ||||||||
Cash flows from investing activities | ||||||||||
Repayment of ESOP loan | 73 | 71 | ||||||||
Net cash used by investing activities | 73 | 71 | ||||||||
Cash flows from financing activities: | ||||||||||
Repurchase of common stock | (74) | (369) | ||||||||
Cash dividends paid on common stock | (347) | (323) | ||||||||
Exercise of stock options | 11 | |||||||||
Net cash provided by financing activities | (421) | (681) | ||||||||
Net change in cash and cash equivalents | (868) | (671) | ||||||||
Cash and cash equivalents at beginning of period | $ 1,472 | $ 2,143 | 1,472 | 2,143 | ||||||
Cash and cash equivalents at end of period | $ 604 | $ 1,472 | $ 604 | $ 1,472 |
QUARTERLY DATA (UNAUDITED) (Det
QUARTERLY DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
QUARTERLY DATA (UNAUDITED) | ||||||||||
Interest and dividend income | $ 3,277 | $ 3,176 | $ 3,194 | $ 3,163 | $ 3,150 | $ 2,989 | $ 2,881 | $ 2,856 | $ 12,810 | $ 11,876 |
Interest expense | 662 | 628 | 604 | 574 | 489 | 431 | 408 | 398 | 2,468 | 1,726 |
Net interest and dividend income | 2,615 | 2,548 | 2,590 | 2,589 | 2,661 | 2,558 | 2,473 | 2,458 | 10,342 | 10,150 |
Provision for loan losses | 53 | 67 | 74 | 62 | 111 | 27 | 194 | 200 | ||
Interest Income (Expense), after Provision for Loan Loss | 2,562 | 2,481 | 2,590 | 2,515 | 2,599 | 2,447 | 2,473 | 2,431 | 10,148 | 9,950 |
Non-interest income | 264 | 244 | 255 | 242 | 350 | 374 | 243 | 222 | 1,005 | 1,189 |
Non-interest expense | 2,718 | 2,586 | 2,601 | 2,637 | 2,167 | 2,127 | 2,142 | 2,254 | 10,542 | 8,690 |
Income before income taxes | 108 | 139 | 244 | 120 | 782 | 694 | 574 | 399 | 611 | 2,449 |
Income tax provision (benefit) | 181 | 104 | 92 | 40 | 302 | 269 | 211 | 149 | 417 | 931 |
Net income | $ (73) | $ 35 | $ 152 | $ 80 | $ 480 | $ 425 | $ 363 | $ 250 | $ 194 | $ 1,518 |
Net income per share: | ||||||||||
Basic (in dollars per share) | $ (0.04) | $ 0.02 | $ 0.09 | $ 0.05 | $ 0.27 | $ 0.24 | $ 0.21 | $ 0.14 | $ 0.11 | $ 0.87 |
Diluted (in dollars per share) | $ (0.04) | $ 0.02 | $ 0.09 | $ 0.05 | $ 0.27 | $ 0.24 | $ 0.21 | $ 0.14 | $ 0.11 | $ 0.86 |