form10q6302011.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A

[x]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                                                      June 30, 2011
OR
 
 
[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to

Commission file number 0-27782

Dime Community Bancshares, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
 
11-3297463
(I.R.S. employer identification number)
 
209 Havemeyer Street, Brooklyn, NY
(Address of principal executive offices)
 
 
11211
(Zip Code)

(718) 782-6200
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all the reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES            X            NO ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES             X              NO ___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

LARGE ACCELERATED FILER ___
ACCELERATED FILER         X     
NON -ACCELERATED FILER  ___
SMALLER REPORTING COMPANY ___

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES                                       NO            X  

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Classes of Common Stock
 
Number of Shares Outstanding at August 5, 2011
$.01 Par Value
 
34,997,739
     

 
 

 
 
 

 
The sole purpose of this Amendment to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2011 (the “10-Q”), is to furnish the Interactive Data File exhibits required by Item 601(b)(101) of Regulation S-K.  No other changes have been made to the 10-Q filed on August 9, 2011.
 
 
Item 6.           Exhibits

Exhibit Number
3(i)
 
Amended and Restated Certificate of Incorporation of Dime Community Bancshares, Inc. (1)
3(ii)
 
Amended and Restated Bylaws of Dime Community Bancshares, Inc. (15)
4.1
 
Amended and Restated Certificate of Incorporation of Dime Community Bancshares, Inc. [See Exhibit 3(i) hereto]
4.2
 
Amended and Restated Bylaws of Dime Community Bancshares, Inc. [See Exhibit 3(ii) hereto]
4.3
 
Draft Stock Certificate of Dime Community Bancshares, Inc.  (3)
4.4
 
Second Amended and Restated Declaration of Trust, dated as of July 29, 2004, by and among Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company as Institutional Trustee, Dime Community
   Bancshares, Inc., as Sponsor, the Administrators of Dime Community Capital Trust I and the holders from time to time of undivided beneficial interests in the assets of Dime Community Capital Trust I (8)
4.5
 
Indenture, dated as of March 19, 2004, between Dime Community Bancshares, Inc. and Wilmington Trust Company, as trustee (8)
4.6
 
Series B Guarantee Agreement, dated as of July 29, 2004, executed and delivered by Dime Community Bancshares, Inc., as Guarantor and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders
   from time to time of the Series B Capital Securities of Dime Community Capital Trust I (8)
10.1
 
Amended and Restated Employment Agreement between The Dime Savings Bank of Williamsburgh and Vincent F. Palagiano (12)
10.2
 
Amended and Restated Employment Agreement between The Dime Savings Bank of Williamsburgh and Michael P. Devine (12)
10.3
 
Amended and Restated Employment Agreement between The Dime Savings Bank of Williamsburgh and Kenneth J. Mahon (12)
10.4
 
Employment Agreement between Dime Community Bancorp, Inc. and Vincent F. Palagiano(16)
10.5
 
Employment Agreement between Dime Community Bancorp, Inc. and Michael P. Devine (16)
10.6
 
Employment Agreement between Dime Community Bancorp, Inc. and Kenneth J. Mahon(16)
10.7
 
Form of Employee Retention Agreement by and among The Dime Savings Bank of Williamsburgh, Dime Community    Bancorp, Inc. and certain officers (5)
10.7(i)
 
Amendment to Form of Employee Retention Agreement by and among The Dime Savings Bank of Williamsburgh, Dime Community    Bancorp, Inc. and certain officers (12)
10.8
 
The Benefit Maintenance Plan of Dime Community Bancorp, Inc. (16)
10.9
 
Severance Pay Plan of The Dime Savings Bank of Williamsburgh (12)
10.10
 
Retirement Plan for Board Members of Dime Community Bancorp, Inc. (12)
10.12
 
Recognition and Retention Plan for Outside Directors, Officers and Employees of Dime Community Bancorp, Inc., as amended by amendments number 1 and 2 (6)
10.13
 
Form of stock option agreement for Outside Directors under Dime Community Bancshares, Inc. 1996 and 2001 Stock Option Plans for Outside Directors, Officers and Employees and the 2004 Stock Incentive Plan. (6)
10.14
 
Form of stock option agreement for officers and employees under Dime Community Bancshares, Inc. 1996 and 2001 Stock Option Plans for Outside Directors, Officers and Employees and the 2004 Stock Incentive Plan (6)
10.15
 
Form of award notice for outside directors under the Recognition and Retention Plan for Outside Directors, Officers and Employees of Dime Community Bancorp, Inc. (6)
10.16
 
Form of award notice for officers and employees under the Recognition and Retention Plan for Outside Directors, Officers and Employees of Dime Community Bancorp, Inc. (6)
10.17
 
Financial Federal Savings Bank Incentive Savings Plan in RSI Retirement Trust (7)
10.18
 
Financial Federal Savings Bank Employee Stock Ownership Plan (7)
10.19
 
Option Conversion Certificates between Dime Community Bancshares, Inc. and each of Messrs. Russo, Segrete, Calamari, Latawiec, O'Gorman, and Ms. Swaya pursuant to Section 1.6(b) of the Agreement and Plan of
   Merger, dated as of July 18, 1998 by and between Dime Community Bancshares, Inc. and Financial Bancorp, Inc. (7)
10.20*
 
Dime Community Bancshares, Inc. 2001 Stock Option Plan for Outside Directors, Officers and Employees*
10.21
 
Dime Community Bancshares, Inc. 2004 Stock Incentive Plan for Outside Directors, Officers and Employees (11)
10.22
 
Waiver executed by Vincent F. Palagiano (10)
10.23
 
Waiver executed by Michael P. Devine (10)
10.24
 
Waiver executed by Kenneth J. Mahon (10)
10.25
 
Form of restricted stock award notice for officers and employees under the 2004 Stock Incentive Plan (9)
10.27
 
Form of restricted stock award notice for outside directors under the 2004 Stock Incentive Plan (9)
10.28
 
Employee Retention Agreement between The Dime Savings Bank of Williamsburgh, Dime Community Bancshares, Inc.  and Daniel Harris (12)
10.29
 
Dime Community Bancshares, Inc. Annual Incentive Plan (12)
10.30
 
Amendment to the Dime Savings Bank of Williamsburgh 401(K) Plan (14)
10.31
 
Employee Stock Ownership Plan of Dime Community Bancshares, Inc. and Certain Affiliates (12)
12.1*
 
Computation of ratio of earnings to fixed charges*
31(i).1*
 
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)*
31(i).2*
 
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)*
32.1*
 
Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350*
32.2*
 
Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350*
101**   Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2011, is formatted in XBRL (Extensible Business Reporting Language) interactive data files: (i) the Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income for the three-month and six-month periods ended June 30, 2011 and 2010, (iii) the Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2011 and 2010, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity for the six-month periods ended June 30, 2011 and 2010, and (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text.

(1)
Incorporated by reference to the registrant's Transition Report on Form 10-K for the transition period ended December 31, 2002 filed on March 28, 2003.
(2)
Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed on May 11, 2009.
(3)
Incorporated by reference to the registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998 filed on September 28, 1998.
(4)
Incorporated by reference to the registrant's Current Report on Form 8-K dated April 9, 1998 and filed on April 16, 1998.
(5)
Incorporated by reference to Exhibits to the registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1997 filed on September 26, 1997.
(6)
Incorporated by reference to the registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1997 filed on September 26, 1997, and the Current Reports on Form 8-K filed on March 22, 2004 and March 29, 2005.
(7)
Incorporated by reference to the registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2000 filed on September 28, 2000.
(8)
Incorporated by reference to Exhibits to the registrant’s Registration Statement No. 333-117743 on Form S-4 filed on July 29, 2004.
(9)
Incorporated by reference to the registrant's Current Report on Form 8-K filed on March 22, 2005.
(10)
Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 filed on May 10, 2005.
(11)
Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 filed on August 8, 2008.
(12)
Incorporated by reference to the registrant's Annual Report on Form 10-K for the year ended December 31, 2008 filed on March 16, 2009.
(13)
Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed on May 11, 2009
(14)
Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed on May 10, 2010
(15)
Incorporated by reference to the registrant's Current Report on Form 8-K filed on March 17, 2011.
(16)
Incorporated by reference to the registrant's Current Report on Form 8-K filed on April 4, 2011.
(17)
Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed on May 10, 2011
 
*      Filed with the 10-Q and attached hereto (exactly as filed with the 10-Q).
**    Furnished, not filed, herewith.
 

 
54 

 



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Dime Community Bancshares, Inc.



Dated: August 9, 2011
 
By: /s/ VINCENT F. PALAGIANO
   
Vincent F. Palagiano
   
Chairman of the Board and Chief Executive Officer


Dated: August 9, 2011
 
By: /s/ KENNETH J. MAHON
   
Kenneth J. Mahon
   
First Executive Vice President and Chief Financial Officer (Principal Accounting Officer)

 
 
 
 

 
 

 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[x]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                                                      June 30, 2011
OR
 
 
[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to

Commission file number 0-27782

Dime Community Bancshares, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
 
11-3297463
(I.R.S. employer identification number)
 
209 Havemeyer Street, Brooklyn, NY
(Address of principal executive offices)
 
 
11211
(Zip Code)

(718) 782-6200
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all the reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES            X            NO ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES             X              NO ___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

LARGE ACCELERATED FILER ___
ACCELERATED FILER         X     
NON -ACCELERATED FILER  ___
SMALLER REPORTING COMPANY ___

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES                                       NO            X  

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Classes of Common Stock
 
Number of Shares Outstanding at August 5, 2011
$.01 Par Value
 
34,997,739
     


 
 

 


   
Page
 
PART I – FINANCIAL INFORMATION
 
Item 1.
Unaudited Condensed Consolidated Financial Statements
 
 
Condensed Consolidated Statements of Financial Condition at June 30, 2011 and December 31, 2010
3
 
Condensed Consolidated Statements of Operations and Comprehensive Income for the Three-Month and
   Six-Month Periods Ended June 30, 2011 and 2010
4
 
Condensed Consolidated Statements of Changes in Stockholders' Equity for the Six Months Ended
   June 30, 2011 and 2010
5
 
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010
6
 
Notes to Consolidated Financial Statements
7-31
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
31-48
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
48-49
Item 4.
Controls and Procedures
49
 
PART II - OTHER INFORMATION
 
Item 1.
Legal Proceedings
50
Item 1A.
Risk Factors
50-52
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
44
Item 3.
Defaults Upon Senior Securities
44
Item 5.
Other Information
44
Item 6.
Exhibits
44-46
 
Signatures
47

Certain statements contained in this quarterly report on Form 10-Q that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such.  In addition, certain statements may be contained in future filings with the U.S. Securities and Exchange Commission (the "SEC"), press releases, and oral and written statements made by management or with its approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act.  Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of Dime Community Bancshares, Inc. and its subsidiaries (the "Company") or those of its management or board of directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements.  

Forward-looking statements include information concerning possible or assumed future results of operations and statements preceded by, followed by or that include the words “believes,” “expects,” “feels,” “anticipates,” “intends,” “plans,” “estimates,” “predicts,” “projects,” “potential,” “outlook,” “could,” “will,” “may” or similar expressions.  Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions.  Actual results may differ materially from those expressed in or implied by these forward-looking statements.  Factors that could cause actual results to differ from these forward-looking statements include, but are not limited to, the following, as well as those discussed elsewhere in this report and the documents incorporated by reference herein:

·
the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company's control;
·
there may be increases in competitive pressure among financial institutions or from non-financial institutions;
·
changes in the interest rate environment may reduce interest margins;
·
changes in deposit flows, loan demand or real estate values may adversely affect the business of The Dime Savings Bank of Williamsburgh (the "Bank");
·
changes in accounting principles, policies or guidelines may cause the Company's financial condition to be perceived differently;
·
changes in corporate and/or individual income tax laws may adversely affect the Company's business or financial condition;
·
general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or banking industry, may be less favorable than currently anticipated;
·
legislation or regulatory changes may adversely affect the Company's business;
·
technological changes may be more difficult or expensive than the Company anticipates;
·
success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates;
·
litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates; and
·
the risks referred to in the section entitled "Risk Factors."

Undue reliance should not be placed on any forward-looking statements.  Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events except to the extent required by Federal securities laws.

 

 

Item 1.  Condensed Consolidated Financial Statements

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands except share amounts)

   
June 30, 2011
   
December 31, 2010
 
ASSETS:
           
Cash and due from banks
  $ 131,643     $ 86,193  
Federal funds sold and other short-term investments
    11,575       4,536  
Investment securities held-to-maturity (estimated fair value of $6,484 and $4,408 at June 30, 2011 and December 31, 2010, respectively) (Fully unencumbered)
    7,249       6,641  
Investment securities available-for-sale, at fair value:
               
   Encumbered
    101,484       80,229  
   Unencumbered
    63,628       5,413  
      165,112       85,642  
Mortgage-backed securities available-for-sale, at fair value:
               
   Encumbered
    113,060       139,192  
   Unencumbered
    4,377       5,326  
      117,437       144,518  
Trading securities
    1,829       1,490  
Loans:
               
    Real estate, net
    3,419,510       3,467,644  
    Other loans
    3,630       2,540  
    Less allowance for loan losses
    (19,518 )     (19,166 )
   Total loans, net
    3,403,622       3,451,018  
Loans held for sale
    656       3,308  
Premises and fixed assets, net
    32,608       31,613  
Federal Home Loan Bank of New York ("FHLBNY") capital stock
    49,489       51,718  
Other real estate owned ("OREO")
    -       -  
Goodwill
    55,638       55,638  
Other assets
    115,924       117,980  
Total Assets
  $ 4,092,782     $ 4,040,295  
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Liabilities:
               
Due to depositors:
               
Interest bearing deposits
  $ 2,279,472     $ 2,224,851  
Non-interest bearing deposits
    136,500       125,730  
Total deposits
    2,415,972       2,350,581  
Escrow and other deposits
    89,466       68,542  
Securities sold under agreements to repurchase
    195,000       195,000  
FHLBNY advances
    939,775       990,525  
Trust Preferred securities payable
    70,680       70,680  
Other liabilities
    34,615       36,233  
Total Liabilities
  $ 3,745,508     $ 3,711,561  
Commitments and Contingencies
               
Stockholders' Equity:
               
Preferred stock ($0.01 par, 9,000,000 shares authorized, none issued or outstanding at June 30, 2011 and December 31, 2010)
    -       -  
Common stock ($0.01 par, 125,000,000 shares authorized, 51,413,667 shares and 51,219,609 shares issued at June 30, 2011 and December 31, 2010, respectively, 
   and  34,956,614  shares and 34,593,180 shares outstanding at June 30, 2011 and December 31, 2010, respectively)
    514       512  
Additional paid-in capital
    228,996       225,585  
Retained earnings
    343,669       329,668  
Accumulated other comprehensive loss, net of deferred taxes
    (5,561 )     (6,352 )
Unallocated common stock of Employee Stock Ownership Plan ("ESOP")
    (3,354 )     (3,470 )
Unearned Restricted Stock Award common stock
    (3,915 )     (2,684 )
Common stock held by Benefit Maintenance Plan ("BMP")
    (8,634 )     (7,979 )
Treasury stock, at cost (16,457,053 shares and 16,626,429 shares at June 30, 2011 and December 31, 2010, respectively)
    (204,441 )     (206,546 )
Total Stockholders' Equity
  $ 347,274     $ 328,734  
Total Liabilities And Stockholders' Equity
  $ 4,092,782     $ 4,040,295  
See notes to condensed consolidated financial statements.

 

 

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in thousands except per share amounts)
   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Interest income:
                       
Loans secured by real estate
  $ 51,857     $ 51,068     $ 102,486     $ 101,191  
Other loans
    24       30       50       68  
Mortgage-backed securities
    1,330       2,082       2,782       4,354  
Investment securities
    382       312       698       719  
Federal funds sold and other short-term investments
    677       681       1,449       1,423  
Total interest  income
    54,270       54,173       107,465       107,755  
Interest expense:
                               
Deposits and escrow
    6,798       8,010       13,583       15,603  
Borrowed funds
    11,312       12,958       22,679       26,181  
Total interest expense
    18,110       20,968       36,262       41,784  
Net interest income
    36,160       33,205       71,203       65,971  
Provision for loan losses
    1,662       3,834       3,088       7,281  
Net interest income after provision for loan losses
    34,498       29,371       68,115       58,690  
Non-interest income:
                               
Total other than temporary impairment ("OTTI") losses
    (574 )       (521 )       (637 )       (736 )  
Less:  Non-credit portion of OTTI recorded in other comprehensive income (before taxes)
    -       13       -       63  
Net OTTI recognized in earnings
    (574 )       (508 )       (637 )       (673 )  
Service charges and other fees
    901       945       1,664       1,881  
Net mortgage banking income
    203       303       296       513  
Net gain on sales of securities and other assets
    21       216       67       785  
Income from bank owned life insurance
    447       488       914       992  
Other
    736       1,013       1,340       1,469  
Total non-interest income
    1,734       2,457       3,644       4,967  
Non-interest expense:
                               
Salaries and employee benefits
    8,061       7,490       16,795       15,469  
Stock benefit plan amortization expense
    955       1,032       1,948       1,940  
Occupancy and equipment
    2,403       2,648       5,092       4,906  
Federal deposit insurance premiums
    347       991       1,571       1,983  
Data processing costs
    784       803       1,476       1,562  
Provision for losses on OREO
    -       157       -       357  
Other
    2,533       2,670       5,061       5,265  
Total non-interest expense
    15,083       15,791       31,943       31,482  
Income before income taxes
    21,149       16,037       39,816       32,175  
Income tax expense
    8,811       6,033       16,398       12,701  
Net income
  $ 12,338     $ 10,004     $ 23,418     $ 19,474  
Earnings per Share:
                               
Basic
  $ 0.37     $ 0.30     $ 0.70     $ 0.59  
Diluted
  $ 0.36     $ 0.30     $ 0.69     $ 0.58  
                                 
STATEMENTS OF COMPREHENSIVE INCOME
                               
Net Income
  $ 12,338     $ 10,004     $ 23,418     $ 19,474  
Amortization and reversal of net unrealized loss on securities transferred from available-for-sale to held-to-
   maturity, net of taxes of $14 and $17 during the three months ended June 30, 2011 and 2010, respectively, and
   $26 and $29 during the six months ended June 30, 2011 and 2010, respectively
    18       21       32       36  
Reduction in non-credit component of OTTI charge, net of taxes of $290 and $178 during the three months ended
   June 30, 2011 and 2010, respectively, and $566 and $303 during the six months ended June 30, 2011 and
   2010, respectively
    352       216       688       370  
Non-credit component of OTTI charge recognized during the period, net of tax benefits of $(5) during
   the three months ended June 30, 2010 and $(27) during the six months ended June 30, 2010
    -       (8 )       -       (36 )  
Reclassification adjustment for securities sold during the period, net of taxes of $127 during the three months
   ended June 30, 2010 and $384 during the six months ended June 30, 2010
    -       (155 )       -       (467 )  
Net unrealized securities gains arising during the period, net of taxes of $304 and $239 during the three months
   ended June 30, 2011 and 2010, respectively, and $37 and $479 during the six months ended June 30, 2011
   and 2010, respectively
    368       291       44       582  
Defined benefit plan adjustments, net of tax (benefits) expense of $(535) during the three months ended
   June 30, 2010, and $23 and $(560) during the six months ended June 30, 2011 and 2010, respectively
    -       (650 )       27       (680 )  
Comprehensive Income
  $ 13,076     $ 9,719     $ 24,209     $ 19,279  
See notes to condensed consolidated financial statements.


 

 

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 (Dollars in thousands)

   
Six Months Ended June 30,
 
   
2011
   
2010
 
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
           
Common Stock (Par Value $0.01):
           
Balance at beginning of period
  $ 512     $ 511  
Shares issued in exercise of options
    2       -  
Balance at end of period
    514       511  
Additional Paid-in Capital:
               
Balance at beginning of period
    225,585       214,654  
Stock options exercised
    1,800       165  
Forfeited restricted stock award shares returned to treasury stock
    2       3  
Tax benefit of stock plans
    305       88  
BMP award distribution
    -       (28 )
BMP reclassification
    -       8,007  
Amortization of excess fair value over cost – ESOP stock and stock options expense
    804       866  
Release from treasury stock for restricted stock award and BMP benefit shares
    500       47  
Balance at end of period
    228,996       223,802  
Retained Earnings:
               
Balance at beginning of period
    329,668       306,787  
Net income for the period
    23,418       19,474  
Cash dividends declared and paid
    (9,417 )     (9,306 )
BMP reclassification
    -       133  
Balance at end of period
    343,669       317,088  
Accumulated Other Comprehensive Loss, net of tax:
               
Balance at beginning of period
    (6,352 )     (5,082 )
Amortization and reversal of net unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of tax
    32       36  
Non-credit component of OTTI charge recognized during the period, net of tax
    -       (36 )
Reduction in non-credit component of OTTI during the period, net of tax
    688       370  
Change in unrealized gain or loss on available-for-sale securities during the period
    44       115  
Adjustments to comprehensive income from defined benefit plans, net of tax
    27       (680 )
Balance at end of period
    (5,561 )     (5,277 )
ESOP:
               
Balance at beginning of period
    (3,470 )     (3,701 )
Amortization of earned portion of ESOP stock
    116       115  
Balance at end of period
    (3,354 )     (3,586 )
Unearned Restricted Stock Award Common Stock:
               
Balance at beginning of period
    (2,684 )     (2,505 )
Amortization of earned portion of restricted stock awards
    700       607  
Forfeited restricted stock award shares returned to treasury stock
    22       149  
Release from treasury stock for restricted stock award and BMP benefit shares
    (1,953 )     (1,824 )
Balance at end of period
    (3,915 )     (3,573 )
Treasury Stock, at cost:
               
Balance at beginning of period
    (206,546 )     (207,884 )
Forfeited restricted stock award shares returned to treasury stock
    (24 )     (152 )
Release from treasury stock for restricted stock award and BMP benefit shares
    2,129       1,777  
Balance at end of period
    (204,441 )     (206,259 )
Common Stock Held by BMP:
               
Balance at beginning of period
    (7,979 )     (8,007 )
Release from treasury stock for restricted stock award and BMP benefit shares
    (676 )     -  
BMP award distribution
    21       28  
Balance at end of period
    (8,634 )     (7,979 )
TOTAL STOCKHOLDERS' EQUITY
    347,274       314,727  

See notes to condensed consolidated financial statements.
.

 

 

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In thousands)

   
Six Months Ended June 30 ,
 
   
2011
   
2010
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net Income
  $ 23,418     $ 19,474  
Adjustments to reconcile net income to net cash provided by  operating activities:
               
Net loss (gain) on sale of loans originated for sale
    14       (181 )
Net gain on sale of investment securities available-for-sale
    -       (608 )
Net gain recognized on the transfer of securities from available-for-sale into trading
    -       (242 )
Net (gain) loss on trading securities
    (53 )     65  
Net depreciation and amortization
    1,526       1,254  
ESOP compensation expense
    561       489  
Stock plan compensation (excluding ESOP)
    1,059       1,099  
Provision for loan losses
    3,088       7,281  
Provision for losses on OREO
    -       357  
Provision to increase the liability for loans sold with recourse
    -       -  
Recovery of write down of mortgage servicing asset
    -       -  
OTTI charge for investment securities recognized in earnings
    637       673  
Increase in cash surrender value of Bank Owned Life Insurance
    (914 )     (992 )
Deferred income tax credit
    (718 )     (369 )
Excess tax benefit of stock plans
    (305 )     (88 )
Changes in assets and liabilities:
               
Origination of loans held for sale
    (3,050 )     (14,927 )
Proceeds from sale of loans held for sale
    6,448       14,832  
Decrease (increase) in other assets
    3,341       (1,095 )
Decrease in other liabilities
    (1,568 )     (2,559 )
Net cash provided by operating activities
    33,484       24,463  
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Net increase in federal funds sold and other short term investments
    (7,039 )     (41,670 )
Proceeds from principal repayments of investment securities held-to-maturity
    81       90  
Proceeds from maturities of investment securities available-for-sale
    -       -  
Proceeds from calls and principal repayments of investment securities available-for-sale
    94,000       30,000  
Proceeds from sales of investment securities available-for-sale
    -       2,527  
Purchases of investment securities available-for-sale
    (172,910 )     (31,433 )
Principal collected on mortgage backed securities available-for-sale
    26,573       40,646  
Purchases of trading securities
    (286 )     -  
Net decrease (increase) in loans
    43,548       (75,538 )
Proceeds from the sale of OREO
    -       368  
Purchases of fixed assets, net
    (2,506 )     (1,731 )
Redemption of FHLBNY capital stock
    2,229       1,015  
Net cash used in investing activities
    (16,310 )     (75,726 )
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Net increase in due to depositors
    65,391       222,979  
Net  increase in escrow and other deposits
    20,924       11,804  
Increase in securities sold under agreements to repurchase
    -       (35,000 )
Increase(Decrease) in FHLBNY advances
    (50,750 )     10,850  
Repayment of subordinated note
    -       (25,000 )
Cash dividends paid
    (9,417 )     (9,306 )
Exercise of stock options
    1,802       165  
BMP award distribution
    21       -  
Excess tax benefit of stock plans
    305       88  
Net cash provided by financing activities
    28,276       176,580  
INCREASE IN CASH AND DUE FROM BANKS
    45,450       125,317  
CASH AND DUE FROM BANKS, BEGINNING OF PERIOD
    86,193       39,338  
CASH AND DUE FROM BANKS, END OF PERIOD
  $ 131,643     $ 164,655  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid for income taxes
  $ 13,718     $ 15,560  
Cash paid for interest
    36,591       42,142  
Loans transferred to OREO
    -       320  
Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity
    58       65  
Net decrease non-credit component of OTTI
    (1,254 )     (610 )
Adjustments to other comprehensive income from defined benefit plans, net of tax
  $ 27     $ (680 )
See notes to condensed consolidated financial statements.



 

 


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.   NATURE OF OPERATIONS

Dime Community Bancshares, Inc. (the "Holding Company") is a Delaware corporation and parent company of the Bank, a federally chartered stock savings bank.  The Holding Company's direct subsidiaries are the Bank, Dime Community Capital Trust 1 and 842 Manhattan Avenue Corp.  The Bank's direct subsidiaries are Boulevard Funding Corp., Dime Insurance Agency Inc. (f/k/a Havemeyer Investments, Inc.), DSBW Preferred Funding Corporation, DSBW Residential Preferred Funding Corp., Dime Reinvestment Corp. and 195 Havemeyer Corp.

The Bank maintains its headquarters in the Williamsburg section of Brooklyn, New York and operates twenty-six full service retail banking offices located in the New York City boroughs of Brooklyn, Queens, and the Bronx, and in Nassau County, New York.  The Bank’s principal business is gathering deposits from customers within its market area and via the internet, and investing them primarily in multifamily residential, commercial real estate, one- to four-family residential, construction and land acquisition, and consumer loans, as well as mortgage-backed securities (“MBS”), obligations of the U.S. Government and Government Sponsored Entities ("GSEs"), and corporate debt and equity securities.

2.   SUMMARY OF ACCOUNTING POLICIES

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for a fair presentation of the Company's financial condition as of June 30, 2011, the results of operations and statements of comprehensive income for the three-month and six-month periods ended June 30, 2011 and 2010, and the changes in stockholders' equity and cash flows for the six months ended June 30, 2011 and 2010.  The results of operations for the three-month and six-month periods ended June 30, 2011 are not necessarily indicative of the results of operations for the remainder of the year ending December 31, 2011.  Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted pursuant to the rules and regulations of the SEC.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Please see “Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” for a discussion of areas in the accompanying condensed consolidated financial statements where significant estimates are utilized.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2010 and notes thereto.

3.   RECENT ACCOUNTING PRONOUNCEMENTS

In April 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2011-2, "A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring" ("ASU 2011-2").  ASU 2011-2 clarifies the guidance for determining whether a loan restructuring constitutes a troubled debt restructuring ("TDR") outlined in Accounting Standards Codification ("ASC") No. 310-40, "Receivables—Troubled Debt Restructurings by Creditors," by providing additional guidance to a creditor in making the following required assessments needed to determine whether a restructuring is a TDR: (i) whether or not a concession has been granted in a debt restructuring; (ii) whether a temporary or permanent increase in the contractual interest rate precludes the restructuring from being a TDR; (iii) whether a restructuring results in an insignificant  delay in payment; (iv) whether a borrower that is not currently in payment default is experiencing financial difficulties; and (v) whether a creditor can use the effective interest rate test outlined in debtor’s guidance on restructuring of payables (ASC Topic No. 470-60-55-10) when evaluating whether or not a restructuring constitutes a TDR.  ASU 2011-2 is effective for interim periods beginning on or after June 15, 2011.  Adoption of ASU 2011-2 is not expected to have a material effect upon the Company's consolidated financial condition or results of operations.

In July 2010. the FASB issued Accounting Standards Update No. 2010-20, "Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses" ("ASU 2010-20").  ASU 2010-20 requires companies to provide a greater level of disaggregated information regarding: (1) the credit quality of their financing receivables; and (2) their allowance for credit losses.  ASU 2010-20 further requires companies to disclose credit quality indicators, past due information, and modifications of their financing receivables. For public companies, ASU 2010-20 is effective for interim and annual reporting periods ending on or after December 15, 2010.  ASU 2010-20 encourages, but does not require, comparative disclosures for earlier reporting periods that ended before initial adoption.  Adoption of ASU 2010-20 did not have a material impact upon the Company's consolidated financial condition or results of operations.

 
7

 
In January 2010, FASB issued Accounting Standards Update No. 2010-06, " Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements" ("ASU 2010-6").  ASU 2010-6 required new disclosures related to transfers into and out of fair value hierarchy Levels 1 and 2, as well as certain activities for assets with fair values measured under the Level 3 hierarchy. ASU 2010-6 also provided amendments clarifying the level of disaggregation and disclosures about inputs and valuation techniques along with conforming amendments to the guidance on employers’ disclosures about postretirement benefit plan assets. ASU 2010-6 was effective for interim and annual reporting periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Adoption of ASU 2010-6 has not had, and is not expected to have, a material impact upon the Company's financial condition or results of operations.

4.   TREASURY STOCK

The Company did not repurchase any shares of treasury stock during the six months ended June 30, 2011 and 2010.  On April 29, 2011, 126,304 shares of the Company's common stock were released from treasury in order to fulfill benefit obligations under the 2004 Stock Incentive Plan.  The closing price of the Company's common stock on that date was $15.46, and the shares were released utilizing the average historical cost method.  On May 3, 2011, 45,056 shares of treasury stock were released in order to fulfill benefit obligations under the BMP.  The closing price of the Company's common stock on that date was $15.16, and the shares were released utilizing the average historical cost method.  On April 30, 2010, 143,083 shares of the Company's common stock were released from treasury in order to fulfill benefit obligations under the 2004 Stock Incentive Plan.  The closing price of the Company's common stock on that date was $12.75.  The shares were released utilizing the average historical cost method.

The Company returned 1,984 and 10,176 forfeited restricted stock awards into treasury stock during the six months ended June 30, 2011 and June 30, 2010, respectively.

5.   ACCOUNTING FOR GOODWILL

The Company has designated the last day of its fiscal year as its date for annual impairment testing.  The Company performed an impairment test as of December 31, 2010 and concluded that no impairment of goodwill existed.  No events or circumstances have occurred subsequent to December 31, 2010 that would, in management's opinion, reduce the fair value of the Company's reporting unit below its carrying value.  Such events or circumstances would require the immediate performance of an impairment test in accordance with ASC 350.

6.   EARNINGS PER SHARE ("EPS")

EPS is calculated and reported in accordance with ASC 260.  For entities like the Company with complex capital structures, ASC 260 requires disclosure of basic EPS and diluted EPS on the face of the income statement, along with a reconciliation of their numerators and denominators.

Basic EPS is computed by dividing net income by the weighted-average number of common shares outstanding during the period (weighted-average common shares are adjusted to exclude unallocated ESOP shares).  Diluted EPS is computed using the same method as basic EPS, however, the computation reflects the potential dilution that would occur if outstanding in-the-money stock options were exercised and converted into common stock.

 

 


The following is a reconciliation of the numerators and denominators of basic EPS and diluted EPS for the periods presented:

   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
   
(Dollars in Thousands)
 
Numerator:
                       
Net Income per the Consolidated Statements of Operations
  $ 12,338     $ 10,004     $ 23,418     $ 19,474  
Denominator:
                               
Weighted-average number of shares outstanding utilized in the calculation of basic EPS
    33,695,418       33,244,218       33,582,080       33,206,948  
Common stock equivalents resulting from the dilutive effect of "in-the-money" outstanding stock options
    188,500       111,402       232,984       101,956  
Anti-dilutive effect of tax benefits associated with "in-the-money" outstanding stock options
    (18,010 )     (13,735 )     (21,348 )     (13,203 )
Weighted average number of shares outstanding utilized in the calculation of diluted EPS
    33,865,908       33,341,885       33,793,716       33,295,701  

Common stock equivalents resulting from the dilutive effect of "in-the-money" outstanding stock options are calculated based upon the excess of the average market value of the Holding Company's common stock over the exercise price of outstanding in-the-money stock options during the period.

There were  1,263,877 and 2,666,827 weighted-average stock options outstanding for the three-month periods ended June 30, 2011 and 2010, respectively, that were not considered in the calculation of diluted EPS since their exercise prices exceeded the average market price during the period.  There were 1,232,350 and 2,699,614 weighted-average stock options outstanding for the six-month periods ended June 30, 2011 and 2010, respectively, that were not considered in the calculation of diluted EPS since their exercise prices exceeded the average market price during the period.

7.    ACCOUNTING FOR STOCK BASED COMPENSATION

During the three-month and six-month periods ended June 30, 2011 and 2010, the Holding Company and Bank maintained the Dime Community Bancshares, Inc. 2001 Stock Option Plan for Outside Directors, Officers and Employees; and the 2004 Stock Incentive Plan (collectively the "Stock Plans"), which are discussed more fully in Note 15 to the Company's audited consolidated financial statements for the year ended December 31, 2010, and which are subject to the accounting requirements of ASC 505-50 and ASC 718.

Stock Option Awards

Combined activity related to stock options granted under the Stock Plans during the periods presented was as follows:

   
At or for the Three Months Ended June 30,
   
At or for the Six Months Ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
   
(Dollars in Thousands, Except per Share Amounts)
 
Options outstanding – beginning of period
    3,092,127       3,258,771       3,213,007       3,266,920  
Options granted
    91,583       97,294       91,583       97,294  
Weighted average exercise price of grants
  $ 15.46     $ 12.75     $ 15.46     $ 12.75  
Options exercised
    104,670       19,331       220,989       19,331  
Weighted average exercise price of exercised options
    10.67       8.53       10.95       8.53  
Options forfeited
    -       8,750       4,561       16,899  
Weighted average exercise price of forfeited options
    -     $ 13.74       16.73     $ 14.30  
Options outstanding – end of period
    3,079,040       3,327,984       3,079,040       3,327,984  
Weighted average exercise price of outstanding options at the end of period
  $ 14.91     $ 14.54     $ 14.91     $ 14.54  
Remaining options available for grant
    411,962       553,738       411,962       553,738  
Exercisable options at end of period
    2,867,436       2,860,928       2,867,436       2,860,928  
Weighted average exercise price of exercisable options at the end of period
  $ 15.05     $ 14.86     $ 15.05     $ 14.86  
Cash received for option exercise cost
    1,116       165       2,420       165  
Income tax benefit recognized
    134       20       245       20  
Compensation expense recognized
  $ 132       254     $ 359       491  
Remaining unrecognized compensation expense
    1,137       1,174       1,137       1,174  
Weighted average remaining years for which compensation expense is to be recognized
    3.1       2.0       3.1       2.0  


 

 


The range of exercise prices and weighted-average remaining contractual lives of options outstanding, vested and unvested, under the Stock Plans were as follows:

     
Outstanding Options as of June 30, 2011
   
Vested Options as of June 30, 2011
 
Exercise Prices
   
Amount
   
Weighted Average Contractual Years Remaining
   
Amount
   
Weighted Average Contractual Years Remaining
 
$ 8.34       149,909       7.8       92,679       7.8  
$ 10.91       172,081       0.4       172,081       0.4  
$ 12.75       87,541       8.8       46,345       8.8  
$ 13.16       511,078       1.6       511,078       1.6  
$ 13.74       866,375       5.8       866,375       5.8  
$ 14.92       34,425       6.7       25,818       6.7  
$ 15.10       318,492       3.9       318,492       3.9  
$ 15.46       91,583       9.8       -       9.8  
$ 16.45       76,320       3.6       76,320       3.6  
$ 16.73       51,943       7.1       38,955       7.1  
$ 18.18       80,000       6.9       80,000       6.9  
$ 19.90       639,293       2.6       639,293       2.6  
Total
      3,079,040       4.2       2,867,436       3.9  


The weighted average fair value per option at the date of grant for stock options granted was estimated as follows:

   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Total options granted
    91,583       97,294       91,583       97,294  
Estimated fair value on date of grant
  $ 4.82     $ 3.70     $ 4.82     $ 3.70  
Pricing methodology utilized
 
Black- Scholes
   
Black- Scholes
   
Black- Scholes
   
Black- Scholes
 
Expected life (in years)
    6.80       5.99       6.80       5.99  
Interest rate
    2.59 %     2.76 %     2.59 %     2.76 %
Volatility
    42.35       43.69       42.35       43.69  
Dividend yield
    3.62       4.39       3.62       4.39  

Restricted Stock Awards

The Company, from time to time, issues restricted stock awards to outside directors and officers under the 2004 Stock Incentive Plan.  Typically, awards to outside directors fully vest on the first anniversary of the grant date, while awards to officers vest in equal annual installments over a four- or five-year period.

The following is a summary of activity related to the restricted stock awards granted under the 2004 Stock Incentive Plan during the periods indicated:

   
At or for the Three Months Ended June 30,
   
At or for the Six Months Ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
   
(Dollars in Thousands)
 
Unvested allocated shares – beginning of period
    307,783       275,823       309,783       295,066  
Shares granted
    126,304       143,083       126,304       143,083  
Shares vested
    107,649       86,040       109,649       95,107  
Shares forfeited
    1,984       -       1,984       10,176  
Unvested allocated shares – end of period
    324,454       332,866       324,454       332,866  
Unallocated shares - end of period
    -       -       -       -  
Compensation recorded to expense
  $ 392     $ 353     $ 700     $ 608  
Income tax benefit recognized
    60       73       60       68  

8.   LOANS RECEIVABLE AND CREDIT QUALITY

Loans are reported at the principal amount outstanding, net of unearned fees or costs and the allowance for loan losses.  Interest income on loans is recorded using the level yield method.  Under this method, discount accretion and premium amortization are included in interest income.  Loan origination fees and certain direct loan origination costs are deferred and amortized as yield adjustments over the contractual loan terms.

 
10

 
Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  The Company analyzes loans individually by classifying the loans as to credit risk.  This analysis includes all non-homogeneous loans, such as multifamily residential and mixed use residential, mixed use commercial and commercial real estate loans and construction loans, as well as one-to four family residential and cooperative apartment loans with balances greater than $730,000.  This analysis is performed on a quarterly basis.  The Company uses the following definitions for risk ratings:

Special Mention.  Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

All loans not classified as Special Mention, Substandard or Doubtful were deemed pass loans at both June 30, 2011 and December 31, 2010.

The Bank had no loans classified as Doubtful at June 30, 2011 or December 31, 2010.

The following is a summary of the credit risk profile of the real estate loans (principal balance only and including loans held for sale) by internally assigned grade as of the date indicated:

   
Balance at June 30, 2011
 
Grade
 
One- to Four-Family
Residential and
Cooperative Unit
   
Multifamily
Residential and Residential
Mixed Use
   
Mixed Use
Commercial
Real Estate
   
Commercial
Real Estate
   
Construction
   
Total
 
   
(Dollars in Thousands)
 
Pass
  $ 66,392     $ 2,499,407     $ 350,738     $ 382,503     $ 4,989     $ 3,304,029  
Special Mention
    979       10,395       2,018       32,734       3,030       49,156  
Substandard
    56       6,105       5,278       17,046       2,865       31,350  
Total real estate loans individually assigned a credit grade
  $ 67,427     $ 2,515,907     $ 358,034     $ 432,283     $ 10,884     $ 3,384,535  
Real estate loans not individually assigned a credit grade (1)
  $ 35,631       -       -       -       -     $ 35,631  
(1) Amount comprised of fully performing one- to four-family residential and cooperative unit loans with balances of $730 or less.  The credit quality of these loans was instead evaluated based upon payment activity.

 
11 

 


   
Balance at December 31, 2010
 
Grade
 
One- to Four-Family
Residential and
Cooperative Unit
   
Multifamily
Residential and Residential
Mixed Use
   
Mixed Use
Commercial
Real Estate
   
Commercial
Real Estate
   
Construction
   
Total
 
   
(Dollars in Thousands)
 
Pass
  $ 70,831     $ 2,483,695     $ 357,463     $ 426,518     $ 9,465     $ 3,347,972  
Special Mention
    127       10,367       5,989       23,150       5,773       45,406  
Substandard
    257       11,216       1,613       18,435       -       31,521  
Total real estate loans individually assigned a credit grade
  $ 71,215     $ 2,505,278     $ 365,065     $ 468,103     $ 15,238     $ 3,424,899  
Real estate loans not individually assigned a credit grade (1)
  $ 46,053       -       -       -       -     $ 46,053  
(1) Amount comprised of fully performing one- to four-family residential and cooperative unit loans with balances of $730 or less.  The credit quality of these loans was instead evaluated based upon payment activity.

For consumer loans, the Company evaluates credit quality based on payment activity.  Consumer loans that are 90 days or more past due are placed on non-accrual status, while all remaining consumer loans are classified and evaluated as performing.

The following is a summary of the credit risk profile of consumer loans by internally assigned grade:

Grade
 
Balance at
June 30, 2011
   
Balance at
December 31, 2010
 
   
(Dollars in Thousands)
 
Performing
  $ 3,620     $ 2,523  
Non-accrual
    10       17  
Total
  $ 3,630     $ 2,540  

The following is an age analysis of past due loans (including loans held for sale) as of the dates indicated:

At June 30, 2011
 
30 to 59 Days Past Due
60 to 89 Days Past Due
90 Days or More Past Due
Total Past Due
Current
Total Loans
Loans 90 Days or More Past Due and Still Accruing Interest
 
(Dollars in Thousands)
Real Estate:
             
   One- to four-family residential and cooperative unit
$910
$73
$67
$1,050
$102,008
$103,058
   Multifamily residential and residential mixed use
2,995
3,115
3,765
9,875
2,506,032(a)
2,515,907
$413
   Mixed use commercial real estate
1,633
434
3,309
5,376
352,658
358,034
   Commercial real estate
1,435
2,987
8,506
12,928
419,355
432,283
1,575
   Construction
 - 
3,297
3,297
7,587
10,884
432
Total real estate (including loans held for sale)
$6,973
$6,609
$18,944
$32,526
$3,387,640
$3,420,166
$2,420
Consumer
$1
$- 
$10
$11
$3,619
$3,630
(a) Includes FHA/VA insured loans totaling $159.

 
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At December 31, 2010
 
30 to 59 Days Past Due
60 to 89 Days Past Due
90 Days or More Past Due
Total Past Due
Current
Total Loans
Loans 90 Days or More Past Due and Still Accruing Interest
 
(Dollars in Thousands)
Real Estate:
             
   One- to four-family residential and cooperative unit
$130
$141
$223
$494
$116,774
$117,268
   Multifamily residential and residential mixed use
4,435
2,631
11,058
18,124
2,487,054(a)
2,505,178
$3,510
   Mixed use commercial real estate
190
3,051
1,217
4,458
360,607
365,065
   Commercial real estate
3,059
7,592
11,494
22,145
446,058
468,203
331
   Construction
 -  
4,500
4,500
10,738
15,238
4,500
Total real estate (including loans held for sale)
$7,814
$13,415
$28,492
$49,721
$3,421,231
$3,470,952
$8,341
Consumer
$6
$1
$17
$24
$2,516
$2,540
(a) Includes FHA/VA insured loans totaling $285.

Accrual of interest is generally discontinued on loans that have missed three consecutive monthly payments, at which time the Bank generally does not recognize the interest from the third month and reverses all interest associated with the missed payments.  The Bank generally initiates foreclosure proceedings when a loan enters non-accrual status, and does not accept partial payments on loans on which foreclosure proceedings have commenced.  At some point during foreclosure proceedings, the Bank procures current appraisal information in order to prepare an estimate of the fair value of the underlying collateral.  If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure action is completed, the property securing the loan is transferred to OREO.  The Bank generally utilizes all available remedies in an effort to resolve either non-accrual loans or OREO properties as quickly and prudently as possible in consideration of market conditions, the physical condition of the property and any other mitigating circumstances.  In the event that a non-accrual loan is subsequently brought current, it is returned to accrual status once the doubt concerning collectability has been removed and the borrower has demonstrated performance in accordance with the loan terms and conditions for a period of at least six months.

Management may elect to continue the accrual of interest when a loan is in the process of collection and the estimated fair value of the collateral is sufficient to satisfy the outstanding principal balance (including any outstanding advances related to the loan) and accrued interest.  Such elections have not been commonplace.

The following table summarizes loans on non-accrual status for the periods indicated:

   
At June 30, 2011
   
At December 31, 2010
 
   
(Dollars in Thousands)
 
Real Estate Loans:
           
   One- to four-family residential and cooperative unit
  $ 67     $ 223  
   Multifamily residential and residential mixed use
    3,352       7,548  
   Mixed use commercial real estate
    3,309       1,217  
   Commercial real estate
    6,931       11,163  
   Construction
    2,865       -  
Total real estate loans (including loans held for sale)
  $ 16,524       20,151  
Consumer loans
    10       17  
Total non-accrual
  $ 16,534     $ 20,168  

Accruing Loans 90 Days or More Past Due:

At June 30, 2011, the Bank owned two real estate loans totaling $413,000 that were in excess of 90 days past due on their contractual balloon principal payment that continued to make monthly payments consistent with their initial contractual amortization schedule exclusive of the balloon payment.  The weighted average loan-to-value ratio of these loans were below 30% at June 30, 2011, and management expects that they will either be satisfied or formally modified in the future.  As a result, these loans remained on accrual status at June 30, 2011 and were deemed performing assets.  The Bank also had one commercial real estate loan at June 30, 2011 with an outstanding balance
 
 
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of $1.6 million that had not made any payments of principal or interest in over 90 days while the borrower was finalizing negotiations on a significant new tenant lease for the underlying collateral property.  This lease agreement was completed in early July, and the borrower has subsequently made payments of principal and interest.  The Bank expects to receive all principal and interest on this loan, and therefore retained it on accrual status as of June 30, 2011.

In addition, the Bank had one construction loan totaling $432,000 that was in excess of 90 days past its contractual maturity at June 30, 2011, on which the Bank received payments throughout 2010 and the six months ended June 30, 2011, and expects to either receive satisfaction or convert to a permanent real estate loan in future quarters.  As a result, this loan remained on accrual status and was deemed a performing loan at June 30, 2011.   This loan was internally graded Special Mention at June 30, 2011.

TDRs.

At June 30, 2011, the Bank had fourteen loans totaling $18.2 million whose terms were modified in a manner that met the criteria for a TDR.  Two of these loans, with an aggregate outstanding principal balance of $6.0 million, were on non-accrual status as of June 30, 2011, while the remaining twelve loans, with an outstanding principal balance of $12.2 million, were accruing TDRs at June 30, 2011.  Six of these TDRs were commercial real estate loans, five were multifamily residential and mixed-use residential real estate loans and the remaining were mixed-use commercial real estate loans.  At December 31, 2010, the Bank had nineteen loans totaling $22.6 million whose terms were modified in a manner that met the criteria for a TDR.  Seven of these loans, with an aggregate outstanding principal balance of $10.1 million, were on non-accrual status as of December 31, 2010, while the remaining twelve loans, with an outstanding principal balance of $12.4 million, were accruing TDRs at December 31, 2010.  Eight of these TDRs were commercial real estate loans, eight were multifamily residential and residential mixed-use real estate loans and the remaining were mixed-use commercial real estate loans.

The Company does not restructure troubled consumer loans, thus all TDRs have been made on real estate loans.  The following table summarizes TDRs as of and for the periods indicated:

 
At or for the Six Months Ended June 30, 2011
At or for the Year Ended December 31, 2010
 
No. of Loans
Balance
No. of Loans
Balance
 
(Dollars in Thousands)
Loans modified during the period in a manner that met the definition of a TDR
$- 
18
$24,928
Modifications granted:
       
   Reduction of outstanding principal due
   Deferral of principal amounts due
17
16,342
   Temporary reduction in interest rate
6
10,517
   Below market interest rate granted
Outstanding principal balance immediately before and after modification
18
24,928
Aggregate principal charge-off recognized on TDRs outstanding at period end
3
1,311
9
2,204
Outstanding principal balance at period end
14
18,170
19
22,558
TDRs that re-defaulted subsequent to being modified (at period end):
2
6,009
7
10,136
TDRs on accrual status at period end
12
12,161
12
12,422
TDRs on non-accrual status at period end
2
6,009
7
10,136

All TDRs are considered impaired loans and are evaluated individually for measurable impairment, if any.  If a TDR is substantially performing in accordance with its restructured terms, management will look to either the present value of the expected cash flows from the debt service or the potential net liquidation proceeds of the underlying collateral in measuring impairment.  If a TDR has re-defaulted, only the likely realizable net proceeds from the liquidation of collateral is considered when measuring impairment.  While measured impairment on TDRs is typically charged off immediately, if such impairment was measured solely from a reduction in the present value of expected cash flows of a performing TDR, it may be reflected as an allocated reserve within the allowance for loan losses.

Impaired Loans

At June 30, 2011, the Bank had forty-one loans totaling $36.6 million deemed impaired (as defined in Note 9), compared to fifty-seven loans totaling $44.1 million as of December 31, 2010.  The average balance of impaired loans was approximately $40.6 million during the six months ended June 30, 2011 and $29.1 million during the six months ended June 30, 2010.  During the six months ended June 30, 2011, write-downs of principal totaling $2.8 million were recognized on nine impaired loans.  Write-downs of principal on two impaired loans totaled $501,000 during the six months ended June 30, 2010.

 
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At June 30, 2010, an aggregate balance of $6.9 million was allocated within the allowance for loan losses for probable losses on impaired loans, and, with the exception of one loan with an outstanding balance of $2.5 million, all impaired loans had an allocated reserve at June 30, 2010.  Effective July 1, 2010, the Bank commenced a general practice of immediately charging off calculated reserves on impaired loans.  At June 30, 2011, there was one impaired loan with a reserve of $280,000 allocated within the allowance for loan losses, related to the shortfall on the present value of the estimated cash flows associated with a performing TDR.

The Bank disposed of sixteen impaired loans with a recorded balance totaling $9.0 million during the six months ended June 30, 2011, receiving an aggregate amount approximating their recorded balance.  During the six months ended June 30, 2010, the Bank disposed of seven impaired loans totaling $14.9 million, recognizing principal charge-offs of $4.0 million on the disposals.

At June 30, 2011 and December 31, 2010, loans totaling $20.1 million and $24.3 million, respectively, while on accrual status, were deemed impaired.  The great majority of these loans were either accruing TDRs or loans past due 90 days or more but still accruing as of the respective quarter end. Net interest received on these impaired loans totaled $511,000 during the six months ended June 30, 2011.

At both June 30, 2011 and December 31, 2010, approximately $77,000 and $340,000, respectively, of one- to four-family residential and cooperative apartment loans with a balance of $730,000 or less and consumer loans were on non-accrual status, but were not included in the $36.6 million of impaired loans, as these loans are considered homogeneous loan pools not individually analyzed for impairment.

Delinquent Serviced Loans Subject to a First Loss Position

The Bank has a first loss position associated with multifamily loans that it sold to FNMA between December 2002 and February 2009 (the "First Loss Position").  Under the terms of its seller/servicer agreement with FNMA, the Bank is obligated to fund FNMA all monthly principal and interest payments under the original terms of the loans until the earlier of the following events: (1) the loans have been fully satisfied or enter OREO status; or (2) the First Loss Position is fully exhausted.

At June 30, 2011, within the pool of multifamily loans sold to FNMA, there was one $1.4 million loan that was delinquent between 30 and 89 days, and there were no loans 90 days or more delinquent.  At December 31, 2010, within the pool of multifamily loans sold to FNMA, there were three loans totaling $3.7 million 30 to 89 days delinquent, and no loans 90 days or more delinquent.

9.   ALLOWANCE FOR LOAN LOSSES AND RESERVE FOR FIRST LOSS POSITION ON MULTIFAMILY LOANS SOLD TO FNMA

The allowance for loan losses is a valuation allowance for probable incurred credit losses.  Loan losses are charged against the allowance when management believes the uncollectibility of all or part of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using, among other factors, past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, and economic conditions.  Allocations to the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

In determining its periodic allowance for loan losses, the Company has identified two portfolio segments: 1) real estate loans, and 2) consumer loans.  Consumer loans represent a nominal portion of the Company’s loan portfolio.  Within the real estate loan segment, the Bank analyzes the allowance based upon: 1) their designation as an impaired, special mention or pass graded loan; and 2) within loans designated as pass, the underlying collateral type.

Real Estate Loans

The Bank’s periodic evaluation of its allowance for loan losses on real estate loans has traditionally been comprised of three primary components.  The first two components relate to problem loans and are divided between loans deemed impaired (primarily loans classified as substandard or doubtful, and TDR loans) and loans designated as special mention.   The final component relates to pass graded or performing loans.

Impaired Loan Component

A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Non-accrual loans and loans for which the terms have been modified in a manner that meets the criteria of a TDR are deemed impaired.

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 or shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the
 
 
15

 
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.

All multifamily residential, mixed use, commercial real estate and construction loans that are deemed to meet the definition of impaired are individually evaluated for impairment.  In addition, all cooperative unit, one- to four-family residential and consumer loans in excess of $730,000 are individually evaluated for impairment.  Impairment is typically measured using either: 1) the likely realizable value of a note sale; 2) the fair value of the underlying collateral, net of likely disposal costs, if repayment is expected solely from liquidation of the collateral; or 3) the present value of estimated future cash flows using the loan’s existing rate.  TDRs are typically separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception.  If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral less estimated disposal costs.  For TDRs that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

Prior to July 1, 2010, the Company recognized impairment of real estate loans through an allocated reserve balance within the allowance for loan losses.  As a result, increases or decreases in either the amount of impaired loans, the magnitude of impairment of such loans, or the election to recognize the impairment as either an allocated reserve or a principal charge-off could create potential volatility within the allocated portion of the allowance for loan losses associated with such loans.  Effective July 1, 2010, with the exception of performing TDRs, the Bank commenced a general practice of immediately charging off the specific components of the allowance related to loans individually classified as impaired, and not recognizing them through a reserve within the allowance for loan losses.  As previously mentioned, the Bank has maintained the common industry practice of recognizing an allocated reserve within the allowance for loan losses for instances in which impairment is measured solely from a reduction in the present value of expected cash flows of a performing TDR.  The general practice of immediately charging off the specific components of the allowance related to loans individually classified as impaired (other than performing TDRs), although not mandated under GAAP, has significantly reduced the level of volatility of the allowance for loan losses associated with impaired loans.

There were no allocated reserves associated with impaired loans at December 31, 2010.  At June 30, 2011, an allocated reserve of $298,000 was recognized for a reduction in the present value of expected cash flows associated with one performing TDR loan.  Otherwise, there were no allocated reserves on impaired loans at June 30, 2011.  Charge-offs of measured impairment of principal balances (full or partial) on impaired loans totaled $886,000 and $656,000 during the six months ended June 30, 2011 and 2010, respectively.  In addition, charge-offs of $18,000 were recognized during the six months ended June 30, 2010 on impaired loans that were disposed of during the period.  As previously discussed, prior to July 1, 2010, if impairment was measured on these loans, a portion of the allowance was allocated so that the loan was reported, net of its measured impairment, once its allocated reserve within the allowance for loan losses was considered.

Large groups of smaller balance homogeneous real estate loans, such as cooperative unit and one-to four-family residential real estate loans with balances of $730,000 or less, are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Special Mention Component

In order to determine an expected loss percentage on its pool of Special Mention loans, the Bank calculates a rolling 12-month loss history analysis on its pool of such loans.  The loss percentage resulting from this analysis is then applied to the aggregate pool of Special Mention loans at the measurement date.  Based upon this methodology, increases or decreases in either the amount of Special Mention loans, or the magnitude of charge-offs recognized within the 12 months prior to the assessment date, will impact the estimated portion of the allowance for loan losses associated with such loans.  As a result, the allowance for loan losses associated with Special Mention loans is subject to great volatility.

The portion of the allowance for loan losses attributable to Special Mention loans increased from $1.9 million at December 31, 2010 to $2.1 million at June 30, 2011, primarily reflecting an increase of 43 basis points in the 12-month loss history analysis performed on the Special Mention pool at June 30, 2011 compared to December 31, 2010.

Performing Loan Component (Pass Graded Loans)

The Bank initially looks to the underlying collateral type when determining the allowance for loan losses associated with performing real estate loans.  The following underlying collateral types are analyzed separately: 1) one- to four family residential and cooperative unit; 2) multifamily residential and residential mixed use; 3)mixed use commercial real estate, 4) commercial real estate; and 5) construction.  Within each of the analyses of the underlying collateral types, the following elements are additionally considered and provided weighting in determining the allowance for loan losses for performing loans:
 
                           i.  Charge-off experience
                          ii.  Economic conditions
                         iii.  Underwriting standards or experience
 
16

 
                         iv.  Loan concentrations
                          v.  The period of time the loan has been held and performing
 
The following is a brief synopsis of the manner in which each element is considered.

(i)  Charge off experience – Loans within the performing loan portfolio are segmented by significant common characteristics, against which historical loss rates are applied.  In late 2010, the Bank updated the historical period used in this methodology.  Previously, the 1992 to 1996 experience factors were used, since that period represented the most recent complete loss cycle experienced by the Bank for its geography and type of collateral.  During the final quarter of 2010, the Bank updated its experience factors to include only the period 2008 to 2010; for although the current credit cycle may not have completely run its course, the Bank concluded that there was sufficient data to make the experience factors from this period relevant and meaningful.

(ii) Economic conditions - At both June 30, 2011 and December 31, 2010, the Bank assigned an expected loss rate to its entire performing mortgage loan portfolio based, in part, upon a review of economic conditions affecting the local real estate market. Specifically, the Bank considered both the level of and recent trends in: 1) the local unemployment rate, 2) real estate vacancy rates, 3) real estate sales and pricing, and 4) delinquencies in the Bank’s loan portfolio.  At June 30, 2010, the Bank considered the same set of variables in its analysis of expected economic loss from the performing mortgage loan portfolio, however, due to the relatively higher level of uncertainty surrounding the local real estate market at that time, the Bank arrived at a higher expected loss rate for the performing loan group as compared to June 30, 2011.

(iii) Underwriting standards or experience – Underwriting standards are reviewed to ensure that changes in the Bank's lending policies and practices are adequately evaluated for risk and reflected in its analysis of potential credit losses.  Different loss expectations are incorporated into the methodology.  Based upon the Bank’s mitigation of only certain less critical underwriting practices during the year ended December 31, 2010 and the six months ended June 30, 2011, this component did not impact the methodology at either June 30, 2011 or December 31, 2010.

(iv) Concentrations of credit – The Bank regularly reviews its loan concentrations (borrower, collateral type and location) in order to ensure that heightened risk has not evolved that has not been captured through other factors.  The risk component of loan concentrations is regularly evaluated for reserve adequacy.

(v) The period of time loans have been held and performing (Loan Seasoning) – Generally, it is assumed that loans performing for a period of at least three years are likely to result in diminishing principal losses with the passage of time.  As a result, it is assumed that a lower expected loss percentage should be applied to these loans.  This element was given considerable weight in the evaluation of the allowance for loan losses at June 30, 2010, however, received significantly less consideration in the June 30, 2011 and December 31, 2010 evaluations.  The decrease in consideration resulted from an analysis of the loss experience recognized during the 2008 to 2010 recessionary period (to which the Company migrated late in 2010), which concluded that, contrary to this common assumption, the age or seasoning of the loan did not inversely correlate to the Bank's loss experience.

Consumer Loans

Loss percentages are applied to consumer loans based upon either their delinquency status or loan type.  These loss percentages are derived from a combination of the Company’s historical loss experience and/or nationally published loss data on these loans.  Consumer loans in excess of 120 days delinquent are typically fully charged off against the allowance for loan losses.

Changes in the aggregate allowance for loan losses for loans owned by the Bank were as follows:

   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
   
(Dollars in Thousands)
 
Balance at beginning of period
  $ 19,663     $ 24,620     $ 19,166     $ 21,505  
Provision for loan losses
    1,662       3,834       3,089       7,281  
Loans charged off
    (1,975 )     (5,024 )     (3,176 )     (5,793 )
Recoveries
    42       -       263       -  
Transfer from (to) reserves on loan commitments
    126       (80 )     176       357  
Balance at end of period
  $ 19,518     $ 23,350       19,518     $ 23,350  


 
17 

 


The following table presents data regarding the allowance for loan losses and loans evaluated for impairment by class of loan within the real estate loan segment as well as for the aggregate consumer loan segment:

At or for the Three Months Ended June 30, 2011
 
Real Estate Loans
Consumer Loans
 
One- to Four Family Residential
and Cooperative
Unit
Multifamily
Residential and Residential Mixed Use
Mixed Use
Commercial
Real Estate
Commercial
Real Estate
Construction
Total Real Estate
 
 
(Dollars in Thousands)
Beginning balance
$280 
$14,425 
$1,074 
$3,532 
$318 
$19,629 
$34 
Charge-offs
(8)
(129)
(61)
(1,039)
(725)
(1,962)
(13)
Recoveries
-  
37 
-  
42 
-  
Transfer from reserve for loan commitments
-  
61 
33 
29 
126 
-  
Provision
127 
35 
61 
848 
583 
1,654 
Ending balance
$399 
$14,396 
$1,108 
$3,407 
$179 
$19,489 
$29 

At or for the Six Months Ended June 30, 2011
 
Real Estate Loans
Consumer Loans
 
One- to Four Family Residential
and
Cooperative
Unit
Multifamily Residential and Residential Mixed Use
Mixed Use
Commercial
Real Estate
Commercial
Real Estate
Construction
Total Real Estate
 
 
(Dollars in Thousands)
Beginning balance
$409 
$14,226 
$1,331 
$2,821 
$345 
$19,132 
$34 
Charge-offs
(83)
(495)
(264)
(1,596)
(725)
(3,163)
(13)
Recoveries
-  
125 
134 
-  
263 
-  
Transfer from (to) reserve for loan commitments
-  
158 
(6)
14 
10 
176 
-  
Provision
73 
382 
43 
2,034 
549 
3,081 
Ending balance
$399 
$14,396 
$1,108 
$3,407 
$179 
$19,489 
$29 

At June 30, 2011
 
Real Estate Loans
Consumer Loans
 
One- to Four Family Residential
and
Cooperative
Unit
Multifamily Residential and Residential Mixed Use
Mixed Use
Commercial
Real Estate
Commercial
Real Estate
Construction
Total Real Estate
 
 
(Dollars in Thousands)
Ending balance – loans individually evaluated for impairment
$-  
$9,716 
$4,468 
$19,121 
$3,297 
$36,602 
$-  
Ending balance – loans collectively evaluated for impairment
103,058 
2,515,907 
358,034 
432,283 
10,884 
3,420,166 
3,630 
Allowance balance associated with loans individually
   evaluated for impairment
-  
-  
-  
280 
-  
280 
-  
Allowance balance associated with loans collectivelly evaluated
   for impairment
399 
14,396 
1,108 
3,127 
179 
19,209 
29 



 
18

 


At December 31, 2010
 
Real Estate Loans
Consumer Loans
 
One- to Four Family Residential
and
Cooperative
Unit
Multifamily Residential and Residential Mixed Use
Mixed Use Commercial
Real Estate
Commercial Real Estate
Construction
Total Real Estate
 
 
(Dollars in Thousands)
Ending balance – loans individually evaluated for impairment
$-  
$16,368 
$2,387 
$20,842 
$4,500 
$44,097 
$-  
Ending balance – loans collectively evaluated for impairment
117,268 
2,483,897 
362,678 
447,261 
10,738 
3,421,842 
2,540 
Allowance balance associated with loans individually evaluated
   for impairment
-  
-  
-  
-  
-  
-  
-  
Allowance balance associated with loans collectivelly evaluated
   for impairment
409 
14,226 
1,331 
2,821 
345 
19,132 
34 

Due to their small individual balances, the Bank does not evaluate individual consumer loans for impairment.  The following table summarizes impaired real estate loans for the periods indicated:

At June 30, 2011
For the Three Months Ended
June 30, 2011
For the Six Months
Ended June 30, 2011
 
Unpaid Principal Balance at Period End
Recorded Investment
at Period End
Reserve Balance Allocated within the Allowance for Loan Losses at Period End
Average Recorded Balance
Interest
Income Recognized
Average Recorded Balance
Interest
Income
Recognized
 
(Dollars in Thousands)
Multifamily Residential and Residential Mixed Use
             
   With no allocated reserve
$11,329
$9,715