Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. TF FINANCIAL CORP (921051) 10-Q published on Aug 14, 2014 at 1:30 pm
Reporting Period: Jun 29, 2014
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments also require enhanced disclosures. The accounting changes in this update are effective for the first interim or annual period beginning after December 15, 2014. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application is prohibited. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The disclosures are not required to be presented for comparative periods before the effective date. This update is not expected to have a significant impact on the Company’s financial statements.
In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This update is not expected to have a significant impact on the Company’s financial statements.
Subsequent to June 30, 2014 and pursuant to the requirements contained in the Merger Agreement referred to in Note 13, the Company’s board of directors adopted resolutions which provided to freeze the status of the Plan effective October 15, 2014 (“the freeze date”). Accordingly, no additional participants will enter the Plan after October 15, 2014; no additional years of credited service for benefit accrual purposes will be earned after the freeze date under the Plan; and compensation earned by participants after the freeze date will not be taken into account under the Plan.
A curtailment charge of $2.1 million is estimated to increase the net periodic benefit cost by an increase to AOCI which will serve to eliminate prior service costs and certain losses recognized in AOCI. In addition, for purposes of determining the projected benefit obligation, AOCI is estimated to increase by a pre-tax adjustment of $1.1 million related to the reduction of the projected benefit obligation. The Company will recognize the appropriate effects of the curtailment charge and the reduced benefit obligations in accumulated other comprehensive income net of tax during the third quarter of 2014.
Noninterest Income. Total noninterest income was $1.5 million for the first six months of 2014 compared with $3.3 million for the same period in 2013. The decrease was mainly the result of income from the benefits paid on the bank owned life insurance policies totaling $934,000 during the second quarter of 2013 due to the death of two insured individuals. In addition, gain related to an eminent domain matter affecting a parcel of Company property totaled $417,000 in 2013, whereas there was no such gain in 2014. Gain on sale of loans in the secondary market decreased by $356,000 when comparing the first six months of 2014 and the same period in 2013 due to a decrease in residential loan activity throughout the Company’s markets. Additionally, fair value adjustments to mortgage servicing rights were $229,000 higher in the first half of 2013 as compared to the same period in 2014. Offsetting this decrease was the gain on security sales totaling $17,000 during the six months ended June 30, 2014 while there were no such sales in the first half of 2013.
Noninterest Expense. Total noninterest expense increased by $1.6 million to $11.7 million for the six months ended June 30, 2014 compared to the same period in 2013. Employee compensation increased by $930,000 in the first six months of 2014, mainly the result of employee costs associated with staffing the five additional branches acquired from Roebling. In addition, the hiring of additional commercial lenders during 2014 contributed to the increase. Occupancy costs increased $330,000 in 2014, largely the result of operating and maintaining the five additional branch offices acquired from Roebling. Additionally, there was an increase of $85,000 in costs incurred related to snow removal during the first half of 2014 over the same period in 2013. Merger-related costs attributable to the announced acquisition of the Company by National Penn Bank totaled $1.1 million during the six months ended June 30, 2014 while merger-related costs attributable to the Company’s acquisition of Roebling totaled $615,000 during the same period of 2013. Foreclosed real estate expense decreased $411,000 in six months ended June 30, 2014 mainly due to a decrease in the holding costs of real estate acquired through foreclosure, resulting from the disposition of such properties during the intervening period.