SIFI 03.31.2015 10-Q1

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______ to ______

 Commission File Number:  0-54241
 
SI FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
__________________________________________________
Maryland
 
80-0643149
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
803 Main Street, Willimantic, Connecticut
 
06226
(Address of principal executive offices)
 
(Zip Code)
 
(860) 423-4581
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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  o

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 (Section 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  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer o
Accelerated Filer x
 
 
Non-Accelerated Filer o
Smaller Reporting Company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o    No  x
 
As of May 1, 2015, there were 12,495,375 shares of the registrant’s common stock outstanding.
 




SI FINANCIAL GROUP, INC.
TABLE OF CONTENTS
 
 
 
 
Page No.
 
 
 
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
Item 1.
 
Financial Statements (Unaudited):
 
 
 
 
 
 
 
Consolidated Balance Sheets at March 31, 2015 and December 31, 2014
 
 
 
 
 
 
Consolidated Statements of Income for the three months ended March 31, 2015 and 2014
 
 
 
 
 
 
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2015 and 2014
 
 
 
 
 
 
Consolidated Statement of Changes in Shareholders’ Equity for the three months ended March 31, 2015
 
 
 
 
 
 
Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
PART II. OTHER INFORMATION
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
 
 
Item 6.
 
 
 
 
 
 
 





PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements.
SI FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts / Unaudited)
 
March 31,
2015
 
December 31,
2014
ASSETS:
 
 
 
Cash and due from banks:
 
 
 
Noninterest-bearing
$
17,413

 
$
18,965

Interest-bearing
35,264

 
20,286

Total cash and cash equivalents
52,677

 
39,251

 
 
 
 
Available for sale securities, at fair value
176,496

 
173,040

Loans held for sale
562

 
747

Loans receivable (net of allowance for loan losses of $8,083 at March 31, 2015 and $7,797 at December 31, 2014)
1,043,160

 
1,044,864

Federal Home Loan Bank stock, at cost
10,333

 
10,333

Bank-owned life insurance
21,468

 
21,306

Premises and equipment, net
21,915

 
21,711

Goodwill and other intangibles
18,547

 
18,697

Accrued interest receivable
3,835

 
3,853

Deferred tax asset, net
7,521

 
8,048

Other real estate owned, net
1,324

 
1,271

Other assets
7,589

 
7,412

Total assets
$
1,365,427

 
$
1,350,533

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
 

 
 

Liabilities:
 

 
 

Deposits:
 

 
 

Noninterest-bearing
$
137,639

 
$
146,062

Interest-bearing
892,008

 
864,651

Total deposits
1,029,647

 
1,010,713

 
 
 
 
Mortgagors' and investors' escrow accounts
2,039

 
3,600

Federal Home Loan Bank advances
144,006

 
148,277

Junior subordinated debt owed to unconsolidated trust
8,248

 
8,248

Accrued expenses and other liabilities
22,459

 
21,956

Total liabilities
1,206,399

 
1,192,794

 
 
 
 
Shareholders' Equity:
 

 
 

Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued)

 

Common stock ($.01 par value; 35,000,000 shares authorized; 12,776,315 shares and 12,776,426 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively)
128

 
128

Additional paid-in-capital
125,375

 
125,459

Unallocated common shares held by ESOP
(4,008
)
 
(4,128
)
Unearned restricted shares
(1,214
)
 
(1,312
)
Retained earnings
37,925

 
37,497

Accumulated other comprehensive income
822

 
95

Total shareholders' equity
159,028

 
157,739

Total liabilities and shareholders' equity
$
1,365,427

 
$
1,350,533

 

See accompanying notes to unaudited interim consolidated financial statements.

1



SI FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts / Unaudited)
 
Three Months Ended
March 31,
 
2015
 
2014
Interest and dividend income:
 
 
 
Loans, including fees
$
10,614

 
$
11,087

Securities:
 

 
 

Taxable interest
733

 
880

Tax-exempt interest
59

 
42

Dividends
45

 
49

Other
19

 
13

Total interest and dividend income
11,470

 
12,071

 
 
 
 
Interest expense:
 

 
 

Deposits
1,368

 
1,319

Federal Home Loan Bank advances
596

 
682

Subordinated debt and other borrowings
83

 
83

Total interest expense
2,047

 
2,084

 
 
 
 
Net interest income
9,423

 
9,987

 
 
 
 
Provision for loan losses
335

 
430

 
 
 
 
Net interest income after provision for loan losses
9,088

 
9,557

 
 
 
 
Noninterest income:
 

 
 

Service fees
1,648

 
1,718

Wealth management fees
298

 
323

Increase in cash surrender value of bank-owned life insurance
162

 
142

Net gain on sales of securities

 
35

Mortgage banking
147

 
160

Net gain (loss) on fair value of derivatives
(5
)
 
17

Other
87

 
377

Total noninterest income
2,337

 
2,772

 
 
 
 
Noninterest expenses:
 

 
 

Salaries and employee benefits
4,944

 
5,200

Occupancy and equipment
2,053

 
2,107

Computer and electronic banking services
1,297

 
1,352

Outside professional services
466

 
449

Marketing and advertising
246

 
226

Supplies
148

 
168

FDIC deposit insurance and regulatory assessments
245

 
349

Core deposit intangible amortization
150

 
164

Other real estate operations
82

 
169

Other
430

 
770

Total noninterest expenses
10,061

 
10,954

 
 
 
 
Income before income tax provision
1,364

 
1,375

Income tax provision
443

 
469

Net income
$
921

 
$
906

 
 
 
 
Earnings per share:
 

 
 

Basic
$
0.07

 
$
0.07

Diluted
$
0.07

 
$
0.07

 

See accompanying notes to unaudited interim consolidated financial statements.

2



SI FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands / Unaudited)

 
 
 
Three Months Ended March 31,
 
 
 
2015
 
2014
Net income
 
$
921

 
$
906

Other comprehensive income, net of tax:
 
 
 
 
Available for sale securities:
 
 
 
 
Net unrealized holding gains
 
702

 
340

Reclassification adjustment for gains recognized in net income (1)
 

 
(23
)
Net unrealized holding gains on available for sale securities
 
702

 
317

 Net unrealized gain on interest-rate swap derivative
 
25

 
23

Other comprehensive income
 
727

 
340

Comprehensive income
 
$
1,648

 
$
1,246

 
 
 
 
 
 
(1) Amounts are included in net gain on sales of securities in noninterest income on the consolidated
statements of income. Income tax expense associated with the reclassification adjustment for the
three months ended March 31, 2015 and 2014 was $0 and $12,000, respectively.

See accompanying notes to unaudited interim consolidated financial statements.

    
 



3



SI FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2015
(In Thousands, Except Share Data / Unaudited)

 
Common Stock
 
Additional
Paid-in
Capital
 
Unallocated
Common
Shares Held
by ESOP
 
Unearned
Restricted
Shares
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income
 
Total
Shareholders'
Equity
 
Shares
 
Dollars
 
 
 
 
 
 
Balance at December 31, 2014
12,776,426

 
$
128

 
$
125,459

 
$
(4,128
)
 
$
(1,312
)
 
$
37,497

 
$
95

 
$
157,739

Comprehensive income

 

 

 

 

 
921

 
727

 
1,648

Cash dividends declared ($0.04 per share)

 

 

 

 

 
(493
)
 

 
(493
)
Equity incentive plans compensation

 

 
85

 

 
98

 

 

 
183

Allocation of 12,159 ESOP shares

 

 
19

 
120

 

 

 

 
139

Tax benefit from share-based compensation

 

 
5

 

 

 

 

 
5

Stock options exercised
193,438

 
2

 
2,154

 

 

 

 

 
2,156

Common shares repurchased
(193,549
)
 
(2
)
 
(2,347
)
 

 

 

 

 
(2,349
)
Balance at March 31, 2015
12,776,315

 
$
128

 
$
125,375

 
$
(4,008
)
 
$
(1,214
)
 
$
37,925

 
$
822

 
$
159,028

 
See accompanying notes to unaudited interim consolidated financial statements.


4



SI FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands / Unaudited)
 
Three Months Ended
March 31,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
921

 
$
906

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

Provision for loan losses
335

 
430

Employee stock ownership plan expense
139

 
142

Equity incentive plan expense
183

 
189

Excess tax benefit from share-based compensation
(5
)
 
(3
)
Amortization of investment premiums and discounts, net
308

 
282

Amortization of loan premiums and discounts, net
375

 
322

Depreciation and amortization of premises and equipment
699

 
629

Amortization of core deposit intangible
150

 
164

Amortization of deferred debt issue costs
9

 
46

Net gain on sales of securities

 
(35
)
Net loss (gain) on fair value of derivatives
5

 
(17
)
Deferred income tax provision (benefit)
151

 
(6
)
Loans originated for sale
(3,390
)
 
(4,307
)
Proceeds from sale of loans held for sale
3,599

 
5,410

Net gain on sales of loans held for sale
(87
)
 
(94
)
Net loss (gain) on sales or write-downs of other real estate owned
(1
)
 
35

Increase in cash surrender value of bank-owned life insurance
(162
)
 
(142
)
Change in operating assets and liabilities:
 

 
 

Accrued interest receivable
18

 
101

Other assets
(114
)
 
1,899

Accrued expenses and other liabilities
541

 
3,762

Net cash provided by operating activities
3,674

 
9,713

 
 
 
 
Cash flows from investing activities:
 

 
 

Purchases of available for sale securities
(10,306
)
 
(12,297
)
Proceeds from sales of available for sale securities

 
81

Proceeds from maturities of and principal repayments on available for sale securities
7,607

 
12,684

Loan principal collections, net of originations
12,222

 
5,064

Purchases of loans
(11,280
)
 
(443
)
Proceeds from sales of other real estate owned

 
357

Purchases of premises and equipment
(903
)
 
(173
)
Net cash provided by (used in) investing activities
(2,660
)
 
5,273

 
 
 
 

5



SI FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(In Thousands / Unaudited)
 
Three Months Ended
March 31,
 
2015
 
2014
Cash flows from financing activities:
 

 
 

Net increase in deposits
18,934

 
19,534

Net decrease in mortgagors' and investors' escrow accounts
(1,561
)
 
(1,597
)
Proceeds from Federal Home Loan Bank advances
6,000

 
10,000

Repayments of Federal Home Loan Bank advances
(10,280
)
 
(16,396
)
Excess tax benefit from share-based compensation
5

 
3

Cash dividends on common stock
(493
)
 
(368
)
Stock options exercised
20

 
297

Common shares repurchased
(213
)
 
(53
)
Net cash provided by financing activities
12,412

 
11,420

 
 
 
 
 
 
 
 
Net change in cash and cash equivalents
13,426

 
26,406

Cash and cash equivalents at beginning of period
39,251

 
27,321

Cash and cash equivalents at end of period
$
52,677

 
$
53,727

 
 
 
 
Supplemental cash flow information:
 

 
 

Interest paid
$
2,031

 
$
2,075

Income taxes received, net

 
(1,816
)
Transfer of loans to other real estate owned
52

 

Stock options exercised by net-share settlement
2,136

 
19


 See accompanying notes to unaudited interim consolidated financial statements.

6

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 


NOTE 1.  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business
SI Financial Group, Inc. (the “Company”) is the holding company for Savings Institute Bank and Trust Company (the “Bank”). Established in 1842, the Bank is a community-oriented financial institution headquartered in Willimantic, Connecticut. The Bank provides a variety of financial services to individuals, businesses and municipalities through its 26 offices in eastern Connecticut and Rhode Island. Its primary products include savings, checking and certificate of deposit accounts, residential and commercial mortgage loans, commercial business loans and consumer loans.  In addition, wealth management services, which include trust, financial planning, life insurance and investment services, are offered to individuals and businesses through the Bank’s offices. The Company does not conduct any material business other than owning all of the stock of the Bank and making payments on the subordinated debentures held by the Company.

Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, the Bank, and the Bank’s wholly-owned subsidiaries, SI Mortgage Company and SI Realty Company, Inc. All significant intercompany accounts and transactions have been eliminated.

Basis of Financial Statement Presentation
The interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, with the instructions to Form 10-Q and Rule 10.01 of Regulation S-X of the Securities and Exchange Commission and general practices within the banking industry. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been omitted.  Information in the accompanying interim consolidated financial statements and notes to the financial statements of the Company as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 is unaudited. These unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited financial statements of the Company and the accompanying notes for the year ended December 31, 2014 contained in the Company’s Form 10-K.

In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all of the adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial condition, results of operations and cash flows as of and for the periods covered herein. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the operating results for the year ending December 31, 2015 or for any other period.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the balance sheets and reported amounts of revenues and expenses for the periods presented. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, other-than-temporary impairment (“OTTI”) of securities, deferred income taxes and the impairment of long-lived assets.

Reclassifications
Amounts in the Company’s prior year consolidated financial statements are reclassified to conform to the current year presentation.  Such reclassifications have no effect on net income.


7

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

Loans Receivable
Loans receivable are stated at current unpaid principal balances, net of the allowance for loan losses and deferred loan origination fees and costs. Management has the ability and intent to hold its loans receivable for the foreseeable future or until maturity or pay-off.

A loan is impaired when, based on current information and events, it is probable the Company will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan by loan basis for residential and commercial mortgage loans and commercial business loans by either the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not typically identify individual consumer loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring ("TDR") agreement.

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and concessions have been made to the original contractual terms, such as reductions of interest rates or deferral of interest or principal payments due to the borrower’s financial condition, the modification is considered a TDR.

Management considers all nonaccrual loans, with the exception of certain consumer loans, to be impaired. Also, all TDRs are initially classified as impaired.  In most cases, loan payments less than 90 days past due are considered minor collection delays and the related loans are generally not considered impaired.

Allowance for Loan Losses
The allowance for loan losses, a material estimate which could change significantly in the near-term, is established through a provision for loan losses charged to earnings to account for losses that are inherent in the loan portfolio and estimated to occur, and is maintained at a level that management considers adequate to absorb losses in the loan portfolio. Loan losses are charged against the allowance for loan losses when management believes the uncollectibility of the principal loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses when received. In the determination of the allowance for loan losses, management may obtain independent appraisals for significant properties, if necessary.

Management's judgment in determining the adequacy of the allowance is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses is evaluated on a monthly basis by management and is based on the evaluation of the known and inherent risk characteristics and size and composition of the loan portfolio, the assessment of current economic and real estate market conditions, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, historical loan loss experience, the level and trends of nonperforming loans, delinquencies, classified assets and loan charge-offs and evaluations of loans and other relevant factors.

The allowance for loan losses consists of the following key elements:

Specific allowance for identified impaired loans. For loans identified as impaired, an allowance is established when the present value of expected cash flows (or observable market price of the loan or fair value of the collateral if the loan is collateral dependent) of the impaired loan is lower than the carrying value of that loan.

General valuation allowance. The general component represents a valuation allowance on the remainder of the loan portfolio, after excluding impaired loans. For this portion of the allowance, loans are segregated by category and assigned an allowance percentage based on historical loan loss experience

8

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

adjusted for qualitative factors stratified by the following loan segments:  residential one- to four-family, multi-family and commercial real estate, construction, commercial business and consumer. Management uses a rolling average of historical losses based on the time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off and recovery practices; changes in international, national, regional and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments; changes in the nature and volume of the loan portfolio and in the terms of the loans; changes in the experience, ability, and depth of lending management and other relevant staff; changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans; changes in the quality of the loan review system; changes in the underlying collateral for collateral-dependent loans; the existence and effect of any concentrations of credit and changes in the level of such concentrations; the effect of other external factors such as competition and legal and regulatory capital requirements on the level of estimated credit losses in the portfolio.

The qualitative factors are determined based on the following various risk characteristics for each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential – One- to Four-Family – The Bank primarily originates conventional loans with loan-to-value ratios less than 95% and generally originates loans with loan-to-value ratios in excess of 80% only when secured by first liens on owner-occupied one- to four-family residences. Loans with loan-to-value ratios in excess of 80% generally require private mortgage insurance or additional collateral. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality of this segment.

Multi-family and Commercial – Loans in this segment are originated for the purpose of acquiring, developing, improving or refinancing multi-family and commercial real estate where the property is the primary collateral securing the loan, and the income generated from the property is the primary repayment source. The underlying cash flows generated by the properties can be adversely impacted by the economy as evidenced by increased vacancy rates. Payments on loans secured by income-producing properties often depend on the successful operation and management of the properties. Management continually monitors the cash flows of these loans.

Construction – This segment includes loans to individuals, and to a lesser extent builders, to finance the construction of residential dwellings. The Bank also originates construction loans for commercial development projects. Upon the completion of construction, the loan generally converts to a permanent mortgage loan. Credit risk is affected by cost overruns, correct estimates of the sale price of the property, time to sell at an adequate price and market conditions.

Commercial Business – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy and reduced viability of the industry in which the customer operates will have a negative impact on the credit quality in this segment. The Bank also provides loans to investors in the time share industry, which are secured by consumer receivables, and provides loans for capital improvements to condominium associations, which are secured by the assigned rights to levy special assessments to condominium owners.

Consumer – Loans in this segment primarily include home equity lines of credit (representing both first and second liens), indirect automobile loans and, to a lesser extent, loans secured by marketable securities,

9

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

passbook or certificate accounts, motorcycles, automobiles and recreational vehicles, as well as unsecured loans. Consumer loan collections depend on the borrower’s continuing financial stability, and therefore, are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

In computing the allowance for loan losses, we do not assign a general valuation allowance to the Small Business Administration (“SBA”) and United States Department of Agriculture (“USDA”) loans that we purchase as such loans are fully guaranteed. These loans are included in commercial business loans. See Note 4 for details.
 
The majority of the Company's loans are collateralized by real estate located in eastern Connecticut and Rhode Island. To a lesser extent, certain commercial real estate loans are secured by collateral located outside of our primary market area. Accordingly, the collateral value of a substantial portion of the Company's loan portfolio and real estate acquired through foreclosure is susceptible to changes in local market conditions.
 
Although management believes it uses the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and the Company’s results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while management believes it has established the allowance for loan losses in conformity with GAAP, our regulators, in reviewing the loan portfolio, may request us to increase our allowance for loan losses based on judgments different from ours. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for loan losses may not be adequate or increases may be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses would adversely affect the Company’s financial condition and results of operations.

Interest and Fees on Loans
Interest on loans is accrued and included in net interest income based on contractual rates applied to principal amounts outstanding. Accrual of interest is discontinued when loan payments are 90 days or more past due, based on contractual terms, or when, in the judgment of management, collectibility of the loan or loan interest becomes uncertain. Subsequent recognition of income occurs only to the extent payment is received subject to management's assessment of the collectibility of the remaining interest and principal. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectibility of interest and principal is no longer in doubt and the borrower has made regular payments in accordance with the terms of the loan over a period of at least six months. Interest collected on nonaccrual loans is recognized only to the extent cash payments are received, and may be recorded as a reduction to principal if the collectibility of the principal balance of the loan is unlikely.

Loan origination fees, direct loan origination costs and loan purchase premiums are deferred, and the net amount is recognized as an adjustment of the related loan's yield utilizing the interest method over the contractual life of the loan. In addition, discounts related to fair value adjustments for loans receivable acquired in a business combination or asset purchase are accreted into earnings over the contractual term as an adjustment of the loan's yield. The Company periodically evaluates the cash flows expected to be collected for loans acquired with deteriorated credit quality. Changes in the expected cash flows compared to the expected cash flows as of the date of acquisition may impact the accretable yield or result in a charge to the provision for loan losses to the extent of a shortfall.

Common Share Repurchases
The Company is chartered in the state of Maryland. Maryland law does not provide for treasury shares, rather shares repurchased by the Company constitute authorized but unissued shares. GAAP states that accounting for treasury stock shall conform to state law. Therefore, the cost of shares repurchased by the Company has been allocated to common stock, additional paid-in capital and retained earnings balances.

10

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 


Recent Accounting Pronouncements
Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. In January 2014, the Financial Accounting Standards Board ("FASB") issued amended guidance that clarifies when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The amended guidance clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. In addition, the amended guidance requires interim and annual disclosures of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amended guidance may be applied prospectively or through a modified retrospective approach and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. The adoption of the amended guidance did not have a material impact on the Company’s consolidated financial statements.

Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure - In August 2014, the FASB issued amended guidance that addresses the diversity in practice regarding the classification and measurement of foreclosed loans which were part of a government-sponsored loan guarantee program (e.g. HUD, FHA, VA). The amended guidance outlines certain criteria that, if met, the loan (residential or commercial) should be derecognized and a separate other receivable should be recorded upon foreclosure at the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. This amended guidance will be effective for annual reporting periods beginning after December 15, 2014, including interim periods within that reporting period. Early adoption is permitted, provided the entity has adopted Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40):  Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amended guidance should be adopted either prospectively or on a modified retrospective basis. The adoption of the amended guidance did not have a material impact on the Company’s consolidated financial statements.

Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs - In April 2015, the FASB issued guidance, as part of its initiative to reduce complexity in accounting standards, simplifying the presentation of debt issuance costs. The amended guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amended guidance should be applied on a retrospective basis and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. The adoption of the amended guidance is not expected to have a material impact on the Company's consolidated financial statements.

NOTE 2.  EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net income available to common shareholders by the weighted average number of common shares outstanding during the period. Unvested restricted shares are considered outstanding in the computation of basic earnings per share since the shares participate in dividends and the rights to the dividends are non-forfeitable. Diluted earnings per share is computed in a manner similar to basic earnings per share except that the weighted average number of common shares outstanding is increased to include the incremental common shares (as computed using the treasury stock method) that would have been outstanding if all potentially dilutive common stock equivalents were issued during the period. The Company’s

11

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

common stock equivalents relate solely to stock options. Repurchased common shares and unallocated common shares held by the Bank’s ESOP are not deemed outstanding for earnings per share calculations.
 
Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the weighted average market value for the periods presented, and are not considered in diluted earnings per share calculations. The Company had anti-dilutive common shares outstanding of 372,936 and 394,497 for the three months ended March 31, 2015 and 2014, respectively.

The computation of earnings per share is as follows:
 
Three Months Ended
March 31,
 
2015
 
2014
 
(Dollars in Thousands, Except Per Share Amounts)
Net income
$
921

 
$
906

 
 
 
 
Weighted average common shares outstanding:
 

 
 

Basic
12,315,733

 
12,295,225

Effect of dilutive stock options
38,641

 
48,252

Diluted
12,354,374

 
12,343,477

 
 
 
 
Earnings per share:
 

 
 

Basic
$
0.07

 
$
0.07

Diluted
$
0.07

 
$
0.07


NOTE 3.  SECURITIES

Available for sale securities:
The amortized cost, gross unrealized gains and losses and fair values of available for sale securities at March 31, 2015 and December 31, 2014 are as follows:
 
 
March 31, 2015
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
 
(In Thousands)
Debt securities:
 
 
 
 
 
 
 
U.S. Government and agency obligations
$
71,996

 
$
607

 
$
(185
)
 
$
72,418

Government-sponsored enterprises
27,372

 
318

 
(14
)
 
27,676

Mortgage-backed securities:(1)
 
 
 

 
 

 
 

Agency - residential
63,770

 
1,031

 
(707
)
 
64,094

Non-agency - residential
248

 
3

 
(4
)
 
247

Corporate debt securities
1,000

 

 

 
1,000

Collateralized debt obligation
1,156

 

 
(18
)
 
1,138

Obligations of state and political subdivisions
3,032

 
180

 

 
3,212

Tax-exempt securities
6,556

 
155

 

 
6,711

Total available for sale securities
$
175,130

 
$
2,294

 
$
(928
)
 
$
176,496

 
 
 
 
 
 
 
 
 
(1) Agency securities refer to debt obligations issued or guaranteed by government corporations or government-sponsored enterprises (“GSEs”).  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by any of the GSEs or the U.S. Government.

12

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

 
 
December 31, 2014
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
 
(In Thousands)
Debt securities:
 
 
 
 
 
 
 
U.S. Government and agency obligations
$
66,232

 
$
385

 
$
(226
)
 
$
66,391

Government-sponsored enterprises
27,435

 
120

 
(67
)
 
27,488

Mortgage-backed securities:(1)
 
 
 
 
 
 
 

Agency - residential
67,008

 
907

 
(1,065
)
 
66,850

Non-agency - residential
254

 
3

 
(4
)
 
253

Corporate debt securities
1,000

 

 

 
1,000

Collateralized debt obligation
1,188

 

 
(7
)
 
1,181

Obligations of state and political subdivisions
3,039

 
167

 
(6
)
 
3,200

Tax-exempt securities
6,583

 
97

 
(3
)
 
6,677

Total available for sale securities
$
172,739

 
$
1,679

 
$
(1,378
)
 
$
173,040

 
 
 
 
 
 
 
 
 
(1) Agency securities refer to debt obligations issued or guaranteed by government corporations or GSEs.  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by any of the GSEs or the U.S. Government.

The amortized cost and fair value of debt securities by contractual maturities at March 31, 2015 are presented below. Maturities are based on the final contractual payment dates and do not reflect the impact of potential prepayments or early redemptions. Because mortgage-backed securities ("MBS") are not due at a single maturity date, they are not included in the maturity categories in the following maturity summary.
 
 
Amortized
Cost
 
Fair
Value
 
(In Thousands)
Within 1 year
$
2,540

 
$
2,548

After 1 but within 5 years
48,537

 
49,053

After 5 but within 10 years
15,146

 
15,350

After 10 years
44,889

 
45,204

 
111,112

 
112,155

Mortgage-backed securities
64,018

 
64,341

Total debt securities
$
175,130

 
$
176,496


The following is a summary of realized gains and losses on the sales of securities for the three months ended March 31, 2015 and 2014:
 
Three Months Ended
March 31,
 
2015
 
2014
 
(In Thousands)
Gross gains on sales
$

 
$
35

Gross losses on sales

 

Net gain on sales of securities
$

 
$
35


Proceeds from the sale of available for sale securities were $81,000 for the three months ended March 31, 2014. There were no sales of available for sale securities for the three months ended March 31, 2015.


13

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

The following tables present information pertaining to securities with gross unrealized losses at March 31, 2015 and December 31, 2014, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position.
 
 
Less Than 12 Months
 
12 Months Or More
 
Total
March 31, 2015
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
(In Thousands)
U.S. Government and agency obligations
$
9,147

 
$
32

 
$
13,556

 
$
153

 
$
22,703

 
$
185

Government sponsored enterprises
997

 
1

 
3,026

 
13

 
4,023

 
14

Mortgage-backed securities:
 

 
 

 
 

 
 

 
 

 
 

Agency - residential
1,662

 
1

 
31,596

 
706

 
33,258

 
707

Non-agency - residential

 

 
123

 
4

 
123

 
4

Collateralized debt obligation
1,138

 
18

 

 

 
1,138

 
18

Total
$
12,944

 
$
52

 
$
48,301

 
$
876

 
$
61,245

 
$
928


 
Less Than 12 Months
 
12 Months Or More
 
Total
December 31, 2014
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
(In Thousands)
U.S. Government and agency obligations
$
9,273

 
$
15

 
$
16,655

 
$
211

 
$
25,928

 
$
226

Government-sponsored enterprises
6,974

 
4

 
3,973

 
63

 
10,947

 
67

Mortgage-backed securities:
 

 
 

 
 

 
 

 
 

 
 

Agency - residential
4,251

 
122

 
32,127

 
943

 
36,378

 
1,065

Non-agency - residential

 

 
127

 
4

 
127

 
4

Collateralized debt obligation
1,181

 
7

 

 

 
1,181

 
7

Obligations of state and political subdivisions

 

 
668

 
6

 
668

 
6

Tax-exempt securities
1,141

 
3

 

 

 
1,141

 
3

Total
$
22,820

 
$
151

 
$
53,550

 
$
1,227

 
$
76,370

 
$
1,378


At March 31, 2015, twenty-seven debt securities with gross unrealized losses had aggregate depreciation of approximately 1.49% of the Company’s amortized cost basis. The majority of the unrealized losses are related to the Company’s agency MBS. There were no investments deemed other-than-temporarily impaired for the three months ended March 31, 2015 or 2014. The following summarizes, by security type, the basis for management’s determination during the preparation of the financial statements that the applicable investments within the Company’s securities portfolio were not other-than-temporarily impaired at March 31, 2015.

U.S. Government and Agency Obligations. The unrealized losses on the Company’s U.S. Government and agency obligations related primarily to a widening of the rate spread to comparable treasury securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell the securities before their anticipated recovery, which may be at maturity, the Company did not consider these securities to be other-than-temporarily impaired at March 31, 2015.

Government Sponsored Enterprises. The unrealized losses on the Company's government sponsored enterprises were also caused by interest rate movement. The contractual cash flows of these investments are guaranteed by a government sponsored agency. Accordingly, it is expected that the securities would not be settled at a price less

14

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

than the amortized cost of our investment. As a result of (1) the decline in market value being attributable to changes in interest rates and not credit quality, (2) the Company's position that it does not intend to sell these securities and (3) it is not more likely than not that the Company will be required to sell the securities before their anticipated recovery, which may be at maturity, the Company did not consider these securities to be other-than-temporarily impaired at March 31, 2015.

Mortgage-backed Securities - Agency - Residential. The unrealized losses on the Company’s agency–residential mortgage-backed securities were caused by increases in the rate spread to comparable treasury securities. The Company does not expect these securities to settle at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before the recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired at March 31, 2015.

Mortgage-backed Securities - Non-agency - Residential. The unrealized losses on the Company's non-agency - residential mortgage-backed securities relate to one investment which has been evaluated by management and no potential credit losses were identified. Because the Company does not intend to sell this security and it is not more likely than not that the Company will be required to sell this security before the recovery of its amortized cost basis, which may be maturity, the Company did not consider this investment to be other-than-temporarily impaired at March 31, 2015.
 
Collateralized Debt Obligations. The unrealized losses on the Company's collateralized debt obligations relate to one investment in a pooled trust preferred security ("PTPS"). The PTPS market has stabilized at depressed market values as a result of market saturation. Transactions for PTPS have been limited and have occurred primarily as a result of distressed or forced liquidation sales. The securities were widely held by hedge funds and European banks and used to offset interest rate exposure tied to LIBOR. As positions unwound, an excess supply of these securities have saturated the market.

Management evaluated current credit ratings, credit support and stress testing for future defaults related to the Company's PTPS. Management also reviewed analytics provided by the trustee and independent OTTI reviews and associated cash flow analyses performed by an independent third party. The unrealized losses on the Company's PTPS investment were caused by a lack of liquidity, credit downgrades and decreasing credit support. The increased number of bank and insurance company failures has decreased the level of credit support for this investment. A number of lower tranches have foregone payments or have received payment in kind through increased principal allocations. However, the number of deferring securities has been decreasing and a number of reinstatements have occurred recently. The Company's PTPS was upgraded to investment grade and based on its senior credit profile, management does not believe this investment will suffer from any further credit-related losses. Because the Company does not intend to sell the investment and it is not more likely than not the Company will be required to sell the investment before recovery of its amortized cost basis, which may be at maturity, the Company did not record impairment losses as of March 31, 2015.



15

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

NOTE 4.  LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loan Portfolio
The composition of the Company’s loan portfolio at March 31, 2015 and December 31, 2014 is as follows:
 
 
 
March 31, 2015
 
December 31, 2014
 
 
(In Thousands)
Real estate loans:
 
 
 
Residential - 1 to 4 family
$
430,676

 
$
430,575

Multi-family and commercial
295,029

 
298,320

Construction
15,395

 
13,579

Total real estate loans
741,100

 
742,474

 
 
 
 
 
Commercial business loans:
 

 
 

SBA and USDA guaranteed
115,892

 
118,466

Time share
46,452

 
45,669

Condominium association
22,709

 
21,386

Other
67,590

 
66,446

Total commercial business loans
252,643

 
251,967

 
 
 
 
 
Consumer loans:
 

 
 

Home equity
51,059

 
51,093

Indirect automobile
3,192

 
3,692

Other
1,691

 
1,864

Total consumer loans
55,942

 
56,649

 
 
 
 
 
Total loans
1,049,685

 
1,051,090

 
 
 
 
 
Deferred loan origination costs, net of fees
1,558

 
1,571

Allowance for loan losses
(8,083
)
 
(7,797
)
Loans receivable, net
$
1,043,160

 
$
1,044,864


The Company purchased commercial business loans totaling $11.3 million during the three months months ended March 31, 2015. For the twelve months ended December 31, 2014, the Company purchased commercial business loans totaling $59.9 million.


16

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

Allowance for Loan Losses
Changes in the allowance for loan losses for the three months ended March 31, 2015 and 2014 are as follows:
Three Months Ended
March 31, 2015
Residential -
1 to 4 Family
 
Multi-family
and Commercial
 
Construction
 
Commercial
Business
 
Consumer
 
Total
 
(In Thousands)
Balance at beginning of period
$
955

 
$
3,607

 
$
254

 
$
2,382

 
$
599

 
$
7,797

Provision for loan losses
24

 
59

 
38

 
209

 
5

 
335

Loans charged-off
(35
)
 
(20
)
 

 
(25
)
 
(1
)
 
(81
)
Recoveries of loans previously charged-off
32

 

 

 

 

 
32

Balance at end of period
$
976

 
$
3,646

 
$
292

 
$
2,566

 
$
603

 
$
8,083

 
 
 
 
 
 
 
 
 
 
 
 

Three Months Ended
March 31, 2014
Residential -
1 to 4 Family
 
Multi-family
and Commercial
 
Construction
 
Commercial
Business
 
Consumer
 
Total
 
(In Thousands)
Balance at beginning of period
$
975

 
$
3,395

 
$
169

 
$
1,875

 
$
502

 
$
6,916

Provision for loan losses
33

 
207

 
15

 
130

 
45

 
430

Loans charged-off
(74
)
 

 

 
(13
)
 
(29
)
 
(116
)
Recoveries of loans previously charged-off
14

 

 

 
3

 
5

 
22

Balance at end of period
$
948

 
$
3,602

 
$
184

 
$
1,995

 
$
523

 
$
7,252

 
 
 
 
 
 
 
 
 
 
 
 



17

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

Further information pertaining to the allowance for loan losses at March 31, 2015 and December 31, 2014 is as follows:
March 31, 2015
Residential -
1 to 4 Family
 
Multi-family
and Commercial
 
Construction
 
Commercial
Business
 
Consumer
 
Total
 
(In Thousands)
Allowance for loans individually evaluated and deemed to be impaired
$
279

 
$
108

 
$

 
$
137

 
$

 
$
524

Allowance for loans individually or collectively evaluated and not deemed to be impaired
697

 
3,538

 
292

 
2,429

 
603

 
7,559

Allowance for loans acquired with deteriorated credit quality

 

 

 

 

 

Total loan loss allowance
$
976

 
$
3,646

 
$
292

 
$
2,566

 
$
603

 
$
8,083

 
 
 
 
 
 
 
 
 
 
 
 
Loans individually evaluated and deemed to be impaired
$
5,092

 
$
2,053

 
$

 
$
742

 
$
24

 
$
7,911

Loans individually or collectively evaluated and not deemed to be impaired
425,214

 
289,294

 
15,395

 
251,552

 
55,918

 
1,037,373

Amount of loans acquired with deteriorated credit quality
370

 
3,682

 

 
349

 

 
4,401

Total loans
$
430,676

 
$
295,029

 
$
15,395

 
$
252,643

 
$
55,942

 
$
1,049,685

 
December 31, 2014
Residential -
1 to 4 Family
 
Multi-family
and Commercial
 
Construction
 
Commercial
Business
 
Consumer
 
Total
 
(In Thousands)
Allowance for loans individually evaluated and deemed to be impaired
$
287

 
$
52

 
$

 
$
20

 
$

 
$
359

Allowance for loans individually or collectively evaluated and not deemed to be impaired
668

 
3,555

 
254

 
2,362

 
599

 
7,438

Allowance for loans acquired with deteriorated credit quality

 

 

 

 

 

Total loan loss allowance
$
955

 
$
3,607

 
$
254

 
$
2,382

 
$
599

 
$
7,797

 
 
 
 
 
 
 
 
 
 
 
 
Loans individually evaluated and deemed to be impaired
$
5,318

 
$
1,872

 
$

 
$
470

 
$

 
$
7,660

Loans individually or collectively evaluated and not deemed to be impaired
424,885

 
292,215

 
13,579

 
251,140

 
56,649

 
1,038,468

Amount of loans acquired with deteriorated credit quality
372

 
4,233

 

 
357

 

 
4,962

Total loans
$
430,575

 
$
298,320

 
$
13,579

 
$
251,967

 
$
56,649

 
$
1,051,090



18

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

Past Due Loans
The following represents an aging of loans at March 31, 2015 and December 31, 2014:
March 31, 2015
30-59
Days
Past Due
 
60-89
Days
Past Due
 
90 Days or More
Past Due
 
Total 30
Days or More
Past Due
 
Current
 
Total
Loans
 
(In Thousands)
Real Estate:
 

 
 

 
 
 
 
 
 
 
 
Residential - 1 to 4 family
$
4,375

 
$
477

 
$
1,210

 
$
6,062

 
$
424,614

 
$
430,676

Multi-family and commercial
4,338

 
241

 
721

 
5,300

 
289,729

 
295,029

Construction

 

 

 

 
15,395

 
15,395

Commercial Business:
 

 
 

 
 

 
 

 
 

 
 

SBA and USDA guaranteed
1,726

 
899

 

 
2,625

 
113,267

 
115,892

Time share

 

 

 

 
46,452

 
46,452

Condominium association

 

 

 

 
22,709

 
22,709

Other
300

 
171

 
246

 
717

 
66,873

 
67,590

Consumer:
 

 
 

 
 

 
 

 
 

 
 

Home equity
134

 
43

 
23

 
200

 
50,859

 
51,059

Indirect automobile
29

 

 

 
29

 
3,163

 
3,192

Other
2

 

 

 
2

 
1,689

 
1,691

Total
$
10,904

 
$
1,831

 
$
2,200

 
$
14,935

 
$
1,034,750

 
$
1,049,685


December 31, 2014
30-59
Days
Past Due
 
60-89
Days
Past Due
 
90 Days or More
Past Due
 
Total 30
Days or More
Past Due
 
Current
 
Total
Loans
 
Past Due 90 Days or More and Accruing
 
(In Thousands)
 
 
Real Estate:
 

 
 

 
 
 
 
 
 
 
 
 
 
Residential - 1 to 4 family
$
4,194

 
$
258

 
$
1,602

 
$
6,054

 
$
424,521

 
$
430,575

 
$

Multi-family and commercial
768

 
794

 
775

 
2,337

 
295,983

 
298,320

 

Construction

 

 

 

 
13,579

 
13,579

 

Commercial Business:
 

 
 

 
 

 
 

 
 

 
 

 
 
SBA and USDA guaranteed
1,536

 

 
459

 
1,995

 
116,471

 
118,466

 
459

Time share

 

 

 

 
45,669

 
45,669

 

Condominium association

 

 

 

 
21,386

 
21,386

 

Other
50

 

 
446

 
496

 
65,950

 
66,446

 

Consumer:
 

 
 

 
 

 
 

 
 

 
 

 
 
Home equity
20

 
158

 
23

 
201

 
50,892

 
51,093

 

Indirect automobile
103

 
10

 

 
113

 
3,579

 
3,692

 

Other

 

 

 

 
1,864

 
1,864

 

Total
$
6,671

 
$
1,220

 
$
3,305

 
$
11,196

 
$
1,039,894

 
$
1,051,090

 
$
459

     
The Company did not have any loans that were past due 90 days or more and still accruing interest at March 31, 2015.


19

Table of Contents
SI FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 AND DECEMBER 31, 2014

 
 
 
 
 
 

Impaired and Nonaccrual Loans
The following is a summary of impaired loans and nonaccrual loans at March 31, 2015 and December 31, 2014:
 
Impaired Loans(1)
 
 
March 31, 2015
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Nonaccrual
Loans
 
(In Thousands)
Impaired loans without valuation allowance:
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
Residential - 1 to 4 family
$
3,200

 
$
3,200

 
$

 
$
2,713

Multi-family and commercial
4,393

 
4,590

 

 
899

Commercial business - Other
643

 
643

 

 
245

Consumer - Home equity
24

 
24

 

 
24

Total impaired loans without valuation allowance
8,260

 
8,457

 

 
3,881

 
 
 
 
 
 
 
 
Impaired loans with valuation allowance:
 

 
 

 
 

 
 

Real Estate:
 
 
 
 
 
 
 
Residential - 1 to 4 family
2,262

 
2,290

 
279

 
241

Multi-family and commercial
1,342

 
1,452

 
108

 
190

Commercial business - Other
448

 
448

 
137

 
448

Total impaired loans with valuation allowance
4,052

 
4,190

 
524

 
879

Total impaired loans