XML 29 R13.htm IDEA: XBRL DOCUMENT

Loans and the Allowance for Loan and Lease Losses

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 5 - Loans and the Allowance for Loan and Lease Losses

The following table sets forth the composition of the Company’s loan portfolio segments, including net deferred fees and costs, at December 31, 2015 and 2014, respectively:

		2015			2014
		(in thousands)
Commercial		$	570,116		$	499,816
Commercial real estate			1,966,696			1,634,510
Commercial construction			328,838			167,359
Residential real estate			233,690			234,967
Consumer			2,454			2,879
Gross loans			3,101,794			2,539,531
Net deferred loan (fees) costs			(2,787)			(890)
Total loans receivable		$	3,099,007		$	2,538,641

The loan segments in the above table have unique risk characteristics with respect to credit quality:

●	The repayment of commercial loans is generally dependent on the creditworthiness and cash flow of borrowers, and if applicable, guarantors, which may be negatively impacted by adverse economic conditions. While the majority of these loans are secured, collateral type, marketing, coverage, valuation and monitoring is not as uniform as in other portfolio classes and recovery from liquidation of such collateral may be subject to greater variability.
●	Payment on commercial mortgages is driven principally by operating results of the managed properties or underlying business and secondarily by the sale or refinance of such properties. Both primary and secondary sources of repayment, and value of the properties in liquidation, may be affected to a greater extent by adverse conditions in the real estate market or the economy in general.
●	Properties underlying construction, land and land development loans often do not generate sufficient cash flows to service debt and thus repayment is subject to ability of the borrower and, if applicable, guarantors, to complete development or construction of the property and carry the project, often for extended periods of time. As a result, the performance of these loans is contingent upon future events whose probability at the time of origination is uncertain.
●	The ability of borrowers to service debt in the residential and consumer loan portfolios is generally subject to personal income which may be impacted by general economic conditions, such as increased unemployment levels. These loans are predominately collateralized by first and/or second liens on single family properties. If a borrower cannot maintain the loan, the Company’s ability to recover against the collateral in sufficient amount and in a timely manner may be significantly influenced by market, legal and regulatory conditions.

Purchased Credit-Impaired Loans

The Company holds purchased loans for which there was, at their acquisition date, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows at December 31, 2015 and December 31, 2014.

		2015			2014
		(in thousands)
Commercial		$	7,078		$	7,199
Commercial real estate			1,775			1,816
Commercial construction			-			-
Residential real estate			328			806
Consumer			-			-
Total carrying amount		$	9,181		$	9,821

For those purchased loans disclosed above, the Company did not increase the allowance for loan and lease losses for the year ended December 31, 2015. No allowances for loan and lease losses were reversed during 2015.

The accretable yield, or income expected to be collected, on the purchased credit impaired loans above is as follows at December 31, 2015 and December 31, 2014.

		2015			2014
		(in thousands)
Balance at beginning of period		$	4,805		$	5,013
New loans purchased			-			-
Accretion of income			(1,206)			(142)
Reclassifications from nonaccretable difference			-			-
Disposals			-			(66)
Balance at end of period		$	3,599		$	4,805

The following table presents nonaccrual loans by class of loans:

Loans Receivable on Nonaccrual Status

		2015			2014
		(in thousands)
Commercial		$	6,586		$	616
Commercial real estate			9,112			8,197
Commercial construction			1,479			-
Residential real estate			3,559			2,796
Total loans receivable on nonaccrual status		$	20,736		$	11,609

Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified impaired loans.

At December 31, 2015 and 2014, loan balances of approximately $1.6 billion and $1.0 billion were pledged to secure borrowings from the Federal Reserve Bank of New York and Federal Home Loan Bank Advances.

At December 31, 2015 and 2014, the net investment in direct lease financing consists of a minimum lease receivable of $4,105,000 and $4,267,000, respectively, and unearned interest income of $394,000 and $538,000, respectively, for a net investment in direct lease financing of $3,712,000 and $3,729,000, respectively. The net investment in direct lease financing is carried as a component of loans in the Company’s consolidated statements of condition and included in the commercial loan segment. The tenant is in default under the lease and the Bank intends to sell the property. The Company has allocated a $1.3 million specific allowance for the net investment in direct lease financing as of December 31, 2015. The Company did not allocate a specific allowance for the net investment in direct lease financing as of December 31, 2014.

The Company continuously monitors the credit quality of its loans receivable. In addition to the internal staff, the Company utilizes the services of a third party loan review firm to rate the credit quality of its loans receivable. Credit quality is monitored by reviewing certain credit quality indicators. Assets classified “Pass” are deemed to possess average to superior credit quality, requiring no more than normal attention. Assets classified as “Special Mention” have generally acceptable credit quality yet possess higher risk characteristics/circumstances than satisfactory assets. Such conditions include strained liquidity, slow pay, stale financial statements, or other conditions that require more stringent attention from the lending staff. These conditions, if not corrected, may weaken the loan quality or inadequately protect the Company’s credit position at some future date. Assets are classified “Substandard” if the asset has a well-defined weakness that requires management’s attention to a greater degree than for loans classified special mention. Such weakness, if left uncorrected, could possibly result in the compromised ability of the loan to perform to contractual requirements. An asset is classified as “Doubtful” if it is inadequately protected by the net worth and/or paying capacity of the obligor or of the collateral, if any, that secures the obligation. Assets classified as doubtful include assets for which there is a “distinct possibility” that a degree of loss will occur if the inadequacies are not corrected. All loans past due 90 days or more and all impaired loans are included in the appropriate category below. The following table presents information about the loan credit quality by loan segment at December 31, 2015 and 2014:

Credit Quality Indicators

		December 31, 2015
					Special
		Pass			Mention			Substandard			Doubtful			Total
		(in thousands)
Commercial		$	462,358		$	11,760		$	95,998		$	-		$	570,116
Commercial real estate			1,919,041			18,990			28,426			239			1,966,696
Commercial construction			326,697			662			1,479			-			328,838
Residential real estate			229,426			-			4,264			-			233,690
Consumer			2,368			-			86			-			2,454
Total loans		$	2,939,890		$	31,412		$	130,253		$	239		$	3,101,794

		December 31, 2014
					Special
		Pass			Mention			Substandard			Doubtful			Total
		(in thousands)
Commercial		$	481,927		$	3,686		$	14,203		$	-		$	499,816
Commercial real estate			1,596,317			14,140			23,764			289			1,634,510
Commercial construction			165,880			1,479			-			-			167,359
Residential real estate			230,772			-			4,195			-			234,967
Consumer			2,778			-			101			-			2,879
Total loans		$	2,477,674		$	19,305		$	42,263		$	289		$	2,539,531

The following table provides an analysis of the impaired loans by segment at December 31, 2015 and 2014:

		December 31, 2015
		(dollars in thousands)
					Unpaid						Average			Interest
		Recorded			Principal			Related			Recorded			Income
No Related Allowance Recorded		Investment			Balance			Allowance			Investment			Recognized
Commercial		$	610		$	645		$			$	686		$	-
Commercial real estate			15,517			16,512						6,363			60
Commercial construction			2,149			2,141						1,535			-
Residential real estate			3,954			4,329						3,322			10
Consumer			87			86						96			5
Total		$	22,318		$	23,173		$			$	12,002		$	75

					Unpaid						Average			Interest
		Recorded			Principal			Related			Recorded			Income
With An Allowance Recorded		Investment			Balance			Allowance			Investment			Recognized
Commercial		$	84,787		$	84,449		$	6,725		$	55,445		$	1,895
Total
Commercial		$	85,397		$	85,094		$	6,725		$	56,131		$	1,895
Commercial real estate			15,517			16,512			-			6,363			60
Commercial construction			2,149			2,141			-			1,535
Residential real estate			3,954			4,329			-			3,322			10
Consumer			87			86			-			96			5
Total		$	107,104		$	108,162		$	6,725		$	67,447		$	1,970

		December 31, 2014
		(dollars in thousands)
					Unpaid						Average			Interest
		Recorded			Principal			Related			Recorded			Income
No Related Allowance Recorded		Investment			Balance			Allowance			Investment			Recognized
Commercial		$	481		$	527		$	-		$	494		$	-
Commercial real estate			5,890			6,857			-			6,276			129
Residential real estate			3,072			3,406			-			3,170			41
Consumer			109			101			-			107			-
Total		$	9,552		$	10,891		$	-		$	10,047		$	170

					Unpaid						Average			Interest
		Recorded			Principal			Related			Recorded			Income
With An Allowance Recorded		Investment			Balance			Allowance			Investment			Recognized
Commercial		$	387		$	389		$	111		$	389		$	-
Commercial real estate			3,520			3,520			150			3,584			171
Total		$	3,907		$	3,909		$	261		$	3,973		$	171
Total
Commercial		$	868		$	917		$	111		$	883		$	-
Commercial real estate			9,410			10,107			150			9,860			300
Residential real estate			3,072			3,406			-			3,170			41
Consumer			109			101			-			106			-
Total		$	13,459		$	14,531		$	261		$	14,019		$	342

		December 31, 2013
		(dollars in thousands)
					Unpaid						Average			Interest
		Recorded			Principal			Related			Recorded			Income
No Related Allowance Recorded		Investment			Balance			Allowance			Investment			Recognized
Commercial		$	449		$	449		$	-		$	494		$	25
Commercial real estate			10,482			10,783			-			10,658			496
Residential real estate			1,858			2,000			-			1,892			94
Consumer			120			120			-			128			6
Total		$	12,909		$	13,352		$	-		$	13,172		$	621

					Unpaid						Average			Interest
		Recorded			Principal			Related			Recorded			Income
With An Allowance Recorded		Investment			Balance			Allowance			Investment			Recognized
Commercial		$	672		$	672		$	300		$	687		$	43
Commercial real estate			4,344			4,344			115			4,359			200
Total		$	5,016		$	5,016		$	415		$	5,046		$	243

Total
Commercial		$	1,121		$	1,121		$	300		$	1,181		$	68
Commercial real estate			14,826			15,127			115			15,017			696
Residential real estate			1,858			2,000			-			1,892			94
Consumer			120			120			-			128			6
Total (including related
allowance)		$	17,925		$	18,368		$	415		$	18,218		$	864

Included in the impaired loans table are $85.9 million, $1.8 million and $5.7 million of performing TDRs as of December 31, 2015, 2014 and 2013 respectively. The recorded investment in loans include accrued interest receivable and other capitalized costs such as real estate taxes paid on behalf of the borrower and loan origination fees, net, when applicable. Cash basis interest and interest income recognized on accrual basis approximate each other.

The following table provides an analysis of the aging of the loans by segment, excluding net deferred costs that are past due at December 31, 2015 and December 31, 2014 by class:

Aging Analysis

		December 31, 2015
																				Loans
																				Receivable > 90
								90 Days or												Days Past Due
		30-59 Days			60-89 Days			Greater Past			Total Past						Total Loans			and
		Past Due			Past Due			Due			Due			Current			Receivable			Accruing
		(in thousands)
Commercial		$	6,887		$	3,505		$	6,865		$	17,257		$	552,859		$	570,116		$	-
Commercial
real estate			1,998			988			9,561			12,547			1,954,149			1,966,696			-
Commercial
construction			-			-			1,479			1,479			327,359			328,838			-
Residential
real estate			-			-			2,122			2,122			231,568			233,690			-
Consumer			4			9			-			13			2,441			2,454			-
Total		$	8,889		$	4,502		$	20,027		$	33,418		$	3,068,376		$	3,101,794		$	-

Aging Analysis

		December 31, 2014
																				Loans
																				Receivable > 90
								90 Days or												Days Past Due
		30-59 Days			60-89 Days			Greater Past			Total Past						Total Loans			and
		Past Due			Past Due			Due			Due			Current			Receivable			Accruing
		(in thousands)
Commercial		$	6,060		$	-		$	662		$	6,722		$	493,094		$	499,816		$	45
Commercial
real estate			4,937			638			5,961			11,536			1,622,974			1,634,510			609
Commercial
construction			-			-			-			-			167,359			167,359			-
Residential
real estate			1,821			210			3,200			5,231			229,736			234,967			557
Consumer			30			1			-			31			2,848			2,879			-
Total		$	12,848		$	849		$	9,823		$	23,520		$	2,516,011		$	2,539,531		$	1,211

The following table details the amount of loans that are evaluated individually, and collectively, for impairment (excluding net deferred costs), acquired with deteriorated quality, and the related portion of the allowance for loan and lease loss that is allocated to each loan portfolio class:

		December 31, 2015
					Commercial			Commercial			Residential
		Commercial			real estate			construction			real estate			Consumer			Unallocated			Total
		(in thousands)
Allowance for loan and lease losses:
Individually evaluated for impairment		$	6,725		$	-		$	-		$	-		$	-		$	-		$	6,725
Collectively evaluated for impairment			4,224			10,926			3,253			976			4			464			19,847
Acquired with deteriorated credit quality			-			-			-			-			-			-			-
Total		$	10,949		$	10,926		$	3,253		$	976		$	4		$	464		$	26,572

Gross loans
Individually evaluated for impairment			85,397			15,517			2,149			3,954			87			-			107,104
Collectively evaluated for impairment			477,641			1,949,404			326,689			229,408			2,367			-			2,985,509
Acquired with deteriorated credit quality			7,078			1,775			-			328			-			-			9,181
Total			570,116			1,966,696			328,838			233,690			2,454			-			3,101,794

The tables above include approximately $867 million of acquired loans as of December 31, 2015 reported as collectively evaluated for impairment, of which $672 million were included in the commercial real estate loan segment.

		December 31, 2014
					Commercial			Commercial			Residential
		Commercial			real estate			construction			real estate			Consumer			Unallocated			Total
		(in thousands)
Allowance for loan and lease losses:
Individually evaluated for impairment		$	111		$	151		$	-		$	-		$	-		$	-		$	262
Collectively evaluated for impairment			2,972			7,648			1,239			1,113			7			919			13,898
Acquired with deteriorated credit quality			-			-			-			-			-			-			-
Total		$	3,083		$	7,799		$	1,239		$	1,113		$	7		$	919		$	14,160

Gross loans
Individually evaluated for impairment		$	868		$	9,410		$	-		$	3,072		$	109		$	-		$	13,459
Collectively evaluated for impairment			491,749			1,623,284			167,359			231,089			2,770			-			2,516,251
Acquired with deteriorated credit quality			7,199			1,816			-			806			-			-			9,821
Total		$	499,816		$	1,634,510		$	167,359		$	234,967		$	2,879		$	-		$	2,539,531

The tables above include approximately $1.2 billion of acquired loans as of December 31, 2014 reported as collectively evaluated for impairment, of which $809 million were included in the commercial real estate loan segment.

The Company’s allowance for loan and lease losses is analyzed quarterly. Many factors are considered, including growth in the portfolio, delinquencies, nonaccrual loan levels, and other factors inherent in the extension of credit.

A summary of the activity in the allowance for loan and lease losses is as follows:

		Year Ended December 31, 2015
		(dollars in thousands)
					Commercial			Commercial			Residential
		Commercial			real estate			construction			real estate			Consumer			Unallocated			Total
Balance at January 1, 2015		$	3,083		$	7,799		$	1,239		$	1,113		$	7		$	919		$	14,160
Loans charged-off			(101)			(406)			-			-			(31)			-			(538)
Recoveries			13			327			-			2			3			-			345
Provision for loan and lease losses			7,954			3,206			2,014			(139)			25			(455)			12,605
Balance at December 31, 2015		$	10,949		$	10,926		$	3,253		$	976		$	4		$	464		$	26,572

		Year Ended December 31, 2014
		(dollars in thousands)
					Commercial			Commercial			Residential
		Commercial			real estate			construction			real estate			Consumer			Unallocated			Total
Balance at January 1, 2014		$	1,698		$	5,746		$	362		$	990		$	146		$	1,391		$	10,333
Loans charged-off			(379)			(398)			-			(159)			-			-			(936)
Recoveries			50			-			-			19			11			-			80
Provision for loan and lease losses			1,714			2,451			877			263			(150)			(472)			4,683
Balance at December 31, 2014		$	3,083		$	7,799		$	1,239		$	1,113		$	7		$	919		$	14,160

		Year Ended December 31, 2013
		(dollars in thousands)
					Commercial			Commercial			Residential
		Commercial			real estate			construction			real estate			Consumer			Unallocated			Total
Balance at January 1, 2013		$	2,424		$	5,323		$	313		$	1,532		$	113		$	532		$	10,237
Loans charged-off			(6)			(126)			-			(175)			(22)			-			(329)
Recoveries			41			28			-			-			6			-			75
Provision for loan and lease losses			(761)			521			49			(367)			49			859			350
Balance at December 31, 2013		$	1,698		$	5,746		$	362		$	990		$	146		$	1,391		$	10,333

Troubled Debt Restructurings

Loans are considered to have been modified in a troubled debt restructuring ("TDRs") when due to a borrower’s financial difficulties, the Company makes certain concessions to the borrower that it would not otherwise consider. Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Generally, a nonaccrual loan that has been modified in a troubled debt restructuring remains on nonaccrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the modified loan. However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains on nonaccrual status.

At December 31, 2015, there were no commitments to lend additional funds to borrowers whose loans were on nonaccrual status or were contractually past due in excess of 90 days and still accruing interest, or whose terms have been modified in troubled debt restructurings.

As of December 31, 2015, total TDRs were $86.6 million, of which $85.9 million were current and have complied with the terms of their restructured agreement. As of December 31, 2014, total TDRs were $2.8 million, of which $1.8 million were current and have complied with the terms of their restructured agreement. The Company has allocated $4.5 million and $0 in specific allowance for those loans at December 31, 2015 and 2014, respectively.

The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2015 (dollars in thousands):

				Pre-Modification			Post-Modification
				Outstanding			Outstanding
		Number of		Recorded			Recorded
		Loans		Investment			Investment
Troubled debt restructurings:
Commercial		48		$	78,466		$	78,466
Commercial real estate		3			5,049			5,049
Commercial construction		1			661			661
Residential real estate		1			110			110
Consumer		1			4			4

Total		54		$	84,290		$	84,290

The increase in performing TDRs was due to loans secured by New York City taxi medallions that were modified during the second quarter of 2015. The modifications consisted of a deferral of principal amortization from approximately 25-30 year amortization to interest-only. There was no extension of the loans’ contractual maturity dates, there was no forgiveness of principal, and the interest rates on these loans were increased from approximately 3%-3.25% to 3.75%. These loans were accruing prior to modification and remained in accrual status post-modification.

The $4.5 million in specific allocations associated with taxi medallion lending referred to above was calculated based on the fair value of the collateral, and excludes any consideration for the personal guarantees of borrowers, which provides an additional source of repayment but cannot be relied upon. The valuation per corporate medallion used for the calculation at December 31, 2015 was approximately $800,000. A specific allocation was required at December 31, 2015 primarily due to a decline in the value of taxi medallions.

The TDRs described above increased the allowance for loan and lease losses by $4.5 million. There were no charge-offs in connection with a loan modification at the time of modification during the year ended December 31, 2015. There were no troubled debt restructurings for which there was a payment default within twelve months following the modification during the year ended December 31, 2015.

The following table presents loans by segment modified as troubled debt restructurings that occurred during the year ended December 31, 2014 (dollars in thousands):

				Pre-Modification			Post-Modification
				Outstanding			Outstanding
		Number of		Recorded			Recorded
		Loans		Investment			Investment
Troubled debt restructurings:
Commercial		1		$	672		$	289
Commercial real estate		-			-			-
Commercial construction		-			-			-
Residential real estate		2			275			272

Total		3		$	947		$	561

The TDRs presented as of December 31, 2014 did not increase the allowance for loan and lease losses and resulted in charge-offs of $333,000 during the year ended December 31, 2014. There were no troubled debt restructurings for which there was a payment default within twelve months following the modification during the year ended December 31, 2014.

There were no troubled debt restructurings that occurred during the year ended December 31, 2013.