Form 10-Q
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012

Commission File Number 1-31565

NEW YORK COMMUNITY BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

Delaware     06-1377322

(State or other jurisdiction of

incorporation or organization)

    (I.R.S. Employer Identification No.)

615 Merrick Avenue, Westbury, New York 11590

(Address of principal executive offices)

(Registrant’s telephone number, including area code)  (516) 683-4100

Indicate by check mark whether the registrant (1) has filed all 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  Large Accelerated Filer X   Accelerated Filer        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

 

439,114,402

 
 

 Number of shares of common stock outstanding at 

October 31, 2012

 


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

FORM 10-Q

Quarter Ended September 30, 2012

 

INDEX

              Page No.  

Part I.

   FINANCIAL INFORMATION     

Item 1.

   Financial Statements     
   Consolidated Statements of Condition as of September 30, 2012 (unaudited) and December 31, 2011             1
   Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)             2
   Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2012 (unaudited)             3
   Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 (unaudited)             4
   Notes to the Unaudited Consolidated Financial Statements             5

Item 2.

   Management’s Discussion and Analysis of Financial Condition and Results of Operations           42

Item 3.

   Quantitative and Qualitative Disclosures about Market Risk           93

Item 4.

   Controls and Procedures           94

Part II.

   OTHER INFORMATION     

Item 1.

   Legal Proceedings           94

Item 1A.

   Risk Factors           94

Item 2.

   Unregistered Sales of Equity Securities and Use of Proceeds           95

Item 3.

   Defaults Upon Senior Securities           95

Item 4.

   Mine Safety Disclosures           95

Item 5.

   Other Information           95

Item 6.

   Exhibits           96

Signatures

          97

Exhibits

    

 

 


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CONDITION

(in thousands, except share data)

 

     September 30,
2012
(unaudited)
   December 31,
2011

Assets:

         

Cash and cash equivalents

     $ 2,538,290          $ 2,001,737    

Securities:

         

Available-for-sale ($165,835 and $590,488 pledged, respectively)

       378,514            724,662    

Held to maturity ($4,377,046 and $3,610,172 pledged, respectively) (fair value of $5,004,397 and $3,966,185, respectively)

       4,765,694            3,815,854    
    

 

 

      

 

 

 

Total securities

       5,144,208            4,540,516    
    

 

 

      

 

 

 

Non-covered loans held for sale

       1,211,767            1,036,918    

Non-covered loans held for investment, net of deferred loan fees and costs

       26,822,850            25,532,818    

Less:  Allowance for losses on non-covered loans

       (139,015)           (137,290)   
    

 

 

      

 

 

 

Non-covered loans held for investment, net

       26,683,835            25,395,528    

Covered loans

       3,400,624            3,753,031    

Less: Allowance for losses on covered loans

       (54,591)           (33,323)   
    

 

 

      

 

 

 

Covered loans, net

       3,346,033            3,719,708    
    

 

 

      

 

 

 

Total loans, net

       31,241,635            30,152,154    

Federal Home Loan Bank stock, at cost

       473,629            490,228    

Premises and equipment, net

       253,504            250,859    

FDIC loss share receivable

       594,994            695,179    

Goodwill

       2,436,131            2,436,131    

Core deposit intangibles, net

       36,734            51,668    

Mortgage servicing rights

       122,530            117,012    

Bank-owned life insurance

       781,630            768,996    

Other real estate owned (includes $50,404 and $71,400, respectively, covered by loss sharing agreements)

       94,336            155,967    

Other assets

       376,174            363,855    
    

 

 

      

 

 

 

Total assets

     $ 44,093,795          $ 42,024,302    
    

 

 

      

 

 

 

Liabilities and Stockholders’ Equity:

         

Deposits:

         

NOW and money market accounts

     $   8,814,151          $   8,757,198    

Savings accounts

       4,122,015            3,953,859    

Certificates of deposit

       9,091,022            7,373,263    

Non-interest-bearing accounts

       2,494,435            2,189,810    
    

 

 

      

 

 

 

Total deposits

       24,521,623            22,274,130    

Borrowed funds:

         

Wholesale borrowings:

         

Federal Home Loan Bank advances

       8,945,008            9,314,193    

Repurchase agreements

       4,125,000            4,125,000    

Fed funds purchased

       100,000            --    
    

 

 

      

 

 

 

Total wholesale borrowings

       13,170,008            13,439,193    

Junior subordinated debentures

       427,077            426,936    

Other borrowings

       4,300            94,284    
    

 

 

      

 

 

 

Total borrowed funds

       13,601,385            13,960,413    

Other liabilities

       328,322            224,055    
    

 

 

      

 

 

 

Total liabilities

       38,451,330            36,458,598    
    

 

 

      

 

 

 

Stockholders’ equity:

         

Preferred stock at par $0.01 (5,000,000 shares authorized; none issued)

       --            --    

Common stock at par $0.01 (600,000,000 shares authorized; 439,133,951 and 437,426,665 shares issued, and 439,114,402 and 437,344,796 shares outstanding, respectively)

       4,391            4,374    

Paid-in capital in excess of par

       5,321,655            5,309,269    

Retained earnings

       374,351            324,967    

Treasury stock, at cost (19,549 and 81,869 shares, respectively)

       (258)           (996)   

Accumulated other comprehensive loss, net of tax:

         

Net unrealized gain on securities available for sale, net of tax

       10,871            1,321    

Net unrealized loss on the non-credit portion of other-than-temporary impairment (“OTTI”) losses on securities, net of tax

       (13,552)           (13,627)   

Net unrealized loss on pension and post-retirement obligations, net of tax

       (54,993)           (59,604)   
    

 

 

      

 

 

 

Total accumulated other comprehensive loss, net of tax

       (57,674)           (71,910)   
    

 

 

      

 

 

 

Total stockholders’ equity

       5,642,465            5,565,704    
    

 

 

      

 

 

 

Total liabilities and stockholders’ equity

     $ 44,093,795          $ 42,024,302    
    

 

 

      

 

 

 

See accompanying notes to the consolidated financial statements.

 

1


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

 

     For the
Three Months Ended
September 30,
            For the
Nine Months Ended
September 30,
 
         2012              2011                     2012              2011      

Interest Income:

              

Mortgage and other loans

    $ 394,935           $ 400,114                       $ 1,199,600           $ 1,224,348      

Securities and money market investments

     47,776            61,777               144,729            177,474      
  

 

 

    

 

 

       

 

 

    

 

 

 

Total interest income

     442,711            461,891               1,344,329            1,401,822      
  

 

 

    

 

 

       

 

 

    

 

 

 

Interest Expense:

              

NOW and money market accounts

     9,106            9,095               27,196            30,647      

Savings accounts

     3,288            3,696               10,349            12,029      

Certificates of deposit

     23,516            25,173               70,725            77,099      

Borrowed funds

     121,851            128,960               366,039            381,884      
  

 

 

    

 

 

       

 

 

    

 

 

 

Total interest expense

     157,761            166,924               474,309            501,659      
  

 

 

    

 

 

       

 

 

    

 

 

 

Net interest income

     284,950            294,967               870,020            900,163      

Provision for losses on non-covered loans

     10,000            18,000               40,000            59,000      

Provision for losses on covered loans

     2,820            --               21,268            8,708      
  

 

 

    

 

 

       

 

 

    

 

 

 

Net interest income after provisions for loan losses

     272,130            276,967               808,752            832,455      
  

 

 

    

 

 

       

 

 

    

 

 

 

Non-Interest Income:

              

Total loss on OTTI of securities

     --            --               --            (18,124)     

Less:  Non-credit portion of OTTI recorded in other comprehensive income (before taxes)

     --            --               --            --      
  

 

 

    

 

 

       

 

 

    

 

 

 

Net loss on OTTI recognized in earnings

     --            --               --            (18,124)     

Mortgage banking income

     52,581            24,274               146,069            55,986      

Fee income

     9,427            11,544               28,618            35,586      

Bank-owned life insurance

     6,781            6,890               23,168            21,343      

Net gain on sales of securities

     510            6,734               1,369            35,469      

FDIC indemnification income

     2,256            --               17,015            7,624      

Gain on business disposition

     --            --               --            9,823      

Other

     10,102            8,627               25,619            27,860      
  

 

 

    

 

 

       

 

 

    

 

 

 

Total non-interest income

     81,657            58,069               241,858            175,567      
  

 

 

    

 

 

       

 

 

    

 

 

 

Non-Interest Expense:

              

Operating expenses:

              

Compensation and benefits

     74,416            76,898               221,624            222,184      

Occupancy and equipment

     22,956            21,711               68,089            65,421      

General and administrative

     51,094            47,918               154,280            146,139      
  

 

 

    

 

 

       

 

 

    

 

 

 

Total operating expenses

     148,466            146,527               443,993            433,744      

Amortization of core deposit intangibles

     4,855            6,089               14,934            20,618      
  

 

 

    

 

 

       

 

 

    

 

 

 

Total non-interest expense

     153,321            152,616               458,927            454,362      
  

 

 

    

 

 

       

 

 

    

 

 

 

Income before income taxes

     200,466            182,420               591,683            553,660      

Income tax expense

     71,668            62,670               213,420            191,275      
  

 

 

    

 

 

       

 

 

    

 

 

 

Net Income

    $ 128,798           $ 119,750             $   378,263           $   362,385      
  

 

 

    

 

 

       

 

 

    

 

 

 

Other comprehensive income (loss), net of tax:

              

Change in net unrealized gain/loss on securities available for sale, net of tax of $3,498; $3,961; $6,971; and $3,502, respectively

     5,198            6,109               10,383            (5,167)     

Change in the non-credit portion of OTTI losses recognized in other comprehensive income, net of tax of $17; $17; $48; and $4,842, respectively

     26            22               75            7,229      

Change in pension and post-retirement obligations, net of tax of $1,042; $503; $3,128; and $1,509, respectively

     1,537            741               4,611            2,225      

Less:   Reclassification adjustment for sales of available for sale securities and loss on OTTI of securities, net of tax of $204; $5,550; $536; and $6,978, respectively

     (306)           (8,245)              (833)           (10,367)     
  

 

 

    

 

 

       

 

 

    

 

 

 

Total other comprehensive income (loss), net of tax

     6,455            (1,373)              14,236            (6,080)     
  

 

 

    

 

 

       

 

 

    

 

 

 

Total comprehensive income, net of tax

    $ 135,253           $ 118,377             $   392,499           $   356,305      
  

 

 

    

 

 

       

 

 

    

 

 

 

Basic earnings per share

     $0.29            $0.27               $0.86            $0.82      
  

 

 

    

 

 

       

 

 

    

 

 

 

Diluted earnings per share

     $0.29            $0.27               $0.86            $0.82      
  

 

 

    

 

 

       

 

 

    

 

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

2


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

 

   

For the Nine Months
 Ended September 30, 2012 

Common Stock (Par Value: $0.01):

           

Balance at beginning of year

                          $ 4,374                       

Shares issued for restricted stock awards (1,707,286 shares)

          17        
       

 

 

     

Balance at end of period

          4,391        
       

 

 

     

Paid-in Capital in Excess of Par:

           

Balance at beginning of year

          5,309,269        

Shares issued for restricted stock awards, net of forfeitures

          (3,430)       

Compensation expense related to restricted stock awards

          15,476        

Tax effect of stock plans

          340        
       

 

 

     

Balance at end of period

          5,321,655        
       

 

 

     

Retained Earnings:

           

Balance at beginning of year

          324,967        

Net income

          378,263        

Dividends paid on common stock ($0.75 per share)

          (328,879)       
       

 

 

     

Balance at end of period

          374,351        
       

 

 

     

Treasury Stock:

           

Balance at beginning of year

          (996)       

Purchase of common stock (209,555 shares)

          (2,713)       

Shares issued for restricted stock awards (271,875 shares)

          3,451        
       

 

 

     

Balance at end of period

          (258)       
       

 

 

     

Accumulated Other Comprehensive Loss, net of tax:

           

Balance at beginning of year

          (71,910)       

Other comprehensive income, net of tax

          14,236        
       

 

 

     

Balance at end of period

          (57,674)       
       

 

 

     

Total stockholders’ equity

         $  5,642,465        
       

 

 

     

See accompanying notes to the consolidated financial statements.

 

3


Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

     For the Nine Months Ended
September 30,
 
     2012        2011  

Cash Flows from Operating Activities:

       

Net income

    $ 378,263            $ 362,385     

Adjustments to reconcile net income to net cash provided by operating activities:

       

Provision for loan losses

     61,268             67,708     

Depreciation and amortization

     18,699             17,642     

Accretion of premiums and discounts, net

     (2,263)            (987)    

Amortization of core deposit intangibles

     14,934             20,618     

Net gain on sale of securities

     (1,369)            (35,469)    

Net gain on sale of loans

     (159,511)            (56,131)    

Gain on business disposition

     --             (9,823)    

Stock plan-related compensation

     15,514             12,096     

Loss on OTTI of securities recognized in earnings

     --             18,124     

Changes in assets and liabilities:

       

Decrease in deferred tax asset, net

     28,344             51,799     

Decrease (increase) in other assets

     93,341             (2,985)    

Increase (decrease) in other liabilities

     112,006             (82,526)    

Origination of loans held for sale

     (7,971,638)            (4,426,713)    

Proceeds from sale of loans originated for sale

     7,950,220             4,705,787     
  

 

 

      

 

 

 

Net cash provided by operating activities

     537,808             641,525     
  

 

 

      

 

 

 

Cash Flows from Investing Activities:

       

Proceeds from repayment of securities held to maturity

     1,838,793             1,821,919     

Proceeds from repayment of securities available for sale

     457,808             158,479     

Proceeds from sale of securities held to maturity

     --             284,406     

Proceeds from sale of securities available for sale

     561,369             740,738     

Purchase of securities held to maturity

     (2,785,758)            (2,609,676)    

Purchase of securities available for sale

     (656,115)            (748,721)    

Net redemption of Federal Home Loan Bank stock

     16,599             3,424     

Net increase in loans

     (969,820)            (1,191,660)    

Purchase of premises and equipment, net

     (21,344)            (29,491)    

Net cash acquired in business transactions

     --             100,027     
  

 

 

      

 

 

 

Net cash used in investing activities

     (1,558,468)            (1,470,555)    
  

 

 

      

 

 

 

Cash Flows from Financing Activities:

       

Net increase in deposits

     2,247,493             943,596     

Net decrease in short-term borrowed funds

     (262,000)            --     

Net decrease in long-term borrowed funds

     (97,028)            (121,039)    

Tax effect of stock plans

     340             2,518     

Cash dividends paid on common stock

     (328,879)            (327,657)    

Treasury stock purchases

     (2,713)            (2,769)    

Net cash received from stock option exercises

     --             3,519     
  

 

 

      

 

 

 

Net cash provided by financing activities

     1,557,213             498,168     
  

 

 

      

 

 

 

Net increase (decrease) in cash and cash equivalents

     536,553             (330,862)    

Cash and cash equivalents at beginning of period

     2,001,737             1,927,542     
  

 

 

      

 

 

 

Cash and cash equivalents at end of period

    $  2,538,290            $  1,596,680     
  

 

 

      

 

 

 

Supplemental information:

       

Cash paid for interest

      $469,664              $513,189     

Cash paid for income taxes

     196,761             106,480     

Non-cash investing and financing activities:

       

Transfers to other real estate owned from loans

     77,080             197,114     

See accompanying notes to the consolidated financial statements.

 

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Table of Contents

NEW YORK COMMUNITY BANCORP, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Organization

Formerly known as Queens County Bancorp, Inc., New York Community Bancorp, Inc. (on a stand-alone basis, the “Parent Company” or, collectively with its subsidiaries, the “Company”) was organized under Delaware law on July 20, 1993 and is the holding company for New York Community Bank and New York Commercial Bank (hereinafter referred to as the “Community Bank” and the “Commercial Bank,” respectively, and collectively as the “Banks”). In addition, for the purpose of these Consolidated Financial Statements, the “Community Bank” and the “Commercial Bank” refer not only to the respective banks but also to their respective subsidiaries.

The Community Bank is the primary banking subsidiary of the Company. Founded on April 14, 1859 and formerly known as Queens County Savings Bank, the Community Bank converted from a state-chartered mutual savings bank to the capital stock form of ownership on November 23, 1993, on which date the Company completed its initial offering of common stock (par value: $0.01 per share) at a price of $25.00 per share. The Commercial Bank was established on December 30, 2005.

Reflecting nine stock splits, the Company’s initial offering price adjusts to $0.93 per share. All share and per share data presented in this report have been adjusted to reflect the impact of the stock splits.

The Company changed its name to New York Community Bancorp, Inc. on November 21, 2000 in anticipation of completing the first of eight business combinations that expanded its footprint well beyond Queens County to encompass all five boroughs of New York City, Long Island, and Westchester County in New York, and seven counties in the northern and central parts of New Jersey. The Company expanded beyond this region to south Florida, northeast Ohio, and central Arizona through its FDIC-assisted acquisition of certain assets and assumption of certain liabilities of AmTrust Bank (“AmTrust”) in December 2009, and extended its Arizona franchise through its FDIC-assisted acquisition of certain assets and assumption of certain liabilities of Desert Hills Bank (“Desert Hills”) in March 2010. On June 28, 2012, the Company completed its 11th transaction when it assumed the deposits of Aurora Bank FSB.

Reflecting this strategy of growth through acquisitions, the Community Bank currently operates 240 branches, four of which operate directly under the Community Bank name. The remaining 236 branches operate through seven divisional banks—Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, and Roosevelt Savings Bank (in New York), Garden State Community Bank in New Jersey, AmTrust Bank in Florida and Arizona, and Ohio Savings Bank in Ohio.

The Commercial Bank currently operates 34 branches in Manhattan, Queens, Brooklyn, Westchester County, and Long Island (all in New York), including 17 branches that operate under the name “Atlantic Bank.”

Basis of Presentation

The following is a description of the significant accounting and reporting policies that the Company and its wholly-owned subsidiaries follow in preparing and presenting their consolidated financial statements, which conform to U.S. generally accepted accounting principles (“GAAP”) and to general practices within the banking industry. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and judgments 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. Estimates that are particularly susceptible to change in the near term are used in connection with the determination of the allowances for loan losses; the valuation of loans held for sale; the evaluation of goodwill for impairment; the evaluation of other-than-temporary impairment (“OTTI”) on securities; and the evaluation of the need for a valuation allowance on the Company’s deferred tax assets. The current economic environment has increased the degree of uncertainty inherent in these material estimates.

 

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The unaudited consolidated financial statements include the accounts of the Company and other entities in which the Company has a controlling financial interest. All inter-company accounts and transactions are eliminated in consolidation. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2011 Annual Report on Form 10-K. The Company currently has unconsolidated subsidiaries in the form of nine wholly-owned statutory business trusts, which were formed to issue guaranteed capital debentures (“capital securities”). Please see Note 6, “Borrowed Funds,” for additional information regarding these trusts.

When necessary, certain reclassifications have been made to prior-year amounts to conform to the current-year presentation.

Note 2. Computation of Earnings per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. 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.

Unvested stock-based compensation awards containing non-forfeitable rights to dividends are considered participating securities and therefore are included in the two-class method for calculating EPS. Under the two-class method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. The Company grants restricted stock to certain employees under its stock-based compensation plans. Recipients receive cash dividends during the vesting periods of these awards (i.e., including on the unvested portion of such awards). Since these dividends are non-forfeitable, the unvested awards are considered participating securities and have earnings allocated to them.

The following table presents the Company’s computation of basic and diluted EPS for the periods indicated:

 

     Three Months Ended
September 30,
         Nine Months Ended
September 30,
 
(in thousands, except share and per share data)          2012                  2011                      2012                  2011        

Net income

     $128,798           $119,750             $378,263           $362,385     

Less: Dividends paid on and earnings allocated to

          participating securities

     (1,213)          (914)            (3,552)          (2,732)    
  

 

 

    

 

 

      

 

 

    

 

 

 

Earnings applicable to common stock

     $127,585           $118,836             $374,711           $359,653     
  

 

 

    

 

 

      

 

 

    

 

 

 

Weighted average common shares outstanding

     437,787,688           436,243,926             437,692,411           435,980,390     
  

 

 

    

 

 

      

 

 

    

 

 

 

Basic earnings per common share

     $0.29           $0.27             $0.86           $0.82     
  

 

 

    

 

 

      

 

 

    

 

 

 

Earnings applicable to common stock

     $127,585           $118,836             $374,711           $359,653     
  

 

 

    

 

 

      

 

 

    

 

 

 

Weighted average common shares outstanding

     437,787,688           436,243,926             437,692,411           435,980,390     

Potential dilutive common shares(1)

     5,664           33,640             5,026           371,359     
  

 

 

    

 

 

      

 

 

    

 

 

 

Total shares for diluted earnings per share computation

     437,793,352           436,277,566             437,697,437           436,351,749     
  

 

 

    

 

 

      

 

 

    

 

 

 

Diluted earnings per common share and common share equivalents

     $0.29           $0.27             $0.86           $0.82     
  

 

 

    

 

 

      

 

 

    

 

 

 

 

(1) Options to purchase 2,579,585 shares of the Company’s common stock that were outstanding in the three and nine months ended September 30, 2012, at a weighted average exercise price of $16.86, were excluded from the respective computations of diluted EPS because their inclusion would have had an antidilutive effect. Options to purchase 8,918,493 and 3,122,124 shares, respectively, of the Company’s common stock that were outstanding in the three and nine months ended September 30, 2011, at respective weighted average exercise prices of $15.64 and $17.32, were excluded from the respective computations of diluted EPS because their inclusion would have had an antidilutive effect.

 

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Note 3. Securities

The following table summarizes the Company’s portfolio of securities available for sale at September 30, 2012:

 

     September 30, 2012
(in thousands)     Amortized 
Cost
       Gross
  Unrealized  
Gain
       Gross
  Unrealized  
Loss
        Fair Value 

Mortgage-Related Securities:

                         

GSE (1) certificates

     $ 93,764           $ 8,270           $ 6           $ 102,028  

GSE CMOs (2)

       80,472            5,945            --            86,417  

Private label CMOs

       18,426            --            325            18,101  
    

 

 

        

 

 

        

 

 

        

 

 

 

Total mortgage-related securities

     $ 192,662           $ 14,215           $    331           $ 206,546  
    

 

 

        

 

 

        

 

 

        

 

 

 

Other Securities:

                         

GSE debentures

     $ 11,000           $ 68           $ --           $ 11,068  

State, county, and municipal

       1,195            131            --            1,326  

Capital trust notes

       35,228            2,352            4,009            33,571  

Preferred stock

       77,913            5,093            --            83,006  

Common stock

       42,917            1,273            1,193            42,997  
    

 

 

        

 

 

        

 

 

        

 

 

 

Total other securities

     $ 168,253           $ 8,917           $  5,202           $ 171,968  
    

 

 

        

 

 

        

 

 

        

 

 

 

Total securities available for sale (3)

     $ 360,915           $ 23,132           $  5,533           $ 378,514  
    

 

 

        

 

 

        

 

 

        

 

 

 

 

(1) Government-sponsored enterprises
(2) Collateralized mortgage obligations
(3) The non-credit portion of OTTI recorded in accumulated other comprehensive loss (“AOCL”) was $570,000 (before taxes).

As of September 30, 2012, the fair value of marketable equity securities included common stock of $43.0 million, corporate preferred stock of $82.9 million, and Freddie Mac preferred stock of $105,000. Common stock primarily consisted of an investment in a large cap equity fund and certain other funds that are Community Reinvestment Act (“CRA”) eligible. The Freddie Mac preferred stock was recognized by the Company as other-than-temporarily impaired in the fourth quarter of 2008.

The following table summarizes the Company’s portfolio of securities available for sale at December 31, 2011:

 

     December 31, 2011
(in thousands)     Amortized 
Cost
       Gross
  Unrealized  
Gain
       Gross
  Unrealized  
Loss
        Fair Value 

Mortgage-Related Securities:

                         

GSE certificates

     $ 97,642          $ 5,013           $ 10          $ 102,645  

GSE CMOs

       62,373            2,903            --            65,276  

Private label CMOs

       25,306            --            1,265            24,041  
    

 

 

        

 

 

        

 

 

        

 

 

 

Total mortgage-related securities

     $ 185,321          $ 7,916           $ 1,275          $ 191,962  
    

 

 

        

 

 

        

 

 

        

 

 

 

Other Securities:

                         

GSE debentures

     $ 456,969          $ 1,797           $ --          $ 458,766  

State, county, and municipal

       1,188            97            --            1,285  

Capital trust notes

       36,754            141            4,692            32,203  

Preferred stock

       --            195            --            195  

Common stock

       42,863            1,604            4,216            40,251  
    

 

 

        

 

 

        

 

 

        

 

 

 

Total other securities

     $  537,774          $   3,834           $   8,908          $  532,700  
    

 

 

        

 

 

        

 

 

        

 

 

 

Total securities available for sale (1)

     $  723,095          $ 11,750           $  10,183          $  724,662  
    

 

 

        

 

 

        

 

 

        

 

 

 

 

(1) The non-credit portion of OTTI recorded in AOCL was $570,000 (before taxes).

 

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The following tables summarize the Company’s portfolio of securities held to maturity at September 30, 2012 and December 31, 2011:

 

     September 30, 2012
(in thousands)     Amortized 
Cost
     Carrying  
Amount
   Gross
    Unrealized    
Gain
   Gross
   Unrealized   
Loss
    Fair Value 

Mortgage-Related Securities:

                        

GSE certificates

      $ 1,266,523         $ 1,266,523         $ 102,160         $ --         $ 1,368,683  

GSE CMOs

       2,087,968          2,087,968          110,349          --          2,198,317  

Other mortgage-related securities

       3,263          3,263          --          --          3,263  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total mortgage-related securities

      $ 3,357,754         $ 3,357,754         $ 212,509         $ --         $ 3,570,263  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Other Securities:

                        

GSE debentures

      $ 1,203,313         $ 1,203,313         $ 17,121         $ 26         $ 1,220,408  

Corporate bonds

       77,407          77,407          9,715          --          87,122  

Municipal bonds

       17,326          17,326          347          --          17,673  

Capital trust notes

       131,507          109,894          14,804          15,767          108,931  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total other securities

      $ 1,429,553         $ 1,407,940         $ 41,987         $ 15,793         $ 1,434,134  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total securities held to maturity (1)

      $ 4,787,307         $ 4,765,694         $ 254,496         $ 15,793         $ 5,004,397  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

(1) Held-to-maturity securities are reported at a carrying amount equal to amortized cost less the non-credit portion of OTTI recorded in AOCL. The non-credit portion of OTTI recorded in AOCL was $21.6 million (before taxes).

 

     December 31, 2011
(in thousands)     Amortized 
Cost
     Carrying  
Amount
   Gross
    Unrealized    
Gain
   Gross
   Unrealized   
Loss
    Fair Value 

Mortgage-Related Securities:

                        

GSE certificates

      $ 660,945         $ 660,945         $ 47,064         $ --         $ 708,009  

GSE CMOs

       2,331,916          2,331,916          93,216          --          2,425,132  

Other mortgage-related securities

       3,379          3,379          --          --          3,379  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total mortgage-related securities

      $ 2,996,240         $ 2,996,240         $ 140,280         $ --         $ 3,136,520  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Other Securities:

                        

GSE debentures

      $ 633,258         $ 633,258         $ 14,878         $ 146         $ 647,990  

Corporate bonds

       54,759          54,759          2,826          12          57,573  

Capital trust notes

       153,334          131,597          12,362          19,857          124,102  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total other securities

      $ 841,351         $ 819,614         $ 30,066         $ 20,015         $ 829,665  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total securities held to maturity (1)

      $ 3,837,591         $ 3,815,854         $ 170,346         $ 20,015         $ 3,966,185  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

(1) The non-credit portion of OTTI recorded in AOCL was $21.7 million (before taxes).

The Company had $473.6 million and $490.2 million of Federal Home Loan Bank (“FHLB”) stock, at cost, at September 30, 2012 and December 31, 2011, respectively. The Company is required to maintain this investment in order to have access to funding resources provided by the FHLB.

The following table summarizes the gross proceeds, gross realized gains, and gross realized losses from the sale of available-for-sale securities during the nine months ended September 30, 2012 and 2011:

 

      For the Nine Months Ended 
September 30,
(in thousands)   

    2012    

  

    2011    

Gross proceeds

     $ 561,369        $ 740,738  

Gross realized gains

       1,369          26,977  

Gross realized losses

       --          11  
    

 

 

      

 

 

 

In addition, during the nine months ended September 30, 2011, the Company sold held-to-maturity securities with gross proceeds of $284.4 million and gross realized gains of $8.5 million. These sales occurred because the Company had either collected a substantial portion (at least 85%) of the initial principal balance or because there was evidence of significant deterioration in the issuers’ creditworthiness.

 

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The $142.5 million market value of the capital trust note portfolio at September 30, 2012 included three pooled trust preferred securities. The following table details the pooled trust preferred securities that had at least one credit rating below investment grade as of September 30, 2012:

 

     INCAPS
Funding I
  Alesco Preferred
Funding VII Ltd.
  Preferred Term
Securities II
(dollars in thousands)     Class B-2 Notes    Class C-1 Notes    Mezzanine Notes 

Book value

       $14,964         $553         $491  

Fair value

       17,095         281         728  

Unrealized gain (loss)

       2,131         (272 )       237  

Lowest credit rating assigned to security

       CCC         C         C  

Number of banks/insurance companies currently performing

       24         58         24  

Actual deferrals and defaults as a percentage of original collateral

       8 %       18 %       34 %

Expected deferrals and defaults as a percentage of remaining performing collateral

       22         25         19  

Expected recoveries as a percentage of remaining performing collateral

       --         --         2  

Excess subordination as a percentage of remaining performing collateral

       17         --         --  

As of September 30, 2012, after taking into account the Company’s best estimates of future deferrals, defaults, and recoveries, two of its pooled trust preferred securities had no excess subordination in the classes it owns and one had excess subordination of 17%. Excess subordination is calculated after taking into account the deferrals, defaults, and recoveries noted in the table above, and indicates whether there is sufficient additional collateral to cover the outstanding principal balance of the class owned, after taking into account these projected deferrals, defaults, and recoveries.

As the following table indicates, there was no activity from December 31, 2011 through September 30, 2012 in the credit loss component of OTTI on debt securities for which a non-credit component of OTTI was recognized in AOCL. The beginning balance represents the credit loss component for debt securities for which OTTI occurred prior to January 1, 2012. For credit-impaired debt securities, OTTI recognized in earnings after that date is presented as an addition in two components, based upon whether the current period is the first time a debt security was credit-impaired (initial credit impairment) or is not the first time a debt security was credit-impaired (subsequent credit impairment).

 

 

(in thousands)

  For the Nine Months
 Ended September 30, 2012 

Beginning credit loss amount as of December 31, 2011

     $ 219,978  

Add:    Initial other-than-temporary credit losses

      --  

            Subsequent other-than-temporary credit losses

      --  

            Amount previously recognized in AOCL

      --  

Less:    Realized losses for securities sold

      --  

            Securities intended or required to be sold

      --  

            Increases in expected cash flows on debt securities

      --  
   

 

 

 

Ending credit loss amount as of September 30, 2012

     $ 219,978  
   

 

 

 

 

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The following table summarizes the carrying amounts and estimated fair values of held-to-maturity debt securities, and the amortized costs and estimated fair values of available-for-sale debt securities, at September 30, 2012, by contractual maturity. Mortgage-related securities held to maturity and available for sale, all of which have prepayment provisions, are distributed to a maturity category based on the ends of the estimated average lives of such securities. Principal and amortization prepayments are not shown in maturity categories as they occur, but are considered in the determination of estimated average life.

 

 

     Carrying Amount at September 30, 2012     
(dollars in thousands)    Mortgage-
Related
Securities
   Average
Yield
   U.S. Treasury
and GSE
Obligations
   Average
Yield
   State, County,
and Municipal
   Average
Yield
(1)
   Other Debt
Securities 
(2)
   Average
Yield
   Fair Value

Held-to-Maturity Securities:

                                            

Due within one year

      $ --          --%           $ --          --%          $ --          --%          $ --          --%          $ --  

Due from one to five years

       --          --               --          --               1,791          2.96               46,588          4.04               49,836  

Due from five to ten years

       1,715,778          3.20               60,682          4.17               --          --               --          --               1,925,888  

Due after ten years

       1,641,976          3.73               1,142,631          2.60               15,535          3.90               140,713          6.55               3,028,673  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total debt securities held to maturity

      $ 3,357,754          3.46%           $ 1,203,313            2.68%          $  17,326          3.80%          $  187,301            5.93%          $  5,004,397  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Available-for-Sale Securities: (3)

                                            

Due within one year

      $ --          --%           $ --          --%          $ 125          5.63%          $ --          --%          $ 126  

Due from one to five years

       7,936          7.22               --          --               512          6.21               --          --               9,011  

Due from five to ten years

       78,396          3.48               11,000          3.25               558          6.56               --          --               98,119  

Due after ten years

       106,330          3.71               --          --               --          --               35,228          6.06               145,255  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total debt securities available for sale

      $ 192,662            3.76%           $ 11,000            3.25%          $ 1,195            6.31%          $ 35,228            6.06%          $ 252,511  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

(1) Not presented on a tax-equivalent basis.
(2) Includes corporate bonds and capital trust notes. Included in capital trust notes are $15.5 million and $491,000 of pooled trust preferred securities available for sale and held to maturity, respectively, all of which are due after ten years. The remaining capital trust notes consist of single-issue trust preferred securities.
(3) As equity securities have no contractual maturity, they have been excluded from this table.

At September 30, 2012, the Company had commitments to purchase $310.3 million of securities, all of which were GSE securities.

 

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The following tables present held-to-maturity and available-for-sale securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of September 30, 2012:

 

At September 30, 2012   Less than Twelve Months   Twelve Months or Longer   Total
(in thousands)  

   Fair Value   

   Unrealized Loss       Fair Value       Unrealized Loss       Fair Value          Unrealized    
Loss

Temporarily Impaired Held-to-Maturity Debt Securities:

                       

GSE debentures

      $    14,956          $  26          $        --         $             --         $    14,956          $         26  

Corporate bonds

      --         --         --         --         --         --  

Municipal bonds

      --         --         --         --         --         --  

Capital trust notes

      --         --         55,373         15,767         55,373         15,767  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total temporarily impaired held-to-maturity debt securities

      $    14,956          $  26          $55,373         $ 15,767            $    70,329          $  15,793  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Temporarily Impaired Available-for-Sale Securities:

                       

Debt Securities:

                       

GSE certificates

      $         371          $    6          $        --         $          --            $         371          $           6  

Private label CMOs

      18,101         325         --         --            18,101         325  

Capital trust notes

      --         --         6,518         4,009            6,518         4,009  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total temporarily impaired available-for-sale debt securities

      $    18,472          $331          $  6,518         $    4,009            $    24,990          $    4,340  

Equity securities

      --         --         29,667         1,193(1)          29,667         1,193  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total temporarily impaired available-for-sale securities

      $    18,472          $331          $36,185         $    5,202            $    54,657          $    5,533  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(1) The twelve months or longer unrealized losses on equity securities of $1.2 million at September 30, 2012 relate to available-for-sale equity securities that consisted of a large cap equity fund and investments in certain financial institutions at that date. The principal balance of the large cap equity fund was $29.1 million and the twelve months or longer unrealized loss was $556,000. The principal balance of investments in financial institutions totaled $1.7 million and the twelve months or longer unrealized loss was $623,000.

 

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The following tables present held-to-maturity and available-for-sale securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of December 31, 2011:

 

At December 31, 2011   Less than Twelve Months   Twelve Months or Longer   Total
(in thousands)     Fair Value      Unrealized Loss      Fair Value      Unrealized Loss      Fair Value      Unrealized Loss 

Temporarily Impaired Held-to-Maturity Debt Securities:

                       

GSE debentures

     $ 62,601        $ 146        $ --        $ --        $ 62,601        $ 146  

GSE certificates

      --         --         --         --         --         --  

GSE CMOs

      --         --         --         --         --         --  

Corporate bonds

      4,987         12         --         --         4,987         12  

Capital trust notes

      971         43         68,570         19,814      

 

69,541

 

   

 

19,857

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total temporarily impaired held-to-maturity debt securities

     $ 68,559        $ 201        $ 68,570        $ 19,814        $ 137,129        $ 20,015  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Temporarily Impaired Available-for-Sale Securities:

                       

Debt Securities:

                       

GSE certificates

     $ 181        $ 9        $ 13        $ 1        $ 194        $ 10  

Private label CMOs

      24,041         1,265         --         --         24,041         1,265  

Corporate bonds

      --         --         --         --         --         --  

State, county, and municipal

      --         --         --         --         --         --  

Capital trust notes

      15,154         363         9,810         4,329         24,964         4,692  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total temporarily impaired available-for-sale debt securities

     $ 39,376        $ 1,637        $ 9,823        $ 4,330      

 $

49,199

 

   

 $

5,967

 

Equity securities

      784         40         26,651         4,176         27,435         4,216  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total temporarily impaired available-for-sale securities

     $ 40,160        $ 1,677        $ 36,474        $ 8,506        $ 76,634        $ 10,183  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

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An OTTI loss on impaired securities must be fully recognized in earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost. However, even if an investor does not expect to sell a debt security, it must evaluate the expected cash flows to be received and determine if a credit loss has occurred. In the event that a credit loss occurs, only the amount of impairment associated with the credit loss is recognized in earnings. Amounts relating to factors other than credit losses are recorded in AOCL. Financial Accounting Standards Board (“FASB”) guidance also requires additional disclosures regarding the calculation of credit losses, as well as factors considered by the investor in reaching a conclusion that an investment is not other-than-temporarily impaired.

Available-for-sale securities in unrealized loss positions are analyzed as part of the Company’s ongoing assessment of OTTI. When the Company intends to sell such available-for-sale securities, the Company recognizes an impairment loss equal to the full difference between the amortized cost basis and the fair value of those securities. When the Company does not intend to sell available-for-sale equity or debt securities in an unrealized loss position, potential OTTI is considered based on a variety of factors, including the length of time and extent to which the fair value has been less than the cost; adverse conditions specifically related to the industry, the geographic area, or financial condition of the issuer, or the underlying collateral of a security; the payment structure of the security; changes to the rating of the security by a rating agency; the volatility of the fair value changes; and changes in fair value of the security after the balance sheet date. For debt securities, the Company estimates cash flows over the remaining life of the underlying collateral to assess whether credit losses exist and, where applicable, to determine if any adverse changes in cash flows have occurred. The Company’s cash flow estimates take into account expectations of relevant market and economic data as of the end of the reporting period. As of September 30, 2012, the Company did not intend to sell the securities with an unrealized loss position in AOCL, and it was more likely than not that the Company would not be required to sell these securities before recovery of their amortized cost basis. The Company believes that the securities with an unrealized loss position in AOCL were not other-than-temporarily impaired as of September 30, 2012.

Other factors considered in determining whether a loss is temporary include the length of time and the extent to which fair value has been below cost; the severity of the impairment; the cause of the impairment; the financial condition and near-term prospects of the issuer; activity in the market of the issuer that may indicate adverse credit conditions; and the forecasted recovery period using current estimates of volatility in market interest rates (including liquidity and risk premiums).

Management’s assertion regarding its intent not to sell, or that it is not more likely than not that the Company will be required to sell the security before its anticipated recovery, is based on a number of factors, including a quantitative estimate of the expected recovery period (which may extend to maturity) and management’s intended strategy with respect to the identified security or portfolio. If management does have the intent to sell, or believes it is more likely than not that the Company will be required to sell the security before its anticipated recovery, the unrealized loss is charged directly to earnings in the Consolidated Statement of Income and Comprehensive Income.

The Company reviews quarterly financial information related to its investments in capital trust notes as well as other information that is released by each financial institution to determine the continued creditworthiness of the issuer of the securities. The contractual terms of these investments do not permit settling the securities at prices that are less than the amortized costs of the investments; therefore, the Company expects that these investments will not be settled at prices that are less than their amortized costs. The Company continues to monitor these investments and currently estimates that the present value of expected cash flows is not less than the amortized cost of the securities. Because the Company does not have the intent to sell the investments, and it is not more likely than not that the Company will be required to sell them before the anticipated recovery of fair value, which may be at maturity, it did not consider these investments to be other-than-temporarily impaired at September 30, 2012. It is possible that these securities will perform worse than is currently expected, which could lead to adverse changes in cash flows from these securities and potential OTTI losses in the future. Events that may occur in the future at the financial institutions that issued these securities could trigger material unrecoverable declines in the fair values of the Company’s investments and therefore could result in future potential OTTI losses. Such events include, but are not limited to, government intervention, deteriorating asset quality and credit metrics, significantly higher levels of default and loan loss provisions, losses in value on the underlying collateral, deteriorating credit enhancement, net operating losses, and further illiquidity in the financial markets.

 

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Table of Contents

At September 30, 2012, the Company’s equity securities portfolio consisted of perpetual preferred and common stock, and mutual funds. The Company considers a decline in the fair value of available-for-sale equity securities to be other than temporary if the Company does not expect to recover the entire amortized cost basis of the security. The unrealized losses on the Company’s equity securities were primarily caused by market volatility. The Company evaluated the near-term prospects of a recovery of fair value for each security in the portfolio, together with the severity and duration of impairment to date. Based on this evaluation, and the Company’s ability and intent to hold these investments for a period of time reasonably sufficient to realize a near-term forecasted recovery of fair value, the Company did not consider these investments to be other-than-temporarily impaired at September 30, 2012. Nonetheless, it is possible that these equity securities will perform worse than is currently expected, which could lead to adverse changes in their fair values, or the failure of the securities to fully recover in value as presently forecasted by management, causing the Company to potentially record OTTI losses in future periods. Events that could trigger material declines in the fair values of these securities include, but are not limited to, deterioration in the equity markets; a decline in the quality of the loan portfolios of the issuers in which the Company has invested; and the recording of higher loan loss provisions and net operating losses by such issuers.

The investment securities designated as having a continuous loss position for twelve months or more at September 30, 2012 consisted of eight capital trust notes and four equity securities. At December 31, 2011, the investment securities designated as having a continuous loss position for twelve months or more consisted of one mortgage-related security, eleven capital trust notes, and six equity securities. At September 30, 2012 and December 31, 2011, the combined market value of the respective securities represented unrealized losses of $21.0 million and $28.3 million. At September 30, 2012, the fair value of securities having a continuous loss position for twelve months or more was 18.7% below the collective amortized cost of $112.0 million. At December 31, 2011, the fair value of such securities was 21.2% below the collective amortized cost of $133.4 million.

 

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Note 4. Loans

The following table sets forth the composition of the loan portfolio at September 30, 2012 and December 31, 2011:

 

    September 30, 2012   December 31, 2011
(dollars in thousands)        Amount        Percent of
Non-Covered
 Loans Held for 
Investment
       Amount        Percent of
Non-Covered
 Loans Held for 
Investment

Non-Covered Loans Held for Investment:

               

Mortgage Loans:

               

Multi-family

      $18,468,229           68.88%           $17,430,628           68.28%   

Commercial real estate

      7,193,194           26.83             6,855,244           26.85     

Acquisition, development, and construction

      383,695           1.43             445,671           1.75     

One-to-four family

      131,115           0.49             127,361           0.50     
   

 

 

     

 

 

     

 

 

     

 

 

 

Total mortgage loans held for investment

      26,176,233           97.63             $24,858,904           97.38     
   

 

 

     

 

 

     

 

 

     

 

 

 

Other Loans:

               

Commercial and industrial

      582,572           2.17             599,986           2.35     

Other

      54,256           0.20             69,907           0.27     
   

 

 

     

 

 

     

 

 

     

 

 

 

Total other loans held for investment

      636,828           2.37             669,893           2.62     
   

 

 

     

 

 

     

 

 

     

 

 

 

Total non-covered loans held for investment

      26,813,061            100.00%           $25,528,797            100.00%   
       

 

 

         

 

 

 

Net deferred loan origination costs

      9,789               4,021        

Allowance for losses on non-covered loans

      (139,015)              (137,290)       
   

 

 

         

 

 

     

Non-covered loans held for investment, net

      26,683,835               $25,395,528        

Covered loans

      3,400,624               3,753,031        

Allowance for losses on covered loans

      (54,591)              (33,323)       
   

 

 

         

 

 

     

Total covered loans, net

      3,346,033               $  3,719,708        

Loans held for sale

      1,211,767               1,036,918        
   

 

 

         

 

 

     

Total loans, net

      $31,241,635               $30,152,154        
   

 

 

         

 

 

     

Non-Covered Loans

Non-Covered Loans Held for Investment

The vast majority of the loans the Company originates for investment are multi-family loans, most of which are collateralized by non-luxury apartment buildings in New York City that feature below-market rents. In addition, the Company originates commercial real estate (“CRE”) loans, most of which are collateralized by properties located in New York City and, to a lesser extent, on Long Island and in New Jersey.

To a lesser extent, the Company also originates acquisition, development, and construction (“ADC”) loans and commercial and industrial (“C&I”) loans. ADC loans are primarily originated for multi-family and residential tract projects in New York City and on Long Island, while C&I loans are made on both a secured and unsecured basis, to small and mid-size businesses in New York City, Long Island, New Jersey, and, to a lesser extent, Arizona, for working capital, business expansion, and the purchase of machinery and equipment.

Payments on multi-family and CRE loans generally depend on the income produced by the underlying properties which, in turn, depends on their successful operation and management. Accordingly, the ability of the Company’s borrowers to repay these loans may be impacted by adverse conditions in the local real estate market and the local economy. While the Company generally requires that such loans be qualified on the basis of the collateral property’s current cash flows, appraised value, and debt service coverage ratio, among other factors, there can be no assurance that its underwriting policies will protect the Company from credit-related losses or delinquencies.

ADC loans typically involve a higher degree of credit risk than loans secured by improved or owner-occupied real estate. The risk of loss on an ADC loan is largely dependent upon the accuracy of the initial appraisal of the property’s value upon completion of construction or development; the estimated cost of construction, including interest; and the estimated time to complete and/or sell or lease such property. The Company seeks to minimize these risks by maintaining consistent lending policies and rigorous underwriting standards. However, if the estimate

 

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Table of Contents

of value proves to be inaccurate, the cost of completion is greater than expected, the length of time to complete and/or sell or lease the collateral property is greater than anticipated, or if there is a downturn in the local economy or real estate market, the property could have a value upon completion that is insufficient to assure full repayment of the loan. This could have a material adverse effect on the quality of the ADC loan portfolio, and could result in significant losses or delinquencies.

The Company seeks to minimize the risks involved in C&I lending by underwriting such loans on the basis of the cash flows produced by the business; by requiring that such loans be collateralized by various business assets, including inventory, equipment, and accounts receivable, among others; and by requiring personal guarantees. However, the capacity of a borrower to repay a C&I loan is substantially dependent on the degree to which his or her business is successful. In addition, the collateral underlying such loans may depreciate over time, may not be conducive to appraisal, or may fluctuate in value, based upon the results of operations of the business.

The ability of the Company’s borrowers to repay their loans, and the value of the collateral securing such loans, could be adversely impacted by continued or more significant economic weakness in its local markets as a result of increased unemployment, declining real estate values, or increased residential and office vacancies. This not only could result in the Company experiencing an increase in charge-offs and/or non-performing assets, but also could necessitate an increase in the provision for loan losses. These events, if they were to occur, would have an adverse impact on the Company’s results of operations and its capital.

Loans Held for Sale

The Community Bank’s mortgage banking operation is one of the largest aggregators of one-to-four family loans for sale to GSEs in the nation. Community banks, credit unions, mortgage companies, and mortgage brokers use the subsidiary’s proprietary web-accessible mortgage banking platform to originate and close one-to-four family loans in all 50 states. The Company sells these loans, primarily servicing retained.

Prior to December 2010, the Company would originate one-to-four family loans for its customers in its branches and on its website on a pass-through, or conduit, basis, and would sell the loans to the third-party conduit shortly after they closed. Since then, the Company had been originating one-to-four family loans through its mortgage banking operation, directly and indirectly, rather than through the single third-party conduit with which it previously worked. The vast majority of the one-to-four family loans produced for the Company’s customers are aggregated with loans produced by its mortgage banking clients throughout the nation, and then sold.

The Company also services mortgage loans for various third parties. At September 30, 2012, the unpaid principal balance of serviced loans amounted to $16.6 billion. At December 31, 2011, the unpaid principal balance of loans serviced for others amounted to $13.1 billion.

Asset Quality

The following table presents information regarding the quality of the Company’s non-covered loans held for investment at September 30, 2012:

 

(in thousands)     30-89 Days 
Past Due
   Non-
 Accrual 
    90 Days or More 
Delinquent and
Still Accruing
Interest
    Total Past 
Due
      Current       Total Loans
Receivable

Multi-family

      $ 33,644         $ 139,293         $ --         $ 172,937         $ 18,295,292          $ 18,468,229  

Commercial real estate

       4,631          54,641          --          59,272          7,133,922          7,193,194  

Acquisition, development, and construction

       --          24,813          --          24,813          358,882          383,695  

One-to-four family

       3,563          9,487          --          13,050          118,065          131,115  

Commercial and industrial

       5,831          17,342          --          23,173          559,399          582,572  

Other

       1,233          992          --          2,225          52,031          54,256  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total

      $ 48,902         $ 246,568         $ --         $ 295,470         $ 26,517,591          $ 26,813,061  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

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The following table presents information regarding the quality of the Company’s non-covered loans held for investment at December 31, 2011:

 

(in thousands)     30-89 Days 
Past Due
   Non-
 Accrual 
   90 Days or More
Delinquent and
Still Accruing
Interest
    Total Past 
Due
      Current       Total Loans
Receivable

Multi-family

      $ 46,702         $ 205,064         $ --         $ 251,766         $ 17,178,862          $ 17,430,628  

Commercial real estate

       53,798          68,032          --          121,830          6,733,414          6,855,244  

Acquisition, development, and construction

       6,520          29,886          --          36,406          409,265          445,671  

One-to-four family

       2,712          11,907          --          14,619          112,742          127,361  

Commercial and industrial

       1,223          8,827          --          10,050          589,936          599,986  

Other

       702          2,099          --          2,801          67,106          69,907  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total

      $ 111,657         $ 325,815         $ --         $ 437,472         $ 25,091,325          $ 25,528,797  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

The following table summarizes the Company’s non-covered loan portfolio by credit quality indicator at September 30, 2012:

 

(in thousands)    Multi-Family      Commercial  
Real Estate
  Acquisition,
 Development, and 
Construction
   One-to-Four 
Family
  Total
  Mortgage  
Segment
   Commercial 
and
Industrial
    Other     Total Other
Loan Segment

Credit Quality Indicator:

                               

Pass

       $18,170,382        $ 7,089,632        $ 350,651        $ 124,100        $ 25,734,765        $ 540,616        $ 53,263        $ 593,879  

Special mention

      54,093         31,223         5,900         301         91,517         19,772         --         19,772  

Substandard

      242,263         72,339         24,061         6,714         345,377         22,184         993         23,177  

Doubtful

      1,491         --         3,083         --         4,574         --         --         --  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total

       $18,468,229        $ 7,193,194        $ 383,695        $ 131,115        $ 26,176,233        $ 582,572        $ 54,256        $ 636,828  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

The following table summarizes the Company’s non-covered loan portfolio by credit quality indicator at December 31, 2011:

 

(in thousands)    Multi-Family      Commercial  
Real Estate
  Acquisition,
 Development, and 
Construction
   One-to-Four 
Family
  Total
  Mortgage  
Segment
   Commercial 
and
Industrial
    Other     Total Other
Loan Segment

Credit Quality Indicator:

                               

Pass

       $17,135,461        $ 6,704,824        $ 399,811        $ 118,293        $ 24,358,389        $ 570,442        $ 67,808        $ 638,250  

Special mention

      58,134         64,802         6,489         --         129,425         13,234         --         13,234  

Substandard

      237,033         85,618         39,371         9,068         371,090         15,928         2,099         18,027  

Doubtful

      --         --         --         --         --         382         --         382  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total

       $17,430,628        $ 6,855,244        $ 445,671        $ 127,361        $ 24,858,904        $ 599,986        $ 69,907        $ 669,893  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

The preceding classifications follow regulatory guidelines and can be generally described as follows: pass loans are of satisfactory quality; special mention loans have a potential weakness or risk that may result in the deterioration of future repayment; substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness and there is a distinct possibility that the Company will sustain some loss); and doubtful loans, based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable. In addition, one-to-four family residential loans are classified utilizing an inter-regulatory agency methodology that incorporates the extent of delinquency and the loan-to-value ratios. These classifications are the most current available and have been generally updated within the last twelve months.

Troubled Debt Restructurings

In accordance with GAAP, the Company is required to account for certain held-for-investment loan modifications or restructurings as Troubled Debt Restructurings (“TDRs”). In general, a modification or restructuring of a loan constitutes a TDR if the Company grants a concession to a borrower experiencing financial difficulty. Loans modified as TDRs are placed on non-accrual status until the Company determines that future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate performance according to the restructured terms for a period of at least six consecutive months.

 

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The following table presents information regarding the Company’s TDRs as of September 30, 2012 and December 31, 2011:

 

     September 30, 2012    December 31, 2011
(in thousands)    Accruing    Non-Accrual    Total    Accruing    Non-Accrual    Total

Loan Category:

                             

Multi-family

        $74,825           $117,683           $192,508           $60,454           $166,248           $226,702  

Commercial real estate

       37,473          39,881          77,354          3,389          39,054          42,443  

Acquisition, development, and construction

       --          11,734          11,734          --          15,886          15,886  

Commercial and industrial

       1,523          --          1,523          --          667          667  

One-to-four family

       --          1,101          1,101          --          1,411          1,411  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total

        $113,821           $170,399           $284,220           $63,843           $223,266           $287,109  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

In an effort to proactively manage delinquent loans, the Company has selectively extended to certain borrowers concessions such as rate reductions, extension of maturity dates, and forbearance agreements. As of September 30, 2012, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $252.9 million and loans on which forbearance agreements were reached amounted to $31.3 million.

The eligibility of a borrower for work-out concessions of any nature depends upon the facts and circumstances of each transaction, which may change from period to period, and involve judgment by Company personnel regarding the likelihood that the concession will result in the maximum recovery for the Company.

The financial effects of TDRs granted in the three and nine months ended September 30, 2012 were as follows:

 

    Financial Effect of Modifications
    For the Three Months Ended
September 30, 2012
  For the Nine Months Ended
September 30, 2012
    Weighted Average Interest Rate       Weighted Average Interest Rate    
(dollars in thousands)   Number
of Loans
  Pre-
Modification
  Post-
Modification
  Charge-off
Amount
  Number
of Loans
  Pre-
Modification
  Post-
Modification
  Charge-off
Amount

Loan Category:

                               

Multi-family

      --         -- %       -- %      $ --         4         6.19 %       5.34 %      $ 188  

Commercial real estate

      --         --         --         --         3         6.30         4.50         --  

Acquisition, development, and construction

      --         --         --         --         --         --         --         --  

Other

      --         --         --         --         --         --         --         --  
   

 

 

             

 

 

     

 

 

             

 

 

 

Total/average

        --         -- %       -- %      $ --         7         6.28 %       4.71 %      $ 188  
   

 

 

             

 

 

     

 

 

             

 

 

 

As of September 30, 2012, there were no payment defaults on any loans that had been modified as TDRs during the preceding twelve months. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The Company does not consider a payment to be in default when the loan is in forbearance, or otherwise granted a delay of payment, when the agreement to forebear or allow a delay of payment is part of a modification. Subsequent to the modification, the loan is not considered to be in default until payment is contractually past due in accordance with the modified terms. In addition, the Company does consider a loan with multiple modifications of forbearance periods to be in default.

 

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Covered Loans

The following table presents the balance of covered loans acquired in the AmTrust and Desert Hills acquisitions as of September 30, 2012:

 

(dollars in thousands)      Amount      Percent of
Covered Loans

Loan Category:

         

One-to-four family

      $ 3,069,827          90.3%   

All other loans

       330,797          9.7       
    

 

 

      

 

 

 

Total covered loans

      $ 3,400,624          100.0%   
    

 

 

      

 

 

 

The Company refers to the loans acquired in the AmTrust and Desert Hills acquisitions as “covered loans” because the Company is being reimbursed for a substantial portion of losses on these loans under the terms of the FDIC loss sharing agreements. Covered loans are accounted for under Accounting Standards Codification (“ASC”) Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”), and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the lives of the loans. Under ASC 310-30, purchasers are permitted to aggregate acquired loans into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.

At September 30, 2012 and December 31, 2011, the outstanding balances of covered loans (representing amounts owed to the Company) were $4.1 billion and $4.5 billion, respectively. The carrying values of such loans were $3.4 billion and $3.8 billion, respectively, at September 30, 2012 and December 31, 2011.

At the respective acquisition dates, the Company estimated the fair values of the AmTrust and Desert Hills loan portfolios, which represented the expected cash flows from the portfolios discounted at market-based rates. In estimating such fair value, the Company (a) calculated the contractual amount and timing of undiscounted principal and interest payments (the “undiscounted contractual cash flows”); and (b) estimated the expected amount and timing of undiscounted principal and interest payments (the “undiscounted expected cash flows”). The amount by which the undiscounted expected cash flows exceed the estimated fair value (the “accretable yield”) is accreted into interest income over the lives of the loans. The difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is referred to as the “non-accretable difference.” The non-accretable difference represents an estimate of the credit risk in the loan portfolios at the acquisition date.

The accretable yield is affected by changes in interest rate indices for variable rate loans, changes in prepayment assumptions, and changes in expected principal and interest payments over the estimated lives of the loans. Changes in interest rate indices for variable rate loans increase or decrease the amount of interest income expected to be collected, depending on the direction of interest rates. Prepayments affect the estimated lives of covered loans and could change the amount of interest income and principal expected to be collected. Changes in expected principal and interest payments over the estimated lives of covered loans are driven by the credit outlook and actions that may be taken with borrowers.

The Company periodically evaluates the estimates of the cash flows it expects to collect. Expected future cash flows from interest payments are based on variable rates at the time of the periodic evaluation. Estimates of expected cash flows that are impacted by changes in interest rate indices for variable rate loans and prepayment assumptions are treated as prospective yield adjustments and included in interest income.

Changes in the accretable yield for covered loans were as follows for the nine months ended September 30, 2012:

 

(in thousands)    Accretable Yield

Balance at beginning of period

       $1,365,978    

Reclassification to non-accretable difference

       (172,775)    

Accretion

       (135,531)    
    

 

 

 

Balance at end of period

        $1,057,672    
    

 

 

 

 

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The line item in the preceding table titled “reclassification to non-accretable difference” includes changes in cash flows the Company expects to collect due to changes in prepayment assumptions and changes in interest rates on variable rate loans. As of the Company’s last periodic evaluation, prepayment assumptions increased and, accordingly, future expected interest cash flows decreased. This resulted in a decrease in the accretable yield. In addition, these decreases were coupled with additional reductions in the expected cash flows from interest payments, as interest rates continued to be very low. As a result, a large percentage of the Company’s covered variable rate loans continue to reset at lower interest rates. Partially offsetting these decreases were increases in the expected principal and interest payments driven by better expectations relating to credit.

In connection with the AmTrust and Desert Hills transactions, the Company has acquired other real estate owned (“OREO”), all of which is covered under FDIC loss sharing agreements. Covered OREO is initially recorded at its estimated fair value on the acquisition date, based on independent appraisals less the estimated selling costs. Any subsequent write-downs due to declines in fair value are charged to non-interest expense, and partially offset by loss reimbursements under the FDIC loss sharing agreements. Any recoveries of previous write-downs are credited to non-interest expense and partially offset by the portion of the recovery that is due to the FDIC.

The FDIC loss share receivable represents the present value of the estimated losses on covered loans to be reimbursed by the FDIC. The estimated losses were based on the same cash flow estimates used in determining the fair value of the covered loans. The FDIC loss share receivable is reduced as losses on covered loans are recognized and as loss sharing payments are received from the FDIC. Realized losses in excess of acquisition-date estimates will result in an increase in the FDIC loss share receivable. Conversely, if realized losses are less than the acquisition-date estimates, the FDIC loss share receivable will be reduced.

The following table presents information regarding the Company’s covered loans 90 days or more past due at September 30, 2012 and December 31, 2011:

 

(in thousands)     September 30, 2012      December 31, 2011 

Covered Loans 90 Days or More Past Due:

         

One-to-four family

        $297,293           $314,821  

Other loans

       19,844          32,621  
    

 

 

      

 

 

 

Total covered loans 90 days or more past due

        $317,137           $347,442  
    

 

 

      

 

 

 

The following table presents information regarding the Company’s covered loans that were 30 to 89 days past due at September 30, 2012 and December 31, 2011:

 

(in thousands)     September 30, 2012      December 31, 2011 

Covered Loans 30-89 Days Past Due:

         

One-to-four family

           $84,471           $103,495  

Other loans

       7,449          8,494  
    

 

 

      

 

 

 

Total covered loans 30-89 days past due

           $91,920           $111,989  
    

 

 

      

 

 

 

At September 30, 2012, the Company had $91.9 million of covered loans that were 30 to 89 days past due, and covered loans of $317.1 million that were 90 days or more past due but considered to be performing due to the application of the yield accretion method under ASC 310-30. The remaining portion of the Company’s covered loan portfolio totaled $3.0 billion at September 30, 2012 and was considered current as of that date. ASC 310-30 allows the Company to aggregate credit-impaired loans acquired in the same fiscal quarter into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Accordingly, loans that may have been classified as non-performing loans by AmTrust or Desert Hills are no longer classified as non-performing because, at the respective dates of acquisition, the Company believed that it would fully collect the new carrying value of these loans. The new carrying value represents the contractual balance, reduced by the portion that is expected to be uncollectible (referred to as the “non-accretable difference”) and by an accretable yield (discount) that is recognized as interest income. It is important to note that management’s judgment is required in reclassifying loans subject to ASC 310-30 as performing loans, and its judgment is dependent on having a reasonable expectation about the timing and amount of the cash flows to be collected, even if the loan is contractually past due.

 

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The primary credit quality indicator for covered loans is the expectation of underlying cash flows. The Company recorded provisions for losses on covered loans of $2.8 million and $21.3 million, respectively, during the three and nine months ended September 30, 2012. These provisions were largely due to credit deterioration in the acquired portfolios of one-to-four family and home equity loans. The provisions for losses on covered loans were largely offset by FDIC indemnification income of $2.3 million and $17.0 million, respectively, recorded in non-interest income for the three and nine months ended September 30, 2012.

Note 5. Allowance for Loan Losses

The following tables provide additional information regarding the Company’s allowance for loan losses, based upon the method of evaluating loan impairment:

 

(in thousands)      Mortgage        Other        Total  

Allowance for Loan Losses at September 30, 2012:

              

Individually evaluated for impairment

       $    1,677          $        --          $    1,677  

Collectively evaluated for impairment

       124,017          13,321          137,338  

Acquired loans with deteriorated credit quality

       35,085          19,506          54,591  
    

 

 

      

 

 

      

 

 

 

Total

       $160,779          $32,827          $193,606  
    

 

 

      

 

 

      

 

 

 

 

(in thousands)      Mortgage        Other        Total  

Allowance for Loan Losses at December 31, 2011:

              

Individually evaluated for impairment

       $       490          $        --          $       490  

Collectively evaluated for impairment

       121,505          15,295          136,800  

Acquired loans with deteriorated credit quality

       14,227          19,096          33,323  
    

 

 

      

 

 

      

 

 

 

Total

       $136,222          $34,391          $170,613  
    

 

 

      

 

 

      

 

 

 

The following tables provide additional information regarding the methods used to evaluate the Company’s loan portfolio for impairment:

 

(in thousands)       Mortgage          Other          Total   

Loans Receivable at September 30, 2012:

              

Individually evaluated for impairment

       $     302,571          $     17,770          $     320,341  

Collectively evaluated for impairment

       25,873,662          619,058          26,492,720  

Acquired loans with deteriorated credit quality

       3,069,827          330,797          3,400,624  
    

 

 

      

 

 

      

 

 

 

Total

       $29,246,060          $   967,625          $30,213,685  
    

 

 

      

 

 

      

 

 

 

 

(in thousands)      Mortgage            Other            Total    

Loans Receivable at December 31, 2011:

            

Individually evaluated for impairment

     $     324,427           $       5,995           $     330,422   

Collectively evaluated for impairment

     24,534,477           663,898           25,198,375   

Acquired loans with deteriorated credit quality

     3,366,456           386,575           3,753,031   
  

 

 

      

 

 

      

 

 

 

Total

     $28,225,360           $1,056,468           $29,281,828   
  

 

 

      

 

 

      

 

 

 

Non-Covered Loans

The following table summarizes activity in the allowance for losses on non-covered loans for the nine months ended September 30, 2012 and 2011:

 

     September 30,  
     2012         2011  
(in thousands)    Mortgage      Other      Total         Mortgage      Other      Total  

Balance, beginning of period

    $ 121,995          $ 15,295          $ 137,290           $ 140,834          $ 18,108          $ 158,942     

Charge-offs

     (35,542)          (6,217)          (41,759)           (73,994)          (9,485)          (83,479)    

Recoveries

     735           2,749           3,484            2,189           2,727           4,916     

Provision for loan losses

     38,506           1,494           40,000            53,287           5,713           59,000     
  

 

 

    

 

 

    

 

 

     

 

 

    

 

 

    

 

 

 

Balance, end of period

    $ 125,694          $ 13,321          $ 139,015           $ 122,316          $ 17,063          $ 139,379     
  

 

 

    

 

 

    

 

 

     

 

 

    

 

 

    

 

 

 

Non-accrual loans amounted to $246.6 million and $325.8 million, respectively, at September 30, 2012 and December 31, 2011. There were no loans over 90 days past due and still accruing interest at either of these dates.

 

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The following table presents additional information regarding the Company’s impaired loans at or for the nine months ended September 30, 2012:

 

(in thousands)   Recorded
  Investment  
   Unpaid
  Principal  
Balance
   Related
  Allowance  
   Average
Recorded
  Investment  
   Interest
Income
  Recognized  

Impaired loans with no related allowance:

                       

Multi-family

    $ 158,750        $ 176,801        $ --        $ 188,180        $ 2,642  

Commercial real estate

      79,744          81,237          --          69,544          1,030  

Acquisition, development, and construction

      22,643          27,015          --          24,538          636  

One-to-four family

      1,102          1,147          --          1,118          --  

Commercial and industrial

      17,769          24,999          --          9,840          1,749  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans with no related allowance

    $ 280,008        $ 311,199        $ --        $ 293,220        $ 6,057  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Impaired loans with an allowance recorded:

                       

Multi-family

    $ 38,488        $ 39,368        $ 1,628        $ 30,423        $ 655  

Commercial real estate

      1,845          1,845          49          3,953          79  

Acquisition, development, and construction

      --          --          --          2,098          --  

One-to-four family

      --          --          --          --          --  

Commercial and industrial

      --          --          --          --          --  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans with an allowance recorded

    $ 40,333        $ 41,213        $ 1,677        $ 36,474        $ 734  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans:

                       

Multi-family

    $ 197,238        $ 216,169        $ 1,628        $ 218,603        $ 3,297  

Commercial real estate

      81,589          83,082          49          73,497          1,109  

Acquisition, development, and construction

      22,643          27,015          --          26,636          636  

One-to-four family

      1,102          1,147          --          1,118          --  

Commercial and industrial

      17,769          24,999          --          9,840          1,749  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans

    $  320,341        $  352,412        $  1,677        $  329,694        $ 6,791  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

The following table presents additional information regarding the Company’s impaired loans at or for the year ended December 31, 2011:

 

(in thousands)   Recorded
  Investment  
   Unpaid
  Principal  
Balance
   Related
  Allowance  
   Average
Recorded
  Investment  
   Interest
Income
  Recognized  

Impaired loans with no related allowance:

                       

Multi-family

    $ 235,100        $ 244,684        $ --        $ 321,994        $ 3,435  

Commercial real estate

      49,258          52,152          --          63,032          1,397  

Acquisition, development, and construction

      26,680          27,143          --          42,600          1,141  

One-to-four family

      1,127          1,520          --          2,649          10  

Commercial and industrial

      5,995          10,240          --          6,442          60  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans with no related allowance

    $ 318,160        $ 335,739        $ --        $ 436,717        $ 6,043  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Impaired loans with an allowance recorded:

                       

Multi-family

    $ 6,329        $ 6,899        $ 408        $ 10,893        $ 187  

Commercial real estate

      5,648          5,857          53          10,297          --  

Acquisition, development, and construction

      --          --          --          14,495          --  

One-to-four family

      285          373          29          71          --  

Commercial and industrial

      --          --          --          1,837          --  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans with an allowance recorded

    $ 12,262        $ 13,129        $ 490        $ 37,593        $ 187  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans:

                       

Multi-family

    $ 241,429        $ 251,583        $ 408        $ 332,887        $ 3,622  

Commercial real estate

      54,906          58,009          53          73,329          1,397  

Acquisition, development, and construction

      26,680          27,143          --          57,095          1,141  

One-to-four family

      1,412          1,893          29          2,720          10  

Commercial and industrial

      5,995          10,240          --          8,279          60  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total impaired loans

    $ 330,422        $  348,868        $ 490        $