Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 01, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | Coastway Bancorp, Inc. | ||
Entity Central Index Key | 1,585,023 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
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 | $ 48.4 | ||
Entity Common Stock, Shares Outstanding | 4,799,179 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Cash and cash equivalents: | ||
Cash and due from banks | $ 3,041 | $ 2,936 |
Interest-earning deposits | 15,281 | 11,646 |
Total cash and cash equivalents | 18,322 | 14,582 |
Certificates of deposit | 6,074 | 3,016 |
Federal Home Loan Bank stock, at cost | 5,283 | 3,207 |
Loans, net of allowance for loan losses of $2,194 and $1,942, respectively | 467,023 | 383,909 |
Loans held for sale | 18,952 | 10,995 |
Premises and equipment, net | 31,407 | 31,938 |
Accrued interest receivable | 1,414 | 1,253 |
Real estate held for sale | 3,305 | 3,831 |
Foreclosed real estate | 710 | 1,285 |
Bank-owned life insurance | 4,326 | 4,191 |
Net deferred tax asset | 815 | 1,114 |
Other assets | 7,506 | 6,505 |
Total assets | 565,137 | 465,826 |
Deposits: | ||
Interest-bearing | 277,559 | 270,041 |
Non-interest-bearing | 95,960 | 73,503 |
Total deposits | 373,519 | 343,544 |
Borrowed funds | 115,500 | 47,800 |
Accrued expenses and other liabilities | 5,196 | 3,978 |
Total liabilities | $ 494,215 | $ 395,322 |
Commitments and contingencies (Note 6 and Note 10) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value; 20,000,000 shares authorized, none issued or outstanding | ||
Common stock, $0.01 par value; 50,000,000 shares authorized; 4,822,279 and 4,949,179 issued and outstanding at December 31, 2015 and 2014 | $ 48 | $ 49 |
Additional paid-in capital | 46,094 | 47,527 |
Retained earnings | 28,697 | 27,069 |
Unearned compensation - Employee Stock Ownership Plan (ESOP) | (3,643) | (3,801) |
Accumulated other comprehensive loss | (274) | (340) |
Total stockholders' equity | 70,922 | 70,504 |
Total liabilities and stockholders' equity | $ 565,137 | $ 465,826 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Consolidated Balance Sheets | ||
Loans, allowance for loan losses | $ 2,194 | $ 1,942 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 4,822,279 | 4,949,179 |
Common stock, shares outstanding | 4,822,279 | 4,949,179 |
Consolidated Statements of Net
Consolidated Statements of Net Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Interest income: | ||
Interest and fees on loans | $ 17,640 | $ 15,451 |
Other interest income | 187 | 141 |
Total interest income | 17,827 | 15,592 |
Interest expense: | ||
Interest on deposits | 2,038 | 2,300 |
Interest on borrowed funds | 189 | 96 |
Total interest expense | 2,227 | 2,396 |
Net interest income | 15,600 | 13,196 |
Provision (credit) for loan losses | 496 | 432 |
Net interest income after provision for loan losses | 15,104 | 12,764 |
Non-interest income: | ||
Customer service fees | 3,113 | 3,063 |
Net gain on sales of loans and other mortgage banking income | 3,258 | 2,562 |
Bank-owned life insurance income | 135 | 132 |
Other income | 117 | 150 |
Total non-interest income | 6,623 | 5,907 |
Non-interest expenses: | ||
Salary and employee benefits | 9,667 | 9,301 |
Occupancy and equipment | 3,085 | 2,732 |
Data processing | 1,699 | 1,668 |
Deposit servicing | 762 | 781 |
Professional fees | 692 | 707 |
FDIC insurance assessment | 374 | 338 |
Advertising | 270 | 239 |
Impairment loss on real estate held for sale | 581 | 1,099 |
Foreclosed real estate | 211 | 201 |
Contribution to Coastway Cares Charitable Foundation II | 1,521 | |
Other general and administrative | 1,605 | 1,579 |
Total non-interest expenses | 18,946 | 20,166 |
Income (loss) before income taxes | 2,781 | (1,495) |
Income tax expense (benefit) | 1,153 | (530) |
Net income (loss) | $ 1,628 | $ (965) |
Weighted average common shares outstanding (basic and diluted) | 4,529 | |
Per share information: | ||
Earnings (loss) per common share (basic and diluted) | $ 0.36 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Comprehensive Income (Loss) | ||
Net income (loss) | $ 1,628 | $ (965) |
Defined benefit pension plan: | ||
Gains (losses) arising during the year | 52 | (259) |
Actuarial gain (loss) amortized through salary and employee expense | 58 | 18 |
Tax effect | (44) | 96 |
Net-of-tax amount | 66 | (145) |
Comprehensive income (loss) | $ 1,694 | $ (1,110) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Unearned Compensation-ESOP | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2013 | $ 28,034 | $ (195) | $ 27,839 | |||
Increase (Decrease) in Stockholders' Equity | ||||||
Comprehensive (loss) income | (965) | (145) | (1,110) | |||
Issuance of common stock for initial public offering, net of expenses of $1,926 | $ 48 | $ 46,297 | 46,345 | |||
Issuance of common stock for initial public offering, net of expenses (in shares) | 4,827,125 | |||||
Issuance of common stock to Coastway Cares Charitable Foundation II | $ 1 | 1,220 | 1,221 | |||
Issuance of common stock to Coastway Cares Charitable Foundation II (in shares) | 122,054 | |||||
Common stock purchased by the ESOP (395,934 shares) | $ (3,959) | (3,959) | ||||
ESOP shares allocated (15,837 shares) | 10 | 158 | 168 | |||
Balance at Dec. 31, 2014 | $ 49 | 47,527 | 27,069 | (3,801) | (340) | 70,504 |
Balance (in shares) at Dec. 31, 2014 | 4,949,179 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Common stock repurchased | $ (1) | (1,454) | $ (1,455) | |||
Common stock repurchased (in shares) | (126,900) | (126,900) | ||||
Comprehensive (loss) income | 1,628 | 66 | $ 1,694 | |||
ESOP shares allocated (15,837 shares) | 21 | 158 | 179 | |||
Balance at Dec. 31, 2015 | $ 48 | $ 46,094 | $ 28,697 | $ (3,643) | $ (274) | $ 70,922 |
Balance (in shares) at Dec. 31, 2015 | 4,822,279 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2014USD ($)shares | |
Consolidated Statement of Changes in Stockholders' Equity | |
Issuance of common stock for initial public offering, expenses (in dollars) | $ | $ 1,926 |
ESOP shares issued | 395,934 |
ESOP shares allocated, number of shares | (15,837) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 1,628 | $ (965) |
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | ||
Provision (credit) for loan losses | 496 | 432 |
Loans originated for sale | (171,486) | (134,805) |
Loans sold | 166,102 | 134,914 |
Gain on sale of mortgage loans, net | (2,573) | (2,575) |
Gain on sale of portfolio loans sold | (328) | |
Amortization of deferred loan costs | 818 | 678 |
Loss on foreclosed real estate | 126 | 129 |
Income from Bank-owned life insurance income | (135) | (132) |
Gain on sale of premises and equipment | (15) | |
Impairment loss on real estate held for sale | 581 | 1,099 |
Depreciation and amortization expense | 1,277 | 1,108 |
Deferred income tax expense (benefit) | 255 | (578) |
Issuance of common stock to Coastway Cares Charitable Foundation II | 1,221 | |
ESOP expense | 179 | 168 |
Net change in: | ||
Accrued interest receivable | (161) | (159) |
Other, net | 327 | (1,324) |
Net cash used in operating activities | (2,894) | (804) |
Cash flows from investing activities: | ||
Purchase of certificates of deposit | (3,058) | (3,016) |
Proceeds from redemption of FHLB stock | 331 | |
Purchase of FHLB stock | (2,076) | (844) |
Loan originations net of principal payments | (32,008) | (45,222) |
Purchases of loans from third party originators | (57,383) | (12,066) |
Proceeds from portfolio loans sold | 4,492 | |
Proceeds from sale of real estate held for sale | 1,887 | |
Proceeds from sale of foreclosed real estate, net | 1,248 | 1,130 |
Purchases of premises and equipment | (801) | (10,749) |
Net cash used in investing activities | (89,586) | (68,549) |
Cash flows from financing activities: | ||
Net increase in deposits | 29,975 | 13,628 |
Net change in short-term borrowed funds | 69,000 | 20,500 |
Repayments of long-term borrowed funds | (1,300) | (700) |
Repurchase of common stock | (1,455) | |
Issuance of common stock for initial public offering | 46,345 | |
Stock subscriptions received | (43,398) | |
Purchase of common stock by ESOP | (3,959) | |
Net cash provided by (used in) financing activities | 96,220 | 32,416 |
Net increase (decrease) in cash and cash equivalents | 3,740 | (36,937) |
Cash and cash equivalents at beginning of the year | 14,582 | 51,519 |
Cash and cash equivalents at end of the year | 18,322 | 14,582 |
Supplemental cash flow information: | ||
Interest paid on deposits | 2,038 | 2,304 |
Interest paid on borrowed funds | 177 | 94 |
Income taxes paid | 596 | 202 |
Supplemental non-cash Transactions | ||
Loans transferred to foreclosed real estate | 799 | 964 |
Real estate transferred from premises and equipment to real estate held for investment | $ 55 | $ 3,302 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations and Basis of Presentation Coastway Bancorp, Inc., a Maryland chartered stock corporation ("Company" or "Corporation"), was formed to serve as the holding company for Coastway Community Bank. Coastway Community Bank (the "Bank") provides a variety of financial services to individuals and small businesses throughout Rhode Island. Its primary deposit products are savings, demand, money market and term certificate accounts and its primary lending products are residential and commercial mortgage and business loans. Prior to January 14, 2014, the Bank was 100% owned by Coastway Bancorp, LLC ("LLC") and the LLC was 100% owned by Coastway Bancorp, MHC ("MHC"). The MHC, a state-chartered mutual holding company and its wholly-owned subsidiary, the LLC were formed on February 1, 2013. The consolidated financial statements at and for the years ended December 31, 2015 and 2014 include the accounts of the Corporation and the Bank. All significant intercompany balances and transactions have been eliminated in consolidation. Stock Conversion On August 22, 2013, the Board of Directors of the MHC, LLC and the Bank adopted the Plan of Conversion and Reorganization to convert the MHC from the mutual holding company form of organization to a stock holding company form of organization ("Conversion") On January 14, 2014, the Conversion was completed and Coastway Bancorp, Inc. became the parent holding company for Coastway Community Bank. A total of 4,827,125 shares of Corporation common stock were sold to depositors and to the general public, including those issued to the Corporation's tax-qualified employee benefit plans, at $10.00 per share through which the Corporation received net offering proceeds of approximately $46.3 million. Also, on January 14, 2014, the Corporation contributed $300,000 in cash and 122,054 shares of common stock to Coastway Cares Charitable Foundation II, which together totaled $1.5 million or 3.15% of the gross proceeds of the offering, which was recorded as a component of non-interest expense in the first quarter of 2014. The total number of shares of common stock outstanding upon completion of the Conversion was 4,949,179 shares. In connection with the Conversion, the Corporation implemented an employee stock ownership plan ("ESOP"), to provide eligible employees the opportunity to own corporation stock. This plan is a tax-qualified retirement plan for the benefit of all Company employees. The ESOP acquired 395,934 shares of the stock issued in the Conversion which were financed by a loan from the Corporation. See Note 9. As part of the Conversion, Coastway Bancorp, Inc. established a liquidation account in an amount equal to the net worth of Coastway Bancorp, MHC as of the date of the latest consolidated balance sheet appearing in the final prospectus distributed in connection with the Conversion, or $27.5 million. The liquidation account will be maintained for the benefit of eligible account holders and supplemental eligible account holders who maintain their accounts at Coastway Community Bank after the Conversion. The liquidation account will be reduced annually to the extent that such account holders have reduced their qualifying deposits as of each fiscal year end. Subsequent increases will not restore an account holder's interest in the liquidation account. In the event of a complete liquidation of the Corporation or the Bank, each eligible account holder will be entitled to receive balances for accounts then held. Subsequent to the Conversion, the Corporation may not declare or pay dividends on, and may not repurchase, any of its shares of common stock if the effect thereof would cause stockholders' equity to be reduced below the liquidation account balance, applicable regulatory capital maintenance requirements, or if such declaration, payment or repurchase would otherwise violate regulatory requirements. Use of Estimates To prepare consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, 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, the valuation of deferred tax assets and the valuation of real estate held for sale. Reclassification Certain amounts in the 2014 consolidated financial statements have been reclassified to conform to the 2015 presentation. Reclassifications had no effect on prior year net income or stockholders' equity. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, amounts due from banks and interest-earning deposits. Interest-earning deposits are carried at cost which approximates fair value and mature either daily or on demand. Federal Home Loan Bank Stock The Bank, as a member of the Federal Home Loan Bank ("FHLB") system, is required to maintain an investment in capital stock of the FHLB. Based on the redemption provisions of the FHLB, the stock has no quoted market value, is carried at cost, and is classified as a restricted security. At its discretion, the FHLB may declare cash or stock dividends on the stock which are reported as income. The Bank reviews for impairment based on the ultimate recoverability of the cost basis in the FHLB stock. As of and at December 31, 2015 and 2014, no impairment has been recognized. Loans The Bank's lending activities are conducted principally in Rhode Island. Loans purchased from third party originators are generally collateralized by properties in New England, primarily in Massachusetts. The Bank grants one-to-four family residential loans as well as commercial business, commercial real estate and consumer loans. Most loans granted by the Bank are collateralized by real estate. The ability and willingness of the one-to-four family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of economic activity within the borrowers' geographic area and real estate values. The ability and willingness of commercial loan borrowers to repay their loan commitments is generally dependent on the state of the real estate economic sector in the borrowers' geographic area and the general economy. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, 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 fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. Individually purchased one- to four-family loans are generally purchased at a premium, which is amortized into income as an adjustment of the related loan yield using the interest method. For loan disclosures and the allowance for loan losses estimate, the Bank's loan portfolio includes residential 1-4 family real estate, home equity loans and lines of credit, commercial real estate, commercial business, commercial construction, Small Business Administration ("SBA") and consumer segments. The accrual of interest on loans is discontinued at the time the loan is 90 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual 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 nonaccrual 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. 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 uncollectibility of a loan balance is confirmed. For impaired loans that are deemed collateral dependent, the recorded balance of the loan is reduced to fair value of the collateral net of estimated selling costs by charge off. The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general and specific components, as further described below. General component of the allowance for loan losses The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by loan segments. Management uses a ten year historical loss period to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; charge off trends in the past three years; weighted average risk weightings; loan concentrations; management's assessment of internal factors; and management's assessment of external factors such as interest rates, real estate markets and local and national economic factors. There were no changes in the Bank's policies or methodology pertaining to the general component of the allowance for loan losses during the year ended December 31, 2015. Refer to Note 4 for additional information regarding the amounts attributable to historical loss and qualitative factors. The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows: One-to-four family residential real estate and home equity—Loans in these segments are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The Bank generally has first liens on one-to-four family residential real estate loans and first or second liens on property securing home equity loans and lines of credit. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in these segments. Commercial—Commercial loan segments include commercial real estate, commercial and industrial loans for businesses and construction financing for business/properties located principally in Rhode Island. For commercial real estate loans, the underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Non-real estate commercial loans are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. Commercial construction generally represent loans to finance construction of retail and office space. Commercial real estate loans also include loans made under the SBA 504 program which is an economic development program which finances the expansion of small businesses. The Bank generally provides 50% of the projected costs, and the loan is secured by a first lien on the commercial property. The SBA does not provide a guarantee on loans made under the SBA 504 program. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment. Management monitors the cash flows of these loans. SBA—Loans in this segment include commercial loans underwritten using SBA guidelines for the SBA's 7(a) program and include both guaranteed and unguaranteed loans. Under the SBA 7(a) Program, loans may qualify for guarantees up to 85% of principal and accrued interest up to a maximum SBA guarantee of $3.75 million per borrower and related entities. The Bank does not treat the SBA guarantee as a substitute for a borrower meeting reasonable credit standards. SBA guarantees are generally sought on loans that exhibit minimum capital levels, a short time in business, lower collateral coverage or maximum loan terms beyond the Bank's normal underwriting criteria. For a number of SBA loans, the Bank has sold portions of certain loans and retains the unguaranteed portion while continuing to service the entire loan. The guaranteed portion of SBA loans in the Bank's portfolio is not allocated a general reserve because the Bank has not experienced losses on such loans and management expects the guarantees will be effective, if necessary. Consumer—This segment includes unsecured and vehicle loans and repayment is dependent on the credit quality of the individual borrower. Specific component of the allowance for loan losses The specific component relates to loans that are classified as impaired. Commercial and SBA loans are evaluated for impairment on a loan-by-loan basis. Impairment is measured by either the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows or collateral value of the impaired loan is lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and performing residential real estate loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement. 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. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The Bank periodically may agree to modify the contractual terms of loans, such as a reduction in interest rate of the loan for some period of time, an extension of the maturity date or an extension of time to make payments with the delinquent payments added to the end of the loan term. 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. Loans on non-accrual status at the date of modification are initially classified as non-accrual troubled debt restructurings. TDRs may be returned to accrual status after a period of satisfactory payment performance per the terms of the restructuring, generally six months of current payments. Loans Held for Sale and Mortgage Banking Activities Effective January 1, 2015, the Bank elected to utilize the fair value option to record loans held for sale at fair value at each balance sheet date. The fair value includes the servicing value of the loans as management sells all loans held for sale servicing released. Prior to January 1, 2015, loans originated and intended for sale in the secondary market were carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, were recognized through a valuation allowance by charges to non-interest income. One-to-four family residential loans are sold with servicing released. Gains and losses on loan sales are recorded in non-interest income as gains on sale of loans and other mortgage banking income. Mortgage Banking Commitments to fund certain mortgage loans (interest rate locks) to be sold in the secondary market and forward loan commitments for the future delivery of mortgage loans to third party investors, including To Be Announced securities ("TBAs") and mandatory forward commitments, are considered derivatives. These mortgage banking related derivatives are not designated in hedge relationships and are accounted for at fair value, with change in fair value recorded in net gain on sales of loans and other mortgage banking income on the income statement. Best efforts commitments are accounted for at fair value, with change in fair value recorded in net gain on sales of loans and other mortgage banking income on the income statement, as management has elected fair value accounting for these commitments. Derivative Loan Commitments Mortgage loan commitments are considered derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. The Bank enters into commitments to fund residential mortgage loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. Outstanding derivative loan commitments expose the Bank to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. If interest rates increase, the value of these loan commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases. Forward Loan Sale Commitments To protect against the price risk inherent in derivative loan commitments, the Bank utilizes best efforts forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the derivative loan commitments. With a best efforts contract, the Bank commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. Generally, the price the investor will pay the seller for an individual loan is specified prior to the loan being funded (e.g., on the same day the lender commits to lend funds to a potential borrower). For TBAs, the Bank sells a security in the open market with a promise to deliver a pool of loans with an aggregate specified principal amount and quality to the investor at a specified point in the future. If the Bank fails to deliver the pool of loans, the Bank will repurchase the security at the market price on the date of repurchase. Fair value changes in mortgage banking derivatives and commitments to sell fixed-rate residential mortgages subsequent to inception are estimated using anticipated market prices based on pricing indications provided from syndicate banks and consideration of pull-through and fallout rates derived from the Bank's internal data and adjusted using management judgment. Mortgage banking derivatives include the non-refundable costs of originating the loan based on the Bank's internal cost analysis that is not observable. Fluctuations in interest rates may impact estimated pull-through rates on mortgage originations, which in turn may affect the valuation of forward loan sale commitments. Premises and Equipment Land is carried at cost. Buildings and equipment are carried at cost, less accumulated depreciation and amortization computed on the straight-line method over the estimated useful lives of the assets or the expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured. Real Estate Held for Sale Real estate held for sale is carried at the lower of cost or fair value, less cost to sell. Real estate is classified as held for sale when management has committed to a plan to sell the asset; the asset is available for immediate sale in its present condition; an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition of a sale within one year; the asset is being actively marketed for sale; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. In June 2013, upon expiration of the letter of intent from an expected lessee, the Bank reclassified the $1.4 million carrying value of the undeveloped land previously classified as real estate held for investment at December 31, 2012 to real estate held for sale as management intended to sell the land and all of the above criteria have been met. In June, 2013 the Bank reclassified land and building previously purchased for the potential relocation of the corporate headquarters, with a carrying value of $2.6 million, from premises and equipment to real estate held for sale as the Bank determined that the costs to improve the property for its intended use exceeded its initial expectations. The land and building were sold in October 2014. The Bank recorded a $482,000 impairment loss in non-interest expenses in 2013 upon transfer of the aforementioned properties to real estate held for sale. An additional loss of $393,000 was recorded upon entering into a Purchase & Sale agreement ("P&S") in 2014. During the third quarter of 2015, the Bank accepted an offer and entered into a P&S agreement for $1.1 million to sell the undeveloped land and recorded impairment of $195,000 in connection with the acceptance of the offer. The land was sold in February, 2016. In August 2014, the Bank reclassified its previous headquarters, One Coastway Plaza (the "Plaza"), located in Cranston from premises and equipment to real estate held for sale as the Bank relocated its corporate headquarters to Warwick, and the Bank recorded an impairment loss of $706,000. In September 2015, the Bank entered into a P&S agreement for $2.4 million to sell the Plaza and recorded impairment of $386,000 in connection with the acceptance of the offer. The building was sold in January, 2016. The Bank financed the loan to acquire the property at market terms with an adequate down payment to meet the sales criteria. Foreclosed Real Estate Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value, less cost to sell, at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less costs to sell. Revenue and expenses from operations, changes in the valuation allowance, gains or losses on sales and any direct write-downs are included in foreclosed real estate expenses. Foreclosed real estate consists of residential real estate properties and a commercial building. Bank-owned Life Insurance Bank-owned life insurance policies on certain key executives are reflected in the Consolidated Balance Sheets at the amount that can be realized under the insurance contracts, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Changes in cash surrender value are reflected in non-interest income in the Consolidated Statements of Net Income (Loss) and are not subject to income taxes. Transfers of Financial Assets Transfers of an entire financial asset, a group of entire financial assets, or a participating interest in an entire financial asset 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 Bank, (2) the transferee obtains the right to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets. During the normal course of business, the Bank may transfer a portion of a financial asset, for example, a participation loan or the government guaranteed portion of a loan. In order to be eligible for sales treatment, the transfer of the portion of the loan must meet the criteria of a participating interest. If it does not meet the criteria of a participating interest, the transfer must be accounted for as a secured borrowing. In order to meet the criteria for a participating interest, all cash flows from the loan must be divided proportionately, the rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties and no loan holder has the right to pledge or exchange the entire loan. Defined Benefit Plan The compensation cost of an employee's pension benefit is recognized on the projected unit credit method over the employee's approximate service period. The aggregate cost method is utilized for funding purposes. The Bank accounts for its defined benefit pension plan using an actuarial model that allocates pension costs over the service period of employees in the plan. The Bank accounts for the over-funded or under-funded status of its defined benefit plan as an asset or liability in its balance sheet and recognizes changes in the funded status in the year in which the changes occur through other comprehensive income/loss. Other Retirement Plans Employee 401(K) expense represents the amount of matching contributions. Supplemental retirement expense allocates benefits over the remaining service term. Employee Stock Ownership Plan The cost of shares issued to the ESOP, but not yet allocated to participants, is shown as a reduction of stockholders' equity. Compensation expense is based on the market price of shares as they are committed to be released to participant accounts. Income Taxes Deferred income tax assets and liabilities are determined using the liability 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 basis 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. The Company does not have any uncertain tax positions at December 31, 2015 and 2014 which require accrual or disclosure. The Company records interest and penalties as part of income tax expense, if applicable. Earnings Per Common Share Basic earnings (loss) per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) 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 (loss) that would result from the assumed issuance. There were no potentially dilutive common stock equivalents as of December 31, 2015 and 2104. Earnings (loss) per share is not presented for the year ended December 31, 2014 as common shares had not been outstanding during the entire period. Unallocated ESOP shares are not deemed outstanding for the earnings per share calculation. Comprehensive Income/Loss Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the stockholders' equity section of the consolidated balance sheets, such items, along with net income/loss, are components of comprehensive income/loss. The Bank measures the pension plan assets and pension obligations on an annual basis and recognizes in the consolidated financial statements an asset or liability for the plan's funded status. Accumulated other comprehensive loss represents the actuarial loss that will be amortized through salary and employee benefits expense, and amounted to $456,000 and $566,000, at December 31, 2015 and 2014, respectively net of related tax effects of $182,000 and $226,000, respectively. Dividends The Company and the Bank are regulated enterprises and their abilities to pay dividends are subject to regulatory review and restrictions. Certain regulatory and statutory restrictions exist regarding dividends, loans, and advances from the Bank to the Compnay. The FDIC and the Federal Reserve have the authority to use their enforcement powers to prohibit dividend payments if, in their opinion, the payment of dividends would constitute an unsafe or unsound practice. Segments and Significant Group Concentrations of Credit Risk Management evaluates the Bank'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 Bank does not derive revenues from or have assets located in foreign countries, nor does it derive revenue from any single customer that represents 10% or more of the Bank's total revenues. Recent Accounting Pronouncements As an "emerging growth company," as defined in Title 1 of the Jumpstart Our Business Startups (JOBS) Act, the Corporation has elected to use the extended transition period to delay adoption of new or reissued accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, the consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. As of December 31, 2015, there is no significant difference in the comparability of the financial statements as a result of this extended transition period. In January 2014, the FASB issued ASU 2014-04, Receivables-Troubled Debt Restructurings by Creditors (Subtopic 310-40), which is intended to reduce diversity by clarifying when an in-substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The ASU also provides guidance on disclosures of the amount of foreclosed residential real estate properties and of the recorded investment in consumer mortgage loans that are in process of foreclosure. Under the extended transition period for the emerging growth company, the Corporation adopted this standard for the annual periods beginning after December 15, 2014 and for interim periods within annual periods beginning after December 15, 2015. The adoption of the standard was not material. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The ASU requires equity instruments (except those accounted for under the equity method of accounting or that result in consolidations 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 an equity investment that does not have a readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions. For public business entities, the standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2018 and interim periods within fiscal periods after December 15, 2019. We do not expect a significant impact upon adoption on January 1, 2019. |
RESTRICTIONS ON CASH AND AMOUNT
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS | 12 Months Ended |
Dec. 31, 2015 | |
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS | |
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS | 2. RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS The Bank is required to maintain average cash balances on hand or with the Federal Reserve Bank. At December 31, 2015 and 2014, the reserve balance amounted to $2.6 million and $2.2 million, respectively. |
CERTIFICATES OF DEPOSITS
CERTIFICATES OF DEPOSITS | 12 Months Ended |
Dec. 31, 2015 | |
CERTIFICATES OF DEPOSIT | |
CERTIFICATES OF DEPOSIT | 3. CERTIFICATES OF DEPOSIT At December 31, 2015, investments in certificates of deposit amounting to $3.0 million with an interest rate of 0.70% mature in December 2016 and $3.1 million with an interest rate of 0.65% mature in April 2016. Certificates of deposit are carried at cost which approximates fair value. |
LOANS
LOANS | 12 Months Ended |
Dec. 31, 2015 | |
LOANS | |
LOANS | 4. LOANS A summary of the balances of loans follows: December 31, 2015 2014 (In thousands) Residential real estate mortgage loans: 1 - 4 family $ $ Home equity loans and lines of credit Total residential real estate mortgage loans Commercial: Commercial real estate Commercial business Commercial construction SBA Total commercial loans Consumer Total loans Allowance for loan losses ) ) Net deferred loan costs Loans, net $ $ SBA loans carry a lower credit risk profile than standard commercial loans due to government guarantees inherent in SBA lending. Generally, loans with balances in excess of $150,000 have a 75% SBA guarantee, loans less than $150,000 have an 85% guarantee, and lines of credit have a 50% guarantee. Guaranteed portions of SBA loans total $24.8 million and $29.2 million at December 31, 2015 and 2014, respectively. Residential 1-4 family loans of $208.8 million and $134.1 million at December 31, 2015 and 2014 included purchased loans totaling $64.1 million and $11.9 million, respectively. Loans totaling $56.7 million were individually purchased during the year ended December 31, 2015 from third parties at a cost of $57.4 million and were underwritten based on the Bank's credit standards prior to purchase. The loans purchased from third parties are located in New England, primarily in Massachusetts. Activity in the allowance for loan losses and allocation of the allowance to loan segments follows: Year Ended December 31, 2015 Residential 1 - 4 Family Home Equity Commercial Real Estate Commercial Business Commercial Construction SBA Consumer Total (In thousands) Allowance for loan losses: Beginning balance $ $ $ $ $ $ $ $ Provisions (credit) for loan losses ) ) Loans charged-off ) ) — — — ) ) ) Recoveries — — — Ending balance $ $ $ $ $ $ $ $ December 31, 2015 Residential 1 - 4 Family Home Equity Commercial Real Estate Commercial Business Commercial Construction SBA Consumer Total (In thousands) Allowance for impaired loans $ $ $ — $ — $ — $ — $ $ Allowance for non-impaired loans Total allowance for loan losses $ $ $ $ $ $ $ $ Impaired loans $ $ $ $ — $ — $ $ $ Non-impaired loans Total loans $ $ $ $ $ $ $ $ Year Ended December 31, 2014 Residential 1 - 4 Family Home Equity Commercial Real Estate Commercial Business Commercial Construction SBA Consumer Total (In thousands) Allowance for loan losses: Beginning balance $ $ $ $ $ $ $ $ Provisions (credit) for loan losses ) ) Loans charged-off ) ) — — — ) ) ) Recoveries — — — Ending balance $ $ $ $ $ $ $ $ The allowance allocated by segment is as follows: December 31, 2014 Residential 1 - 4 Family Home Equity Commercial Real Estate Commercial Business Commercial Construction SBA Consumer Total (In thousands) Allowance for impaired loans $ $ $ — $ — $ — $ $ $ Allowance for non-impaired loans Total allowance for loan losses $ $ $ $ $ $ $ $ Impaired loans $ $ $ — $ — $ — $ $ $ Non-impaired loans Total loans $ $ $ $ $ $ $ $ Of the $2.0 million and $1.8 million of impaired SBA loans at December 31, 2015 and 2014, respectively, guaranteed portions amounted to $1.7 million and $1.4 million, respectively. The following is a summary of past due and non-accrual loans at December 31, 2015 and 2014: 30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days or more Past Due Total Past Due Past Due > 90 Days and Still Accruing Loans on Non-accrual (In thousands) December 31, 2015 Residential real estate: Residential 1 - 4 family $ $ $ $ $ — $ Home equity loans and lines of credit — Commercial real estate — — — Commercial business — — — — — — Commercial construction — — — — — — SBA — — — Consumer — — — — Total $ $ $ $ $ — $ December 31, 2014 Residential real estate: Residential 1 - 4 family $ — $ $ $ $ — $ Home equity loans and lines of credit — Commercial real estate — — — — — — Commercial — — — — Commercial construction — — — — — — SBA — — Consumer — — — — Total $ $ $ $ $ — $ The following is information pertaining to impaired loans: December 31, 2015 December 31, 2014 Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance (Dollars in thousands) Impaired loans without a valuation allowance: Residential real estate: Residential 1 - 4 family $ $ $ — $ $ $ — Home equity loans and lines of credit — — Commercial real estate — — — — SBA — — Consumer — — — — Total $ $ $ — $ $ $ — Impaired loans with a valuation allowance: Residential real estate: Residential 1 - 4 family $ $ $ $ $ $ Home equity loans and lines of credit SBA — — — Consumer Total $ $ $ $ $ $ Year ended December 31, 2015 Year ended December 31, 2014 Average Recorded Investment Interest Income Recognized Interest Income Recognized on Cash Basis Average Recorded Investment Interest Income Recognized Interest Income Recognized on Cash Basis (Dollars in thousands) Residential real estate: Residential 1 - 4 family $ $ $ $ $ $ Home equity loans and lines of credit Commercial real estate — — — SBA Consumer — — — Total $ $ $ $ $ $ No additional funds are committed to be advanced in connection with impaired loans at December 31, 2015 and 2014. The following is a summary of troubled debt restructurings for the years ended December 31, 2015 and 2014: Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment (In thousands) Year Ended December 31, 2015 Residential 1 - 4 family $ $ Home equity and lines of credit Commercial real estate SBA Year Ended December 31, 2014 Residential 1 - 4 family $ $ Home equity and lines of credit SBA Consumer — — The troubled debt restructurings described above had a $2,300 and $12,000 impact to the allowance for loan losses and resulted in $11,000 and no charge-offs for the year ended December 31, 2015 and 2014, respectively. Troubled debt restructurings totaled $6.6 million and $7.2 million of which $3.5 million and $2.9 million are on accrual at December 31, 2015 and 2014. TDRs of $6.6 million had specific reserves of $56,000 at December 31, 2015. TDRs of $7.2 million had specific reserves of $141,000 at December 31, 2014. The terms for loan modifications are determined on a loan-by-loan basis. In connection with troubled debt restructurings, terms may be modified to fit the ability of the borrower to repay in line with their current financial status, which may include a temporary reduction in the interest rate to market rate or below, a change in the terms to grant principal or interest deferments, or movement of past due amounts to the back-end of the loan or refinancing. All deferred payments will be collected at the time of final repayment. For qualifying loans the Bank will permit multiple modifications to a loan if the borrower performs under the modified terms. During the year ended December 31, 2015, the Bank modified seven loans totaling $845,000 that were performing troubled debt restructured loans at the time of modification. During the year ended 2014, the Bank modified eight loans totaling $1.1 million that were performing troubled debt restructured loans at the time of modification. These loans are included in the table above and are reported as impaired loans at December 31, 2015 and 2014. Management performs a discounted cash flow calculation to determine the amount of the impairment reserve required on each of the troubled debt restructurings and must exercise judgment to determine the amounts and timing of cash flows. Any impairment reserve required is recorded through the provision for loan losses. TDRs are reported as non-accrual loans unless the loan qualified for accruing status at the time of the restructure, or the loan has performed according to the new contractual terms for at least six months. The following is a summary of troubled debt restructurings that defaulted in the first twelve months after restructure during the years ended December 31, 2015 and 2014: Number of Contracts Recorded Investment (In thousands) Year Ended December 31, 2015 Residential 1 - 4 family $ Home equity SBA Year Ended December 31, 2014 Residential 1 - 4 family $ SBA The troubled debt restructurings above have specific reserves of $20,000 and $45,000 and resulted in charge-offs of $16,000 and $0 during the years ended December 31, 2015 and 2014, respectively. Credit Quality Information Commercial and SBA loans are risk rated based on key factors such as management ability, financial condition, debt repayment ability, collateral, industry conditions and loan structure. Risk ratings 1 through 5 are considered "pass" rated, risk rating 5.5 is considered "watch list", risk rating 6 is considered "special mention", while risk ratings 7, 8 and 9 are considered "classified" ratings. Risk Rating 1—Excellent: loans to borrowers of the strongest financial condition, or loans to borrowers that are secured by cash collateral or highly liquid marketable securities with ample margin. Quality is unquestioned with no known credit deficiencies or technical exceptions. Risk Rating 2—Very Strong: high quality loans to businesses with solid and consistent financial condition with no major problems, but with less stature than credits with a risk rating of 1. The probability of serious financial deterioration is slight. Risk Rating 3—Strong: above average quality loans to businesses with solid and consistent financial condition that conform to most acceptable credit standards. The probability of serious financial deterioration is below average, although some vulnerability to changing economic conditions may be evidenced. Risk Rating 4—Good: average quality loans to businesses with sound financial condition that conform to most acceptable credit standards. The probability of serious financial deterioration is average, with vulnerability to changing economic conditions evidenced. Risk Rating 5—Satisfactory: loans that possess above average risk, but exhibit current factors that indicate debt repayment ability. Borrowers in this category currently exhibit satisfactory operations, but may be highly susceptible to economic downturns or events that can result in a significant impact on the borrower's ability to properly service debt. Risk rating 5.5—Watch List: loans in this category exhibit the characteristics associated with 5 risk-rated loans, but possess negative factors that warrant increased oversight yet do not warrant a negative risk rating. Factors may include short-term negative operating trends, temporary liquidity shortfalls, modest delinquency, missing or incomplete financial information, or negative balance sheet trends. Risk Rating 6—Special Mention: these loans have potential weaknesses and require management's close attention. If these weaknesses are not addressed, they may weaken the prospects for repayment at a future date. Special mention assets do not expose the institution to sufficient risk to warrant a classified rating. Risk Rating 7—Substandard: loans in this category are inadequately protected by the current financial condition and repayment ability of the borrower or pledged collateral, if any. These assets have a well-defined weakness(es) that jeopardizes the repayment of the debt in full, and are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Risk Rating 8—Doubtful: loans have all the weaknesses of those classified substandard. In addition, it is highly unlikely that a doubtful asset can be collected or liquidated in full. The possibility of loss is extremely high. However, because of certain important and reasonably specific pending factors, which may work to strengthen the asset, its classification as a loss is deferred until the asset's status can be better determined. Risk Rating 9—Loss: loans classified as loss are considered uncollectible and of such little value that they are no longer considered bankable. This classification does not mean that the asset has no recovery or salvage value. However, it is not practical or desirable to defer writing off the asset even though partial recovery may occur in the future. On an annual basis, or more often if needed, the Bank formally reviews the ratings on commercial and SBA loans for loans over $250,000. On an annual basis, the Bank engages an independent third-party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process. Credit quality for residential real estate mortgage and consumer loans is determined by monitoring loan payment history and on-going communications with borrowers, and are not risk graded. The following table presents the Bank's commercial loans by risk rating. December 31, 2015 Commercial Real Estate Commercial Business Commercial Construction SBA Total (In thousands) Loans rated 1 - 5 $ $ $ $ $ Loans rated 5.5 — Loans rated 6 — — Loans rated 7 — — Loans rated 8 — — — — — $ $ $ $ $ December 31, 2014 Commercial Real Estate Commercial Business Commercial Construction SBA Total (In thousands) Loans rated 1 - 5 $ $ $ $ $ Loans rated 5.5 — — Loans rated 6 — — Loans rated 7 — Loans rated 8 — — — — — $ $ $ $ $ |
LOAN SERVICING
LOAN SERVICING | 12 Months Ended |
Dec. 31, 2015 | |
LOAN SERVICING | |
LOAN SERVICING | 5. LOAN SERVICING The Bank has transferred a portion of its originated commercial and SBA loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in the Bank's accompanying consolidated balance sheets. The Bank and participating lenders share ratably in cash flows and any gains or losses that may result from a borrower's lack of compliance with contractual terms of the loan. The Bank continues to service the loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments (net of servicing fees) to participating lenders and disburses required escrow funds to relevant parties. At December 31, 2015 and 2014, the Bank was servicing commercial loans for participants aggregating $4.3 million and $6.6 million, respectively. At December 31, 2015 and 2014, the Bank was servicing SBA loans for participants aggregating $17.2 million and $17.4 million, respectively. The Bank sold the guaranteed portion of SBA loans totaling $4.2 million during 2015 for a gain of $328,000. There were no sales of SBA loans in 2014. |
PREMISES AND EQUIPMENT
PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
PREMISES AND EQUIPMENT | |
PREMISES AND EQUIPMENT | 6. PREMISES AND EQUIPMENT A summary of the cost and accumulated depreciation and amortization of premises and equipment follows: December 31, 2015 2014 (In thousands) Land $ $ Buildings and improvements Furniture, fixtures and equipment Leasehold improvements Less accumulated depreciation and amortization ) ) $ $ Depreciation and amortization expense amounted to $1.3 million and $1.1 million for the years ended December 31, 2015 and 2014, respectively. The Bank leases certain facilities and equipment under long-term noncancelable lease commitments. Pursuant to terms of the lease agreements in effect at December 31, 2015, future minimum lease commitments are as follows (in thousands): 2016 $ 2017 2018 2019 — 2020 — Thereafter — $ One lease has four options to renew for 5 year periods each. The cost of such rentals is not included above. Rent expense amounted to $173,000 and $154,000 for the years ended December 31, 2015 and 2014, respectively. |
DEPOSITS
DEPOSITS | 12 Months Ended |
Dec. 31, 2015 | |
DEPOSITS | |
DEPOSITS | 7. DEPOSITS A summary of deposit balances, by type, is as follows: December 31, 2015 2014 (In thousands) Non-interest-bearing demand deposit accounts $ $ Savings accounts and interest-bearing DDA Money market accounts Club accounts Total non-certificate accounts Term certificates $250,000 or greater Term certificates less than $250,000 Total certificate accounts Total deposits $ $ A summary of certificate accounts by maturity is as follows: December 31, 2015 December 31, 2014 Maturing Periods Amount Weighted Average Rate Amount Weighted Average Rate (Dollars in thousands) Within 1 year $ % $ % Within 2 years Within 3 years Within 4 years Within 5 years Within 6 years — — $ % $ % |
BORROWED FUNDS
BORROWED FUNDS | 12 Months Ended |
Dec. 31, 2015 | |
BORROWED FUNDS | |
BORROWED FUNDS | 8. BORROWED FUNDS FHLB advances with an original maturity of less than three months amounted to $115.5 million and $46.5 million at December 31, 2015 and 2014, respectively, at a weighted average rate of 0.44% and 0.24%, respectively. There are no long-term advances outstanding at December 31, 2015. Long-term FHLB advances consist of the following fixed-rate advances: December 31, 2014 Amount Weighted Average Rate (Dollars in thousands) Non-amortizing advances maturing: 2015 % Total FHLB advances $ % At December 31, 2015 and 2014, the Bank has a $6 million available line of credit with the FHLB. There were no amounts outstanding on this line of credit at December 31, 2015 or 2014. All borrowings from the FHLB are secured by a blanket lien on qualified collateral, defined principally as 75% of the carrying value of first mortgage loans on owner-occupied residential property. At December 31, 2015 and 2014, the Bank has an agreement with the Federal Reserve Bank of Boston for borrowings at the discount window. The terms of this agreement call for the pledging of certain loans as security for any and all obligations of the Bank under this agreement. At December 31, 2015 and 2014, there were no borrowings under this agreement. The Bank had $14.6 million collateral pledged to the Federal Reserve Bank of Boston at December 31, 2015. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2015 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 9. EMPLOYEE BENEFITS Defined Benefit Plan The Bank has a noncontributory, defined benefit pension plan (the "Plan") that, prior to its curtailment, covered substantially all qualified full-time employees. In March 1993, the Bank's Board of Directors approved an amendment to the Plan, which froze employee pension benefits at the benefit amounts earned by employees as of April 15, 1993. The benefits were based upon years of service and the employees' compensation during the last five years of employment prior to the Plan's curtailment. Information pertaining to the activity in the Plan is as follows: Years ended December 31, 2015 2014 (In thousands) Change in benefit obligation: Benefit obligation at beginning of year $ $ Interest cost Actuarial (gain) loss ) Benefits paid ) ) Projected benefit obligation at end of year Change in plan assets: Fair value of plan assets at beginning of year Actual return on plan assets Employer contribution — Benefits paid ) ) Fair value of plan assets at end of year Unfunded status and (prepaid) accrued pension benefit at end of year $ $ Accumulated benefit obligation at end of year $ $ At December 31, 2015 and 2014, the discount rate used to determine the benefit obligation was 4.34% and 3.95%, respectively. The components of net periodic pension cost are as follows: Years Ended December 31, 2015 2014 (In thousands) Interest cost $ $ Expected return on plan assets ) ) Amortization of actuarial loss Settlement cost $ $ Certain participants elected to take lump sum payments which resulted in the settlement costs of $26,000 and $141,000 for the year ended December 31, 2015 and 2014, respectively noted above, since lump sum payments exceeded the sum of the interest and service costs components of the net periodic pension cost. An actuarial loss of $50,000, included in accumulated other comprehensive loss at December 31, 2015, is expected to be recognized as a component of net periodic pension cost for the year ending December 31, 2016. The assumptions used to determine net periodic pension cost are as follows: Years Ended December 31, 2015 2014 Discount rate % % Expected return on plan assets % % In general, the Bank has selected their assumptions with respect to the expected long-term rate of return based on prevailing yields on high quality fixed income investments increased by a premium for equity return expectations. The plan assets are all measured at fair value in Level 1 because the values are based on quoted market prices in an active exchange market. The fair values of major categories of pension plan assets are summarized below: December 31, 2015 2014 (In thousands) Equity securities: Domestic mutual funds $ $ Fixed income International mutual funds International exchange traded funds Cash and cash equivalents $ $ The Bank expects to contribute $19,000 to the plan during the year ending December 31, 2016. Estimated future benefit payments are expected to be paid follows: Years Ending December 31, Amount (In thousands) 2016 $ 2017 2018 2019 2020 Thereafter Deferred Compensation Supplemental Executive Retirement Plan The Bank entered into a non-qualified deferred compensation supplemental executive retirement plan ("DCSERP") with a senior executive as of January 1, 2004, which was amended and restated as of January 1, 2011 and as of January 1, 2013. Effective during the first quarter of 2015, the DCSERP was amended to allow the executive to invest all or a portion of the deferred compensation in Corporation stock, provided that such stock will only be settled in Corporation stock. The Rabbi Trust which holds the assets invested on behalf of the DCSERP, was also similarly amended and effective in the first quarter of 2015. In 2011, the Bank contributed an initial amount of $62,000 and is required to make annual contributions of $72,000 each January 1 thereafter until January 1, 2023, so long as the executive remains employed by the Bank. Upon separation from service on or after age 67, the Bank shall pay the DCSERP benefit in 10 approximately equal annual installments staring on the first business day of January after separation from service. If the executive dies before all installments have been paid, the balance shall be paid in a cash lump sum to his beneficiary, other than Corporation stock, which shall be paid in Corporation stock. If the executive separates from service before age 67 for reasons other than death, disability or cause, he shall be paid the vested portion of his DCSERP benefit in a lump sum no later than the first day of the second month after such separation from service. As of December 31, 2015, the executive was 75% vested in the SERP benefit. An additional 5% of his DCSERP benefit becomes vested as of each December 31 until it is 100% vested on December 31, 2020. If the executive employment is terminated for cause, he will forfeit all benefits under the SERP. To fund this plan, the Bank holds investment assets which are included in other assets at fair value with changes in fair value recorded through earnings. The plan participant has the right to provide the Board of Directors of the Bank with investment directions for these investments. All earnings or losses on investments are the sole responsibility of the participant. The investments informally fund the DCSERP liability but remain assets of the Bank and are subject to the claims of general creditors of the Bank. The assets related to this Plan are $930,000 and $989,000 at December 31, 2015 and 2014, respectively. The liability for the benefit obligation is reported in accrued expenses and other liabilities in the amount of $930,000 and $989,000 at December 31, 2015 and 2014, respectively. Additionally, the Rabbi Trust holds 8,900 shares of Corporation stock at December 31, 2015 which is accounted for at its cost basis of $100,000, which is offset in stockholders' equity by the benefit obligation of $100,000. Compensation expense related to this plan was $72,000 and $72,000 for the years ended December 31, 2015 and 2014, respectively. 401(k) Plan The Bank has a defined contribution 401(k) Salary Deferral Plan (the "Plan") covering substantially all qualified employees. Under the provisions of the Plan, each qualified employee may contribute up to 15% of total compensation. The Bank matches 100% of up to 5% of the employee's contribution. In addition, the Bank may contribute for each qualified employee an amount equal to 5% of gross compensation less amounts allocated to the ESOP as a discretionary contribution. The Bank's contribution to the Plan was $537,000 and $704,000 for the years ended December 31, 2015 and 2014, respectively. Incentive Compensation At December 31, 2015 and 2014, the Bank did not have a formal incentive plan but on an annual basis the Board of Directors reviewed Bank performance and authorized bonus amounts at their discretion. Salary and employee benefits expense for the years ended December 31, 2015 and 2014 amounted to $237,000 and $222,000, respectively related to discretionary bonuses. On January 28, 2016, the Company and the Bank formally adopted an Annual Incentive Plan ("AIP"), effective January 1, 2016. Participants in the AIP are recommended by the CEO and approved by the Compensation Committee of the Board of Directors. Awards will be allocated based on specific performance goals, and unless the Compensation Committee deems otherwise, awards will not be paid, regardless of performance, if positive net income is not achieved. However, the Compensation Committee will have the ability to make discretionary bonuses to key performers if the AIP does not activate. Supplemental Retirement Agreements Effective July 1, 2013, the Bank entered into supplemental retirement agreements ("SERP") with six executive officers, which provide for payments upon attaining the retirement age specified in the agreements, generally 65-67. The present value of these future payments is accrued over the remaining service term. Supplemental retirement benefits generally vest as they are accrued; however a termination of employment subsequent to a change in control will result in the vesting of all benefits that would have accrued to the officer's normal retirement date. An additional officer was added to the SERP effective January 1, 2015. SERP expense totaled $603,000 and $410,000 for the years ended December 31, 2015 and 2014, respectively. The weighted average discount rate used to determine the SERP cost for the year ended December 31, 2015 was 3.24%. At December 31, 2015 and 2014, the accrued liability related to the SERP was $1.2 million and $579,000, respectively. While the plan is unfunded, the Bank purchased Bank-owned life insurance concurrent with entering into the SERP arrangements. Employee Stock Ownership Plan The Corporation maintains an Employee Stock Ownership Plan ("ESOP") to provide eligible employees the opportunity to own Corporation stock. This plan is a tax-qualified retirement plan for the benefit of all Corporation employees. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax limits. The Corporation granted a loan to the ESOP for the purchase of shares of the Corporation's common stock at the Conversion date. As of December 31, 2015, the ESOP holds 395,543 shares, or 8% of the common stock outstanding on that date. The loan obtained by the ESOP from the Corporation to purchase common stock is payable annually over 25 years at the prime rate, as published in The Wall Street Journal, which is 3.25% per annum at December 31, 2015. The loan is secured by the shares purchased, which are held in a suspense account for allocation among participants as the loan is repaid. Cash dividends if paid in the future on unallocated shares will be used to repay the outstanding debt of the ESOP then due. If the amount of dividends exceeds the outstanding debt of the ESOP, then, in the sole discretion of the Corporation, cash dividends may be allocated to active participants on a non-discriminatory basis, or be deemed to be general earnings of the ESOP. Shares used as collateral to secure the loan are released and available for allocation to eligible employees as the principal and interest on the loan is paid. Shares held by the ESOP include the following: December 31, 2015 Allocated Distributions ) Committed to be allocated — Unallocated The fair value of unallocated shares was approximately $4.8 million at December 31, 2015. Total compensation expense recognized in connection with the ESOP for the years ended December 31, 2015 and 2014 was $179,000 and $168,000. Executive Change in Control Severance Plan The Bank entered into an Executive Change in Control Severance Plan ("Severance Plan") effective upon the closing of the conversion and stock offering in January 2014 (see Note 1), with certain officers. The participants in the Severance Plan will be paid two times the participants' base salaries plus their highest bonus in the two calendar years immediately prior to termination, upon a change in control, if the participant is not offered a comparable employment position in a similar geographic location. Equity Incentive Plan On May 21, 2015, the Coastway Bancorp, Inc. stockholders approved the 2015 Equity Incentive Plan ("EIP"). Types of awards permitted by the EIP include stock options, restricted stock awards, restricted stock units, and performance awards. The number of shares available for issuance under the EIP was 692,885 at December 31, 2015. Stock options under the EIP will generally expire after ten years after the date of grant. Unless otherwise determined by the Compensation Committee, awards under the EIP (other than Performance Awards) shall be granted with a vesting rate not exceeding twenty percent per year, with the first installment vesting no earlier than one year after the date of grant. Upon an involuntary termination following a change in control, all stock options, restricted stock awards and units will become fully vested and performance awards will be deemed earned. There were no awards granted under the EIP during the year ended December 31, 2015. Termination Benefits During the second quarter of 2014, the Corporation offered termination benefits of $103,000 to certain employees who were involuntarily terminated. The expense related to the termination benefits were recorded as a component of salaries and employee benefits expense in accordance with FASB Accounting Standards Codification ASC Topic 420 Exit or Disposal Cost Obligations . The affected employees are not required to render any additional services to receive termination benefits. The benefits are being paid weekly over varying periods up to 20 weeks. At December 31, 2014, of the $103,000 of termination expense recorded, no amount remained unpaid. |
OFF-BALANCE SHEET ACTIVITIES AN
OFF-BALANCE SHEET ACTIVITIES AND MORTGAGE BANKING | 12 Months Ended |
Dec. 31, 2015 | |
OFF-BALANCE SHEET ACTIVITIES AND MORTGAGE BANKING | |
OFF-BALANCE SHEET ACTIVITIES AND MORTGAGE BANKING | 10. OFF-BALANCE SHEET ACTIVITIES AND MORTGAGE BANKING In the normal course of business, there are outstanding commitments and contingencies which are not reflected in the accompanying consolidated financial statements. Loan Commitments The Bank is a party to conditional commitments to lend funds in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit which include commercial and home equity lines of credit that involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Bank's exposure to credit loss is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments as it does for on-balance-sheet instruments. The following financial instruments were outstanding whose contract amounts represent credit risk: December 31, 2015 2014 (In thousands) Commitments to originate loans for portfolio $ $ Commitments to originate loans to be sold Commitments to purchase loans from third parties Unfunded commitments under home equity lines of credit Unfunded commitments under commercial lines of credit Unfunded commitments under SBA lines of credit Unfunded commitments under overdraft lines of credit Unadvanced funds on construction loans The 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 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 creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based upon management's credit evaluation of the counterparty. Collateral held generally consists of real estate. Loans Sold with Recourse Obligations The Bank sells certain loans on a servicing-released basis to investors pursuant to contracts which include limited recourse provisions whereby the Bank would be required to repurchase loans and/or refund premiums in the event a borrower defaults generally on any of the first four payments due. At December 31, 2015 and 2014, the premiums received on loans sold that were subject to refund provisions amounted to $1,296,000 and $1,065,000, respectively. The contracts also include repurchase obligation provisions for fraud or misrepresentation. The Bank repurchased $830,000 in loans and refunded premiums of $46,000 under these agreements during 2015. No liability has been recorded in the consolidated financial statements related to these recourse obligations. Mortgage Banking At December 31, 2015, the Bank had $13.1 million of interest rate lock commitments to borrowers and loans held for sale of $19.0 million with $31.3 million of forward commitments for the future delivery of residential mortgage loans. Included in the forward commitments total are open TBAs with a notional amount of $4.0 million, mandatory delivery contracts with a notional amount of $2.8 million, and best efforts contracts with a notional amount of $24.5 million. The Bank has $4.8 million of closed hedge instruments that are not settled at December 31, 2015. The Bank had $10.8 million in interest rate lock commitments to borrowers, loans held for sale of $11.0 million, and forward commitments to sell loans of $21.5 million at December 31, 2014 and consisted only of the best efforts contracts. The following table presents the fair values of derivative instruments and forward loan sale commitments in the consolidated balance sheets: Assets Liabilities Balance Sheet Location Fair Value Balance Sheet Location Fair Value (In thousands) December 31, 2015 Derivative loan commitments $ N/A $ — Commitments hedged with best efforts Other assets N/A — Commitments hedged with TBA Other assets N/A — Total derivative commitments N/A — Forward loan sale commitments N/A — Best efforts contracts N/A — Other liabilities Mandatory delivery contracts Other assets N/A — TBA securities N/A — Other liabilities Total forward loans sale commitments Total derivative loan and forward loan sale commitments $ $ Assets Liabilities Balance Sheet Location Fair Value Balance Sheet Location Fair Value (In thousands) December 31, 2014 Derivative loan commitments Other assets $ N/A $ — Forward loan sale commitments N/A — Other liabilities Total derivatives not designated as hedging instruments $ $ Interest Rate Risk Management—Derivative Instruments not Designated as Hedging Instruments The following table presents information pertaining to the gains and losses on Bank's derivative instruments and forward commitments to sell loans not designated as hedging instruments: Years Ended December 31, Location of Gain/(Loss) 2015 2014 (In thousands) Derivative loan commitments—best efforts Net gain on sales of loans and other mortgage banking income $ $ Derivative loan commitments—TBA Net gain on sales of loans and other mortgage banking income — Best efforts contracts Net gain on sales of loans and other mortgage banking income ) ) Mandatory delivery contracts Net gain on sales of loans and other mortgage banking income — TBA securities Net gain on sales of loans and other mortgage banking income ) — Total $ $ ) Executive Employment Agreement The Bank has entered into an Executive Employment Agreement with its President which automatically renews annually unless otherwise determined by the Board of Directors, and provides for, among other things, an annual base salary, participation in any and all employee benefit plans, and guaranteed employment. The agreement provides for continued payment of base salary and continued benefits for five years following termination of employment without cause or a change of control event. However, such employment may be terminated for cause, as defined, without incurring any continuing obligation. Legal and Other Loss Contingencies Various legal claims also arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Bank's consolidated financial statements at December 31, 2015 and 2014. |
LOANS TO RELATED PARTIES
LOANS TO RELATED PARTIES | 12 Months Ended |
Dec. 31, 2015 | |
LOANS TO RELATED PARTIES | |
LOANS TO RELATED PARTIES | 11. LOANS TO RELATED PARTIES Information pertaining to loans to directors, executive officers and their associates is as follows: Years Ended December 31, 2015 2014 (In thousands) Balance at beginning of year $ $ Principal additions Principal payments ) ) Balance at end of year $ $ In the ordinary course of business, the Bank has granted loans to officers and directors. The Bank has an Employee Loan Discount Program which allows rates to be reduced by 1% with a floor rate of 4%. On January 30, 2013, the Bank modified a related party loan to an officer that resulted in an unsecured residential loan in the amount of $482,000, which has a balance outstanding of $428,000 at December 31, 2015, which is current at December 31, 2015. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES Allocation of income taxes between current and deferred portions is as follows: Years Ended December 31, 2015 2014 (In thousands) Current tax expense (benefit): Federal $ $ ) State Deferred tax expense (benefit): Federal ) State ) ) Total income tax expense (benefit) $ $ ) The reasons for the differences between the statutory federal income tax expense (benefit) and the actual tax expense (benefit) are summarized as follows: Years Ended December 31, 2015 2014 (In thousands) Statutory tax expense (benefit) at 34% $ $ ) Increase (decrease) resulting from: State taxes, net of federal tax benefit Other, net ) ) $ $ ) The tax effects of each item that give rise to deferred taxes are as follows: December 31, 2015 2014 (In thousands) Deferred tax assets: Allowance for loan losses $ $ Employee benefits Non-accrual interest Defined benefit pension plan Charitable contribution carryforwards Organization costs Impairment on real estate held for sale Other, net Total deferred tax assets Deferred tax liabilities: Premises and equipment, net ) ) Net deferred loan costs ) ) Mortgage derivatives ) ) Other, net ) ) Total deferred tax liabilities ) ) Deferred tax asset, net $ $ A summary of the change in deferred taxes is as follows: Years Ended December 31, 2015 2014 (In thousands) Balance at beginning of year $ $ Deferred tax (expense) benefit ) Unrealized gain/loss pertaining to defined benefit pension plan ) Balance at end of year $ $ The Bank has a net deferred tax asset of $542,000 relating to charitable contribution carry forwards that must be utilized by the income tax year ending December 31, 2019. Charitable contributions are generally limited to a ten percent of taxable income deduction. At December 31, 2015 and 2014, the Bank has no ASC 740-10 unrecognized tax benefits. The Bank does not expect the total amount of the unrecognized tax benefits to significantly increase within the next twelve months. The Bank's income tax returns are subject to review and examination by federal and state taxing authorities. The Bank is subject to U.S. federal income tax as well as income tax in various state taxing jurisdictions. The Bank is no longer subject to examination by federal and state taxing authorities for years prior to the year ended December 31, 2012. |
MINIMUM REGULATORY CAPITAL REQU
MINIMUM REGULATORY CAPITAL REQUIREMENTS | 12 Months Ended |
Dec. 31, 2015 | |
MINIMUM REGULATORY CAPITAL REQUIREMENTS | |
MINIMUM REGULATORY CAPITAL REQUIREMENTS | 13. MINIMUM REGULATORY CAPITAL REQUIREMENTS The Bank is subject to various regulatory capital requirements administered by the federal and state 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 adverse 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. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and Tier 1 capital (as defined) to risk-weighted assets (as defined) Common Equity Tier 1 to risk-weighted assets (as defined) and of Tier 1 capital to average assets (as defined). Management believes, as of December 31, 2015 and 2014, that the Bank meet all capital adequacy requirements to which it is subject. As of December 31, 2015, the most recent notification from the Federal Deposit Insurance Corporation ("FDIC") categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution's category. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. In July, 2013, the FDIC and the other federal bank regulatory agencies issued a final rule to revise their risk-based and leverage capital requirements and their method for calculating risk-weighted assets, to make them consistent with the agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. The final rule applies to all depository institutions, top-tier bank holding companies with total consolidated assets of $500 million or more, and top-tier savings and loan holding companies ("banking organizations"). Among other things, the rule establishes a new Common Equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increases the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also limits a banking organization's capital distributions and certain discretionary bonus payments if the banking organization does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets. The final rule became effective for the Bank on January 1, 2015. The capital conservation buffer requirement will be phased in beginning January 1, 2016 at 0.625% and ending January 1, 2019, when the full capital conservation buffer requirement will be effective. Capital ratios at December 31, 2015 are calculated under the requirements of BASEL III, whereas capital ratios at December 31, 2014 are calculated under the requirements of BASEL I, and as a result, are not considered comparative. The Bank's actual and minimum required capital amounts at December 31, 2015 and 2014 are as follows: Actual Minimum Capital for Capital Adequacy Purposes Minimum Capital to be Well Capitalized (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio December 31, 2015 Total capital (to risk weighted assets) $ % $ % $ % Tier 1 capital (to risk weighted assets) % % Common Equity Tier 1 (to risk weighted assets) % % Tier 1 leverage capital (to average assets) % % December 31, 2014 Total capital (to risk weighted assets) $ % $ % $ % Tier 1 capital (to risk weighted assets) Tier 1 capital (to average assets) On April 9, 2015, the Board of Governors of the Federal Reserve System issued the Final Rule to implement Public law 113-250 enacted on December 18, 2014 that updates the Small Bank Holding Company Policy Statement ("Policy Statement"), which became effective in May 2015. Pursuant to the Policy Statement, capital rules and reporting requirements will not apply to the small bank holding companies (defined as less than $1.0 billion in assets) which meet the following criteria: (1) not engaged in significant non-bank activities; (2) no significant off-balance sheet activities conducted through a non-bank subsidiary, and (3) no material amount of SEC registered debt or equity securities outstanding (other than trust preferred). The Bank will still be subject to the capital rules and reporting requirements, though the holding company will be exempt. |
FAIR VALUES OF ASSETS AND LIABI
FAIR VALUES OF ASSETS AND LIABILITIES | 12 Months Ended |
Dec. 31, 2015 | |
FAIR VALUES OF ASSETS AND LIABILITIES | |
FAIR VALUES OF ASSETS AND LIABILITIES | 14. FAIR VALUES OF ASSETS AND LIABILITIES Fair Value Hierarchy The Bank groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. Level 1—Valuation is based on quoted prices in active markets for identical assets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets. Level 2—Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets; 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. 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 or liabilities include financial instruments whose value is determined using unobservable inputs to 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. Transfers between levels, if any, are recognized at the end of a reporting period. Determination of Fair Value The Bank uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of an asset or liability 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 Bank's various assets and liabilities. 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 an asset or liability. The following methods and assumptions were used by the Bank in estimating fair value disclosures: Cash and cash equivalents —The carrying amounts of cash and cash equivalents approximate fair values based on the short-term nature of the assets. Certificates of Deposit —The carrying amount of certificates of deposit approximates fair value based on the short-term nature of the asset. Federal Home Loan Bank stock —The carrying value of Federal Home Loan Bank stock is deemed to approximate fair value, based on the redemption provisions of the Federal Home Loan Bank. Loans, net —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 non-performing loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. Loans held for sale —Fair values of loans held for sale are based on prevailing market rates for loans with similar characteristics. Deposits —The fair values of deposits with no stated maturity, such as demand deposits, savings, club and money market accounts, are equal to the amount payable on demand at the reporting date. Fair values for term certificates are estimated using a discounted cash flow calculation that applies market interest rates currently being offered for deposits of similar remaining maturities. Borrowed funds —The fair values of the Bank's FHLB advances are estimated using discounted cash flow analyses based on the current incremental borrowing rates in the market for similar types of borrowing arrangements. Accrued interest —The carrying amounts of accrued interest approximate fair value. Off-balance sheet credit-related instruments —Fair values for off-balance-sheet, credit related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The estimates of fair value of financial instruments were based on information available at December 31, 2015 and 2014 and are not indicative of the fair value of those instruments as of the date of this report. These estimates do not include any premium or discount that could result from offering for sale at one time the Corporation's entire holdings of a particular instrument. The fair value of the Corporation's time deposit liabilities do not take into consideration the value of the Corporation's long-term relationships with depositors, which may have significant value. Because no active market exists for a portion of the Corporation's financial instruments, fair value estimates were based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates were based on existing on- and off-balance sheet financial instruments without an attempt to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments, including premises and equipment, foreclosed real estate, and real estate held for sale. Assets and Liabilities Measured at Fair Value on a Recurring Basis At December 31, 2015 and 2014, there are no assets or liabilities measured at fair value on a recurring basis other than loans held for sale, mortgage derivatives and forward commitments to sell loans. See Note 10. Fair value changes in mortgage banking derivatives and commitments to sell fixed-rate residential mortgages subsequent to inception are estimated using anticipated market prices based on pricing indications provided from syndicate banks and consideration of pull-through and fallout rates derived from the Bank's internal data and adjusted using management judgment. Mortgage banking derivatives include the non-refundable costs of originating the loan based on the Bank's internal cost analysis that is not observable. The fair value of the mortgage banking derivatives and forward commitments to sell using best efforts contracts are considered to be Level 3 assets. The following table shows significant unobservable inputs used in the recurring fair value measurements of Level 3 assets and liabilities: Measurements Asset (Liability) Fair Value Valuation Technique Unobservable Inputs Range (In thousands) December 31, 2015 Derivative loan commitments $ Investor pricing Pull-through rate 79.6% - 100% Forward loan sale commitments—best efforts contracts ) Investor pricing Pull-through rate 82.5% - 100% December 31, 2014 Derivative loan commitments $ Investor pricing Pull-through rate 82.5 - 100% Forward loan sale commitments ) Investor pricing Pull through rate 82.5% - 100% The table below presents (in thousands), for the years ended December 31, 2015 and 2014, the changes in Level 3 assets and liabilities, consisting of derivative loan and forward sale commitments, that are measured on a recurring basis. There were no transfers between levels during the periods presented. 2015 2014 Balance at beginning of year Gains (loss) arising during the period — — Gains (loss) on new commitments during the period ) Reclassifications of realized gains on settled commitments ) ) Balance at end of year $ $ Assets Measured at Fair Value on a Non-recurring Basis The Bank may also be required, from time to time, to measure certain other assets at fair value on a non-recurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. 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, 2015 and 2014. The losses represent the amount of write-downs during the year on assets held at year end. December 31, 2015 Year Ended December 31, 2015 Level 1 Level 2 Level 3 Total Losses (In thousands) Foreclosed real estate $ — $ — $ $ Impaired loans — — ) Real estate held for sale — — $ — $ $ $ December 31, 2014 Year Ended December 31, 2014 Level 1 Level 2 Level 3 Total Losses (In thousands) Foreclosed real estate $ — $ — $ $ Impaired loans — — Real estate held for sale — — $ — $ — $ $ Losses applicable to impaired loans are estimated using the appraised value of the underlying collateral, discounted as necessary due to management's estimates of changes in market conditions, less selling costs. The loss is not recorded directly as an adjustment to current earnings or comprehensive income, but rather as a component in determining the overall adequacy of the allowance for loan losses. Adjustments to the estimated fair value of impaired loans may result in increases or decreases to the provision for loan losses. Impaired loans of $1.2 million, net of specific reserves of $15,000, resulted in a credit provision of $47,000 in the current year. Certain properties in foreclosed real estate and real estate held for sale were adjusted to fair value based on appraisals that utilize prices in observed transactions involving similar assets or estimated sales price less costs to sell. If necessary, these appraised values were adjusted by management to recognize unobservable inputs for specific characteristics of the properties. Losses during the year represent amounts charged off to the allowance for loan losses upon transfer from loans and subsequent write-downs charged to earnings. There are no liabilities measured at fair value on a non-recurring basis at December 31, 2015 or 2014. The following table shows significant unobservable inputs used in the non-recurring fair value measurements of Level 3 assets: Measurements Fair Value Valuation Technique Unobservable Inputs Range (In thousands) December 31, 2015 Foreclosed real estate $ Discounted appraisals Collateral discounts 5 - 30% Impaired loans Discounted appraisals Collateral discounts 5 - 30% December 31, 2014 Foreclosed real estate $ Discounted appraisals Collateral discounts 5 - 30% Impaired loans Discounted appraisals Collateral discounts 5 - 30% Real estate held for sale Appraisal Selling costs 5 - 6% Summary of Fair Values of Financial Instruments The estimated fair values, and related carrying amounts, of the Bank'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 Bank. Effective January 1, 2015, the Bank has elected the fair value option for loans held for sale. These loans are intended for sale and the Bank believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company's policy on loans held for investment. None of these loans are 90 days or more past due or on non-accrual as of December 31, 2015. As of December 31, 2015, the aggregate fair value, contractual balance and gain or loss was as follows: 2015 (in thousands) Aggregate fair value $ Contractual balance Gain (loss) The total amount of gains and losses from changes in fair value included in earnings for the year ended December 31, 2015 for loans held for sale was $684,000. The following tables present the carrying amount, estimated fair value and placement in the fair value hierarchy of the Bank's financial instruments as of December 31, 2015 and 2014. The tables exclude financial instruments for which the carrying value approximates fair value and derivatives. Financial assets for which the fair value approximates carrying value include cash and cash equivalents, certificates of deposit and accrued interest receivable. Financial liabilities for which the fair value approximates carrying value include non-maturity deposits and accrued interest payable. December 31, 2015 Fair Value Measurements Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3 (In thousands) Financial assets: Loans, net of allowance for loan losses $ $ $ — $ — $ Loans held for sale — — FHLB stock N/A — — N/A Financial liabilities: Certificates of deposit — — Borrowed funds — — December 31, 2014 Fair Value Measurements Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3 (In thousands) Financial assets: Loans, net of allowance for loan losses $ $ $ — $ — $ Loan held for sale — — FHLB stock N/A — — N/A Financial liabilities: Certificates of deposit — — Borrowed funds — — (1) Excluded from this table are certain financial instruments that approximate fair value, as they were short-term in nature or payable on demand. These include cash and cash equivalents, certificates of deposit, accrued interest receivable, non-term deposit accounts, and accrued interest payable. The respective carrying values of cash and cash equivalents, certificates of deposit and non-term deposit accounts would all be considered to be classified within Level 1 of their fair value hierarchy. The $1.4 million and $1.3 million carrying value of accrued interest receivable on loans at December 31, 2015 and December 31, 2014, would generally be considered Level 3 in the fair value hierarchy and the carrying value of accrued interest payable of $24,000 and $11,000 would be considered Level 2 at December 31, 2015 and December 31, 2014, respectively. |
PARENT COMPANY FINANCIAL STATEM
PARENT COMPANY FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2015 | |
PARENT COMPANY FINANCIAL STATEMENTS | |
PARENT COMPANY FINANCIAL STATEMENTS | 15. PARENT COMPANY FINANCIAL STATEMENTS Condensed financial information relative to the Parent Company's balance sheets at December 31, 2015 and 2014 and the related statements of net income and loss and cash flows for the year ended December 31, 2015 and 2014 are presented below. The statement of stockholders' equity is not presented below as the parent company's stockholders' equity is that of the consolidated company. BALANCE SHEETS December 31 2015 December 31 2014 (in thousands) Assets Cash $ $ Certificates of Deposit Investments in subsidiaries Note receivable from subsidiary Other assets Total assets $ $ Liabilities and stockholders' equity Other liabilities $ $ Stockholders' equity Total liabilities and stockholders' equity $ $ STATEMENTS OF NET INCOME (LOSS) Year-ended December 31 Year-ended December 31 2015 2014 (in thousands) Income Interest income $ $ Expenses Other expenses Loss before income taxes and equity in undistributed income (loss) of subsidiaries ) ) Income tax benefit ) ) Loss of parent company ) ) Equity in undistributed income (loss) of subsidiaries ) Net income (loss) $ $ ) STATEMENTS OF CASH FLOWS Year-ended December 31 Year-ended December 31 2015 2014 (in thousands) Cash flows from operating activities: Net income (loss) $ $ ) Adjustments to reconcile net loss to cash used in operating activities Change in other assets ) Change in other liabilities Equity in undistributed income (loss) of subsidiaries ) Net cash provided by (used in) operating activities ) Cash flows used in investing activities: Purchase of certificates of deposit ) ) Change in note receivable from subsidiary, net ) Net cash used in investing activities ) ) Cash flows used in financing activities: Repurchase of common stock ) — Issuance of common stock for initial public offering — Purchase of common stock by ESOP — ) Proceeds from initial public offering contributed to subsidiary — ) Net cash provided by (used in) financing activities ) Net increase (decrease) in cash and cash equivalents ) Cash and cash equivalents at the beginning of the year — Cash and cash equivalents at the end of the year $ $ |
EARNINGS PER SHARE AND STOCK RE
EARNINGS PER SHARE AND STOCK REPURCHASE | 12 Months Ended |
Dec. 31, 2015 | |
EARNINGS PER SHARE AND STOCK REPURCHASE | |
EARNINGS PER SHARE AND STOCK REPURCHASE | 16. EARNINGS PER SHARE AND STOCK REPURCHASE The factors used in the earnings per share computation follow: 2015 (in thousands) Basic and Diluted; Net income $ Weighted average common shares outstanding Less: Average unallocated ESOP shares Average shares Basic and diluted earnings per common share $ Earnings (loss) per share is not presented for the year ended December 31, 2014 as common shares had not been outstanding during the entire period. On January 30, 2015, the Company announced that the Board of Directors adopted its first stock repurchase program. Under the repurchase program, the Company is authorized to repurchase up to 247,459 shares of its common stock, or approximately 5% of its outstanding shares. The repurchase program permits shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. During the year ended December 31, 2015, 126,900 shares were repurchased for a cost of $1.5 million. Repurchases will be made at management's discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company's financial performance. Open market purchases will be conducted in accordance with the limitations set forth in Rule 10b-18 of the Securities and Exchange Commission and other applicable legal requirements. The repurchase program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase any particular number of shares. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
SUBSEQUENT EVENTS. | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS In February 2016, the Compensation Committee of the Board of Directors authorized the grant of 91,225 options at a strike price of $12.41 and 39,045 shares of restricted stock to directors and certain key senior executives. The options and the restricted stock vest over a five year period. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Nature of Operations and Basis of Presentation | Nature of Operations and Basis of Presentation Coastway Bancorp, Inc., a Maryland chartered stock corporation ("Company" or "Corporation"), was formed to serve as the holding company for Coastway Community Bank. Coastway Community Bank (the "Bank") provides a variety of financial services to individuals and small businesses throughout Rhode Island. Its primary deposit products are savings, demand, money market and term certificate accounts and its primary lending products are residential and commercial mortgage and business loans. Prior to January 14, 2014, the Bank was 100% owned by Coastway Bancorp, LLC ("LLC") and the LLC was 100% owned by Coastway Bancorp, MHC ("MHC"). The MHC, a state-chartered mutual holding company and its wholly-owned subsidiary, the LLC were formed on February 1, 2013. The consolidated financial statements at and for the years ended December 31, 2015 and 2014 include the accounts of the Corporation and the Bank. All significant intercompany balances and transactions have been eliminated in consolidation. |
Stock Conversion | Stock Conversion On August 22, 2013, the Board of Directors of the MHC, LLC and the Bank adopted the Plan of Conversion and Reorganization to convert the MHC from the mutual holding company form of organization to a stock holding company form of organization ("Conversion") On January 14, 2014, the Conversion was completed and Coastway Bancorp, Inc. became the parent holding company for Coastway Community Bank. A total of 4,827,125 shares of Corporation common stock were sold to depositors and to the general public, including those issued to the Corporation's tax-qualified employee benefit plans, at $10.00 per share through which the Corporation received net offering proceeds of approximately $46.3 million. Also, on January 14, 2014, the Corporation contributed $300,000 in cash and 122,054 shares of common stock to Coastway Cares Charitable Foundation II, which together totaled $1.5 million or 3.15% of the gross proceeds of the offering, which was recorded as a component of non-interest expense in the first quarter of 2014. The total number of shares of common stock outstanding upon completion of the Conversion was 4,949,179 shares. In connection with the Conversion, the Corporation implemented an employee stock ownership plan ("ESOP"), to provide eligible employees the opportunity to own corporation stock. This plan is a tax-qualified retirement plan for the benefit of all Company employees. The ESOP acquired 395,934 shares of the stock issued in the Conversion which were financed by a loan from the Corporation. See Note 9. As part of the Conversion, Coastway Bancorp, Inc. established a liquidation account in an amount equal to the net worth of Coastway Bancorp, MHC as of the date of the latest consolidated balance sheet appearing in the final prospectus distributed in connection with the Conversion, or $27.5 million. The liquidation account will be maintained for the benefit of eligible account holders and supplemental eligible account holders who maintain their accounts at Coastway Community Bank after the Conversion. The liquidation account will be reduced annually to the extent that such account holders have reduced their qualifying deposits as of each fiscal year end. Subsequent increases will not restore an account holder's interest in the liquidation account. In the event of a complete liquidation of the Corporation or the Bank, each eligible account holder will be entitled to receive balances for accounts then held. Subsequent to the Conversion, the Corporation may not declare or pay dividends on, and may not repurchase, any of its shares of common stock if the effect thereof would cause stockholders' equity to be reduced below the liquidation account balance, applicable regulatory capital maintenance requirements, or if such declaration, payment or repurchase would otherwise violate regulatory requirements. |
Use of Estimates | Use of Estimates To prepare consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, 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, the valuation of deferred tax assets and the valuation of real estate held for sale. |
Reclassification | Reclassification Certain amounts in the 2014 consolidated financial statements have been reclassified to conform to the 2015 presentation. Reclassifications had no effect on prior year net income or stockholders' equity. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand, amounts due from banks and interest-earning deposits. Interest-earning deposits are carried at cost which approximates fair value and mature either daily or on demand. |
Federal Home Loan Bank Stock | Federal Home Loan Bank Stock The Bank, as a member of the Federal Home Loan Bank ("FHLB") system, is required to maintain an investment in capital stock of the FHLB. Based on the redemption provisions of the FHLB, the stock has no quoted market value, is carried at cost, and is classified as a restricted security. At its discretion, the FHLB may declare cash or stock dividends on the stock which are reported as income. The Bank reviews for impairment based on the ultimate recoverability of the cost basis in the FHLB stock. As of and at December 31, 2015 and 2014, no impairment has been recognized. |
Loans | Loans The Bank's lending activities are conducted principally in Rhode Island. Loans purchased from third party originators are generally collateralized by properties in New England, primarily in Massachusetts. The Bank grants one-to-four family residential loans as well as commercial business, commercial real estate and consumer loans. Most loans granted by the Bank are collateralized by real estate. The ability and willingness of the one-to-four family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of economic activity within the borrowers' geographic area and real estate values. The ability and willingness of commercial loan borrowers to repay their loan commitments is generally dependent on the state of the real estate economic sector in the borrowers' geographic area and the general economy. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, 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 fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. Individually purchased one- to four-family loans are generally purchased at a premium, which is amortized into income as an adjustment of the related loan yield using the interest method. For loan disclosures and the allowance for loan losses estimate, the Bank's loan portfolio includes residential 1-4 family real estate, home equity loans and lines of credit, commercial real estate, commercial business, commercial construction, Small Business Administration ("SBA") and consumer segments. The accrual of interest on loans is discontinued at the time the loan is 90 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual 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 nonaccrual 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. 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 uncollectibility of a loan balance is confirmed. For impaired loans that are deemed collateral dependent, the recorded balance of the loan is reduced to fair value of the collateral net of estimated selling costs by charge off. The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general and specific components, as further described below. General component of the allowance for loan losses The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by loan segments. Management uses a ten year historical loss period to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; charge off trends in the past three years; weighted average risk weightings; loan concentrations; management's assessment of internal factors; and management's assessment of external factors such as interest rates, real estate markets and local and national economic factors. There were no changes in the Bank's policies or methodology pertaining to the general component of the allowance for loan losses during the year ended December 31, 2015. Refer to Note 4 for additional information regarding the amounts attributable to historical loss and qualitative factors. The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows: One-to-four family residential real estate and home equity—Loans in these segments are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The Bank generally has first liens on one-to-four family residential real estate loans and first or second liens on property securing home equity loans and lines of credit. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in these segments. Commercial—Commercial loan segments include commercial real estate, commercial and industrial loans for businesses and construction financing for business/properties located principally in Rhode Island. For commercial real estate loans, the underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Non-real estate commercial loans are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. Commercial construction generally represent loans to finance construction of retail and office space. Commercial real estate loans also include loans made under the SBA 504 program which is an economic development program which finances the expansion of small businesses. The Bank generally provides 50% of the projected costs, and the loan is secured by a first lien on the commercial property. The SBA does not provide a guarantee on loans made under the SBA 504 program. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment. Management monitors the cash flows of these loans. SBA—Loans in this segment include commercial loans underwritten using SBA guidelines for the SBA's 7(a) program and include both guaranteed and unguaranteed loans. Under the SBA 7(a) Program, loans may qualify for guarantees up to 85% of principal and accrued interest up to a maximum SBA guarantee of $3.75 million per borrower and related entities. The Bank does not treat the SBA guarantee as a substitute for a borrower meeting reasonable credit standards. SBA guarantees are generally sought on loans that exhibit minimum capital levels, a short time in business, lower collateral coverage or maximum loan terms beyond the Bank's normal underwriting criteria. For a number of SBA loans, the Bank has sold portions of certain loans and retains the unguaranteed portion while continuing to service the entire loan. The guaranteed portion of SBA loans in the Bank's portfolio is not allocated a general reserve because the Bank has not experienced losses on such loans and management expects the guarantees will be effective, if necessary. Consumer—This segment includes unsecured and vehicle loans and repayment is dependent on the credit quality of the individual borrower. Specific component of the allowance for loan losses The specific component relates to loans that are classified as impaired. Commercial and SBA loans are evaluated for impairment on a loan-by-loan basis. Impairment is measured by either the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows or collateral value of the impaired loan is lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and performing residential real estate loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement. 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. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The Bank periodically may agree to modify the contractual terms of loans, such as a reduction in interest rate of the loan for some period of time, an extension of the maturity date or an extension of time to make payments with the delinquent payments added to the end of the loan term. 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. Loans on non-accrual status at the date of modification are initially classified as non-accrual troubled debt restructurings. TDRs may be returned to accrual status after a period of satisfactory payment performance per the terms of the restructuring, generally six months of current payments. |
Loans Held for Sale and Mortgage Banking Activities | Loans Held for Sale and Mortgage Banking Activities Effective January 1, 2015, the Bank elected to utilize the fair value option to record loans held for sale at fair value at each balance sheet date. The fair value includes the servicing value of the loans as management sells all loans held for sale servicing released. Prior to January 1, 2015, loans originated and intended for sale in the secondary market were carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, were recognized through a valuation allowance by charges to non-interest income. One-to-four family residential loans are sold with servicing released. Gains and losses on loan sales are recorded in non-interest income as gains on sale of loans and other mortgage banking income. Mortgage Banking Commitments to fund certain mortgage loans (interest rate locks) to be sold in the secondary market and forward loan commitments for the future delivery of mortgage loans to third party investors, including To Be Announced securities ("TBAs") and mandatory forward commitments, are considered derivatives. These mortgage banking related derivatives are not designated in hedge relationships and are accounted for at fair value, with change in fair value recorded in net gain on sales of loans and other mortgage banking income on the income statement. Best efforts commitments are accounted for at fair value, with change in fair value recorded in net gain on sales of loans and other mortgage banking income on the income statement, as management has elected fair value accounting for these commitments. Derivative Loan Commitments Mortgage loan commitments are considered derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. The Bank enters into commitments to fund residential mortgage loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. Outstanding derivative loan commitments expose the Bank to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. If interest rates increase, the value of these loan commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases. Forward Loan Sale Commitments To protect against the price risk inherent in derivative loan commitments, the Bank utilizes best efforts forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the derivative loan commitments. With a best efforts contract, the Bank commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. Generally, the price the investor will pay the seller for an individual loan is specified prior to the loan being funded (e.g., on the same day the lender commits to lend funds to a potential borrower). For TBAs, the Bank sells a security in the open market with a promise to deliver a pool of loans with an aggregate specified principal amount and quality to the investor at a specified point in the future. If the Bank fails to deliver the pool of loans, the Bank will repurchase the security at the market price on the date of repurchase. Fair value changes in mortgage banking derivatives and commitments to sell fixed-rate residential mortgages subsequent to inception are estimated using anticipated market prices based on pricing indications provided from syndicate banks and consideration of pull-through and fallout rates derived from the Bank's internal data and adjusted using management judgment. Mortgage banking derivatives include the non-refundable costs of originating the loan based on the Bank's internal cost analysis that is not observable. Fluctuations in interest rates may impact estimated pull-through rates on mortgage originations, which in turn may affect the valuation of forward loan sale commitments. |
Premises and Equipment | Premises and Equipment Land is carried at cost. Buildings and equipment are carried at cost, less accumulated depreciation and amortization computed on the straight-line method over the estimated useful lives of the assets or the expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured. |
Real Estate Held for Sale | Real Estate Held for Sale Real estate held for sale is carried at the lower of cost or fair value, less cost to sell. Real estate is classified as held for sale when management has committed to a plan to sell the asset; the asset is available for immediate sale in its present condition; an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition of a sale within one year; the asset is being actively marketed for sale; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. In June 2013, upon expiration of the letter of intent from an expected lessee, the Bank reclassified the $1.4 million carrying value of the undeveloped land previously classified as real estate held for investment at December 31, 2012 to real estate held for sale as management intended to sell the land and all of the above criteria have been met. In June, 2013 the Bank reclassified land and building previously purchased for the potential relocation of the corporate headquarters, with a carrying value of $2.6 million, from premises and equipment to real estate held for sale as the Bank determined that the costs to improve the property for its intended use exceeded its initial expectations. The land and building were sold in October 2014. The Bank recorded a $482,000 impairment loss in non-interest expenses in 2013 upon transfer of the aforementioned properties to real estate held for sale. An additional loss of $393,000 was recorded upon entering into a Purchase & Sale agreement ("P&S") in 2014. During the third quarter of 2015, the Bank accepted an offer and entered into a P&S agreement for $1.1 million to sell the undeveloped land and recorded impairment of $195,000 in connection with the acceptance of the offer. The land was sold in February, 2016. In August 2014, the Bank reclassified its previous headquarters, One Coastway Plaza (the "Plaza"), located in Cranston from premises and equipment to real estate held for sale as the Bank relocated its corporate headquarters to Warwick, and the Bank recorded an impairment loss of $706,000. In September 2015, the Bank entered into a P&S agreement for $2.4 million to sell the Plaza and recorded impairment of $386,000 in connection with the acceptance of the offer. The building was sold in January, 2016. The Bank financed the loan to acquire the property at market terms with an adequate down payment to meet the sales criteria. |
Foreclosed Real Estate | Foreclosed Real Estate Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value, less cost to sell, at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less costs to sell. Revenue and expenses from operations, changes in the valuation allowance, gains or losses on sales and any direct write-downs are included in foreclosed real estate expenses. Foreclosed real estate consists of residential real estate properties and a commercial building. |
Bank-owned Life Insurance | Bank-owned Life Insurance Bank-owned life insurance policies on certain key executives are reflected in the Consolidated Balance Sheets at the amount that can be realized under the insurance contracts, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Changes in cash surrender value are reflected in non-interest income in the Consolidated Statements of Net Income (Loss) and are not subject to income taxes. |
Transfers of Financial Assets | Transfers of Financial Assets Transfers of an entire financial asset, a group of entire financial assets, or a participating interest in an entire financial asset 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 Bank, (2) the transferee obtains the right to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets. During the normal course of business, the Bank may transfer a portion of a financial asset, for example, a participation loan or the government guaranteed portion of a loan. In order to be eligible for sales treatment, the transfer of the portion of the loan must meet the criteria of a participating interest. If it does not meet the criteria of a participating interest, the transfer must be accounted for as a secured borrowing. In order to meet the criteria for a participating interest, all cash flows from the loan must be divided proportionately, the rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties and no loan holder has the right to pledge or exchange the entire loan. |
Defined Benefit Plan | Defined Benefit Plan The compensation cost of an employee's pension benefit is recognized on the projected unit credit method over the employee's approximate service period. The aggregate cost method is utilized for funding purposes. The Bank accounts for its defined benefit pension plan using an actuarial model that allocates pension costs over the service period of employees in the plan. The Bank accounts for the over-funded or under-funded status of its defined benefit plan as an asset or liability in its balance sheet and recognizes changes in the funded status in the year in which the changes occur through other comprehensive income/loss. |
Other Retirement Plans | Other Retirement Plans Employee 401(K) expense represents the amount of matching contributions. Supplemental retirement expense allocates benefits over the remaining service term. |
Employee Stock Ownership Plan | Employee Stock Ownership Plan The cost of shares issued to the ESOP, but not yet allocated to participants, is shown as a reduction of stockholders' equity. Compensation expense is based on the market price of shares as they are committed to be released to participant accounts. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are determined using the liability 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 basis 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. The Company does not have any uncertain tax positions at December 31, 2015 and 2014 which require accrual or disclosure. The Company records interest and penalties as part of income tax expense, if applicable. |
Earnings Per Common Share | Earnings Per Common Share Basic earnings (loss) per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) 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 (loss) that would result from the assumed issuance. There were no potentially dilutive common stock equivalents as of December 31, 2015 and 2104. Earnings (loss) per share is not presented for the year ended December 31, 2014 as common shares had not been outstanding during the entire period. Unallocated ESOP shares are not deemed outstanding for the earnings per share calculation. |
Comprehensive Income/Loss | Comprehensive Income/Loss Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the stockholders' equity section of the consolidated balance sheets, such items, along with net income/loss, are components of comprehensive income/loss. The Bank measures the pension plan assets and pension obligations on an annual basis and recognizes in the consolidated financial statements an asset or liability for the plan's funded status. Accumulated other comprehensive loss represents the actuarial loss that will be amortized through salary and employee benefits expense, and amounted to $456,000 and $566,000, at December 31, 2015 and 2014, respectively net of related tax effects of $182,000 and $226,000, respectively. |
Dividends | Dividends The Company and the Bank are regulated enterprises and their abilities to pay dividends are subject to regulatory review and restrictions. Certain regulatory and statutory restrictions exist regarding dividends, loans, and advances from the Bank to the Compnay. The FDIC and the Federal Reserve have the authority to use their enforcement powers to prohibit dividend payments if, in their opinion, the payment of dividends would constitute an unsafe or unsound practice. |
Segments and Significant Group Concentrations of Credit Risk | Segments and Significant Group Concentrations of Credit Risk Management evaluates the Bank'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 Bank does not derive revenues from or have assets located in foreign countries, nor does it derive revenue from any single customer that represents 10% or more of the Bank's total revenues. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements As an "emerging growth company," as defined in Title 1 of the Jumpstart Our Business Startups (JOBS) Act, the Corporation has elected to use the extended transition period to delay adoption of new or reissued accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, the consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. As of December 31, 2015, there is no significant difference in the comparability of the financial statements as a result of this extended transition period. In January 2014, the FASB issued ASU 2014-04, Receivables-Troubled Debt Restructurings by Creditors (Subtopic 310-40), which is intended to reduce diversity by clarifying when an in-substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The ASU also provides guidance on disclosures of the amount of foreclosed residential real estate properties and of the recorded investment in consumer mortgage loans that are in process of foreclosure. Under the extended transition period for the emerging growth company, the Corporation adopted this standard for the annual periods beginning after December 15, 2014 and for interim periods within annual periods beginning after December 15, 2015. The adoption of the standard was not material. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The ASU requires equity instruments (except those accounted for under the equity method of accounting or that result in consolidations 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 an equity investment that does not have a readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions. For public business entities, the standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2018 and interim periods within fiscal periods after December 15, 2019. We do not expect a significant impact upon adoption on January 1, 2019. |
LOANS (Tables)
LOANS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
LOANS | |
Summary of the balances of loans | December 31, 2015 2014 (In thousands) Residential real estate mortgage loans: 1 - 4 family $ $ Home equity loans and lines of credit Total residential real estate mortgage loans Commercial: Commercial real estate Commercial business Commercial construction SBA Total commercial loans Consumer Total loans Allowance for loan losses ) ) Net deferred loan costs Loans, net $ $ |
Schedule of activity in the allowance for loan losses and allocation of the allowance to loan segments | Year Ended December 31, 2015 Residential 1 - 4 Family Home Equity Commercial Real Estate Commercial Business Commercial Construction SBA Consumer Total (In thousands) Allowance for loan losses: Beginning balance $ $ $ $ $ $ $ $ Provisions (credit) for loan losses ) ) Loans charged-off ) ) — — — ) ) ) Recoveries — — — Ending balance $ $ $ $ $ $ $ $ December 31, 2015 Residential 1 - 4 Family Home Equity Commercial Real Estate Commercial Business Commercial Construction SBA Consumer Total (In thousands) Allowance for impaired loans $ $ $ — $ — $ — $ — $ $ Allowance for non-impaired loans Total allowance for loan losses $ $ $ $ $ $ $ $ Impaired loans $ $ $ $ — $ — $ $ $ Non-impaired loans Total loans $ $ $ $ $ $ $ $ Year Ended December 31, 2014 Residential 1 - 4 Family Home Equity Commercial Real Estate Commercial Business Commercial Construction SBA Consumer Total (In thousands) Allowance for loan losses: Beginning balance $ $ $ $ $ $ $ $ Provisions (credit) for loan losses ) ) Loans charged-off ) ) — — — ) ) ) Recoveries — — — Ending balance $ $ $ $ $ $ $ $ December 31, 2014 Residential 1 - 4 Family Home Equity Commercial Real Estate Commercial Business Commercial Construction SBA Consumer Total (In thousands) Allowance for impaired loans $ $ $ — $ — $ — $ $ $ Allowance for non-impaired loans Total allowance for loan losses $ $ $ $ $ $ $ $ Impaired loans $ $ $ — $ — $ — $ $ $ Non-impaired loans Total loans $ $ $ $ $ $ $ $ |
Schedule of past due and non-accrual loans | 30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days or more Past Due Total Past Due Past Due > 90 Days and Still Accruing Loans on Non-accrual (In thousands) December 31, 2015 Residential real estate: Residential 1 - 4 family $ $ $ $ $ — $ Home equity loans and lines of credit — Commercial real estate — — — Commercial business — — — — — — Commercial construction — — — — — — SBA — — — Consumer — — — — Total $ $ $ $ $ — $ December 31, 2014 Residential real estate: Residential 1 - 4 family $ — $ $ $ $ — $ Home equity loans and lines of credit — Commercial real estate — — — — — — Commercial — — — — Commercial construction — — — — — — SBA — — Consumer — — — — Total $ $ $ $ $ — $ |
Schedule of information pertaining to impaired loans | December 31, 2015 December 31, 2014 Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance (Dollars in thousands) Impaired loans without a valuation allowance: Residential real estate: Residential 1 - 4 family $ $ $ — $ $ $ — Home equity loans and lines of credit — — Commercial real estate — — — — SBA — — Consumer — — — — Total $ $ $ — $ $ $ — Impaired loans with a valuation allowance: Residential real estate: Residential 1 - 4 family $ $ $ $ $ $ Home equity loans and lines of credit SBA — — — Consumer Total $ $ $ $ $ $ Year ended December 31, 2015 Year ended December 31, 2014 Average Recorded Investment Interest Income Recognized Interest Income Recognized on Cash Basis Average Recorded Investment Interest Income Recognized Interest Income Recognized on Cash Basis (Dollars in thousands) Residential real estate: Residential 1 - 4 family $ $ $ $ $ $ Home equity loans and lines of credit Commercial real estate — — — SBA Consumer — — — Total $ $ $ $ $ $ |
Schedule of troubled debt restructurings | Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment (In thousands) Year Ended December 31, 2015 Residential 1 - 4 family $ $ Home equity and lines of credit Commercial real estate SBA Year Ended December 31, 2014 Residential 1 - 4 family $ $ Home equity and lines of credit SBA Consumer — — |
Schedule of troubled debt restructurings that subsequently defaulted within 12 months of restructuring | Number of Contracts Recorded Investment (In thousands) Year Ended December 31, 2015 Residential 1 - 4 family $ Home equity SBA Year Ended December 31, 2014 Residential 1 - 4 family $ SBA |
Schedule of the Bank's commercial loans by risk rating | December 31, 2015 Commercial Real Estate Commercial Business Commercial Construction SBA Total (In thousands) Loans rated 1 - 5 $ $ $ $ $ Loans rated 5.5 — Loans rated 6 — — Loans rated 7 — — Loans rated 8 — — — — — $ $ $ $ $ December 31, 2014 Commercial Real Estate Commercial Business Commercial Construction SBA Total (In thousands) Loans rated 1 - 5 $ $ $ $ $ Loans rated 5.5 — — Loans rated 6 — — Loans rated 7 — Loans rated 8 — — — — — $ $ $ $ $ |
PREMISES AND EQUIPMENT (Tables)
PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PREMISES AND EQUIPMENT | |
Summary of the cost and accumulated depreciation and amortization of premises and equipment | December 31, 2015 2014 (In thousands) Land $ $ Buildings and improvements Furniture, fixtures and equipment Leasehold improvements Less accumulated depreciation and amortization ) ) $ $ |
Schedule of future minimum lease commitments | Pursuant to terms of the lease agreements in effect at December 31, 2015, future minimum lease commitments are as follows (in thousands): 2016 $ 2017 2018 2019 — 2020 — Thereafter — $ |
DEPOSITS (Tables)
DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
DEPOSITS | |
Summary of deposit balances, by type | December 31, 2015 2014 (In thousands) Non-interest-bearing demand deposit accounts $ $ Savings accounts and interest-bearing DDA Money market accounts Club accounts Total non-certificate accounts Term certificates $250,000 or greater Term certificates less than $250,000 Total certificate accounts Total deposits $ $ |
Summary of certificate accounts by maturity | December 31, 2015 December 31, 2014 Maturing Periods Amount Weighted Average Rate Amount Weighted Average Rate (Dollars in thousands) Within 1 year $ % $ % Within 2 years Within 3 years Within 4 years Within 5 years Within 6 years — — $ % $ % |
BORROWED FUNDS (Tables)
BORROWED FUNDS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
BORROWED FUNDS | |
Schedule of Long-term FHLB advances | December 31, 2014 Amount Weighted Average Rate (Dollars in thousands) Non-amortizing advances maturing: 2015 % Total FHLB advances $ % |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
EMPLOYEE BENEFITS | |
Schedule of change in benefit obligation | Years ended December 31, 2015 2014 (In thousands) Change in benefit obligation: Benefit obligation at beginning of year $ $ Interest cost Actuarial (gain) loss ) Benefits paid ) ) Projected benefit obligation at end of year |
Schedule of change in plan assets | Change in plan assets: Fair value of plan assets at beginning of year Actual return on plan assets Employer contribution — Benefits paid ) ) Fair value of plan assets at end of year Unfunded status and (prepaid) accrued pension benefit at end of year $ $ Accumulated benefit obligation at end of year $ $ |
Schedule of components of net periodic pension cost | Years Ended December 31, 2015 2014 (In thousands) Interest cost $ $ Expected return on plan assets ) ) Amortization of actuarial loss Settlement cost $ $ |
Schedule of assumptions used to determine net periodic pension cost | Years Ended December 31, 2015 2014 Discount rate % % Expected return on plan assets % % |
Summary of the fair values of major categories of pension plan assets | December 31, 2015 2014 (In thousands) Equity securities: Domestic mutual funds $ $ Fixed income International mutual funds International exchange traded funds Cash and cash equivalents $ $ |
Schedule of estimated future benefit payments | Years Ending December 31, Amount (In thousands) 2016 $ 2017 2018 2019 2020 Thereafter |
Schedule of shares held by the ESOP | December 31, 2015 Allocated Distributions ) Committed to be allocated — Unallocated |
OFF-BALANCE SHEET ACTIVITIES 32
OFF-BALANCE SHEET ACTIVITIES AND MORTGAGE BANKING (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
OFF-BALANCE SHEET ACTIVITIES AND MORTGAGE BANKING | |
Schedule of financial instruments outstanding whose contract amounts represent credit risk | December 31, 2015 2014 (In thousands) Commitments to originate loans for portfolio $ $ Commitments to originate loans to be sold Commitments to purchase loans from third parties Unfunded commitments under home equity lines of credit Unfunded commitments under commercial lines of credit Unfunded commitments under SBA lines of credit Unfunded commitments under overdraft lines of credit Unadvanced funds on construction loans |
Schedule of the fair values of derivative loan commitments and forward sale commitments in the consolidated balance sheet | Assets Liabilities Balance Sheet Location Fair Value Balance Sheet Location Fair Value (In thousands) December 31, 2015 Derivative loan commitments $ N/A $ — Commitments hedged with best efforts Other assets N/A — Commitments hedged with TBA Other assets N/A — Total derivative commitments N/A — Forward loan sale commitments N/A — Best efforts contracts N/A — Other liabilities Mandatory delivery contracts Other assets N/A — TBA securities N/A — Other liabilities Total forward loans sale commitments Total derivative loan and forward loan sale commitments $ $ Assets Liabilities Balance Sheet Location Fair Value Balance Sheet Location Fair Value (In thousands) December 31, 2014 Derivative loan commitments Other assets $ N/A $ — Forward loan sale commitments N/A — Other liabilities Total derivatives not designated as hedging instruments $ $ |
Schedule of information pertaining to the gains and losses on Bank's derivative loan commitments not designated as hedging instruments and forward loan sale commitments | Years Ended December 31, Location of Gain/(Loss) 2015 2014 (In thousands) Derivative loan commitments—best efforts Net gain on sales of loans and other mortgage banking income $ $ Derivative loan commitments—TBA Net gain on sales of loans and other mortgage banking income — Best efforts contracts Net gain on sales of loans and other mortgage banking income ) ) Mandatory delivery contracts Net gain on sales of loans and other mortgage banking income — TBA securities Net gain on sales of loans and other mortgage banking income ) — Total $ $ ) |
LOANS TO RELATED PARTIES (Table
LOANS TO RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
LOANS TO RELATED PARTIES | |
Schedule of loans to directors, executive officers and their associates | Years Ended December 31, 2015 2014 (In thousands) Balance at beginning of year $ $ Principal additions Principal payments ) ) Balance at end of year $ $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
Schedule of allocation of income taxes between current and deferred portions | Years Ended December 31, 2015 2014 (In thousands) Current tax expense (benefit): Federal $ $ ) State Deferred tax expense (benefit): Federal ) State ) ) Total income tax expense (benefit) $ $ ) |
Summary of reasons for the differences between the statutory federal income tax expense (benefit) and the actual tax expense (benefit) | Years Ended December 31, 2015 2014 (In thousands) Statutory tax expense (benefit) at 34% $ $ ) Increase (decrease) resulting from: State taxes, net of federal tax benefit Other, net ) ) $ $ ) |
Schedule of deferred taxes | December 31, 2015 2014 (In thousands) Deferred tax assets: Allowance for loan losses $ $ Employee benefits Non-accrual interest Defined benefit pension plan Charitable contribution carryforwards Organization costs Impairment on real estate held for sale Other, net Total deferred tax assets Deferred tax liabilities: Premises and equipment, net ) ) Net deferred loan costs ) ) Mortgage derivatives ) ) Other, net ) ) Total deferred tax liabilities ) ) Deferred tax asset, net $ $ |
Summary of change in deferred taxes | Years Ended December 31, 2015 2014 (In thousands) Balance at beginning of year $ $ Deferred tax (expense) benefit ) Unrealized gain/loss pertaining to defined benefit pension plan ) Balance at end of year $ $ |
MINIMUM REGULATORY CAPITAL RE35
MINIMUM REGULATORY CAPITAL REQUIREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
MINIMUM REGULATORY CAPITAL REQUIREMENTS | |
Schedule of the Bank's actual and minimum required capital amounts | Actual Minimum Capital for Capital Adequacy Purposes Minimum Capital to be Well Capitalized (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio December 31, 2015 Total capital (to risk weighted assets) $ % $ % $ % Tier 1 capital (to risk weighted assets) % % Common Equity Tier 1 (to risk weighted assets) % % Tier 1 leverage capital (to average assets) % % December 31, 2014 Total capital (to risk weighted assets) $ % $ % $ % Tier 1 capital (to risk weighted assets) Tier 1 capital (to average assets) |
FAIR VALUES OF ASSETS AND LIA36
FAIR VALUES OF ASSETS AND LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair values of assets and liabilities | |
Schedule of change in Level 3 assets and liabilities that are measured on a recurring basis | The table below presents (in thousands), for the years ended December 31, 2015 and 2014, the changes in Level 3 assets and liabilities, consisting of derivative loan and forward sale commitments, that are measured on a recurring basis. There were no transfers between levels during the periods presented. 2015 2014 Balance at beginning of year Gains (loss) arising during the period — — Gains (loss) on new commitments during the period ) Reclassifications of realized gains on settled commitments ) ) Balance at end of year $ $ |
Summary of the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets | December 31, 2015 Year Ended December 31, 2015 Level 1 Level 2 Level 3 Total Losses (In thousands) Foreclosed real estate $ — $ — $ $ Impaired loans — — ) Real estate held for sale — — $ — $ $ $ December 31, 2014 Year Ended December 31, 2014 Level 1 Level 2 Level 3 Total Losses (In thousands) Foreclosed real estate $ — $ — $ $ Impaired loans — — Real estate held for sale — — $ — $ — $ $ |
Schedule of aggregate fair value, contractual balance and gain or loss under fair value option for loans held for sale | 2015 (in thousands) Aggregate fair value $ Contractual balance Gain (loss) |
Summary of carrying values, estimated fair values and placement in the fair value hierarchy of the Company's financial instruments | December 31, 2015 Fair Value Measurements Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3 (In thousands) Financial assets: Loans, net of allowance for loan losses $ $ $ — $ — $ Loans held for sale — — FHLB stock N/A — — N/A Financial liabilities: Certificates of deposit — — Borrowed funds — — December 31, 2014 Fair Value Measurements Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3 (In thousands) Financial assets: Loans, net of allowance for loan losses $ $ $ — $ — $ Loan held for sale — — FHLB stock N/A — — N/A Financial liabilities: Certificates of deposit — — Borrowed funds — — (1) Excluded from this table are certain financial instruments that approximate fair value, as they were short-term in nature or payable on demand. These include cash and cash equivalents, certificates of deposit, accrued interest receivable, non-term deposit accounts, and accrued interest payable. The respective carrying values of cash and cash equivalents, certificates of deposit and non-term deposit accounts would all be considered to be classified within Level 1 of their fair value hierarchy. The $1.4 million and $1.3 million carrying value of accrued interest receivable on loans at December 31, 2015 and December 31, 2014, would generally be considered Level 3 in the fair value hierarchy and the carrying value of accrued interest payable of $24,000 and $11,000 would be considered Level 2 at December 31, 2015 and December 31, 2014, respectively. |
Recurring | |
Fair values of assets and liabilities | |
Schedule of significant unobservable inputs used in the fair value measurements of Level 3 assets and liabilities | Measurements Asset (Liability) Fair Value Valuation Technique Unobservable Inputs Range (In thousands) December 31, 2015 Derivative loan commitments $ Investor pricing Pull-through rate 79.6% - 100% Forward loan sale commitments—best efforts contracts ) Investor pricing Pull-through rate 82.5% - 100% December 31, 2014 Derivative loan commitments $ Investor pricing Pull-through rate 82.5 - 100% Forward loan sale commitments ) Investor pricing Pull through rate 82.5% - 100% |
Non-recurring | |
Fair values of assets and liabilities | |
Schedule of significant unobservable inputs used in the fair value measurements of Level 3 assets and liabilities | Measurements Fair Value Valuation Technique Unobservable Inputs Range (In thousands) December 31, 2015 Foreclosed real estate $ Discounted appraisals Collateral discounts 5 - 30% Impaired loans Discounted appraisals Collateral discounts 5 - 30% December 31, 2014 Foreclosed real estate $ Discounted appraisals Collateral discounts 5 - 30% Impaired loans Discounted appraisals Collateral discounts 5 - 30% Real estate held for sale Appraisal Selling costs 5 - 6% |
PARENT COMPANY FINANCIAL STAT37
PARENT COMPANY FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PARENT COMPANY FINANCIAL STATEMENTS | |
Schedule of balance sheets | BALANCE SHEETS December 31 2015 December 31 2014 (in thousands) Assets Cash $ $ Certificates of Deposit Investments in subsidiaries Note receivable from subsidiary Other assets Total assets $ $ Liabilities and stockholders' equity Other liabilities $ $ Stockholders' equity Total liabilities and stockholders' equity $ $ |
Schedule of net Income (loss) | STATEMENTS OF NET INCOME (LOSS) Year-ended December 31 Year-ended December 31 2015 2014 (in thousands) Income Interest income $ $ Expenses Other expenses Loss before income taxes and equity in undistributed income (loss) of subsidiaries ) ) Income tax benefit ) ) Loss of parent company ) ) Equity in undistributed income (loss) of subsidiaries ) Net income (loss) $ $ ) |
Schedule of cash flows | STATEMENTS OF CASH FLOWS Year-ended December 31 Year-ended December 31 2015 2014 (in thousands) Cash flows from operating activities: Net income (loss) $ $ ) Adjustments to reconcile net loss to cash used in operating activities Change in other assets ) Change in other liabilities Equity in undistributed income (loss) of subsidiaries ) Net cash provided by (used in) operating activities ) Cash flows used in investing activities: Purchase of certificates of deposit ) ) Change in note receivable from subsidiary, net ) Net cash used in investing activities ) ) Cash flows used in financing activities: Repurchase of common stock ) — Issuance of common stock for initial public offering — Purchase of common stock by ESOP — ) Proceeds from initial public offering contributed to subsidiary — ) Net cash provided by (used in) financing activities ) Net increase (decrease) in cash and cash equivalents ) Cash and cash equivalents at the beginning of the year — Cash and cash equivalents at the end of the year $ $ |
EARNINGS PER COMMON SHARE AND S
EARNINGS PER COMMON SHARE AND STOCK REPURCHASE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
EARNINGS PER SHARE AND STOCK REPURCHASE | |
Schedule of earnings (loss) per common share | 2015 (in thousands) Basic and Diluted; Net income $ Weighted average common shares outstanding Less: Average unallocated ESOP shares Average shares Basic and diluted earnings per common share $ |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Nature of Operations & Stock Conversions (Details) - USD ($) | Jan. 14, 2014 | Jan. 13, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Summary Of Significant Accounting Policies | |||||||
Number of shares of common stock offering on a priority basis to qualifying depositors and to the general public, including those issued to tax qualified employee benefit plans | 4,827,125 | ||||||
Share price (in dollars per share) | $ 10 | ||||||
Net proceeds from common stock offering on a priority basis to qualifying depositors and to the general public, including those issued to tax qualified employee benefit plans | $ 46,300,000 | ||||||
Amount of cash contribution to Coastway Cares Charitable Foundation II | $ 300,000 | ||||||
Number of common stock shares contribution to Coastway Cares Charitable Foundation II | 122,054 | ||||||
Total contribution to Coastway Cares Charitable Foundation II as a percentage of gross proceeds of offering | 3.15% | ||||||
Gross proceeds of the offering | $ 1,521,000 | ||||||
Gross proceeds of the offering | $ 1,500,000 | ||||||
Total number of shares of common stock outstanding upon completion of the Conversion | 4,949,179 | ||||||
Number of shares of stock issued in conversion that were acquired by ESOP | 395,934 | ||||||
Liquidation amount | $ 27,500,000 | ||||||
Real Estate Held for Development and Sale | |||||||
Impairment loss on real estate held for sale | $ 581,000 | 1,099,000 | $ 482,000 | ||||
Bank | |||||||
Federal Home Loan Bank Stock | |||||||
Impairment | $ 0 | $ 0 | |||||
Bancorp | |||||||
Summary Of Significant Accounting Policies | |||||||
Ownership percentage | 100.00% | ||||||
Coastway Bancorp, MHC | |||||||
Summary Of Significant Accounting Policies | |||||||
Ownership percentage | 100.00% | ||||||
Real estate, Held-for-sale | Located in Coventry | |||||||
Real Estate Held for Development and Sale | |||||||
Sale price | $ 1,100,000 | $ 1,100,000 | |||||
Impairment loss on real estate held for sale | 195,000 | ||||||
Real estate, Held-for-sale | Located in Cranston | |||||||
Real Estate Held for Development and Sale | |||||||
Sale price | 2,400,000 | $ 2,400,000 | |||||
Impairment loss on real estate held for sale | $ 386,000 |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loan Loss Allowance (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Allowance for Loan Losses | |
Historical loss period used to capture relevant loss data for each loan segment | 10 years |
Period of charge-off trends to be considered for adjustment to historical loss factor | 3 years |
Period of satisfactory payments to return loan from TDR to accrual status | 6 months |
Commercial loans | Commercial construction | |
Allowance for Loan Losses | |
Loans provided as a percentage of projected costs | 50.00% |
Commercial loans | SBA | Maximum | |
Allowance for Loan Losses | |
Percentage of principal and accrued interest that may qualify for guarantees | 85.00% |
Amount of principal and accrued interest that may qualify for guarantees | $ 3,750 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Real Estate thru Comprehensive Income/Loss (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 01, 2013 | |
Real estate | |||||
Period within which transfer of the asset is expected to qualify for recognition of sale | 1 year | ||||
Premises and equipment, net | $ 31,407,000 | $ 31,938,000 | |||
Real estate held for sale | 3,305,000 | 3,831,000 | |||
Impairment loss on real estate held for sale | 581,000 | 1,099,000 | $ 482,000 | ||
Comprehensive Income/Loss | |||||
Actuarial loss amortized through pension expense, net of tax | 456,000 | 566,000 | |||
Actuarial loss amortized through pension expense, tax effect | $ 182,000 | 226,000 | |||
Loss on entering into purchase and sale agreement | $ 393,000 | ||||
Reclassification of undeveloped land | |||||
Real estate | |||||
Real estate held for investment | $ 1,400,000 | ||||
Real estate held for sale | 1,400,000 | ||||
Reclassification of land and building | |||||
Real estate | |||||
Premises and equipment, net | 2,600,000 | ||||
Real estate held for sale | $ 2,600,000 | ||||
Reclassification of premises and equipment | |||||
Real estate | |||||
Impairment loss on real estate held for sale | $ 706,000 |
RESTRICTIONS ON CASH AND AMOU42
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS | ||
Reserve balance | $ 2.6 | $ 2.2 |
CERTIFICATES OF DEPOSIT (Detail
CERTIFICATES OF DEPOSIT (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Certificates of deposit | $ 6,074 | $ 3,016 |
December 2,016 | ||
Certificates of deposit | $ 3,000 | |
Certificate of deposit interest rate (as a percent) | 0.70 | |
April 2,016 | ||
Certificates of deposit | $ 3,100 | |
Certificate of deposit interest rate (as a percent) | 0.65 | |
Parent Company | ||
Certificates of deposit | $ 6,074 | $ 3,016 |
LOANS - Loan Balances (Details)
LOANS - Loan Balances (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Loans | |||
Total loans | $ 465,556,000 | $ 383,163,000 | |
Allowance for loan losses | (2,194,000) | (1,942,000) | $ (1,656,000) |
Net deferred loan costs | 3,661,000 | 2,688,000 | |
Loans, net | $ 467,023,000 | 383,909,000 | |
Lines of credit | |||
Loans | |||
Guarantees (as a percent) | 50.00% | ||
Residential 1-4 family | |||
Loans | |||
Allowance for loan losses | $ (863,000) | (654,000) | (462,000) |
Home equity and lines of credit | |||
Loans | |||
Allowance for loan losses | (525,000) | (584,000) | (605,000) |
Commercial real estate | |||
Loans | |||
Allowance for loan losses | (503,000) | (400,000) | (321,000) |
Commercial business | |||
Loans | |||
Allowance for loan losses | (39,000) | (28,000) | (29,000) |
Commercial construction | |||
Loans | |||
Allowance for loan losses | (21,000) | (30,000) | (24,000) |
SBA | |||
Loans | |||
Allowance for loan losses | (234,000) | (236,000) | $ (197,000) |
Guaranteed portions | 24,800,000 | 29,200,000 | |
SBA | Loans in excess of $150,000 | |||
Loans | |||
Base amount for computation of guarantee percentage of loans | $ 150,000 | ||
Guarantees (as a percent) | 75.00% | ||
SBA | Loans less than $150,000 | |||
Loans | |||
Base amount for computation of guarantee percentage of loans | $ 150,000 | ||
Guarantees (as a percent) | 85.00% | ||
Consumer | |||
Loans | |||
Total loans | $ 1,252,000 | 1,372,000 | |
Residential real estate mortgage loans | |||
Loans | |||
Total loans | 285,658,000 | 213,855,000 | |
Residential real estate mortgage loans | Residential 1-4 family | |||
Loans | |||
Total loans | 208,777,000 | 134,084,000 | |
Current balance of the loans purchased from third parties | 64,100,000 | 11,900,000 | |
Loans purchased from third party originators during the year | 56,700,000 | ||
Cost of loans purchased from third parties during the year | 57,400,000 | ||
Residential real estate mortgage loans | Home equity and lines of credit | |||
Loans | |||
Total loans | 76,881,000 | 79,771,000 | |
Commercial loans | |||
Loans | |||
Total loans | 178,646,000 | 167,936,000 | |
Commercial loans | Commercial real estate | |||
Loans | |||
Total loans | 125,782,000 | 108,025,000 | |
Commercial loans | Commercial business | |||
Loans | |||
Total loans | 8,918,000 | 7,698,000 | |
Commercial loans | Commercial construction | |||
Loans | |||
Total loans | 4,729,000 | 8,181,000 | |
Commercial loans | SBA | |||
Loans | |||
Total loans | $ 39,217,000 | $ 44,032,000 |
LOANS - Allowance for Loan Loss
LOANS - Allowance for Loan Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for loan losses: | ||||
Allowance at beginning of the period | $ 1,942 | $ 1,656 | ||
Provision (credit) for loan losses | 496 | 432 | ||
Loans charged-off | (300) | (278) | ||
Recoveries | 56 | 132 | ||
Allowance at the end of the period | 2,194 | 1,942 | ||
Allowance for loan losses | ||||
Allowance for impaired loans | $ 63 | $ 229 | ||
Allowance for non-impaired loans | 2,131 | 1,713 | ||
Total | 1,942 | 1,656 | 2,194 | 1,942 |
Loans | ||||
Impaired loans | 7,704 | 9,295 | ||
Non-impaired loans | 457,852 | 373,868 | ||
Total Loans | 465,556 | 383,163 | ||
Consumer | ||||
Allowance for loan losses: | ||||
Allowance at beginning of the period | 10 | 18 | ||
Provision (credit) for loan losses | (8) | (26) | ||
Loans charged-off | (6) | (3) | ||
Recoveries | 13 | 21 | ||
Allowance at the end of the period | 9 | 10 | ||
Allowance for loan losses | ||||
Allowance for impaired loans | 3 | 4 | ||
Allowance for non-impaired loans | 6 | 6 | ||
Total | 10 | 18 | 9 | 10 |
Loans | ||||
Impaired loans | 14 | 25 | ||
Non-impaired loans | 1,238 | 1,347 | ||
Total Loans | 1,252 | 1,372 | ||
Residential 1-4 family | ||||
Allowance for loan losses: | ||||
Allowance at beginning of the period | 654 | 462 | ||
Provision (credit) for loan losses | 337 | 222 | ||
Loans charged-off | (139) | (112) | ||
Recoveries | 11 | 82 | ||
Allowance at the end of the period | 863 | 654 | ||
Allowance for loan losses | ||||
Allowance for impaired loans | 43 | 144 | ||
Allowance for non-impaired loans | 820 | 510 | ||
Total | 654 | 462 | 863 | 654 |
Loans | ||||
Impaired loans | 4,224 | 6,664 | ||
Non-impaired loans | 204,553 | 127,420 | ||
Total Loans | 208,777 | 134,084 | ||
Home equity and lines of credit | ||||
Allowance for loan losses: | ||||
Allowance at beginning of the period | 584 | 605 | ||
Provision (credit) for loan losses | 53 | 84 | ||
Loans charged-off | (128) | (129) | ||
Recoveries | 16 | 24 | ||
Allowance at the end of the period | 525 | 584 | ||
Allowance for loan losses | ||||
Allowance for impaired loans | 17 | 68 | ||
Allowance for non-impaired loans | 508 | 516 | ||
Total | 584 | 605 | 525 | 584 |
Loans | ||||
Impaired loans | 1,055 | 800 | ||
Non-impaired loans | 75,826 | 78,971 | ||
Total Loans | 76,881 | 79,771 | ||
Commercial real estate | ||||
Allowance for loan losses: | ||||
Allowance at beginning of the period | 400 | 321 | ||
Provision (credit) for loan losses | 103 | 79 | ||
Allowance at the end of the period | 503 | 400 | ||
Allowance for loan losses | ||||
Allowance for non-impaired loans | 503 | 400 | ||
Total | 400 | 321 | 503 | 400 |
Loans | ||||
Impaired loans | 398 | |||
Non-impaired loans | 125,384 | 108,025 | ||
Total Loans | 125,782 | 108,025 | ||
Commercial business | ||||
Allowance for loan losses: | ||||
Allowance at beginning of the period | 28 | 29 | ||
Provision (credit) for loan losses | 11 | (1) | ||
Allowance at the end of the period | 39 | 28 | ||
Allowance for loan losses | ||||
Allowance for non-impaired loans | 39 | 28 | ||
Total | 28 | 29 | 39 | 28 |
Loans | ||||
Non-impaired loans | 8,918 | 7,698 | ||
Total Loans | 8,918 | 7,698 | ||
Commercial construction | ||||
Allowance for loan losses: | ||||
Allowance at beginning of the period | 30 | 24 | ||
Provision (credit) for loan losses | (9) | 6 | ||
Allowance at the end of the period | 21 | 30 | ||
Allowance for loan losses | ||||
Allowance for non-impaired loans | 21 | 30 | ||
Total | 30 | 24 | 21 | 30 |
Loans | ||||
Non-impaired loans | 4,729 | 8,181 | ||
Total Loans | 4,729 | 8,181 | ||
SBA | ||||
Allowance for loan losses: | ||||
Allowance at beginning of the period | 236 | 197 | ||
Provision (credit) for loan losses | 9 | 68 | ||
Loans charged-off | (27) | (34) | ||
Recoveries | 16 | 5 | ||
Allowance at the end of the period | 234 | 236 | ||
Allowance for loan losses | ||||
Allowance for impaired loans | 13 | |||
Allowance for non-impaired loans | 234 | 223 | ||
Total | $ 236 | $ 197 | 234 | 236 |
Loans | ||||
Impaired loans | 2,013 | 1,806 | ||
Non-impaired loans | 37,204 | 42,226 | ||
Total Loans | 39,217 | 44,032 | ||
Guaranteed portions of impaired loans | $ 1,700 | $ 1,400 |
LOANS - Past Due Loans (Details
LOANS - Past Due Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Past due loans | ||
Total Past Due | $ 4,516 | $ 3,538 |
Loans on Non-accrual | 4,240 | 6,444 |
Consumer | ||
Past due loans | ||
Total Past Due | 123 | 8 |
Residential 1-4 family | ||
Past due loans | ||
Total Past Due | 2,168 | 2,775 |
Loans on Non-accrual | 3,068 | 5,870 |
Home equity and lines of credit | ||
Past due loans | ||
Total Past Due | 1,519 | 462 |
Loans on Non-accrual | 466 | 370 |
Commercial real estate | ||
Past due loans | ||
Total Past Due | 239 | |
Loans on Non-accrual | 239 | |
Commercial business | ||
Past due loans | ||
Total Past Due | 84 | |
SBA | ||
Past due loans | ||
Total Past Due | 467 | 209 |
Loans on Non-accrual | 467 | 204 |
30 to 59 Days Past Due | ||
Past due loans | ||
Total Past Due | 2,529 | 301 |
30 to 59 Days Past Due | Consumer | ||
Past due loans | ||
Total Past Due | 123 | |
30 to 59 Days Past Due | Residential 1-4 family | ||
Past due loans | ||
Total Past Due | 1,156 | |
30 to 59 Days Past Due | Home equity and lines of credit | ||
Past due loans | ||
Total Past Due | 1,250 | 301 |
60 to 89 Days Past Due | ||
Past due loans | ||
Total Past Due | 881 | 700 |
60 to 89 Days Past Due | Consumer | ||
Past due loans | ||
Total Past Due | 8 | |
60 to 89 Days Past Due | Residential 1-4 family | ||
Past due loans | ||
Total Past Due | 642 | 580 |
60 to 89 Days Past Due | Home equity and lines of credit | ||
Past due loans | ||
Total Past Due | 239 | 8 |
60 to 89 Days Past Due | Commercial business | ||
Past due loans | ||
Total Past Due | 84 | |
60 to 89 Days Past Due | SBA | ||
Past due loans | ||
Total Past Due | 20 | |
90 Days or more Past Due | ||
Past due loans | ||
Total Past Due | 1,106 | 2,537 |
90 Days or more Past Due | Residential 1-4 family | ||
Past due loans | ||
Total Past Due | 370 | 2,195 |
90 Days or more Past Due | Home equity and lines of credit | ||
Past due loans | ||
Total Past Due | 30 | 153 |
90 Days or more Past Due | Commercial real estate | ||
Past due loans | ||
Total Past Due | 239 | |
90 Days or more Past Due | SBA | ||
Past due loans | ||
Total Past Due | $ 467 | $ 189 |
LOANS - Impaired Loans (Details
LOANS - Impaired Loans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Recorded investment in impaired loans and the related specific allowance allocated | |||
Recorded investment with no allowance | $ 6,532 | $ 6,031 | |
Recorded investment with allowance | 1,172 | 3,264 | |
Unpaid Principal Balance | |||
With no related allowance recorded | 6,723 | 6,220 | |
With an allowance recorded | 1,214 | 3,351 | |
Related Allowance | |||
Allowance for impaired loans | 63 | 229 | |
Average recorded investment | 8,447 | 9,570 | |
Interest income recognized | 340 | 418 | |
Interest Income Recognized on Cash Basis | 137 | 312 | |
Additional funds committed to be advanced for impaired loans | 0 | 0 | |
Residential 1-4 family | |||
Recorded investment in impaired loans and the related specific allowance allocated | |||
Recorded investment with no allowance | 3,287 | 3,658 | |
Recorded investment with allowance | 937 | 3,006 | |
Unpaid Principal Balance | |||
With no related allowance recorded | 3,459 | 3,756 | |
With an allowance recorded | 999 | 3,093 | |
Related Allowance | |||
Allowance for impaired loans | 43 | 144 | |
Average recorded investment | 5,482 | 6,978 | |
Interest income recognized | 156 | 251 | |
Interest Income Recognized on Cash Basis | 110 | 217 | |
Home equity and lines of credit | |||
Recorded investment in impaired loans and the related specific allowance allocated | |||
Recorded investment with no allowance | 834 | 693 | |
Recorded investment with allowance | 221 | 107 | |
Unpaid Principal Balance | |||
With no related allowance recorded | 834 | 782 | |
With an allowance recorded | 201 | 107 | |
Related Allowance | |||
Allowance for impaired loans | 17 | 68 | |
Average recorded investment | 1,015 | 510 | |
Interest income recognized | 49 | 25 | |
Interest Income Recognized on Cash Basis | 18 | 12 | |
Commercial real estate | |||
Recorded investment in impaired loans and the related specific allowance allocated | |||
Recorded investment with no allowance | 398 | ||
Unpaid Principal Balance | |||
With no related allowance recorded | 398 | ||
Related Allowance | |||
Average recorded investment | 149 | ||
Interest income recognized | 7 | ||
Interest Income Recognized on Cash Basis | 7 | ||
SBA | |||
Recorded investment in impaired loans and the related specific allowance allocated | |||
Recorded investment with no allowance | 2,013 | 1,671 | |
Recorded investment with allowance | $ 135 | ||
Unpaid Principal Balance | |||
With no related allowance recorded | 2,032 | 1,673 | |
With an allowance recorded | 135 | ||
Related Allowance | |||
Allowance for impaired loans | 13 | ||
Average recorded investment | 1,783 | 2,054 | |
Interest income recognized | 128 | 141 | |
Interest Income Recognized on Cash Basis | 2 | 83 | |
Consumer | |||
Recorded investment in impaired loans and the related specific allowance allocated | |||
Recorded investment with no allowance | 9 | ||
Recorded investment with allowance | 14 | 16 | |
Unpaid Principal Balance | |||
With no related allowance recorded | 9 | ||
With an allowance recorded | 14 | 16 | |
Related Allowance | |||
Allowance for impaired loans | 3 | 4 | |
Average recorded investment | $ 18 | 28 | |
Interest income recognized | $ 1 |
LOANS - Troubled Debt Restructu
LOANS - Troubled Debt Restructuring (Details) | 12 Months Ended | ||
Dec. 31, 2015USD ($)contract | Dec. 31, 2014USD ($)contract | Dec. 31, 2013USD ($)contract | |
Troubled Debt Restructurings (TDRs) | |||
Total TDR loans | $ 6,600,000 | $ 7,200,000 | |
Troubled debt restructurings reserves | 56,000 | 141,000 | |
Period of current payments after which loans are returned to accrual status after a period of satisfactory payment performance | 6 months | ||
Impact on allowance for loan losses | 2,300 | 12,000 | |
Charge-offs | $ 11,000 | $ 0 | |
Residential 1-4 family | |||
Troubled Debt Restructurings (TDRs) | |||
Number of restructurings (in loans) | contract | 3 | 7 | |
Pre-modification outstanding recorded investment | $ 799,000 | $ 2,150,000 | |
Post-modification outstanding recorded investment | $ 788,000 | $ 2,150,000 | |
Home equity and lines of credit | |||
Troubled Debt Restructurings (TDRs) | |||
Number of restructurings (in loans) | contract | 6 | 5 | |
Pre-modification outstanding recorded investment | $ 368,000 | $ 300,000 | |
Post-modification outstanding recorded investment | $ 368,000 | $ 300,000 | |
Commercial real estate | |||
Troubled Debt Restructurings (TDRs) | |||
Number of restructurings (in loans) | contract | 2 | ||
Pre-modification outstanding recorded investment | $ 268,000 | ||
Post-modification outstanding recorded investment | $ 268,000 | ||
SBA | |||
Troubled Debt Restructurings (TDRs) | |||
Number of restructurings (in loans) | contract | 2 | 4 | |
Pre-modification outstanding recorded investment | $ 455,000 | $ 641,000 | |
Post-modification outstanding recorded investment | 455,000 | 641,000 | |
Accrual status | |||
Troubled Debt Restructurings (TDRs) | |||
Total TDR loans | 3,500,000 | $ 1,100,000 | $ 845,000 |
Number of restructurings (in loans) | contract | 8 | 7 | |
Default status | |||
Troubled Debt Restructurings (TDRs) | |||
Charge-offs | 16,000 | $ 0 | |
TDR recorded investment reserves | $ 20,000 | $ 45,000 | |
Default status | Residential 1-4 family | |||
Troubled debt restructurings that subsequently defaulted within 12 months of restructuring | |||
Number of TDR's that defaulted (in loans) | contract | 4 | 6 | |
Recorded investment | $ 955,000 | $ 1,374,000 | |
Default status | Home equity and lines of credit | |||
Troubled debt restructurings that subsequently defaulted within 12 months of restructuring | |||
Number of TDR's that defaulted (in loans) | contract | 2 | ||
Recorded investment | $ 45,000 | ||
Default status | SBA | |||
Troubled debt restructurings that subsequently defaulted within 12 months of restructuring | |||
Number of TDR's that defaulted (in loans) | contract | 1 | 1 | |
Recorded investment | $ 9,000 | $ 9,000 |
LOANS - Credit Quality (Details
LOANS - Credit Quality (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Credit Quality Indicators | ||
Value of commercial and SBA loan consider for risk review | $ 250,000 | |
Total loans | 465,556,000 | $ 383,163,000 |
Commercial loans | ||
Credit Quality Indicators | ||
Total loans | 178,646,000 | 167,936,000 |
Commercial loans | Loans rated 1-5 | ||
Credit Quality Indicators | ||
Total loans | 170,203,000 | 156,616,000 |
Commercial loans | Loans rated 5.5 | ||
Credit Quality Indicators | ||
Total loans | 3,454,000 | 5,123,000 |
Commercial loans | Loans rated 6 | ||
Credit Quality Indicators | ||
Total loans | 1,325,000 | 2,151,000 |
Commercial loans | Loans rated 7 | ||
Credit Quality Indicators | ||
Total loans | 3,664,000 | 4,046,000 |
Commercial loans | Commercial real estate | ||
Credit Quality Indicators | ||
Total loans | 125,782,000 | 108,025,000 |
Commercial loans | Commercial real estate | Loans rated 1-5 | ||
Credit Quality Indicators | ||
Total loans | 122,466,000 | 102,261,000 |
Commercial loans | Commercial real estate | Loans rated 5.5 | ||
Credit Quality Indicators | ||
Total loans | 1,563,000 | 3,964,000 |
Commercial loans | Commercial real estate | Loans rated 6 | ||
Credit Quality Indicators | ||
Total loans | 75,000 | 708,000 |
Commercial loans | Commercial real estate | Loans rated 7 | ||
Credit Quality Indicators | ||
Total loans | 1,678,000 | 1,092,000 |
Commercial loans | Commercial business | ||
Credit Quality Indicators | ||
Total loans | 8,918,000 | 7,698,000 |
Commercial loans | Commercial business | Loans rated 1-5 | ||
Credit Quality Indicators | ||
Total loans | 8,826,000 | 7,698,000 |
Commercial loans | Commercial business | Loans rated 5.5 | ||
Credit Quality Indicators | ||
Total loans | 92,000 | |
Commercial loans | Commercial construction | ||
Credit Quality Indicators | ||
Total loans | 4,729,000 | 8,181,000 |
Commercial loans | Commercial construction | Loans rated 1-5 | ||
Credit Quality Indicators | ||
Total loans | 4,729,000 | 7,879,000 |
Commercial loans | Commercial construction | Loans rated 7 | ||
Credit Quality Indicators | ||
Total loans | 302,000 | |
Commercial loans | SBA | ||
Credit Quality Indicators | ||
Total loans | 39,217,000 | 44,032,000 |
Commercial loans | SBA | Loans rated 1-5 | ||
Credit Quality Indicators | ||
Total loans | 34,182,000 | 38,778,000 |
Commercial loans | SBA | Loans rated 5.5 | ||
Credit Quality Indicators | ||
Total loans | 1,799,000 | 1,159,000 |
Commercial loans | SBA | Loans rated 6 | ||
Credit Quality Indicators | ||
Total loans | 1,250,000 | 1,443,000 |
Commercial loans | SBA | Loans rated 7 | ||
Credit Quality Indicators | ||
Total loans | $ 1,986,000 | $ 2,652,000 |
LOAN SERVICING (Details)
LOAN SERVICING (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commercial business | ||
Loan Servicing | ||
Aggregate amount of loans transferred to a participating lender and serviced by the company | $ 4,300,000 | $ 6,600,000 |
SBA | ||
Loan Servicing | ||
Guaranteed portion of loans sold by the bank | 4,200,000 | 0 |
Gain on loans sold by the bank | 328,000 | |
Aggregate amount of loans transferred to a participating lender and serviced by the company | $ 17,200,000 | $ 17,400,000 |
PREMISES AND EQUIPMENT - Summar
PREMISES AND EQUIPMENT - Summary of Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Premises and Equipment | ||
Premises and equipment, gross | $ 38,766 | $ 38,783 |
Less accumulated depreciation and amortization | (7,359) | (6,845) |
Premises and equipment, net | 31,407 | 31,938 |
Depreciation and amortization expense | 1,277 | 1,108 |
Land | ||
Premises and Equipment | ||
Premises and equipment, gross | 8,654 | 8,654 |
Buildings and improvements | ||
Premises and Equipment | ||
Premises and equipment, gross | 23,592 | 23,456 |
Furniture, fixtures and equipment | ||
Premises and Equipment | ||
Premises and equipment, gross | 6,312 | 6,562 |
Leasehold improvements | ||
Premises and Equipment | ||
Premises and equipment, gross | $ 208 | $ 111 |
PREMISES AND EQUIPMENT - Lease
PREMISES AND EQUIPMENT - Lease Commitments (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Future minimum lease commitments | ||
2,016 | $ 173,000 | |
2,017 | 160,000 | |
2,018 | 40,000 | |
Total | $ 373,000 | |
Renewal term | 5 years | |
Number of options available for lease extensions (in options) | item | 4 | |
Rent expense | $ 173,000 | $ 154,000 |
DEPOSITS (Details)
DEPOSITS (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
DEPOSITS | ||
Non-interest-bearing demand deposit accounts | $ 95,960 | $ 73,503 |
Savings accounts and interest-bearing DDA | 98,133 | 86,529 |
Money market accounts | 69,036 | 64,117 |
Club accounts | 1,352 | 1,189 |
Total non-certificate accounts | 264,481 | 225,338 |
Term certificates $250,000 or greater | 19,364 | 16,538 |
Term certificates less than $250,000 | 89,674 | 101,668 |
Total certificate accounts | 109,038 | 118,206 |
Total deposits | 373,519 | 343,544 |
Amount | ||
Within 1 year | 51,568 | 53,385 |
Within 2 years | 20,349 | 29,922 |
Within 3 years | 18,134 | 16,303 |
Within 4 years | 3,847 | 13,084 |
Within 5 years | 15,140 | 5,465 |
Within 6 years | 47 | |
Total certificate accounts | $ 109,038 | $ 118,206 |
Weighted Average Rate | ||
Within 1 year | 1.29% | 1.45% |
Within 2 years | 1.43% | 1.93% |
Within 3 years | 1.40% | 1.67% |
Within 4 years | 1.32% | 1.56% |
Within 5 years | 1.79% | 1.27% |
Within 6 years | 1.24% | |
Total | 1.41% | 1.60% |
BORROWED FUNDS (Details)
BORROWED FUNDS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
BORROWED FUNDS | ||
Year one | $ 115,500,000 | $ 46,500,000 |
Weighted average rate (as a percent) | 0.44% | 0.24% |
FHLB long-term advances outstanding | $ 0 | |
Long-term FHLB advances, Amount | ||
Year one | 115,500,000 | $ 46,500,000 |
Total FHLB advances | $ 1,300,000 | |
Long-term FHLB advances, Weighted Average Rate | ||
Total FHLB advances (as a percent) | 4.04% | |
Federal Reserve Bank of Boston | ||
Additional disclosures | ||
Collateral pledged to Federal Reserve Bank | 14,600,000 | |
Federal Reserve Bank of Boston | Discount window | ||
Additional disclosures | ||
Outstanding amount | 0 | $ 0 |
Lines of credit | ||
Additional disclosures | ||
Maximum borrowing capacity | 6,000,000 | 6,000,000 |
Outstanding amount | $ 0 | 0 |
Secured blanket lien on qualified collateral (as a percent) | 75.00% | |
Non-amortizing advances | ||
BORROWED FUNDS | ||
Year one | 1,300,000 | |
Long-term FHLB advances, Amount | ||
Year one | $ 1,300,000 | |
Long-term FHLB advances, Weighted Average Rate | ||
Year one (as a percent) | 4.04% |
EMPLOYEE BENEFITS - Plan Activi
EMPLOYEE BENEFITS - Plan Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
EMPLOYEE BENEFITS | ||
Expected contribution to the plan | $ 19,000 | |
Defined Benefit Pension Plan | ||
Employee benefits | ||
Number of years of employees' compensation prior to the Plan's curtailment on which benefits were based | 5 years | 5 years |
Change in benefit obligation: | ||
Benefit obligation at beginning of year | $ 1,779,000 | $ 1,806,000 |
Interest cost | 70,000 | 90,000 |
Actuarial (gain) loss | (115,000) | 357,000 |
Benefits paid | (124,000) | (474,000) |
Projected benefit obligation at end of year | 1,610,000 | 1,779,000 |
Change in plan assets: | ||
Fair value of plan assets at beginning of year | 1,539,000 | 1,868,000 |
Actual return on plan assets | 18,000 | 88,000 |
Employer contribution | 57,000 | |
Benefits paid | (124,000) | (474,000) |
Fair value of plan assets at end of year | 1,433,000 | 1,539,000 |
Unfunded status and (prepaid) accrued pension benefit at end of year | 177,000 | 240,000 |
Accumulated benefit obligation at end of year | $ 1,610,000 | $ 1,779,000 |
Discount rate used to determine the benefit obligation (as a percent) | 4.34% | 3.95% |
Components of net periodic pension cost | ||
Interest cost | $ 70,000 | $ 90,000 |
Expected return on plan assets | (106,000) | (132,000) |
Amortization of actuarial loss | 58,000 | 18,000 |
Settlement cost | 26,000 | 141,000 |
Net periodic pension cost | 48,000 | $ 116,000 |
Amount of actuarial loss included in accumulated other comprehensive loss expected to be recognized as a component of net periodic pension cost for the year ending December 31, 2014 | $ 50,000 | |
Assumptions used to determine net periodic pension cost | ||
Discount rate (as a percent) | 3.95% | 4.95% |
Expected return on plan assets (as a percent) | 7.00% | 7.00% |
EMPLOYEE BENEFITS - Future Bene
EMPLOYEE BENEFITS - Future Benefit Payments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Employee benefits | |||
Expected contribution to the plan in fiscal year 2016 | $ 19,000 | ||
Defined Benefit Pension Plan | |||
Employee benefits | |||
Fair value of pension plan assets | 1,433,000 | $ 1,539,000 | $ 1,868,000 |
Estimated future benefit payments | |||
2,016 | 43,000 | ||
2,017 | 66,000 | ||
2,018 | 226,000 | ||
2,019 | 72,000 | ||
2,020 | 83,000 | ||
Thereafter | 531,000 | ||
Defined Benefit Pension Plan | level 1 | |||
Employee benefits | |||
Fair value of pension plan assets | 1,433,000 | 1,539,000 | |
Defined Benefit Pension Plan | level 1 | Domestic mutual funds | |||
Employee benefits | |||
Fair value of pension plan assets | 653,000 | 671,000 | |
Defined Benefit Pension Plan | level 1 | Fixed income | |||
Employee benefits | |||
Fair value of pension plan assets | 467,000 | 524,000 | |
Defined Benefit Pension Plan | level 1 | International mutual funds | |||
Employee benefits | |||
Fair value of pension plan assets | 230,000 | 244,000 | |
Defined Benefit Pension Plan | level 1 | International exchange traded funds | |||
Employee benefits | |||
Fair value of pension plan assets | 52,000 | 66,000 | |
Defined Benefit Pension Plan | level 1 | Cash and cash equivalents | |||
Employee benefits | |||
Fair value of pension plan assets | $ 31,000 | $ 34,000 |
EMPLOYEE BENEFITS - Deferred Co
EMPLOYEE BENEFITS - Deferred Compensation (Details) - Deferred Compensation Supplemental Executive Retirement Plan | 12 Months Ended | ||
Dec. 31, 2015USD ($)ageitemshares | Dec. 31, 2014USD ($) | Dec. 31, 2011USD ($) | |
Deferred Compensation Supplemental Executive Retirement Plan | |||
Initial amount contributed | $ 62,000 | ||
Annual contributions each January 1 thereafter until January 1, 2023, so long as the executive remains employed | $ 72,000 | ||
Number of approximately equal annual installments for payment of benefit | item | 10 | ||
Assets related to the Rabbi Trust | $ 930,000 | $ 989,000 | |
Liability for benefit obligation reported in accrued expenses and other liabilities | $ 930,000 | 989,000 | |
Shares held in the Rabbi Trust (in shares) | shares | 8,900 | ||
Value of shares held in the Rabbi Trust | $ 100,000 | ||
Compensation expense | 72,000 | $ 72,000 | |
Benefit obligation | $ 100,000 | ||
Executive officers | |||
Deferred Compensation Supplemental Executive Retirement Plan | |||
Age of individual when benefits shall be payable in equal annual installments | item | 67 | ||
Threshold age of individual on separation from service when vested portion of benefits shall be payable in lump sum | age | 67 | ||
Cumulative vesting percentage | 75.00% | ||
Additional vesting percentage as of each December 31 until 100% vesting | 5.00% | ||
Threshold vesting percentage | 100.00% |
EMPLOYEE BENEFITS - Defined Con
EMPLOYEE BENEFITS - Defined Contribution Plan (Details) - Defined Benefit Pension Plan - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
401(k) Plan | ||
Maximum percentage of total compensation that each qualified employee may contribute | 15.00% | |
Matching contribution by employer (as a percent) | 100.00% | |
Percentage of employee's contribution for which the employer makes a matching contribution | 5.00% | |
Amount of contribution | $ 537,000 | $ 704,000 |
Maximum | ||
401(k) Plan | ||
Percentage of gross compensation contributed by employer as a discretionary contribution | 5.00% |
EMPLOYEE BENEFITS - Incentive C
EMPLOYEE BENEFITS - Incentive Compensation (Details) | Jul. 01, 2013item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Incentive Compensation [Abstract] | |||
Incentive compensation expense | $ 237,000 | $ 222,000 | |
Defined Benefit Pension Plan | |||
Employee benefits | |||
Discount rate (as a percent) | 3.95% | 4.95% | |
SERP | |||
Employee benefits | |||
Expense (income) | $ 603,000 | $ 410,000 | |
Discount rate (as a percent) | 3.24% | ||
Liability for benefit obligation reported in accrued expenses and other liabilities | $ 1,200,000 | $ 579,000 | |
Executive officers | SERP | |||
Employee benefits | |||
Number of employees with whom the entity entered into agreements (in employees) | item | 6 |
EMPLOYEE BENEFITS - Defined Ben
EMPLOYEE BENEFITS - Defined Benefit Plans and OPEB (Details) - USD ($) | May. 21, 2015 | Jun. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 |
Employee Stock Ownership Plan | ||||
Percentage of common stock outstanding, held in ESOP (as a percent) | 8.00% | |||
Term of loan payable | 25 years | |||
Interest rate (as a percent) | 3.25% | |||
Shares held by the ESOP | ||||
Allocated (in shares) | 31,674 | |||
Distributions | (391) | |||
Committed to be allocated (in shares) | 15,837 | (15,837) | ||
Unallocated (in shares) | 364,260 | |||
Total (in shares) | 395,543 | |||
Fair value of unallocated shares | $ 4,800,000 | |||
Compensation expense | 179,000 | $ 168,000 | ||
Termination Benefits | ||||
Termination benefits | $ 103,000 | |||
Remaining termination expense accrued | 0 | |||
Incentive Compensation | ||||
Incentive compensation expense | $ 237,000 | $ 222,000 | ||
Maximum | ||||
Termination Benefits | ||||
Period over which benefits will be paid | 140 days | |||
2015 Equity Incentive Plan | ||||
Equity Incentive Plan | ||||
Number of shares available for issuance under the EIP | 692,885 | |||
Expiration period after grant date | 10 years | |||
Granted (in shares) | 0 | 0 | ||
2015 Equity Incentive Plan | Maximum | ||||
Equity Incentive Plan | ||||
Vesting rate per year (as a percent) | 20.00% | |||
Vesting period after grant date | 1 year |
OFF-BALANCE SHEETS ACTIVITIES A
OFF-BALANCE SHEETS ACTIVITIES AND MORTGAGE BANKING - Financial Instruments (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($)payment | |
Loans Sold with Recourse Obligations | ||
Number of first due payments default which would require the Bank to repurchase loans and/or refund premiums | payment | 4 | |
Premiums on loans sold that were subject to refund provisions | $ 1,296,000 | $ 1,065,000 |
Recourse obligations | 0 | |
Amount of repurchased loans | 830,000 | |
Amount of premium refunded of repurchased loans | 46,000 | |
Commitments to originate loans for portfolio | ||
Loan Commitments | ||
Outstanding financial instruments whose contract amounts represent credit risk | 14,905,000 | 8,583,000 |
Commitments to originate loans to be sold | ||
Loan Commitments | ||
Outstanding financial instruments whose contract amounts represent credit risk | 13,142,000 | 10,751,000 |
Commitments to purchase loans from third parties | ||
Loan Commitments | ||
Outstanding financial instruments whose contract amounts represent credit risk | 5,988,000 | 4,644,000 |
Unfunded commitments under home equity lines of credit | ||
Loan Commitments | ||
Outstanding financial instruments whose contract amounts represent credit risk | 51,639,000 | 47,106,000 |
Unfunded commitments under commercial lines of credit | ||
Loan Commitments | ||
Outstanding financial instruments whose contract amounts represent credit risk | 11,542,000 | 11,922,000 |
Unfunded commitments under SBA lines of credit | ||
Loan Commitments | ||
Outstanding financial instruments whose contract amounts represent credit risk | 4,340,000 | 3,668,000 |
Unfunded commitments under overdraft lines of credit | ||
Loan Commitments | ||
Outstanding financial instruments whose contract amounts represent credit risk | 181,000 | 171,000 |
Unadvanced funds on construction loans | ||
Loan Commitments | ||
Outstanding financial instruments whose contract amounts represent credit risk | $ 7,225,000 | $ 2,793,000 |
OFF-BALANCE SHEETS ACTIVITIES62
OFF-BALANCE SHEETS ACTIVITIES AND MORTGAGE BANKING - Derivatives (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair values of derivative instruments in the balance sheet | ||
Loans held for sale | $ 18,952 | $ 10,995 |
Closed hedge instruments not settled | 4,800 | |
Forward loan sale commitments | ||
Fair values of derivative instruments in the balance sheet | ||
Forward commitments | 31,300 | 21,500 |
Best Efforts Contracts | ||
Fair values of derivative instruments in the balance sheet | ||
Forward commitments | 24,500 | |
Mandatory Delivery Contracts | ||
Fair values of derivative instruments in the balance sheet | ||
Forward commitments | 2,800 | |
TBA securities | ||
Fair values of derivative instruments in the balance sheet | ||
Forward commitments | 4,000 | |
Interest rate lock commitments | ||
Fair values of derivative instruments in the balance sheet | ||
Commitments to borrowers | 13,100 | 10,800 |
Not Designated As Hedging Instruments | ||
Fair values of derivative instruments in the balance sheet | ||
Assets, Fair Value | 220 | 98 |
Liabilities, Fair Value | 180 | 96 |
Not Designated As Hedging Instruments | Derivative loan commitments | ||
Fair values of derivative instruments in the balance sheet | ||
Assets, Fair Value | 217 | |
Not Designated As Hedging Instruments | Commitments hedged with best efforts | Other assets | ||
Fair values of derivative instruments in the balance sheet | ||
Assets, Fair Value | 162 | 98 |
Not Designated As Hedging Instruments | Commitments hedged with TBA | Other assets | ||
Fair values of derivative instruments in the balance sheet | ||
Assets, Fair Value | 55 | |
Not Designated As Hedging Instruments | Forward loan sale commitments | ||
Fair values of derivative instruments in the balance sheet | ||
Assets, Fair Value | 3 | |
Liabilities, Fair Value | 180 | |
Not Designated As Hedging Instruments | Best Efforts Contracts | Other liabilities. | ||
Fair values of derivative instruments in the balance sheet | ||
Liabilities, Fair Value | 175 | $ 96 |
Not Designated As Hedging Instruments | Mandatory Delivery Contracts | Other assets | ||
Fair values of derivative instruments in the balance sheet | ||
Assets, Fair Value | 3 | |
Not Designated As Hedging Instruments | TBA securities | Other liabilities. | ||
Fair values of derivative instruments in the balance sheet | ||
Liabilities, Fair Value | $ 5 |
OFF-BALANCE SHEETS ACTIVITIES63
OFF-BALANCE SHEETS ACTIVITIES AND MORTGAGE BANKING - Gain/Loss on Derivatives (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Executive Employment Agreement | ||
Period of continued benefits following termination of employment under executive employment agreement | 5 years | |
Not Designated As Hedging Instruments | ||
Gains and losses on derivative instruments | ||
Gains (losses) on derivative instruments | $ 40 | |
Not Designated As Hedging Instruments | Gain (loss) on sale of loans, net | ||
Gains and losses on derivative instruments | ||
Gains (losses) on derivative instruments | $ (242) | |
Not Designated As Hedging Instruments | Commitments hedged with best efforts | Net gain on sales of loans and other mortgage banking income | ||
Gains and losses on derivative instruments | ||
Gains (losses) on derivative instruments | 162 | 102 |
Not Designated As Hedging Instruments | Commitments hedged with TBA | Net gain on sales of loans and other mortgage banking income | ||
Gains and losses on derivative instruments | ||
Gains (losses) on derivative instruments | 55 | |
Not Designated As Hedging Instruments | Best Efforts Contracts | Net gain on sales of loans and other mortgage banking income | ||
Gains and losses on derivative instruments | ||
Gains (losses) on derivative instruments | (175) | $ (344) |
Not Designated As Hedging Instruments | Mandatory Delivery Contracts | Net gain on sales of loans and other mortgage banking income | ||
Gains and losses on derivative instruments | ||
Gains (losses) on derivative instruments | 3 | |
Not Designated As Hedging Instruments | TBA securities | Net gain on sales of loans and other mortgage banking income | ||
Gains and losses on derivative instruments | ||
Gains (losses) on derivative instruments | $ (5) |
LOANS TO RELATED PARTIES (Detai
LOANS TO RELATED PARTIES (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Jan. 30, 2013 | |
Additional disclosure | |||
Unsecured residential loan | $ 428,000 | ||
Directors, executive officers and their associates | |||
Loans to related parties | |||
Balance at beginning of year | 1,307,000 | $ 1,274,000 | |
Principal additions | 238,000 | 441,000 | |
Principal payments | (463,000) | (408,000) | |
Balance at end of year | $ 1,082,000 | $ 1,307,000 | |
Officers and directors | |||
Additional disclosure | |||
Percentage of reduction in interest rates on loans originated in accordance with the Bank's Employee Loan Discount Program (as a percent) | 1.00% | ||
Officers and directors | Minimum | |||
Additional disclosure | |||
Floor rate (as a percent) | 4.00% | ||
Officer | |||
Additional disclosure | |||
Unsecured residential loan | $ 482,000 |
INCOME TAXES - Income Tax Expen
INCOME TAXES - Income Tax Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current tax expense (benefit): | ||
Federal | $ 688 | $ (63) |
State | 210 | 111 |
Total | 898 | 48 |
Deferred tax expense (benefit): | ||
Federal | 107 | (469) |
State | 148 | (109) |
Total | 255 | (578) |
Total income tax expense (benefit) | $ 1,153 | $ (530) |
Differences between the statutory federal income tax expense and the actual tax expense | ||
Statutory tax rate (as a percent) | 34.00% | 34.00% |
Statutory tax expense (benefit) at 34% | $ 945 | $ (508) |
Increase (decrease) resulting from: | ||
State taxes, net of federal tax benefit | 236 | 1 |
Other, net | (28) | (23) |
Total income tax expense (benefit) | 1,153 | (530) |
Parent Company | ||
Deferred tax expense (benefit): | ||
Total income tax expense (benefit) | (1) | (1) |
Increase (decrease) resulting from: | ||
Total income tax expense (benefit) | $ (1) | $ (1) |
INCOME TAXES - Deferred Tax Ass
INCOME TAXES - Deferred Tax Assets/Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred tax assets: | ||||
Allowance for loan losses | $ 877 | $ 775 | ||
Employee benefits | 969 | 595 | ||
Non-accrual interest | 100 | 68 | ||
Defined benefit pension plan | 182 | 226 | ||
Charitable contribution carryforwards | 542 | 558 | ||
Organization costs | 133 | 144 | ||
Impairment on real estate held for sale | 472 | 287 | ||
Other, net | 25 | 97 | ||
Total deferred tax assets | 3,300 | 2,750 | ||
Deferred tax liabilities: | ||||
Premises and equipment, net | (639) | (374) | ||
Net deferred loan costs | (1,536) | (1,115) | ||
Mortgage derivatives | (216) | (88) | ||
Other, net | (94) | (59) | ||
Total deferred tax liabilities | (2,485) | (1,636) | ||
Deferred tax asset, net | $ 1,114 | $ 440 | $ 815 | $ 1,114 |
Change in deferred taxes | ||||
Balance at beginning of year | 1,114 | 440 | ||
Deferred tax (expense) benefit | (255) | 578 | ||
Unrealized gain/loss pertaining to defined benefit pension plan | (44) | 96 | ||
Balance at end of year | $ 815 | $ 1,114 | ||
Charitable contribution limited percentage of taxable income deduction | 10.00% |
MINIMUM REGULATORY CAPITAL RE67
MINIMUM REGULATORY CAPITAL REQUIREMENTS - Actual & Minimum Required Capital Amounts (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Jul. 31, 2013 | Jun. 30, 2013 |
Total capital (to risk weighted assets) | ||||
Actual Amount | $ 55,355 | $ 53,434 | ||
Actual Ratio (as a percent) | 13.03% | 15.27% | ||
Minimum Capital Requirements Amount | $ 33,993 | $ 27,987 | ||
Minimum Capital Requirements Ratio (as a percent) | 8.00% | 8.00% | 6.00% | 4.00% |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 42,491 | $ 34,984 | ||
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 10.00% | 10.00% | ||
Tier 1 capital (to risk weighted assets) | ||||
Actual Amount | $ 53,161 | $ 51,492 | ||
Actual Ratio (as a percent) | 12.51% | 14.72% | ||
Minimum Capital Requirements Amount | $ 25,495 | $ 13,994 | ||
Minimum Capital Requirements Ratio (as a percent) | 6.00% | 4.00% | ||
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 33,993 | $ 20,990 | ||
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 8.00% | 6.00% | ||
Actual Amount | $ 53,161 | $ 51,492 | ||
Actual Ratio (as a percent) | 10.06% | 11.63% | ||
Minimum Capital Requirements Amount | $ 21,148 | $ 17,707 | ||
Minimum Capital Requirements Ratio (as a percent) | 4.00% | 4.00% | ||
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 26,435 | $ 22,133 | ||
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 5.00% | 5.00% | ||
Common Equity Tier 1 (to risk weighted assets) | ||||
Actual Amount | $ 53,161 | |||
Actual Ratio (as a percent) | 12.51% | |||
Minimum Capital for Capital Adequacy Purposes, Amount | $ 19,121 | |||
Minimum Capital for Capital Adequacy Purposes, Ratio (as a percent) | 4.50% | |||
Minimum Capital to be Well Capitalized, Amount | $ 27,619 | |||
Minimum Capital to be Well Capitalized, Ratio (as a percent) | 6.50% |
MINIMUM REGULATORY CAPITAL RE68
MINIMUM REGULATORY CAPITAL REQUIREMENTS - Additional Information (Details) - USD ($) $ in Thousands | Jan. 01, 2016 | Jul. 31, 2013 | Dec. 31, 2015 | Jan. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2013 |
Consolidated assets | $ 565,137 | $ 465,826 | ||||
Tier 1 risk-based capital ratio (as a percent) | 6.00% | 8.00% | 8.00% | 4.00% | ||
Minimum Capital for Capital Adequacy Purposes, Ratio (as a percent) | 4.50% | |||||
Risk weight (as a percent) | 150.00% | |||||
Exposures due time | 90 days | |||||
Capital conservation buffer (as a percent) | 2.50% | |||||
Capital conservation buffer, effective percentage | 0.625% | |||||
Common stock authorized to repurchased under repurchase program (in shares) | 247,459 | |||||
Common stock authorized to repurchased under repurchase program (in percent) | 5.00% | |||||
Common stock repurchased (in shares) | 126,900 | |||||
Repurchase of common stock | $ 1,455 | |||||
Minimum | ||||||
Consolidated assets | $ 500,000 | |||||
Maximum | ||||||
Consolidated assets | 1,000,000 | |||||
Parent Company | ||||||
Consolidated assets | 70,948 | $ 70,505 | ||||
Repurchase of common stock | $ 1,455 |
FAIR VALUES OF ASSETS AND LIA69
FAIR VALUES OF ASSETS AND LIABILITIES - Fair Values (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Fair value measurements | |||
Assets measured at fair value on a recurring basis other than mortgage derivatives | $ 0 | $ 0 | |
Liabilities measured at fair value on a recurring basis other than mortgage derivatives | 0 | 0 | |
Fair value, Foreclosed real estate | 710,000 | 1,285,000 | |
Fair value, Real estate held for sale | 3,305,000 | 3,831,000 | |
Provisions (credit) | 496,000 | 432,000 | |
Total write-downs losses on real estate held for sale | 581,000 | 1,099,000 | $ 482,000 |
Non-recurring | |||
Fair value measurements | |||
Losses on impairment assets | 580,000 | 939,000 | |
Non-recurring | Level 2 | |||
Fair value measurements | |||
Fair Value, Assets | 3,305,000 | ||
Non-recurring | Level 3 | |||
Fair value measurements | |||
Fair Value, Assets | 1,886,000 | 7,191,000 | |
Recurring | Level 3 | Derivative loan commitments | |||
Fair value measurements | |||
Assets, Fair Value | 217,000 | 98,000 | |
Recurring | Level 3 | Forward loan sale commitments | |||
Fair value measurements | |||
Assets, Fair Value | (175,000) | (96,000) | |
Foreclosed real estate | Non-recurring | |||
Fair value measurements | |||
Losses on foreclosed real estate | (46,000) | (89,000) | |
Impaired loans (collateral dependent) | |||
Fair value measurements | |||
Impaired loans, specific reserves | 15,000 | ||
Provisions (credit) | (47,000) | ||
Impaired loans (collateral dependent) | Non-recurring | |||
Fair value measurements | |||
Losses on collateral dependent impaired loans | (47,000) | 144,000 | |
Impaired loans (collateral dependent) | Non-recurring | Level 3 | |||
Fair value measurements | |||
Fair value, Impaired loans (collateral dependent) | 1,176,000 | 2,075,000 | |
Real estate held for sale | Non-recurring | |||
Fair value measurements | |||
Total write-downs losses on real estate held for sale | 581,000 | 706,000 | |
Real estate held for sale | Non-recurring | Level 2 | |||
Fair value measurements | |||
Fair value, Real estate held for sale | $ 3,305,000 | ||
Real estate held for sale | Non-recurring | Level 3 | |||
Fair value measurements | |||
Fair value, Real estate held for sale | $ 3,831,000 |
FAIR VALUES OF ASSETS AND LIA70
FAIR VALUES OF ASSETS AND LIABILITIES - Loan Commitments - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
FAIR VALUES OF ASSETS AND LIABILITIES | ||
Transfer of Level 3 assets and liabilities measured on recurring basis | $ 0 | $ 0 |
Derivative Loan Commitments and Forward Loan Sale Commitments, change in Level 3 assets and liabilities that are measured on a recurring basis | ||
Balance at beginning of year | 2 | 244 |
Gains (loss) on new commitments during the period | 42 | (24) |
Reclassification of realized gains on settled commitments | (2) | (218) |
Balance at end of year | $ 42 | $ 2 |
FAIR VALUES OF ASSETS AND LIA71
FAIR VALUES OF ASSETS AND LIABILITIES - Qualitative Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Real estate held for sale | $ 3,305 | $ 3,831 | |
Recurring | Level 3 | Derivative loan commitments | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Fair Value, Assets | 217 | 98 | |
Recurring | Level 3 | Forward loan sale commitments | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Fair Value, Assets | (175) | (96) | |
Non-recurring | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Liabilities measured at fair value | 0 | 0 | |
Non-recurring | Foreclosed real estate | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Losses on foreclosed real estate | (46) | (89) | |
Non-recurring | Level 3 | Foreclosed real estate | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Foreclosed real estate | 710 | 1,285 | |
Non-recurring | Level 3 | Foreclosed real estate | Appraisal of collateral | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Foreclosed real estate | 710 | 1,285 | |
Non-recurring | Level 3 | Impaired loans (collateral dependent) | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Fair value, Impaired loans | 1,176 | 2,075 | |
Non-recurring | Level 3 | Impaired loans (collateral dependent) | Appraisal of collateral | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Fair value, Impaired loans | $ 1,176 | 2,075 | |
Non-recurring | Level 3 | Real estate held for sale | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Real estate held for sale | 3,831 | ||
Non-recurring | Level 3 | Real estate held for sale | Appraisal of collateral | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Real estate held for sale | $ 3,831 | ||
Minimum | Recurring | Level 3 | Derivative loan commitments | Investor pricing | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Pull-through rate (as a percent) | 79.60% | 82.50% | |
Minimum | Recurring | Level 3 | Forward loan sale commitments | Investor pricing | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Pull-through rate (as a percent) | 82.50% | 82.50% | |
Minimum | Non-recurring | Level 3 | Foreclosed real estate | Appraisal of collateral | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Collateral discounts (as a percent) | 5.00% | ||
Minimum | Non-recurring | Level 3 | Impaired loans (collateral dependent) | Appraisal of collateral | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Collateral discounts (as a percent) | 5.00% | 5.00% | |
Minimum | Non-recurring | Level 3 | Real estate held for sale | Appraisal of collateral | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Selling costs (as a percent) | 5.00% | ||
Maximum | Recurring | Level 3 | Derivative loan commitments | Investor pricing | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Pull-through rate (as a percent) | 100.00% | 100.00% | |
Maximum | Recurring | Level 3 | Forward loan sale commitments | Investor pricing | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Pull-through rate (as a percent) | 100.00% | 100.00% | |
Maximum | Non-recurring | Level 3 | Foreclosed real estate | Appraisal of collateral | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Collateral discounts (as a percent) | 30.00% | ||
Maximum | Non-recurring | Level 3 | Impaired loans (collateral dependent) | Appraisal of collateral | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Collateral discounts (as a percent) | 30.00% | 30.00% | |
Maximum | Non-recurring | Level 3 | Real estate held for sale | Appraisal of collateral | |||
Additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis | |||
Selling costs (as a percent) | 6.00% |
FAIR VALUES OF ASSETS AND LIA72
FAIR VALUES OF ASSETS AND LIABILITIES - Fair Value Option (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
FAIR VALUES OF ASSETS AND LIABILITIES | |
Aggregate fair value | $ 18,952,000 |
Contractual balance | 18,268,000 |
Gain (Loss) | 684,000 |
Amount of gains and losses from changes in fair value included in earnings for loans held for sale | $ 684,000 |
FAIR VALUES OF ASSETS AND LIA73
FAIR VALUES OF ASSETS AND LIABILITIES - Carrying Amounts (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Financial liabilities: | ||
Certificates of deposit | $ 109,038,000 | $ 118,206,000 |
Borrowed funds | 115,500,000 | 47,800,000 |
Accrued interest receivable | 1,414,000 | 1,253,000 |
Level 2 | ||
Financial assets: | ||
Loans held for sale | 18,952,000 | |
Financial liabilities: | ||
Certificates of deposit | 109,423,000 | 119,987,000 |
Borrowed funds | 115,495,000 | 47,809,000 |
Level 3 | ||
Financial assets: | ||
Loans, net of allowance for loan losses | 471,245,000 | 387,560,000 |
Loans held for sale | 11,173,000 | |
Carrying Amount | ||
Financial assets: | ||
Loans, net of allowance for loan losses | 467,023,000 | 383,909,000 |
Loans held for sale | 18,952,000 | 10,995,000 |
FHLB stock | 5,283,000 | 3,207,000 |
Financial liabilities: | ||
Certificates of deposit | 109,038,000 | 118,206,000 |
Borrowed funds | 115,500,000 | 47,800,000 |
Carrying Amount | Level 2 | ||
Financial liabilities: | ||
Accrued interest payable | 24,000 | 11,000 |
Carrying Amount | Level 3 | ||
Financial liabilities: | ||
Accrued interest receivable | 1,400,000 | 1,300,000 |
Fair Value | ||
Financial assets: | ||
Loans, net of allowance for loan losses | 471,245,000 | 387,560,000 |
Loans held for sale | 18,952,000 | 11,173,000 |
Financial liabilities: | ||
Certificates of deposit | 109,423,000 | 119,987,000 |
Borrowed funds | $ 115,495,000 | $ 47,809,000 |
PARENT COMPANY FINANCIAL STAT74
PARENT COMPANY FINANCIAL STATEMENTS - Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Assets | ||||
Certificates of Deposit | $ 6,074 | $ 3,016 | ||
Other assets | 7,506 | 6,505 | ||
Total assets | 565,137 | 465,826 | ||
Liabilities and stockholders' equity | ||||
Stockholders' equity | 70,922 | 70,504 | $ 27,839 | |
Total liabilities and stockholders' equity | 565,137 | 465,826 | ||
Parent Company | ||||
Assets | ||||
Cash | 7,650 | 11,808 | ||
Certificates of Deposit | 6,074 | 3,016 | ||
Investments in subsidiaries | [1] | 53,471 | 51,594 | |
Note receivable from subsidiary | [1] | 3,741 | 3,849 | |
Other assets | 12 | 238 | ||
Total assets | 70,948 | 70,505 | ||
Liabilities and stockholders' equity | ||||
Other liabilities | 26 | 1 | ||
Stockholders' equity | 70,922 | 70,504 | ||
Total liabilities and stockholders' equity | $ 70,948 | $ 70,505 | ||
[1] | December 31December 31 20152014 (in thousands)AssetsCash$ 7,650$ 11,808Certificates of Deposit 6,074 3,016Investments in subsidiaries 53,471 51,594Note receivable from subsidiary 3,741 3,849Other assets 12 238Total assets$ 70,948$ 70,505Liabilities and stockholders’ equityOther liabilities$ 26$ 1Stockholders’ equity 70,922 70,504Total liabilities and stockholders’ equity$ 70,948$ 70,505 |
PARENT COMPANY FINANCIAL STAT75
PARENT COMPANY FINANCIAL STATEMENTS - Statements of Net Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Income | |||
Interest income | $ 17,827 | $ 15,592 | |
Expenses | |||
Loss before income taxes and equity in undistributed income (loss) of subsidiaries | 2,781 | (1,495) | |
Income tax benefit | 1,153 | (530) | |
Net income (loss) | 1,628 | (965) | |
Parent Company | |||
Income | |||
Interest income | [1] | 225 | 212 |
Expenses | |||
Other expenses | 229 | 216 | |
Loss before income taxes and equity in undistributed income (loss) of subsidiaries | (4) | (4) | |
Income tax benefit | (1) | (1) | |
Loss of parent company | (3) | (3) | |
Equity in undistributed income (loss) of subsidiaries | 1,631 | (962) | |
Net income (loss) | $ 1,628 | $ (965) | |
[1] | Year endedYear Ended December 31December 3120152014 (in thousands)IncomeInterest income$ 225$ 212ExpensesOther expenses 229 216Loss before income taxes and equity in undistributed income (loss) of subsidiaries (4) (4)Income tax benefit (1) (1)Loss of parent company (3) (3)Equity in undistributed income (loss) of subsidiaries 1,631 (962)Net income (loss)$ 1,628$ (965) |
PARENT COMPANY FINANCIAL STAT76
PARENT COMPANY FINANCIAL STATEMENTS - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 1,628 | $ (965) |
Adjustments to reconcile net loss to cash used in operating activities | ||
Change in other assets | 327 | (1,324) |
Net cash provided by (used in) operating activities | (2,894) | (804) |
Cash flows used in investing activities: | ||
Purchase of certificates of deposit | (3,058) | (3,016) |
Net cash used in investing activities | (89,586) | (68,549) |
Cash flows used in financing activities: | ||
Repurchase of common stock | (1,455) | |
Issuance of common stock for initial public offering | 46,345 | |
Purchase of common stock by ESOP | (3,959) | |
Net cash provided by (used in) financing activities | 96,220 | 32,416 |
Net increase (decrease) in cash and cash equivalents | 3,740 | (36,937) |
Cash and cash equivalents at beginning of the year | 14,582 | 51,519 |
Cash and cash equivalents at end of the year | 18,322 | 14,582 |
Parent Company | ||
Cash flows from operating activities: | ||
Net income (loss) | 1,628 | (965) |
Adjustments to reconcile net loss to cash used in operating activities | ||
Change in other assets | 225 | (238) |
Change in other liabilities | 25 | 1 |
Equity in undistributed income (loss) of subsidiaries | (1,631) | 962 |
Net cash provided by (used in) operating activities | 247 | (240) |
Cash flows used in investing activities: | ||
Purchase of certificates of deposit | (3,058) | (3,016) |
Change in note receivable from subsidiary, net | 108 | (3,849) |
Net cash used in investing activities | (2,950) | (6,865) |
Cash flows used in financing activities: | ||
Repurchase of common stock | (1,455) | |
Issuance of common stock for initial public offering | 46,345 | |
Purchase of common stock by ESOP | (3,959) | |
Proceeds from initial public offering contributed to subsidiary | (23,473) | |
Net cash provided by (used in) financing activities | (1,455) | 18,913 |
Net increase (decrease) in cash and cash equivalents | (4,158) | 11,808 |
Cash and cash equivalents at beginning of the year | 11,808 | |
Cash and cash equivalents at end of the year | $ 7,650 | $ 11,808 |
EARNINGS PER SHARE AND STOCK 77
EARNINGS PER SHARE AND STOCK REPURCHASE (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Jan. 30, 2015 | |
Basic and Diluted; | |||
Net income | $ 1,628 | $ (965) | |
Weighted average common shares outstanding (in shares) | 4,901,000 | ||
Less: Average unallocated ESOP shares | 372,000 | ||
Average shares | 4,529,000 | ||
Basic and diluted earnings per common share (in dollars per share) | $ 0.36 | ||
Common stock authorized to repurchased under repurchase program (in shares) | 247,459 | ||
Common stock authorized to repurchased under repurchase program (in percent) | 5.00% | ||
Common stock repurchased (in shares) | 126,900 | ||
Repurchase of common stock | $ 1,455 | ||
Parent Company | |||
Basic and Diluted; | |||
Net income | 1,628 | $ (965) | |
Repurchase of common stock | $ 1,455 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - SUBSEQUENT EVENTS | 1 Months Ended |
Feb. 29, 2016$ / sharesshares | |
SUBSEQUENT EVENTS | |
Options (in shares) | 91,225 |
Options, strike price (in dollars per share) | $ / shares | $ 12.41 |
Vesting period (in years) | 5 years |
Directors and certain key senior executives | |
SUBSEQUENT EVENTS | |
Restricted stock (in shares) | 39,045 |