|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
|||
|
|
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
Smaller reporting company
|
Emerging Growth Company
|
Part I |
Financial Information
|
September 30,
2021
|
December 31,
2020
|
|||||||
ASSETS
|
||||||||
Cash and due from banks
|
$
|
|
$
|
|
||||
Federal funds sold and other short-term investments
|
|
|
||||||
Cash and cash equivalents
|
|
|
||||||
Debt securities available for sale, at fair value
|
|
|
||||||
Debt securities held to maturity (fair value 2021
- $
|
|
|
||||||
Federal Home Loan Bank (FHLB) stock
|
|
|
||||||
Loans held for sale, at fair value
|
|
|
||||||
Total loans
|
|
|
||||||
Allowance for loan losses
|
(
|
)
|
(
|
)
|
||||
Net loans
|
|
|
||||||
Premises and equipment – net
|
|
|
||||||
Accrued interest receivable
|
|
|
||||||
Bank-owned life insurance
|
|
|
||||||
Other real estate owned - net
|
|
|
||||||
Net deferred tax asset
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Deposits
|
||||||||
Noninterest-bearing
|
$
|
|
$
|
|
||||
Interest-bearing
|
|
|
||||||
Total deposits
|
|
|
||||||
Other borrowed funds
|
|
|
||||||
Long-term debt
|
|
|
||||||
Accrued expenses and other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingent liabilities
|
|
|
||||||
Shareholders’ equity
|
||||||||
Common stock,
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive income
|
|
|
||||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Three Months
Ended
September 30,
2021
|
Three Months
Ended
September 30,
2020
|
Nine Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2020
|
|||||||||||||
Interest income
|
||||||||||||||||
Loans, including fees
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Securities
|
||||||||||||||||
Taxable
|
|
|
|
|
||||||||||||
Tax-exempt
|
|
|
|
|
||||||||||||
FHLB Stock
|
|
|
|
|
||||||||||||
Federal funds sold and other short-term investments
|
|
|
|
|
||||||||||||
Total interest income
|
|
|
|
|
||||||||||||
Interest expense
|
||||||||||||||||
Deposits
|
|
|
|
|
||||||||||||
Other borrowings
|
|
|
|
|
||||||||||||
Long-term debt
|
|
|
|
|
||||||||||||
Total interest expense
|
|
|
|
|
||||||||||||
Net interest income
|
|
|
|
|
||||||||||||
Provision for loan losses
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Net interest income after provision for loan losses
|
|
|
|
|
||||||||||||
Noninterest income
|
||||||||||||||||
Service charges and fees
|
|
|
|
|
||||||||||||
Net gains on mortgage loans
|
|
|
|
|
||||||||||||
Trust fees
|
|
|
|
|
||||||||||||
ATM and debit card fees
|
|
|
|
|
||||||||||||
Bank owned life insurance (“BOLI”) income
|
|
|
|
|
||||||||||||
Other
|
|
|
|
|
||||||||||||
Total noninterest income
|
|
|
|
|
||||||||||||
Noninterest expense
|
||||||||||||||||
Salaries and benefits
|
|
|
|
|
||||||||||||
Occupancy of premises
|
|
|
|
|
||||||||||||
Furniture and equipment
|
|
|
|
|
||||||||||||
Legal and professional
|
|
|
|
|
||||||||||||
Marketing and promotion
|
|
|
|
|
||||||||||||
Data processing
|
|
|
|
|
||||||||||||
FDIC assessment
|
|
|
|
|
||||||||||||
Interchange and other card expense
|
|
|
|
|
||||||||||||
Bond and D&O Insurance
|
|
|
|
|
||||||||||||
Other
|
|
|
|
|
||||||||||||
Total noninterest expenses
|
|
|
|
|
||||||||||||
Income before income tax
|
|
|
|
|
||||||||||||
Income tax expense
|
|
|
|
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Basic earnings per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Diluted earnings per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Cash dividends per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months
Ended
September 30,
2021
|
Three Months
Ended
September 30,
2020
|
Nine Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2020
|
|||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other comprehensive income:
|
||||||||||||||||
Unrealized gains (losses):
|
||||||||||||||||
Net change in unrealized gains (losses) on debt securities available for sale
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Tax effect
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Net change in unrealized gains (losses) on debt securities available for sale, net of tax
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Less: reclassification adjustments:
|
||||||||||||||||
Reclassification for gains included in net income
|
|
|
|
|
||||||||||||
Tax effect
|
|
|
|
|
||||||||||||
Reclassification for gains included in net income, net of tax
|
|
|
|
|
||||||||||||
Other comprehensive income (loss), net of tax
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Comprehensive income
|
$
|
|
$
|
|
$
|
|
$
|
|
Common
Stock
|
Retained Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Shareholders’
Equity
|
|||||||||||||
Balance, July 1, 2020
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Net income for the three months ended September 30, 2020
|
|
|
|
|
||||||||||||
Cash dividends at $
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Repurchase of |
( |
) | ( |
) | ||||||||||||
Net change in unrealized gain on debt securities available for sale, net of tax
|
|
|
|
|
||||||||||||
Stock compensation expense
|
|
|
|
|
||||||||||||
Balance, September 30, 2020
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Balance, July 1, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Net income for the three months ended September 30, 2021
|
|
|
|
|
||||||||||||
Cash dividends at $
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Repurchase of
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Net change in unrealized gain on debt securities available for sale, net of tax
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Stock compensation expense
|
|
|
|
|
||||||||||||
Balance, September 30, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
Common
Stock
|
Retained Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Shareholders’
Equity
|
|||||||||||||
Balance, January 1, 2020
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||
Net income for the nine months ended September 30, 2020
|
|
|
|
|
||||||||||||
Cash dividends at $
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Repurchase of
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Net change in unrealized gain on debt securities available for sale, net of tax
|
|
|
|
|
||||||||||||
Stock compensation expense
|
|
|
|
|
||||||||||||
Balance, September 30, 2020
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Balance, January 1, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Net income for the nine months ended September 30, 2021
|
|
|
|
|
||||||||||||
Cash dividends at $
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Repurchase of
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Net change in unrealized gain on debt securities available for sale, net of tax
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Stock compensation expense
|
|
|
|
|
||||||||||||
Balance, September 30, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
Nine Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2020
|
|||||||
Cash flows from operating activities
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Stock compensation expense
|
|
|
||||||
Provision for loan losses
|
(
|
)
|
|
|||||
Origination of loans for sale
|
(
|
)
|
(
|
)
|
||||
Proceeds from sales of loans originated for sale
|
|
|
||||||
Net gains on mortgage loans
|
(
|
)
|
(
|
)
|
||||
Write-down of other real estate
|
|
|
||||||
Net loss on sales of other real estate
|
|
|
||||||
Deferred income tax expense (benefit)
|
|
(
|
)
|
|||||
Change in accrued interest receivable and other assets
|
|
(
|
)
|
|||||
Earnings in bank-owned life insurance
|
(
|
)
|
(
|
)
|
||||
Change in accrued expenses and other liabilities
|
(
|
)
|
|
|||||
Net cash from operating activities
|
|
|
||||||
Cash flows from investing activities
|
||||||||
Loan originations and payments, net
|
|
(
|
)
|
|||||
Purchases of securities available for sale
|
(
|
)
|
(
|
)
|
||||
Purchases of securities held to maturity
|
(
|
)
|
(
|
)
|
||||
Purchase of bank-owned life insurance
|
( |
) | ||||||
Proceeds from:
|
||||||||
Maturities and calls of securities
|
|
|
||||||
Principal paydowns on securities
|
|
|
||||||
Sales of other real estate
|
|
|
||||||
Proceeds from payout of bank-owned insurance claim
|
|
|
||||||
Additions to premises and equipment
|
(
|
)
|
(
|
)
|
||||
Net cash from investing activities
|
|
(
|
)
|
|||||
Cash flows from financing activities
|
||||||||
Change in deposits
|
|
|
||||||
Repayments and maturities of other borrowed funds
|
( |
) | ||||||
Proceeds from other borrowed funds
|
|
|
||||||
Repurchase of shares for taxes withheld on vested restricted stock
|
(
|
)
|
(
|
)
|
||||
Cash dividends paid
|
(
|
)
|
(
|
)
|
||||
Net cash from financing activities
|
|
|
||||||
Net change in cash and cash equivalents
|
|
|
||||||
Cash and cash equivalents at beginning of period
|
|
|
||||||
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
Nine Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2020
|
|||||||
Supplemental cash flow information
|
||||||||
Interest paid
|
$
|
|
$
|
|
||||
Income taxes paid
|
|
|
||||||
Supplemental noncash disclosures:
|
||||||||
Security settlement
|
|
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
September 30, 2021
|
||||||||||||||||
Available for Sale
|
||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
U.S. Agency MBS and CMOs
|
|
|
(
|
)
|
|
|||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
||||||||||||
Taxable state and municipal bonds
|
|
|
(
|
)
|
|
|||||||||||
Corporate bonds and other debt securities
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||
Held to Maturity
|
||||||||||||||||
Tax-exempt state and municipal bonds
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
December 31, 2020
|
||||||||||||||||
Available for Sale
|
||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
U.S. Agency MBS and CMOs
|
|
|
(
|
)
|
|
|||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
||||||||||||
Taxable state and municipal bonds
|
|
|
(
|
)
|
|
|||||||||||
Corporate bonds and other debt securities
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||
Held to Maturity
|
||||||||||||||||
Tax-exempt state and municipal bonds
|
$
|
|
$
|
|
$ |
$
|
|
Held–to-Maturity Securities
|
Available-for-Sale Securities
|
|||||||||||||||
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
|||||||||||||
Due in one year or less
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Due from one to five years
|
|
|
|
|
||||||||||||
Due from five to ten years
|
|
|
|
|
||||||||||||
Due after ten years
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
September 30, 2021
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
||||||||||||||||||
Available for Sale
|
||||||||||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
U.S. Agency MBS and CMOs
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
|
|
||||||||||||||||||
Taxable state and municipal bonds
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Corporate bonds and other debt securities
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Held to Maturity
|
||||||||||||||||||||||||
Tax-exempt state and municipal bonds
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
December 31, 2020
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
||||||||||||||||||
Available for Sale
|
||||||||||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
||||||||||
U.S. Agency MBS and CMOs
|
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
|
|
||||||||||||||||||
Taxable state and municipal bonds
|
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||
Corporate bonds and other debt securities
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
||||||||||
Held to Maturity
|
||||||||||||||||||||||||
Tax-exempt state and municipal bonds
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30,
2021
|
December 31,
2020
|
|||||||
Commercial and industrial:
|
||||||||
Commercial and industrial,
excluding PPP
|
$
|
|
$
|
|
||||
PPP
|
|
|
||||||
Total commercial and
industrial
|
|
|
||||||
Commercial real estate:
|
||||||||
Residential developed
|
|
|
||||||
Unsecured to residential
developers
|
|
|
||||||
Vacant and unimproved
|
|
|
||||||
Commercial development
|
|
|
||||||
Residential improved
|
|
|
||||||
Commercial improved
|
|
|
||||||
Manufacturing and
industrial
|
|
|
||||||
Total commercial real
estate
|
|
|
||||||
Consumer:
|
||||||||
Residential mortgage
|
|
|
||||||
Unsecured
|
|
|
||||||
Home equity
|
|
|
||||||
Other secured
|
|
|
||||||
Total consumer
|
|
|
||||||
Total loans
|
|
|
||||||
Allowance for loan losses
|
(
|
)
|
(
|
)
|
||||
$
|
|
$
|
|
Three months ended September 30, 2021
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Charge-offs
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
Recoveries
|
|
|
|
|
|
|||||||||||||||
Provision for loan losses
|
(
|
)
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||||
Ending Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Three months ended September 30, 2020
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Charge-offs
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
Recoveries
|
|
|
|
|
|
|||||||||||||||
Provision for loan losses
|
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||
Ending Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Nine months ended September 30, 2021
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Charge-offs
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
Recoveries
|
|
|
|
|
|
|||||||||||||||
Provision for loan losses
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
Ending Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Nine months ended September 30, 2020
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Charge-offs
|
(
|
)
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||||
Recoveries
|
|
|
|
|
|
|||||||||||||||
Provision for loan losses
|
(
|
)
|
|
(
|
)
|
|
|
|||||||||||||
Ending Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30, 2021
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Ending allowance attributable to
loans:
|
||||||||||||||||||||
Individually reviewed for
impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Loans:
|
||||||||||||||||||||
Individually reviewed for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending loans balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2020
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Ending allowance attributable to loans:
|
||||||||||||||||||||
Individually reviewed for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Loans:
|
||||||||||||||||||||
Individually reviewed for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending loans balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30, 2021
|
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance
Allocated
|
|||||||||
With no related allowance recorded:
|
||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
—
|
||||||
Commercial real estate:
|
||||||||||||
Residential improved
|
|
|
—
|
|||||||||
Commercial improved
|
|
|
—
|
|||||||||
|
|
—
|
||||||||||
Consumer
|
|
|
—
|
|||||||||
Total with no related allowance recorded
|
$
|
|
$
|
|
$
|
—
|
||||||
With an allowance recorded:
|
||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
||||||
Commercial real estate:
|
||||||||||||
Commercial improved
|
|
|
|
|||||||||
Manufacturing and industrial
|
|
|
|
|||||||||
|
|
|
||||||||||
Consumer:
|
||||||||||||
Residential mortgage
|
|
|
|
|||||||||
Unsecured
|
|
|
|
|||||||||
Home equity
|
|
|
|
|||||||||
Other secured
|
|
|
|
|||||||||
|
|
|
||||||||||
Total with an allowance recorded
|
$
|
|
$
|
|
$
|
|
||||||
Total
|
$
|
|
$
|
|
$
|
|
December 31, 2020
|
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance
Allocated
|
|||||||||
With no related allowance recorded:
|
||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
—
|
||||||
Commercial real estate:
|
||||||||||||
Residential improved
|
|
|
—
|
|||||||||
Commercial improved
|
|
|
—
|
|||||||||
|
|
—
|
||||||||||
Consumer
|
|
|
—
|
|||||||||
Total with no related allowance recorded
|
$
|
|
$
|
|
$
|
—
|
||||||
With an allowance recorded:
|
||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
||||||
Commercial real estate:
|
||||||||||||
Residential developed
|
|
|
|
|||||||||
Commercial improved
|
|
|
|
|||||||||
Manufacturing and industrial
|
|
|
|
|||||||||
|
|
|
||||||||||
Consumer:
|
||||||||||||
Residential mortgage
|
|
|
|
|||||||||
Unsecured
|
|
|
|
|||||||||
Home equity
|
|
|
|
|||||||||
Other secured
|
|
|
|
|||||||||
|
|
|
||||||||||
Total with an allowance recorded
|
$
|
|
$
|
|
$
|
|
||||||
Total
|
$
|
|
$
|
|
$
|
|
Three
Months
Ended
September 30,
2021
|
Three
Months
Ended
September 30,
2020
|
Nine
Months
Ended
September 30,
2021
|
Nine
Months
Ended
September 30,
2020
|
|||||||||||||
Average of impaired loans during the period:
|
||||||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Commercial real estate:
|
||||||||||||||||
Residential developed
|
|
|
|
|
||||||||||||
Residential improved
|
|
|
|
|
||||||||||||
Commercial improved
|
|
|
|
|
||||||||||||
Manufacturing and industrial
|
|
|
|
|
||||||||||||
Consumer
|
|
|
|
|
||||||||||||
Interest income recognized during impairment:
|
||||||||||||||||
Commercial and industrial
|
|
|
|
|
||||||||||||
Commercial real estate
|
|
|
|
|
||||||||||||
Consumer
|
|
|
|
|
||||||||||||
Cash-basis interest income recognized
|
||||||||||||||||
Commercial and industrial
|
|
|
|
|
||||||||||||
Commercial real estate
|
|
|
|
|
||||||||||||
Consumer
|
|
|
|
|
September 30, 2021
|
Nonaccrual
|
Over 90
days
Accruing
|
||||||
Commercial and industrial
|
$
|
|
$
|
|
||||
Commercial real estate:
|
||||||||
Residential improved
|
|
|
||||||
Commercial improved
|
|
|
||||||
|
|
|||||||
Consumer:
|
||||||||
Residential mortgage
|
|
|
||||||
|
|
|||||||
Total
|
$
|
|
$
|
|
December 31, 2020
|
Nonaccrual
|
Over 90 days
Accruing
|
||||||
Commercial and industrial
|
$
|
|
$
|
|
||||
Commercial real estate:
|
||||||||
Residential improved
|
|
|
||||||
Commercial improved
|
|
|
||||||
|
|
|||||||
Consumer:
|
||||||||
Residential mortgage
|
|
|
||||||
|
|
|||||||
Total
|
$
|
|
$
|
|
September 30, 2021
|
30-90
Days
|
Greater Than
90 Days
|
Total
Past Due
|
Loans Not
Past Due
|
Total
|
|||||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Commercial real estate:
|
||||||||||||||||||||
Residential developed
|
|
|
|
|
|
|||||||||||||||
Unsecured to residential developers
|
|
|
|
|
|
|||||||||||||||
Vacant and unimproved
|
|
|
|
|
|
|||||||||||||||
Commercial development
|
|
|
|
|
|
|||||||||||||||
Residential improved
|
|
|
|
|
|
|||||||||||||||
Commercial improved
|
|
|
|
|
|
|||||||||||||||
Manufacturing and industrial
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
Consumer:
|
||||||||||||||||||||
Residential mortgage
|
|
|
|
|
|
|||||||||||||||
Unsecured
|
|
|
|
|
|
|||||||||||||||
Home equity
|
|
|
|
|
|
|||||||||||||||
Other secured
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2020
|
30-90
Days
|
Greater Than
90 Days
|
Total
Past Due
|
Loans Not
Past Due
|
Total
|
|||||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Commercial real estate:
|
||||||||||||||||||||
Residential developed
|
|
|
|
|
|
|||||||||||||||
Unsecured to residential developers
|
||||||||||||||||||||
Vacant and unimproved
|
|
|
|
|
|
|||||||||||||||
Commercial development
|
|
|
|
|
|
|||||||||||||||
Residential improved
|
|
|
|
|
|
|||||||||||||||
Commercial improved
|
|
|
|
|
|
|||||||||||||||
Manufacturing and industrial
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
Consumer:
|
||||||||||||||||||||
Residential mortgage
|
|
|
|
|
|
|||||||||||||||
Unsecured
|
|
|
|
|
|
|||||||||||||||
Home equity
|
|
|
|
|
|
|||||||||||||||
Other secured
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30, 2021
|
December 31, 2020
|
|||||||||||||||
Number of
Loans
|
Outstanding
Recorded
Balance
|
Number of
Loans
|
Outstanding
Recorded
Balance
|
|||||||||||||
Commercial and industrial
|
|
$
|
|
|
$
|
|
||||||||||
Commercial real estate
|
|
|
|
|
||||||||||||
Consumer
|
|
|
|
|
||||||||||||
|
$
|
|
|
$
|
|
September 30,
2021
|
December 31,
2020
|
|||||||
Accruing TDR - nonaccrual at restructuring
|
$
|
|
$
|
|
||||
Accruing TDR - accruing at restructuring
|
|
|
||||||
Accruing TDR - upgraded to accruing after six consecutive payments
|
|
|
||||||
$
|
|
$
|
|
September 30, 2021
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
Total
|
|||||||||||||||||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||||||||||||||
Residential developed
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Unsecured to residential developers
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Vacant and unimproved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Commercial development
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential improved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Commercial improved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Manufacturing & industrial
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2020
|
1 |
2 |
3 | 4 |
5 |
6 |
7 |
8 |
Total
|
|||||||||||||||||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||||||||||||||
Residential developed
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Vacant and unimproved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Commercial development
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential improved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Commercial improved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Manufacturing & industrial
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30,
2021
|
December 31,
2020
|
|||||||
Not classified as impaired
|
$
|
|
$
|
|
||||
Classified as impaired
|
|
|
||||||
Total commercial loans classified substandard or worse
|
$
|
|
$
|
|
September 30, 2021
|
Residential
Mortgage
|
Consumer
Unsecured
|
Home
Equity
|
Consumer
Other
|
||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Nonperforming
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2020
|
Residential
Mortgage
|
Consumer
Unsecured
|
Home
Equity
|
Consumer
Other
|
||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Nonperforming
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Level 1: |
Quoted prices (unadjusted) for identical assets or liabilities
in active markets that the entity has the ability to access as of the measurement date.
|
Level 2: |
Significant other observable inputs other than Level 1 prices
such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
Level 3: |
Significant unobservable inputs that reflect a reporting
entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
|
Fair
Value
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
September 30, 2021
|
||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
U.S. Agency MBS and CMOs
|
|
|
|
|
||||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
||||||||||||
Taxable state and municipal bonds
|
|
|
|
|
||||||||||||
Corporate bonds and other debt securities
|
|
|
|
|
||||||||||||
Other equity securities
|
|
|
|
|
||||||||||||
Loans held for sale
|
|
|
|
|
||||||||||||
Interest rate swaps
|
|
|
|
|
||||||||||||
Interest rate swaps
|
(
|
)
|
|
|
(
|
)
|
||||||||||
December 31, 2020
|
||||||||||||||||
Available for sale securities
|
||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
U.S. Agency MBS and CMOs
|
|
|
|
|
||||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
||||||||||||
Taxable state and municipal bonds
|
|
|
|
|
||||||||||||
Corporate bonds and other debt securities
|
|
|
|
|
||||||||||||
Other equity securities
|
|
|
|
|
||||||||||||
Loans held for sale
|
|
|
|
|
||||||||||||
Interest rate swaps
|
|
|
|
|
||||||||||||
Interest rate swaps
|
(
|
)
|
|
|
(
|
)
|
|
Fair
Value
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
September 30, 2021
|
||||||||||||||||
Impaired loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
December 31, 2020
|
||||||||||||||||
Impaired loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other real estate owned
|
|
|
|
|
Asset Fair
Value
|
Valuation
Technique
|
Unobservable
Inputs
|
Range (%)
|
||||||
September 30, 2021
|
|||||||||
Impaired Loans
|
$
|
|
Sales comparison approach
|
Adjustment for differences between comparable sales
|
|
Asset Fair
Value
|
Valuation
Technique
|
Unobservable
Inputs
|
Range (%)
|
||||||
December 31, 2020
|
|||||||||
Impaired Loans
|
$
|
|
Sales comparison approach
|
Adjustment for differences between comparable sales
|
|
||||
Income approach
|
Capitalization rate
|
|
|||||||
Other real estate owned
|
|
Sales comparison approach
|
Adjustment for differences between comparable sales
|
|
|||||
Income approach
|
Capitalization rate
|
|
Level in | September 30, 2021 | December 31, 2020 | |||||||||||||||
|
Fair Value
Hierarchy
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
||||||||||||
Financial assets
|
|||||||||||||||||
Cash and due from banks
|
Level 1
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Cash equivalents
|
Level 2
|
|
|
|
|
||||||||||||
Securities held to maturity
|
Level 3
|
|
|
|
|
||||||||||||
FHLB stock
|
|
NA
|
|
NA
|
|||||||||||||
Loans, net
|
Level 2
|
|
|
|
|
||||||||||||
Bank owned life insurance
|
Level 3
|
|
|
|
|
||||||||||||
Accrued interest receivable
|
Level 2
|
|
|
|
|
||||||||||||
Financial liabilities
|
|||||||||||||||||
Deposits
|
Level 2
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Other borrowed funds
|
Level 2
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Long-term debt
|
Level 2
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Accrued interest payable
|
Level 2
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Off-balance sheet credit-related items
|
|||||||||||||||||
Loan commitments
|
|
|
|
|
September 30,
2021
|
December 31,
2020
|
|||||||
Noninterest-bearing demand
|
$
|
|
$
|
|
||||
Interest bearing demand
|
|
|
||||||
Savings and money market accounts
|
|
|
||||||
Certificates of deposit
|
|
|
||||||
$
|
|
$
|
|
Principal Terms
|
Advance
Amount
|
Range of Maturities
|
Weighted
Average
Interest Rate
|
||||||
September 30, 2021
|
|||||||||
Single maturity fixed rate advances
|
$
|
|
May
to July |
|
%
|
||||
Putable advances
|
|
November
to July |
|
%
|
|||||
$
|
|
Principal Terms
|
Advance
Amount
|
Range of Maturities
|
Weighted
Average
Interest Rate
|
||||||
December 31, 2020
|
|||||||||
Single maturity fixed rate advances
|
$
|
|
April
to July |
|
%
|
||||
Putable advances
|
|
November
to February |
|
%
|
|||||
$
|
|
2021
|
$
|
|
||
2022 |
|
|||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
Thereafter
|
|
|||
$
|
|
Three Months
Ended
September 30, 2021
|
Three Months
Ended
September 30, 2020
|
Nine Months
Ended
September 30, 2021
|
Nine Months
Ended
September 30, 2020
|
|||||||||||||
Net income available to common shares
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Weighted average shares outstanding, including participating stock
awards - Basic
|
|
|
|
|
||||||||||||
Dilutive potential common shares:
|
||||||||||||||||
Stock options
|
|
|
|
|
||||||||||||
Weighted average shares outstanding - Diluted
|
|
|
|
|
||||||||||||
Basic earnings per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Diluted earnings per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months
Ended
September 30, 2021
|
Three Months
Ended
September 30, 2020
|
Nine Months
Ended
September 30, 2021
|
Nine Months
Ended
September 30, 2020
|
|||||||||||||
Current
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Deferred
|
|
|
|
(
|
)
|
|||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
Three Months
Ended
September 30, 2021
|
Three Months
Ended
September 30, 2020
|
Nine Months
Ended
September 30, 2021
|
Nine Months
Ended
September 30, 2020
|
|||||||||||||
Statutory rate
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Statutory rate applied to income before taxes
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Deduct
|
||||||||||||||||
Tax-exempt interest income
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Bank-owned life insurance
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Other, net
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
September 30,
2021
|
December 31,
2020
|
|||||||
Deferred tax assets
|
||||||||
Allowance for loan losses
|
$
|
|
$
|
|
||||
Net deferred loan fees
|
|
|
|
|||||
Nonaccrual loan interest
|
|
|
||||||
Valuation allowance on other real estate owned
|
|
|
||||||
Other
|
|
|
||||||
Gross deferred tax assets
|
|
|
||||||
Valuation allowance
|
|
|
||||||
Total net deferred tax assets
|
|
|
||||||
Deferred tax liabilities
|
||||||||
Depreciation
|
(
|
)
|
(
|
)
|
||||
Prepaid expenses
|
(
|
)
|
(
|
)
|
||||
Unrealized gain on securities available for sale
|
(
|
)
|
(
|
)
|
||||
Other
|
(
|
)
|
(
|
)
|
||||
Gross deferred tax liabilities
|
(
|
)
|
(
|
)
|
||||
Net deferred tax asset
|
$
|
|
$
|
|
September 30,
2021
|
December 31,
2020
|
|||||||
Commitments to make loans
|
$
|
|
$
|
|
||||
Letters of credit
|
|
|
||||||
Unused lines of credit
|
|
|
Minimum
Capital
|
Minimum Capital
Adequacy With
|
To Be Well
Capitalized Under
Prompt Corrective
|
||||||||||||||||||||||||||||||
Actual
|
Adequacy
|
Capital Buffer
|
Action Regulations
|
|||||||||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||||||||
September 30, 2021
|
||||||||||||||||||||||||||||||||
CET1 capital (to risk weighted assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||||
Bank
|
|
|
|
|
|
|
$
|
|
|
%
|
||||||||||||||||||||||
Tier 1 capital (to risk weighted assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
|
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total capital (to risk weighted assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
|
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Tier 1 capital (to average assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
N/A
|
N/A
|
|
|
||||||||||||||||||||||||
December 31, 2020
|
||||||||||||||||||||||||||||||||
CET1 capital (to risk weighted assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||||
Bank
|
|
|
|
|
|
|
$
|
|
|
%
|
||||||||||||||||||||||
Tier 1 capital (to risk weighted assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
|
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total capital (to risk weighted assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
|
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Tier 1 capital (to average assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
N/A
|
N/A
|
|
|
Item 2. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
For the three months ended September 30,
|
||||||||||||||||||||||||
2021
|
2020
|
|||||||||||||||||||||||
Average
Balance
|
Interest
Earned
or Paid
|
Average
Yield
or Cost
|
Average
Balance
|
Interest
Earned
or Paid
|
Average
Yield
or Cost
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable securities
|
$
|
200,981
|
$
|
786
|
1.56
|
%
|
$
|
179,887
|
$
|
867
|
1.92
|
%
|
||||||||||||
Tax-exempt securities (1)
|
172,372
|
777
|
2.32
|
137,351
|
861
|
3.23
|
||||||||||||||||||
Commercial loans (2)
|
873,248
|
8,055
|
3.61
|
955,695
|
9,480
|
3.88
|
||||||||||||||||||
PPP loans (3)
|
133,413
|
3,104
|
9.10
|
346,073
|
2,067
|
2.34
|
||||||||||||||||||
Residential mortgage loans
|
123,574
|
1,039
|
3.36
|
175,978
|
1,604
|
3.64
|
||||||||||||||||||
Consumer loans
|
54,591
|
563
|
4.09
|
67,549
|
703
|
4.14
|
||||||||||||||||||
Federal Home Loan Bank stock
|
11,558
|
44
|
1.51
|
11,558
|
100
|
3.41
|
||||||||||||||||||
Federal funds sold and other short-term investments
|
1,234,420
|
474
|
0.15
|
541,981
|
140
|
0.10
|
||||||||||||||||||
Total interest earning assets (1)
|
2,804,157
|
14,842
|
2.12
|
2,416,072
|
15,822
|
2.62
|
||||||||||||||||||
Noninterest earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
39,725
|
35,737
|
||||||||||||||||||||||
Other
|
104,782
|
102,389
|
||||||||||||||||||||||
Total assets
|
$
|
2,948,664
|
$
|
2,554,198
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Interest bearing demand
|
$
|
723,516
|
$
|
49
|
0.03
|
%
|
$
|
587,356
|
$
|
78
|
0.05
|
%
|
||||||||||||
Savings and money market accounts
|
817,307
|
60
|
0.03
|
743,612
|
121
|
0.07
|
||||||||||||||||||
Time deposits
|
99,312
|
100
|
0.40
|
128,551
|
422
|
1.31
|
||||||||||||||||||
Borrowings:
|
||||||||||||||||||||||||
Other borrowed funds
|
79,565
|
325
|
1.60
|
72,057
|
364
|
1.97
|
||||||||||||||||||
Long-term debt
|
1,345
|
12
|
3.42
|
20,619
|
163
|
3.10
|
||||||||||||||||||
Total interest bearing liabilities
|
1,721,045
|
546
|
0.13
|
1,552,195
|
1,148
|
0.29
|
||||||||||||||||||
Noninterest bearing liabilities:
|
||||||||||||||||||||||||
Noninterest bearing demand accounts
|
964,908
|
755,990
|
||||||||||||||||||||||
Other noninterest bearing liabilities
|
12,717
|
14,311
|
||||||||||||||||||||||
Shareholders' equity
|
249,994
|
231,702
|
||||||||||||||||||||||
Total liabilities and shareholders' equity
|
$
|
2,948,664
|
$
|
2,554,198
|
||||||||||||||||||||
Net interest income
|
$
|
14,296
|
$
|
14,674
|
||||||||||||||||||||
Net interest spread (1)
|
1.99
|
%
|
2.33
|
%
|
||||||||||||||||||||
Net interest margin (1)
|
2.04
|
%
|
2.43
|
%
|
||||||||||||||||||||
Ratio of average interest earning assets to average interest bearing liabilities
|
162.93
|
%
|
155.66
|
%
|
(1) |
Yields are presented on a tax equivalent basis using an assumed tax rate of 21% at September 30, 2021 and 2020.
|
(2) |
Includes loan fees of $103,000 and $152,000 for the three months ended September 30, 2021 and 2020, respectively. Includes average nonaccrual loans of approximately $426,000 and $196,000
for the three months ended September 30, 2021 and 2020, respectively. Excludes PPP loans.
|
(3) |
Includes loan fees of $2.8 million and $1.2 million for the three months ended September 30, 2021 and 2020, respectively.
|
For the nine months ended September 30,
|
||||||||||||||||||||||||
2021
|
2020
|
|||||||||||||||||||||||
Average
Balance
|
Interest
Earned
or Paid
|
Average
Yield
or Cost
|
Average
Balance
|
Interest
Earned
or Paid
|
Average
Yield
or Cost
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable securities
|
$
|
195,867
|
$
|
2,365
|
1.61
|
%
|
$
|
184,809
|
$
|
2,882
|
2.08
|
%
|
||||||||||||
Tax-exempt securities (1)
|
145,571
|
2,295
|
2.71
|
132,471
|
2,607
|
3.38
|
||||||||||||||||||
Commercial loans (2)
|
906,493
|
25,590
|
3.72
|
1,035,247
|
31,882
|
4.06
|
||||||||||||||||||
PPP loans (3)
|
206,941
|
8,690
|
5.54
|
203,875
|
3,682
|
2.38
|
||||||||||||||||||
Residential mortgage loans
|
136,435
|
3,526
|
3.44
|
190,782
|
5,275
|
3.69
|
||||||||||||||||||
Consumer loans
|
56,373
|
1,724
|
4.09
|
71,732
|
2,354
|
4.38
|
||||||||||||||||||
Federal Home Loan Bank stock
|
11,558
|
162
|
1.84
|
11,558
|
339
|
3.86
|
||||||||||||||||||
Federal funds sold and other short-term investments
|
1,012,179
|
948
|
0.12
|
346,900
|
802
|
0.30
|
||||||||||||||||||
Total interest earning assets (1)
|
2,671,417
|
45,300
|
2.28
|
2,177,374
|
49,823
|
3.07
|
||||||||||||||||||
Noninterest earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
35,084
|
30,572
|
||||||||||||||||||||||
Other
|
102,849
|
96,605
|
||||||||||||||||||||||
Total assets
|
$
|
2,809,350
|
$
|
2,304,551
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Interest bearing demand
|
$
|
670,029
|
$
|
122
|
0.02
|
%
|
$
|
510,181
|
$
|
356
|
0.09
|
%
|
||||||||||||
Savings and money market accounts
|
811,381
|
183
|
0.03
|
698,097
|
1,050
|
0.20
|
||||||||||||||||||
Time deposits
|
103,271
|
428
|
0.55
|
141,762
|
1,712
|
1.62
|
||||||||||||||||||
Borrowings:
|
||||||||||||||||||||||||
Other borrowed funds
|
70,623
|
1,005
|
1.88
|
68,610
|
1,069
|
2.06
|
||||||||||||||||||
Long-term debt
|
14,123
|
319
|
2.98
|
20,619
|
612
|
3.90
|
||||||||||||||||||
Total interest bearing liabilities
|
1,669,427
|
2,057
|
0.16
|
1,439,269
|
4,799
|
0.44
|
||||||||||||||||||
Noninterest bearing liabilities:
|
||||||||||||||||||||||||
Noninterest bearing demand accounts
|
881,177
|
625,759
|
||||||||||||||||||||||
Other noninterest bearing liabilities
|
13,535
|
13,327
|
||||||||||||||||||||||
Shareholders' equity
|
245,211
|
226,196
|
||||||||||||||||||||||
Total liabilities and shareholders' equity
|
$
|
2,809,350
|
$
|
2,304,551
|
||||||||||||||||||||
Net interest income
|
$
|
43,243
|
$
|
45,024
|
||||||||||||||||||||
Net interest spread (1)
|
2.12
|
%
|
2.63
|
%
|
||||||||||||||||||||
Net interest margin (1)
|
2.18
|
%
|
2.77
|
%
|
||||||||||||||||||||
Ratio of average interest earning assets to average interest bearing liabilities
|
160.02
|
%
|
151.28
|
%
|
(1) |
Yields are presented on a tax equivalent basis using an assumed tax rate of 21% at September 30, 2021 and 2020.
|
(2) |
Includes loan fees of $628,000 and $612,000 for the nine months ended September 30, 2021 and 2020, respectively. Includes average nonaccrual loans of approximately $472,000 and $2.8
million for the nine months ended September 30, 2021 and 2020, respectively. Excludes PPP loans.
|
(3) |
Includes loan fees of $7.1 million and $2.1 million for the nine months ended September 30, 2021 and 2020, respectively.
|
For the three months ended September 30,
2021 vs 2020
Increase (Decrease) Due to
|
For the nine months ended September 30,
2021 vs 2020
Increase (Decrease) Due to
|
|||||||||||||||||||||||
Volume
|
Rate
|
Total
|
Volume
|
Rate
|
Total
|
|||||||||||||||||||
Interest income
|
||||||||||||||||||||||||
Taxable securities
|
$
|
94
|
$
|
(175
|
)
|
$
|
(81
|
)
|
$
|
164
|
$
|
(681
|
)
|
$
|
(517
|
)
|
||||||||
Tax-exempt securities
|
255
|
(339
|
)
|
(84
|
)
|
338
|
(650
|
)
|
(312
|
)
|
||||||||||||||
Commercial loans, excluding PPP loans
|
(786
|
)
|
(639
|
)
|
(1,425
|
)
|
(3,767
|
)
|
(2,525
|
)
|
(6,292
|
)
|
||||||||||||
PPP loans
|
(1,868
|
)
|
2,905
|
1,037
|
56
|
4,952
|
5,008
|
|||||||||||||||||
Residential mortgage loans
|
(448
|
)
|
(117
|
)
|
(565
|
)
|
(1,423
|
)
|
(326
|
)
|
(1,749
|
)
|
||||||||||||
Consumer loans
|
(134
|
)
|
(6
|
)
|
(140
|
)
|
(484
|
)
|
(146
|
)
|
(630
|
)
|
||||||||||||
Federal Home Loan Bank stock
|
—
|
(56
|
)
|
(56
|
)
|
—
|
(177
|
)
|
(177
|
)
|
||||||||||||||
Federal funds sold and other short-term investments
|
240
|
94
|
334
|
828
|
(682
|
)
|
146
|
|||||||||||||||||
Total interest income
|
(2,647
|
)
|
1,667
|
(980
|
)
|
(4,288
|
)
|
(235
|
)
|
(4,523
|
)
|
|||||||||||||
Interest expense
|
||||||||||||||||||||||||
Interest bearing demand
|
$
|
15
|
$
|
(44
|
)
|
$
|
(29
|
)
|
$
|
87
|
$
|
(321
|
)
|
(234
|
)
|
|||||||||
Savings and money market accounts
|
11
|
(72
|
)
|
(61
|
)
|
147
|
(1,014
|
)
|
(867
|
)
|
||||||||||||||
Time deposits
|
(80
|
)
|
(242
|
)
|
(322
|
)
|
(376
|
)
|
(908
|
)
|
(1,284
|
)
|
||||||||||||
Other borrowed funds
|
34
|
(73
|
)
|
(39
|
)
|
30
|
(94
|
)
|
(64
|
)
|
||||||||||||||
Long-term debt
|
(166
|
)
|
15
|
(151
|
)
|
(167
|
)
|
(126
|
)
|
(293
|
)
|
|||||||||||||
Total interest expense
|
(186
|
)
|
(416
|
)
|
(602
|
)
|
(279
|
)
|
(2,463
|
)
|
(2,742
|
)
|
||||||||||||
Net interest income
|
$
|
(2,461
|
)
|
$
|
2,083
|
$
|
(378
|
)
|
$
|
(4,009
|
)
|
$
|
2,228
|
$
|
(1,781
|
)
|
Three Months
Ended
September 30,
2021
|
Three Months
Ended
September 30,
2020
|
Nine Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2020
|
|||||||||||||
Service charges and fees on deposit accounts
|
$
|
1,183
|
$
|
987
|
$
|
3,240
|
$
|
2,957
|
||||||||
Net gains on mortgage loans
|
851
|
1,546
|
4,177
|
4,045
|
||||||||||||
Trust fees
|
1,079
|
921
|
3,217
|
2,801
|
||||||||||||
ATM and debit card fees
|
1,676
|
1,542
|
4,844
|
4,199
|
||||||||||||
Bank owned life insurance (“BOLI”) income
|
260
|
215
|
787
|
688
|
||||||||||||
Investment services fees
|
330
|
328
|
1,146
|
980
|
||||||||||||
Other income
|
263
|
553
|
938
|
1,234
|
||||||||||||
Total noninterest income
|
$
|
5,642
|
$
|
6,092
|
$
|
18,349
|
$
|
16,904
|
Three Months
Ended
September 30,
2021
|
Three Months
Ended
September 30,
2020
|
Nine Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2020
|
|||||||||||||
Salaries and benefits
|
$
|
6,278
|
$
|
6,480
|
$
|
19,192
|
$
|
18,937
|
||||||||
Occupancy of premises
|
992
|
1,026
|
3,023
|
2,984
|
||||||||||||
Furniture and equipment
|
1,014
|
967
|
2,929
|
2,704
|
||||||||||||
Legal and professional
|
272
|
260
|
768
|
798
|
||||||||||||
Marketing and promotion
|
175
|
239
|
525
|
716
|
||||||||||||
Data processing
|
839
|
761
|
2,602
|
2,309
|
||||||||||||
FDIC assessment
|
204
|
131
|
532
|
207
|
||||||||||||
Interchange and other card expense
|
391
|
367
|
1,137
|
1,041
|
||||||||||||
Bond and D&O insurance
|
112
|
104
|
334
|
313
|
||||||||||||
Outside services
|
510
|
491
|
1,434
|
1,322
|
||||||||||||
Other noninterest expense
|
763
|
707
|
2,277
|
2,428
|
||||||||||||
Total noninterest expense
|
$
|
11,550
|
$
|
11,533
|
$
|
34,753
|
$
|
33,759
|
Three Months
Ended
September 30,
2021
|
Three Months
Ended
September 30,
2020
|
Nine Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2020
|
|||||||||||||
Salaries and other compensation
|
$ |
5,708
|
$ |
5,678
|
$ |
17,174
|
$ |
16,919
|
||||||||
Salary deferral from commercial loan originations
|
(204
|
)
|
(229
|
)
|
(825
|
)
|
(899
|
)
|
||||||||
Bonus accrual
|
289
|
296
|
688
|
619
|
||||||||||||
Mortgage production - variable comp
|
187
|
316
|
903
|
834
|
||||||||||||
401k matching contributions
|
98
|
194
|
327
|
464
|
||||||||||||
Medical insurance costs
|
200
|
225
|
925
|
1,000
|
||||||||||||
Total salaries and benefits
|
$
|
6,278
|
$
|
6,480
|
$
|
19,192
|
$
|
18,937
|
Nine months ended September 30, 2021
|
Nine months ended September 30, 2020
|
|||||||||||||||||||||||
Portfolio
Originations
|
Percent of
Total
Originations
|
Average
Loan Size
|
Portfolio
Originations
|
Percent of
Total
Originations
|
Average
Loan Size
|
|||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Residential developed
|
$
|
6,369
|
1.4
|
%
|
$ |
490
|
$
|
3,035
|
0.5
|
%
|
$ |
217
|
||||||||||||
Unsecured to residential developers
|
—
|
—
|
—
|
170
|
—
|
170
|
||||||||||||||||||
Vacant and unimproved
|
8,345
|
1.9
|
642
|
23,943
|
3.7
|
2,394
|
||||||||||||||||||
Commercial development
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Residential improved
|
75,223
|
16.9
|
607
|
45,463
|
7.0
|
425
|
||||||||||||||||||
Commercial improved
|
54,609
|
12.2
|
1,187
|
45,493
|
7.0
|
1,379
|
||||||||||||||||||
Manufacturing and industrial
|
24,962
|
5.6
|
960
|
12,098
|
1.9
|
432
|
||||||||||||||||||
Total commercial real estate
|
169,508
|
38.0
|
764
|
130,202
|
20.1
|
675
|
||||||||||||||||||
Commercial and industrial, excluding PPP
|
77,019
|
17.3
|
770
|
112,312
|
17.3
|
913
|
||||||||||||||||||
PPP loans
|
128,052
|
28.7
|
127
|
346,276
|
53.4
|
199
|
||||||||||||||||||
Total commercial and commercial real estate
|
374,579
|
84.0
|
282
|
588,790
|
90.9
|
287
|
||||||||||||||||||
Consumer
|
||||||||||||||||||||||||
Residential mortgage
|
30,415
|
6.8
|
295
|
29,327
|
4.5
|
333
|
||||||||||||||||||
Unsecured
|
—
|
—
|
—
|
21
|
—
|
11
|
||||||||||||||||||
Home equity
|
39,884
|
8.9
|
126
|
28,727
|
4.4
|
112
|
||||||||||||||||||
Other secured
|
1,452
|
0.3
|
25
|
1,003
|
0.2
|
15
|
||||||||||||||||||
Total consumer
|
71,751
|
16.0
|
150
|
59,078
|
9.1
|
142
|
||||||||||||||||||
Total loans
|
$
|
446,330
|
100.0
|
%
|
$ |
247
|
$
|
647,868
|
100.0
|
%
|
$ |
262
|
Nine Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2020
|
|||||||
Commercial loans originated
|
$
|
374,579
|
$
|
588,790
|
||||
Repayments of commercial loans
|
(543,287
|
)
|
(288,049
|
)
|
||||
Change in undistributed - available credit
|
(87,282
|
)
|
(86,930
|
)
|
||||
Net increase (decrease) in total commercial loans
|
$
|
(255,990
|
)
|
$
|
213,811
|
September 30, 2021
|
December 31, 2020
|
|||||||||||||||
Balance
|
Percent of
Total Loans
|
Balance
|
Percent of
Total Loans
|
|||||||||||||
Commercial real estate: (1)
|
||||||||||||||||
Residential developed
|
$
|
6,184
|
0.5
|
%
|
$
|
8,549
|
0.6
|
%
|
||||||||
Unsecured to residential developers
|
19
|
—
|
—
|
—
|
||||||||||||
Vacant and unimproved
|
36,616
|
3.2
|
47,122
|
3.3
|
||||||||||||
Commercial development
|
403
|
—
|
857
|
—
|
||||||||||||
Residential improved
|
100,608
|
8.9
|
114,392
|
8.0
|
||||||||||||
Commercial improved
|
267,910
|
23.6
|
266,006
|
18.6
|
||||||||||||
Manufacturing and industrial
|
115,470
|
10.2
|
115,247
|
8.1
|
||||||||||||
Total commercial real estate
|
527,210
|
46.4
|
552,173
|
38.6
|
||||||||||||
Commercial and industrial, excluding PPP
|
356,812
|
31.4
|
436,331
|
30.6
|
||||||||||||
PPP loans
|
77,571
|
6.8
|
229,079
|
16.0
|
||||||||||||
Total commercial and commercial real estate
|
961,593
|
84.6
|
1,217,583
|
85.2
|
||||||||||||
Consumer
|
||||||||||||||||
Residential mortgage
|
119,106
|
10.5
|
149,556
|
10.5
|
||||||||||||
Unsecured
|
103
|
—
|
161
|
—
|
||||||||||||
Home equity
|
52,127
|
4.6
|
57,975
|
4.0
|
||||||||||||
Other secured
|
3,684
|
0.3
|
4,056
|
0.3
|
||||||||||||
Total consumer
|
175,020
|
15.4
|
211,748
|
14.8
|
||||||||||||
Total loans
|
$
|
1,136,613
|
100.0
|
%
|
$
|
1,429,331
|
100.0
|
%
|
(1) |
Includes both owner occupied and non-owner occupied commercial real estate.
|
September 30,
2021
|
December 31,
2020
|
|||||||
Nonaccrual loans
|
$
|
420
|
$
|
533
|
||||
Loans 90 days or more delinquent and still accruing
|
—
|
—
|
||||||
Total nonperforming loans (NPLs)
|
420
|
533
|
||||||
Foreclosed assets
|
2,343
|
2,537
|
||||||
Repossessed assets
|
—
|
—
|
||||||
Total nonperforming assets (NPAs)
|
$
|
2,763
|
$
|
3,070
|
||||
NPLs to total loans
|
0.04
|
%
|
0.04
|
%
|
||||
NPAs to total assets
|
0.10
|
%
|
0.12
|
%
|
September 30, 2021
|
December 31, 2020
|
|||||||||||||||||||||||
Commercial
|
Consumer
|
Total
|
Commercial
|
Consumer
|
Total
|
|||||||||||||||||||
Performing TDRs
|
$
|
1,802
|
$
|
3,296
|
$
|
5,098
|
$
|
4,959
|
$
|
4,049
|
$
|
9,008
|
||||||||||||
Nonperforming TDRs (1)
|
332
|
—
|
332
|
437
|
—
|
437
|
||||||||||||||||||
Total TDRs
|
$
|
2,134
|
$
|
3,296
|
$
|
5,430
|
$
|
5,396
|
$
|
4,049
|
$
|
9,445
|
(1)
|
Included in nonperforming asset table above
|
Quarter Ended
September 30,
2021
|
Quarter Ended
June 30,
2021
|
Quarter Ended
March 31,
2021
|
Quarter Ended
December 31,
2020
|
Quarter Ended
September 30,
2020
|
||||||||||||||||
Nonperforming loans
|
$ |
420
|
$ |
433
|
$ |
525
|
$ |
533
|
$ |
195
|
||||||||||
Other real estate owned and repo assets
|
2,343
|
2,343
|
2,371
|
2,537
|
2,624
|
|||||||||||||||
Total nonperforming assets
|
2,763
|
2,776
|
2,896
|
3,070
|
2,819
|
|||||||||||||||
Net charge-offs (recoveries)
|
(276
|
)
|
(104
|
)
|
(44
|
)
|
(50
|
)
|
(203
|
)
|
||||||||||
Total delinquencies
|
437
|
126
|
217
|
581
|
524
|
September 30, 2021
|
||||||||||||||||||||||||
Excluding PPP
|
PPP Loans
|
Total
|
Percent of
Total Loans
|
Percent Grade
4 or Better
|
Percent Grade
5 or Worse
|
|||||||||||||||||||
Industry:
|
||||||||||||||||||||||||
Agricultural Products
|
$
|
41,605
|
$
|
394
|
$
|
41,999
|
4.37
|
%
|
98.71
|
%
|
1.29
|
%
|
||||||||||||
Mining and Oil Extraction
|
947
|
63
|
1,010
|
0.11
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||||||||
Construction
|
68,309
|
8,803
|
77,112
|
8.02
|
%
|
98.60
|
%
|
1.40
|
%
|
|||||||||||||||
Manufacturing
|
128,466
|
16,682
|
145,148
|
15.09
|
%
|
97.51
|
%
|
2.49
|
%
|
|||||||||||||||
Wholesale Trade
|
61,267
|
704
|
61,971
|
6.44
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||||||||
Retail Trade
|
75,009
|
2,744
|
77,753
|
8.09
|
%
|
99.89
|
%
|
0.11
|
%
|
|||||||||||||||
Transportation and Warehousing
|
43,367
|
3,998
|
47,365
|
4.93
|
%
|
98.11
|
%
|
1.89
|
%
|
|||||||||||||||
Information
|
682
|
323
|
1,005
|
0.10
|
%
|
37.21
|
%
|
62.79
|
%
|
|||||||||||||||
Finance and Insurance
|
32,592
|
187
|
32,779
|
3.41
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||||||||
Real Estate and Rental and Leasing
|
274,304
|
900
|
275,204
|
28.62
|
%
|
99.77
|
%
|
0.23
|
%
|
|||||||||||||||
Professional, Scientific and Technical Services
|
7,042
|
3,241
|
10,283
|
1.07
|
%
|
97.77
|
%
|
2.23
|
%
|
|||||||||||||||
Management of Companies and Enterprises
|
—
|
—
|
—
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
|||||||||||||||
Administrative and Support Services
|
17,265
|
10,187
|
27,452
|
2.85
|
%
|
99.62
|
%
|
0.38
|
%
|
|||||||||||||||
Education Services
|
2,645
|
1,882
|
4,527
|
0.47
|
%
|
98.08
|
%
|
1.92
|
%
|
|||||||||||||||
Health Care and Social Assistance
|
50,709
|
16,366
|
67,075
|
6.98
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||||||||
Arts, Entertainment and Recreation
|
7,720
|
473
|
8,193
|
0.85
|
%
|
96.01
|
%
|
3.99
|
%
|
|||||||||||||||
Accommodations and Food Services
|
40,830
|
6,326
|
47,156
|
4.90
|
%
|
86.85
|
%
|
13.15
|
%
|
|||||||||||||||
Other Services
|
31,265
|
4,296
|
35,561
|
3.70
|
%
|
99.47
|
%
|
0.53
|
%
|
|||||||||||||||
Total commercial loans
|
$
|
884,024
|
$
|
77,569
|
$
|
961,593
|
100.00
|
%
|
98.48
|
%
|
1.52
|
%
|
Macatawa Bank Corporation
|
Sept 30,
2021
|
June 30,
2021
|
March 31,
2021
|
Dec 31,
2020
|
Sept 30,
2020
|
|||||||||||||||
Total capital to risk weighted assets
|
18.6
|
%
|
19.7
|
%
|
19.3
|
%
|
18.3
|
%
|
17.7
|
%
|
||||||||||
Common Equity Tier 1 to risk weighted assets
|
17.4
|
17.1
|
16.7
|
15.8
|
15.3
|
|||||||||||||||
Tier 1 capital to risk weighted assets
|
17.4
|
18.5
|
18.1
|
17.1
|
16.6
|
|||||||||||||||
Tier 1 capital to average assets
|
8.5
|
9.5
|
9.8
|
9.9
|
9.8
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More than
5 years
|
|||||||||||||
Long term debt
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Time deposit maturities
|
77,814
|
14,807
|
1,247
|
58
|
||||||||||||
Other borrowed funds
|
—
|
30,000
|
20,000
|
35,000
|
||||||||||||
Operating lease obligations
|
310
|
364
|
144
|
—
|
||||||||||||
Total
|
$
|
78,124
|
$
|
45,171
|
$
|
21,391
|
$
|
35,058
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
Interest Rate Scenario
|
Economic
Value of
Equity
|
Percent
Change
|
Net Interest
Income
|
Percent
Change
|
||||||||||||
Interest rates up 200 basis points
|
$
|
326,003
|
9.20
|
%
|
$
|
54,796
|
19.82
|
%
|
||||||||
Interest rates up 100 basis points
|
312,041
|
4.52
|
50,116
|
9.58
|
||||||||||||
No change
|
298,538
|
—
|
45,733
|
—
|
||||||||||||
Interest rates down 100 basis points
|
276,628
|
(7.34
|
)
|
44,824
|
(1.99
|
)
|
||||||||||
Interest rates down 200 basis points
|
276,703
|
(7.31
|
)
|
44,547
|
(2.59
|
)
|
Item 4: |
CONTROLS AND PROCEDURES
|
(a) |
Evaluation of Disclosure Controls and Procedures. Under the
supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), we conducted an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Exchange Act Rule 13a-15(e) as of September 30, 2021, the end of the period covered by this report.
|
(b) |
Changes in Internal Controls. During the period covered by
this report, there have been no changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Total
Number of
Shares
Purchased
|
Average
Price Paid
Per Share
|
|||||||
Period
|
||||||||
July 1 - July 31, 2021
|
||||||||
Employee Transactions
|
2,518
|
$
|
8.55
|
|||||
August 1 - August 31, 2021
|
||||||||
Employee Transactions
|
—
|
—
|
||||||
September 1 - September 30, 2021
|
||||||||
Employee Transactions
|
—
|
—
|
||||||
Total for Third Quarter ended September 30, 2021
|
||||||||
Employee Transactions
|
2,518
|
$
|
8.55
|
Item 6. |
EXHIBITS.
|
Restated Articles of Incorporation. Previously filed with the Commission on
October 27, 2016 in Macatawa Bank Corporation’s Quarterly Report on Form 10-Q, Exhibit 3.1. Here incorporated by reference.
|
|
Bylaws. Previously filed with the Commission on February 19, 2015 in
Macatawa Bank Corporation's Annual Report on Form 10-K for the year ended December 31, 2014, Exhibit 3.2. Here incorporated by reference.
|
|
Restated Articles of Incorporation. Exhibit 3.1 is here incorporated by reference.
|
|
Bylaws. Exhibit 3.2 is here incorporated by reference.
|
|
4.3
|
Long-Term Debt. The registrant has outstanding long-term debt which at the time of this report does not exceed 10% of the registrant's total consolidated assets. The
registrant agrees to furnish copies of the agreements defining the rights of holders of such long-term debt to the SEC upon request.
|
Certification of Chief Executive Officer.
|
|
Certification of Chief Financial Officer.
|
|
Certification pursuant to 18 U.S.C. Section 1350.
|
|
101.INS
|
Inline XBRL Instance Document
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
MACATAWA BANK CORPORATION
|
|
/s/ Ronald L. Haan
|
|
Ronald L. Haan
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ Jon W. Swets
|
|
Jon W. Swets
|
|
Senior Vice President and
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
Dated: October 28, 2021
|
1. |
I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2021 of Macatawa Bank Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
|
(c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Ronald L. Haan
|
|
Ronald L. Haan
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2021 of Macatawa Bank Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
|
(c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Jon W. Swets
|
|
Jon W. Swets
|
|
Senior Vice President and
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
/s/ Ronald L. Haan
|
|
Ronald L. Haan
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ Jon W. Swets
|
|
Jon W. Swets
|
|
Senior Vice President and
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
Dated: October 28, 2021
|
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
ASSETS | ||
Debt securities held to maturity, fair value | $ 140,412 | $ 83,246 |
Shareholders' equity | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 34,189,799 | 34,197,519 |
Common stock, shares outstanding (in shares) | 34,189,799 | 34,197,519 |
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Interest income | ||||
Loans, including fees | $ 12,761 | $ 13,854 | $ 39,530 | $ 43,194 |
Securities | ||||
Taxable | 786 | 867 | 2,365 | 2,881 |
Tax-exempt | 777 | 861 | 2,295 | 2,607 |
FHLB Stock | 44 | 100 | 162 | 339 |
Federal funds sold and other short-term investments | 474 | 140 | 948 | 802 |
Total interest income | 14,842 | 15,822 | 45,300 | 49,823 |
Interest expense | ||||
Deposits | 209 | 621 | 732 | 3,118 |
Other borrowings | 325 | 364 | 1,006 | 1,069 |
Long-term debt | 12 | 163 | 319 | 612 |
Total interest expense | 546 | 1,148 | 2,057 | 4,799 |
Net interest income | 14,296 | 14,674 | 43,243 | 45,024 |
Provision for loan losses | (550) | 500 | (1,300) | 2,200 |
Net interest income after provision for loan losses | 14,846 | 14,174 | 44,543 | 42,824 |
Noninterest income | ||||
Service charges and fees | 1,183 | 987 | 3,240 | 2,957 |
Net gains on mortgage loans | 851 | 1,546 | 4,177 | 4,045 |
Trust fees | 1,079 | 921 | 3,217 | 2,801 |
ATM and debit card fees | 1,676 | 1,542 | 4,844 | 4,199 |
Bank owned life insurance ("BOLI") income | 260 | 215 | 787 | 688 |
Other | 593 | 881 | 2,084 | 2,214 |
Total noninterest income | 5,642 | 6,092 | 18,349 | 16,904 |
Noninterest expense | ||||
Salaries and benefits | 6,278 | 6,480 | 19,192 | 18,937 |
Occupancy of premises | 992 | 1,026 | 3,023 | 2,984 |
Furniture and equipment | 1,014 | 967 | 2,929 | 2,704 |
Legal and professional | 272 | 260 | 768 | 798 |
Marketing and promotion | 175 | 239 | 525 | 716 |
Data processing | 839 | 761 | 2,602 | 2,309 |
FDIC assessment | 204 | 131 | 532 | 207 |
Interchange and other card expense | 391 | 367 | 1,137 | 1,041 |
Bond and D&O Insurance | 112 | 104 | 334 | 313 |
Other | 1,273 | 1,198 | 3,711 | 3,750 |
Total noninterest expenses | 11,550 | 11,533 | 34,753 | 33,759 |
Income before income tax | 8,938 | 8,733 | 28,139 | 25,969 |
Income tax expense | 1,736 | 1,613 | 5,341 | 4,800 |
Net income | $ 7,202 | $ 7,120 | $ 22,798 | $ 21,169 |
Basic earnings per common share (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.67 | $ 0.62 |
Diluted earnings per common share (in dollars per share) | 0.21 | 0.21 | 0.67 | 0.62 |
Cash dividends per common share (in dollars per share) | $ 0.08 | $ 0.08 | $ 0.24 | $ 0.24 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ||||
Net income | $ 7,202 | $ 7,120 | $ 22,798 | $ 21,169 |
Unrealized gains (losses): | ||||
Net change in unrealized gains (losses) on debt securities available for sale | (792) | 39 | (3,443) | 3,865 |
Tax effect | 166 | (8) | 723 | (814) |
Net change in unrealized gains (losses) on debt securities available for sale, net of tax | (626) | 31 | (2,720) | 3,051 |
Less: reclassification adjustments: | ||||
Reclassification for gains included in net income | 0 | 0 | 0 | 0 |
Tax effect | 0 | 0 | 0 | 0 |
Reclassification for gains included in net income, net of tax | 0 | 0 | 0 | 0 |
Other comprehensive income (loss), net of tax | (626) | 31 | (2,720) | 3,051 |
Comprehensive income | $ 6,576 | $ 7,151 | $ 20,078 | $ 24,220 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Cash dividend per share (in dollars per share) | $ 0.08 | $ 0.08 | $ 0.24 | $ 0.24 |
Common Stock [Member] | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Number of shares repurchased for taxes withheld on vested restricted stock (in shares) | 2,518 | 1,696 | 3,859 | 3,304 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE 1 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Principles of Consolidation: The
accompanying consolidated financial statements include the accounts of Macatawa Bank Corporation (“the Company”, “our”, “we”) and its wholly-owned subsidiary, Macatawa Bank (“the Bank”). All significant intercompany accounts and
transactions have been eliminated in consolidation.
Macatawa Bank is a Michigan chartered bank with
depository accounts insured by the Federal Deposit Insurance Corporation. The Bank operates 26 full service branch offices
providing a full range of commercial and consumer banking and trust services in Kent County, Ottawa County, and northern Allegan County, Michigan.
The Company previously owned all of the
common stock of Macatawa Statutory Trust II. This was a grantor trust that issued trust preferred securities and was not consolidated with the Company under accounting principles generally accepted in the United States of America.
On July 7, 2021, the Company redeemed all of the $20.0 million of outstanding trust preferred securities and $619,000 of common securities associated with this trust.
Recent Events: On March 22, 2020, the
federal banking agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with
Customers Affected by the Coronavirus.” The guidance explained that in consultation with the FASB staff the federal banking agencies concluded that short-term modifications (e.g. six months) made on a good faith basis to
borrowers who were current as of the implementation date of a modification are not Troubled Debt Restructurings (“TDRs”). The Coronavirus Aid, Relief and Economic Security (“CARES”) Act was passed by Congress on March 27, 2020.
Section 4013 of the CARES Act also addressed COVID-19 related modifications and specified that COVID-19 related modifications on loans that were not more than 30 days past due as of December 31, 2019 are not TDRs. On December 27,
2020, another COVID-19 relief bill was signed that extended this guidance until the earlier of January 1, 2022 or 60 days after the date on which the national emergency declared as a result of COVID-19 is terminated. Through
September 30, 2021, the Bank had applied this guidance and modified 726 individual loans with aggregate principal balances
totaling $337.2 million. As of September 30, 2021, all of these modifications had expired and the loans returned to their
contractual payment terms.
The CARES Act, as amended, included an
allocation of $659 billion for loans to be issued by financial institutions through the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”). PPP loans are forgivable, in whole or in part, if the proceeds are
used for payroll and other permitted purposes in accordance with the requirements of the PPP. These loans carry a fixed rate of 1.00% and a term of two years (loans made before June 5, 2020) or five years (loans made on or after June
5, 2020), if not forgiven, in whole or in part. Payments are deferred until either the date on which the SBA remits the amount of forgiveness proceeds to the lender or the date that is 10 months after the last day of the covered
period if the borrower does not apply for forgiveness within that 10 month period. Through December 31, 2020, the Bank had originated 1,738
PPP loans totaling $346.7 million in principal, with an average loan size of $200,000. Fees totaling $10.0 million were
generated from the SBA for these loans in the year ended December 31, 2020. These fees are deferred and amortized into interest income over the contractual period of 24 months or 60 months, as applicable. Upon SBA forgiveness,
unamortized fees are then recognized into interest income. Participation in the PPP had a significant impact on the Bank’s asset mix and net interest income in 2020 and will continue to impact both asset mix and net interest income
until these loans are forgiven or paid off. The initial PPP expired on August 8, 2020. Through December 31, 2020, 765
PPP loans totaling $113.5 million had been forgiven by the SBA and a total of $5.4 million in PPP fees had been recognized by the Bank.
On December 27, 2020, another COVID-19 relief
bill was signed that extended and modified several provisions of the PPP. This included an additional allocation of $284 billion. The SBA reactivated the PPP on January 11, 2021. The Bank originated additional loans through the
PPP, which expired on May 31, 2021. In the nine months ended September 30, 2021, the Bank had generated and received SBA approval on 1,000
PPP loans totaling $128.1 million and generated $5.6 million in related deferred PPP fees. In the nine months ended September 30, 2021, 1,742 PPP loans totaling $279.9 million had been forgiven by the
SBA and a total of $7.1 million in PPP fees had been recognized by the Bank including fees recognized upon forgiveness and
continuing amortization of fees from the 2020 and 2021 PPP originations.
While the Company continues to evaluate the
disruption caused by the pandemic and impact of the CARES Act, these events may have a material adverse impact on the Company’s results of future operations, financial position, capital, and liquidity in fiscal year 2021 and beyond.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) believed necessary
for a fair presentation have been included.
Operating results for the three and nine month
periods ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. For further information, refer to the consolidated financial statements and related notes
included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Use of Estimates: To prepare financial
statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts
reported in the financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, valuation of deferred tax assets, loss contingencies, fair value of other real estate owned and fair
values of financial instruments are particularly subject to change.
Bank-Owned Life Insurance (BOLI): The Bank has purchased life insurance policies on certain officers. BOLI is recorded at its
currently realizable cash surrender value. Changes in cash surrender value are recorded in other income. In early April 2021, the Bank purchased an additional $10.0 million in BOLI policies.
Allowance for Loan Losses: The allowance
for loan losses (allowance) is a valuation allowance for probable incurred credit losses inherent in our loan portfolio, increased by the provision for loan losses and recoveries, and decreased by charge-offs of loans. Management
believes the allowance for loan losses balance to be adequate based on known and inherent risks in the portfolio, past loan loss experience, information about specific borrower situations and estimated collateral values, economic
conditions and other relevant factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off. Loan losses are charged
against the allowance when management believes the uncollectibility of a loan balance is confirmed. Management continues its collection efforts on previously charged-off balances and applies recoveries as additions to the allowance
for loan losses.
The allowance consists of
specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-classified loans and is based on historical loss experience adjusted for
current qualitative factors. The Company maintains a loss migration analysis that tracks loan losses and recoveries based on loan class and the loan risk grade assignment for commercial loans. At September 30, 2021, an 18 month annualized historical loss experience was used for commercial loans and a 12 month historical loss experience period was applied to residential mortgage loans and consumer loans. These historical loss percentages are adjusted
(both upwards and downwards) for certain qualitative factors, including economic trends, credit quality trends, valuation trends, concentration risk, quality of loan review, changes in personnel, external factors and other
considerations. At September 30, 2021, the qualitative factor allocations for economic trends related to the COVID-19 that had been increased significantly during 2020 were maintained reflecting continued uncertainty of economic
conditions with the reopening of the economy and surges in COVID-19 cases associated with the Delta variant of the virus. PPP loans receive $0 allocation as they are fully guaranteed by the SBA and are subject to be forgiven under the SBA forgiveness criteria.
A loan is impaired when, based on current
information and events, it is believed to be probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified and a concession
has been made, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.
Commercial and commercial real estate loans
with relationship balances exceeding $500,000 and an internal risk grading of 6 or worse are evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated and the loan is reported at the present value of
estimated future cash flows using the loan’s existing interest rate or at the fair value of collateral, less estimated costs to sell, if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous
loans, such as consumer and residential real estate loans, are collectively evaluated for impairment and they are not separately identified for impairment disclosures.
Troubled debt restructurings are also
considered impaired with impairment generally measured at the present value of estimated future cash flows using the loan’s effective rate at inception or using the fair value of collateral, less estimated costs to sell, if repayment
is expected solely from the collateral.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Foreclosed Assets: Assets acquired
through or instead of loan foreclosure, primarily other real estate owned, are initially recorded at fair value less estimated costs to sell when acquired, establishing a new cost basis. If fair value declines, a valuation allowance
is recorded through expense. Costs after acquisition are expensed unless they add value to the property.
Income Taxes: Income tax expense is
the sum of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the
carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
The Company recognizes a tax position as a
benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater
than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and penalties related to income tax matters in income tax
expense.
Revenue Recognition: The Company
recognizes revenues as they are earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. The Company’s primary source of revenue is interest income from the
Bank’s loans and investment securities. The Company also earns noninterest revenue from various banking services offered by the Bank.
Interest Income: The Company’s largest source
of revenue is interest income which is primarily recognized on an accrual basis based on contractual terms written into loans and investment contracts.
Noninterest Revenue: The Company derives the
majority of its noninterest revenue from: (1) service charges for deposit related services, (2) gains related to mortgage loan sales, (3) trust fees and (4) debit and credit card interchange income. Most of these services are
transaction based and revenue is recognized as the related service is provided.
Derivatives: Certain of the Bank’s
commercial loan customers have entered into interest rate swap agreements directly with the Bank. At the same time the Bank enters into a swap agreement with its customer, the Bank enters into a corresponding interest rate swap
agreement with a correspondent bank at terms mirroring the Bank’s interest rate swap with its commercial loan customer. This is known as a back-to-back swap agreement. Under this arrangement the Bank has two freestanding interest rate swaps, each of which is carried at fair value. As the terms mirror each other, there is no income
statement impact to the Bank. At September 30, 2021 and December 31, 2020, the total notional amount of such agreements was $143.2
million and $156.4 million, respectively, and resulted in a derivative asset with a fair value of $3.4 million and $4.2
million, respectively, which were included in other assets and a derivative liability of $3.4 million and $4.2 million, respectively, which were included in other liabilities.
Mortgage Banking Derivatives: Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary
market and forward commitments for the future delivery of these mortgage loans are accounted for as derivatives not qualifying for hedge accounting. Fair values of these mortgage derivatives are estimated based on changes in
mortgage interest rates from the date the interest rate on the loan is locked. The Bank enters into commitments to sell mortgage backed securities, which it later buys back in order to hedge its exposure to interest rate risk
in its mortgage pipeline. At times, the Bank also enters into forward commitments for the future delivery of mortgage loans when loans are closed but not yet sold, in order to hedge the change in interest rates resulting from
its commitments to sell the loans.
Changes in the fair values of these interest rate lock and mortgage backed security and forward commitment derivatives are included in net gains on mortgage
loans. The fair value of interest rate lock commitments was $(28,000) at September 30, 2021 and $103,000 at December 31, 2020. The fair value of mortgage backed security derivatives was $43,000 at September 30, 2021 and $(233,000) at
December 31, 2020.
Reclassifications: Some items in the
prior year financial statements were reclassified to conform to the current presentation.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Newly Issued Not Yet Effective Standards: FASB issued ASU No. 2016-13, Financial Instruments—Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and
other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires
consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance eliminates the probable initial recognition threshold and, instead, reflects an entity’s current estimate
of all expected credit losses. The new guidance broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually to include forecasted
information, as well as past events and current conditions. There is no specified method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss
estimate. Although an entity may still use its current systems and methods for recording the allowance for credit losses, under the new rules, the inputs used to record the allowance for credit losses generally will need to change
to appropriately reflect an estimate of all expected credit losses and the use of reasonable and supportable forecasts. Additionally, credit losses on available-for-sale debt securities will now have to be presented as an allowance
rather than as a write-down.
ASU No. 2019-10 Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) – Effective Dates updated the effective date of this ASU for smaller reporting companies, such as the
Company, to fiscal years beginning after December 15, 2022. The Company selected a software vendor for applying this new ASU for Current Expected Credit Losses (“CECL”), began implementation of the software in the second quarter of
2018, completed integration during the third quarter of 2018 and ran parallel computations with both systems using the current GAAP incurred loss model in the fourth quarter of 2018. The Company went live with this software
beginning in January 2019 for its monthly incurred loss computations and began modeling the new current expected credit loss model assumptions to the allowance for loan losses computation. During 2019, 2020 and the first nine
months of 2021, the Company modeled the various methods prescribed in the ASU against the Company’s identified loan segments. The Company anticipates continuing to run parallel computations and fine tune assumptions as it continues
to evaluate the impact of adoption of the new standard. The COVID-19 pandemic that broke out in the United States in the first quarter of 2020 and continued into 2021 may have a significant impact on allowance computations under
the incurred loss model which could be amplified under the new standard.
|
SECURITIES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES |
NOTE 2 – SECURITIES
The amortized cost and fair value of securities
at period-end were as follows (dollars in thousands):
There were no sales of securities in the three and nine month periods ended September 30, 2021 and 2020.
Contractual maturities of debt securities at September 30, 2021
were as follows (dollars in thousands):
NOTE 2 – SECURITIES (Continued)
Securities with unrealized losses at September 30,
2021 and December 31, 2020,
aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (dollars in thousands):
Other-Than-Temporary-Impairment
Management evaluates securities for
other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. At September 30, 2021, 88 securities available for sale with fair values totaling $116.8
million had unrealized losses totaling $1.5 million. At September 30, 2021, 7 securities held to maturity with fair values totaling $20.4
million had unrealized losses totaling $47,000. Management has the intent and ability to hold the securities classified as
held to maturity until they mature, at which time the Company will receive full value for the securities. In addition, management believes it is more likely than not that the Company will not be required to sell any of its investment
securities before a recovery of cost. Management determined that the unrealized losses for the three and nine month periods ended September 30, 2021 and 2020 were attributable to changes in interest rates and not due to credit
quality. As such, no OTTI charges were necessary during each period.
Securities with a carrying value
of approximately $5.0 million and $6.1 million were pledged as security for public deposits, letters of credit and for other purposes required or permitted by law at September 30, 2021 and December 31, 2020, respectively.
|
LOANS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS |
NOTE 3 – LOANS
Portfolio loans were as follows (dollars in thousands):
NOTE 3 – LOANS (Continued)
Activity in the allowance for loan losses by portfolio segment was as follows (dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on
impairment method (dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents loans individually evaluated
for impairment by class of loans as of September 30, 2021 (dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2020 (dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents information regarding average balances of impaired loans and interest recognized on impaired loans for the three and nine month periods ended September 30, 2021
and 2020 (dollars in thousands):
NOTE 3 – LOANS (Continued)
Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The following tables present the recorded investment in
nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2021 and December 31, 2020:
NOTE 3 – LOANS (Continued)
The following table presents the aging of the recorded investment in past due loans as of September 30, 2021 and December 31, 2020 by class of
loans (dollars in thousands):
NOTE 3 – LOANS (Continued)
The Company had allocated $574,000
and $1,210,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDRs”)
as of September 30, 2021 and December 31, 2020, respectively. These loans may have involved the restructuring of terms to allow customers to mitigate the risk of foreclosure by meeting a lower loan payment requirement based upon their
current cash flow. These may also include loans that renewed at existing contractual rates, but below market rates for comparable credit. The Company has been active at utilizing these programs and working with its customers to reduce
the risk of foreclosure. For commercial loans, these modifications typically include an interest only period and, in some cases, a lowering of the interest rate on the loan. In some cases, the modification will include separating the
note into two notes with the first note structured to be supported by current cash flows and collateral, and the second note
made for the remaining unsecured debt. The second note is charged off immediately and collected only after the first note is paid in full. This modification type is commonly referred to as an A-B note structure. For consumer mortgage
loans, the restructuring typically includes a lowering of the interest rate to provide payment and cash flow relief. For each restructuring, a comprehensive credit underwriting analysis of the borrower’s financial condition and prospects
of repayment under the revised terms is performed to assess whether the structure can be successful and that cash flows will be sufficient to support the restructured debt. An analysis is also performed to determine whether the
restructured loan should be on accrual status. Generally, if the loan is on accrual at the time of restructure, it will remain on accrual after the restructuring. In some cases, a nonaccrual loan may be placed on accrual at
restructuring if the loan’s actual payment history demonstrates it would have cash flowed under the restructured terms. After six
consecutive payments under the restructured terms, a nonaccrual restructured loan is reviewed for possible upgrade to accruing status.
In situations where there is a subsequent modification or renewal and the loan is brought to market terms, including a contractual
interest rate not less than a market interest rate for new debt with similar credit risk characteristics, the TDR and impaired loan designations may be removed. In addition, the TDR designation may also be removed from loans modified
under an A-B note structure. If the remaining “A” note is at a market rate at the time of restructuring (taking into account the borrower’s credit risk and prevailing market conditions), the loan can be removed from TDR designation in a
subsequent calendar year after six months of performance in accordance with the new terms. The market rate relative to the
borrower’s credit risk is determined through analysis of market pricing information gathered from peers and use of a loan pricing model. The general objective of the model is to achieve a consistent return on equity from one credit to
the next, taking into consideration differences in credit risk. In the model, credits with higher risk receive a higher potential loss allocation, and therefore require a higher interest rate to achieve the target return on equity.
As with other impaired loans, an allowance for loan loss is estimated for each TDR based on the most likely source of repayment for
each loan. For impaired commercial real estate loans that are collateral dependent, the allowance is computed based on the fair value of the underlying collateral, less estimated costs to sell. For impaired commercial loans where
repayment is expected from cash flows from business operations, the allowance is computed based on a discounted cash flow computation. Certain groups of TDRs, such as residential mortgages, have common characteristics and for them the
allowance is computed based on a discounted cash flow computation on the change in weighted rate for the pool. The allowance allocations for commercial TDRs where we have reduced the contractual interest rate are computed by measuring
cash flows using the new payment terms discounted at the original contractual rate.
The following table presents information regarding troubled debt restructurings as of September 30, 2021 and December 31, 2020
(dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents information related to accruing TDRs as of September 30, 2021 and December 31, 2020. The table presents
the amount of accruing troubled debt restructurings that were on nonaccrual status prior to the restructuring, accruing at the time of restructuring and those that were upgraded to accruing status after receiving six consecutive monthly
payments in accordance with the restructured terms as of each period reported (dollars in thousands):
There were no
TDRs executed during the three month and nine month periods ended September 30, 2021. There were no TDRs executed during the
three month period ended September 30, 2020 and two consumer TDRs totaling $30,000 executed during the nine month period ended September 30, 2020.
According to the accounting standards, not all loan modifications are TDRs. TDRs are modifications or renewals where the Company has
granted a concession to a borrower in financial distress. The Company reviews all modifications and renewals for determination of TDR status. In some situations a borrower may be experiencing financial distress, but the Company does not
provide a concession. These modifications are not considered TDRs. In other cases, the Company might provide a concession, such as a reduction in interest rate, but the borrower is not experiencing financial distress. This could be the
case if the Company is matching a competitor’s interest rate. These modifications would also not be considered TDRs. Finally, any renewals at existing terms for borrowers not experiencing financial distress would not be considered
TDRs. As with other loans not considered TDR or impaired, allowance allocations are based on the historical based allocation for the applicable loan grade and loan class.
Payment defaults on TDRs have been minimal and during the three and nine month periods ended September 30, 2021 and 2020, the balance
of loans that became delinquent by more than 90 days past due or that were transferred to nonaccrual within 12 months of restructuring were not material.
In late March 2020, the federal banking regulators issued guidance that modifications made to a borrower affected by the COVID-19
pandemic and governmental shutdown orders do not need to be identified as a TDR if the loan was current at the time a modification plan was implemented. Section 4013 of the CARES Act also addressed COVID-19 related modifications and
specified that such modifications made on loans that were current as of December 31, 2019 are not TDRs. On December 27, 2020, President Trump signed another COVID-19 relief bill that extends this guidance until the earlier of January 1,
2022 or 60 days after the national emergency termination date. Through September 30, 2021, the Bank had applied this guidance and had made 726
such modifications with principal balances totaling $337.2 million. The Bank continues to follow the guidance issued by the
banking regulators in making any TDR determinations. At September 30, 2021, there were no such loans still in their
modification period.
NOTE 3 – LOANS (Continued)
Credit Quality
Indicators: The Company categorizes loans into risk
categories based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic
trends, among other factors. The Company analyzes commercial loans individually and classifies these relationships by credit risk grading. The Company uses an eight point grading system, with grades 5 through 8 being considered classified, or watch, credits. All commercial loans are assigned a grade at origination, at
each renewal or any amendment. When a credit is first downgraded to a watch credit (either through renewal, amendment, loan officer identification or the loan review process), an Administrative Loan Review (“ALR”) is generated by the
credit department and the loan officer. All watch credits have an ALR completed quarterly which analyzes the collateral position and cash flow of the borrower and its guarantors. Management meets quarterly with loan officers to
discuss each of these credits in detail and to help formulate solutions where progress has stalled. When necessary, the loan officer proposes changes to the assigned loan grade as part of the ALR. Additionally, Loan Review reviews all
loan grades upon origination, renewal or amendment and again as loans are selected though the loan review process. The credit will stay on the ALR until either its grade has improved to a 4 or the credit relationship is at a zero
balance. The Company uses the following definitions for the risk grades:
1. Excellent - Loans supported by extremely strong financial condition or secured by the Bank’s own
deposits. Minimal risk to the Bank and the probability of serious rapid financial deterioration is extremely small.
2. Above Average - Loans supported by sound financial statements that indicate the ability to repay or
borrowings secured (and margined properly) with marketable securities. Nominal risk to the Bank and probability of serious financial deterioration is highly unlikely. The overall quality of these credits is very high.
3. Good Quality - Loans supported by satisfactory asset quality and liquidity, good debt capacity coverage,
and good management in all critical positions. Loans are secured by acceptable collateral with adequate margins. There is a slight risk of deterioration if adverse market conditions prevail.
4. Acceptable Risk - Loans carrying an acceptable risk to the Bank, which may be slightly below average
quality. The borrower has limited financial strength with considerable leverage. There is some probability of deterioration if adverse market conditions prevail. These credits should be monitored closely by the Relationship Manager.
5. Marginally Acceptable - Loans are of marginal quality with above normal risk to the Bank. The borrower
shows acceptable asset quality but very little liquidity with high leverage. There is inconsistent earning performance without the ability to sustain adverse market conditions. The primary source of repayment is questionable, but the
secondary source of repayment still remains an option. Very close attention by the Relationship Manager and management is needed.
6. Substandard - Loans are inadequately protected by the net worth and paying capacity of the borrower or
the collateral pledged. The primary and secondary sources of repayment are questionable. Heavy debt condition may be evident and volume and earnings deterioration may be underway. It is possible that the Bank will sustain some loss if the
deficiencies are not immediately addressed and corrected.
7. Doubtful - Loans supported by weak or no financial statements, as well as the ability to repay the
entire loan, are questionable. Loans in this category are normally characterized less than adequate collateral, insolvent, or extremely weak financial condition. A loan classified doubtful has all the weaknesses inherent in one classified
substandard with the added characteristic that the weaknesses makes collection or liquidation in full highly questionable. The possibility of loss is extremely high, however, activity may be underway to minimize the loss or maximize the
recovery.
8. Loss - Loans are considered uncollectible and of little or no value as a bank asset.
NOTE 3 – LOANS (Continued)
As of September 30, 2021 and December 31, 2020, the risk grade category of commercial loans by class of loans were as follows (dollars in thousands):
Commercial loans rated a 6
or worse per the Company’s internal risk rating system are considered substandard, doubtful or loss. Commercial loans classified as substandard or worse were as follows at period-end (dollars in thousands):
The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For consumer loan
classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in consumer loans based on payment
activity (dollars in thousands):
|
FAIR VALUE |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE |
NOTE 4 – FAIR VALUE
ASC Topic 820, Fair
Value Measurements and Disclosures, establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of
inputs that may be used to measure fair value include:
Investment Securities: The fair values of
investment securities are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by
relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair values of certain securities held to maturity are determined by computing discounted cash flows using observable and unobservable
market inputs (Level 3 inputs).
Loans Held for Sale: The fair value of loans held for sale is based upon binding quotes from third party investors (Level 2 inputs). Impaired Loans: Loans identified as
impaired are measured using one of three methods: the loan’s observable market price, the fair value of collateral or the present value of expected future cash flows. For each period presented, no impaired loans were measured using the
loan’s observable market price. If an impaired loan has had a charge-off or if the fair value of the collateral is less than the recorded investment in the loan, we establish a specific reserve and report the loan as nonrecurring Level
3. The fair value of collateral of impaired loans is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income
approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a
Level 3 classification of the inputs for determining fair value.
Other Real Estate Owned: Other real estate
owned (OREO) properties are initially recorded at fair value, less estimated costs to sell when acquired, establishing a new cost basis. Adjustments to OREO are measured at fair value, less costs to sell. Fair values are generally
based on third party appraisals or realtor evaluations of the property. These appraisals and evaluations may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.
Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3
classification. In cases where the carrying amount exceeds the fair value, less estimated costs to sell, an impairment loss is recognized through a valuation allowance, and the property is reported as nonrecurring Level 3.
Interest Rate Swaps: For interest rate
swap agreements, we measure fair value utilizing pricing provided by a third-party pricing source that that uses market observable inputs, such as forecasted yield curves, and other unobservable inputs and accordingly, interest rate
swap agreements are classified as Level 3.
NOTE 4 – FAIR VALUE (Continued)
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
Assets measured at fair value on a non-recurring basis are summarized below (in thousands):
NOTE 4 – FAIR VALUE (Continued)
Quantitative information about Level 3 fair value measurements measured on a non-recurring basis was as follows at period end (dollars in thousands):
NOTE 4 – FAIR VALUE (Continued)
The carrying amounts and estimated
fair values of financial instruments, not previously presented, were as follows at September 30, 2021 and December 31, 2020
(dollars in thousands):
The methods and assumptions used to estimate fair
value are described as follows.
Carrying amount is the estimated fair value for
cash and cash equivalents, bank owned life insurance, accrued interest receivable and payable, demand deposits, short-term borrowings and variable rate loans or deposits that reprice frequently and fully. Security fair values are
determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities as discussed above. For fixed rate loans, interest-bearing time deposits in other financial institutions, or deposits
and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk (including consideration of
widening credit spreads). Fair value of debt is based on current rates for similar financing. It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. The fair value of
off-balance sheet credit-related items is not significant.
The estimated fair values of financial
instruments disclosed above as follow the guidance in ASU 2016-01 which prescribes an “exit price” approach in estimating and disclosing fair value of financial instruments incorporating discounts for credit, liquidity and marketability
factors.
|
DEPOSITS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS |
NOTE 5 – DEPOSITS
Deposits are summarized as follows (dollars in thousands):
Time deposits that exceed the FDIC insurance
limit of $250,000 were approximately $29.7 million at September 30, 2021 and $28.8 million at December 31, 2020.
|
OTHER BORROWED FUNDS |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER BORROWED FUNDS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER BORROWED FUNDS |
NOTE 6 - OTHER BORROWED FUNDS
Other borrowed funds include advances from the
Federal Home Loan Bank and borrowings from the Federal Reserve Bank.
Federal Home Loan Bank Advances
At period-end, advances from the Federal Home
Loan Bank were as follows (dollars in thousands):
Each advance is subject to a prepayment fee if
paid prior to its maturity date. Fixed rate advances are payable at maturity. Amortizable mortgage advances are fixed rate advances with scheduled repayments based upon amortization to maturity. These advances were collateralized by
residential and commercial real estate loans totaling $389.8 million and $427.9 million under a blanket lien arrangement at September 30, 2021 and December 31, 2020, respectively.
Scheduled repayments of FHLB advances as of September 30, 2021 were
as follows (in thousands):
Federal Reserve Bank borrowings
The Company has a financing arrangement with the
Federal Reserve Bank. There were no borrowings outstanding at September 30, 2021 and December 31, 2020, and the Company
had approximately $4.8 million and $12.9 million in unused borrowing capacity based on commercial and mortgage loans pledged to the Federal Reserve Bank totaling $5.2 million and $13.8 million at September 30, 2021
and December 31, 2020, respectively.
|
EARNINGS PER COMMON SHARE |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER COMMON SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER COMMON SHARE |
NOTE 7 - EARNINGS PER COMMON SHARE
A reconciliation of the numerators and denominators of basic and diluted earnings per common share for the three and nine month periods ended September 30,
2021 and 2020
are as follows (dollars in thousands, except per share data):
There were no antidilutive shares
of common stock in the three and nine month periods ended September 30, 2021 and 2020.
|
FEDERAL INCOME TAXES |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FEDERAL INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FEDERAL INCOME TAXES |
NOTE 8 - FEDERAL INCOME TAXES
Income tax expense was as follows (dollars in thousands):
The difference between the financial statement tax expense and amount computed by applying the statutory federal tax rate to pretax
income was reconciled as follows (dollars in thousands):
The realization of deferred tax assets is largely dependent upon future taxable income, future reversals of existing taxable
temporary differences and the ability to carryback losses to available tax years. In assessing the need for a valuation allowance, we consider positive and negative evidence, including taxable income in carry-back years, scheduled
reversals of deferred tax liabilities, expected future taxable income and tax planning strategies. Management believes it is more likely than not that all of the deferred tax assets will be realized against deferred tax liabilities and
projected future taxable income.
The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):
There were no
unrecognized tax benefits at September 30, 2021 or December 31, 2020 and the Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. The Company is no longer subject to examination by the Internal Revenue Service for years before 2018.
|
COMMITMENTS AND OFF BALANCE-SHEET RISK |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||
COMMITMENTS AND OFF BALANCE-SHEET RISK [Abstract] | |||||||||||||||||||||||||||||||||||||
COMMITMENTS AND OFF BALANCE-SHEET RISK |
NOTE 9 – COMMITMENTS AND OFF BALANCE-SHEET RISK
Some financial instruments are used to meet
customer financing needs and to reduce exposure to interest rate changes. These financial instruments include commitments to extend credit and standby letters of credit. These involve, to varying degrees, credit and interest rate risk
in excess of the amount reported in the financial statements.
Commitments to extend credit are agreements to
lend to a customer as long as there is no violation of any condition established in the commitment, and generally have fixed expiration dates. Collateral or other security is normally not obtained for these financial instruments prior
to their use and many of the commitments are expected to expire without being used. Standby letters of credit are conditional commitments to guarantee a customer’s performance to a third party. Exposure to credit loss if the other
party does not perform is represented by the contractual amount for commitments to extend credit and standby letters of credit.
A summary of the contractual amounts of financial
instruments with off‑balance‑sheet risk was as follows at period-end (dollars in thousands):
The notional amount of commitments to fund
mortgage loans to be sold into the secondary market was approximately $3.7 million and $0 at September 30, 2021 and December 31, 2020, respectively.
The Bank enters into commitments to sell mortgage backed securities, which it later buys back in order to hedge its exposure to interest
rate risk in its mortgage pipeline. These commitments were approximately $8.5 million and $21.0 million at September 30, 2021 and December 31, 2020, respectively.
At September 30, 2021, approximately 40.3% of the Bank’s commitments to make loans were at fixed rates, offered at current market rates. The remainder of the commitments to
make loans were at variable rates tied to prime or one month LIBOR and generally expire within 30 days. The majority of the unused lines of credit were at variable rates tied to prime.
|
CONTINGENCIES |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
CONTINGENCIES [Abstract] | |
CONTINGENCIES |
NOTE 10 – CONTINGENCIES
The Company and its subsidiaries periodically
become defendants in certain claims and legal actions arising in the ordinary course of business. As of September 30, 2021, there were no material pending legal proceedings to which the Company or any of its subsidiaries are a party or
which any of its properties are the subject.
|
SHAREHOLDERS' EQUITY |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY |
NOTE 11 – SHAREHOLDERS’ EQUITY
Regulatory Capital
The Company and the Bank are subject to
regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items
calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors, and the regulators can lower
classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements.
The prompt corrective action regulations provide
five categories, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and
critically undercapitalized, although these terms are not used to represent overall financial condition. If a bank is only adequately capitalized, regulatory approval is required to, among other things, accept, renew or roll-over
brokered deposits. If a bank is undercapitalized, capital distributions and growth and expansion are limited, and plans for capital restoration are required.
In July 2013, the Board of Governors of the
Federal Reserve Board and the FDIC approved the rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (commonly known as Basel III). The rules include a common equity Tier 1 capital to
risk-weighted assets ratio (CET1 ratio) of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets, which effectively results in a minimum CET1 ratio of 7.0%. The minimum ratio of Tier 1 capital to risk-weighted assets is
6.0% (which, with the capital conservation buffer, effectively results in a minimum Tier 1 capital ratio of 8.5%), which effectively results in a minimum total capital to risk-weighted assets ratio of 10.5% (with the capital
conservation buffer), and requires a minimum leverage ratio of 4.0%.
NOTE 11 – SHAREHOLDERS' EQUITY (Continued)
At September 30, 2021 and December 31, 2020, actual capital levels and minimum required levels were (dollars in thousands):
All $20.0 million of trust preferred securities outstanding at December 31, 2020 qualified as Tier 1 capital. On July 7, 2021, the Company redeemed all of the
outstanding trust preferred securities. Refer to our 2020 Form 10-K for more information on the trust preferred securities.
The Bank was categorized as “well capitalized” at
September 30, 2021 and December 31, 2020.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Principles of Consolidation |
Principles of Consolidation: The
accompanying consolidated financial statements include the accounts of Macatawa Bank Corporation (“the Company”, “our”, “we”) and its wholly-owned subsidiary, Macatawa Bank (“the Bank”). All significant intercompany accounts and
transactions have been eliminated in consolidation.
Macatawa Bank is a Michigan chartered bank with
depository accounts insured by the Federal Deposit Insurance Corporation. The Bank operates 26 full service branch offices
providing a full range of commercial and consumer banking and trust services in Kent County, Ottawa County, and northern Allegan County, Michigan.
The Company previously owned all of the
common stock of Macatawa Statutory Trust II. This was a grantor trust that issued trust preferred securities and was not consolidated with the Company under accounting principles generally accepted in the United States of America.
On July 7, 2021, the Company redeemed all of the $20.0 million of outstanding trust preferred securities and $619,000 of common securities associated with this trust.
|
Recent Events |
Recent Events: On March 22, 2020, the
federal banking agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with
Customers Affected by the Coronavirus.” The guidance explained that in consultation with the FASB staff the federal banking agencies concluded that short-term modifications (e.g. six months) made on a good faith basis to
borrowers who were current as of the implementation date of a modification are not Troubled Debt Restructurings (“TDRs”). The Coronavirus Aid, Relief and Economic Security (“CARES”) Act was passed by Congress on March 27, 2020.
Section 4013 of the CARES Act also addressed COVID-19 related modifications and specified that COVID-19 related modifications on loans that were not more than 30 days past due as of December 31, 2019 are not TDRs. On December 27,
2020, another COVID-19 relief bill was signed that extended this guidance until the earlier of January 1, 2022 or 60 days after the date on which the national emergency declared as a result of COVID-19 is terminated. Through
September 30, 2021, the Bank had applied this guidance and modified 726 individual loans with aggregate principal balances
totaling $337.2 million. As of September 30, 2021, all of these modifications had expired and the loans returned to their
contractual payment terms.
The CARES Act, as amended, included an
allocation of $659 billion for loans to be issued by financial institutions through the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”). PPP loans are forgivable, in whole or in part, if the proceeds are
used for payroll and other permitted purposes in accordance with the requirements of the PPP. These loans carry a fixed rate of 1.00% and a term of two years (loans made before June 5, 2020) or five years (loans made on or after June
5, 2020), if not forgiven, in whole or in part. Payments are deferred until either the date on which the SBA remits the amount of forgiveness proceeds to the lender or the date that is 10 months after the last day of the covered
period if the borrower does not apply for forgiveness within that 10 month period. Through December 31, 2020, the Bank had originated 1,738
PPP loans totaling $346.7 million in principal, with an average loan size of $200,000. Fees totaling $10.0 million were
generated from the SBA for these loans in the year ended December 31, 2020. These fees are deferred and amortized into interest income over the contractual period of 24 months or 60 months, as applicable. Upon SBA forgiveness,
unamortized fees are then recognized into interest income. Participation in the PPP had a significant impact on the Bank’s asset mix and net interest income in 2020 and will continue to impact both asset mix and net interest income
until these loans are forgiven or paid off. The initial PPP expired on August 8, 2020. Through December 31, 2020, 765
PPP loans totaling $113.5 million had been forgiven by the SBA and a total of $5.4 million in PPP fees had been recognized by the Bank.
On December 27, 2020, another COVID-19 relief
bill was signed that extended and modified several provisions of the PPP. This included an additional allocation of $284 billion. The SBA reactivated the PPP on January 11, 2021. The Bank originated additional loans through the
PPP, which expired on May 31, 2021. In the nine months ended September 30, 2021, the Bank had generated and received SBA approval on 1,000
PPP loans totaling $128.1 million and generated $5.6 million in related deferred PPP fees. In the nine months ended September 30, 2021, 1,742 PPP loans totaling $279.9 million had been forgiven by the
SBA and a total of $7.1 million in PPP fees had been recognized by the Bank including fees recognized upon forgiveness and
continuing amortization of fees from the 2020 and 2021 PPP originations.
While the Company continues to evaluate the
disruption caused by the pandemic and impact of the CARES Act, these events may have a material adverse impact on the Company’s results of future operations, financial position, capital, and liquidity in fiscal year 2021 and beyond.
|
Basis of Presentation |
Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) believed necessary
for a fair presentation have been included.
Operating results for the three and nine month
periods ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. For further information, refer to the consolidated financial statements and related notes
included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
|
Use of Estimates |
Use of Estimates: To prepare financial
statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts
reported in the financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, valuation of deferred tax assets, loss contingencies, fair value of other real estate owned and fair
values of financial instruments are particularly subject to change.
|
Bank-Owned Life Insurance (BOLI) |
Bank-Owned Life Insurance (BOLI): The Bank has purchased life insurance policies on certain officers. BOLI is recorded at its
currently realizable cash surrender value. Changes in cash surrender value are recorded in other income. In early April 2021, the Bank purchased an additional $10.0 million in BOLI policies.
|
Allowance for Loan Losses |
Allowance for Loan Losses: The allowance
for loan losses (allowance) is a valuation allowance for probable incurred credit losses inherent in our loan portfolio, increased by the provision for loan losses and recoveries, and decreased by charge-offs of loans. Management
believes the allowance for loan losses balance to be adequate based on known and inherent risks in the portfolio, past loan loss experience, information about specific borrower situations and estimated collateral values, economic
conditions and other relevant factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off. Loan losses are charged
against the allowance when management believes the uncollectibility of a loan balance is confirmed. Management continues its collection efforts on previously charged-off balances and applies recoveries as additions to the allowance
for loan losses.
The allowance consists of
specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-classified loans and is based on historical loss experience adjusted for
current qualitative factors. The Company maintains a loss migration analysis that tracks loan losses and recoveries based on loan class and the loan risk grade assignment for commercial loans. At September 30, 2021, an 18 month annualized historical loss experience was used for commercial loans and a 12 month historical loss experience period was applied to residential mortgage loans and consumer loans. These historical loss percentages are adjusted
(both upwards and downwards) for certain qualitative factors, including economic trends, credit quality trends, valuation trends, concentration risk, quality of loan review, changes in personnel, external factors and other
considerations. At September 30, 2021, the qualitative factor allocations for economic trends related to the COVID-19 that had been increased significantly during 2020 were maintained reflecting continued uncertainty of economic
conditions with the reopening of the economy and surges in COVID-19 cases associated with the Delta variant of the virus. PPP loans receive $0 allocation as they are fully guaranteed by the SBA and are subject to be forgiven under the SBA forgiveness criteria.
A loan is impaired when, based on current
information and events, it is believed to be probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified and a concession
has been made, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.
Commercial and commercial real estate loans
with relationship balances exceeding $500,000 and an internal risk grading of 6 or worse are evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated and the loan is reported at the present value of
estimated future cash flows using the loan’s existing interest rate or at the fair value of collateral, less estimated costs to sell, if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous
loans, such as consumer and residential real estate loans, are collectively evaluated for impairment and they are not separately identified for impairment disclosures.
Troubled debt restructurings are also
considered impaired with impairment generally measured at the present value of estimated future cash flows using the loan’s effective rate at inception or using the fair value of collateral, less estimated costs to sell, if repayment
is expected solely from the collateral.
|
Foreclosed Assets |
Foreclosed Assets: Assets acquired
through or instead of loan foreclosure, primarily other real estate owned, are initially recorded at fair value less estimated costs to sell when acquired, establishing a new cost basis. If fair value declines, a valuation allowance
is recorded through expense. Costs after acquisition are expensed unless they add value to the property.
|
Income Taxes |
Income Taxes: Income tax expense is
the sum of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the
carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
The Company recognizes a tax position as a
benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater
than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and penalties related to income tax matters in income tax
expense.
|
Revenue Recognition |
Revenue Recognition: The Company
recognizes revenues as they are earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. The Company’s primary source of revenue is interest income from the
Bank’s loans and investment securities. The Company also earns noninterest revenue from various banking services offered by the Bank.
Interest Income: The Company’s largest source
of revenue is interest income which is primarily recognized on an accrual basis based on contractual terms written into loans and investment contracts.
Noninterest Revenue: The Company derives the
majority of its noninterest revenue from: (1) service charges for deposit related services, (2) gains related to mortgage loan sales, (3) trust fees and (4) debit and credit card interchange income. Most of these services are
transaction based and revenue is recognized as the related service is provided.
|
Derivatives |
Derivatives: Certain of the Bank’s
commercial loan customers have entered into interest rate swap agreements directly with the Bank. At the same time the Bank enters into a swap agreement with its customer, the Bank enters into a corresponding interest rate swap
agreement with a correspondent bank at terms mirroring the Bank’s interest rate swap with its commercial loan customer. This is known as a back-to-back swap agreement. Under this arrangement the Bank has two freestanding interest rate swaps, each of which is carried at fair value. As the terms mirror each other, there is no income
statement impact to the Bank. At September 30, 2021 and December 31, 2020, the total notional amount of such agreements was $143.2
million and $156.4 million, respectively, and resulted in a derivative asset with a fair value of $3.4 million and $4.2
million, respectively, which were included in other assets and a derivative liability of $3.4 million and $4.2 million, respectively, which were included in other liabilities.
|
Mortgage Banking Derivatives |
Mortgage Banking Derivatives: Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary
market and forward commitments for the future delivery of these mortgage loans are accounted for as derivatives not qualifying for hedge accounting. Fair values of these mortgage derivatives are estimated based on changes in
mortgage interest rates from the date the interest rate on the loan is locked. The Bank enters into commitments to sell mortgage backed securities, which it later buys back in order to hedge its exposure to interest rate risk
in its mortgage pipeline. At times, the Bank also enters into forward commitments for the future delivery of mortgage loans when loans are closed but not yet sold, in order to hedge the change in interest rates resulting from
its commitments to sell the loans.
Changes in the fair values of these interest rate lock and mortgage backed security and forward commitment derivatives are included in net gains on mortgage
loans. The fair value of interest rate lock commitments was $(28,000) at September 30, 2021 and $103,000 at December 31, 2020. The fair value of mortgage backed security derivatives was $43,000 at September 30, 2021 and $(233,000) at
December 31, 2020.
|
Reclassifications |
Reclassifications: Some items in the
prior year financial statements were reclassified to conform to the current presentation.
|
Newly Issued Not Yet Effective Standards |
Newly Issued Not Yet Effective Standards: FASB issued ASU No. 2016-13, Financial Instruments—Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and
other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires
consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance eliminates the probable initial recognition threshold and, instead, reflects an entity’s current estimate
of all expected credit losses. The new guidance broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually to include forecasted
information, as well as past events and current conditions. There is no specified method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss
estimate. Although an entity may still use its current systems and methods for recording the allowance for credit losses, under the new rules, the inputs used to record the allowance for credit losses generally will need to change
to appropriately reflect an estimate of all expected credit losses and the use of reasonable and supportable forecasts. Additionally, credit losses on available-for-sale debt securities will now have to be presented as an allowance
rather than as a write-down.
ASU No. 2019-10 Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) – Effective Dates updated the effective date of this ASU for smaller reporting companies, such as the
Company, to fiscal years beginning after December 15, 2022. The Company selected a software vendor for applying this new ASU for Current Expected Credit Losses (“CECL”), began implementation of the software in the second quarter of
2018, completed integration during the third quarter of 2018 and ran parallel computations with both systems using the current GAAP incurred loss model in the fourth quarter of 2018. The Company went live with this software
beginning in January 2019 for its monthly incurred loss computations and began modeling the new current expected credit loss model assumptions to the allowance for loan losses computation. During 2019, 2020 and the first nine
months of 2021, the Company modeled the various methods prescribed in the ASU against the Company’s identified loan segments. The Company anticipates continuing to run parallel computations and fine tune assumptions as it continues
to evaluate the impact of adoption of the new standard. The COVID-19 pandemic that broke out in the United States in the first quarter of 2020 and continued into 2021 may have a significant impact on allowance computations under
the incurred loss model which could be amplified under the new standard.
|
SECURITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost and Fair Value of Securities |
The amortized cost and fair value of securities
at period-end were as follows (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Maturities of Debt Securities |
Contractual maturities of debt securities at September 30, 2021
were as follows (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities in Continuous Unrealized Loss Position |
Securities with unrealized losses at September 30,
2021 and December 31, 2020,
aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (dollars in thousands):
|
LOANS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio Loans |
Portfolio loans were as follows (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in Allowance for Loan Losses by Portfolio Segment |
Activity in the allowance for loan losses by portfolio segment was as follows (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment Method |
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on
impairment method (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Individually Evaluated for Impairment by Class of Loans |
The following table presents loans individually evaluated
for impairment by class of loans as of September 30, 2021 (dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2020 (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Balances of Impaired Loans and Interest Recognized on Impaired Loans |
The following table presents information regarding average balances of impaired loans and interest recognized on impaired loans for the three and nine month periods ended September 30, 2021
and 2020 (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans |
Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The following tables present the recorded investment in
nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2021 and December 31, 2020:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aging of Recorded Investment in Past Due Loans by Class of Loans |
The following table presents the aging of the recorded investment in past due loans as of September 30, 2021 and December 31, 2020 by class of
loans (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Troubled Debt Restructurings |
The following table presents information regarding troubled debt restructurings as of September 30, 2021 and December 31, 2020
(dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents information related to accruing TDRs as of September 30, 2021 and December 31, 2020. The table presents
the amount of accruing troubled debt restructurings that were on nonaccrual status prior to the restructuring, accruing at the time of restructuring and those that were upgraded to accruing status after receiving six consecutive monthly
payments in accordance with the restructured terms as of each period reported (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Grade Category of Loans by Class of Loans |
As of September 30, 2021 and December 31, 2020, the risk grade category of commercial loans by class of loans were as follows (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Loans Classified as Substandard or Worse |
Commercial loans rated a 6
or worse per the Company’s internal risk rating system are considered substandard, doubtful or loss. Commercial loans classified as substandard or worse were as follows at period-end (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recorded Investment in Consumer Loans Based on Payment Activity |
The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For consumer loan
classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in consumer loans based on payment
activity (dollars in thousands):
|
FAIR VALUE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on Recurring Basis |
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on Non-Recurring Basis |
Assets measured at fair value on a non-recurring basis are summarized below (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quantitative Information about Level 3 Fair Value Measurements Measured on Non-Recurring Basis |
Quantitative information about Level 3 fair value measurements measured on a non-recurring basis was as follows at period end (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts and Estimated Fair Values of Financial Instruments, Not Previously Presented |
The carrying amounts and estimated
fair values of financial instruments, not previously presented, were as follows at September 30, 2021 and December 31, 2020
(dollars in thousands):
|
DEPOSITS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits Liabilities |
Deposits are summarized as follows (dollars in thousands):
|
OTHER BORROWED FUNDS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER BORROWED FUNDS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advances from Federal Home Loan Bank |
At period-end, advances from the Federal Home
Loan Bank were as follows (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repayments of FHLB Advances |
Scheduled repayments of FHLB advances as of September 30, 2021 were
as follows (in thousands):
|
EARNINGS PER COMMON SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER COMMON SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerators and Denominators of Basic and Diluted Earnings per Common Share |
A reconciliation of the numerators and denominators of basic and diluted earnings per common share for the three and nine month periods ended September 30,
2021 and 2020
are as follows (dollars in thousands, except per share data):
|
FEDERAL INCOME TAXES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FEDERAL INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Expense |
Income tax expense was as follows (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Difference between Financial Statement Tax Expense and Amount Computed by Applying Statutory Federal Tax Rate to Pretax Income |
The difference between the financial statement tax expense and amount computed by applying the statutory federal tax rate to pretax
income was reconciled as follows (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Tax Assets and Liabilities |
The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):
|
COMMITMENTS AND OFF BALANCE-SHEET RISK (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||
COMMITMENTS AND OFF BALANCE-SHEET RISK [Abstract] | |||||||||||||||||||||||||||||||||||||
Contractual Amounts of Financial Instruments with Off-Balance-Sheet Risk |
A summary of the contractual amounts of financial
instruments with off‑balance‑sheet risk was as follows at period-end (dollars in thousands):
|
SHAREHOLDERS' EQUITY (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actual Capital Levels and Minimum Required Levels |
At September 30, 2021 and December 31, 2020, actual capital levels and minimum required levels were (dollars in thousands):
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Bank-Owned Life Insurance (BOLI) (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Apr. 10, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Bank-Owned Life Insurance [Abstract] | |||
Purchase of additional BOLI policies | $ 10,000 | $ 10,000 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Derivatives (Details) - Swap [Member] - Interest Rate Swap [Member] $ in Millions |
Sep. 30, 2021
USD ($)
InterestRateSwap
|
Dec. 31, 2020
USD ($)
|
---|---|---|
Derivatives [Abstract] | ||
Number of freestanding interest rate swaps | InterestRateSwap | 2 | |
Notional amount of agreements | $ 143.2 | $ 156.4 |
Derivative asset fair value | 3.4 | 4.2 |
Derivative liability fair value | $ 3.4 | $ 4.2 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Mortgage Banking Derivatives (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Mortgage Backed Securities [Member] | ||
Mortgage Banking Derivatives [Abstract] | ||
Fair value of derivatives | $ 43,000 | $ (233,000) |
Interest Rate Lock Commitments [Member] | ||
Mortgage Banking Derivatives [Abstract] | ||
Fair value of derivatives | $ (28,000) | $ 103,000 |
SECURITIES, Held-to-maturity Securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Held to Maturity [Abstract] | ||
Amortized cost | $ 137,569 | $ 79,468 |
Fair value | 140,412 | 83,246 |
Tax-Exempt State and Municipal Bonds [Member] | ||
Held to Maturity [Abstract] | ||
Amortized cost | 137,569 | 79,468 |
Gross unrealized gains | 2,890 | 3,778 |
Gross unrealized losses | (47) | 0 |
Fair value | $ 140,412 | $ 83,246 |
SECURITIES, Sales of Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
SECURITIES [Abstract] | ||||
Sales of securities | $ 0 | $ 0 | $ 0 | $ 0 |
SECURITIES, Contractual Maturities of Debt Securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Held-to-Maturity Securities, Amortized Cost [Abstract] | ||
Due in one year or less | $ 31,503 | |
Due from one to five years | 69,127 | |
Due from five to ten years | 19,359 | |
Due after ten years | 17,580 | |
Amortized cost | 137,569 | $ 79,468 |
Held-to-Maturity Securities, Fair Value [Abstract] | ||
Due in one year or less | 31,569 | |
Due from one to five years | 70,077 | |
Due from five to ten years | 20,425 | |
Due after ten years | 18,341 | |
Fair value | 140,412 | 83,246 |
Available-for-Sale Securities, Amortized Cost [Abstract] | ||
Due in one year or less | 22,681 | |
Due from one to five years | 66,771 | |
Due from five to ten years | 87,960 | |
Due after ten years | 62,172 | |
Amortized cost | 239,584 | 231,498 |
Available-for-Sale Securities, Fair Value [Abstract] | ||
Due in one year or less | 22,881 | |
Due from one to five years | 68,448 | |
Due from five to ten years | 87,899 | |
Due after ten years | 62,247 | |
Fair value | $ 241,475 | $ 236,832 |
SECURITIES, Held to Maturity - Continuous Unrealized Loss Position (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Securities in continuous unrealized losses position, fair value [Abstract] | ||
Total | $ 20,400,000 | |
Securities in continuous unrealized loss position, unrealized loss [Abstract] | ||
Total | (47,000) | |
Tax-Exempt State and Municipal Bonds [Member] | ||
Securities in continuous unrealized losses position, fair value [Abstract] | ||
Less than 12 months | 20,390,000 | $ 0 |
12 months or more | 0 | 0 |
Total | 20,390,000 | 0 |
Securities in continuous unrealized loss position, unrealized loss [Abstract] | ||
Less than 12 months | (47,000) | 0 |
12 months or more | 0 | 0 |
Total | $ (47,000) | $ 0 |
LOANS, Commercial Loans Classified as Substandard or Worse (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Commercial loans classified as substandard or worse [Abstract] | ||
Classified as impaired | $ 5,430 | $ 10,619 |
Total ending loans balance | 1,136,613 | 1,429,331 |
Commercial Loans [Member] | ||
Commercial loans classified as substandard or worse [Abstract] | ||
Total ending loans balance | 961,593 | 1,217,583 |
Commercial Loans [Member] | Substandard or Worse [Member] | ||
Commercial loans classified as substandard or worse [Abstract] | ||
Not classified as impaired | 263 | 591 |
Classified as impaired | 1,003 | 5,159 |
Total ending loans balance | $ 1,266 | $ 5,750 |
FAIR VALUE, Off-balance Sheet (Details) - Loan Commitments [Member] - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Financial instruments with off-balance sheet credit risk [Abstract] | ||
Off-balance sheet credit-related items | $ 103,595 | $ 88,022 |
Carrying Amount [Member] | ||
Financial instruments with off-balance sheet credit risk [Abstract] | ||
Off-balance sheet credit-related items | 0 | 0 |
Fair Value [Member] | ||
Financial instruments with off-balance sheet credit risk [Abstract] | ||
Off-balance sheet credit-related items | $ 0 | $ 0 |
DEPOSITS (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Summary of deposit [Abstract] | ||
Noninterest-bearing demand | $ 934,477,000 | $ 809,437,000 |
Interest bearing demand | 706,247,000 | 642,918,000 |
Savings and money market accounts | 818,525,000 | 742,685,000 |
Certificates of deposit | 93,926,000 | 103,547,000 |
Total deposits | 2,553,175,000 | 2,298,587,000 |
FDIC insurance limit on deposit accounts | 250,000 | 250,000 |
Time deposits that exceed FDIC insurance limit | $ 29,700,000 | $ 28,800,000 |
OTHER BORROWED FUNDS, Scheduled Repayments of FHLB Advances (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Scheduled repayments of FHLB advances [Abstract] | ||
2021 | $ 0 | |
2022 | 0 | |
2023 | 10,000 | |
2024 | 40,000 | |
2025 | 0 | |
Thereafter | 35,000 | |
Total | $ 85,000 | $ 70,000 |
OTHER BORROWED FUNDS, Federal Reserve Bank Borrowings (Details) - Federal Reserve Bank Borrowings [Member] - USD ($) $ in Millions |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Debt instruments [Abstract] | ||
Borrowings outstanding | $ 0.0 | $ 0.0 |
Unused borrowing capacity | 4.8 | 12.9 |
Commercial and mortgage loans pledged to the Federal Reserve Bank | $ 5.2 | $ 13.8 |
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Reconciliation of numerators and denominators of basic and diluted earnings per common share [Abstract] | ||||
Net income available to common shares | $ 7,202 | $ 7,120 | $ 22,798 | $ 21,169 |
Weighted average shares outstanding, including participating stock awards - Basic (in shares) | 34,190,264 | 34,109,901 | 34,192,916 | 34,108,676 |
Dilutive potential common shares [Abstract] | ||||
Stock options (in shares) | 0 | 0 | 0 | 0 |
Weighted average shares outstanding - Diluted (in shares) | 34,190,264 | 34,109,901 | 34,192,916 | 34,108,676 |
Basic earnings per common share (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.67 | $ 0.62 |
Diluted earnings per common share (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.67 | $ 0.62 |
Stock Options [Member] | ||||
Earnings per common share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 0 | 0 | 0 | 0 |
0>H52G9 R9PHOXJ5*'B*
MUA5L'BIENJHQ2[41D- ;6:@3)8H,]G@G2@4YJJP6-"_QC[!A0F.?^#T;3+G0
M)\0/[$;X!R/\][EZJ2_$SRK9\70(JF^!&L0QC7I03;DPHB$=@!H ,$&](M%
M'N]Y[N[1B>?A3LA'E2)J>,JS0HV<5.ORTG55G&+.U)DHL:"3E9 YT[25:U>5
M$EEB07GF^I[7=W/&"V<\M+8[.1Z*C H<83;;KFU_GT-?BVT!CRB[A#*!$\9QR;P4]I753HZE)7Q@HOKIM8:(
MI#O'5(@2IY\$9S_HC*'%!#*NW=3:+?C%JQ)AD2+-TASOCL6;C=;E\1#HK:2^
M_@L6A H+Z':Z.1/Y:@0YZ,Q^"9/\NQKN4:$CUK+]Y)C?Z*$0QHI#C-1=P35W
M0Q15W-3:XQ:0+TK?[1U(Z;Q,R7<%*)/K1[OQ5KPF#L[+&]VR_88+XWLGHK/*&O;)@4^L""$B5J/3/%8;*BL!K\;P
MC-.GQ*B#=-*HJI).Z
M>=,HG744OQL^,\Y#[9VC3=#:.4Z.CLKU_RG^XL4CS%,H%6O0]#Z'X(*B.?IO
M;I3
(YN,Z$ZD24X>&>*[
M+,/LGSN2TL-8,[77C:=D$PNYH4]&6[PA"R*>MX\,5GKM)4HRDO.$YHB1]5B[
M-8>!Z4B# O$M(0=^40BA;W?;3_HL-=!A5H*
MZU6*.ZO3X8)L;Y!M?$*689F*YYF^W]Q0T?FUZ,%_CGXFAEV_%W;AS_Y-[\4?
MMRLN&!S[/SN".W5PIPCNO!%\!@4RR4.:$=5K5=JZA:VL@_N)!Z1'^OXT5PJ0
M*84Y!?EMD&5Y@_XY*E"@3-,=U*@SBKV:8J]3W^<
L *2 MV]AFT(XM]O(?>+*'O,;$)FHL?WZZ*9JE>U+>W;:\7YOVKD/@\_O91
MS2&_38FM"-,$T@,U[YN$^ AWX5]FMW(IBUC5OQB RQH&<",M)C$+S8ECZF""Z#T:!$^/P
M6->^11[F_&?:Y(COZ6_HHS5['WJ9=Y&2^[/K9%GPX\AZ-T,PDV 7GLJ<69[U
MK^1=IEAS;-U3RSD(U^TI@SR6/]_^>"8.%VBC7Z/(BL,IO1$[V2@.#P%L^"_8
M"\+AYGHBQ='(*_E2:P^.LI&M1L3FT;R3RQ4#;;R4]9[%QT/L+]96]Y':>N"*
M)I7UT&G]Y;H:< @NKU^DK8&?\=\I?