BCB BANCORP INC - Interim / Quarterly Report 2014

10-Q 1 c454-20140930x10q.htm 10-Q HTML document created with Rivet Software Powered by Crossfire 5.10.188.0 Created on: 11/7/2014 2:46:52 PM 10Q 093014_Taxonomy2014

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2014

☐ 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: 0-50275

BCB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

New Jersey	26-0065262
(State or other jurisdiction of incorporation or organization)	(IRS Employer I.D. No.)
104-110 Avenue C Bayonne, New Jersey	07002
(Address of principal executive offices)	(Zip Code)

(201) 823-0700

(Registrant’s telephone number, including area code)

(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 ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ 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 definition s of “ large accelerated filer ,” “ accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Smaller Reporting Company	☐

Indicate by check mark whether the registrant is a shell company (as defined in R ule 12b-2 of the Exchange Act). ☐ Yes ☒ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 6 , 2014, BCB Bancorp, Inc., had 8, 386,957 shares of common stock, no par value, outstanding.

BCB BANCORP INC. AND SUBSIDIARIES

INDEX

	Page
PART I. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition as of September 30, 2014 (unaudited) and December 31, 2013	1
Consolidated Statements of Income for the three and nine months ended September 30, 2014 and 2013 (unaudited)	2
Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2014 and 2013 (unaudited)	3
Consolidated Statement of Changes in Stockholders’ Equity for the nine months ended September 30, 2014 (unaudited)	4
Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013 (unaudited)	5
Notes to Unaudited Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3. Quantitative and Qualitative Disclosures about Market Risk	47
Item 4. Controls and Procedures	48
PART II. OTHER INFORMATION	49
Item 1. Legal Proceedings	49
Item 1A. Risk Factors	49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3. Defaults Upon Senior Securities	50
Item 4. Mine Safety Disclosures	50
Item 5. Other Information	50
Item 6. Exhibits
	50
Signatures Page
	51

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

( I n T housands, E xcept S hare and Per Share Data, Unaudited )

	September 30,	December 31,
	2014	2013
ASSETS
Cash and amounts due from depository institutions	$ 9,785	$ 10,847
Interest-earning deposits	15,340	18,997
Total cash and cash equivalents	25,125	29,844
Interest-earning time deposits	990	990
Securities available for sale	9,674	1,104
Securities held to maturity, fair value $0 and $115,158,
respectively	-	114,216
Loans held for sale	3,313	1,663
Loans receivable, net of allowance for loan losses of $15,393 and
$14,342, respectively	1,145,014	1,020,344
Federal Home Loan Bank of New York stock, at cost	6,918	7,840
Premises and equipment, net	13,681	13,853
Accrued interest receivable	4,272	4,157
Other real estate owned	3,911	2,227
Deferred income taxes	7,789	9,942
Other assets	9,133	1,779
Total Assets	$ 1,229,820	$ 1,207,959
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Non-interest bearing deposits	$ 121,202	$ 107,613
Interest bearing deposits	878,168	861,057
Total deposits	999,370	968,670
Short-term Debt	7,000	18,000
Long-term Debt	110,000	110,000
Subordinated Debentures	4,124	4,124
Other Liabilities	6,613	7,105
Total Liabilities	1,127,107	1,107,899
STOCKHOLDERS' EQUITY
Preferred stock: $0.01 par value, 10,000,000 shares authorized,
issued and outstanding 1,343 shares of series A and B 6% noncumulative perpetual
preferred stock (liquidation value $10,000 per share)	-	-
Additional paid-in capital preferred stock	13,326	12,556
Common stock; $0.064 par value; 20,000,000 shares authorized, issued 10,917,220 and
10,861,129 at September 30, 2014 and December 31, 2013, respectively, 8,386,957 shares and
8,331,750 shares, respectively outstanding	698	694
Additional paid-in capital common stock	92,589	92,064
Retained earnings	25,722	23,710
Accumulated other comprehensive (loss) income	(517)	129
Treasury stock, at cost, 2,530,263 and 2,529,379 shares, respectively	(29,105)	(29,093)
Total Stockholders' Equity	102,713	100,060
Total Liabilities and Stockholders' Equity	$ 1,229,820	$ 1,207,959

See accompanying notes to unaudited consolidated financial statements.

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Income

(In Thousands, except for per share amounts, Unaudited)

	Three Months Ended September 30, — 2014	2013	Nine Months Ended September 30, — 2014	2013
Interest income:
Loans, including fees	$ 15,286	$ 13,341	$ 42,848	$ 39,580
Investments, taxable	309	872	2,102	2,861
Investments, non-taxable	3	12	28	37
Other interest-earning assets	12	14	36	38
Total interest income	15,610	14,239	45,014	42,516
Interest expense:
Deposits:
Demand	124	114	372	324
Savings and club	92	93	274	270
Certificates of deposit	1,066	1,192	3,207	3,633
	1,282	1,399	3,853	4,227
Borrowings	1,274	1,250	3,799	3,714
Total interest expense	2,556	2,649	7,652	7,941
Net interest income	13,054	11,590	37,362	34,575
Provision for loan losses	650	450	2,100	2,250
Net interest income after provision for loan losses	12,404	11,140	35,262	32,325
Non-interest income:
Fees and service charges	627	444	1,659	1,347
Gain on sales of loans	360	263	1,367	609
Loss on bulk sale of impaired loans held in portfolio	(4,012)	-	(4,012)	-
Gain on sales of securities held to maturity	2,249	18	2,288	378
Gain on sale of securities available for sale	-	-	1,223	-
Other	26	38	63	94
Total non-interest income (loss)	(750)	763	2,588	2,428
Non-interest expense:
Salaries and employee benefits	5,274	4,024	14,777	11,210
Occupancy expense of premises	1,066	933	3,010	2,612
Equipment	1,474	1,397	4,172	3,845
Professional fees	520	693	1,543	1,720
Director fees	182	168	544	504
Regulatory assessments	301	286	835	829
Advertising	278	149	718	429
Other real estate owned, net	61	99	101	(17)
Other	770	584	2,248	1,693
Total non-interest expense	9,926	8,333	27,948	22,825
Income before income tax provision	1,728	3,570	9,902	11,928
Income tax provision	640	1,428	3,949	4,823
Net Income	$ 1,088	$ 2,142	$ 5,953	$ 7,105
Preferred stock dividends	202	130	599	390
Net Income available to common stockholders	$ 886	$ 2,012	$ 5,354	$ 6,715
Net Income per common share-basic and diluted
Basic	$ 0.11	$ 0.24	$ 0.64	$ 0.80
Diluted	$ 0.11	$ 0.24	$ 0.64	$ 0.80
Weighted average number of common shares outstanding
Basic	8,380	8,365	8,358	8,419
Diluted	8,413	8,368	8,399	8,423

See accompanying notes to unaudited consolidated financial statements.

BCB BANCORP INC. AND SUBSIDIARIES Consoli dated Statements of Comprehensive Income (In Thousands, Unaudit e d)

	Three Months Ended September 30, — 2014	2013	Nine Months Ended September 30, — 2014	2013
Net Income	$ 1,088	$ 2,142	$ 5,953	$ 7,105
Other comprehensive income, net of tax:
Unrealized gains on available-for-sale securities:
Net loss on securities reclassified from held to maturity to available for sale (a)	(58)	-	(58)	-
Unrealized holding gains arising during the period (b)	8	75	133	324
Less: reclassification adjustment for gains included in net income (c)	-	-	(721)	-
Benefit plans (d)	-	11	-	33
Other comprehensive income	(50)	86	(646)	357
Comprehensive income	$ 1,038	$ 2,228	$ 5,307	$ 7,462

(a) Represents the unrealized loss on the reclassification of held to maturity to available for sale securities. Represents an unrealized loss of $97,000 less deferred taxes of $39,000.

(b) Represents the net change of the unrealized gain on available-for-sale securities. Represents unrealized gains of $ 12 ,000 , $ 128 ,000 , $ 224 ,000 , and $ 549 ,000 , respectively, less deferred taxes of $ 4 ,000 , $ 53 ,000 , $ 91 , 000 and $ 225 ,000 , respectively. The Statements of Income line items impacted by these amounts are gains on sales of securities and income tax provision.

(c) Represents the sale of available-for-sale securities during the three months ended June 30, 2014, for which unrealized gains were previously reported totaling $1.2 million, less deferred taxes of $498,000 . No sales of available-for-sale securities occurred during the three months ended September 30, 2014 and 2013 or for the nine months ended September 30, 2013.

(d) Represents the net change of unrecognized loss included in net periodic pension cost. Represents a gross change of $0 , $18,000 , $0 , and ($54,000) , respectively, less deferred taxes of $0 , $7,000 , $0 , and ( $ 21 ,000 ) , respectively. The Statements of Income line items impacted by these amounts are salaries and employee be nefits and income tax provision .

See accompanying notes to unaudited consolidated financial statements.

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholders ’ Equity

(In Thousands, except share and per share data, Unaudited)

	Preferred Stock	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Total
Beginning Balance at January 1, 2014	$ —	$ 694	$ 104,620	$ 23,710	$ (29,093)	$ 129	$ 100,060
Proceeds from issuance of Series B preferred stock	—	—	770	—	—	—	770
Exercise of Stock Options (127,539 shares)	—	4	345	—	—	—	349
Stock-based compensation expense	—	—	40	—	—	—	40
Treasury Stock Purchases (884 shares)	—	—	—	—	(12)	—	(12)
Dividends payable on Series A and Series B 6% noncumulative perpetual preferred stock	—	—	—	(599)	—	—	(599)
Cash dividends on common stock ($0.12 per share in February and $0.14 per share in May and August) declared	—	—	—	(3,293)	—	—	(3,293)
Dividend Reinvestment Plan	—	—	49	(49)	—	—	—
Stock Purchase Plan	—	—	91	—	—	—	91
Net income	—	—	—	5,953	—	—	5,953
					—
Other comprehensive income	—	—	—	—	—	(646)	(646)
Ending Balance at September 30, 2014	$ —	$ 698	$ 105,915	$ 25,722	$ (29,105)	$ (517)	$ 102,713

See accompanying notes to unaudited consolidated financial statements.

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In Thousands, Unaudited)

	Nine Months Ended September 30, — 2014	2013
Cash Flows from Operating Activities :
Net Income	$ 5,953	$ 7,105
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of premises and equipment	1,101	1,009
Amortization and accretion, net	(687)	650
Provision for loan losses	2,100	2,250
Deferred income tax	2,599	15
Loans originated for sale	(18,913)	(16,955)
Proceeds from sale of loans	18,170	14,964
Gain on sales of loans	(1,367)	(609)
Gain on sales of other real estate owned	-	(90)
Fair value adjustment of other real estate owned	-	(110)
Gain on sales of securities held to maturity	(2,288)	(378)
Gain on sales of securities available for sale	(1,223)	-
Loss on bulk sale of impaired loans held in portfolio	4,012	-
Stock compensation expense	40	54
(Increase) decrease in interest receivable	(115)	14
(Increase) decrease in other assets	(7,354)	4,251
Increase (decrease) in accrued interest payable	10	(386)
(Decrease) in other liabilities	(502)	(476)
Net Cash Provided by Operating Activities	1,536	11,308
Cash flows from investing activities:
Proceeds from repayments and calls on securities held to maturity	10,272	38,954
Proceeds from call of securities available for sale	34	1,000
Purchases of securities held to maturity	(3,034)	(3,590)
Proceeds from sales of securities held to maturity	99,246	9,493
Proceeds from sales of securities available for sale	1,320	-
Proceeds from sales of other real estate owned	200	3,092
Proceeds from bulk sale of impaired loans held in portfolio	10,355	-
Proceeds from sale of participation loans held in portfolio	-	24,224
Participation loans sold held in portfolio	-	(24,224)
Purchases of loans	-	(4,991)
Net (Increase) in loans receivable	(141,854)	(61,480)
Additions to premises and equipment	(722)	(1,559)
Purchase/Redemption of Federal Home Loan Bank of New York stock, net	922	668
Net Cash (Used In) Investing Activities	(23,261)	(18,413)
Cash flows from financing activities:
Net increase in deposits	30,700	27,181
Net change in short-term debt	(11,000)	(17,000)
Purchases of treasury stock	(12)	(1,895)
Cash dividend paid on common stock	(3,293)	(3,030)
Cash dividend paid on preferred stock	(599)	(260)
Net proceeds from Issuance of common stock	436	-
Net proceeds from Issuance of preferred stock	770	-
Exercise of stock options	4	151
Net Cash Provided by Financing Activities	17,006	5,147
Net (Decrease) In Cash and Cash Equivalents	(4,719)	(1,958)
Cash and Cash Equivalents-Beginning	29,844	34,147
Cash and Cash Equivalents-Ending	$ 25,125	$ 32,189
Supplementary Cash Flow Information:
Cash paid during the year for:
Income taxes	$ 7,750	$ 857
Interest	$ 7,642	$ 8,326
Non-cash items:
Transfer of loans to other real estate owned	$ 2,091	$ 3,010
Loans to facilitate sale of other real estate owned	$ -	$ 650
Reclassification of loans originated for sale to held to maturity	$ 460	$ 2,832

See accompanying notes to unaudited consolidated financial statements.

BCB Bancorp Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of BCB Bancorp, Inc. (the “Company”) and the Company’s wholly owned subsidiaries, BCB Community Bank (the “Bank”), BCB Holding Company Investment Company, BCB New York Asset Management, Inc. and Pamrapo Service Corporation. The Company’s business is conducted principally through the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and, therefore, do not necessarily include all information that would be included in audited financial statements. The information furnished reflects all adjustments that are, in the opinion of management, necessary for a fair presentation of consolidated financial condition and results of operations. All such adjustments are of a normal recurring nature. These results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 201 4 or any other future period. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statement of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 201 3 , which are included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission. In preparing these consolidated financial statements, BCB Bancorp, Inc., evaluated the events and transactions that occurred between December 31, 2013 , and the date these consolidated financial statements were issued.

New Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) has issued ASU No. 2014-04, Receivable-Troubled Debt Restructurings by Creditors (Sub-Topic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this ASU are intended to clarify 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 should be derecognized and the real estate recognized. They clarify 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. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2014. Early adoption is permitted. Retrospective application is permitted. The Company does not believe this pronouncement, when adopted, will have a material impact on the Company’s results of operations or financial position.

The Financial Accounting Standards Board (“FASB”) has issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of ASU 2013-11 did not have a significant impact on the Company’s financial condition, results of operations, or cash flows.

In June 2014, The Financial Accounting Standards Board (“FASB”) has issued ASU 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update require two accounting changes. First, repurchase-to-maturity transactions will be accounted for as secured borrowing transactions on the balance sheet, rather than sales. Second, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with (or in contemplation of) a repurchase agreement with the same counterparty, which also will generally result in secured borrowing accounting for the repurchase agreement. The ASU introduces new disclosures to increase transparency about the types of collateral pledged for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The ASU also requires a transferor to disclose information about transactions accounted for as a sale in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets through an agreement with the transferee.

For public business entities, the accounting changes and disclosure for certain transactions accounted for as a sale are effective for the first interim or annual period beginning after December 15, 2014. The disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. All entities are 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 for a public business entity is prohibited. The disclosures are not required to be presented for comparative periods before the effective date. The Company does not believe the adoption of this update will have a material impact of the Company’s con solidated financial statements.

In August 2014, The Financial Accounting Standards Board (“FASB”) has issued ASU 2014-14, Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update address a practice issue related to the classification of certain foreclosed residential and nonresidential mortgage loans that are either fully or partially guaranteed under government programs. Specifically, creditors should reclassify loans that meet certain conditions to “other receivables” upon foreclosure, rather than reclassifying them to other real estate owned (OREO). The separate other receivable recorded upon foreclosure is to be measured based on the amount of the loan balance (principal and interest) the creditor expects to recover from the guarantor.

The ASU is effective for public business entities for annual periods and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted, if the entity has already adopted ASU 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. Transition methods include a prospective method and a modified retrospective method; however, entities must apply the same transition method as elected under ASU 2014-04. The Company does not believe the adoption of this update will have a material impact of the Company’s consolidated financial statements.

Note 2 – Reclassification

Certain amounts as of December 31 , 201 3 and the three and nine month period s ended September 30, 2013 have been reclassified to conform to the current period’s presentation. These changes had no effect on the Company’s results of operations or financial position .

Note 3 – Benefit Plans

The Company assumed, through the merger with Pamrapo Bancorp, Inc., a non-contributory defined benefit pension plan covering all eligible employees of Pamrapo Savings Bank. Effective January 1, 2010, the defined benefit pension plan (“Pension Plan”), was frozen by Pamrapo Savings Bank. All benefits for eligible participants accrued in the “Pension Plan” to the freeze date have been retained. Accordingly, no employees are permitted to commence participation in the Pension Plan and future salary increases and future years of service are not considered when computing an employee’s benefits under the Pension Plan. The Pension Plan is funded in conformity with the funding requirements of applicable government regulations. The Company also acquired through the merger with Pamrapo Bancorp, Inc. a supplemental executive retirement plan (“SERP”) in which certain former employees of Pamrapo Savings Bank are covered. A SERP is an unfunded non-qualified deferred retirement plan. Participants who retire at the age of 65 ( the “Normal Retirement Age”), are entitled to an annual retirement benefit equal to 75% of compensation reduced by their retirement plan annual benefits. Participants retiring before the Normal Retirement Age receive the same benefits reduced by a percentage based on years of service to the Company and the number of years prior to the Normal Retirement Age that participants retire.

Periodic pension and SERP cost, which is recorded as part of salaries and employee benefits expense in our Consolidated Statements of Income, is comprised of the following. (In Thousands):

	Three months ended September 30, — 2014	2013	Nine months ended September 30, — 2014	2013
Pension plan:
Interest cost	$ 100	$ 98	$ 299	$ 294
Expected return on plan assets	(154)	(137)	(462)	(411)
Amortization of unrecognized loss	-	18	-	54
Net periodic pension cost	(54)	(21)	(163)	(63)
SERP plan:
Interest cost	$ 5	$ 4	$ 15	$ 12
Net periodic postretirement cost	$ 5	$ 4	$ 15	$ 12

Note 3 – Benefit Plans (Continued)

The Company, under the plan approved by its shareholders on April 28, 2011 (“2011 Stock Plan”), authorized the issuance of up to 900,000 shares of common stock of BCB Bancorp, Inc. pursuant to grants of stock options. Employees and directors of BCB Bancorp, Inc. and BCB Community Bank are eligible to participate in the 2011 Stock Plan. All stock options will be granted in the form of either "incentive" stock options or "non-qualified" stock options. Incentive stock options have certain tax advantages that must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees are permitted to receive incentive stock options. On March 7, 2014, a grant of 110,000 options was declared for members of the Board of Directors which vest at a rate of 10% per year, over ten years commencing on the first anniversary of the grant date. The exercise price was recorded as of the close of business on March 7, 2014. On January 17, 2013, a grant of 130,000 options was declared for certain members of the Board of D irectors. The exercise price was recorded as of the close o f business on January 17, 2013. During the third quarter of 2013, there were 29,928 stock options granted to one director, which vest ed immediately. The exercise price was recorded as of the close of business on August 7, 2013.

The expense recognized for all option grants is net of estimated forfeitures and is recognized over the awards’ respective requisite service periods. The fair values relating to all options granted are estimated using a Black-Scholes option pricing model. Expected volatilities are based on historical volatility of our stock and other factors, such as implied market volatility using this options expected term. The Company used the mid-point of the original vesting period and original option life to estimate the options’ expected term, which represents the period of time that the options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company recognizes expense for the fair values of these option awards, which have graded vesting, on a straight-line basis over the requisite service period of these awards.

A s ummary of stock option activity follows:

Outstanding at December 31, 2013	Number of Option Shares — 344,128	$ 8.93-18.41	$ 11.09
Options granted	110,000	13.32	13.32
Options exercised	(127,539)	8.93-11.84	11.56
Options forfeited	(42,569)	8.93-29.25	15.03
Options expired	(300)	15.60
Outstanding at September 30, 2014	283,720	$ 8.93-15.65	$ 11.16

As of September 30 , 2014, stock options which are granted and were exercisable totaled 53,220 stock options.

It is Company policy to issue new shares upon share option exercise. Expected future expense relating to the unvested options outstanding as of September 30, 2014 is $ 474,819 ov er a weighted average period of 8.84 years.

Note 4 – Net Income per Common Share

Basic net income per common share is computed by dividing net income less dividends on preferred stock by the weighted average number of shares of common stock outstanding. The diluted net income per common share is computed by adjusting the we ighted average number of shares of common stock outstanding to include the effects of outstanding stock options, if dilutive, us ing the treasury stock method. Dilution is not applicable in periods of net loss. For the three and nine months ended September 30 , 2014 and 2013, the difference in the weighted average number of basic and diluted common shares was due solely to the effects of outstanding stock options. No adjustments to net income were necessary in calculating basic and diluted net i ncome per share. For the three months ended September 30 , 2014 and 2013 , the weighted average number of outstanding options considered to be anti-dilutive were 121,458 , and 324,772 , respectively , and for the nine months ended September 30, 2014 and 2013, the weighted average number of outstanding options considered to be anti-dilutive were 128,125 and 324,772 , respectively.

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:

	For the Three Months Ended September 30,
	2014			2013
	Income	Shares	Per Share	Income	Shares	Per Share
	(Numerator)	(Denominator)	Amount	(Numerator)	(Denominator)	Amount
	(In Thousands, Except per share data)
Net income available to common stockholders	$ 886			$ 2,012
Basic earnings per share-
Income available to
Common stockholders	$ 886	8,380	$ 0.11	$ 2,012	8,365	$ 0.24
Effect of dilutive securities:
Stock options	-	33		-	3
Diluted earnings per share-
Income available to
Common stockholders	$ 886	8,413	$ 0.11	$ 2,012	8,368	$ 0.24

	For the Nine Months Ended September 30,
	2014			2013
	Income	Shares	Per Share	Income	Shares	Per Share
	(Numerator)	(Denominator)	Amount	(Numerator)	(Denominator)	Amount
	(In Thousands, Except per share data)
Net income available to common stockholders	$ 5,354			$ 6,715
Basic earnings per share-
Income available to
Common stockholders	$ 5,354	8,358	$ 0.64	$ 6,715	8,419	$ 0.80
Effect of dilutive securities:
Stock options	-	41		-	4
Diluted earnings per share-
Income available to
Common stockholders	$ 5,354	8,399	$ 0.64	$ 6,715	8,423	$ 0.80

Note 5 – Securities Available for Sale

The following table presents by maturity the amortized cost and gross unrealized gains and losses on securities available for sale as September 30, 2014. There were no mortgage backed securities available for sale at December 31, 201 3.

		Gross	Gross
Amortized		Unrealized	Unrealized
Cost		Gains	Losses	Fair Value
(In Thousands)
Residential mortgage-backed securities:
Due after five years through ten years	3,501	-	(87)	3,414
Due after ten years	6,258	95	(93)	6,260
$	9,759	$ 95	$ (180)	$ 9,674

The following tables present the cost and gross unrealized gains and losses on securitie s available for sale as of September 30 , 2014 and December 31, 201 3 :

	September 30, 2014	Gross	Gross
		Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
	(In Thousands)
Residential Mortgage-Backed Securities (1)	$ 9,759	$ 95	$ (180)	$ 9,674

	December 31, 2013	Gross	Gross
		Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
	(In Thousands)
Equity Securities-Financial Institutions	$ 97	$ 1,007	$ —	$ 1,104
(1) All residential mortgage-backed securities are issued by government-sponsored enterprises.

The unrealized losses, categorized by the length of time of continuous loss position, and fair value of related securities available for sale were as follows :

	Less than 12 Months — Fair	Unrealized	More than 12 Months — Fair	Unrealized	Total — Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
	(In Thousands)
September 30, 2014
Residential mortgage-backed securities	$ 3,374	$ (25)	$ 2,709	$ (155)	$ 6,083	$ (180)
	$ 3,374	$ (25)	$ 2,709	$ (155)	$ 6,083	$ (180)

December 31, 2013 — Residential mortgage-backed securities	$ -	$ -	$ -	$ -	$ -	$ -
Equity securities	-	-	-	-	-	-
	$ -	$ -	$ -	$ -	$ -	$ -

Note 6 – Securities Held to Maturity

The following table presents by maturity the amortized cost and gross unrealized gains and losses on securities held to maturity as of December 31, 201 3 . There were no securities held to maturity at September 30, 2014.

	December 31, 2013	Gross	Gross
	Amortized	Unrealized	Unrealized
	Cost	Gains	Losses	Fair Value
	(In Thousands)
Residential mortgage-backed securities:
Due after one year through five years	$ 998	$ —	$ (2)	$ 996
Due after five years through ten years	3,163	—	(135)	3,028
Due after ten years	108,698	2,239	(1,192)	109,745
	112,859	2,239	(1,329)	113,769
Municipal obligations:
Due after five to ten years	1,357	32	—	1,389
	$ 114,216	$ 2,271	$ (1,329)	$ 115,158

The amortized cost and carrying values shown above are categorized by contractual final maturity. Actual maturities will differ from contractual final maturities due to scheduled monthly payments related to mortgage–backed securities and due to the borrowers having the right to prepay obligations with or without prepayment penalties. As of December 31, 2013, all residential mortgage backed securities held in the portfolio were Government Sponsored Enterprise securities.

In 2013, management decided to sell certain mortgage-backed securities that were issued by the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”). While these securities were classified as held to maturity, with the intent to hold to maturity, ASC 320 (formerly FAS 115) allows sales of securities so designated, provided that a substantial portion (at least 85%) of the principal balance purchased has been amortized prior to the sale. Sales of securities that had been classified as held to maturity, and do not meet any of the safe harbor exemptions under ASC 320, would then require that all remaining securities be transferred to the available for sale category and the Company would be prohibited from using the held to maturity classification for at least a two-year period. In July 2014, the Company transferred all of its remaining held-to-maturity investments to the available-for-sale category. Management determined that it no longer had the positive intent to hold its investment in securities classified as held-to-maturity, and in July 2014 sold $96.9 million of these securities. During the nine months ended September 30, 2014, proceeds from sales of securities previously classified as held to maturity totaled approximately $99.2 million, and resulted in gross gains of approximately $2.8 million, and gross losses of approximately $500,000 . Sales of held to maturity securities that met the 85% threshold totaled approximately $537,000 , and resulted in gross gains of approximately $40,000 , and gross losses of approximately $1,000 during the nine months ended September 30, 2014.

During the nine months ended September 30, 2013, proceeds from sales of securities held to maturity meeting the 85% threshold totaled approximately $9.5 million, and resulted in gross gains of approximately $402,000 , and gross losses of approximately $24,000 . There were no sales of held to maturity securities that did not meet the 85% threshold.

The unrealized losses, categorized by the length of time of continuous loss position, and fair value of related securities held to maturity were as follows:

	Less than 12 Months — Fair	Unrealized	More than 12 Months — Fair	Unrealized	Total — Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
	(In Thousands)
September 30, 2014
Residential mortgage-backed securities	$ -	$ -	$ -	$ -	$ -	$ -
	$ -	$ -	$ -	$ -	$ -	$ -
December 31, 2013
Residential mortgage-backed securities	$ 42,894	$ (1,329)	$ -	$ -	$ 42,894	$ (1,329)
	$ 42,894	$ (1,329)	$ -	$ -	$ 42,894	$ (1,329)

Note 7 - Loans Receivable and Allowance for Loan Losses

The following table presents the recorded investment in loans receivable as of September 30, 2014 and December 31, 201 3 by segment and class:

	September 30, 2014	December 31, 2013
	(In Thousands)
Originated loans:
Residential one-to-four family	$ 117,916	$ 97,581
Commercial and multi-family	669,472	549,918
Construction	64,996	37,307
Commercial business (1)	52,997	52,659
Home equity (2)	29,686	28,660
Consumer	1,576	533
Sub-total	936,643	766,658
Acquired loans recorded at fair value:
Residential one-to-four family	89,437	100,612
Commercial and multi-family	101,599	126,123
Construction	-	200
Commercial business (1)	7,154	10,478
Home equity (2)	24,299	27,313
Consumer	715	919
Sub-total	223,204	265,645
Acquired loans with deteriorated credit:
Residential one-to-four family	1,572	2,141
Commercial and multi-family	1,136	2,081
Construction	-	-
Commercial business (1)	369	371
Home equity (2)	84	90
Consumer	-	-
Sub-total	3,161	4,683
Total Loans	1,163,008	1,036,986
Less:
Deferred loan fees, net	(2,601)	(2,300)
Allowance for loan losses	(15,393)	(14,342)
	(17,994)	(16,642)
Total Loans, net	$ 1,145,014	$ 1,020,344
_____________________________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

Allowance for Loan Losses

Management reviews the adequacy of the allowance on at least a quarterly basis to ensure that the provision for loan losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is adequate based on management’s assessment of probable estimated losses. The Company’s methodology for assessing the adequacy of the allowance for loan losses consists of several key ele ments. These elements include a specific reserve for impaired loans , a general allocated reserve for all remaining loans, and an unallocated portion.

The Company consistently applies the following comprehensive methodology. During the quarterly review of the allowance for loan losses, the Company considers a variety of factors that include:

· General economic conditions.

· Trends in charge-offs.

· Trends and levels of delinquent loans.

· Trends and levels of non-performing loans, including loans over 90 days delinquent.

· Trends in volume and terms of loans.

· Levels of allowance for specific classified loans.

· Credit concentrations.

The methodology includes the segregation of the loan portfolio by loans that are performing and loans that are impaired. Loans which are performing are evaluated collectively by loan class or loan type. The allowance for performing loans is evaluated based on historical loan loss experience, including consideration of peer loss analysis, with an adjustment for qualitative factors including economic conditions in the Company’s market. Impaired loans are loans which are 90 days or more delinquent or troubled debt restructured. These loans are individually evaluated for impairment either by current appraisal or net present value of expected cash flows. Management reviews the overall estimate of this allowance for reasonableness and bases the loan loss provision accordingly.

The portfolio of performing loans is segmented into the following loan classes, where the risk level for each class is analyzed when determining the allowance for these loans:

Residential one-to-four family real estate loans involve certain risks such as interest rate risk and risk of non-repayment. Adjustable-rate residential family real estate loans decrease the interest rate risk to the Company that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying property may be adversely affected by higher interest rates. Repayment risk can additionally be affected by job loss, divorce, illness and personal bankruptcy of the borrower.

Commercial and multi-family real estate lending entails significant additional risks as compared with residential family property lending. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for commercial real estate as well as economic conditions generally.

Construction lending is generally considered to involve a high degree of risk due to the concentration of principal in a limited number of loans and borrowers and the effects of the general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the total cost (including interest charges to completion) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. Additionally, speculative construction loans to a builder are not ordinarily pre-sold and thus pose a greater potential risk to the Bank than construction loans to individuals on their personal residence.

Commercial business lending is generally considered high risk due to the concentration of principal in a limited number of loans and borrowers and the impact changing general economic conditions have on the business. Commercial business loans and lines of credit are primarily secured by inventories and other business assets. In most cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance.

Home equity lending entails certain risks such as interest rate risk and risk of non-repayment. The marketability of the underlying property may be adversely affected by higher interest rates, decreasing the value of collateral securing the loan. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy of the borrower.

Home equity line of credit lending entails securing an equity interest in the borrower’s home. The princip al risk associated with this type of lending is that the marketability of the underlying property may be adversely affected by higher interest rates. Repayment risk can additionally be affected by job loss, divorce, illness and personal bankruptcy of the borrower. This type of lending is often priced on an adjustable rate basis with the rate set at or above a predefined index. Adjustable-rate loans decrease the interest rate risk to the Company that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default.

Consumer loans generally have more credit risk than loans secured by real estate because of the type and nature of the collateral and, in certain cases, the absence of collateral. Consumer loans generally have shorter terms and higher interest rates than other lending. In addition, consumer lending collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely effected by job loss, divorce, illness and personal bankruptcy. In most cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan.

Acquired l oans added to portfolio via our purchase of b anks are recorded at fair value with no carryover of a related allowance for loan losses. Determining the fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

We have acquired loans in two separate acquisitions ( Pamrapo Savings Bank in 2010 ( “Pamrapo” ) and Allegiance Community Bank in 2011 ( “Allegiance”) ) . For each acquisition, we reviewed all acquired loans and considered the following factors as indicators that such an acquired loan had evidence of deterioration in credit quality and was therefore in the scope of Accounting Standards Codification (“ASC”) 310-30:

· Loans that were 90 days or more past due,

· Loans that had an internal risk rating of substandard or worse. Substandard is consistent with regulatory definitions and is defined as having a well defined weakness that jeopardizes liquidation of the loan,

· Loans that were classified as nonaccrual by the acquired bank at the time of acquisition, or,

· Loans that had been previously modified in a troubled debt restructuring.

Any acquired loans that were not individually in the scope of ASC 310-30 because they did not meet the criteria above were accounted for under ASC 310-20 (No nrefundable fees and other costs ) . Charge-offs of the principal amount on acquired loans accounted for under ASC 310-20 would be charged off against the allowance for loan losses.

Acquired loans accounted for under ASC 310-30

We performed a fair market valuation on each of the loans and each loan was recorded at a discount which includes the establishment of an associated “Credit Mark” reducing the carrying value of that loan to its fair value at the time of acquisition. We determined that at least part of the discount on the acquired loans was attributable to credit quality by reference to the valuation model used to estimate the fair value of the loan. The valuation model incorporated lifetime expected credit losses into the loans’ fair valuation in consideration of factors such as evidence of credit deterioration since origination and the amounts of contractually required principal and interest that we did not expect to collect as of the acquisition date. The excess of expected cash flows from acquired loans over the estimated fair value of acquired loans at acquisition is referred to as the accretable discount and is recognized into interest income over the remaining life of the acquired loans using the interest method. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. The nonaccretable discount represents estimated future credit losses expected to be incurred over the life of the acquired loans.

Subsequent decreases to the expected cash flows require us to evaluate the need for an addition to the allowance for loan losses. Subsequent improvements in expected cash flows result in the reversal of a corresponding amount of the nonaccretable discount which we then reclassify as accret a ble discount that is recognized into interest income over the remaining life of the loan using the interest method. Our evaluation of the amount of future cash flows that we expect to collect takes into account actual credit performance of the acquired loans to date and our best estimates for the expected lifetime credit performance of the loans using currently available information. Charge-offs of the principal amount on acquired loans would be first applied to the nonaccretable discount portion of the fair value adjustment. To the extent that we experience a deterioration in credit quality in our expected cash flows subsequent to the acquisition of the loans, an allowance for loan losses would be established based on our estimate of future credit losses over the remaining life of the loans.

In accordance with ASC 310-30, recognition of income is dependent on having a reasonable expectation about the timing and amount of cash flows expected to be collected. We perform such an evaluation on a quarterly basis on our acquired loans individually accounted for under ASC 310-30. Cash flows for acquired loans individually accounted for under ASC 310-30 are estimated on a quarterly basis. Based on this evaluation, a determination is made as to whether or not we have a reasonable expectation about the timing and amount of cash flows. Such an expectation includes cash flows from normal customer repayment, foreclosure or other collection efforts. To the extent that we cannot reasonably estimate cash flows, interest income recognition is discontinued.

The Company also maintains an unallocated allowance. The unallocated allowance is used to cover any factors or conditions which may cause a potential loan loss but are not specifically identifiable. It is prudent to maintain an unallocated portion of the allowance because no matter how detailed an analysis of potential loan losses is performed, these estimates lack some element of precision. Management must make estimates using assumptions and information that is often subjective and changing rapidly. In addition, as an integral part of their examination process, the Federal Deposit Insurance Corporation will periodically review the allowance for loan losses and may require us to adjust the allowance based on their analysis of information available to it at the time of its examination.

Classified Assets . The Company’s policies provide for a classification system for problem assets. Under this classification system, problem assets are classified as “substandard,” “doubtful,” “loss” or “special mention.” An asset is considered substandard if it is inadequately protected by its current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard assets incl ude those characterized by the distinct possibility that some loss will be sustained if the deficiencies are not corrected. Assets classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic t hat the weakness present makes collection or liquidation in full on the basis of currently existing facts, conditions, and values, high ly questionable and improbable. Assets classifie d as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted, and the loan, or a portion thereof, is charged-off. Assets may be designated special mention because of potential weaknesses that do not currently warrant classification in one of the aforementioned categories.

When the Company classifies problem loans, it may establish general allowances for loan losses in an amount deemed prudent by management. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. A portion of general loss allowances established to cover possible losses related to assets classified as substandard or doubtful may be included in determining our regulatory capital. Specific valuation allowances for loan losses generally do not qualify as regulatory capital. As of September 30, 2014, we had $ 25.7 million in loans classified as substandard, $13 .9 million in loans classified as special mention and no loans classified as loss. The loans classified as substandard represent primarily commercial loans secured either by residential real estate, commercial real estate or heavy equipment. The loans that have been classified substandard were classified as such primarily because either updated financial information has not been provided timely, or the collateral underlying the loan is in the process of being revalued.

The current methodology for this calculation is determined with the Company’s specific Historical Loss Percentage (“HLP”) for each loan type, using two years of prior Company data (or eight quarters). The relative weights of prior quarters are decayed logarithmically and are further adjusted based on the trend of the historical loss percentage at the time. Also, instead of applying consistent percentages to each of the credit risk grades, the current methodology applies a higher factor to classified loans based on a delinquency risk trend and concentration risk trend by using the past due and non-accrual as a percentage of the specific loan category.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended September 30, 2014 and recorded investment in loans receivable at September 30, 2014 . The table also details the amount of total loans receivable, that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class. (In Thousands):

	Residential		Construction	Commercial Business (1)	Home Equity (2)	Consumer	Unallocated	Total
Allowance for loan losses:
Originated Loans:	$ 2,334	$ 8,380	$ 668	$ 911	$ 522	$ 132	$ 343	$ 13,290
Acquired loans recorded at fair value:	626	696	-	-	61	6	-	1,389
Acquired loans with deteriorated credit:	63	81	-	126	3	-	-	273
Beginning Balance, June 30, 2014	3,023	9,157	668	1,037	586	138	343	14,952
Charge-offs:
Originated Loans:	-	80	-	44	-	-	-	124
Acquired loans recorded at fair value:	-	234	-	-	-	-	-	234
Acquired loans with deteriorated credit:	-	-	-	-	-	-	-	-
Sub-total:	-	314	-	44	-	-	-	358
Recoveries:
Originated Loans:	-	125	-	22	-	-	-	147
Acquired loans recorded at fair value:	-	-	-	-	-	2	-	2
Acquired loans with deteriorated credit:	-	-	-	-	-	-	-	-
Sub-total:	-	125	-	22	-	2	-	149
Provisions:
Originated Loans:	(619)	1,352	556	(105)	(159)	(3)	(205)	817
Acquired loans recorded at fair value:	(73)	(230)	-	-	60	(8)	-	(251)
Acquired loans with deteriorated credit:	1	(11)	-	94	-	-	-	84
Sub-total:	(691)	1,111	556	(11)	(99)	(11)	(205)	650
Totals:
Originated Loans:	1,715	9,777	1,224	784	363	129	138	14,130
Acquired loans recorded at fair value:	553	232	-	-	121	-	-	906
Acquired loans with deteriorated credit:	64	70	-	220	3	-	-	357
Ending Balance, September 30, 2014	$ 2,332	$ 10,079	$ 1,224	$ 1,004	$ 487	$ 129	$ 138	$ 15,393
Loans Receivable:
Ending Balance Originated Loans:	117,916	669,472	64,996	52,997	29,686	1,576	-	936,643
Ending Balance Acquired loans recorded at fair value:	89,437	101,599	-	7,154	24,299	715	-	223,204
Ending Balance Acquired loans with deteriorated credit:	1,572	1,136	-	369	84	-	-	3,161
Total Gross Loans:	$ 208,925	$ 772,207	$ 64,996	$ 60,520	$ 54,069	$ 2,291	$ -	$ 1,163,008
Ending Balance: Loans individually evaluated
for impairment:
Ending Balance Originated Loans:	11,007	9,110	-	2,046	1,029	1,320	-	24,512
Ending Balance Acquired loans recorded at fair value:	10,749	6,781	-	-	1,545	-	-	19,075
Ending Balance Acquired loans with deteriorated credit:	1,572	880	-	369	84	-	-	2,905
Ending Balance Loans individually evaluated
for impairment:	$ 23,328	$ 16,771	$ -	$ 2,415	$ 2,658	$ 1,320	$ -	$ 46,492
Ending Balance: Loans collectively evaluated
for impairment:
Ending Balance Originated Loans:	106,909	660,362	64,996	50,951	28,657	256	-	912,131
Ending Balance Acquired loans recorded at fair value:	78,688	94,818	-	7,154	22,754	715	-	204,129
Ending Balance Acquired loans with deteriorated credit:	-	256	-	-	-	-	-	256
Ending Balance Loans collectively evaluated
for impairment:	$ 185,597	$ 755,436	$ 64,996	$ 58,105	$ 51,411	$ 971	$ -	$ 1,116,516
_____________________________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the nine months ended September 30, 2014. (In Thousands):

	Residential		Construction	Commercial Business (1)	Home Equity (2)	Consumer	Unallocated	Total
Allowance for loan losses:
Originated Loans:	$ 1,729	$ 7,419	$ 700	$ 1,295	$ 363	$ 3	$ 83	$	11,592
Acquired loans recorded at fair value:	832	1,744	1	44	129	-	-		2,750
Acquired loans with deteriorated credit:	-	-	-	-	-	-	-		-
Beginning Balance, December 31, 2013	2,561	9,163	701	1,339	492	3	83		14,342
Charge-offs:
Originated Loans:	-	388	-	170	27	-	-	-	585
Acquired loans recorded at fair value:	-	755	-	-	-	2	-	-	757
Acquired loans with deteriorated credit:	-	-	-	-	-	-	-	-	-
Sub-total:	-	1,143	-	170	27	2	-		1,342
Recoveries:
Originated Loans:	-	125	-	22	-	-	-		147
Acquired loans recorded at fair value:	-	73	65	-	6	2	-		146
Acquired loans with deteriorated credit:	-	-	-	-	-	-	-		-
Sub-total:	-	198	65	22	6	2	-		293
Provisions:
Originated Loans:	(14)	2,621	524	(363)	27	126	55		2,976
Acquired loans recorded at fair value:	(279)	(830)	(66)	(44)	(14)	-	-		(1,233)
Acquired loans with deteriorated credit:	64	70	-	220	3	-	-		357
Sub-total:	(229)	1,861	458	(187)	16	126	55		2,100
Totals:
Originated Loans:	1,715	9,777	1,224	784	363	129	138		14,130
Acquired loans recorded at fair value:	553	232	-	-	121	-	-		906
Acquired loans with deteriorated credit:	64	70	-	220	3	-	-		357
Ending Balance, September 30, 2014	$ 2,332	$ 10,079	$ 1,224	$ 1,004	$ 487	$ 129	$ 138	$	15,393
_____________________________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the year ended December 31, 201 3 and recorded investment in loans receivable at December 31, 201 3 . The table also details the amount of total loans receivable, that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class. (In Thousands):

	Residential		Commercial & Multi-family	Construction	Commercial Business (1)	Home Equity (2)		Consumer		Unallocated		Total
Allowance for loan losses:
Originated Loans:	$ 1,143	$	7,088	$ 866	$ 576	$	284	$	41	$	32	$	10,030
Acquired loans recorded at fair value:	719		963	93	244		191		18		-		2,228
Acquired loans with deteriorated credit:	105		-	-	-		-		-		-		105
Beginning Balance, December 31, 2012	1,967		8,051	959	820		475		59		32		12,363
Charge-offs:
Originated Loans:	6	-	27	-	233	-	1	-	-	-	-	-	267
Acquired loans recorded at fair value:	23	-	89	132	141	-	301	-	-	-	-	-	686
Acquired loans with deteriorated credit:	11	-	7	-	-	-	-	-	-	-	-	-	18
Sub-total:	40		123	132	374		302		-		-		971
Recoveries:
Originated Loans:	42		-	3	-		6		-		-		51
Acquired loans recorded at fair value:	-		95	-	31		-		-		-		126
Acquired loans with deteriorated credit:	4		1	-	16		2		-		-		23
Sub-total:	46		96	3	47		8		-		-		200
Provisions:
Originated Loans:	550		358	(169)	952		74		(38)		51		1,778
Acquired loans recorded at fair value:	136		775	40	(90)		239		(18)		-		1,082
Acquired loans with deteriorated credit:	(98)		6	-	(16)		(2)		-		-		(110)
Sub-total:	588		1,139	(129)	846		311		(56)		51		2,750
Totals:
Originated Loans:	1,729		7,419	700	1,295		363		3		83		11,592
Acquired loans recorded at fair value:	832		1,744	1	44		129		-		-		2,750
Acquired loans with deteriorated credit:	-		-	-	-		-		-		-		-
Ending Balance, December 31, 2013	$ 2,561	$	9,163	$ 701	$ 1,339	$	492	$	3	$	83	$	14,342
Loans Receivables:
Ending Balance Originated Loans:	97,581		549,918	37,307	52,659		28,660		533		-		766,658
Ending Balance Acquired Loans:	100,612		126,123	200	10,478		27,313		919		-		265,645
Ending Balance Acquired loans with deteriorated credit:	2,141		2,081	-	371		90		-		-		4,683
Total Gross Loans:	$ 200,334	$	678,122	$ 37,507	$ 63,508	$	56,063	$	1,452	$	-	$	1,036,986
Ending Balance: Loans individually evaluated
for impairment:
Ending Balance Originated Loans:	1,840		8,638	-	3,870		833		-		-		15,181
Ending Balance Acquired Loans:	9,930		13,434	-	-		1,460		5		-		24,829
Ending Balance Acquired loans with deteriorated credit:	2,141		1,815	-	371		90		-		-		4,417
Ending Balance Loans individually evaluated
for impairment:	$ 13,911	$	23,887	$ -	$ 4,241	$	2,383	$	5	$	-	$	44,427
Ending Balance: Loans collectively evaluated
for impairment:
Ending Balance Originated Loans:	95,741		541,280	37,307	48,789		27,827		533		-		751,477
Ending Balance Acquired Loans:	90,682		112,689	200	10,478		25,853		914		-		240,816
Ending Balance Acquired loans with deteriorated credit:	-		266	-	-		-		-		-		266
Ending Balance Loans collectively evaluated
for impairment:	$ 186,423	$	654,235	$ 37,507	$ 59,267	$	53,680	$	1,447	$	-	$	992,559
_____________________________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended September 30, 2013 . (In Thousands):

	Residential		Commercial & Multi-family	Construction	Commercial Business (1)	Home Equity (2)		Consumer		Unallocated		Total
Allowance for credit losses:
Originated Loans:	$ 1,661	$	6,865	$ 1,065	$ 1,557	$	299	$	17	$	388	$	11,852
Acquired loans recorded at fair value:	565		866	134	17		188		37		-		1,807
Acquired loans with deteriorated credit:	14		-	-	-		-		-		-		14
Beginning Balance, June 30, 2013	2,240		7,731	1,199	1,574		487		54		388		13,673
Charge-offs:
Originated Loans:	6	-	27	-	10	-	1	-	-	-	-	-	44
Acquired loans recorded at fair value:	23	-	4	130	141	-	27	-	-	-	-	-	325
Acquired loans with deteriorated credit:	11	-	7	-	-	-	-	-	-	-	-	-	18
Sub-total:	40		38	130	151		28		-		-		387
Recoveries:
Originated Loans:	7		-	-	-		6		-		-		13
Acquired loans recorded at fair value:	-		95	-	14		-		-		-		109
Acquired loans with deteriorated credit:	4		1	-	16		2		-		-		23
Sub-total:	11		96	-	30		8		-		-		145
Provisions:
Originated Loans:	18		311	33	(121)		16		(1)		(56)		200
Acquired loans recorded at fair value:	110		69	1	132		(56)		(1)		-		255
Acquired loans with deteriorated credit:	7		6	-	(16)		(2)		-		-		(5)
Sub-total:	135		386	34	(5)		(42)		(2)		(56)		450
Totals:
Originated Loans:	1,680		7,149	1,098	1,426		320		16		332		12,021
Acquired loans recorded at fair value:	652		1,026	5	22		105		36		-		1,846
Acquired loans with deteriorated credit:	14		-	-	-		-		-		-		14
Ending Balance, September 30, 2013	$ 2,346	$	8,175	$ 1,103	$ 1,448	$	425	$	52	$	332	$	13,881
Loans Receivable:
Ending Balance Originated Loans:	92,828		523,628	34,591	46,906		27,528		590		-		726,071
Ending Balance Acquired loans recorded at fair value:	104,145		131,282	205	7,568		28,523		961		-		272,684
Ending Balance Acquired loans with deteriorated credit:	2,148		2,089	-	375		91		-		-		4,703
Total Gross Loans:	$ 199,121	$	656,999	$ 34,796	$ 54,849	$	56,142	$	1,551	$	-	$	1,003,458
Ending Balance: Loans individually evaluated
for impairment:
Ending Balance Originated Loans:	1,846		8,764	-	5,393		600		-		-		16,603
Ending Balance Acquired loans recorded at fair value:	10,458		12,809	-	44		1,622		5		-		24,938
Ending Balance Acquired loans with deteriorated credit:	2,148		1,821	-	375		91		-		-		4,435
Ending Balance Loans individually evaluated
for impairment:	$ 14,452	$	23,394	$ -	$ 5,812	$	2,313	$	5	$	-	$	45,976
Ending Balance: Loans collectively evaluated
for impairment:
Ending Balance Originated Loans:	90,982		514,864	34,591	41,513		26,928		590		-		709,468
Ending Balance Acquired loans recorded at fair value:	93,687		118,473	205	7,524		26,901		956		-		247,746
Ending Balance Acquired loans with deteriorated credit:	-		268	-	-		-		-		-		268
Ending Balance Loans collectively evaluated
for impairment:	$ 184,669	$	633,605	$ 34,796	$ 49,037	$	53,829	$	1,546	$	-	$	957,482
_____________________________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the nine months ended September 30, 2013 . (In Thousands):

	Residential		Commercial & Multi-family	Construction	Commercial Business (1)		Home Equity (2)		Consumer		Unallocated		Total
Allowance for credit losses:
Originated Loans:	$ 1,143	$	7,088	$ 866	$	576	$	284	$	41	$	32	$	10,030
Acquired loans recorded at fair value:	719		963	93		244		191		18		-		2,228
Acquired loans with deteriorated credit:	105		-	-		-		-		-		-		105
Beginning Balance, December 31, 2012	1,967		8,051	959		820		475		59		32		12,363
Charge-offs:
Originated Loans:	6	-	27	-	-	233	-	1	-	-	-	-	-	267
Acquired loans recorded at fair value:	23	-	89	130	-	141	-	264	-	-	-	-	-	647
Acquired loans with deteriorated credit:	11	-	7	-	-	-	-	-	-	-	-	-	-	18
Sub-total:	40		123	130		374		265		-		-		932
Recoveries:
Originated Loans:	42		-	3		-		6		-		-		51
Acquired loans recorded at fair value:	-		95	-		31		-		-		-		126
Acquired loans with deteriorated credit:	4		1	-		16		2		-		-		23
Sub-total:	46		96	3		47		8		-		-		200
Provisions:
Originated Loans:	501		88	229		1,083		31		(25)		300		2,207
Acquired loans recorded at fair value:	(44)		57	42		(112)		178		18		-		139
Acquired loans with deteriorated credit:	(84)		6	-		(16)		(2)		-		-		(96)
Sub-total:	373		151	271		955		207		(7)		300		2,250
Totals:
Originated Loans:	1,680		7,149	1,098		1,426		320		16		332		12,021
Acquired loans recorded at fair value:	652		1,026	5		22		105		36		-		1,846
Acquired loans with deteriorated credit:	14		-	-		-		-		-		-		14
Ending Balance, September 30, 2013	$ 2,346	$	8,175	$ 1,103	$	1,448	$	425	$	52	$	332	$	13,881
_____________________________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The table below sets forth the amounts and types of non-accrual loans in the Company’s loan portfolio as of September 30, 2014 and December 31, 201 3 . Loans are placed on non-accrual status when they become more than 90 days delinquent, or when the collection of principal and/or interest become doubtful. As of September 30, 2014 and December 31, 201 3 , total non-accrual loans differed from the amount of total loans past due greater than 90 days due to troubled debt restructuring of loans which are maintained on non-accrual status for a minimum of six months until the borrower has demonstrated its ability to satisfy the terms of the restructured loan. Non-accrual loans represent 1.63% of total gross loans at September 30, 2014.

	(In Thousands)	(In Thousands)
Non-Accruing Loans:
Originated loans:
Residential one-to-four family	$ 504	$ 144
Commercial and multi-family	7,971	5,158
Construction	-	521
Commercial business (1)	-	2,279
Home equity (2)	277	309
Consumer	-	-
Sub-total:	$ 8,752	$ 8,411
Acquired loans recorded at fair value:
Residential one-to-four family	$ 5,813	$ 4,685
Commercial and multi-family	1,948	6,575
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	907	757
Consumer	-	-
Sub-total:	$ 8,668	$ 12,017
Acquired loans with deteriorated credit:
Residential one-to-four family	$ 1,084	$ -
Commercial and multi-family	-	-
Construction	-	-
Commercial business (1)	369	-
Home equity (2)	84	137
Consumer	-	-
Sub-total:	$ 1,537	$ 137
Total	$ 18,957	$ 20,565

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7-Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes the average recorded investment and interest income recognized on impaired loans with no related allowance recorded by portfolio class for the three and nine months ended September 30, 2014 and 2013 . (In Thousands):

	2014	2014	2013	2013	2014	2014	2013	2013
	Average	Interest	Average	Interest	Average	Interest	Average	Interest
	Recorded	Income	Recorded	Income	Recorded	Income	Recorded	Income
Originated loans	Investment	Recognized	Investment	Recognized	Investment	Recognized	Investment	Recognized
With no related allowance recorded:
Residential one-to-four family	$ 6,494	$ 95	$ 418	$ 6	$ 4,468	$ 285	$ 468	$ 19
Commercial and Multi-family	8,312	13	5,725	38	6,670	39	4,998	181
Construction	-	-	-	-	-	-	-	-
Commercial business (1)	1,023	25	3,060	74	1,604	76	2,557	102
Home equity (2)	423	6	257	2	416	16	283	9
Consumer	-	-	15	-	-	-	7	1
Sub-total:	$ 16,252	$ 139	$ 9,475	$ 120	$ 13,158	$ 416	$ 8,313	$ 312
Acquired loans recorded at fair value
With no related allowance recorded:
Residential one-to-four family	$ 6,304	$ 12	$ 4,659	$ 43	$ 5,690	$ 37	$ 4,002	$ 136
Commercial and Multi-family	6,626	61	5,097	63	5,439	183	5,484	147
Construction	-	-	-	-	-	-	51	2
Commercial business (1)	-	-	68	-	-	-	87	4
Home equity (2)	743	4	1,073	9	774	11	1,411	30
Consumer	1	-	4	-	2	-	2	-
Sub-total	$ 13,674	$ 77	$ 10,901	$ 115	$ 11,905	$ 231	$ 11,037	$ 319
Acquired loans with deteriorated credit
With no related allowance recorded:
Residential one-to-four family	$ 1,492	$ 5	$ 2,059	$ 29	$ 1,708	$ 16	$ 1,803	$ 89
Commercial and Multi-family	1,245	13	1,811	38	1,435	40	2,238	86
Construction	-	-	-	-	-	-	-	-
Commercial business (1)	-	2	350	5	124	-	338	10
Home equity (2)	85	-	92	1	86	5	-	8
Consumer	-	-	-	-	-	-	92	-
Sub-total:	$ 2,822	$ 20	$ 4,312	$ 73	$ 3,353	$ 61	$ 4,471	$ 193
Total Impaired Loans
With no related allowance recorded:	$ 32,748	$ 236	$ 24,688	$ 308	$ 28,416	$ 708	$ 23,821	$ 824

(1) Includes business lines of credit. (2) Includes home equity lines of credit.

Note 7-Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes the average recorded investment and interest income recognized on impaired loans with allowance recorded by portfolio class for the three and nine months ended September 30, 2014 and 2013 . (In Thousands):

	2014	2014	2013	2013	2014	2014	2013	2013
	Average	Interest	Average	Interest	Average	Interest	Average	Interest
	Recorded	Income	Recorded	Income	Recorded	Income	Recorded	Income
Originated loans	Investment	Recognized	Investment	Recognized	Investment	Recognized	Investment	Recognized
with an allowance recorded:
Residential one-to-four family	$ 3,365	$ 16	$ 1,503	$ 19	$ 2,718	$ 47	$ 1,116	$ 40
Commercial and Multi-family	2,763	-	4,987	66	3,592	-	5,047	115
Construction	-	-	-	-	-	-	-	-
Commercial business (1)	-	-	1,343	18	368	-	1,206	63
Home equity (2)	748	5	436	6	642	15	260	13
Consumer	1,183	-	-	-	789	-	-	-
Sub-total:	$ 8,059	$ 21	$ 8,269	$ 109	$ 8,109	$ 62	$ 7,629	$ 231
Acquired loans recorded at fair value
with an allowance recorded:
Residential one-to-four family	$ 5,715	$ 51	$ 5,925	$ 90	$ 5,632	$ 154	$ 6,355	$ 163
Commercial and Multi-family	2,980	7	9,014	95	5,443	22	8,600	198
Construction	-	-	65	-	-	-	98	-
Commercial business (1)	-	-	461	-	-	-	319	-
Home equity (2)	340	4	282	4	435	12	509	11
Consumer	-	-	-	-	-	-	1	-
Sub-total	$ 9,035	$ 62	$ 15,747	$ 189	$ 11,510	$ 188	$ 15,882	$ 372
Acquired loans with deteriorated credit
with an allowance recorded:
Residential one-to-four family	$ 91	$ 1	$ 93	$ 1	$ 61	$ 3	$ 358	$ 2
Commercial and Multi-family	-	1	-	-	-	3	-	-
Construction	-	-	-	-	-	-	-	-
Commercial business (1)	370	1	-	-	247	2	-	-
Home equity (2)	-	-	-	-	-	-	-	-
Consumer	-	-	-	-	-	-	-	-
Sub-total:	$ 461	$ 3	$ 93	$ 1	$ 308	$ 8	$ 358	$ 2
Total Impaired Loans
with an allowance recorded:	$ 17,555	$ 86	$ 24,109	$ 299	$ 19,927	$ 258	$ 23,869	$ 605

(1) Includes business lines of credit. (2) Includes home equity lines of credit.

Note 7-Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes the recorded investment and unpaid principal balances where there is no related allowance on impaired loans by portfolio class at

September 30, 2014 and December 31, 201 3 . (In Thousands):

	Recorded	Unpaid Principal	Related	Recorded	Unpaid Principal	Related
Originated loans	Investment	Balance	Allowance	Investment	Balance	Allowance
with no related allowance recorded:
Residential one-to-four family	$ 8,561	$ 8,567	$ -	$ 417	$ 444	$ -
Commercial and multi-family	7,478	7,861	-	3,388	3,394	-
Construction	-	-	-	-	-	-
Commercial business (1)	2,046	2,046	-	2,766	2,776	-
Home equity (2)	685	694	-	402	402	-
Consumer	-	-	-	-	-	-
Sub-total:	$ 18,770	$ 19,168	$ -	$ 6,973	$ 7,016	$ -
Acquired loans recorded at fair
value with no related allowance
recorded:
Residential one-to-four family	$ 5,760	$ 5,859	$ -	$ 4,463	$ 4,489	$ -
Commercial and Multi-family	5,407	5,468	-	3,064	3,098	-
Construction	-	-	-	-	-	-
Commercial business (1)	-	-	-	-	-	-
Home equity (2)	999	1,005	-	835	922	-
Consumer	-	-	-	5	5	-
Sub-total:	$ 12,166	$ 12,332	$ -	$ 8,367	$ 8,514	$ -
Acquired loans with deteriorated
credit with no related allowance
recorded:
Residential one-to-four family	$ 1,481	$ 2,142	$ -	$ 2,141	$ 2,879	$ -
Commercial and Multi-family	880	1,039	-	1,815	2,312	-
Construction	-	-	-	-	-	-
Commercial business (1)	-	180	-	371	652	-
Home equity (2)	84	137	-	90	138	-
Consumer	-	-	-	-	-	-
Sub-total:	$ 2,445	$ 3,498	$ -	$ 4,417	$ 5,981	$ -
Total Impaired Loans
with no related allowance recorded:	$ 33,381	$ 34,998	$ -	$ 19,757	$ 21,511	$ -

(1) Includes business lines of credit. (2) Includes home equity lines of credit.

Note 7-Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes the recorded investment, unpaid principal balance, and the related allowance on impaired loans by portfolio class at September 30, 2014 and December 31, 201 3 . (In Thousands):

	Recorded	Unpaid Principal	Related	Recorded	Unpaid Principal	Related
Originated loans	Investment	Balance	Allowance	Investment	Balance	Allowance
with an allowance recorded:
Residential one-to-four family	$ 2,446	$ 2,446	$ 156	$ 1,423	$ 1,423	$ 159
Commercial and Multi-family	1,632	1,647	904	5,250	5,328	298
Construction	-	-	-	-	-	-
Commercial business (1)	-	-	-	1,104	1,104	498
Home equity (2)	344	344	-	431	431	6
Consumer	1,320	1,320	126	-	-	-
Sub-total:	$ 5,742	$ 5,757	$ 1,186	$ 8,208	$ 8,286	$ 961
Acquired loans recorded at fair
value with an allowance
recorded:
Residential one-to-four family	$ 4,989	$ 5,021	$ 258	$ 5,467	$ 5,477	$ 331
Commercial and Multi-family	1,374	1,414	150	10,370	10,418	1,276
Construction	-	-	-	-	-	-
Commercial business (1)	-	-	-	-	-	-
Home equity (2)	546	551	70	625	625	64
Consumer	-	-	-	-	-	-
Sub-total	$ 6,909	$ 6,986	$ 478	$ 16,462	$ 16,520	$ 1,671
Acquired loans with deteriorated
credit with an allowance
recorded:
Residential one-to-four family	$ 91	$ 105	$ 14	$ -	$ -	$ -
Commercial and Multi-family	-	119	45	-	-	-
Construction	-	-	-	-	-	-
Commercial business (1)	369	465	203	-	-	-
Home equity (2)	-	-	-	-	-	-
Consumer	-	-	-	-	-	-
Sub-total:	$ 460	$ 689	$ 262	$ -	$ -	$ -
Total Impaired Loans
with an allowance recorded:	$ 13,111	$ 13,432	$ 1,926	$ 24,670	$ 24,806	$ 2,632
Total Impaired Loans
with no related allowance recorded:	$ 33,381	$ 34,998	$ -	$ 19,757	$ 21,511	$ -
Total Impaired Loans:	$ 46,492	$ 48,430	$ 1,926	$ 44,427	$ 46,317	$ 2,632

(1) Includes business lines of credit. (2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table presents the total troubled debt restructured loans at September 30, 2014 , excluding the purchase impairment mark on the acquired loans with deteriorated credit. ( Dollars In Thousands):

September 30, 2014	Accrual — # of Loans	Amount	Non-accrual — # of Loans	Amount	Total — # of Loans	Amount
Originated loans:
Residential one-to-four family	7	$ 2,210	-	$ -	7	$ 2,210
Commercial and multi-family	3	1,068	9	6,513	12	7,581
Construction	-	-	-	-	-	-
Commercial business (1)	1	802	-	-	1	802
Home equity (2)	2	511	1	56	3	567
Consumer	-	-	-	-	-	-
Sub-total:	13	$ 4,591	10	$ 6,569	23	$ 11,160
Acquired loans recorded at fair value:
Residential one-to-four family	22	$ 4,791	10	$ 2,701	32	$ 7,492
Commercial and Multi-family	10	4,031	4	1,619	14	5,650
Construction	-	-	-	-	-	-
Commercial business (1)	-	-	-	-	-	-
Home equity (2)	5	638	1	217	6	855
Consumer	-	-	-	-	-	-
Sub-total:	37	$ 9,460	15	$ 4,537	52	$ 13,997
Acquired loans with deteriorated credit:
Residential one-to-four family	4	$ 832	2	$ 1,384	6	$ 2,216
Commercial and Multi-family	3	1,158	-	-	3	1,158
Construction	-	-	-	-	-	-
Commercial business (1)	3	275	1	369	4	644
Home equity (2)	-	-	1	131	1	131
Consumer	-	-	-	-	-	-
Sub-total:	10	$ 2,265	4	$ 1,884	14	$ 4,149
Total	60	$ 16,316	29	$ 12,990	89	$ 29,306

(1) Includes business lines of credit. (2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table presents the total troubled debt restructured loans at December 31, 201 3 . ( Dollars In Thousands):

December 31, 2013	Accrual — # of Loans	Amount	Non-accrual — # of Loans	Amount	Total — # of Loans	Amount
Originated loans:
Residential one-to-four family	7	$ 1,988	1	$ 27	8	$ 2,015
Commercial and multi-family	4	3,052	8	4,139	12	7,191
Construction	-	-	-	-	-	-
Commercial business (1)	3	1,591	-	-	3	1,591
Home equity (2)	3	571	-	-	3	571
Consumer	-	-	-	-	-	-
Sub-total:	17	$ 7,202	9	$ 4,166	26	$ 11,368
Acquired loans recorded at fair value:
Residential one-to-four family	25	$ 5,673	8	$ 2,564	33	$ 8,237
Commercial and Multi-family	15	6,545	9	3,606	24	10,151
Construction	-	-	-	-	-	-
Commercial business (1)	-	-	-	-	-	-
Home equity (2)	6	704	-	-	6	704
Consumer	-	-	-	-	-	-
Sub-total:	46	$ 12,922	17	$ 6,170	63	$ 19,092
Acquired loans with deteriorated credit:
Residential one-to-four family	7	$ 1,795	-	$ -	7	$ 1,795
Commercial and Multi-family	4	1,816	-	-	4	1,816
Construction	-	-	-	-	-	-
Commercial business (1)	4	371	-	-	4	371
Home equity (2)	-	-	1	91	1	91
Consumer	-	-	-	-	-	-
Sub-total:	15	$ 3,982	1	$ 91	16	$ 4,073
Total	78	$ 24,106	27	$ 10,427	105	$ 34,533

(1) Includes business lines of credit. (2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

A troubled debt restructuring (“TDR”) is a loan that has been modified whereby the Company has agreed to make certain concessions to a borrower to meet the needs of both the borrower and the Company to maximize the ultimate recovery of a loan. TDR occurs when a borrower is experiencing, or is expected to experience, financial difficulties and the loan is modified using a modification that would otherwise not be granted to the borrower. The types of concessions granted are generally included, but not limited to interest rate reductions, limitations on the accrued interest charged, term extensions, and deferment of principal.

There were no troubled debt restructurings which occurred during the three months ended September 30, 2014 .

The following table summarizes information in regards to troubled debt restructurings for which there was a payment default within twelve months of restructuring during the three months ended September 30, 2014 . ( Dollars In Thousands):

Three Months Ended September 30, 2014	Number of Contracts	Recorded Investment
Originated loans:
Residential one-to-four family	-	$ -
Commercial and multi-family	1	458
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	1	$ 458
Acquired loans recorded at fair value:
Residential one-to-four family	-	$ -
Commercial and Multi-family	-	-
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	-	$ -
Acquired loans with deteriorated credit:
Residential one-to-four family	-	$ -
Commercial and Multi-family	-	-
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	-	$ -
Total	1	$ 458

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes information in regards to troubled debt restructurings which occurred during the nine months ended September 30, 2014 . ( Dollars I n Thousands):

Nine Months Ended September 30, 2014	Number of Contracts	Recorded Investments	Recorded Investments
Originated loans:
Residential one-to-four family	1	$ 432	$ 432
Commercial and multi-family	1	806	806
Construction	-	-	-
Commercial business (1)	-	-	-
Home equity (2)	-	-	-
Consumer	-	-	-
Sub-total:	2	$ 1,238	$ 1,238
Acquired loans recorded at fair value:
Residential one-to-four family	3	$ 1,267	$ 1,269
Commercial and Multi-family	1	186	205
Construction	-	-	-
Commercial business (1)	-	-	-
Home equity (2)	1	256	262
Consumer	-	-	-
Sub-total:	5	$ 1,709	$ 1,736
Acquired loans with deteriorated credit:
Residential one-to-four family	-	$ -	$ -
Commercial and Multi-family	-	-	-
Construction	-	-	-
Commercial business (1)	-	-	-
Home equity (2)	-	-	-
Consumer	-	-	-
Sub-total:	-	$ -	$ -
Total	7	$ 2,947	$ 2,974

__________ (1) Includes business lines of credit.

(2) Includes home equity lines of credit.

The loans included above are considered TDRs as a result of the Company implementing one or more of the following concessions: granting a material extension of time, issuing a forbearance agreement, adjusting the interest rate to a below market rate, accepting interest only for a period of time or a change in amortization period. All TDRs were considered impaired and therefore were individually evaluated for impairment in the calculation of the allowance for loan losses. Prior to their classification as TDRs, certain of these loans had been collectively evaluated for impairment in the calculation of the allowance for loan losses.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes information in regards to troubled debt restructurings for which there was a payment default within twelve mont hs of restructuring during the nine months ended September 30, 2014. ( Dollars I n Thousands):

Nine Months Ended September 30, 2014	Number of Contracts	Recorded Investment
Originated loans:
Residential one-to-four family	-	$ -
Commercial and multi-family	1	458
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	1	$ 458
Acquired loans recorded at fair value:
Residential one-to-four family	-	$ -
Commercial and Multi-family	-	-
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	-	$ -
Acquired loans with deteriorated credit:
Residential one-to-four family	-	$ -
Commercial and Multi-family	-	-
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	-	$ -
Total	1	$ 458

__________ (1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7-Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes information in regards to troubled debt restructurings which occurred during the three months ended September 30, 2013. ( Dollars In Thousands):

Three Months Ended September 30, 2013	Number of Contracts	Recorded Investments	Recorded Investments
Originated loans:
Residential one-to-four family	-	$ -	$ -
Commercial and multi-family	-	-	-
Construction	-	-	-
Commercial business (1)	1	727	728
Home equity (2)	-	-	-
Consumer	-	-	-
Sub-total:	1	$ 727	$ 728
Acquired loans recorded at fair value:
Residential one-to-four family	1	$ 410	$ 414
Commercial and Multi-family	-	-	-
Construction	-	-	-
Commercial business (1)	-	-	-
Home equity (2)	1	29	29
Consumer	-	-	-
Sub-total:	2	$ 439	$ 443
Acquired loans with deteriorated credit:
Residential one-to-four family	-	$ -	$ -
Commercial and Multi-family	-	-	-
Construction	-	-	-
Commercial business (1)	-	-	-
Home equity (2)	-	-	-
Consumer	-	-	-
Sub-total:	-	$ -	$ -
Total	3	$ 1,166	$ 1,171

_________ (1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

Three Months Ended September 30, 2013	Number of Contracts	Recorded Investment
Originated loans:
Residential one-to-four family	-	$ -
Commercial and multi-family	-	-
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	-	$ -
Acquired loans recorded at fair value:
Residential one-to-four family	2	$ 482
Commercial and Multi-family	1	94
Construction	-	-
Commercial business (1)	1	945
Home equity (2)	1	140
Consumer	-	-
Sub-total:	5	$ 1,661
Acquired loans with deteriorated credit:
Residential one-to-four family	-	$ -
Commercial and Multi-family	-	-
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	-	$ -
Total	5	$ 1,661

__________ (1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes information in regards t o troubled debt restructurings which occurred during the nine months ended September 30, 2013 . ( Dollars In Thousands):

Nine Months Ended September 30, 2013	Number of Contracts	Recorded Investments	Recorded Investments
Originated loans:
Residential one-to-four family	2	$ 509	$ 652
Commercial and multi-family	2	526	526
Construction	-	-	-
Commercial business (1)	2	1,549	1,550
Home equity (2)	2	393	398
Consumer	-	-	-
Sub-total:	8	$ 2,977	$ 3,126
Acquired loans recorded at fair value:
Residential one-to-four family	6	$ 2,373	$ 2,407
Commercial and Multi-family	4	2,220	2,386
Construction	-	-	-
Commercial business (1)	-	-	-
Home equity (2)	3	229	230
Consumer	-	-	-
Sub-total:	13	$ 4,822	$ 5,023
Acquired loans with deteriorated credit:
Residential one-to-four family	-	$ -	$ -
Commercial and Multi-family	2	1,653	888
Construction	-	-	-
Commercial business (1)	3	265	293
Home equity (2)	1	140	140
Consumer	-	-	-
Sub-total:	6	$ 2,058	$ 1,321
Total	27	$ 9,857	$ 9,470

__________ (1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes information in regards to troubled debt restructurings for which there was a payment default within twelve months of restructuring during the nine months ended September 30, 2013 . ( Dollars In Thousands):

Nine Months Ended September 30, 2013	Number of Contracts	Recorded Investment
Originated loans:
Residential one-to-four family	-	$ -
Commercial and multi-family	1	727
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	1	727
Acquired loans recorded at fair value:
Residential one-to-four family	6	$ 1,311
Commercial and Multi-family	4	571
Construction	-	-
Commercial business (1)	1	945
Home equity (2)	1	140
Consumer	-	-
Sub-total:	12	2,967
Acquired loans with deteriorated credit:
Residential one-to-four family	-	$ -
Commercial and Multi-family	-	-
Construction	-	-
Commercial business (1)	-	-
Home equity (2)	-	-
Consumer	-	-
Sub-total:	-	-
Total	13	$ 3,694

__________ (1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the delinquency status of total loans receivable as of September 30, 2014 . (In Thousands):

	30-59 Days	60-90 Days	Greater Than	Total Past		Total Loans	Loans Receivable — >90 Days
	Past Due	Past Due	90 Days	Due	Current	Receivable	and Accruing
	(In Thousands)
Originated loans:
Residential one-to-four family	$ 2,169	$ 2,427	$ 504	$ 5,100	$ 112,816	$ 117,916	$ -
Commercial and multi-family	9,714	-	3,230	12,944	656,528	669,472	-
Construction	-	-	-	-	64,996	64,996	-
Commercial business (1)	1,053	22	-	1,075	51,922	52,997	-
Home equity (2)	547	49	56	652	29,034	29,686	-
Consumer	-	-	-	-	1,576	1,576	-
Sub-total:	$ 13,483	$ 2,498	$ 3,790	$ 19,771	$ 916,872	$ 936,643	$ -
Acquired loans recorded at fair value:
Residential one-to-four family	$ 2,753	$ 1,983	$ 2,573	$ 7,309	$ 82,128	89,437	$ -
Commercial and multi-family	5,611	96	-	5,707	95,892	101,599	-
Construction	-	-	-	-	-	-	-
Commercial business (1)	-	-	-	-	7,154	7,154	-
Home equity (2)	1,003	272	377	1,652	22,647	24,299	-
Consumer	10	-	-	10	705	715	-
Sub-total:	$ 9,377	$ 2,351	$ 2,950	$ 14,678	$ 208,526	$ 223,204	$ -
Acquired loans with deteriorated credit:
Residential one-to-four family	$ -	$ -	$ -	$ -	$ 1,572	1,572	$ -
Commercial and multi-family	-	-	-	-	1,136	1,136	-
Construction	-	-	-	-	-	-	-
Commercial business (1)	-	369	-	369	-	369	-
Home equity (2)	84	-	-	84	-	84	-
Consumer	-	-	-	-	-	-	-
Sub-total:	$ 84	$ 369	$ -	$ 453	$ 2,708	$ 3,161	$ -
Total	$ 22,944	$ 5,218	$ 6,740	$ 34,902	$ 1,128,106	$ 1,163,008	$ -

_________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the delinquency status of total loans receivable at December 31, 201 3. (In Thousands):

	30-59 Days	60-90 Days	Greater Than	Total Past		Total Loans	Loans Receivable — >90 Days
	Past Due	Past Due	90 Days	Due	Current	Receivable	and Accruing
	(In Thousands)
Originated loans:
Residential one-to-four family	$ 1,221	$ 1,446	$ -	$ 2,667	$ 94,914	$ 97,581	$ -
Commercial and multi-family	7,170	-	873	8,043	541,875	549,918	-
Construction	1,174	-	-	1,174	36,133	37,307	-
Commercial business (1)	627	-	290	917	51,742	52,659	-
Home equity (2)	126	-	49	175	28,485	28,660	-
Consumer	8	-	-	8	525	533	-
Sub-total:	$ 10,326	$ 1,446	$ 1,212	$ 12,984	$ 753,674	$ 766,658	$ -
Acquired loans recorded at fair value:
Residential one-to-four family	$ 2,223	$ 1,341	$ 2,148	$ 5,712	$ 94,900	100,612	$ -
Commercial and multi-family	5,638	2,882	3,479	11,999	114,124	126,123	-
Construction	-	-	-	-	200	200	-
Commercial business (1)	175	-	-	175	10,303	10,478	-
Home equity (2)	1,220	153	149	1,522	25,791	27,313	-
Consumer	28	2	-	30	889	919	-
Sub-total:	$ 9,284	$ 4,378	$ 5,776	$ 19,438	$ 246,207	$ 265,645	$ -
Acquired loans with deteriorated credit:
Residential one-to-four family	$ -	$ -	$ -	$ -	$ 2,141	$ 2,141	$ -
Commercial and multi-family	-	-	-	-	2,081	2,081	-
Construction	-	-	-	-	-	-	-
Commercial business (1)	-	-	-	-	371	371	-
Home equity (2)	-	-	-	-	90	90	-
Consumer	-	-	-	-	-	-	-
Sub-total:	$ -	$ -	$ -	$ -	$ 4,683	$ 4,683	$ -
Total	$ 19,610	$ 5,824	$ 6,988	$ 32,422	$ 1,004,564	$ 1,036,986	$ -

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table presents the loan portfolio types summarized by the aggregate pass rating and the classified ratings of special mention, substandard, doubtful, and loss within the Company’s internal risk rating system as of September 30, 2014 . (In Thousands):

	Pass	Special Mention	Substandard	Doubtful	Loss	Total
Originated loans:
Residential one-to-four family	$ 115,296	$ 934	$ 1,686	$ -	$ -	$ 117,916
Commercial and multi-family	658,567	1,923	8,982	-	-	669,472
Construction	64,996	-	-	-	-	64,996
Commercial business (1)	47,397	4,139	1,461	-	-	52,997
Home equity (2)	28,743	526	417	-	-	29,686
Consumer	224	1,352	-	-	-	1,576
Sub-total:	$ 915,223	$ 8,874	$ 12,546	$ -	$ -	$ 936,643
Acquired loans recorded at fair value:
Residential one-to-four family	$ 80,053	$ 2,310	$ 7,074	$ -	$	89,437
Commercial and multi-family	96,564	1,895	3,140	-	-	101,599
Construction	-	-	-	-	-	-
Commercial business (1)	7,154	-	-	-	-	7,154
Home equity (2)	22,860	-	1,439	-	-	24,299
Consumer	715	-	-	-	-	715
Sub-total:	$ 207,346	$ 4,205	$ 11,653	$ -	$ -	$ 223,204
Residential one-to-four family	$ 239	$ 283	$ 1,050	$ -	$ -	1,572
Commercial and multi-family	593	543	-	-	-	1,136
Construction	-	-	-	-	-	-
Commercial business (1)	-	-	369	-	-	369
Home equity (2)	-	-	84	-	-	84
Consumer	-	-	-	-	-	-
Sub-total:	$ 832	$ 826	$ 1,503	$ -	$ -	$ 3,161
Total Gross Loans	$ 1,123,401	$ 13,905	$ 25,702	$ -	$ -	$ 1,163,008

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

	Pass	Special Mention	Substandard	Doubtful	Loss	Total
Originated loans:
Residential one-to-four family	$ 95,585	$ 553	$ 1,245	$ 198	$ -	$ 97,581
Commercial and multi-family	539,796	5,022	2,899	2,201	-	549,918
Construction	37,307	-	-	-	-	37,307
Commercial business (1)	45,010	6,581	524	544	-	52,659
Home equity (2)	27,643	642	375	-	-	28,660
Consumer	495	38	-	-	-	533
Sub-total:	$ 745,836	$ 12,836	$ 5,043	$ 2,943	$ -	$ 766,658
Acquired loans recorded at fair value:
Residential one-to-four family	$ 92,351	$ 3,049	$ 5,212	$ -	$ -	100,612
Commercial and multi-family	114,034	4,594	5,214	2,281	-	126,123
Construction	200	-	-	-	-	200
Commercial business (1)	10,478	-	-	-	-	10,478
Home equity (2)	26,254	264	795	-	-	27,313
Consumer	914	-	5	-	-	919
Sub-total:	$ 244,231	$ 7,907	$ 11,226	$ 2,281	$ -	$ 265,645
Acquired loans with deteriorated credit:
Residential one-to-four family	$ 278	$ 1,040	$ 823	$ -	$ -	2,141
Commercial and multi-family	1,332	749	-	-	-	2,081
Construction	-	-	-	-	-	-
Commercial business (1)	-	-	371	-	-	371
Home equity (2)	-	-	90	-	-	90
Consumer	-	-	-	-	-	-
Sub-total:	$ 1,610	$ 1,789	$ 1,284	$ -	$ -	$ 4,683
Total Gross Loans	$ 991,677	$ 22,532	$ 17,553	$ 5,224	$ -	$ 1,036,986

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table presents the unpaid principal balance and the related recorded investment of acquired loans included in our Consolidated Statements of Financial Condition. (In Thousands):

	September 30,	December 31,
	2014	2013
Unpaid principal balance	$ 230,210	$ 274,205
Recorded investment	226,366	270,328

The following table presents changes in the accretable discount on loans acquired for the three and nine months ended September 30, 2014 and 2013 . (In Thousands):

	Three Months Ended September 30, — 2014	2013	Nine Months Ended September 30, — 2014	2013
Balance, Beginning of Period	$ 85,064	$ 115,536	$ 102,454	$ 136,209
Acquisitions	-	-	-	-
Accretion	(5,508)	(7,760)	(23,079)	(28,453)
Net Reclassification from Non-Accretable Difference	252	112	433	132
Balance, End of Period	$ 79,808	$ 107,888	$ 79,808	$ 107,888

The following table presents changes in the non-accretable yield on loans acquired for the three and nine months ended September 30, 2014 and 2013 . (In Thousands):

	Three Months Ended September 30, — 2014	2013	Nine Months Ended September 30, — 2014	2013
Balance, Beginning of Period	$ 4,141	$ 4,614	$ 4,413	$ 4,835
Loans Sold	(32)	-	(123)	-
Amounts not recognized due to chargeoffs on
transfers to other real estate	-	-	-	(201)
Net Reclassification to Accretable Difference	(252)	(112)	(433)	(132)
Balance, End of Period	$ 3,857	$ 4,502	$ 3,857	$ 4,502

No te 8 – Fair Values of Financial Instruments

Guidance on fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1 : Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 : Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 : Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).

An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The only assets or liabilities that the Company measured at fair value on a recurring basis were as follows . ( I n T housands):

		(Level 1) — Quoted Prices in	(Level 2) — Significant	(Level 3)
		Active Markets	Other	Significant
		for Identical	Observable	Unobservable
Description	Total	Assets	Inputs	Inputs
As of September 30, 2014:
Securities available for sale — Residential Mortgage Backed Securities	$ 9,674	$ —	$ 9,674	$ —
As of December 31, 2013:
Securities available for sale — Equity Securities	$ 1,104	$ 1,104	$ —	$ —

The Company’s policy is to recognize transfers between levels as of the actual date of the event or change in circumstances that caused the transfer. There were no transfers of assets or liabilities into or out of Level 1, Level 2, or Level 3 of the fair value hierarchy during the nine months ended September 30 , 2014.

The only assets or liabilities that the Company measured at fair value on a nonrecurring basis were as follows . ( I n T housands):

		(Level 1) — Quoted Prices in	(Level 2) — Significant	(Level 3)
		Active Markets	Other	Significant
		for Identical	Observable	Unobservable
Description	Total	Assets	Inputs	Inputs
As of September 30, 2014
Impaired Loans	$ 11,185	$ —	$ —	$ 11,185
As of December 31, 2013:
Impaired Loans	$ 22,038	$ —	$ —	$ 22,038

Note 8 – Fair Values of Financial Instruments (Continued)

The following table s present additional quantitative information as of September 30 , 2014 and December 31, 201 3 about assets measured at fair value on a nonrecurri ng basis and for which the C ompany has utilized adjusted Level 3 inputs to determine fair value . (Dollars in thousands) :

Quantitative Information about Level 3 Fair Value Measurements	Fair Value	Valuation	Unobservable	Range
	Estimate	Techniques	Input
September 30, 2014:
Impaired Loans	$ 11,185	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-10%
			Liquidation expenses (3)	0%-10%

	Estimate	Valuation — Techniques	Unobservable — Input	Range
December 31, 2013:
Impaired Loans	$ 22,038	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-10%
			Liquidation expenses (3)	0%-10%

(1) Fair value is general l y determined through independent appraisals of the underlying collateral, w hich generally include various L evel 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

T he following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments a s of September 30, 2014 and December 31, 20 1 3 .

Cash and Cash Equivalents and Interest-Earning Time Deposits (Carried at Cost)

The carrying amounts reported in the consolidated statements of financial condition for cash and short-term instruments approximate those assets’ fair values.

Securities

The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.

Loans Held for Sale (Carried at Lower of Cost or Fair Value)

The fair value of loans held for sale is determined, when possible, using quoted secondary-market prices. If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for specific attributes of that loan. Loans held for sale are carried at their cost as of September 30, 201 4 and December 31, 20 1 3 .

Loans Receivable (Carried at Cost)

The fair value of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Note 8 – Fair Values of Financial Instruments (Continued)

Impaired Loans (Generally Carried at Fair Value)

A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are measured based on 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. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value at September 30 , 2014 and December 31, 201 3 consists of the loan balances of $ 13.4 million and $ 24.8 million, net of a valuation allowance of $ 1.9 million and $2. 6 million, respectively.

Real Estate Owned (Generally Carried at Fair Value)

Real Estate Owned is generally carried at fair value, when the carry ing value is written down to fair value, which is determined based upon independent third-party appraisals of the properties, or based upon the expected proceeds from a pending sale . These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

FHLB of New York Stock (Carried at Cost)

The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.

Interest Receivable and Payable (Carried at Cost)

The carrying amount of interest receivable and interest payable approximates its fair value.

Deposits (Carried at Cost)

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Long-Term Debt (Carried at Cost)

Fair values of long-term debt are estimated using discounted cash flow analysis, based on quoted prices for new long-term debt with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Off-Balance Sheet Financial Instruments

Fair values for the Company’s off-balance sheet financial instruments (lending commitments and unused lines of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing. The fair value of these commitments was deemed immaterial and is not presented in the accompanying table.

Note 8 – Fair Values of Financial Instruments (Continued)

The carrying values and estimated fair values of financial instruments were as follows a s of September 30, 2014 and December 31, 20 1 3 (In Thousands) :

			Quoted Prices in Active	Significant	Significant
	Carrying		Markets for Identical Assets	Other Observable Inputs	Unobservable Inputs
	Value	Fair Value	(Level 1)	(Level 2)	(Level 3)
	(In Thousands)
Financial assets:
Cash and cash equivalents	$ 25,125	$ 25,125	$ 25,125	$ -	$ -
Interest-earning time deposits	990	990	990	-	-
Securities available for sale	9,674	9,674	-	9,674	-
Securities held to maturity	-	-	-	-	-
Loans held for sale	3,313	3,414	-	3,414	-
Loans receivable, net	1,145,014	1,173,213	-	-	1,173,213
FHLB of New York stock, at cost	6,918	6,918	-	6,918	-
Accrued interest receivable	4,272	4,272	-	4,272	-
Financial liabilities:
Deposits	999,370	1,003,385	587,184	416,201	-
Borrowings	117,000	122,087	-	122,087	-
Subordinated debentures	4,124	4,303	-	4,303	-
Accrued interest payable	778	778	-	778	-

			Quoted Prices in Active	Significant	Significant
	Carrying		Markets for Identical Assets	Other Observable Inputs	Unobservable Inputs
	Value	Fair Value	(Level 1)	(Level 2)	(Level 3)
	(In Thousands)
Financial assets:
Cash and cash equivalents	$ 29,844	$ 29,844	$ 29,844	$ -	$ -
Interest-earning time deposits	990	990	990	-	-
Securities available for sale	1,104	1,104	1,104	-	-
Securities held to maturity	114,216	115,158	-	115,158	-
Loans held for sale	1,663	1,685	-	1,685	-
Loans receivable, net	1,020,344	1,042,552	-	-	1,042,552
FHLB of New York stock, at cost	7,840	7,840	-	7,840	-
Accrued interest receivable	4,157	4,157	-	4,157	-
Financial liabilities:
Deposits	968,670	972,911	587,889	385,022	-
Borrowings	128,000	135,574	-	135,574	-
Subordinated debentures	4,124	4,368	-	4,368	-
Accrued interest payable	768	768	-	768	-

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This quarterly report contains certain “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward looking statements may be identified by reference to a future period or periods, or by use of forward looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward looking statements are subject to numerous risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements, in addition to those risks disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2013, include, but are not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset/liability management, the financial and securities markets, and the availability of and costs associated with sources of liquidity.

The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions, which may be made to any forward looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Financial Condition

Total assets increased by $21.9 million or 1.8% to $1.230 billion at September 30, 2014 from $1.208 billion at December 31, 2013. The increase in total assets occurred primarily as a result of an increase in loans receivable, net of $124.7 million, partially offset by a decrease in securities held to maturity of $114.2 million. Management is focusing on maintaining adequate liquidity in anticipation of funding loans in the loan pipeline as well as seeking opportunities to purchase loans in the secondary market that provide competitive returns in a risk-mitigated environment. It is our intention to grow our assets at a measured pace consistent with our capital levels and as business opportunities permit. Organic growth should occur consistent with our strategic plan under which we anticipate opening additional branch offices during the next six months.

Total cash and cash equivalents decreased by $4.7 million or 15.8% to $25.1 million at September 30, 2014 from $29.8 million at December 31, 2013. Investment securities classified as held-to-maturity, which totaled $114.2 million at Dec ember 31, 2013, were sold in the quarter ended Sept ember 30, 2014, except for approximately $9.8 million of such securities which were re-designated to a vailable for s ale securities.

Loans receivable, net increased by $124.7 million or 12.2% to $1.145 billion at September 30, 2014 from $1.020 billion at December 31, 2013. The increase resulted primarily from a $121.6 million increase in real estate mortgages comprising commercial and multi-family, construction and participation loans with other financial institutions and an increase of $8.6 million in residential real estate loans, partially offset by a $3.0 million decrease in business loans and commercial lines of credit, a $2.0 million decrease in home equity loans and home equity lines of credit and a $1.1 million increase in the allowance for loan losses. As of September 30, 2014, the allowance for loan losses was $15.4 million or 78.9% of non-accrual loans and 1.28% of gross loans. As a result of the loans acquired in the business combination transactions being recorded at their fair value, the balances in the allowance for loan losses that were on the balance sheets of the former Pamrapo Bancorp, Inc., and Allegiance Community Bank are precluded from being reported in the allowance balance previously discussed, consistent with generally accepted accounting principles.

Deposit liabilities increased by $30.7 million or 3.2% to $999.4 million at September 30, 2014 from $968.7 million at December 31, 2013. The increase resulted primarily from a $31.5 million increase in certificates of deposit, and a $13.6 million increase in non-interest bearing deposits, partly offset by a decrease of $15.9 million in money market interest bearing deposits . The increase in certificates of deposit primarily was the result of additional CDARS deposits of $41.8 million. Recognizing this shift in the mix of our deposits, the attraction and retention of non-interest bearing commercial deposits, and longer dated maturity deposits remains a focus of our retail deposit gathering philosophy. During the nine months ended September 30, 2014, the Federal Open Market Committee (FOMC) has continued its accommodative monetary policy. This extended environment of historically low short term market rates has resulted in continuing parallel low retail deposit account yields, directly decreasing interest expense.

Short-term borrowings decreased by $11.0 million, or 61.1%, to $7.0 million at September 30, 2014 from $18.0 million at December 31, 2013. The lower borrowing total resulted from repayments from proceeds of the sale of investment securities classified as held-to-maturity Long-term borrowed money remained constant at $110.0 million at September 30, 2014 and December 31, 2013. The purpose of these borrowings reflects the use of long and short term Federal Home Loan Bank advances to augment deposits as the Company’s funding source for originating loans and investing in GSE investment securities.

Stockholders’ equity increased by $2.6 million or 2.7% to $102.7 million at September 30, 2014 from $100.1 million at December 31, 2013. The increase in stockholders’ equity was primarily attributable to net income of $6.0 million, and an increase of $770,000 in preferred stock outstanding as a result of our capital raising efforts, which concluded by March 31, 2014, partly offset by cash dividends paid during the nine months ended September 30, 2014 totaling $3.3 million on outstanding common shares of stock and $599,000 on outstanding shares of preferred stock. The Company accrued a dividend payable for the third quarter on the preferred shares for $201,000 which will be paid in the fourth quarter. As of September 30, 2014, the Bank’s Tier 1, Tier 1 Risk-Based and Total Risk Based Capital Ratios were 8.30%, 11.19% and 12.45% respectively.

Three Months of Operation

Net income decreased by $1.0 million or 49.2% to $1.1 million for the three months ended September 30, 2014 from $2.1 million for the three months ended September 30, 2013. Net income decreased due to lower non-interest income and higher non-interest expense in the current-year period, partially offset by increased net interest income.

Net interest income increased by $1.5 million or 12.6% to $13.1 million for the three months ended September 30, 2014 from $11.6 million for the three months ended September 30, 201 3 . The increase in net interest income resulted primarily from an increase in the average balance of interest-earning assets of $54.4 million, or 4.7% , to $1.213 billion for the three months ended September 30, 2014, from $1.158 billion for the three months ended September 30, 2013, and an increase in the average yield on interest-earning as sets of 23 basis points to 5.15% for the three months ended September 30, 2014, from 4.92% for the three months ended September 30, 2013. The average balance of interest-bearing liabilities inc reased by $34.7 million, or 3.6% , to $1.011 billion for the three months ended Sept ember 30, 2014, from $976.3 million for the three months ended September 30, 2013, while the average cost of interest-bearing liabilities decrease d by seven basis points to 1.01% for the three months ended

September 30, 2014, from 1.08% for the three month s ended September 30, 2013. Net interest margin was 4.31% for the three months ended September 30, 2014 and 4.00% for the three months ended September 30, 2013.

Interest income on loans receivable increased by $1.9 million or 14.6% to $15.3 million for the three months ended September 30, 2014 from $13.4 million for the three months ended September 30, 2013. The increase was primarily attributable to an increase in the average balance of loans receivable of $158.9 million or 16.1% to $1.143 billion for the three months ended September 30, 2014 from $984.3 million for the three months ended September 30, 2013, partially offset by a decrease in the average yield on loans receivable to 5.34% for the three months ended September 30, 2014 from 5.42% for the three months ended September 30, 2013. The increase in the average balance of loans receivable was the result of the successful on-going implementation of our comprehensive loan growth strategy. The decrease in average yield reflects the competitive price environment prevalent in the Company’s primary market area on loan facilities as well as the repricing downward of certain variable rate loans.

Interest income on securities decreased by $572,000 or 64.7% to $312,000 for the three months ended September 30, 2014 from $884,000 for the three months ended September 30, 2013. This decrease was primarily due to a decrease in the average balance of securities of $91.6 million or 70.0% to $39.3 million for the three months ended September 30, 2014 from $130.9 million for the three months ended September 30, 2013, partly offset by an increase in the average yield of securities to 3.17% for the three months ended September 30, 2014 from 2.70% for the three months ended September 30, 2013. Investment securities classified as held-to-maturity, which totaled $114.2 million at Dec ember 31, 2013, were sold in the quarter ended September 30, 2014, except for approximately $9.8 million of such securities which were re-designated as a vailable for s ale securities.

Interest income on other interest-earning assets decreased by $2,000 or 14.3% to $12,000 for the three months ended September 30, 2014 from $14,000 for the three months ended September 30, 2013. This decrease was primarily due to a decrease of $12.8 million or 29.6% in the average balance of other interest-earning assets to $30.4 million for the three months ended September 30, 2014 from $43.2 million for the three months ended September 30, 2013. The average yield on other interest-earning assets increased to 0.16% for the three months ended September 30, 2014 from 0.13% for the three months ended September 30, 2013. The static nature of the average yield on other interest-earning assets reflects the current philosophy of the FOMC of keeping short term interest rates at historically low levels for the last several years.

Total interest expense decreased by $93,000 or 3.5% to $2.56 million for the three months ended September 30, 2014 from $2.65 million for the three months ended September 30, 2013. The decrease resulted primarily from a decrease in the average cost of interest-bearing liabilities of seven basis points to 1.01% for the three months ended September 30, 2014 from 1.08% for the three months ended September 30, 2013, partly offset by an increase in the average balance of interest-bearing liabilities of $34.7 million or 3.6% to $1.010 billion for the three months ended September 30, 2014 from $976.3 million for the three months ended September 30, 2013 . The decrease in the average cost of interest bearing liabilities reflects the lower short term interest rate environment and our ability to reduce our pricing on a select number of retail deposit products.

The provision for loan losses totaled $650,000 and $450,000 for the three months ended September 30, 2014 and 2013, respectively. The provision for loan losses is established based upon management’s review of the Company’s loans and consideration of a variety of factors including, but not limited to, (1) the risk characteristics of the loan portfolio, (2) current economic conditions, (3) actual losses previously experienced, (4) the dynamic activity and fluctuating balance of loans receivable, and (5) the existing level of reserves for loan losses that are probable and estimable. During the three months ended September 30, 2014, the Company experienced $209,000 in net charge-offs (consisting of $358,000 in charge-offs and $149,000 in recoveries). The Bank had non-performing loans totaling $19.0 million or 1.63% of gross loans at September 30, 2014 and $20.6 million or 1.98% of gross loans at December 31, 2013. The allowance for loan losses was $15.4 million or 1.32% of gross loans at September 30, 2014, $14.3 million or 1.38% of gross loans at December 31, 2013 and $13.9 million or 1.39% of gross loans at September 30, 2013. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in the aforementioned criteria. In addition various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require the Company to recognize additional provisions based on their judgment of information available to them at the time of their examination. Management believes that the allowance for loan losses was adequate at September 30, 2014, December 31, 2013 and September 30, 2013.

Total non-interest income decr eased by $1.5 million, or 198.3% , to a loss of $750,000 for the three months ended September 30, 2014, from $763,000 of income for the three months ended September 30, 2013. The decrease in non-interest income for the three-month period ended September 30, 2014, primarily reflected a $4.0 million loss on the bulk sale of impaired loans, partially offset by a $2.2 million gain on the sale of investment securities held to maturity.

Total non-interest expense increased by $1.6 million or 19.1 % to $9.9 million for the three months ended September 30, 2014 from $8.3 million for the three months ended September 30, 2013. Salaries and employee benefits expense increased by $1.3 million or 31.1% to $5.3 million for the three months ended September 30, 2014 from $4.0 million for the three months ended September 30, 2013. This increase in both salaries and employee benefits was mainly attributable to an increase of 71 full-time equivalent employees, or 28.9%, to 317 at September 30, 2014 from 246 at September 30, 2013, which relates to the addition of new business development and loan administration employees, and the anticipated opening of new branch offices in 2014, as well as providing health benefits to a greater number of existing employees. Occupancy expense increased by $133,000 or 14.3% to $1.1 million for the three months ended September 30, 2014 from $933,000 for the three months ended September 30, 2013. Equipment expense increased by $77,000 or 5.5% to $1.5 million for the three months ended September 30, 2014 from $1.4 million for the three months ended September 30, 2013. The increases in occupancy and equipment expenses related primarily to the anticipated opening of new branch offices in 2014. Professional fees decreased by $173,000 or 25% to $520,000 for the three months ended September 30, 2014 from $693,000 for the three months ended September 30, 2013. Advertising expense increased by $129,000 or 86.6% to $278,000 for the three months ended September 30, 2014 from $149,000 for the three months ended September 30, 2013. The increase in advertising was primarily due to our marketing efforts related to the previously mentioned expansion of our geographic footprint. Other non-interest expense increased by $186,000 or 31.8% to $770,000 for the three months ended September 30, 2014 from $584,000 for the three months ended September 30, 2013. Other non-interest expense is comprised of loan expense, stationary, forms and printing, check printing, correspondent bank fees, telephone and communication, and other fees and expenses.

Income tax provision decreased by $788,000 or 55.2% to $640,000 for the three months ended September 30, 2014 from $1.4 million for the three months ended September 30, 2013 . The decrease in income tax provision was a result of lower taxable income during the three-month period ended September 30, 2014 as compared to the three months ended September 30, 2013. The consolidated effective tax rate for the three months ended September 30, 2014 was 37.0% compared to 40.0% for the three months ended September 30, 2013.

Nine Months of Operation

Net income was $6.0 million for the nine months ended Sept ember 30, 2014, compared with $7.1 million for the nine months ended Sept ember 30, 2013. Net income decreased due to higher non-interest expense, partially offset by increases in net interest income and non-interest income for the nine months ended September 30, 2014, as compared to the prior year period.

Net interest income in creased by $2.8 million, or 8.1% , to $37.4 million for the nine months ended September 30, 2014, from $34.6 million for the nine months ended September 30, 2013. The increase in net interest income resulted primarily from an increase in the average balance of interest-earning assets of $ 61.1 million, or 5.3% , to $1.207 billion for the nine months ended September 30, 2014, from $1.146 billion for the nine months ended September 30, 2013, and an increase in the average yield on interest-earning ass ets of two basis points to 4.97% for the nine months ended September 30, 2014, from 4.95% for the nine months ended September 30, 2013. The average balance of interest-bearing liabilities increased by $38.0 million, or 3.9 % , to $1.010 billion for the nine months ended September 30, 2014, from $971.6 million for the nine months ended September 30, 2013, while the average cost of interest-bearing liabilities decrease d by eight basis points to 1.01% for the nine months ended September 30, 2014, from 1.09% for the nine months ended September 30, 2013. Net interest margin was 4.13% for the nine-month period ended September 30, 2014 and 4.02% for the nine-month period ended September 30, 2013.

Interest income on loans receivable increased by $3.3 million or 8.3% to $42.8 million for the nine months ended September 30, 2014 from $39.5 million for the nine months ended September 30, 2013. The increase was primarily attributable to an increase in the average balance of loans receivable of $126.1 million or 13.0% to $1.094 billion for the nine months ended September 30, 2014 from $967.5 million for the nine months ended September 30, 2013, partially offset by a decrease in the average yield on loans receivable to 5.22% for the nine months ended September 30, 2014 from 5.45% for the nine months ended September 30, 2013. The increase in the average balance of loans receivable was the result of our comprehensive loan growth strategy. The decrease in average yield reflects the competitive price environment prevalent in the Company’s primary market area on loan facilities as well as the repricing downward of certain variable rate loans.

Interest income on securities decreased by $768,000 or 26.5% to $2.1 million for the nine months ended September 30, 2014 from $2.9 million for the nine months ended September 30, 2013. This decrease was primarily due to a decrease in the average balance of securities of $55.2 million or 37.9% to $90.5 million for the nine months ended September 30, 2014 from $145.7 million for the nine months ended September 30, 2013, partly offset by an increase in the average yield of securities to 3.14% for the nine months ended September 30, 2014 from 2.65% for the nine months ended September 30, 2013. Investment securities classified as held-to-maturity, which totaled $114.2 million at December 31, 2013, were sold in the quarter ended September 30, 2014, except for approximately $9.8 million of such securities which were re-designated to a vailable for s ale securities.

Interest income on other interest-earning assets was $36,000 for the nine-month period ended September 30, 2014 compared with $38,000 for the nine months ended September 30, 2013. The average balance of other interest-earning assets decreased $9.8 million or 30.2% to $22.7 million for the nine months ended September 30, 2014 from $32.5 million for the nine months ended September 30, 2013. The average yield on other interest-earning assets increased to 0.21% for the nine months ended September 30, 2014 from 0.16% for the nine months ended September 30, 2013. The low average yield on other interest-earning assets reflects the current philosophy of the FOMC of keeping short term interest rates at historically low levels for the last several years.

Total interest expense decreased by $289,000 or 3.6% to $7.6 million for the nine months ended September 30, 2014 from $7.9 million for the nine months ended September 30, 2013. The decrease resulted primarily from a decrease in the average cost of interest-bearing liabilities of eight basis points to 1.01% for the nine months ended September 30, 2014 from 1.09% for the nine months ended September 30, 2013, partly offset by an increase in the average balance of interest-bearing liabilities of $38.0 million or 3.9% to $1.010 billion for the nine months ended September 30, 2014 from $ 971.6 million for the nine months ended September 30, 2013. The decrease in the average cost reflects the lower short term interest rate environment and our ability to reduce our pricing on a select number of retail deposit products.

The provision for loan losses totaled $2.1 million and $2.3 million for the nine months ended September 30, 2014 and 2013, respectively. The provision for loan losses is established based upon management’s review of the Company’s loans and consideration of a variety of factors including, but not limited to, (1) the risk characteristics of the loan portfolio, (2) current economic conditions, (3) actual losses previously experienced, (4) the dynamic activity and fluctuating balance of loans receivable, and (5) the existing level of reserves for loan losses that are probable and estimable. During the nine months ended September 30, 2014, the Company experienced $1.0 million in net charge-offs (consisting of $1.3 million in charge-offs and $293,000 in recoveries). The Bank had non-performing loans totaling $19.0 million or 1.63% of gross loans at September 30, 2014 and $20.6 million or 1.98% of gross loans at December 31, 2013. The allowance for loan losses was $15.4 million or 1.32% of gross loans at September 30, 2014, $14.3 million or 1.38% of gross loans at December 31, 2013 and $13.9 million or 1.39% of gross loans at September 30, 2013. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in the aforementioned criteria. In addition various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require the Company to recognize additional provisions based on their judgment of information available to them at the time of their examination. Management believes that the allowance for loan losses was adequate at September 30, 2014, December 31, 2013 and September 30, 2013.

Total non-interest income increased by $160,000, or 6.6% to $2.6 million for the nine months ended September 30, 2014 from $2.4 million for the nine months ended September 30, 2013, which included a $1.2 million gain on the sale of investment securities available for sale in the nine-month period ended September 30, 2014, with no comparable sale in the nine-month period ended September 30, 2013, and a $1.9 million increase in gains on the sale of investment securities held to maturity to $2.3 million for the nine months ended September 30, 2014 from $378,000 for the nine months ended September 30, 2013 . In addition, non-interest income included an increase in gains on sales of loans originated for sale of $758,000 to $1.4 million for the nine months ended September 30, 2014 from $609,000 for the nine months ended September 30, 2013. These increases in non-interest income were largely offset by a $4.0 million loss on the bulk sale of impaired loans in the nine-month period ended September 30, 2014, with no comparable sale in the nine-month period ended September 30, 2013.

Total non-interest expense increased by $5.1 million or 22.4% to $27.9 million for the nine months ended September 30, 2014 from $22.8 million for the nine months ended September 30, 2013. Salaries and employee benefits expense increased by $3.6 million or 31.8% to $14.8 million for the nine months ended September 30, 2014 from $11.2 million for the nine months ended September 30, 2013. This increase in both salaries and employee benefits was mainly attributable to an increase of 71 full-time equivalent employees, or 28.9%, to 317 at September 30, 2014 from 246 at September 30, 2013 , which relates to the addition of business development and loan administration employees, and the anticipated opening of new branch offices in 2014, as well as providing health benefits to a greater number of existing employees. Occupancy expense increased by $398,000 or 15.2% to $3.0 million for the nine months ended September 30, 2014 from $2.6 million for the nine months ended September 30, 2013. Equipment expense increased by $327,000 or 8.5% to $4.2 million for the nine months ended September 30, 2014 from $3.8 million for the nine months ended September 30, 2013. The increases in occupancy and equipment expenses related primarily to the anticipated opening of new branch offices in 2014. Advertising expense increased by $289,000 or 67.4% to $718,000 for the nine months ended September 30, 2014 from $429,000 for the nine months ended September 30, 2013. The increase in advertising was primarily due to our marketing efforts related to the previously mentioned expansion of our geographic footprint. Other real estate owned (OREO) (income)/expenses increased by $ 118,000 to expenses of $101,000 for the nine months ended September 30, 2014 from income of $17,000 for the nine months ended September 30, 2013. The increase in expenses was primarily due to an upward valuation adjustment of OREO property of $110,000 for the nine months ended September 30, 2013 compared to no corresponding adjustment for the nine months ended September 30, 2014. Other non-interest expense increased by $555,000 or 32.8% to $2.2 million for the nine months ended September 30, 2014 from $1.7 million for the nine months ended September 30, 2013. Other non-interest expense is comprised of loan expense, stationary, forms and printing, check printing, correspondent bank fees, telephone and communication, and other fees and expenses.

Income tax provision decreased by $874,000 or 18.1% to $3.9 million for the nine months ended September 30, 2014 from $4.8 million for the nine months ended September 30, 2013 . The decrease in income tax provision was a result of lower taxable income during the nine-month period ended September 30, 2014 as compared to the nine months ended September 30, 2013. The consolidated effective tax rate for the nine months ended September 30, 2014 was 39.9% compared to 40.4% for the nine months ended September 30, 2013.

Liquidity and Capital Resources

Liquidity

The overall objective of our liquidity management practices is to ensure the availability of sufficient funds to meet financial commitments and to take advantage of lending and investment opportunities. The Company manages liquidity in order to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings and other obligations as they mature, and to fund loan and investment portfolio opportunities as they arise.

The Company’s primary sources of funds to satisfy its objectives are net growth in deposits (primarily retail), principal and interest payments on loans and investment securities, proceeds from the sale of originated loans and FHLB and other borrowings. The scheduled amortization of loans is a predictable source of funds. Deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company has other sources of liquidity if a need for additional funds arises, including unsecured overnight lines of credit and other collateralized borrowings from the FHLB and other correspondent banks.

At September 30, 2014, the Company had overnight borrowings outstanding with the FHLB of $7.0 million compared to $18.0 million at December 31, 2013. The Company utilizes overnight borrowings from time to time to fund short-term liquidity needs. The Compan y had total borrowings of $121.1 million at September 30, 2014 as compared to $132.1 million at December 31, 2013.

The Company had the ability at September 30, 2014 to obtain additiona l funding from the FHLB of $62.7 million, utilizing unencumbere d loan collateral . The Company expects to have sufficient funds available to meet current loan commitments in the normal course of business through typical sources of liquidity. Time deposits scheduled to mature in one year or less totaled $271.3 million at September 30, 2014. Based upon historical experience data, management estimates that a significant portion of such deposits will remain with the Company.

Capital Resources. At September 30 , 2014, and December 31, 2013, BCB Community Bank exceeded all of its regulatory capital requirements to which it is subject.

	Actual	For Capital Adequacy Purposes	For Well Capitalized Under Prompt Corrective Action
As of September 30, 2014:
Tangible capital to tangible assets	8.30%	4.00%	5.00%
Tier I capital (core) (to adjusted total assets)	11.19%	4.00%	6.00%
Total capital (to risk-weighted assets)	12.45%	8.00%	10.00%
As of December 31, 2013:
Tangible capital to tangible assets	8.70%	4.00%	5.00%
Tier I capital (core) (to adjusted total assets)	12.41%	4.00%	6.00%
Total capital (to risk-weighted assets)	13.66%	8.00%	10.00%

In July 2013, the FDIC and the other federal bank regulatory agencies issued a final rule that will revise their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. Among other things, the new rule establishes a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increases the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealiz ed gains and losses on certain available-for-sale securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised. The rule limits a banking organization's capital distributions and certain discretionary bonus payments if the banking organization does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.

The final rule becomes effective for the Bank and the Company on January 1, 2015. The capital conservation buffer requirement will be phased in beginning January 1, 2016 and ending January 1, 2019, when the full capital conservation buffer requirement will be effective. The Bank and the Company currently comply with the final rule.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Management of Market Risk

General. The majority of our assets and liabilities are monetary in nature. Consequently, one of our most significant forms of market risk is interest rate risk. Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has established an Asset/Liability Committee which is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors. Senior management monitors the level of interest rate risk on a regular basis and the Asset/Liability Committee, which consists of senior management and outside directors operating under a policy adopted by the Board of Directors, meets as needed to review our asset/liability policies and interest rate risk position.

The following table presents the Company’s net portfolio value (“NPV”). These calculations were based upon assumptions believed to be fundamentally sound, although they may vary from assumptions utilized by other financial institutions. The information set forth below is based on data that included all financial instruments as of September 30 , 2014 . Assumptions have been made by the Company relating to interest rates, loan prepayment rates, core deposit duration, and the market values of certain assets and liabilities under the various interest rate scenarios. Actual maturity dates were used for fixed rate loans and certificate accounts. Investment securities were scheduled at either the maturity date or the next scheduled call date based upon management’s judgment of whether the particular security would be called in the current interest rate environment and under assumed interest rate scenarios. Variable rate loans were scheduled as of their next scheduled interest rate repricing date. Additional assumptions made in the preparation of the NPV table include prepayment rates on loans and mortgage-backed securities, core deposits without stated maturity dates were scheduled with an assumed term of 48 months, and money market and non-interest bearing accounts were scheduled with an assumed term of 24 months. The NPV at “PAR” represents the difference between the Company’s estimated value of assets and estimated value of liabilities assuming no change in interest rates. The NPV for decrease s of 2 00 and 300 basis points ha ve been excluded since they would not be meaningful, in the interest rate environment as of September 30 , 2014 . The following sets forth the Company’s NPV as of that date . (Dollars In Thousands):

Change in Calculation	Net Portfolio Value	$ Change from PAR	% Change from PAR	NPV as a % of Assets — NPV Ratio	Change
+300bp	$ 134,809	$ (42,227)	(26.12) %	10.24 %	(242)	bps
+200bp	150,179	(26,857)	(16.62)	11.20	(146)	bps
+100bp	165,624	(11,412)	(7.06)	12.11	(55)	bps
PAR	177,036	-	-	12.66	-	bps
-100bp	208,383	31,347	19.39	14.60	194	bps

bp – basis points

The table above indicates that a s of September 30 , 2014 , in the event of a 100 basis point increase in interest rates, we would experience a 7.06 % decrease in NPV.

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in NPV require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the NPV table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the NPV table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income, and will differ from actual results.

ITEM 4.

Controls a nd Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There has been no change in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved, from time to time, as plaintiff or defendant in various legal actions arising in the normal course of business. Other than as set forth below, as of September 30, 2014, we were not involved in any material legal proceedings the outcome of which, if determined in a manner adverse to the Company, would have a material adverse affect on our financial condition or results of operations.

The Company, as the successor to Pamrapo Bancorp, Inc., and in its own corporate capacity, is a named defendant in a shareholder class action lawsuit, Kube v. Pamrapo Bancorp, Inc., et al., filed in the Superior Court of New Jersey, Hudson County, Chancery Division, General Equity. On May 9, 2012, the Company obtained partial summary judgment, dismissing three of the five Counts of the Complaint. On May 9, 2012, plaintiff’s counsel was awarded interim legal fees of approximately $350,000. The Company’s obligation to pay that amount has been stayed.

The Company filed a motion for summary judgment, seeking the dismissal of the remaining two Counts of the Complaint. That motion was denied, without prejudice, on February 19, 2014. The parties have conferenced in an effort to resolve this case. A final resolution is actively being pursued. The Company is vigorously defending its interests in this litigation.

The Company has brought a lawsuit against Progressive Insurance Company ("Progressive"), the Directors' and Officers' Liability insurance carrier for Pamrapo Bancorp, Inc., at the time of its merger with the Company on July 6, 2010, and Colonial American Insurance Company ("Colonial"), the Directors' and Officers' Liability insurance carrier for the Company at the time of the merger. The lawsuit seeks, among other claims, indemnification, payment of and/or contribution toward the above award of interim attorney's fees to the plaintiff class's counsel, and reimbursement of the attorney's fees and defense costs incurred by the Company in defending the Kube v. Pamrapo Bancorp, Inc., et al., case.

Progressive has made a motion for summary judgment seeking the dismissal of the Company's lawsuit against it. The Company has opposed that motion. That motion is pending before the court.

Preliminary discovery has been exchanged among the parties.

ITEM 1.A . RISK FACTORS

Other than as set forth below, there have been no changes to the risk factors set forth under Item 1.A Risk Factors as set forth in the Company’s Form 10-K for the year ended December 31, 201 3 .

The asset quality of our loan portfolio may deteriorate if the economy falters, resulting in a portion of our loans failing to perform in accordance with their terms. Under such circumstances our profitability will be adversely affected.

At September 30, 2014 , the Company had $39.6 million in classified loans , of which $25.7 million were c lassified as substandard and $13. 9 million were classified as special mention. In addition, at that date we had $ 18.9 million in non-accruing loans. While we have adhered to stringent underwriting standards in the origination of loans, a large percentage of our loan portfolio was obtained in connection with our acquisition s of Pamrapo Bancorp, Inc. and Allegiance Community Bank. In addition, there can be no assurance that loans that we originated will not experience asset quality deterioration as a result of a downturn in the local economy. Should our local economy weaken, our asset quality may deteriorate resulting in losses to the Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On June 28, 2012, the Company announced a seventh stock repurchase plan to repurchase 5% or 440,000 shares of the Company’s common stock. On July 17, 2013, the Company announced an eighth stock repurchase plan to repurchase 5% or 400,000 shares of the Company’s common stock. The re were no Company’s stock purchases for the three months ended September 30, 2014 .

Period	Shares Purchased	Average Price	Total Number of Shares Purchased	Maximum Number of Shares That May Yet be Purchased
July 1- July 31, 2014	-	$ -	-	414,905
August 1- August 31, 2014	-	$ -	-	414,905
September 1- September 30, 2014	-	$ -	-	414,905
Total	-	$ -	-	414,905

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAF ET Y DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None.

ITEM 6 . EXHIBITS

Exhibit 11.0 Computation of Earnings per Share.

Exhibit 31.1 and 31.2 Officers’ Certification filed pursuant to section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32 Officers’ Certification filed pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS XBRL Instance Document

Exhibit 101.SCH XBRL Taxonomy Extension Schema

Exhibit 101.CAL XBRL Taxonomy Extension Calculation LinkBase

Exhibit 101.DEF XBRL Taxonomy Extension Definition LinkBase

Exhibit 101.LAB XBRL Taxonomy Extension Label LinkBase

Exhibit 101.PRE XBRL Taxonomy Extension Presentation LinkBase

Signatures

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

Date: November 7 , 2014	BCB BANCORP, INC. — By:	/s/ Thomas Coughlin
		Thomas Coughlin
		President and Chief Executive Officer (Principal Executive Officer)
Date: November 7 , 2014	By:	/s/ Thomas P. Keating
		Thomas P. Keating Senior Vice President and Chief Financial Officer
		(Principal Accounting and Financial Officer)

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BCB BANCORP INC Interim / Quarterly Report 2014

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BCB BANCORP INC — Interim / Quarterly Report 2014

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