UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
(MARK ONE) | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
OR | |
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
(Exact name of Registrant as Specified in its Charter)
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(
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
| Trading Symbol: |
| Name of each exchange on which registered: |
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. ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
The Registrant had
HERITAGE COMMERCE CORP
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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Cautionary Note Regarding Forward-Looking Statements
This Report on Form 10-Q contains various statements that may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, Rule 3b-6 promulgated thereunder and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These forward-looking statements often can be, but are not always, identified by the use of words such as “assume,” “expect,” “intend,” “plan,” “project,” “believe,” “estimate,” “predict,” “anticipate,” “may,” “might,” “should,” “could,” “goal,” “potential” and similar expressions. We base these forward-looking statements on our current expectations and projections about future events, our assumptions regarding these events and our knowledge of facts at the time the statements are made. These statements include statements relating to our projected growth, anticipated future financial performance, and management’s long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition.
These forward-looking statements are subject to various risks and uncertainties that may be outside our control and our actual results could differ materially from our projected results. Risks and uncertainties that could cause our financial performance to differ materially from our goals, plans, expectations and projections expressed in forward-looking statements include those set forth in our filings with the Securities and Exchange Commission (“SEC”), Item 1A of the Heritage Commerce Corp’s (“the Company”) Annual Report on Form 10-K for the year ended December 31, 2020, and the following:
● | the effect of the COVID-19 pandemic, and other infectious illness outbreaks that may arise in the future, on our customers, employees, businesses, liquidity, financial results and overall condition and which has created significant uncertainties in U.S. and global markets, including our customers' ability to make timely payments on obligations, and operating expense due to alternative approaches to doing business; |
● | current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of declines in property values and overall slowdowns in economic growth should these events occur; |
● | effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Open Market Committee of the Federal Reserve Board; |
● | our ability to anticipate interest rate changes and manage interest rate risk; |
● | changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources; |
● | volatility in credit and equity markets and its effect on the global economy; |
● | our ability to effectively compete with other banks and financial services companies and the effects of competition in the financial services industry on our business; |
● | our ability to achieve loan growth and attract deposits; |
● | risks associated with concentrations in real estate related loans; |
● | the relative strength or weakness of the commercial and real estate markets where our borrowers are located, including related asset and market prices; |
● | credit related impairment charges to our securities portfolio; |
● | changes in the level of nonperforming assets and charge offs and other credit quality measures, and their impact on the adequacy of our allowance for credit losses and our provision for credit losses; |
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● | increased capital requirements for our continual growth or as imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all; |
● | regulatory limits on Heritage Bank of Commerce’s ability to pay dividends to the Company; |
● | changes in our capital management policies, including those regarding business combinations, dividends, and share repurchases; |
● | operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to industry changes in information technology systems, on which we are highly dependent; |
● | our inability to attract, recruit, and retain qualified officers and other personnel could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, results of operations and growth prospects; |
● | possible adjustment of the valuation of our deferred tax assets; |
● | our ability to keep pace with technological changes, including our ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft; |
● | inability of our framework to manage risks associated with our business, including operational risk and credit risk; |
● | risks of loss of funding of Small Business Administration (“SBA”) or SBA loan programs, or changes in those programs; |
● | compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities, accounting and tax matters; |
● | significant changes in applicable laws and regulations, including those concerning taxes, banking and securities; |
● | effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; |
● | costs and effects of legal and regulatory developments, including resolution of regulatory or other governmental inquiries, and the results of regulatory examinations or reviews; |
● | the expense and uncertain resolution of litigation matters whether occurring in the ordinary course of business or otherwise; |
● | availability of and competition for acquisition opportunities; |
● | risks resulting from domestic terrorism; |
● | risks resulting from social unrest and protests; |
● | risks of natural disasters (including earthquakes) and other events beyond our control; |
● | changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, such as the SBA Paycheck Protection Program (“PPP”), the Federal Reserve Board's efforts to provide liquidity to the financial system and provide credit to private commercial and municipal borrowers, and other programs designed to address the effects of the COVID-19 pandemic; |
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● | our participation as a lender in the PPP and similar programs and its effect on our liquidity, financial results, businesses and customers, including the availability of program funds and the ability of customers to comply with requirements and otherwise perform with respect to loans obtained under such programs; |
● | our success in managing the risks involved in the foregoing factors. |
Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events. You should consider any forward looking statements in light of this explanation, and we caution you about relying on forward-looking statements.
5
Part I—FINANCIAL INFORMATION
ITEM 1—CONSOLIDATED FINANCIAL STATEMENTS
HERITAGE COMMERCE CORP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, | December 31, | |||||
| 2021 |
| 2020 | |||
(Dollars in thousands) | ||||||
Assets | ||||||
Cash and due from banks | $ | | $ | | ||
Other investments and interest-bearing deposits in other financial institutions |
| |
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Total cash and cash equivalents |
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Securities available-for-sale, at fair value |
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Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $ | ||||||
and $ | |
| | |||
Loans held-for-sale - SBA, at lower of cost or fair value, including deferred costs |
| |
| | ||
Loans, net of deferred fees |
| |
| | ||
Allowance for credit losses on loans |
| ( |
| ( | ||
Loans, net |
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Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost |
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Company-owned life insurance |
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Premises and equipment, net |
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Goodwill | | | ||||
Other intangible assets |
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Accrued interest receivable and other assets |
| |
| | ||
Total assets | $ | | $ | | ||
Liabilities and Shareholders' Equity | ||||||
Liabilities: | ||||||
Deposits: | ||||||
Demand, noninterest-bearing | $ | | $ | | ||
Demand, interest-bearing |
| |
| | ||
Savings and money market |
| |
| | ||
Time deposits - under $250 |
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Time deposits - $250 and over |
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CDARS - interest-bearing demand, money market and time deposits |
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Total deposits |
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Subordinated debt, net of issuance costs | | | ||||
Accrued interest payable and other liabilities |
| |
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Total liabilities |
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Shareholders' equity: | ||||||
Preferred stock, | ||||||
at March 31, 2021 and December 31, 2020 | ||||||
Common stock, | ||||||
| ||||||
|
| |
| | ||
Retained earnings |
| |
| | ||
Accumulated other comprehensive loss |
| ( |
| ( | ||
Total shareholders' equity |
| |
| | ||
Total liabilities and shareholders' equity | $ | | $ | | ||
See notes to consolidated financial statements (unaudited).
6
HERITAGE COMMERCE CORP
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended | ||||||
March 31, | ||||||
| 2021 |
| 2020 | |||
(Dollars in thousands, except per share amounts) | ||||||
Interest income: | ||||||
Loans, including fees | $ | | $ | | ||
Securities, taxable |
| |
| | ||
Securities, exempt from Federal tax |
| |
| | ||
Other investments, interest-bearing deposits | ||||||
in other financial institutions and Federal funds sold |
| |
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Total interest income |
| |
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Interest expense: | ||||||
Deposits |
| |
| | ||
Subordinated debt |
| |
| | ||
Total interest expense |
| |
| | ||
Net interest income before provision for credit losses on loans |
| |
| | ||
Provision for (recapture of) credit losses on loans |
| ( |
| | ||
Net interest income after provision for credit losses on loans |
| |
| | ||
Noninterest income: | ||||||
| |
| | |||
Gain on sales of SBA loans |
| |
| | ||
Increase in cash surrender value of life insurance |
| |
| | ||
Servicing income |
| |
| | ||
Gain on sales of securities |
| — |
| | ||
— | | |||||
Other |
| |
| | ||
Total noninterest income |
| |
| | ||
Noninterest expense: | ||||||
Salaries and employee benefits |
| |
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Occupancy and equipment |
| |
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Professional fees |
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Other |
| |
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Total noninterest expense |
| |
| | ||
Income before income taxes |
| |
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Income tax expense |
| |
| | ||
Net income | $ | | $ | | ||
Earnings per common share: | ||||||
Basic | $ | $ | ||||
Diluted | $ | $ |
See notes to consolidated financial statements (unaudited).
7
HERITAGE COMMERCE CORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended | |||||||
March 31, | |||||||
| 2021 |
| 2020 |
| |||
(Dollars in thousands) | |||||||
Net income | $ | | $ | | |||
Other comprehensive income (loss): | |||||||
Change in net unrealized holding (losses) gains on available-for-sale | |||||||
securities and I/O strips |
| ( |
| | |||
Deferred income taxes |
| |
| ( | |||
Change in net unamortized unrealized gain on securities available-for- | |||||||
sale that were reclassified to securities held-to-maturity |
| ( |
| ( | |||
Deferred income taxes |
| |
| | |||
Reclassification adjustment for gains realized in income |
| — |
| ( | |||
Deferred income taxes |
| — |
| | |||
Change in unrealized (losses) gains on securities and I/O strips, net of | |||||||
deferred income taxes |
| ( |
| | |||
Change in net pension and other benefit plan liability adjustment |
| |
| | |||
Deferred income taxes |
| ( |
| ( | |||
Change in pension and other benefit plan liability, net of | |||||||
deferred income taxes |
| |
| | |||
Other comprehensive (loss) income |
| ( |
| | |||
Total comprehensive income | $ | | $ | |
See notes to consolidated financial statements (unaudited).
8
HERITAGE COMMERCE CORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
Accumulated | ||||||||||||||
Other | Total | |||||||||||||
Common Stock | Retained | Comprehensive | Shareholders’ | |||||||||||
Shares |
| Amount |
| Earnings |
| Loss |
| Equity | ||||||
(Dollars in thousands, except per share data) | ||||||||||||||
Balance, December 31, 2019 | | $ | | $ | | $ | ( | $ | | |||||
Cumulative effect of change in accounting principles (Note 1) | — | — | ( | — | ( | |||||||||
Balance, January 1, 2020 | | | | ( | | |||||||||
Net income | — | — | | — | | |||||||||
Other comprehensive income | — | — | — | | | |||||||||
Amortization of restricted stock awards, | ||||||||||||||
net of forfeitures and taxes | — | | — | — | | |||||||||
Cash dividend declared $ | — | — | ( | — | ( | |||||||||
Stock option expense, net of forfeitures and taxes | — | | — | — | | |||||||||
Stock options exercised | | | — | — | | |||||||||
Balance, March 31, 2020 | | $ | | $ | | $ | ( | $ | | |||||
Balance, January 1, 2021 | | $ | | $ | | $ | ( | $ | | |||||
Net income | — | — | | — | | |||||||||
Other comprehensive loss | — | — | — | ( | ( | |||||||||
Issuance (forfeitures) of restricted stock awards, net | ( | — | — | — | — | |||||||||
Amortization of restricted stock awards, | ||||||||||||||
net of forfeitures and taxes | — | | — | — | | |||||||||
Cash dividend declared $ | — | — | ( | — | ( | |||||||||
Stock option expense, net of forfeitures and taxes | — | | — | — | | |||||||||
Stock options exercised | | | — | — | | |||||||||
Balance, March 31, 2021 | | $ | | $ | | $ | ( | $ | |
See notes to consolidated financial statements (unaudited).
9
HERITAGE COMMERCE CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended | ||||||
March 31, | ||||||
| 2021 |
| 2020 | |||
(Dollars in thousands) | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Amortization of discounts and premiums on securities |
| |
| | ||
Gain on sale of securities available-for-sale |
| — |
| ( | ||
Gain on sale of SBA loans |
| ( |
| ( | ||
Proceeds from sale of SBA loans originated for sale |
| |
| | ||
SBA loans originated for sale |
| ( |
| ( | ||
Provision for (recapture of) credit losses on loans |
| ( |
| | ||
Increase in cash surrender value of life insurance |
| ( |
| ( | ||
Depreciation and amortization |
| |
| | ||
Amortization of other intangible assets |
| |
| | ||
Stock option expense, net |
| |
| | ||
Amortization of restricted stock awards, net |
| |
| | ||
Amortization of subordinated debt issuance costs | | | ||||
Gain on proceeds from company-owned life insurance | ( | — | ||||
Effect of changes in: | ||||||
Accrued interest receivable and other assets |
| |
| ( | ||
Accrued interest payable and other liabilities |
| ( |
| ( | ||
Net cash provided by operating activities |
| |
| | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Purchase of securities held-to-maturity |
| ( |
| — | ||
Maturities/paydowns/calls of securities available-for-sale |
| |
| | ||
Maturities/paydowns/calls of securities held-to-maturity |
| |
| | ||
Proceeds from sales of securities available-for-sale |
| — |
| | ||
Net change in loans |
| ( |
| ( | ||
Changes in Federal Home Loan Bank stock and other investments |
| ( |
| ( | ||
Purchase of premises and equipment |
| ( |
| ( | ||
Proceeds from redemption of company-owned life insurance | | — | ||||
Net cash (used in) provided by investing activities |
| ( |
| | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Net change in deposits |
| |
| ( | ||
Net change in short-term borrowings | — | ( | ||||
Exercise of stock options |
| |
| | ||
Payment of cash dividends |
| ( |
| ( | ||
Net cash provided by (used in) financing activities |
| |
| ( | ||
Net increase (decrease) in cash and cash equivalents |
| |
| ( | ||
Cash and cash equivalents, beginning of period |
| |
| | ||
Cash and cash equivalents, end of period | $ | | $ | | ||
Supplemental disclosures of cash flow information: | ||||||
Interest paid | $ | | $ | | ||
Income taxes paid (refunds), net |
| ( |
| ( | ||
Supplemental schedule of non-cash activity: | ||||||
Recording of right to use assets in exchange for lease obligations | $ | — | $ | |
See notes to consolidated financial statements (unaudited).
10
HERITAGE COMMERCE CORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021
(Unaudited)
1)
The unaudited consolidated financial statements of Heritage Commerce Corp (the “Company” or “HCC”) and its wholly owned subsidiary, Heritage Bank of Commerce (“HBC”), have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements are not included herein. The interim statements should be read in conjunction with the consolidated financial statements and notes that were included in the Company’s Form 10-K for the year ended December 31, 2020.
HBC is a commercial bank serving customers primarily located in Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara counties of California. CSNK Working Capital Finance Corp. a California corporation, dba Bay View Funding (“Bay View Funding”) is a wholly owned subsidiary of HBC, and provides business-essential working capital factoring financing to various industries throughout the United States.
In management’s opinion, all adjustments necessary for a fair presentation of these consolidated financial statements have been included and are of a normal and recurring nature. All intercompany transactions and balances have been eliminated.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates. Material estimates that are particularly susceptible to significant change include the determination of the allowance for credit losses and any impairment of goodwill or intangible assets. It is reasonably possible the Company’s estimate of the allowance for credit losses and evaluation of impairment of goodwill or intangible assets could change as a result of the continued impact of the COVID-19 pandemic on the economy. The resulting change in these estimates could be material to the Company’s consolidated financial statements.
The results for the three months ended March 31, 2021 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2021.
COVID-19
Capital and Liquidity
While the Company believes that it has sufficient capital to withstand an extended economic recession brought about by COVID-19, its reported and regulatory capital ratios could be adversely impacted by credit losses. The Company relies on cash on hand as well as dividends from its subsidiary bank to service its debt. If the Company’s capital deteriorates such that its subsidiary bank is unable to pay dividends to it for an extended period of time, the Company may not be able to service its debt.
The Company maintains access to multiple sources of liquidity. Wholesale funding markets have remained open to us. If funding costs are elevated for an extended period of time, it could have an adverse effect on the Company’s net interest margin. If an extended recession caused large numbers of the Company’s deposit customers to withdraw their funds, the Company might become more reliant on volatile or more expensive sources of funding.
Asset Valuation
The extent to which the COVID-19 pandemic will impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict. Those developments and factors include the duration and spread of the pandemic, its severity, the actions to contain the pandemic or address its
11
impact, and how quickly and to what extent normal economic and operating conditions can resume. We do not yet know the full extent of the impact. However, the effects could have a material adverse impact on our business, asset valuations, financial condition and results of operations. Material adverse impacts may include all or a combination of valuation impairments on our intangible assets, investments, loans, or deferred tax assets.
Reclassifications
Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications had no impact on the Company’s consolidated financial position, results of operations or net change in cash and cash equivalents.
Adoption of New Accounting Standards
In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes to simplify various aspects of the current guidance to promote consistent application of the standard among reporting entities by moving certain exceptions to the general principles.The amendments are effective as of January 1, 2021 and had no material impact on the consolidated financial statements.
Accounting Guidance Issued But Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the transition away from the LIBOR or other interbank offered rate on financial reporting. To help with the transition to new reference rates, the ASU provides optional expedients and exceptions for applying GAAP to affected contract modifications and hedge accounting relationships. The main provisions include:
● | A change in a contract’s reference interest rate would be accounted for as a continuation of that contract rather than as the creation of a new one for contracts, including loans, debt, leases, and other arrangements, that meet specific criteria. |
● | When updating its hedging strategies in response to reference rate reform, an entity would be allowed to preserve its hedge accounting. |
The guidance is applicable only to contracts or hedge accounting relationships that reference LIBOR or another reference rate expected to be discontinued. Because the guidance is meant to help entities through the transition period, it will be in effect for a limited time and will not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has elected certain optional expedients that are retained through the end of the hedging relationship. The amendments in this ASU are effective March 12, 2020 through December 31, 2022.
ASU 2020-04 permits relief solely for reference rate reform actions and permits different elections over the effective date for legacy and new activity. Accordingly, the Company is evaluating and reassessing the elections on a quarterly basis. For current elections in effect regarding the assertion of the probability of forecasted transactions, the Company elects the expedient to assert the probability of the hedged interest payments and receipts regardless of any expected modification in terms related to reference rate reform.
The Company believes the adoption of this guidance on activities subsequent to December 31, 2020 through December 31, 2022 will not have a material impact on the consolidated financial statements.
London Inter-Bank Offered Rate (“LIBOR”) Transition and Phase-Out
We have loans and borrowings that are tied to LIBOR benchmark interest rates. It is anticipated that the LIBOR index will be phased-out by the end of 2021 and the Federal Reserve Bank of New York has established the Secured Overnight Financing Rate (“SOFR”) as its recommended alternative to LIBOR. We have created a sub-committee of our Asset Liability Management Committee to address LIBOR transition and phase-out issues. We are currently reviewing
12
loan documentation, technology systems and procedures we will need to implement for the transition. We do not expect the transition to have a material impact to the financial statements.
2) Earnings Per Share
Basic earnings per common share is computed by dividing net income by the weighted average common shares outstanding. Diluted earnings per share reflect potential dilution from outstanding stock options using the treasury stock method. There were
| Three Months Ended | |||||
March 31, | ||||||
2021 |
| 2020 | ||||
(Dollars in thousands, except per share amounts) | ||||||
Net income | $ | | $ | | ||
Weighted average common shares outstanding for basic | ||||||
earnings per common share |
| |
| | ||
Dilutive potential common shares |
| |
| | ||
Shares used in computing diluted earnings per common share |
| |
| | ||
Basic earnings per share | $ | | $ | | ||
Diluted earnings per share | $ | | $ | |
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3) Accumulated Other Comprehensive Income (Loss) (“AOCI”)
The following table reflects the changes in AOCI by component for the periods indicated:
Three Months Ended March 31, 2021 and 2020 | ||||||||||||
Unamortized | ||||||||||||
Unrealized | ||||||||||||
Unrealized | Gain on | |||||||||||
Gains (Losses) on | Available- | |||||||||||
Available- | for-Sale | Defined | ||||||||||
for-Sale | Securities | Benefit | ||||||||||
Securities | Reclassified | Pension | ||||||||||
and I/O | to Held-to- | Plan | ||||||||||
Strips | Maturity | Items(1) | Total | |||||||||
(Dollars in thousands) | ||||||||||||
Beginning balance January 1, 2021, net of taxes | $ | | $ | | $ | ( | $ | ( | ||||
Other comprehensive loss before reclassification, | ||||||||||||
net of taxes |
| ( |
| — |
| ( |
| ( | ||||
Amounts reclassified from other comprehensive income (loss), | ||||||||||||
net of taxes |
| — |
| ( |
| |
| | ||||
Net current period other comprehensive income (loss), | ||||||||||||
net of taxes |
| ( |
| ( |
| |
| ( | ||||
Ending balance March 31, 2021, net of taxes | $ | | $ | | $ | ( | $ | ( | ||||
Beginning balance January 1, 2020, net of taxes | $ | | $ | | $ | ( | $ | ( | ||||
Other comprehensive income before reclassification, | ||||||||||||
net of taxes |
| |
| — |
| |
| | ||||
Amounts reclassified from other comprehensive income (loss), | ||||||||||||
net of taxes |
| ( |
| ( |
| |
| ( | ||||
Net current period other comprehensive income (loss), | ||||||||||||
net of taxes |
| |
| ( |
| |
| | ||||
Ending balance March 31, 2020, net of taxes | $ | | $ | | $ | ( | $ | ( |
(1) | This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan. |
14
Amounts Reclassified from |
| |||||||
AOCI |
| |||||||
Three Months Ended |
| |||||||
March 31, | Affected Line Item Where |
| ||||||
Details About AOCI Components | 2021 |
| 2020 |
| Net Income is Presented |
| ||
(Dollars in thousands) |
| |||||||
Unrealized gains on available-for-sale securities | ||||||||
and I/O strips | $ | — | $ | | Gain on sales of securities | |||
| — |
| ( | Income tax expense | ||||
| — |
| | Net of tax | ||||
Amortization of unrealized gain on securities available- | ||||||||
for-sale that were reclassified to securities | ||||||||
held-to-maturity | | | Interest income on taxable securities | |||||
| ( |
| ( | Income tax expense | ||||
| | Net of tax | ||||||
|
| |||||||
Amortization of defined benefit pension plan items (1) | ||||||||
Prior transition obligation and acturial losses (2) |
| |
| | ||||
Prior service cost and actuarial losses (3) |
| ( |
| ( | ||||
| ( |
| ( | Other noninterest expense | ||||
| |