x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TEXAS | 75-1848732 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1201 S. Beckham, Tyler, Texas | 75701 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer x |
Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller reporting company) |
PART I. FINANCIAL INFORMATION | |
PART II. OTHER INFORMATION | |
EXHIBIT 31.1 – CERTIFICATION PURSUANT TO SECTION 302 | |
EXHIBIT 31.2 – CERTIFICATION PURSUANT TO SECTION 302 | |
EXHIBIT 32 – CERTIFICATION PURSUANT TO SECTION 906 |
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share amounts) | |||||||
September 30, 2012 | December 31, 2011 | ||||||
ASSETS | |||||||
Cash and due from banks | $ | 44,670 | $ | 40,989 | |||
Interest earning deposits | 87,302 | 2,249 | |||||
Total cash and cash equivalents | 131,972 | 43,238 | |||||
Investment securities: | |||||||
Available for sale, at estimated fair value | 558,634 | 282,956 | |||||
Held to maturity, at amortized cost | 1,009 | 1,496 | |||||
Mortgage-backed and related securities: | |||||||
Available for sale, at estimated fair value | 865,952 | 716,126 | |||||
Securities carried at fair value through income | — | 647,759 | |||||
Held to maturity, at amortized cost | 293,300 | 365,631 | |||||
FHLB stock, at cost | 33,939 | 33,869 | |||||
Other investments, at cost | 2,064 | 2,064 | |||||
Loans held for sale | 1,158 | 3,552 | |||||
Loans: | |||||||
Loans | 1,221,595 | 1,087,230 | |||||
Less: Allowance for loan losses | (20,848 | ) | (18,540 | ) | |||
Net Loans | 1,200,747 | 1,068,690 | |||||
Premises and equipment, net | 49,925 | 50,595 | |||||
Goodwill | 22,034 | 22,034 | |||||
Other intangible assets, net | 369 | 522 | |||||
Interest receivable | 14,728 | 19,426 | |||||
Other assets | 45,254 | 45,859 | |||||
TOTAL ASSETS | $ | 3,221,085 | $ | 3,303,817 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deposits: | |||||||
Noninterest bearing | $ | 567,062 | $ | 505,594 | |||
Interest bearing | 1,734,755 | 1,816,077 | |||||
Total deposits | 2,301,817 | 2,321,671 | |||||
Short-term obligations: | |||||||
Federal funds purchased and repurchase agreements | 1,468 | 2,945 | |||||
FHLB advances | 151,315 | 361,811 | |||||
Other obligations | 219 | 219 | |||||
Total short-term obligations | 153,002 | 364,975 | |||||
Long-term obligations: | |||||||
FHLB advances | 381,868 | 260,724 | |||||
Long-term debt | 60,311 | 60,311 | |||||
Total long-term obligations | 442,179 | 321,035 | |||||
Deferred tax liability | 1,359 | 3,458 | |||||
Unsettled trades to purchase securities | 17,326 | 1,196 | |||||
Other liabilities | 28,829 | 32,555 | |||||
TOTAL LIABILITIES | 2,944,512 | 3,044,890 | |||||
Off-Balance-Sheet Arrangements, Commitments and Contingencies (Note 10) | |||||||
Shareholders' equity: | |||||||
Common stock - ($1.25 par, 40,000,000 shares authorized, 19,397,673 shares issued in 2012 and 18,517,101 shares issued in 2011) | 24,247 | 23,146 | |||||
Paid-in capital | 194,485 | 176,791 | |||||
Retained earnings | 71,691 | 72,646 | |||||
Treasury stock (2,023,838 shares at cost) | (28,377 | ) | (28,377 | ) | |||
Accumulated other comprehensive income | 14,527 | 14,721 | |||||
TOTAL SHAREHOLDERS' EQUITY | 276,573 | 258,927 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 3,221,085 | $ | 3,303,817 |
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share data) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Interest income | |||||||||||||||
Loans | $ | 17,847 | $ | 16,229 | $ | 52,143 | $ | 50,630 | |||||||
Investment securities – taxable | 22 | 11 | 73 | 49 | |||||||||||
Investment securities – tax-exempt | 3,839 | 3,069 | 9,467 | 9,507 | |||||||||||
Mortgage-backed and related securities | 6,695 | 13,292 | 27,730 | 37,899 | |||||||||||
FHLB stock and other investments | 57 | 50 | 190 | 182 | |||||||||||
Other interest earning assets | 4 | 2 | 19 | 15 | |||||||||||
Total interest income | 28,464 | 32,653 | 89,622 | 98,282 | |||||||||||
Interest expense | |||||||||||||||
Deposits | 2,455 | 3,879 | 8,615 | 11,966 | |||||||||||
Short-term obligations | 1,551 | 1,643 | 4,877 | 5,077 | |||||||||||
Long-term obligations | 2,450 | 3,115 | 7,581 | 10,397 | |||||||||||
Total interest expense | 6,456 | 8,637 | 21,073 | 27,440 | |||||||||||
Net interest income | 22,008 | 24,016 | 68,549 | 70,842 | |||||||||||
Provision for loan losses | 3,265 | 1,454 | 8,491 | 5,452 | |||||||||||
Net interest income after provision for loan losses | 18,743 | 22,562 | 60,058 | 65,390 | |||||||||||
Noninterest income | |||||||||||||||
Deposit services | 3,907 | 4,098 | 11,493 | 12,005 | |||||||||||
Gain on sale of securities available for sale | 4,302 | 3,609 | 13,571 | 9,080 | |||||||||||
Gain (loss) on sale of securities carried at fair value through income | — | 254 | (498 | ) | 592 | ||||||||||
Total other-than-temporary impairment losses | — | — | (21 | ) | — | ||||||||||
Portion of loss recognized in other comprehensive income (before taxes) | — | — | (160 | ) | — | ||||||||||
Net impairment losses recognized in earnings | — | — | (181 | ) | — | ||||||||||
Fair value gains – securities | — | 3,274 | — | 7,357 | |||||||||||
FHLB advance option impairment charges | (195 | ) | (7,819 | ) | (2,031 | ) | (7,819 | ) | |||||||
Gain on sale of loans | 314 | 402 | 743 | 967 | |||||||||||
Trust income | 705 | 672 | 2,051 | 1,968 | |||||||||||
Bank owned life insurance income | 260 | 288 | 780 | 835 | |||||||||||
Other | 1,205 | 957 | 3,439 | 3,021 | |||||||||||
Total noninterest income | 10,498 | 5,735 | 29,367 | 28,006 | |||||||||||
Noninterest expense | |||||||||||||||
Salaries and employee benefits | 11,919 | 11,280 | 35,894 | 34,593 | |||||||||||
Occupancy expense | 1,980 | 1,866 | 5,589 | 5,365 | |||||||||||
Equipment expense | 506 | 540 | 1,570 | 1,558 | |||||||||||
Advertising, travel & entertainment | 606 | 591 | 1,813 | 1,694 | |||||||||||
ATM and debit card expense | 251 | 235 | 817 | 716 | |||||||||||
Director fees | 261 | 193 | 802 | 584 | |||||||||||
Supplies | 178 | 186 | 559 | 571 | |||||||||||
Professional fees | 606 | 571 | 1,547 | 1,583 | |||||||||||
Postage | 179 | 178 | 536 | 543 | |||||||||||
Telephone and communications | 416 | 285 | 1,267 | 967 | |||||||||||
FDIC Insurance | 429 | 212 | 1,313 | 1,710 | |||||||||||
Other | 1,745 | 1,559 | 4,987 | 4,660 | |||||||||||
Total noninterest expense | 19,076 | 17,696 | 56,694 | 54,544 | |||||||||||
Income before income tax expense | 10,165 | 10,601 | 32,731 | 38,852 | |||||||||||
Provision for income tax expense | 1,558 | 2,038 | 6,256 | 7,924 | |||||||||||
Net income | 8,607 | 8,563 | 26,475 | 30,928 | |||||||||||
Less: Net income attributable to the noncontrolling interest | — | — | — | (1,358 | ) | ||||||||||
Net income attributable to Southside Bancshares, Inc. | $ | 8,607 | $ | 8,563 | $ | 26,475 | $ | 29,570 | |||||||
Earnings per common share – basic | $ | 0.50 | $ | 0.50 | $ | 1.53 | $ | 1.71 | |||||||
Earnings per common share – diluted | $ | 0.50 | $ | 0.50 | $ | 1.53 | $ | 1.71 | |||||||
Dividends paid per common share | $ | 0.20 | $ | 0.18 | $ | 0.58 | $ | 0.52 |
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (in thousands) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net income | $ | 8,607 | $ | 8,563 | $ | 26,475 | $ | 30,928 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Unrealized holding gains on available for sale securities during the period | 15,469 | 20,722 | 11,446 | 47,002 | |||||||||||
Noncredit portion of other-than-temporary impairment losses on the AFS securities | — | — | 160 | — | |||||||||||
Reclassification adjustment for gain on sale of available for sale securities included in net income | (4,302 | ) | (3,609 | ) | (13,571 | ) | (9,080 | ) | |||||||
Reclassification of other-than-temporary impairment charges on available for sale securities included in net income | — | — | 181 | — | |||||||||||
Amortization of net actuarial loss, included in net periodic benefit cost | 505 | 366 | 1,516 | 1,099 | |||||||||||
Amortization of prior service credit included in net periodic benefit cost | (10 | ) | (11 | ) | (32 | ) | (33 | ) | |||||||
Other comprehensive income (loss) | 11,662 | 17,468 | (300 | ) | 38,988 | ||||||||||
Income tax benefit (expense) related to other items of comprehensive income | (4,081 | ) | (6,114 | ) | 106 | (13,646 | ) | ||||||||
Other comprehensive income (loss), net of tax | 7,581 | 11,354 | (194 | ) | 25,342 | ||||||||||
Comprehensive income | $ | 16,188 | $ | 19,917 | $ | 26,281 | $ | 56,270 |
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (in thousands, except share amounts) | |||||||||||||||||||||||||||
Common Stock | Paid In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | Total Equity | |||||||||||||||||||||
Balance at December 31, 2010 | $ | 22,075 | $ | 162,877 | $ | 64,179 | $ | (28,377 | ) | $ | (6,293 | ) | $ | 1,113 | $ | 215,574 | |||||||||||
Net Income | 29,570 | 1,358 | 30,928 | ||||||||||||||||||||||||
Other comprehensive income | 25,342 | 25,342 | |||||||||||||||||||||||||
Issuance of common stock (44,352 shares) | 56 | 804 | 860 | ||||||||||||||||||||||||
Stock compensation expense | 143 | 143 | |||||||||||||||||||||||||
Tax benefits related to stock compensation | 2 | 2 | |||||||||||||||||||||||||
Capital distribution to noncontrolling interest shareholders | (475 | ) | (475 | ) | |||||||||||||||||||||||
Purchase of noncontrolling interest | (2,754 | ) | (1,996 | ) | (4,750 | ) | |||||||||||||||||||||
Dividends paid on common stock ($0.52 per share) | (8,414 | ) | (8,414 | ) | |||||||||||||||||||||||
Stock dividend declared | 981 | 15,014 | (15,995 | ) | — | ||||||||||||||||||||||
Balance at September 30, 2011 | $ | 23,112 | $ | 176,086 | $ | 69,340 | $ | (28,377 | ) | $ | 19,049 | $ | — | $ | 259,210 | ||||||||||||
Balance at December 31, 2011 | $ | 23,146 | $ | 176,791 | $ | 72,646 | $ | (28,377 | ) | $ | 14,721 | $ | — | $ | 258,927 | ||||||||||||
Net Income | 26,475 | 26,475 | |||||||||||||||||||||||||
Other comprehensive loss | (194 | ) | (194 | ) | |||||||||||||||||||||||
Issuance of common stock (45,620 shares) | 57 | 906 | 963 | ||||||||||||||||||||||||
Stock compensation expense | 303 | 303 | |||||||||||||||||||||||||
Tax benefits related to stock compensation | 11 | 11 | |||||||||||||||||||||||||
Net issuance of common stock under employee stock plans | 10 | 49 | (63 | ) | (4 | ) | |||||||||||||||||||||
Dividends paid on common stock ($0.58 per share) | (9,908 | ) | (9,908 | ) | |||||||||||||||||||||||
Stock dividend declared | 1,034 | 16,425 | (17,459 | ) | — | ||||||||||||||||||||||
Balance at September 30, 2012 | $ | 24,247 | $ | 194,485 | $ | 71,691 | $ | (28,377 | ) | $ | 14,527 | $ | — | $ | 276,573 |
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) (in thousands) | |||||||
Nine Months Ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
OPERATING ACTIVITIES: | |||||||
Net income | $ | 26,475 | $ | 30,928 | |||
Adjustments to reconcile net income to net cash provided by operations: | |||||||
Depreciation | 2,706 | 2,515 | |||||
Amortization of premium | 35,354 | 26,175 | |||||
Accretion of discount and loan fees | (3,611 | ) | (3,386 | ) | |||
Provision for loan losses | 8,491 | 5,452 | |||||
Stock compensation expense | 303 | 143 | |||||
Deferred tax (benefit) expense | (1,988 | ) | 561 | ||||
Excess tax benefits from stock-based compensation | (11 | ) | — | ||||
Loss (gain) on sale of securities carried at fair value through income | 498 | (592 | ) | ||||
Gain on sale of securities available for sale | (13,571 | ) | (9,080 | ) | |||
Net other-than-temporary impairment losses | 181 | — | |||||
Fair value gain – securities | — | (7,357 | ) | ||||
FHLB advance option impairment charges | 2,031 | 7,819 | |||||
Loss on sale of assets | — | 3 | |||||
Loss on retirement of assets | — | 90 | |||||
Impairment on other real estate owned | 28 | 184 | |||||
Gain on sale of other real estate owned | (2 | ) | (242 | ) | |||
Net change in: | |||||||
Interest receivable | 4,698 | 2,076 | |||||
Other assets | (1,171 | ) | (2,413 | ) | |||
Interest payable | (559 | ) | (861 | ) | |||
Other liabilities | (1,683 | ) | 3,598 | ||||
Loans held for sale | 2,394 | 1,092 | |||||
Net cash provided by operating activities | 60,563 | 56,705 | |||||
INVESTING ACTIVITIES: | |||||||
Securities held to maturity: | |||||||
Purchases | — | (11,875 | ) | ||||
Maturities, calls and principal repayments | 67,162 | 34,097 | |||||
Securities available for sale: | |||||||
Purchases | (1,446,425 | ) | (512,910 | ) | |||
Sales | 745,085 | 516,571 | |||||
Maturities, calls and principal repayments | 279,995 | 195,097 | |||||
Securities carried at fair value through income: | |||||||
Purchases | (57,606 | ) | (707,222 | ) | |||
Sales | 675,255 | 180,723 | |||||
Maturities, calls and principal repayments | 25,279 | 32,132 | |||||
Proceeds from redemption of FHLB stock | 12,266 | 16,461 | |||||
Purchases of FHLB stock and other investments | (12,336 | ) | (10,806 | ) | |||
Net (increase) decrease in loans | (142,126 | ) | 27,344 | ||||
Purchases of premises and equipment | (2,036 | ) | (2,951 | ) | |||
Proceeds from sales of premises and equipment | — | 6 | |||||
Proceeds from sales of other real estate owned | 401 | 676 | |||||
Proceeds from sales of repossessed assets | 3,416 | 3,933 | |||||
Net cash provided by (used in) investing activities | 148,330 | (238,724 | ) | ||||
(continued) |
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) (continued) (in thousands) | |||||||
Nine Months Ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
FINANCING ACTIVITIES: | |||||||
Net increase in demand and savings accounts | 157,650 | 133,513 | |||||
Net (decrease) increase in certificates of deposit | (178,046 | ) | 30,099 | ||||
Net decrease in federal funds purchased and repurchase agreements | (1,477 | ) | (847 | ) | |||
Proceeds from FHLB advances | 12,560,845 | 8,005,080 | |||||
Repayment of FHLB advances | (12,650,197 | ) | (8,004,991 | ) | |||
Net capital distributions to noncontrolling interest in consolidated entities | — | (475 | ) | ||||
Purchase of noncontrolling interest | — | (4,750 | ) | ||||
Excess tax benefits from stock-based compensation | 11 | 2 | |||||
Proceeds from the issuance of common stock | 963 | 860 | |||||
Dividends paid | (9,908 | ) | (8,414 | ) | |||
Net cash (used in) provided by financing activities | (120,159 | ) | 150,077 | ||||
Net increase (decrease) in cash and cash equivalents | 88,734 | (31,942 | ) | ||||
Cash and cash equivalents at beginning of period | 43,238 | 79,073 | |||||
Cash and cash equivalents at end of period | $ | 131,972 | $ | 47,131 | |||
SUPPLEMENTAL DISCLOSURES FOR CASH FLOW INFORMATION: | |||||||
Interest paid | $ | 21,633 | $ | 28,301 | |||
Income taxes paid | $ | 11,200 | $ | 6,500 | |||
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: | |||||||
Loans transferred to other repossessed assets and real estate through foreclosure | $ | 4,028 | $ | 4,790 | |||
Adjustment to pension liability | $ | (1,484 | ) | $ | (1,066 | ) | |
5% stock dividend | $ | 17,459 | $ | 15,995 | |||
Unsettled trades to purchase securities | $ | (17,326 | ) | $ | — |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Basic and Diluted Earnings: | |||||||||||||||
Net income – Southside Bancshares, Inc. | $ | 8,607 | $ | 8,563 | $ | 26,475 | $ | 29,570 | |||||||
Basic weighted-average shares outstanding | 17,363 | 17,279 | 17,342 | 17,263 | |||||||||||
Add: Stock options | 14 | 7 | 12 | 7 | |||||||||||
Diluted weighted-average shares outstanding | 17,377 | 17,286 | 17,354 | 17,270 | |||||||||||
Basic Earnings Per Share: | |||||||||||||||
Net Income - Southside Bancshares, Inc. | $ | 0.50 | $ | 0.50 | $ | 1.53 | $ | 1.71 | |||||||
Diluted Earnings Per Share: | |||||||||||||||
Net Income - Southside Bancshares, Inc. | $ | 0.50 | $ | 0.50 | $ | 1.53 | $ | 1.71 |
Nine Months Ended September 30, 2012 | |||||||||||
Before-Tax Amount | Tax (Expense) Benefit | Net-of-Tax Amount | |||||||||
Unrealized losses on securities: | |||||||||||
Unrealized holding gains arising during period | $ | 11,446 | $ | (4,006 | ) | $ | 7,440 | ||||
Noncredit portion of other-than-temporary impairment losses on the AFS securities | 160 | (56 | ) | 104 | |||||||
Less: reclassification adjustment for gain on sale of AFS securities included in net income | 13,571 | (4,750 | ) | 8,821 | |||||||
Less: reclassification of other-than-temporary impairment charges of AFS securities included in net income | (181 | ) | 63 | (118 | ) | ||||||
Net unrealized losses on securities | (1,784 | ) | 625 | (1,159 | ) | ||||||
Change in pension plans | 1,484 | (519 | ) | 965 | |||||||
Other comprehensive loss | $ | (300 | ) | $ | 106 | $ | (194 | ) |
Three Months Ended September 30, 2012 | |||||||||||
Before-Tax Amount | Tax Expense | Net-of-Tax Amount | |||||||||
Unrealized gains on securities: | |||||||||||
Unrealized holding gains arising during period | $ | 15,469 | $ | (5,414 | ) | $ | 10,055 | ||||
Less: reclassification adjustment for gain on sale of AFS securities included in net income | 4,302 | (1,506 | ) | 2,796 | |||||||
Net unrealized gains on securities | 11,167 | (3,908 | ) | 7,259 | |||||||
Change in pension plans | 495 | (173 | ) | 322 | |||||||
Other comprehensive income | $ | 11,662 | $ | (4,081 | ) | $ | 7,581 |
Nine Months Ended September 30, 2011 | |||||||||||
Before-Tax Amount | Tax Expense | Net-of-Tax Amount | |||||||||
Unrealized gains on securities: | |||||||||||
Unrealized holding gains arising during period | $ | 47,002 | $ | (16,451 | ) | $ | 30,551 | ||||
Less: reclassification adjustment for gain on sale of AFS securities included in net income | 9,080 | (3,178 | ) | 5,902 | |||||||
Net unrealized gains on securities | 37,922 | (13,273 | ) | 24,649 | |||||||
Change in pension plans | 1,066 | (373 | ) | 693 | |||||||
Other comprehensive income | $ | 38,988 | $ | (13,646 | ) | $ | 25,342 |
Three Months Ended September 30, 2011 | |||||||||||
Before-Tax Amount | Tax Expense | Net-of-Tax Amount | |||||||||
Unrealized gains on securities: | |||||||||||
Unrealized holding gains arising during period | $ | 20,722 | $ | (7,253 | ) | $ | 13,469 | ||||
Less: reclassification adjustment for gain on sale of AFS securities included in net income | 3,609 | (1,263 | ) | 2,346 | |||||||
Net unrealized gains on securities | 17,113 | (5,990 | ) | 11,123 | |||||||
Change in pension plans | 355 | (124 | ) | 231 | |||||||
Other comprehensive income | $ | 17,468 | $ | (6,114 | ) | $ | 11,354 |
September 30, 2012 | |||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||
AVAILABLE FOR SALE: | OTTI | Other | |||||||||||||||||
Investment Securities: | |||||||||||||||||||
State and Political Subdivisions | $ | 520,975 | $ | 34,110 | $ | — | $ | 71 | $ | 555,014 | |||||||||
Other Stocks and Bonds | 5,579 | 84 | 2,041 | 2 | 3,620 | ||||||||||||||
Mortgage-backed Securities: | |||||||||||||||||||
U.S. Government Agencies | 99,394 | 3,630 | — | 102 | 102,922 | ||||||||||||||
Government-Sponsored Enterprises | 745,316 | 18,288 | — | 574 | 763,030 | ||||||||||||||
Total | $ | 1,371,264 | $ | 56,112 | $ | 2,041 | $ | 749 | $ | 1,424,586 |
September 30, 2012 | |||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||
HELD TO MATURITY: | OTTI | Other | |||||||||||||||||
Investment Securities: | |||||||||||||||||||
State and Political Subdivisions | $ | 1,009 | $ | 146 | $ | — | $ | — | $ | 1,155 | |||||||||
Mortgage-backed Securities: | |||||||||||||||||||
U.S. Government Agencies | 20,968 | 1,298 | — | — | 22,266 | ||||||||||||||
Government-Sponsored Enterprises | 272,332 | 9,391 | — | 2 | 281,721 | ||||||||||||||
Total | $ | 294,309 | $ | 10,835 | $ | — | $ | 2 | $ | 305,142 |
December 31, 2011 | |||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||
AVAILABLE FOR SALE: | OTTI | Other | |||||||||||||||||
Investment Securities: | |||||||||||||||||||
State and Political Subdivisions | $ | 251,281 | $ | 31,221 | $ | — | $ | 45 | $ | 282,457 | |||||||||
Other Stocks and Bonds | 2,925 | — | 2,426 | — | 499 | ||||||||||||||
Mortgage-backed Securities: | |||||||||||||||||||
U.S. Government Agencies | 99,974 | 7,158 | — | 80 | 107,052 | ||||||||||||||
Government-Sponsored Enterprises | 589,687 | 20,127 | — | 740 | 609,074 | ||||||||||||||
Total | $ | 943,867 | $ | 58,506 | $ | 2,426 | $ | 865 | $ | 999,082 |
December 31, 2011 | |||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||
HELD TO MATURITY: | OTTI | Other | |||||||||||||||||
Investment Securities: | |||||||||||||||||||
State and Political Subdivisions | $ | 1,010 | $ | 196 | $ | — | $ | — | $ | 1,206 | |||||||||
Other Stocks and Bonds | 486 | 15 | — | — | 501 | ||||||||||||||
Mortgage-backed Securities: | |||||||||||||||||||
U.S. Government Agencies | 22,999 | 1,159 | — | 43 | 24,115 | ||||||||||||||
Government-Sponsored Enterprises | 342,632 | 14,848 | — | 11 | 357,469 | ||||||||||||||
Total | $ | 367,127 | $ | 16,218 | $ | — | $ | 54 | $ | 383,291 |
At September 30, | At December 31, | ||||||
2012 | 2011 | ||||||
Mortgage-backed Securities: | |||||||
U.S. Government Agencies | $ | — | $ | 30,413 | |||
Government-Sponsored Enterprises | — | 617,346 | |||||
Total | $ | — | $ | 647,759 |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Net (loss) gain on sales transactions | $ | (498 | ) | $ | 592 | ||
Net mark-to-market gains | — | 7,357 | |||||
Net (loss) gain on securities carried at fair value through income | $ | (498 | ) | $ | 7,949 |
Three Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Net gain on sales transactions | $ | — | $ | 254 | |||
Net mark-to-market gains | — | 3,274 | |||||
Net gain on securities carried at fair value through income | $ | — | $ | 3,528 |
Less Than 12 Months | More Than 12 Months | Total | |||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
As of September 30, 2012: | |||||||||||||||||||||||
Available for Sale | |||||||||||||||||||||||
State and Political Subdivisions | $ | 6,795 | $ | 71 | $ | — | $ | — | $ | 6,795 | $ | 71 | |||||||||||
Other Stocks and Bonds | 164 | 2 | 703 | 2,041 | 867 | 2,043 | |||||||||||||||||
Mortgage-Backed Securities | 149,765 | 632 | 8,205 | 44 | 157,970 | 676 | |||||||||||||||||
Total | $ | 156,724 | $ | 705 | $ | 8,908 | $ | 2,085 | $ | 165,632 | $ | 2,790 | |||||||||||
Held to Maturity | |||||||||||||||||||||||
Mortgage-Backed Securities | $ | 332 | $ | 2 | $ | — | $ | — | $ | 332 | $ | 2 | |||||||||||
Total | $ | 332 | $ | 2 | $ | — | $ | — | $ | 332 | $ | 2 | |||||||||||
As of December 31, 2011: | |||||||||||||||||||||||
Available for Sale | |||||||||||||||||||||||
State and Political Subdivisions | $ | 1,668 | $ | 42 | $ | 307 | $ | 3 | $ | 1,975 | $ | 45 | |||||||||||
Other Stocks and Bonds | — | — | 499 | 2,426 | 499 | 2,426 | |||||||||||||||||
Mortgage-Backed Securities | 148,171 | 754 | 5,322 | 66 | 153,493 | 820 | |||||||||||||||||
Total | $ | 149,839 | $ | 796 | $ | 6,128 | $ | 2,495 | $ | 155,967 | $ | 3,291 | |||||||||||
Held to Maturity | |||||||||||||||||||||||
Mortgage-Backed Securities | $ | 8,918 | $ | 54 | $ | — | $ | — | $ | 8,918 | $ | 54 | |||||||||||
Total | $ | 8,918 | $ | 54 | $ | — | $ | — | $ | 8,918 | $ | 54 |
TRUP | Par | Credit Loss | Amortized Cost | Fair Value | Tranche | Credit Rating | ||||||||||||||
1 | $ | 2,000 | $ | 1,256 | $ | 744 | $ | 117 | C1 | Ca | ||||||||||
2 | 2,000 | 550 | 1,450 | 234 | B1 | C | ||||||||||||||
3 | 2,000 | 1,450 | 550 | 352 | B2 | C | ||||||||||||||
$ | 6,000 | $ | 3,256 | $ | 2,744 | $ | 703 |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Balance, beginning of period | $ | 3,075 | $ | 3,075 | |||
Additions for credit losses recognized on debt securities that had no previous impairment losses | — | — | |||||
Additions for credit losses recognized on debt securities that had previously incurred impairment losses | 181 | — | |||||
Balance, end of period | $ | 3,256 | $ | 3,075 |
Three Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Balance, beginning of period | $ | 3,256 | $ | 3,075 | |||
Additions for credit losses recognized on debt securities that had no previous impairment losses | — | — | |||||
Additions for credit losses recognized on debt securities that had previously incurred impairment losses | — | — | |||||
Balance, end of period | $ | 3,256 | $ | 3,075 |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
U.S. Treasury | $ | — | $ | 6 | |||
State and Political Subdivisions | 9,489 | 9,525 | |||||
Other Stocks and Bonds | 51 | 25 | |||||
Mortgage-backed Securities | 27,730 | 37,899 | |||||
Total interest income on securities | $ | 37,270 | $ | 47,455 |
Three Months Ended September 30, | |||||||
2012 | 2011 | ||||||
U.S. Treasury | $ | — | $ | — | |||
State and Political Subdivisions | 3,847 | 3,073 | |||||
Other Stocks and Bonds | 14 | 7 | |||||
Mortgage-backed Securities | 6,695 | 13,292 | |||||
Total interest income on securities | $ | 10,556 | $ | 16,372 |
September 30, 2012 | |||||||
Amortized Cost | Fair Value | ||||||
Available for sale securities: | (in thousands) | ||||||
Investment Securities | |||||||
Due in one year or less | $ | 4,031 | $ | 4,053 | |||
Due after one year through five years | 13,410 | 13,813 | |||||
Due after five years through ten years | 84,416 | 88,143 | |||||
Due after ten years | 424,697 | 452,625 | |||||
526,554 | 558,634 | ||||||
Mortgage-backed securities | 844,710 | 865,952 | |||||
Total | $ | 1,371,264 | $ | 1,424,586 |
September 30, 2012 | |||||||
Amortized Cost | Fair Value | ||||||
Held to maturity securities: | (in thousands) | ||||||
Investment Securities | |||||||
Due in one year or less | $ | — | $ | — | |||
Due after one year through five years | — | — | |||||
Due after five years through ten years | — | — | |||||
Due after ten years | 1,009 | 1,155 | |||||
1,009 | 1,155 | ||||||
Mortgage-backed securities | 293,300 | 303,987 | |||||
Total | $ | 294,309 | $ | 305,142 |
At September 30, 2012 | At December 31, 2011 | ||||||
Real Estate Loans: | |||||||
Construction | $ | 116,079 | $ | 111,361 | |||
1-4 Family residential | 349,419 | 247,479 | |||||
Other | 225,854 | 206,519 | |||||
Commercial loans | 140,479 | 143,552 | |||||
Municipal loans | 220,590 | 207,261 | |||||
Loans to individuals | 169,174 | 171,058 | |||||
Total loans | 1,221,595 | 1,087,230 | |||||
Less: Allowance for loan losses | 20,848 | 18,540 | |||||
Net loans | $ | 1,200,747 | $ | 1,068,690 |
• | Satisfactory (Rating 1 – 4) – This rating is assigned to all satisfactory loans. This category, by definition, should consist of completely acceptable credit. Credit and collateral exceptions should not be present, although their presence would not necessarily prohibit a loan from being rated Satisfactory, if deficiencies are in process of correction. These loans will not be included in the Watch List. |
• | Satisfactory (Rating 5) – Special Treatment Required – (Pass Watch) – These loans require some degree of special treatment, but not due to credit quality. This category does not include loans specially mentioned or adversely classified by the Loan Review Officer or regulatory authorities; however, particular attention must be accorded such credits due to characteristics such as: |
• | A lack of, or abnormally extended payment program; |
• | A heavy degree of concentration of collateral without sufficient margin; |
• | A vulnerability to competition through lesser or extensive financial leverage; and |
• | A dependence on a single, or few customers, or sources of supply and materials without suitable substitutes or alternatives. |
• | Special Mention (Rating 6) – A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. |
• | Substandard (Rating 7) – Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. |
• | Doubtful (Rating 8) – Loans classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation, in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. |
• | Loss (Rating 9) – Loans classified as Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. |
• | Changes in lending policies or procedures, including underwriting, collection, charge-off, and recovery procedures; |
• | Changes in local, regional and national economic and business conditions including entry into new markets; |
• | Changes in the volume or type of credit extended; |
• | Changes in the experience, ability, and depth of lending management; |
• | Changes in the volume and severity of past due, nonaccrual, restructured, or classified loans; |
• | Changes in loan review or Board oversight; and |
• | Changes in the level of concentrations of credit. |
Nine Months Ended September 30, 2012 | ||||||||||||||||||||||||||||||||
Real Estate | ||||||||||||||||||||||||||||||||
Construction | 1-4 Family Residential | Other | Commercial Loans | Municipal Loans | Loans to Individuals | Unallocated | Total | |||||||||||||||||||||||||
Balance at beginning of period | $ | 2,620 | $ | 1,957 | $ | 3,051 | $ | 2,877 | $ | 619 | $ | 6,244 | $ | 1,172 | $ | 18,540 | ||||||||||||||||
Provision (reversal) for loan losses | 134 | 371 | 353 | 312 | 25 | 7,276 | 20 | 8,491 | ||||||||||||||||||||||||
Loans charged off | (15 | ) | (181 | ) | (99 | ) | (402 | ) | — | (7,367 | ) | — | (8,064 | ) | ||||||||||||||||||
Recoveries of loans charged off | 70 | 166 | 5 | 271 | — | 1,369 |