QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading symbols(s)
|
Name of each exchange on which registered
|
||
None
|
Not Applicable
|
Not Applicable
|
|
No ☐
|
|
No ☐
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
Smaller reporting company
|
Yes
|
No ☒
|
|
Page
|
3
|
|
3
|
|
3
|
|
4 | |
5
|
|
6
|
|
7
|
|
8
|
|
37
|
|
55
|
|
55
|
|
55
|
|
55
|
|
55
|
|
58
|
|
58
|
|
58
|
|
58
|
|
58
|
|
59
|
(in thousands, except share amounts)
|
September 30, 2023
|
December 31, 2022
|
||||||
|
||||||||
Assets
|
||||||||
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Certificates of deposit
|
|
|
||||||
Investment securities – available-for-sale, at estimated fair value, net of allowance for credit losses of $
|
|
|
||||||
Loans, net of allowance for credit losses of $
|
|
|
||||||
Loans held-for-sale
|
|
|
||||||
Stock in Federal Home Loan Bank and other equity securities, at cost
|
|
|
||||||
Premises and equipment, net
|
|
|
||||||
Core deposit intangible
|
||||||||
Interest receivable and other assets
|
|
|
||||||
|
||||||||
Total Assets
|
$
|
|
$
|
|
||||
|
||||||||
Liabilities and Stockholders’ Equity
|
||||||||
|
||||||||
Liabilities:
|
||||||||
|
||||||||
Demand deposits
|
$
|
|
$
|
|
||||
Interest-bearing transaction deposits
|
|
|
||||||
Savings and MMDA’s
|
|
|
||||||
Time, $250,000 or less
|
|
|
||||||
Time, over $250,000
|
|
|
||||||
Total deposits
|
|
|
||||||
|
||||||||
Interest payable and other liabilities
|
|
|
||||||
|
||||||||
Total Liabilities
|
|
|
||||||
Commitments and contingencies (Note 7)
|
||||||||
Stockholders’ Equity:
|
||||||||
Common stock,
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss, net
|
(
|
)
|
(
|
)
|
||||
Total Stockholders’ Equity
|
|
|
||||||
|
||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
|
$
|
|
(in thousands, except per share amounts)
|
Three months
ended
September 30, 2023
|
Three months
ended
September 30, 2022
|
Nine months
ended
September 30, 2023
|
Nine months
ended
September 30, 2022
|
||||||||||||
Interest and dividend income:
|
||||||||||||||||
Loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Due from banks interest bearing accounts
|
|
|
|
|
||||||||||||
Investment securities
|
||||||||||||||||
Taxable
|
|
|
|
|
||||||||||||
Non-taxable
|
|
|
|
|
||||||||||||
Other earning assets
|
|
|
|
|
||||||||||||
Total interest and dividend income
|
|
|
|
|
||||||||||||
Interest expense:
|
||||||||||||||||
Deposits
|
|
|
|
|
||||||||||||
Total interest expense
|
|
|
|
|
||||||||||||
Net interest income
|
|
|
|
|
||||||||||||
Provision for credit losses
|
|
|
|
|
||||||||||||
Net interest income after provision for credit losses
|
|
|
|
|
||||||||||||
Non-interest income:
|
||||||||||||||||
Service charges on deposit accounts
|
|
|
|
|
||||||||||||
Gains on sales of loans held-for-sale
|
|
|
|
|
||||||||||||
Investment and brokerage services income
|
|
|
|
|
||||||||||||
Mortgage brokerage income
|
|
|
|
|
||||||||||||
Loan servicing income
|
|
|
|
|
||||||||||||
Debit card income
|
|
|
|
|
||||||||||||
Losses on sales/calls of available-for-sale securities
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||
Gain on bargain purchase
|
||||||||||||||||
Other income
|
|
|
|
|
||||||||||||
Total non-interest income
|
|
|
|
|
||||||||||||
Non-interest expenses:
|
||||||||||||||||
Salaries and employee benefits
|
|
|
|
|
||||||||||||
Occupancy and equipment
|
|
|
|
|
||||||||||||
Data processing
|
|
|
|
|
||||||||||||
Stationery and supplies
|
|
|
|
|
||||||||||||
Advertising
|
|
|
|
|
||||||||||||
Directors’ fees
|
|
|
|
|
||||||||||||
Amortization of core deposit intangible
|
||||||||||||||||
Other expense
|
|
|
|
|
||||||||||||
Total non-interest expenses
|
|
|
|
|
||||||||||||
Income before provision for income taxes
|
|
|
|
|
||||||||||||
Provision for income taxes
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Basic earnings per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Diluted earnings per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
(in thousands)
|
Three months
ended September 30,
2023
|
Three months
ended
September 30,
2022
|
Nine months
ended
September 30,
2023
|
Nine months
ended
September 30, 2022
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other comprehensive loss, net of tax:
|
||||||||||||||||
Unrealized holding losses arising during the period, net of tax effect of $(
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Less: reclassification adjustment due to losses realized on sales of securities, net of tax effect of $
|
|
|
|
|
||||||||||||
Other comprehensive loss, net of tax
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
||||||||||||||||
Comprehensive (loss) income
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|
Common Stock
|
Additional
Paid-in
|
Retained
|
Accumulated
Other
Comprehensive
|
||||||||||||||||||||
|
Shares
|
Amounts
|
Capital
|
Earnings
|
Loss, net of tax
|
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance
at December 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income
|
|
|
||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Stock dividend adjustment
|
|
|
(
|
)
|
|
|||||||||||||||||||
Cash in lieu of fractional shares
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Stock-based compensation
|
|
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
|
|
|
|||||||||||||||||||||
Stock options exercised, net
|
|
|
|
|||||||||||||||||||||
Stock repurchase and retirement | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at March 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income
|
|
|
||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Stock-based compensation
|
|
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
||||||||||||||||||||||||
Stock repurchase and retirement |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at June 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income | ||||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
( |
) | ( |
) | ||||||||||||||||||||
Stock-based compensation
|
||||||||||||||||||||||||
Stock repurchase and retirement
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at September 30, 2022
|
$ |
$ |
$ |
$ |
( |
) | $ |
|||||||||||||||||
Balance at December 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Cumulative change from adoption of on January 1, 2023
|
( |
) | ( |
) | ||||||||||||||||||||
Balance at January 1, 2023 (as adjusted for adoption of accounting standard)
|
( |
) | ||||||||||||||||||||||
Net income
|
|
|
||||||||||||||||||||||
Other comprehensive income, net of taxes
|
|
|
||||||||||||||||||||||
Stock dividend adjustment
|
|
|
(
|
)
|
|
|||||||||||||||||||
Cash in lieu of fractional shares
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Stock-based compensation
|
|
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
|
|
|
|||||||||||||||||||||
Stock options exercised, net of swapped shares
|
|
|
|
|||||||||||||||||||||
Stock repurchase and retirement |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at March 31, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income
|
|
|
||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Stock-based compensation
|
|
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
|
|
||||||||||||||||||||||
Stock repurchase and retirement
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Balance at June 30, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income | ||||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
( |
) | ( |
) | ||||||||||||||||||||
Stock-based compensation
|
||||||||||||||||||||||||
Restricted stock cancelled, net of common shares issued related to restricted stock grants
|
( |
) | ||||||||||||||||||||||
Stock options exercised, net
|
||||||||||||||||||||||||
Balance at September 30, 2023
|
$ |
$ |
$ |
$ |
( |
) | $ |
|
(in thousands)
|
|||||||
|
Nine months
ended
September 30, 2023
|
Nine months
ended
September 30, 2022
|
||||||
Cash Flows From Operating Activities
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
|
|
||||||
Accretion and amortization of investment securities premiums and discounts, net
|
|
|
||||||
Valuation adjustment on mortgage servicing rights
|
|
(
|
)
|
|||||
Increase (decrease) in deferred loan origination fees and costs, net
|
|
(
|
)
|
|||||
Amortization of core deposit intangible |
||||||||
Provision for credit losses
|
|
|
||||||
Stock-based compensation
|
|
|
||||||
Losses on sales/calls of available-for-sale securities
|
|
|
||||||
Amortization of operating lease right-of-use asset
|
|
|
||||||
Gains on sales of loans held-for-sale
|
(
|
)
|
(
|
)
|
||||
Proceeds from sales of loans held-for-sale
|
|
|
||||||
Originations of loans held-for-sale
|
(
|
)
|
(
|
)
|
||||
Gain on bargain purchase
|
( |
) | ||||||
Changes in assets and liabilities:
|
||||||||
Decrease (increase) in interest receivable and other assets
|
|
(
|
)
|
|||||
Decrease in interest payable and other liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash provided by operating activities
|
|
|
||||||
|
||||||||
Cash Flows From Investing Activities
|
||||||||
Proceeds from calls or maturities of available-for-sale securities
|
|
|
||||||
Proceeds from sales of available-for-sale securities
|
|
|
||||||
Principal repayments on available-for-sale securities
|
|
|
||||||
Purchases of available-for-sale securities
|
(
|
)
|
(
|
)
|
||||
Proceeds from maturities of certificates of deposit
|
|
|
||||||
Proceeds from sales of certificates of deposit
|
|
|
||||||
Purchases of certificates of deposit
|
( |
) | ( |
) | ||||
Net increase in loans
|
(
|
)
|
(
|
)
|
||||
Purchases of Federal Home Loan Bank stock and other equity securities, at cost
|
( |
) | ( |
) | ||||
Purchases of premises and equipment
|
(
|
)
|
(
|
)
|
||||
Cash and cash equivalents acquired in acquisition |
||||||||
Net cash provided by (used in) investing activities
|
|
(
|
)
|
|||||
|
||||||||
Cash Flows From Financing Activities
|
||||||||
Net (decrease) increase in deposits
|
(
|
)
|
|
|||||
Cash dividends paid in lieu of fractional shares
|
(
|
)
|
(
|
)
|
||||
Repurchases of common stock
|
(
|
)
|
(
|
)
|
||||
Net cash (used in) provided by financing activities
|
(
|
)
|
|
|||||
|
||||||||
Net increase (decrease) in Cash and Cash Equivalents
|
|
(
|
)
|
|||||
Cash and Cash
Equivalents, beginning of period
|
|
|
||||||
Cash and Cash
Equivalents, end of period
|
$
|
|
$
|
|
||||
|
||||||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
|
$
|
|
||||
Income taxes
|
||||||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||
Stock dividend distributed
|
|
|
||||||
Unrealized holding losses on available for sale securities, net of taxes
|
(
|
)
|
(
|
)
|
||||
Market value of shares tendered in-lieu of cash to pay for exercise of options
|
||||||||
Recognition of right-of-use assets obtained in exchange for operating lease liabilities
|
||||||||
Non-cash assets acquired (liabilities assumed) in acquisition: | ||||||||
Total assets acquired |
||||||||
Total liabilities assumed |
( |
) |
1. |
BASIS OF PRESENTATION
|
2. |
ACCOUNTING POLICIES
|
3. |
INVESTMENT SECURITIES
|
(in thousands)
|
Amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Estimated fair
value
|
||||||||||||
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Securities of U.S. government agencies and
corporations
|
|
|
(
|
)
|
|
|||||||||||
Obligations of states and political subdivisions
|
|
|
(
|
)
|
|
|||||||||||
Collateralized mortgage obligations
|
|
|
(
|
)
|
|
|||||||||||
Mortgage-backed securities
|
|
|
(
|
)
|
|
|||||||||||
Total debt securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(in thousands)
|
Amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Estimated fair
value
|
||||||||||||
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Securities of U.S. government agencies and
corporations
|
|
|
(
|
)
|
|
|||||||||||
Obligations of states and political subdivisions
|
|
|
(
|
)
|
|
|||||||||||
Collateralized mortgage obligations
|
|
|
(
|
)
|
|
|||||||||||
Mortgage-backed securities
|
|
|
(
|
)
|
|
|||||||||||
Total debt securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(in thousands)
|
Amortized
cost
|
Estimated
fair value
|
||||||
|
||||||||
Maturity in years:
|
||||||||
Due in one year or
less
|
$
|
|
$
|
|
||||
Due after one year
through five years
|
|
|
||||||
Due after five years
through ten years
|
|
|
||||||
Due after ten years
|
|
|
||||||
Subtotal
|
|
|
||||||
Mortgage-backed securities & Collateralized mortgage obligations |
|
|
||||||
Total
|
$
|
|
$
|
|
(in thousands)
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
|||||||||||||||||||
|
||||||||||||||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Securities of U.S. government agencies and
corporations
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Obligations of states and political subdivisions
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Collateralized mortgage obligations
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Mortgage-backed securities
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
(in thousands)
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
|||||||||||||||||||
|
||||||||||||||||||||||||
U.S. Treasury Securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Securities of U.S. government agencies and
corporations
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Obligations of states and political subdivisions
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Collateralized Mortgage obligations
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Mortgage-backed securities
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
4.
|
LOANS AND ALLOWANCE FOR CREDIT LOSSES
|
($ in thousands)
|
September 30,
2023
|
December 31,
2022
|
||||||
|
||||||||
Commercial
|
$
|
|
$
|
|
||||
Commercial Real Estate
|
|
|
||||||
Agriculture
|
|
|
||||||
Residential Mortgage
|
|
|
||||||
Residential Construction
|
|
|
||||||
Consumer
|
|
|
||||||
|
|
|
||||||
Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
Deferred origination fees and costs, net
|
|
|
||||||
Loans, net
|
$
|
|
$
|
|
Allowance for credit losses – Three months ended September 30, 2023
|
||||||||||||||||||||
($ in thousands)
|
Beginning balance
|
Charge-offs
|
Recoveries
|
Provision
(recovery)
|
Ending Balance
|
|||||||||||||||
Commercial
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||
Commercial Real Estate
|
|
|
|
|
|
|||||||||||||||
Agriculture
|
|
|
|
|
|
|||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|||||||||||||||
Residential Construction
|
|
|
|
(
|
)
|
|
||||||||||||||
Consumer
|
|
(
|
)
|
|
|
|
||||||||||||||
Unallocated
|
|
|
|
|
|
|||||||||||||||
Allowance for credit losses on loans
|
|
(
|
)
|
|
|
|
||||||||||||||
Reserve for unfunded commitments
|
|
|
|
(
|
)
|
|
||||||||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Allowance for credit losses – Nine months ended September 30, 2023
|
||||||||||||||||||||||||
($ in thousands)
|
Beginning balance
|
Adoption of CECL
|
Charge-offs
|
Recoveries
|
Provision
(recovery)
|
Ending Balance
|
||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
Commercial Real Estate
|
|
(
|
)
|
|
|
|
|
|||||||||||||||||
Agriculture
|
|
(
|
)
|
(
|
)
|
|
|
|
||||||||||||||||
Residential Mortgage
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Residential Construction
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
Consumer
|
|
|
(
|
)
|
|
(
|
)
|
|
||||||||||||||||
Unallocated
|
|
|
|
(
|
)
|
|
||||||||||||||||||
Allowance for credit losses on loans
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Reserve for unfunded commitments
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Three Months Ended September 30, 2022
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Balance as of June 30, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Provision for (reversal of) loan losses
|
(
|
)
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||||||||
Charge-offs
|
|
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Net (charge-offs)/recoveries
|
|
|
|
|
|
(
|
)
|
|
|
|||||||||||||||||||||||
Balance as of September 30, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Nine
Months Ended September 30, 2022
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Balance as of December 31, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Provision for (reversal of) loan losses
|
(
|
)
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||
Charge-offs
|
(
|
)
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Net (charge-offs)/recoveries
|
(
|
)
|
|
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||
Balance as of September 30, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30, 2023
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Secured by 1-4
Family
Residential
Properties-1st
lien
|
Secured by 1-4
Family
Residential
Properties-junior
lien
|
Secured by 1-4
Family
Residential
Properties-
revolving
|
Commercial
|
Construction and land development
|
Secured by farmland
|
Agriculture production loans
|
Total
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Agriculture
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Consumer
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
December 31, 2022
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Secured by 1-4
Family
Residential
Properties-1st
lien
|
Secured by 1-4
Family
Residential
Properties-junior
lien
|
Secured by 1-4
Family
Residential
Properties-
revolving
|
Commercial
|
Construction and land development
|
Secured by farmland
|
Agriculture production loans
|
Total
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Agriculture
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Consumer
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
($ in thousands)
|
30-59 days
Past Due
& Accruing
|
60-89 days
Past Due
& Accruing
|
90 days or
More Past
Due &
Accruing
|
Nonaccrual
Loans
|
Total Past
Due
& Nonaccrual
Loans
|
Current &
Accruing
Loans
|
Total Loans
|
Nonaccrual
loans with
No ACL
|
||||||||||||||||||||||||
September 30, 2023
|
||||||||||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | $ |
$
|
|
$ | |||||||||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|||||||||||||||||||||||||||
Agriculture
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|||||||||||||||||||||||||||
Consumer
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | $ |
$
|
|
$ | |||||||||||||||||||
|
||||||||||||||||||||||||||||||||
December 31, 2022
|
||||||||||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$ |
$
|
|
$ |
|||||||||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|||||||||||||||||||||||||||
Agriculture
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|||||||||||||||||||||||||||
Consumer
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | $ |
$
|
|
$ |
($ in thousands)
|
Term Extension
|
Combination Term Extension
and Interest Rate Reduction
|
Total Class of Financing
Receivable
|
|||||||||
|
||||||||||||
Commercial
|
$
|
|
$
|
|
|
|||||||
Commercial Real
Estate
|
|
|
|
|||||||||
Agriculture
|
|
|
|
|||||||||
Residential
Mortgage
|
|
|
|
|||||||||
Residential
Construction
|
|
|
|
%
|
||||||||
Consumer
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
|
%
|
($ in thousands)
|
Term Extension
|
Combination Term Extension
and Interest Rate Reduction
|
Total Class of Financing
Receivable
|
|||||||||
Commercial
|
$
|
|
$
|
|
|
%
|
||||||
Commercial Real Estate
|
|
|
|
%
|
||||||||
Agriculture
|
|
|
|
%
|
||||||||
Residential Mortgage
|
|
|
|
|||||||||
Residential Construction
|
|
|
|
%
|
||||||||
Consumer
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
|
%
|
($ in thousands)
|
Weighted-Average
Interest Rate
Reduction
|
Weighted-Average
Term Extension (in
months)
|
||||||
Commercial
|
|
$
|
|
|||||
Commercial Real Estate
|
|
|
||||||
Agriculture
|
|
|
||||||
Residential Mortgage
|
|
|
||||||
Residential Construction
|
|
|
||||||
Consumer
|
|
|
||||||
Total
|
|
$
|
|
($ in thousands)
|
Weighted-Average
Interest Rate
Reduction
|
Weighted-Average
Term Extension (in
months)
|
||||||
Commercial
|
|
%
|
$
|
|
||||
Commercial Real Estate
|
|
%
|
|
|||||
Agriculture
|
|
|
||||||
Residential Mortgage
|
|
|
||||||
Residential Construction
|
|
|
||||||
Consumer
|
|
|
||||||
Total
|
|
%
|
$
|
|
($ in thousands)
|
Nine months ended September 30, 2022
|
|||||||||||
Number of
Contracts
|
Pre-
modification
outstanding
recorded
investment
|
Post-
modification
outstanding
recorded
investment
|
||||||||||
Consumer
|
|
$
|
|
$
|
|
|||||||
Total
|
|
$
|
|
$
|
|
(in thousands)
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year - As of September 30, 2023
|
||||||||||||||||||||||||||||||||
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Revolving
Loans
Amortized
Cost Basis
|
Total
|
|||||||||||||||||||||||||
Commercial
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Commercial loans
|
$
|
|
$ |
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
||||||||||||||||||
Year-to-date Period Charge-offs
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
|
(
|
)
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||||||||
Commercial Real Estate
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Commercial Real Estate loans
|
$
|
|
$ |
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
||||||||||||||||||
Year-to-date Charge-offs
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Agriculture
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
$ |
$
|
|
||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Agriculture loans
|
$
|
|
$ |
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
||||||||||||||||||
Year-to-date Charge-offs
|
(
|
)
|
|
|
|
|
|
( |
) |
(
|
)
|
|||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
(
|
)
|
|
|
|
|
|
( |
) |
(
|
)
|
(in thousands)
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year - As of September 30, 2023
|
||||||||||||||||||||||||||||||||
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Revolving
Loans
Amortized
Cost Basis
|
Total
|
|||||||||||||||||||||||||
Residential Mortgage
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Residential Mortgage loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Charge-offs
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||
Residential Construction
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Residential Construction loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Charge-offs
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Consumer
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Consumer loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Charge-offs
|
(
|
)
|
|
|
|
|
|
(
|
)
|
|||||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
(
|
)
|
|
|
|
|
|
(
|
)
|
|||||||||||||||||||||||
Total Loans | ||||||||||||||||||||||||||||||||
Pass
|
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special Mention
|
||||||||||||||||||||||||||||||||
Substandard
|
||||||||||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Charge-offs
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) |
$
|
(
|
)
|
|||||||||
Year-to-date Recoveries
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Net Charge-offs
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$ | ( |
) |
$
|
(
|
)
|
Pass
|
Special
Mention |
Substandard
|
Doubtful
|
Loss
|
Total
|
|||||||||||||||||||
December 31, 2022
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|
||||||||||||||||||
Agriculture
|
|
|
|
|
|
|
||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|
||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|
||||||||||||||||||
Consumer
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
5. |
MORTGAGE OPERATIONS
|
|
September 30, 2023
|
December 31, 2022
|
||||||
|
||||||||
Constant prepayment rate
|
|
%
|
|
%
|
||||
Discount rate
|
|
%
|
|
%
|
||||
Weighted average life (years)
|
|
|
|
(in thousands)
|
|||||||||||||||
|
December 31, 2022
|
Additions
|
Reductions
|
September 30, 2023
|
||||||||||||
|
||||||||||||||||
Mortgage servicing rights
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Valuation allowance
|
|
|
|
|
||||||||||||
Mortgage servicing rights, net of
valuation allowance
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
6. |
FAIR VALUE MEASUREMENTS
|
|
(in thousands) | |||||||||||||||
September 30, 2023
|
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Securities of U.S. government agencies and
corporations
|
|
|
|
|
||||||||||||
Obligations of states and political
subdivisions
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
|
|
|
||||||||||||
Total investments at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
|
(in thousands) | |||||||||||||||
December 31, 2022
|
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Securities of U.S. government agencies and
corporations
|
|
|
|
|
||||||||||||
Obligations of states and political
subdivisions
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
|
|
|
||||||||||||
Total investments at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
(in thousands)
|
||||||||||||||||
September 30, 2023
|
Carrying
Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Individually evaluated loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total assets at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
Method
|
Assumption Inputs
|
||
Individually evaluated loans
|
Collateral, market, income, enterprise, liquidation, and discounted cash flows
|
External appraised values, management assumptions regarding market trends or other relevant factors, selling costs of
|
(in thousands)
|
September 30, 2023
|
December 31, 2022
|
||||||||||||||||||
|
Level
|
Carrying
amount
|
Fair value
|
Carrying
amount
|
Fair value
|
|||||||||||||||
|
||||||||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
1
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Certificates of deposit
|
2
|
|
|
|
|
|||||||||||||||
Stock in Federal Home Loan Bank and other
equity securities
|
3
|
|
|
|
|
|||||||||||||||
Loans receivable:
|
||||||||||||||||||||
Net loans
|
3
|
|
|
|
|
|||||||||||||||
Loans held-for-sale
|
2
|
|
|
|
|
|||||||||||||||
Interest receivable
|
2
|
|
|
|
|
|||||||||||||||
Mortgage servicing rights
|
3 | |||||||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Time deposits
|
3
|
|
|
|
|
|||||||||||||||
Interest payable
|
2
|
|
|
|
|
7. |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
|
(in thousands)
|
September 30,
2023
|
December 31,
2022
|
||||||
|
||||||||
Undisbursed loan commitments
|
$
|
|
$
|
|
||||
Standby letters of credit
|
|
|
||||||
Commitments to sell loans
|
|
|
||||||
|
$
|
|
$
|
|
8. |
STOCK PLANS
|
|
Number of
Shares
|
Weighted
Average
Exercise Price
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in
years)
|
||||||||||||
Options outstanding at Beginning of
Period
|
|
$
|
|
|||||||||||||
Granted
|
|
|
||||||||||||||
Expired
|
|
|
||||||||||||||
Cancelled / Forfeited
|
|
|
||||||||||||||
Exercised
|
(
|
)
|
|
|||||||||||||
Options outstanding at End of Period
|
|
$
|
|
$
|
|
|
||||||||||
Exercisable (vested) at End of Period
|
|
$
|
|
$
|
|
|
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in
years)
|
||||||||||||
Options outstanding at Beginning
of Period
|
|
$
|
|
|||||||||||||
Granted
|
|
|
||||||||||||||
Expired
|
|
|
||||||||||||||
Cancelled / Forfeited
|
|
|
||||||||||||||
Exercised
|
(
|
)
|
|
|||||||||||||
Options outstanding at End of Period
|
|
$
|
|
$
|
|
|
||||||||||
Exercisable (vested) at End of Period
|
|
$
|
|
$
|
|
|
|
Number of
Shares
|
Weighted
Average
Grant Date
Fair Value
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in
years)
|
||||||||||
Non-vested Restricted stock
outstanding at Beginning of Period
|
|
|
$
|
|
||||||||||
Granted
|
|
|
||||||||||||
Cancelled / Forfeited
|
(
|
)
|
|
|||||||||||
Exercised/Released/Vested
|
(
|
)
|
|
|||||||||||
Non-vested restricted stock outstanding
at End of Period
|
|
$
|
|
$ |
|
|
|
Number of
Shares
|
Weighted
Average
Grant Date
Fair Value
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in
years)
|
||||||||||
Non-vested Restricted stock
outstanding at Beginning of Period
|
|
$
|
|
|
|
|||||||||
Granted
|
|
|
|
|
||||||||||
Cancelled / Forfeited
|
(
|
)
|
|
|
|
|||||||||
Exercised/Released/Vested
|
(
|
)
|
|
|
|
|||||||||
Non-vested restricted stock
outstanding at End of Period
|
|
$
|
|
$ |
|
|
|
Three Months Ended
September 30, 2023
|
Nine Months Ended
September 30, 2023
|
||||||
Risk Free Interest Rate
|
|
%
|
|
%
|
||||
|
||||||||
Expected Dividend Yield
|
|
%
|
|
%
|
||||
|
||||||||
Expected Life in Years
|
|
|
||||||
|
||||||||
Expected Price Volatility
|
|
%
|
|
%
|
9. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
(in thousands)
|
Unrealized
losses on
securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
other
comprehensive
loss
|
||||||||||||
Balance as of June 30, 2023
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
Current period other comprehensive loss
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Balance as of September 30, 2023
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
(in thousands)
|
Unrealized
losses on
securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
other
comprehensive
loss
|
||||||||||||
Balance as of December 31, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
Current period other comprehensive
income
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Balance as of September 30, 2023
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
(in thousands)
|
Unrealized
gains on
securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
other
comprehensive
loss
|
||||||||||||
Balance as of June 30, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Current period other comprehensive loss
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Balance as of September 30, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
(in thousands)
|
Unrealized
gains on
securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
other
comprehensive
loss
|
||||||||||||
Balance as of December 31, 2021
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Current period other comprehensive
loss
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Balance as of September 30, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
10. |
OUTSTANDING SHARES AND EARNINGS PER SHARE
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Basic earnings per share:
|
||||||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Weighted average
common shares outstanding
|
|
|
|
|
||||||||||||
Basic EPS
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Diluted earnings per share:
|
||||||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Weighted average
common shares outstanding
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Effect of dilutive shares
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Adjusted weighted
average common shares outstanding
|
|
|
|
|
||||||||||||
Diluted EPS
|
$
|
|
$
|
|
$
|
|
$
|
|
11. |
LEASES
|
(in thousands)
|
September 30, 2023
|
|||
2023 (remaining 3 months)
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028 and thereafter
|
|
|||
Total lease payments
|
|
|||
Less: interest
|
(
|
)
|
||
Present value of lease liabilities
|
$
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
(in thousands)
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Cash paid for amounts included in the
measurement of lease liabilities
|
||||||||||||||||
Operating cash flows from operating leases
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Right-of-use assets obtained in exchange
for new operating lease liabilities
|
|
|
|
|
September 30, 2023
|
December 31, 2022
|
|||||||
Weighted-average remaining lease term –
operating leases, in years
|
|
|
||||||
Weighted-average discount rate – operating
leases
|
|
%
|
|
%
|
12. |
BUSINESS COMBINATIONS
|
Acquired Branches
January 20, 2023
|
||||
Fair value of consideration received:
|
||||
Cash consideration
|
$
|
|
||
Total fair value of consideration received
|
||||
Assets acquired:
|
||||
Cash and cash equivalents
|
|
|||
Loans
|
|
|||
Premises and equipment
|
|
|||
Core deposit intangible
|
|
|||
Other assets
|
|
|||
Total assets acquired
|
|
|||
Liabilities assumed:
|
||||
Deposits
|
|
|||
Other liabilities
|
|
|||
Total liabilities assumed
|
|
|||
Total net liabilities assumed
|
||||
Bargain purchase gain recognized
|
$ |
Acquired Branches
January 20, 2023
|
||||
Cash consideration received
|
$
|
|
||
Less:
|
||||
Cost basis of net liabilities assumed
|
(
|
)
|
||
Fair Value Adjustments:
|
||||
Loans
|
(
|
)
|
||
Premises and equipment
|
|
|||
Core deposit intangible
|
|
|||
Deposits
|
|
|||
Bargain purchase gain recognized
|
$
|
|
Three months
ended
September 30,
2023
|
Three months
ended
September 30,
2022
|
Nine months
ended
September 30,
2023
|
Nine months
ended
September 30,
2022
|
|||||||||||||
Summarized proforma income statement data:
|
||||||||||||||||
Net interest income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Provision for loan losses
|
|
|
|
|
||||||||||||
Non-interest income
|
|
|
|
|
||||||||||||
Non-interest expense
|
|
|
|
|
||||||||||||
Income before taxes
|
|
|
|
|
||||||||||||
Provision for income taxes
|
|
|
|
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Basic earnings per share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Diluted earnings per share
|
$
|
|
$
|
|
$
|
|
$ |
● |
Our business objectives, strategies and initiatives, our organizational structure, the growth of our business and our competitive position and prospects, and the effect of competition on our business and strategies
|
● |
Our assessment of significant factors and developments that have affected or may affect our results
|
● |
Legal and regulatory actions, and future legislative and regulatory developments, including the effects of the Dodd-Frank Wall Street Reform and Protection Act (the “Dodd-Frank Act”), the Economic Growth, Regulatory Relief and Consumer
Protection Act (the “EGRRCPA”), and other legislation and governmental measures introduced in response to the financial crisis which began in 2008 and the ensuing recession affecting the banking system, financial markets and the U.S.
economy, as well as the effect of the federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), enacted in March 2020, in an effort to mitigate the consequences of the coronavirus pandemic and the governmental actions in
response to the pandemic
|
● |
Regulatory and compliance controls, processes and requirements and their impact on our business
|
● |
The costs and effects of legal or regulatory actions
|
● |
Expectations regarding draws on performance letters of credit and liabilities that may result from recourse provisions in standby letters of credit
|
● |
Our intent to sell or hold, and the likelihood that we would be required to sell, various investment securities
|
● |
Our regulatory capital requirements, including the capital rules established after the 2008 financial crisis by the U.S. federal banking agencies and our current intention not to elect to use the community bank leverage ratio framework
|
● |
Expectations regarding our non-payment of a cash dividend on our common stock in the foreseeable future
|
● |
Credit quality and provision for credit losses and management of asset quality and credit risk, expectations regarding collections and the timing thereof
|
● |
Our allowances for credit losses, including the conditions we consider in determining the unallocated allowance and our portfolio credit quality, the adequacy of the allowance for credit losses, underwriting standards, and risk grading
|
● |
Our assessment of economic conditions and trends and credit cycles and their impact on our business
|
● |
The seasonal nature of our business
|
● |
The impact of changes in interest rates and our strategy to manage our interest rate risk profile and the possible effect of changes in residential mortgage interest rates on new originations and refinancing of existing residential
mortgage loans
|
● |
Loan portfolio composition and risk grade trends, expected charge-offs, portfolio credit quality, loan demand, our strategy regarding loan modifications, delinquency rates and our underwriting standards and our expectations regarding our
recognition of interest income on loans that were provided payment deferrals upon completion of the payment forbearance period
|
● |
Our deposit base including renewal of time deposits and the outlook for deposit balances
|
● |
The impact on our net interest income and net interest margin of changes in interest rates
|
● |
The effect of possible changes in the initiatives and policies of the federal and state bank regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, the Securities and
Exchange Commission and other standard setters
|
● |
Tax rates and the impact of changes in the U.S. tax laws
|
● |
Our pension and retirement plan costs
|
● |
Our liquidity strategies and beliefs concerning the adequacy of our liquidity position
|
● |
Critical accounting policies and estimates, the impact or anticipated impact of recent accounting pronouncements or changes in accounting principles
|
● |
Expected rates of return, maturities, loss exposure, growth rates, yields, and projected results, including expectations about the results of the Company’s acquisition of these branches from Columbia State Bank, completed in January 2023
|
● |
The possible impact of weather-related or other natural conditions, including drought, fire or flooding, seismic events, and related governmental responses, including related electrical power outages, on economic conditions, especially
in the agricultural sector
|
● |
Maintenance of insurance coverages appropriate for our operations
|
● |
Threats to the banking sector and our business due to cybersecurity issues and attacks and regulatory expectations related to cybersecurity
|
● |
Possible changes in the fair values recorded on our financial statements of the assets acquired and liabilities assumed in our business combination completed in January 2023
|
● |
The effects of the coronavirus pandemic on the U.S., California and global economies and the actions of governments to reduce the spread of the virus and to mitigate the resulting economic consequences
|
● |
The possible effects on community banks and our business from the recent failures of other banks
|
● |
The possible adverse impacts on the banking industry and our business from a period of significant, prolonged inflation
|
● |
Descriptions of assumptions underlying or relating to any of the foregoing
|
• |
Net income of $14.7 million for the nine months ended September 30, 2023, up 31.5% from $11.2 million earned for the same period last year. Net income of $4.6 million for each of the three-month periods ended September 30, 2023 and
September 30, 2022.
|
• |
Diluted income per share of $1.01 for the nine months ended September 30, 2023, up 31.2% from diluted income per share of $0.77 in the same period last year. Diluted income per share of $0.32 for the three months ended September 30,
2023, up 3.2% from diluted income per share of $0.31 for the same period last year.
|
• |
Net interest income of $49.6 million for the nine months ended September 30, 2023, up 27.7% from $38.9 million for the same period last year. Net interest income of $15.9 million for the three months ended September 30, 2023, up 11.7%
from $14.2 million for the same period last year.
|
• |
Net interest margin of 3.68% for the nine months ended September 30, 2023, up 26.0% from 2.92% for the same period last year. Net interest margin of 3.51% for the three months ended September 30, 2023, up 12.5% from 3.12% for the same
period last year.
|
• |
Provision for credit losses of $3.1 million for the nine months ended September 30, 2023, up 244.4% from $0.9 million for the same period last year. Provision for credit losses of $0.5 million for the three months ended September 30,
2023, up 66.7% from $0.3 million for the same period last year. The increase in provision for credit losses was primarily due to an agricultural relationship that required a charge-off of $2.6 million during the second quarter of 2023,
coupled with loan growth during the nine months ended September 30, 2023.
|
• |
Total assets of $1.90 billion as of September 30, 2023, up 1.7% from $1.87 billion as of December 31, 2022.
|
• |
Total net loans (including loans held-for-sale) of $1.04 billion as of September 30, 2023, up 6.9% from $970.1 million as of December 31, 2022.
|
• |
Total investment securities of $567.4 million as of September 30, 2023, down 8.2% from $618.1 million as of December 31, 2022.
|
• |
Total deposits of $1.75 billion as of September 30, 2023, up 1.1% from $1.73 billion as of December 31, 2022.
|
•
|
The Company adopted and implemented ASU 2016-13, more commonly referred to as the Current Expected Credit Loss (“CECL”) methodology, on January 1, 2023, which resulted in an increase to the allowance for
credit losses (“ACL”) and reserve for unfunded commitments totaling $1,300,000 as a cumulative effect adjustment from change in accounting policies, with a corresponding decrease in opening retained earnings of $916,000, net of deferred
taxes of $384,000.
|
•
|
On January 20, 2023, the Company completed the acquisition from Columbia State Bank of three branches in the California cities of Colusa, Willows, and Orland. The acquisition resulted in the assumption of $115.9 million of deposits and
acquisition of loans totaling $4.0 million, fixed assets totaling $3.6 million and cash on hand of $1.3 million. The Company also recognized a core deposit intangible of $5.0 million. The Bank received cash consideration totaling
approximately $103.4 million, resulting in a bargain purchase gain totaling approximately $1.4 million recognized during the nine months ended September 30, 2023. On an after-tax basis, the bargain purchase gain contributed $1.0 million
to net income for the nine months ended September 30, 2023.
|
Three Months
Ended September
30, 2023
|
Three Months
Ended September
30, 2022
|
Nine Months
Ended September
30, 2023
|
Nine Months
Ended September
30, 2022
|
|||||||||||||
(dollars in thousands except for per share amounts)
|
||||||||||||||||
For the Period:
|
||||||||||||||||
Net Income
|
$
|
4,619
|
$
|
4,568
|
$
|
14,672
|
$
|
11,155
|
||||||||
Basic Earnings Per Common Share
|
$
|
0.32
|
$
|
0.32
|
$
|
1.01
|
$
|
0.77
|
||||||||
Diluted Earnings Per Common Share
|
$
|
0.32
|
$
|
0.31
|
$
|
1.01
|
$
|
0.77
|
||||||||
Return on Average Assets (annualized)
|
0.96
|
%
|
0.95
|
%
|
1.02
|
%
|
0.79
|
%
|
||||||||
Return on Average Equity (annualized)
|
13.11
|
%
|
14.07
|
%
|
14.41
|
%
|
11.00
|
%
|
||||||||
Average Equity to Average Assets
|
7.30
|
%
|
6.75
|
%
|
7.09
|
%
|
7.19
|
%
|
September 30, 2023
|
December 31, 2022
|
|||||||
(in thousands except for ratios)
|
||||||||
At Period End:
|
||||||||
Total Assets
|
$
|
1,902,328
|
$
|
1,871,361
|
||||
Total Investment Securities, at fair value
|
$
|
567,409
|
$
|
618,092
|
||||
Total Loans, Net (including loans held-for-sale)
|
$
|
1,037,435
|
$
|
970,138
|
||||
Total Deposits
|
$
|
1,746,344
|
$
|
1,726,874
|
||||
Loan-To-Deposit Ratio
|
59.4
|
%
|
56.2
|
%
|
Three months ended
September 30, 2023
|
Three months ended
September 30, 2022
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
1,031,647
|
$
|
13,098
|
5.04
|
%
|
$
|
949,424
|
$
|
10,857
|
4.54
|
%
|
||||||||||||
Certificate of deposits
|
20,794
|
194
|
3.70
|
%
|
11,423
|
57
|
1.98
|
%
|
||||||||||||||||
Interest bearing due from banks
|
148,250
|
1,870
|
5.00
|
%
|
208,059
|
1,061
|
2.02
|
%
|
||||||||||||||||
Investment securities, taxable
|
551,555
|
2,685
|
1.93
|
%
|
589,082
|
2,122
|
1.43
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
31,765
|
199
|
2.49
|
%
|
40,272
|
250
|
2.46
|
%
|
||||||||||||||||
Other interest earning assets
|
10,518
|
214
|
8.07
|
%
|
9,440
|
137
|
5.76
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,794,529
|
18,260
|
4.04
|
%
|
1,807,700
|
14,484
|
3.18
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
49,630
|
41,157
|
||||||||||||||||||||||
Premises and equipment, net
|
9,704
|
6,125
|
||||||||||||||||||||||
Interest receivable and other assets
|
59,579
|
54,289
|
||||||||||||||||||||||
Total average assets
|
$
|
1,913,442
|
$
|
1,909,271
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
415,232
|
472
|
0.45
|
%
|
452,708
|
69
|
0.06
|
%
|
||||||||||||||||
Savings and MMDA’s
|
443,536
|
819
|
0.73
|
%
|
447,797
|
171
|
0.15
|
%
|
||||||||||||||||
Time, $250,000 or less
|
98,898
|
968
|
3.88
|
%
|
36,456
|
23
|
0.25
|
%
|
||||||||||||||||
Time, over $250,000
|
17,554
|
127
|
2.87
|
%
|
10,504
|
8
|
0.30
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
975,220
|
2,386
|
0.97
|
%
|
947,465
|
271
|
0.11
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand deposits
|
779,615
|
814,300
|
||||||||||||||||||||||
Interest payable and other liabilities
|
18,858
|
18,662
|
||||||||||||||||||||||
Total liabilities
|
1,773,693
|
1,780,427
|
||||||||||||||||||||||
Total average stockholders’ equity
|
139,749
|
128,844
|
||||||||||||||||||||||
Total average liabilities and stockholders’ equity
|
$
|
1,913,442
|
$
|
1,909,271
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
15,874
|
3.51
|
%
|
$
|
14,213
|
3.12
|
%
|
(1)
|
Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest thereon is generally excluded. Loan interest income
includes loan fees, net of deferred costs of approximately $(50) and $223 for the three months ended September 30, 2023 and 2022, respectively. Net loan fees for the three months ended September 30, 2023 and September 30, 2022 include $0
and $154 in PPP loan fees recognized, respectively. Also included in loan interest income is interest income recognized on nonaccrual loans paid off totaling $4 and $19 for the three months ended September 30, 2023 and 2022, respectively.
|
(2) |
Interest income and yields on tax-exempt securities are not presented on a taxable-equivalent basis.
|
(3) |
Net interest margin is computed by dividing net interest income by total average interest-earning assets.
|
(4) |
For disclosure purposes, yield /rates are annualized by dividing the number of days in the reported period by 365.
|
Nine months ended
September 30, 2023
|
Nine months ended
September 30, 2022
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
994,504
|
$
|
38,197
|
5.14
|
%
|
$
|
896,708
|
$
|
30,979
|
4.62
|
%
|
||||||||||||
Certificate of deposits
|
21,115
|
556
|
3.52
|
%
|
11,659
|
167
|
1.92
|
%
|
||||||||||||||||
Interest bearing due from banks
|
174,391
|
6,411
|
4.92
|
%
|
231,712
|
1,626
|
0.94
|
%
|
||||||||||||||||
Investment securities, taxable
|
568,322
|
8,041
|
1.89
|
%
|
597,040
|
5,783
|
1.30
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
36,092
|
692
|
2.56
|
%
|
36,656
|
634
|
2.31
|
%
|
||||||||||||||||
Other interest earning assets
|
9,985
|
557
|
7.46
|
%
|
8,513
|
361
|
5.67
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,804,409
|
54,454
|
4.03
|
%
|
1,782,288
|
39,550
|
2.97
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
47,135
|
46,737
|
||||||||||||||||||||||
Premises and equipment, net
|
8,713
|
6,298
|
||||||||||||||||||||||
Interest receivable and other assets
|
58,805
|
49,547
|
||||||||||||||||||||||
Total average assets
|
$
|
1,919,062
|
$
|
1,884,870
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
432,741
|
1,107
|
0.34
|
%
|
441,819
|
205
|
0.06
|
%
|
||||||||||||||||
Savings and MMDA’s
|
460,198
|
1,926
|
0.56
|
%
|
443,063
|
395
|
0.12
|
%
|
||||||||||||||||
Time, $250,000 or less
|
73,485
|
1,542
|
2.81
|
%
|
37,374
|
68
|
0.24
|
%
|
||||||||||||||||
Time, over $250,000
|
13,043
|
242
|
2.48
|
%
|
10,769
|
23
|
0.29
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
979,467
|
4,817
|
0.66
|
%
|
933,025
|
691
|
0.10
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand deposits
|
785,634
|
797,890
|
||||||||||||||||||||||
Interest payable and other liabilities
|
17,837
|
18,380
|
||||||||||||||||||||||
Total liabilities
|
1,782,938
|
1,749,295
|
||||||||||||||||||||||
Total average stockholders’ equity
|
136,124
|
135,575
|
||||||||||||||||||||||
Total average liabilities and stockholders’ equity
|
$
|
1,919,062
|
$
|
1,884,870
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
49,637
|
3.68
|
%
|
$
|
38,859
|
2.92
|
%
|
(1)
|
Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest thereon is generally excluded. Loan interest income
includes loan fees, net of deferred costs of approximately $(17) and $2,703 for the nine months ended September 30, 2023 and 2022, respectively. Net loan fees for the nine months ended September 30, 2023 and September 30, 2022 include $0
and $2,706 in PPP loan fees recognized, respectively. Also included in loan interest income is interest income recognized on nonaccrual loans paid off totaling $1,289 and $46 for the nine months ended September 30, 2023 and 2022,
respectively.
|
(2) |
Interest income and yields on tax-exempt securities are not presented on a taxable-equivalent basis.
|
(4) |
For disclosure purposes, yield /rates are annualized by dividing the number of days in the reported period by 365.
|
Three months ended
September 30, 2023
|
Three months ended
June 30, 2023
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
1,031,647
|
$
|
13,098
|
5.04
|
%
|
$
|
988,094
|
$
|
13,722
|
5.57
|
%
|
||||||||||||
Certificates of deposit
|
20,794
|
194
|
3.70
|
%
|
21,491
|
188
|
3.51
|
%
|
||||||||||||||||
Interest bearing due from banks
|
148,250
|
1,870
|
5.00
|
%
|
169,071
|
2,315
|
5.49
|
%
|
||||||||||||||||
Investment securities, taxable
|
551,555
|
2,685
|
1.93
|
%
|
571,381
|
2,673
|
1.88
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
31,765
|
199
|
2.49
|
%
|
34,953
|
220
|
2.52
|
%
|
||||||||||||||||
Other interest earning assets
|
10,518
|
214
|
8.07
|
%
|
9,985
|
165
|
6.63
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,794,529
|
18,260
|
4.04
|
%
|
1,794,975
|
19,283
|
4.31
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
49,630
|
46,004
|
||||||||||||||||||||||
Premises and equipment, net
|
9,704
|
9,804
|
||||||||||||||||||||||
Interest receivable and other assets
|
59,579
|
59,479
|
||||||||||||||||||||||
Total average assets
|
$
|
1,913,442
|
$
|
1,910,262
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
415,232
|
472
|
0.45
|
%
|
425,903
|
377
|
0.36
|
%
|
||||||||||||||||
Savings and MMDA’s
|
443,536
|
819
|
0.73
|
%
|
455,943
|
582
|
0.51
|
%
|
||||||||||||||||
Time, $250,000 and under
|
98,898
|
968
|
3.88
|
%
|
78,378
|
470
|
2.41
|
%
|
||||||||||||||||
Time, over $250,000
|
17,554
|
127
|
2.87
|
%
|
11,373
|
72
|
2.54
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
975,220
|
2,386
|
0.97
|
%
|
971,597
|
1,501
|
0.62
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand deposits
|
779,615
|
783,045
|
||||||||||||||||||||||
Interest payable and other liabilities
|
18,858
|
17,210
|
||||||||||||||||||||||
Total liabilities
|
1,773,693
|
1,771,852
|
||||||||||||||||||||||
Total average stockholders’ equity
|
139,749
|
138,410
|
||||||||||||||||||||||
Total average liabilities and stockholders’ equity
|
$
|
1,913,442
|
$
|
1,910,262
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
15,874
|
3.51
|
%
|
$
|
17,782
|
3.97
|
%
|
(1) |
Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest is generally excluded. Loan interest income includes loan fees, net of deferred costs of
approximately $(50) and $69 for the three months ended September 30, 2023 and June 30, 2023, respectively. Also included in loan interest income is interest income recognized on nonaccrual loans paid off totaling $4 and $1,285 for the three
months ended September 30, 2023 and June 30, 2023, respectively.
|
(2) |
Interest income and yields on tax-exempt securities are not presented on a taxable equivalent basis.
|
(3) |
Net interest margin is computed by dividing net interest income by total average interest-earning assets.
|
(4) |
For disclosure purposes, yield/rates are annualized by dividing the number of days in the reported period by 365.
|
Three Months Ended
September 30, 2023
Over
Three Months Ended
September 30, 2022
|
Nine Months Ended
September 30, 2023
Over
Nine Months Ended
September 30, 2022
|
Three Months Ended
September 30, 2023
Over
Three Months Ended
June 30, 2023
|
||||||||||||||||||||||||||||||||||
Volume
|
Interest
Rate
|
Change
|
Volume
|
Interest
Rate
|
Change
|
Volume
|
Interest
Rate
|
Change
|
||||||||||||||||||||||||||||
Increase in Interest Income:
|
||||||||||||||||||||||||||||||||||||
Loans
|
$
|
986
|
$
|
1,255
|
$
|
2,241
|
$
|
3,552
|
$
|
3,666
|
$
|
7,218
|
$
|
631
|
$
|
(1,255
|
)
|
$
|
(624
|
)
|
||||||||||||||||
Certificates of Deposit
|
67
|
70
|
137
|
192
|
197
|
389
|
(5
|
)
|
11
|
6
|
||||||||||||||||||||||||||
Due From Banks
|
(374
|
)
|
1,183
|
809
|
(500
|
)
|
5,285
|
4,785
|
(258
|
)
|
(187
|
)
|
(445
|
)
|
||||||||||||||||||||||
Investment Securities - Taxable
|
(140
|
)
|
703
|
563
|
(290
|
)
|
2,548
|
2,258
|
(75
|
)
|
87
|
12
|
||||||||||||||||||||||||
Investment Securities - Non-taxable
|
(54
|
)
|
3
|
(51
|
)
|
(10
|
)
|
68
|
58
|
(18
|
)
|
(3
|
)
|
(21
|
)
|
|||||||||||||||||||||
Other Assets
|
18
|
59
|
77
|
69
|
127
|
196
|
10
|
39
|
49
|
|||||||||||||||||||||||||||
$
|
503
|
$
|
3,273
|
$
|
3,776
|
$
|
3,013
|
$
|
11,891
|
$
|
14,904
|
$
|
285
|
$
|
(1,308
|
)
|
$
|
(1,023
|
)
|
|||||||||||||||||
Increase in Interest Expense:
|
||||||||||||||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||||||||||||||
Interest-Bearing Transaction Deposits
|
$
|
(6
|
)
|
$
|
409
|
$
|
403
|
$
|
(4
|
)
|
$
|
906
|
$
|
902
|
$
|
(9
|
)
|
$
|
104
|
$
|
95
|
|||||||||||||||
Savings & MMDAs
|
(1
|
)
|
649
|
648
|
16
|
1,515
|
1,531
|
(16
|
)
|
253
|
237
|
|||||||||||||||||||||||||
Time Certificates
|
123
|
941
|
1,064
|
138
|
1,555
|
1,693
|
249
|
304
|
553
|
|||||||||||||||||||||||||||
$
|
116
|
$
|
1,999
|
$
|
2,115
|
$
|
150
|
$
|
3,976
|
$
|
4,126
|
$
|
224
|
$
|
661
|
$
|
885
|
|||||||||||||||||||
Increase in Net Interest Income:
|
$
|
387
|
$
|
1,274
|
$
|
1,661
|
$
|
2,863
|
$
|
7,915
|
$
|
10,778
|
$
|
61
|
$
|
(1,969
|
)
|
$
|
(1,908
|
)
|
(in thousands)
|
||||||||||||||||
Three months ended
September 30, 2023
|
Three months ended
September 30, 2022
|
Nine months ended
September 30, 2023
|
Nine months ended
September 30, 2022
|
|||||||||||||
Other non-interest expenses
|
||||||||||||||||
FDIC assessments
|
$
|
231
|
$
|
126
|
$
|
681
|
$
|
401
|
||||||||
Contributions
|
79
|
66
|
190
|
148
|
||||||||||||
Legal fees
|
88
|
151
|
428
|
474
|
||||||||||||
Accounting and audit fees
|
134
|
135
|
451
|
404
|
||||||||||||
Consulting fees
|
163
|
239
|
599
|
428
|
||||||||||||
Postage expense
|
27
|
36
|
123
|
129
|
||||||||||||
Telephone expense
|
37
|
36
|
124
|
109
|
||||||||||||
Public relations
|
87
|
52
|
230
|
183
|
||||||||||||
Training expense
|
37
|
34
|
165
|
115
|
||||||||||||
Loan origination expense
|
120
|
29
|
248
|
178
|
||||||||||||
Computer software depreciation
|
1
|
9
|
17
|
32
|
||||||||||||
Sundry losses
|
80
|
80
|
203
|
184
|
||||||||||||
Loan collection expense (recovery)
|
160
|
114
|
(294
|
)
|
292
|
|||||||||||
Debit card expense
|
305
|
246
|
902
|
722
|
||||||||||||
Other non-interest expense
|
437
|
350
|
1,296
|
1,055
|
||||||||||||
Total other non-interest expenses
|
$
|
1,986
|
$
|
1,703
|
$
|
5,363
|
$
|
4,854
|
(in thousands)
|
||||||||
September 30, 2023
|
December 31, 2022
|
|||||||
Undisbursed loan commitments
|
$
|
197,710
|
$
|
205,610
|
||||
Standby letters of credit
|
1,251
|
1,930
|
||||||
Commitments to sell loans
|
765
|
—
|
||||||
$
|
199,726
|
$
|
207,540
|
• |
Substandard Assets – A substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
|
• |
Doubtful Assets – An asset classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing
facts, conditions, and values, highly questionable or improbable.
|
At September 30, 2023
|
At December 31, 2022
|
|||||||||||||||||||||||
Gross
|
Guaranteed
|
Net
|
Gross
|
Guaranteed
|
Net
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Commercial
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||
Commercial real estate
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Agriculture
|
5,020
|
—
|
5,020
|
7,416
|
—
|
7,416
|
||||||||||||||||||
Residential mortgage
|
400
|
—
|
400
|
123
|
—
|
123
|
||||||||||||||||||
Residential construction
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Consumer
|
699
|
—
|
699
|
637
|
—
|
637
|
||||||||||||||||||
Total non-accrual loans
|
$
|
6,119
|
$
|
—
|
$
|
6,119
|
$
|
8,176
|
$
|
—
|
$
|
8,176
|
|
At September 30, 2023
|
At December 31, 2022
|
||||||||||||||||||||||
Gross
|
Guaranteed
|
Net
|
Gross
|
Guaranteed
|
Net
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Non-accrual loans
|
$
|
6,119
|
$
|
—
|
$
|
6,119
|
$
|
8,176
|
$
|
-
|
$
|
8,176
|
||||||||||||
Loans 90 days past due and still accruing
|
—
|
—
|
—
|
403
|
—
|
403
|
||||||||||||||||||
Total non-performing loans
|
6,119
|
—
|
6,119
|
8,579
|
—
|
8,579
|
||||||||||||||||||
Other real estate owned
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Total non-performing assets
|
$
|
6,119
|
$
|
—
|
$
|
6,119
|
$
|
8,579
|
$
|
—
|
$
|
8,579
|
||||||||||||
Non-performing loans (net of guarantees) to total loans
|
0.6
|
%
|
0.9
|
%
|
||||||||||||||||||||
Non-performing assets (net of guarantees) to total assets
|
0.3
|
%
|
0.5
|
%
|
||||||||||||||||||||
Allowance for credit losses to non-performing loans (net of guarantees)
|
263.9
|
%
|
172.4
|
%
|
Nine months ended
September 30,
|
Year ended
December 31,
|
|||||||||||
2023
|
2022
|
2022
|
||||||||||
Balance at beginning of period
|
$
|
14,792
|
$
|
13,952
|
$
|
13,952
|
||||||
Impact of adopting ASC 326
|
800
|
—
|
—
|
|||||||||
Provision for credit losses
|
3,250
|
900
|
900
|
|||||||||
Loans charged-off:
|
||||||||||||
Commercial
|
(269
|
)
|
(297
|
)
|
(297
|
)
|
||||||
Commercial Real Estate
|
—
|
—
|
—
|
|||||||||
Agriculture
|
(2,567
|
)
|
—
|
—
|
||||||||
Residential Mortgage
|
(3
|
)
|
—
|
—
|
||||||||
Residential Construction
|
—
|
—
|
—
|
|||||||||
Consumer
|
(10
|
)
|
(39
|
)
|
(48
|
)
|
||||||
Total charged-off
|
(2,849
|
)
|
(336
|
)
|
(345
|
)
|
||||||
Recoveries:
|
||||||||||||
Commercial
|
155
|
249
|
275
|
|||||||||
Commercial Real Estate
|
—
|
—
|
—
|
|||||||||
Agriculture
|
—
|
—
|
—
|
|||||||||
Residential Mortgage
|
—
|
—
|
—
|
|||||||||
Residential Construction
|
—
|
—
|
—
|
|||||||||
Consumer
|
1
|
6
|
10
|
|||||||||
Total recoveries
|
156
|
255
|
285
|
|||||||||
Net charge-offs
|
(2,693
|
)
|
(81
|
)
|
(60
|
)
|
||||||
Balance at end of period
|
$
|
16,149
|
$
|
14,771
|
$
|
14,792
|
||||||
Ratio of net charge-offs to average loans outstanding during the period (annualized)
|
(0.36
|
%)
|
(0.01
|
%)
|
(0.01
|
%)
|
||||||
Allowance for credit losses to total loans
|
1.53
|
%
|
1.50
|
%
|
1.50
|
%
|
||||||
Nonaccrual loans to total loans
|
0.6
|
%
|
0.9
|
%
|
0.8
|
%
|
||||||
Allowance for credit losses to nonaccrual loans
|
263.9
|
%
|
174.3
|
%
|
180.9
|
%
|
September 30,
2023
|
December 31,
2022
|
|||||||
Non-interest bearing transaction
|
44.1
|
%
|
44.9
|
%
|
||||
Interest-bearing transaction
|
23.2
|
%
|
25.9
|
%
|
||||
Savings and MMDA
|
25.5
|
%
|
26.6
|
%
|
||||
Time
|
7.2
|
%
|
2.6
|
%
|
|
(in thousands)
|
|||||||
|
September 30, 2023
|
December 31, 2022
|
||||||
Three months or less
|
$
|
1,652
|
$
|
1,211
|
||||
Over three to six months
|
3,294
|
1,012
|
||||||
Over six to twelve months
|
8,159
|
3,769
|
||||||
Over twelve months
|
5,752
|
3,248
|
||||||
Total
|
$
|
18,857
|
$
|
9,240
|
|
(amounts in thousands except percentage amounts)
|
|||||||||||
|
Actual
|
Well Capitalized
|
||||||||||
Capital
|
Ratio
|
Ratio
Requirement
|
||||||||||
Leverage
|
$
|
180,092
|
9.21
|
%
|
5.0
|
%
|
||||||
Common Equity Tier 1
|
$
|
180,092
|
14.31
|
%
|
6.5
|
%
|
||||||
Tier 1 Risk-Based
|
$
|
180,092
|
14.31
|
%
|
8.0
|
%
|
||||||
Total Risk-Based
|
$
|
195,844
|
15.56
|
%
|
10.0
|
%
|
Exhibit
Number
|
|
Description of Document
|
|
|
|
|
Rule 13a — 14(a) Certification of Chief Executive Officer
|
|
|
|
|
|
Rule 13a — 14(a) Certification of Chief Financial Officer
|
|
|
|
|
|
Statement of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
|
|
|
|
|
|
Statement of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
|
|
|
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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).
|
|
|
|
FIRST NORTHERN COMMUNITY BANCORP
|
|
|
|
|
|
|
Date:
|
November 9, 2023
|
By:
|
/s/ Kevin Spink
|
|
|
|
|
|
|
|
|
|
Kevin Spink, Executive Vice President / Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer and Duly Authorized Officer)
|
Date: November 9, 2023
|
|
|
|
/s/ Jeremiah Z. Smith
|
|
|
|
Jeremiah Z. Smith, President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date: November 9, 2023
|
|
|
|
/s/ Kevin Spink
|
|
|
|
Kevin Spink, Executive Vice President / Chief Financial Officer
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
|
Date:
|
November 9, 2023
|
|
/s/ Jeremiah Z. Smith
|
|
|
|
|
|
|
|
Jeremiah Z. Smith, President and Chief Executive Officer
|
(Principal Executive Officer)
|
Date:
|
November 9, 2023
|
|
/s/ Kevin Spink
|
|
|
|
|
|
|
|
Kevin Spink, Executive Vice President / Chief Financial Officer
|
(Principal Financial Officer and Principal Accounting Officer)
|
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Assets | ||
Investment securities available-for-sale, amortized cost | $ 636,903 | $ 683,784 |
Investment securities - available-for-sale, at estimated fair value, allowance for loan losses | 0 | 0 |
Loans, allowance for credit losses | $ 16,149 | $ 14,792 |
Stockholder's Equity: | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 32,000,000 | 16,000,000 |
Common stock, shares issued (in shares) | 14,732,351 | 14,652,584 |
Common stock, shares outstanding (in shares) | 14,732,351 | 14,652,584 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Other comprehensive loss, net of tax: | ||||
Unrealized holding (losses) gains arising during the period, tax | $ (2,097) | $ (7,461) | $ (1,145) | $ (19,850) |
Reclassification adjustment due to losses realized on sales of securities, tax | $ 0 | $ 0 | $ 19 | $ 44 |
BASIS OF PRESENTATION |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
BASIS OF PRESENTATION [Abstract] | |||
BASIS OF PRESENTATION |
The accompanying unaudited condensed consolidated financial statements of First Northern Community Bancorp (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by GAAP for
complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of results
expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2022 as filed with the Securities and Exchange Commission (“SEC”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. All material intercompany balances and transactions have been
eliminated in consolidation.
|
ACCOUNTING POLICIES |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
ACCOUNTING POLICIES [Abstract] | |||
ACCOUNTING POLICIES |
The most significant accounting policies followed by the Company are presented
in Note 1 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. These policies, along with the disclosures presented in the other financial statement notes and in
this discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined.
The following accounting policies were updated from those disclosed in the Form 10-K
for the year ended December 31, 2022 and were effective as of January 1, 2023.
Allowance for Credit Losses – Available-For-Sale Securities
For available-for-sale debt securities in an unrealized loss position, the Company
first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the
security’s amortized cost basis is written down to fair value through income. For debt securities available-for-sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses
or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security,
among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows
expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment
that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
Changes in the allowance for credit losses are recorded as provision for (or reversal
of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Accrued interest receivable on available-for-sale debt securities is excluded from the
estimate of credit losses. Accrued interest receivable on available-for-sale debt securities totaled $1,991,000 and $2,151,000 as of September 30, 2023 and December 31, 2022, respectively, and is included in
on the Condensed Consolidated Balance Sheet.Allowance for Credit Losses – Loans
The allowance for credit losses (ACL) is a valuation account that is deducted from the
loan’s amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the recorded loan balance is confirmed as uncollectible. Expected recoveries do not
exceed the aggregate of amounts previously charged-off and expected to be charged-off.
Management estimates the ACL using relevant information, from internal and external
sources, relating to past events, current conditions, and reasonable and supportable forecasts. In determining the ACL, accruing loans with similar risk characteristics are generally evaluated collectively. To estimate expected losses the Company
generally utilizes historical loss trends and the remaining contractual lives of the loan portfolios to determine estimated credit losses through a reasonable and supportable forecast period. Individual loan credit quality indicators, including
historical credit losses, have been statistically correlated with various econometrics, including California unemployment rate, and California gross domestic product. Model forecasts may be adjusted for inherent limitations or biases that have been
identified through independent validation and back-testing of model performance to actual realized results. The Company utilized a reasonable and supportable forecast period of approximately eight quarters and obtained the forecast data from Moody’s
Analytics. The Company also considered the impact of portfolio concentrations, changes in underwriting practices, imprecision in its economic forecasts, and other risk factors that might influence its loss estimation process.
Loans that do not share similar risk characteristics are individually evaluated by management for potential impairment. Included in loans individually evaluated are
collateral dependent loans. A loan is considered to be collateral dependent when repayment is expected to be provided substantially through the operation or sale of the collateral. Collateral dependent loans are considered to have unique risk
characteristics and are individually evaluated. The ACL on collateral dependent loans is measured using the fair value of the underlying collateral, adjusted for costs to sell when applicable, less the amortized cost basis of the financial asset.
If the value of underlying collateral is determined to be less than the recorded amount of the loan, a charge-off will be taken.
The ACL is measured on a collective (pool) basis when similar risk characteristics
exist. The Company has identified the following portfolio segments to evaluate and measure the ACL:
Commercial:
Commercial loans, whether secured or unsecured, generally are made to support the
short-term operations and other needs of small businesses. These loans are generally secured by the receivables, equipment, and other real property of the business and are susceptible to the related risks described above. Problem commercial loans
are generally identified by periodic review of financial information that may include financial statements, tax returns, and payment history of the borrower. Based on this information, the Company may decide to take any of several courses of action,
including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower’s
income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase
invoices, or other appropriate documentation.
Commercial Real Estate:
Commercial real estate loans generally fall into two categories: owner-occupied and non-owner occupied. Loans secured by owner-occupied real estate are primarily susceptible to changes in the market
conditions of the related business. This may be driven by, among other things, industry changes, geographic business changes, changes in the individual financial capacity of the business owner, general economic conditions, and changes in business
cycles. These same risks apply to commercial loans whether secured by equipment, receivables or other personal property or unsecured. Problem commercial real estate loans are generally identified by periodic review of financial information that may
include financial statements, tax returns, payment history of the borrower, and site inspections. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to
provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower’s income and cash flow, repossession or foreclosure of the
underlying collateral may become necessary. Losses on loans secured by owner occupied real estate, equipment, or other personal property generally are dictated by the value of underlying collateral at the time of default and liquidation of the
collateral. When default is driven by issues related specifically to the business owner, collateral values tend to provide better repayment support and may result in little or no loss. Alternatively, when default is driven by more general economic
conditions, underlying collateral generally has devalued more and results in larger losses due to default. Loans secured by non-owner occupied real estate are primarily susceptible to risks associated with swings in occupancy or vacancy and related
shifts in lease rates, rental rates or room rates. Most often, these shifts are a result of changes in general economic or market conditions or overbuilding and resulting over-supply of space. Losses are dependent on the value of underlying
collateral at the time of default. Values are generally driven by these same factors and influenced by interest rates and required rates of return as well as changes in occupancy costs. Collateral values may be determined by appraisals obtained
through Bank-approved, licensed appraisers, qualified independent third parties, sales invoices, or other appropriate means.
Agriculture:
Agricultural loans, whether secured or unsecured, generally are made to producers and
processors of crops and livestock. Repayment is primarily from the sale of an agricultural product or service. Agricultural loans are generally secured by inventory, receivables, equipment, and other real property. Agricultural loans primarily are
susceptible to changes in market demand for specific commodities. This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions and changes in
business cycles, as well as adverse weather conditions such as drought, fire, or floods. Problem agricultural loans are generally identified by periodic review of financial information that may include financial statements, tax returns, crop
budgets, payment history, and crop inspections. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or
additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower’s income and cash flow, repossession or foreclosure of the underlying collateral may become necessary.
Residential mortgage loans: Residential mortgage loans, which are secured by
real estate, are primarily susceptible to four risks; non-payment due to diminished or lost income, over-extension of credit, a lack of borrower’s cash flow to sustain payments, and shortfalls in collateral value. In general, non-payment is usually
due to loss of employment and follows general economic trends in the economy, particularly the upward movement in the unemployment rate, loss of collateral value, and demand shifts.
Residential construction loans: Construction loans, whether owner-occupied or
non-owner occupied residential development loans, are not only susceptible to the risks related to residential mortgage loans, but the added risks of construction, including cost over-runs, mismanagement of the project, or lack of demand and market
changes experienced at time of completion. Losses are primarily related to underlying collateral value and changes therein as described above. Problem construction loans are generally identified by periodic review of financial information that may
include financial statements, tax returns and payment history of the borrower. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a
significant principal payment and/or additional collateral or requiring similar support from guarantors, or repossession or foreclosure of the underlying collateral. Collateral values may be determined by appraisals obtained through Bank-approved,
licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation.
Consumer:
Consumer loans, whether unsecured or secured, are primarily susceptible to four risks:
non-payment due to diminished or lost income, over-extension of credit, a lack of borrower’s cash flow to sustain payments, and shortfall in collateral value. In general, non-payment is usually due to loss of employment and will follow general
economic trends in the economy, particularly the upward movements in the unemployment rate, loss of collateral value, inflation and demand shifts.
Unfunded commitments: The estimated credit losses associated with these
unfunded lending commitments is calculated using the same models and methodologies noted above and incorporate utilization assumptions at time of default. The reserve for unfunded commitments is maintained on the condensed consolidated balance sheet
in other liabilities.
Accrued interest receivable on loans is not included in the calculation of the
allowance for credit losses. Accrued interest receivable on loans totaled $5,194,000 and $3,594,000 as of September 30, 2023 and December 31, 2022, respectively, and is included in
on the Condensed Consolidated Balance Sheet.Business Combinations
The Company accounts for acquisitions of businesses using the
acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques including discounted
cash flow analyses to determine these fair values. Any excess of the purchase consideration over the fair value of acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill and a deficit is
recognized as a bargain purchase gain.
Goodwill and intangible assets acquired in a business
combination and that are determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be
performed. The Company has no goodwill arising from business combinations. Intangible assets with definite useful lives are amortized
over their estimated useful lives to their estimated residual values. Core deposit intangible assets arising from business combinations are amortized on an accelerated basis reflecting the pattern in which the economic benefits of the intangible
asset are consumed or otherwise used up. The estimated life of the core deposit intangible is approximately 10 years.
Accounting Standards Adopted in 2023
On January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments — Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The measurement of
expected credit losses under the CECL methodology is applicable to financial assets measured at amortized costs, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for
as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in certain leases. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One
such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities, based on management’s intent to sell the security, or likelihood the Company will be required to sell the
security, before recovery of the amortized cost basis.
Upon adoption of ASU
2016-13, the Company made the accounting policy election to not measure an estimate of credit losses on accrued interest receivable as the Company writes off any uncollectible accrued interest receivable in a timely manner.
Results for the reporting periods beginning January 1, 2023 are presented under ASC 326 while prior period amounts continue
to be reported in accordance with previously applicable GAAP. Upon adoption of CECL, the Company recognized an increase in the ACL for loans and reserve for unfunded commitments totaling $1,300,000 as a cumulative effect adjustment from change in accounting policies, with a corresponding decrease in retained earnings of $916,000, net of deferred taxes of $384,000.
On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments—Credit Losses
(Topic 326): Troubled Debt Restructurings and Vintage Disclosures. These amendments eliminate the troubled debt restructuring (TDR) recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the
accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain
modifications of receivables made to borrowers experiencing financial difficulty. For public business entities, these amendments require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net
investment in leases within the scope of Subtopic 326-20. Results for the reporting periods beginning January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.
Recently Issued Accounting Pronouncements
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope.
This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in
Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. An entity may elect to apply ASU 2021-01 on contract modifications
that change the interest rate used for margining, discounting, or contract price alignment retrospectively as of any date from the beginning of the interim period that includes March 12, 2020, or prospectively to new modifications from any date
within the interim period that includes or is subsequent to January 7, 2021, up to the date that financial statements are available to be issued. An entity may elect to apply ASU 2021-01 to eligible hedging relationships existing as of the
beginning of the interim period that includes March 12, 2020, and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. This ASU extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. ASU 2022-06 defers
the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company is in the process of evaluating the provisions of this ASU but does not expect
it to have a material impact on the Company’s consolidated financial statements.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value
Measurement of Equity Securities Subject to Contractual Sale Restrictions. These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and,
therefore, is not considered in measuring fair value. This ASU is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. The Company does not expect this ASU to have a material impact on
the Company’s consolidated financial statements.
|
INVESTMENT SECURITIES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES |
The amortized cost,
unrealized gains and losses and estimated fair values of investments in debt and other securities at September 30, 2023 are summarized as follows:
The amortized cost, unrealized gains and losses and estimated
fair values of investments in debt and other securities at December 31, 2022 are summarized as follows:
The Company had no proceeds from sales of available-for-sale securities for the three-month periods ended September 30, 2023 and 2022, respectively. The Company had
$16,987,000 and $6,349,000
in proceeds from sales of available-for-sale securities for the nine-month periods ended September 30, 2023 and 2022, respectively. There were no
gross realized gains on sales of available-for-sale securities for the three-month periods ended September 30, 2023 and 2022. Gross realized gains on sales of available-for-sale securities were $96,000 and $0 for the nine-month periods ended September 30, 2023
and 2022, respectively. There were no gross realized losses on sales of available-for-sale securities for the three-month periods
ended September 30, 2023 and 2022. Gross realized losses on sales of available-for-sale securities were $160,000 and $152,000 for the nine-month periods ended September 30, 2023 and 2022, respectively.
The amortized cost and estimated fair value of debt and
other securities at September 30, 2023, by contractual maturity, are shown in the following table:
Expected
maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. In addition, factors such as prepayments and interest rates may affect the yield on
the carrying value of mortgage-related securities.
An analysis of gross
unrealized losses of the available-for-sale investment securities portfolio as of September 30, 2023, follows:
Sixty-eight securities, all considered investment grade, which had an aggregate fair value of $81,212,000 and a total unrealized loss of $1,991,000, have been
in an unrealized loss position for less than twelve months as of September 30, 2023.
securities, all
considered investment grade, which had an aggregate fair value of $478,877,000 and a total unrealized loss of $67,507,000, have been in an unrealized loss position for more than twelve months as of September 30, 2023. The unrealized losses on the Company’s
investment securities were caused by market conditions for these types of investments, particularly changes in risk-free interest rates. The decline in fair value is attributable to changes in interest rates and not credit quality, and the Company
does not intend to sell the securities. The Company has concluded it is not more likely than not that the Company will be required to sell these securities prior to recovery of their anticipated cost basis. Therefore, as of September 30, 2023, the
Company has not recorded an allowance for credit losses on these securities and the unrecognized or unrealized losses on these
securities have not been recognized into income.The fair value of investment securities could decline in the
future if the general economy deteriorates, inflation and interest rate increases, credit ratings decline, the issuer’s financial condition deteriorates, or the liquidity for securities declines. As a result, an allowance for credit loss may occur in
the future.
An analysis of gross
unrealized losses of the available-for-sale investment securities portfolio as of December 31, 2022, follows:
Investment securities
carried at $45,366,000 and $44,319,000
at September 30, 2023 and December 31, 2022, respectively, were pledged to secure public deposits or for other purposes as required or permitted by law.
|
LOANS AND ALLOWANCE FOR CREDIT LOSSES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS AND ALLOWANCE FOR CREDIT LOSSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS AND ALLOWANCE FOR CREDIT LOSSES |
The composition of the Company’s loan portfolio, by loan class, as of September 30, 2023 and December 31, 2022 was as follows:
At September 30, 2023 and December 31, 2022, all loans were pledged under a blanket collateral lien
to secure actual or potential borrowings from the Federal Home Loan Bank (“FHLB”).
Allowance for Credit Losses
For the periods indicated, the following tables summarize the
activity in the allowance for credit losses on loans which is recorded as a contra asset, and the reserve for unfunded commitments which is recorded on the balance sheet within other liabilities:
During the quarter ended September 30, 2023, the levels of forecasted California unemployment remained relatively unchanged and forecasted gross domestic product decreased from the prior quarter. During
the nine months ended September 30, 2023, the Company experienced a credit event related to suspected customer fraud on a single agricultural relationship that required a charge-off of $2,567,000 against the allowance for credit losses (ACL). Loan growth was the primary driver for provision expense of $500,000 recognized for the three months ended September 30, 2023. The reduction in the ACL resulting from the charge-off coupled with our loan growth were the primary drivers
for provision expense of $3,100,000 recognized for the nine months ended September 30, 2023. Management believes that the allowance for
credit losses at September 30, 2023 appropriately reflected expected credit losses in the loan portfolio at that date.
The following tables summarize the activity in the allowance for loan losses by loan class for the three and nine months ended September 30, 2022:
Collateral-Dependent Loans
In accordance with ASC 326, a loan is considered collateral-dependent when the borrower is
experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. All loans individually analyzed were collateral-dependent loans as of September 30, 2023 and December 31,
2022. The
following table presents the amortized cost basis of collateral-dependent loans by class, which are individually evaluated to determine expected credit losses as of September 30, 2023 and December 31, 2022:
Foreclosure Proceedings
The Company had no residential real estate property in the process of foreclosure at September 30, 2023 and December 31, 2022.
Non-accrual and Past Due Loans
The Company’s loans by delinquency and non-accrual status, as of September 30, 2023 and December 31, 2022, was as follows:
The Company recognized $4,000 and $19,000 of interest income on nonaccrual loans during the three months ended September 30, 2023 and September 30, 2022, respectively. The Company
recognized $1,289,000 and $46,000
of interest income on nonaccrual loans during the nine months ended September 30, 2023 and September 30, 2022, respectively.
Loan
Modifications
On January 1,
2023, the Company adopted ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. These amendments eliminate the TDR recognition and
measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.
Occasionally, the
Company modifies loans to borrowers in financial difficulty by providing principal forgiveness, term extension, payment delays or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off
against the ACL.
In some cases,
the Company provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as
principal forgiveness, may be granted. For the loans included in the “combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period. The combination is at least two of the
following: a term extension, principal forgiveness, an other-than-insignificant payment delay and/or an interest rate reduction.
The following
tables present the amortized cost basis of loans that were experiencing both financial difficulty and modification during the periods indicated, by class and by type of modification. The percentage of the amortized cost basis of loans that
were modified to borrowers in financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below.
The amortized
cost basis of loans that were experiencing both financial difficulty and modification during the three months ended September 30, 2023 were as follows:
The amortized cost basis of loans that were experiencing both financial difficulty and modification during the nine months ended September
30, 2023 were as follows:
The Company had commitments to lend additional funds totaling $580,000 to borrowers whose loans were modified at September 30, 2023. The following
table presents the financial effect of the loan modifications to borrowers experiencing financial difficulty during the three-month period ended September 30, 2023:
The following table presents the financial effect of the loan modifications to borrowers experiencing financial difficulty during the
nine-month period ended September 30, 2023:
There were no
loans modified within the previous twelve months and for which there was a payment default during the three months ended September 30, 2023. There were two agricultural loans totaling $4,005,000 that were modified within the previous twelve months
and for which there was a payment default during the nine months ended September 30, 2023. The Company recorded charge-offs on these two
agricultural loans totaling $2,567,000 during the nine months ended September 30, 2023.
Upon the
Company’s determination that a modified loan (or portion of a loan) has subsequently become uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible
amount and the ACL is adjusted by the same amount.
Troubled Debt Restructurings
Prior to the Adoption of ASU 2022-02
Prior to the adoption
of ASU 2022-02, the Company accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. The Company had $8,399,000 in TDR loans as of December 31, 2022. Specific reserves for TDR loans totaled $77,000 as of December 31, 2022. TDR loans performing in compliance with modified terms totaled $8,399,000 as of December 31, 2022.
There were no loans modified as TDRs during the three months ended September 30, 2022.
Loans modified as TDRs during the nine months ended September 30, 2022 were as follows:
There were no loans
modified as a TDR within the previous twelve months that subsequently defaulted during the three and nine month periods ended September 30, 2022.
Credit Quality Indicators
All loans are rated using the credit risk ratings and criteria adopted by the
Company. Risk ratings are adjusted as future circumstances warrant. All credits risk rated 1, 2, 3 or 4 equate to a Pass as indicated by Federal and State bank regulatory agencies; a 5 equates to a Special Mention; a 6 equates to Substandard; a
7 equates to Doubtful; and an 8 equates to a Loss. For the definitions of each risk rating, see Note 4 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.
The following tables present the loan portfolio by loan class,
origination year, and internal risk rating as of September 30, 2023. Generally, existing term loans that were re-underwritten are reflected in the table in the year of renewal. Lines of credit that have a conversion feature at the time of
origination, such as construction to permanent loans, are presented by year of origination. Revolving loans converted to term loans totaled $80,000
as of September 30, 2023.
The following table presents the risk ratings by loan class as of December 31, 2022.
|
MORTGAGE OPERATIONS |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE OPERATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE OPERATIONS |
Transfers and servicing
of financial assets and extinguishments of liabilities are accounted for and reported based on consistent application of a financial-components approach that focuses on control. Transfers of financial assets that are sales are distinguished from
transfers that are secured borrowings. Retained servicing rights on loans sold are measured by allocating the previous carrying amount of the transferred assets between the loans sold and retained interest, if any, based on their relative fair
value at the date of transfer. Fair values are estimated using discounted cash flows based on a current market interest rate.
The Company recognizes a gain and a related asset for the fair value of the rights to service loans for others when loans are sold. The Company sold a substantial portion of
its portfolio of conforming long-term residential mortgage loans originated during the nine months ended September 30, 2023 for cash proceeds equal to the fair value of the loans. The Company serviced real estate mortgage loans for others
totaling $186,373,000 and $194,818,000
at September 30, 2023 and December 31, 2022, respectively.
The recorded value of
mortgage servicing rights is amortized in proportion to, and over the period of, estimated net servicing revenues. The Company assesses capitalized mortgage servicing rights for impairment based upon the fair value of those rights at each
reporting date. For purposes of measuring impairment, the rights are stratified based upon the product type, term and interest rates. Fair value is determined by discounting estimated net future cash flows from mortgage servicing activities using
discount rates that approximate current market rates and estimated prepayment rates, among other assumptions. The amount of impairment recognized, if any, is the amount by which the capitalized mortgage servicing rights for a stratum exceeds their
fair value. Impairment, if any, is recognized through a valuation allowance for each individual stratum. Changes in the carrying amount of mortgage servicing rights are reported in earnings under other operating income on the condensed
consolidated statements of income.
Key assumptions used in
measuring the fair value of mortgage servicing rights as of September 30, 2023 and December 31, 2022 were as follows:
The following table summarizes the Company’s mortgage
servicing rights assets as of September 30, 2023 and December 31, 2022. Mortgage servicing rights are included in Interest Receivable and Other Assets on the condensed consolidated balance sheets.
At September 30, 2023 and
December 31, 2022, the estimated fair market value of the Company’s mortgage servicing rights assets was $2,031,000 and $2,101,000, respectively. The change in fair value of mortgage servicing rights during 2023 was primarily due to a decrease in the amount of mortgage loans serviced coupled with changes in prepayment speeds and weighted average
life.
The Company received
contractually specified servicing fees of $117,000 and $126,000 for the three months ended September 30, 2023 and September 30, 2022, respectively. The Company received contractually specified servicing fees of $357,000 and $385,000 for the nine months
ended September 30, 2023 and September 30, 2022, respectively. Loan servicing income on the condensed consolidated statements of income include contractually specified servicing fees, mortgage servicing rights additions, amortization and changes in
the valuation allowance.
|
FAIR VALUE MEASUREMENTS |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
The Company utilizes fair value measurements to record fair value adjustments to
certain assets and liabilities and to determine fair value disclosures. Securities available-for-sale and trading securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at
fair value other assets on a non-recurring basis, such as loans held-for-sale, loans held-for-investment and certain other assets. These non-recurring fair value adjustments typically involve application of lower of cost or market accounting or
write-downs of individual assets. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally corresponds with the Company’s quarterly valuation
process.
Assets Recorded at Fair Value on a Recurring Basis
The table below presents the recorded amount of assets and liabilities measured at
fair value on a recurring basis as of September 30, 2023 and December 31, 2022.
Assets Recorded at Fair Value on a Non-Recurring Basis
The table below presents the recorded amount of assets measured at
fair value on a nonrecurring basis that had a write-down or an additional allowance provided during the nine months ended September 30, 2023.
There were no assets measured at fair value on a non-recurring basis as of December 31, 2022.
There were no liabilities measured at fair value on a recurring or non-recurring basis at September 30, 2023 and December 31, 2022.
Key methods and assumptions used in measuring the fair value of collateral dependent loans as of September 30, 2023 were as follows:
The following section describes the valuation methodologies used for assets and liabilities recorded at fair value.
Investment Securities Available-for-Sale
Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market
prices, if available. If quoted market prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s
credit rating, prepayment assumptions, and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or
brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3
include asset-backed securities in less liquid markets where valuations include significant unobservable assumptions.
Individually Evaluated Loans
The Company does not record loans at fair value on a recurring basis. Loans that do not share similar risk characteristics are
individually evaluated by management for potential impairment. Included in loans individually evaluated are collateral dependent loans. A loan is considered to be collateral dependent when repayment is expected to be provided substantially
through the operation or sale of the collateral. Collateral dependent loans are considered to have unique risk characteristics and are individually evaluated. The ACL on collateral dependent loans is measured using the fair value of the
underlying collateral, adjusted for costs to sell when applicable, less the amortized cost basis of the financial asset. If the value of underlying collateral is determined to be less than the recorded amount of the loan, a charge-off will be
taken. Collateral dependent loans where a charge-off is recorded based on the fair value of collateral require classification in the fair value hierarchy. When a loan is evaluated based on the fair value of the underlying collateral
securing the loan, the Company records the collateral dependent loan as non-recurring Level 3 given the valuation includes significant unobservable assumptions.
Disclosures about Fair Value of Financial Instruments
The estimated fair values of the Company’s financial instruments for the periods
ended September 30, 2023 and December 31, 2022 were approximately as follows:
Limitations
Fair value estimates are made at a specific point in time, based on relevant market
information and information about the financial instrument and expected exit prices. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial
instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various
financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the
estimates.
Fair value estimates are based on existing on- and off-balance sheet financial
instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial
assets or liabilities include deferred tax liabilities and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not
been considered in many of the estimates.
|
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK |
The Company is a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit in the form of loans or through standby letters of credit. These instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amounts recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.
The Bank’s exposure to credit loss in the event of non-performance by the other
party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments.
Financial instruments, whose contract amounts represent credit risk at the indicated
periods, were as follows:
Commitments to extend credit are agreements to lend to a customer as long as there
is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension
of credit, is based on management’s credit evaluation. The types of collateral held varies but may include accounts receivable, inventory, property, plant and
equipment, and income-producing commercial properties.
Standby letters of
credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to
customers. The Bank issues both financial and performance standby letters of credit. The financial standby letters of credit are primarily to guarantee payment to third parties. At September 30, 2023 and December 31, 2022, there were no financial standby letters of credit outstanding. The performance standby letters of credit are typically issued to municipalities as specific
performance bonds. Performance standby letters of credit totaled $1,251,000 and $1,930,000 at September 30, 2023 and December 31, 2022, respectively. The Bank had experienced no draws on outstanding letters of credit, resulting in no related liability included on its balance sheet; however, should a triggering event occur, the Bank either has collateral in excess of the letter of
credit or imbedded agreements of recourse from the customer. The Bank has set aside a reserve for unfunded commitments in the amount of $1,050,000
and $700,000 at September 30, 2023 and December 31, 2022, respectively, which is recorded in “interest payable and other liabilities” on
the Condensed Consolidated Balance Sheets.
Commitments to extend
credit and standby letters of credit bear similar credit risk characteristics as outstanding loans. As of September 30, 2023 and December 31, 2022, the Company had no off-balance sheet derivatives requiring additional disclosure.
The Company may enter
into interest rate lock commitments in connection with its mortgage banking activities to fund residential mortgage loans within specified times in the future. Interest rate lock commitments totaled $310,000 and $0 at September 30, 2023 and December 31, 2022,
respectively. These commitments expose the Company to the risk that the price of the loan underlying the interest rate lock commitment might decline from the inception of the interest rate lock commitment to the funding of the mortgage loan. To
protect against this risk, the Company may enter into commitments to sell loans at specified prices to economically hedge the risk of potential changes in the value of the loans that would result from the commitment. These commitments totaled $765,000 and $0 at September 30, 2023 and
December 31, 2022, respectively. Mortgage loans sold to investors may be sold with servicing rights retained, for which the Company makes only standard legal representations and warranties as to meeting certain underwriting and collateral
documentation standards. In the past two years, the Company has not had to repurchase any loans due to deficiencies in underwriting or loan documentation. Management believes that any liabilities that may result from such recourse provisions are
not significant.
|
STOCK PLANS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK PLANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK PLANS |
On January 26, 2023, the Board of Directors of the Company declared a 5% stock dividend payable as of March 24, 2023 to shareholders of record as of February 28, 2023. All stock options and restricted stock amounts outstanding have been adjusted to give retroactive effect to stock dividends.
The following table presents the activity related to stock options for the three
months ended September 30, 2023.
The following table presents the activity related to stock options for the nine
months ended September 30, 2023.
The
intrinsic value of options exercised was $305,000 and $125,000 during the nine months ended September 30, 2023 and September 30, 2022, respectively. The fair value of awards vested was $123,000 and $142,000 during the nine months ended September 30, 2023 and September 30, 2022, respectively.
As of September 30, 2023, there was $87,000 of total unrecognized compensation cost related to non-vested stock options. This cost is expected to be recognized over a weighted average period of approximately 1.90 years.
There was $22,000 and $71,000 of recognized compensation cost related to
stock options granted for the three and nine months ended September 30, 2023, respectively.
The following table presents the activity related to non-vested restricted stock
for the three months ended September 30,2023.
The following table presents the activity related to non-vested restricted stock
for the nine months ended September 30, 2023.
The weighted average fair value of restricted stock granted during the nine months
ended September 30, 2023 was $8.51 per share.
As of September 30, 2023, there was $1,335,000 of total unrecognized compensation cost related to non-vested restricted stock. This cost is expected to be recognized over a weighted average period of approximately
2.76 years.
There was $106,000 and $421,000 of recognized compensation cost related to
restricted stock awards for the three and nine months ended September 30, 2023, respectively.
The Company has an Employee Stock Purchase Plan (“ESPP”). There are 358,911 shares authorized for issuance under the ESPP. The total number of shares authorized has been adjusted to give retroactive effect to stock
dividends and stock splits, including the 5% stock dividend declared on January 26, 2023, payable March 24, 2023 to shareholders of
record as of February 28, 2023. The ESPP will expire on March 16, 2026.
The ESPP is implemented by participation periods of not more than
each. The Board of Directors determines the commencement date and duration of each participation period. The Board of Directors
approved the current participation period of November 24, 2022 to November 23, 2023. An eligible employee is one who has been continually employed for at least 90 days prior to commencement of a participation period. Under the terms of the ESPP, employees can choose to have up to 10
percent of their compensation withheld to purchase the Company’s common stock each participation period. The purchase price of the stock is 85
percent of the lower of the fair value on the last trading day before the date of participation or the fair value on the last trading day during the participation period.As of September 30, 2023, there was $7,000 of unrecognized compensation cost related to ESPP issuances. This cost is expected to be recognized over a weighted average period of approximately 0.25 years.
There was $8,000 and $24,000 of recognized compensation cost related to ESPP
issuances for the three and nine months ended September 30, 2023, respectively.
The weighted average fair value option at issuance date during the nine months
ended September 30, 2023 was $1.83 per share.
A summary of the weighted average assumptions used in valuing ESPP issuances
during the three and nine months ended September 30, 2023 is presented below.
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
The following table details activity in accumulated other comprehensive loss for the
three months ended September 30, 2023.
The following table details activity in accumulated other comprehensive loss for
the nine months ended September 30, 2023.
The following table details activity in accumulated other comprehensive loss for the
three months ended September 30, 2022.
The following table details activity in accumulated other comprehensive loss for the
nine months ended September 30, 2022.
|
OUTSTANDING SHARES AND EARNINGS PER SHARE |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OUTSTANDING SHARES AND EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OUTSTANDING SHARES AND EARNINGS PER SHARE |
On January 26, 2023, the Board of Directors of the Company declared a 5%
stock dividend payable March 24, 2023 to shareholders of record as of February 28, 2023. All income per share amounts have been adjusted to give retroactive effect to stock dividends.
Earnings Per Share (EPS)
Basic EPS includes no dilution and is computed by dividing net
income available to common shareholders by the weighted average number of common shares outstanding for the respective period. Diluted EPS is computed by dividing net income available to common shareholders by the weighted average number of shares
outstanding plus dilutive shares for the quarter. Diluted shares include all common stock equivalents (“in-the-money” stock options, unvested restricted stock, stock units, warrants and rights, convertible bonds and preferred stock), which reflects
the potential dilution of securities that could share in the earnings of the Company.
The following table presents a reconciliation of basic and
diluted EPS for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands except per share amounts):
Stock options which were not included in the computation of
diluted earnings per share because they would have had an anti-dilutive effect amounted to 338,346 shares and 513,058 shares for the three months ended September 30, 2023 and 2022, respectively. Unvested restricted stock which were not included in the computation
of diluted earnings per share because they would have had an anti-dilutive effect amounted to 0 shares and 74,522 shares for the three months ended September 30, 2023 and 2022, respectively. Stock options which were not included in the computation of diluted
earnings per share because they would have had an anti-dilutive effect amounted to 454,174 shares and 413,335 shares for the nine months ended September 30, 2023 and 2022, respectively. Unvested restricted stock which were not included in the computation
of diluted earnings per share because they would have had an anti-dilutive effect amounted to 44,982 shares and 61,966 shares for the nine months ended September 30, 2023 and 2022, respectively.
|
LEASES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
The Company leases eleven branch and administrative locations under operating leases expiring on various dates through 2031. Leases with an initial term of 12 months or less are not recorded on the balance sheet
and lease expense is recognized on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of ASU 2016-02, Leases (Topic 842), the Company combines lease and nonlease components. The Company had
no financing leases as of September 30, 2023.
Most leases include options to renew, with renewal terms that can extend the lease
term from 3 to 10 years.
The exercise of lease renewal options is at the Company’s sole discretion. Most leases are currently in the extension period. For the remaining leases with options to renew, the Company has not included the extended lease terms in the calculation of
lease liabilities as the options are not reasonably certain of being exercised. Certain lease agreements include rental payments that are adjusted periodically for inflation. The Company’s lease agreements do not contain any residual value guarantees
or restrictive covenants.
The Company uses its FHLB advance fixed rates, which are its incremental borrowing
rates for secured borrowings, as the discount rates to calculate lease liabilities.
The Company had right-of-use assets totaling $4,345,000 and $4,905,000 as of September
30, 2023 and December 31, 2022, respectively. The Company had lease liabilities totaling $4,854,000 and $5,422,000 as of September 30, 2023 and December 31, 2022, respectively. The Company recognized lease expense totaling $315,000 and $286,000 for the three-month
periods ended September 30, 2023 and 2022, respectively, and $916,000 and $874,000 for the nine-month periods ended September 30, 2023 and 2022, respectively. Lease expense includes
operating lease costs, short-term lease costs and variable lease costs. Lease expense is included in occupancy and equipment expense on the condensed consolidated statements of income.
The table below summarizes the maturity of remaining lease liabilities at September
30, 2023:
The following table presents supplemental cash flow information related to leases for the three and nine months ended September 30, 2023:
The following table presents the weighted average operating lease term and discount
rate as of September 30, 2023 and December 31, 2022:
|
BUSINESS COMBINATIONS |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATIONS |
On January 20, 2023, the Company completed the acquisition from Columbia State Bank of three
branches located in the California cities of Colusa, Willows, and Orland, in accordance with a Purchase and Assumption Agreement dated as of November 5, 2022. The acquired assets included all the real property, cash on hand, personal property,
safe deposit agreements, books and records along with certain loans (including accrued interest and fees) booked at the branches or allocated by the seller to the acquired branches. The assumed liabilities primarily consisted of the deposits
booked in the branches or allocated by the seller to the acquired branches.
In accordance with
ASC 805, Business Combinations, the Company recorded a bargain purchase gain of $1,405,000 and $4,970,000 of core deposit intangibles on the acquisition date. The core deposit intangible will be amortized using the sum of the year’s digits method
over the expected life of 10 years with no significant residual value. For tax purposes, acquisition accounting adjustments including
the core deposit intangible are all non-taxable and/or non-deductible. Acquisition related costs of approximately $0 and $154,000 are included in the income statement for the three months ended September 30, 2023 and September 30, 2022, respectively. Acquisition related
costs of approximately $204,000 and $154,000
are included in the income statement for the nine months ended September 30, 2023 and September 30, 2022, respectively.
The Company
recorded the fair values based on the valuations available as of reporting date. In accordance with business combination accounting guidance, we will continue to evaluate these fair values for up to one year following the acquisition date of
January 20, 2023. While management believes the information available and presented below provide a reasonable basis for estimating fair value, we may obtain additional information and evidence during the measurement period that could result in
changes to the estimated fair value amounts. Valuations subject to change include, but are not limited to, loans, deposits and certain other assets and liabilities.
This acquisition
enabled the Company to extend its existing footprint and provided additional core deposit funding for future growth and liquidity and is expected to enhance profitability by introducing existing products and services to the acquired customer base
as well as add new customers in the expanded region.
The following table
summarizes the consideration paid for the acquired branches and amounts of assets acquired and liabilities assumed that were recorded at the acquisition date (in thousands):
A summary of the estimated fair value adjustments resulting in the bargain purchase gain recorded in the branch acquisition are presented below
(in thousands):
The loan portfolio of
the acquired branches was recorded at fair value at the date of acquisition. For the purposes of the valuation analysis, the loan portfolio was segmented based on loan type and credit quality. None of the acquired loans were considered purchased
credit deteriorated (PCD) at acquisition. The fair value of the acquired loans was calculated on a loan-level basis using the discounted cash flow method.
The Company
recorded a core deposit intangible of $4,970,000 at acquisition. A core deposit intangible refers to the intangible asset that
represents the cost savings derived from available core deposits to an alternative funding source. The fair value of the core deposit intangible was calculated using a net cost savings method based on the present value of the estimated net cost
savings attributable to the core deposit base over the expected remaining life of the deposits (plus the present value of the tax amortization benefit). The cost savings derived from the core deposit balance was calculated as the difference
between the prevailing alternative cost of funds and the estimated cost of the core deposits.
The Company assumed net liabilities, at fair value, of $102,020,000 at
acquisition in exchange for cash consideration received of $103,425,000. Under accounting guidance, a bargain purchase gain results if
the fair value of consideration received is more than the fair value of the liabilities assumed. Because the cash consideration received exceeded the fair value of liabilities assumed, the Company recorded a bargain purchase gain of $1,405,000 related to the branch acquisitions during the first quarter of 2023. The bargain purchase gain is separately reported as a component of
non-interest income in our Condensed Consolidated Statements of Income for the nine months ended September 30, 2023.
We believe that we were able to negotiate a bargain purchase price primarily as a result of Columbia State Bank being required to divest of certain branches (along with the
associated deposits and loans) for competitive reasons in accordance with a Letter of Agreement between Columbia State Bank, Umpqua and the Department of Justice Antitrust Division. This agreement was reached in conjunction with the Department of Justice’s
required approval of the merger of Columbia State Bank and Umpqua. The required divestiture, in conjunction with the rural location of the branches acquired, allowed the Company to negotiate a favorable purchase price that, when combined with
changes in market conditions between the date of agreement and the closing date, resulted in the recognition of the bargain purchase gain.
The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1,
2022 (in thousands):
It
is impractical to separately provide information regarding the revenue and earnings of the acquired branches included in the Company’s condensed consolidated statements of income from the January 20, 2023 acquisition date to September 30,
2023 because the operations of the acquired branches were substantially commingled with the operations of the Company as of the system conversion date of January 20, 2023.
|
BASIS OF PRESENTATION (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
BASIS OF PRESENTATION [Abstract] | |
Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements of First Northern Community Bancorp (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by GAAP for
complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of results
expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2022 as filed with the Securities and Exchange Commission (“SEC”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. All material intercompany balances and transactions have been
eliminated in consolidation.
|
ACCOUNTING POLICIES (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
ACCOUNTING POLICIES [Abstract] | |
Allowance for Credit Losses |
Allowance for Credit Losses – Available-For-Sale Securities
For available-for-sale debt securities in an unrealized loss position, the Company
first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the
security’s amortized cost basis is written down to fair value through income. For debt securities available-for-sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses
or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security,
among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows
expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment
that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
Changes in the allowance for credit losses are recorded as provision for (or reversal
of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Accrued interest receivable on available-for-sale debt securities is excluded from the
estimate of credit losses. Accrued interest receivable on available-for-sale debt securities totaled $1,991,000 and $2,151,000 as of September 30, 2023 and December 31, 2022, respectively, and is included in
on the Condensed Consolidated Balance Sheet.Allowance for Credit Losses – Loans
The allowance for credit losses (ACL) is a valuation account that is deducted from the
loan’s amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the recorded loan balance is confirmed as uncollectible. Expected recoveries do not
exceed the aggregate of amounts previously charged-off and expected to be charged-off.
Management estimates the ACL using relevant information, from internal and external
sources, relating to past events, current conditions, and reasonable and supportable forecasts. In determining the ACL, accruing loans with similar risk characteristics are generally evaluated collectively. To estimate expected losses the Company
generally utilizes historical loss trends and the remaining contractual lives of the loan portfolios to determine estimated credit losses through a reasonable and supportable forecast period. Individual loan credit quality indicators, including
historical credit losses, have been statistically correlated with various econometrics, including California unemployment rate, and California gross domestic product. Model forecasts may be adjusted for inherent limitations or biases that have been
identified through independent validation and back-testing of model performance to actual realized results. The Company utilized a reasonable and supportable forecast period of approximately eight quarters and obtained the forecast data from Moody’s
Analytics. The Company also considered the impact of portfolio concentrations, changes in underwriting practices, imprecision in its economic forecasts, and other risk factors that might influence its loss estimation process.
Loans that do not share similar risk characteristics are individually evaluated by management for potential impairment. Included in loans individually evaluated are
collateral dependent loans. A loan is considered to be collateral dependent when repayment is expected to be provided substantially through the operation or sale of the collateral. Collateral dependent loans are considered to have unique risk
characteristics and are individually evaluated. The ACL on collateral dependent loans is measured using the fair value of the underlying collateral, adjusted for costs to sell when applicable, less the amortized cost basis of the financial asset.
If the value of underlying collateral is determined to be less than the recorded amount of the loan, a charge-off will be taken.
The ACL is measured on a collective (pool) basis when similar risk characteristics
exist. The Company has identified the following portfolio segments to evaluate and measure the ACL:
Commercial:
Commercial loans, whether secured or unsecured, generally are made to support the
short-term operations and other needs of small businesses. These loans are generally secured by the receivables, equipment, and other real property of the business and are susceptible to the related risks described above. Problem commercial loans
are generally identified by periodic review of financial information that may include financial statements, tax returns, and payment history of the borrower. Based on this information, the Company may decide to take any of several courses of action,
including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower’s
income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase
invoices, or other appropriate documentation.
Commercial Real Estate:
Commercial real estate loans generally fall into two categories: owner-occupied and non-owner occupied. Loans secured by owner-occupied real estate are primarily susceptible to changes in the market
conditions of the related business. This may be driven by, among other things, industry changes, geographic business changes, changes in the individual financial capacity of the business owner, general economic conditions, and changes in business
cycles. These same risks apply to commercial loans whether secured by equipment, receivables or other personal property or unsecured. Problem commercial real estate loans are generally identified by periodic review of financial information that may
include financial statements, tax returns, payment history of the borrower, and site inspections. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to
provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower’s income and cash flow, repossession or foreclosure of the
underlying collateral may become necessary. Losses on loans secured by owner occupied real estate, equipment, or other personal property generally are dictated by the value of underlying collateral at the time of default and liquidation of the
collateral. When default is driven by issues related specifically to the business owner, collateral values tend to provide better repayment support and may result in little or no loss. Alternatively, when default is driven by more general economic
conditions, underlying collateral generally has devalued more and results in larger losses due to default. Loans secured by non-owner occupied real estate are primarily susceptible to risks associated with swings in occupancy or vacancy and related
shifts in lease rates, rental rates or room rates. Most often, these shifts are a result of changes in general economic or market conditions or overbuilding and resulting over-supply of space. Losses are dependent on the value of underlying
collateral at the time of default. Values are generally driven by these same factors and influenced by interest rates and required rates of return as well as changes in occupancy costs. Collateral values may be determined by appraisals obtained
through Bank-approved, licensed appraisers, qualified independent third parties, sales invoices, or other appropriate means.
Agriculture:
Agricultural loans, whether secured or unsecured, generally are made to producers and
processors of crops and livestock. Repayment is primarily from the sale of an agricultural product or service. Agricultural loans are generally secured by inventory, receivables, equipment, and other real property. Agricultural loans primarily are
susceptible to changes in market demand for specific commodities. This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions and changes in
business cycles, as well as adverse weather conditions such as drought, fire, or floods. Problem agricultural loans are generally identified by periodic review of financial information that may include financial statements, tax returns, crop
budgets, payment history, and crop inspections. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or
additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower’s income and cash flow, repossession or foreclosure of the underlying collateral may become necessary.
Residential mortgage loans: Residential mortgage loans, which are secured by
real estate, are primarily susceptible to four risks; non-payment due to diminished or lost income, over-extension of credit, a lack of borrower’s cash flow to sustain payments, and shortfalls in collateral value. In general, non-payment is usually
due to loss of employment and follows general economic trends in the economy, particularly the upward movement in the unemployment rate, loss of collateral value, and demand shifts.
Residential construction loans: Construction loans, whether owner-occupied or
non-owner occupied residential development loans, are not only susceptible to the risks related to residential mortgage loans, but the added risks of construction, including cost over-runs, mismanagement of the project, or lack of demand and market
changes experienced at time of completion. Losses are primarily related to underlying collateral value and changes therein as described above. Problem construction loans are generally identified by periodic review of financial information that may
include financial statements, tax returns and payment history of the borrower. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a
significant principal payment and/or additional collateral or requiring similar support from guarantors, or repossession or foreclosure of the underlying collateral. Collateral values may be determined by appraisals obtained through Bank-approved,
licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation.
Consumer:
Consumer loans, whether unsecured or secured, are primarily susceptible to four risks:
non-payment due to diminished or lost income, over-extension of credit, a lack of borrower’s cash flow to sustain payments, and shortfall in collateral value. In general, non-payment is usually due to loss of employment and will follow general
economic trends in the economy, particularly the upward movements in the unemployment rate, loss of collateral value, inflation and demand shifts.
Unfunded commitments: The estimated credit losses associated with these
unfunded lending commitments is calculated using the same models and methodologies noted above and incorporate utilization assumptions at time of default. The reserve for unfunded commitments is maintained on the condensed consolidated balance sheet
in other liabilities.
Accrued interest receivable on loans is not included in the calculation of the
allowance for credit losses. Accrued interest receivable on loans totaled $5,194,000 and $3,594,000 as of September 30, 2023 and December 31, 2022, respectively, and is included in
on the Condensed Consolidated Balance Sheet. |
Business Combinations |
Business Combinations
The Company accounts for acquisitions of businesses using the
acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques including discounted
cash flow analyses to determine these fair values. Any excess of the purchase consideration over the fair value of acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill and a deficit is
recognized as a bargain purchase gain.
Goodwill and intangible assets acquired in a business
combination and that are determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be
performed. The Company has no goodwill arising from business combinations. Intangible assets with definite useful lives are amortized
over their estimated useful lives to their estimated residual values. Core deposit intangible assets arising from business combinations are amortized on an accelerated basis reflecting the pattern in which the economic benefits of the intangible
asset are consumed or otherwise used up. The estimated life of the core deposit intangible is approximately 10 years.
|
Accounting Standards Adopted and Recently Issued Accounting Pronouncements |
Accounting Standards Adopted in 2023
On January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments — Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The measurement of
expected credit losses under the CECL methodology is applicable to financial assets measured at amortized costs, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for
as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in certain leases. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One
such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities, based on management’s intent to sell the security, or likelihood the Company will be required to sell the
security, before recovery of the amortized cost basis.
Upon adoption of ASU
2016-13, the Company made the accounting policy election to not measure an estimate of credit losses on accrued interest receivable as the Company writes off any uncollectible accrued interest receivable in a timely manner.
Results for the reporting periods beginning January 1, 2023 are presented under ASC 326 while prior period amounts continue
to be reported in accordance with previously applicable GAAP. Upon adoption of CECL, the Company recognized an increase in the ACL for loans and reserve for unfunded commitments totaling $1,300,000 as a cumulative effect adjustment from change in accounting policies, with a corresponding decrease in retained earnings of $916,000, net of deferred taxes of $384,000.
On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments—Credit Losses
(Topic 326): Troubled Debt Restructurings and Vintage Disclosures. These amendments eliminate the troubled debt restructuring (TDR) recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the
accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain
modifications of receivables made to borrowers experiencing financial difficulty. For public business entities, these amendments require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net
investment in leases within the scope of Subtopic 326-20. Results for the reporting periods beginning January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.
Recently Issued Accounting Pronouncements
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope.
This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in
Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. An entity may elect to apply ASU 2021-01 on contract modifications
that change the interest rate used for margining, discounting, or contract price alignment retrospectively as of any date from the beginning of the interim period that includes March 12, 2020, or prospectively to new modifications from any date
within the interim period that includes or is subsequent to January 7, 2021, up to the date that financial statements are available to be issued. An entity may elect to apply ASU 2021-01 to eligible hedging relationships existing as of the
beginning of the interim period that includes March 12, 2020, and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. This ASU extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. ASU 2022-06 defers
the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company is in the process of evaluating the provisions of this ASU but does not expect
it to have a material impact on the Company’s consolidated financial statements.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value
Measurement of Equity Securities Subject to Contractual Sale Restrictions. These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and,
therefore, is not considered in measuring fair value. This ASU is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. The Company does not expect this ASU to have a material impact on
the Company’s consolidated financial statements.
|
INVESTMENT SECURITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost, Unrealized Gains and Losses and Estimated Fair Values of Investments in Debt and Other Securities |
The amortized cost,
unrealized gains and losses and estimated fair values of investments in debt and other securities at September 30, 2023 are summarized as follows:
The amortized cost, unrealized gains and losses and estimated
fair values of investments in debt and other securities at December 31, 2022 are summarized as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost and Estimated Fair Value of Debt and Other Securities by Contractual Maturity |
The amortized cost and estimated fair value of debt and
other securities at September 30, 2023, by contractual maturity, are shown in the following table:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of Gross Unrealized Losses of the Available-for-sale Investment Securities Portfolio |
An analysis of gross
unrealized losses of the available-for-sale investment securities portfolio as of September 30, 2023, follows:
An analysis of gross
unrealized losses of the available-for-sale investment securities portfolio as of December 31, 2022, follows:
|
LOANS AND ALLOWANCE FOR CREDIT LOSSES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS AND ALLOWANCE FOR CREDIT LOSSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Portfolio, by Loan Class |
The composition of the Company’s loan portfolio, by loan class, as of September 30, 2023 and December 31, 2022 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in ACL on Loans by Loan Class |
For the periods indicated, the following tables summarize the
activity in the allowance for credit losses on loans which is recorded as a contra asset, and the reserve for unfunded commitments which is recorded on the balance sheet within other liabilities:
The following tables summarize the activity in the allowance for loan losses by loan class for the three and nine months ended September 30, 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost of Collateral Dependent Loans by Class | The
following table presents the amortized cost basis of collateral-dependent loans by class, which are individually evaluated to determine expected credit losses as of September 30, 2023 and December 31, 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans by Delinquency and Non-Accrual Status |
The Company’s loans by delinquency and non-accrual status, as of September 30, 2023 and December 31, 2022, was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost Basis of Loans Modification to Borrowers Experiencing Financial Difficulty and Financial Effects of Loan Modifications |
The amortized
cost basis of loans that were experiencing both financial difficulty and modification during the three months ended September 30, 2023 were as follows:
The amortized cost basis of loans that were experiencing both financial difficulty and modification during the nine months ended September
30, 2023 were as follows:
The Company had commitments to lend additional funds totaling $580,000 to borrowers whose loans were modified at September 30, 2023. The following
table presents the financial effect of the loan modifications to borrowers experiencing financial difficulty during the three-month period ended September 30, 2023:
The following table presents the financial effect of the loan modifications to borrowers experiencing financial difficulty during the
nine-month period ended September 30, 2023:
Loans modified as TDRs during the nine months ended September 30, 2022 were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Ratings by Loan Class |
The following tables present the loan portfolio by loan class,
origination year, and internal risk rating as of September 30, 2023. Generally, existing term loans that were re-underwritten are reflected in the table in the year of renewal. Lines of credit that have a conversion feature at the time of
origination, such as construction to permanent loans, are presented by year of origination. Revolving loans converted to term loans totaled $80,000
as of September 30, 2023.
The following table presents the risk ratings by loan class as of December 31, 2022.
|
MORTGAGE OPERATIONS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE OPERATIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Assumptions Used in Measuring the Fair Value of Mortgage Servicing Rights |
Key assumptions used in
measuring the fair value of mortgage servicing rights as of September 30, 2023 and December 31, 2022 were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Servicing Rights Assets |
The following table summarizes the Company’s mortgage
servicing rights assets as of September 30, 2023 and December 31, 2022. Mortgage servicing rights are included in Interest Receivable and Other Assets on the condensed consolidated balance sheets.
|
FAIR VALUE MEASUREMENTS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis |
The table below presents the recorded amount of assets and liabilities measured at
fair value on a recurring basis as of September 30, 2023 and December 31, 2022.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on a Nonrecurring Basis |
The table below presents the recorded amount of assets measured at
fair value on a nonrecurring basis that had a write-down or an additional allowance provided during the nine months ended September 30, 2023.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Methods and Assumptions Used in Measuring Fair Value |
Key methods and assumptions used in measuring the fair value of collateral dependent loans as of September 30, 2023 were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value of Financial Instruments |
The estimated fair values of the Company’s financial instruments for the periods
ended September 30, 2023 and December 31, 2022 were approximately as follows:
|
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments Whose Contract Amount Represent Credit Risk |
Financial instruments, whose contract amounts represent credit risk at the indicated
periods, were as follows:
|
STOCK PLANS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK PLANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Activity |
The following table presents the activity related to stock options for the three
months ended September 30, 2023.
The following table presents the activity related to stock options for the nine
months ended September 30, 2023.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity Related to Restricted Stock |
The following table presents the activity related to non-vested restricted stock
for the three months ended September 30,2023.
The following table presents the activity related to non-vested restricted stock
for the nine months ended September 30, 2023.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Assumptions Used in Valuing ESPP |
A summary of the weighted average assumptions used in valuing ESPP issuances
during the three and nine months ended September 30, 2023 is presented below.
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in Accumulated Other Comprehensive Income (Loss) |
The following table details activity in accumulated other comprehensive loss for the
three months ended September 30, 2023.
The following table details activity in accumulated other comprehensive loss for
the nine months ended September 30, 2023.
The following table details activity in accumulated other comprehensive loss for the
three months ended September 30, 2022.
The following table details activity in accumulated other comprehensive loss for the
nine months ended September 30, 2022.
|
OUTSTANDING SHARES AND EARNINGS PER SHARE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OUTSTANDING SHARES AND EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted EPS |
The following table presents a reconciliation of basic and
diluted EPS for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands except per share amounts):
|
LEASES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities of Remaining Lease Liabilities |
The table below summarizes the maturity of remaining lease liabilities at September
30, 2023:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information Related to Leases |
The following table presents supplemental cash flow information related to leases for the three and nine months ended September 30, 2023:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Operating Lease Term and Discount Rate |
The following table presents the weighted average operating lease term and discount
rate as of September 30, 2023 and December 31, 2022:
|
BUSINESS COMBINATIONS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets Acquired and Liabilities Assumed |
The following table
summarizes the consideration paid for the acquired branches and amounts of assets acquired and liabilities assumed that were recorded at the acquisition date (in thousands):
A summary of the estimated fair value adjustments resulting in the bargain purchase gain recorded in the branch acquisition are presented below
(in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Pro Forma Information |
The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1,
2022 (in thousands):
|
ACCOUNTING POLICIES, Allowance for Credit Losses (Details) $ in Thousands |
Sep. 30, 2023
USD ($)
Category
|
Dec. 31, 2022
USD ($)
|
---|---|---|
Loan Portfolio by Loan Class [Abstract] | ||
Accrued interest receivable, available-for-sale debt securities | $ 1,991 | $ 2,151 |
Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] | Interest receivable and other assets | Interest receivable and other assets |
Accrued interest receivable, loans | $ 5,194 | $ 3,594 |
Financing Receivable, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] | Interest receivable and other assets | Interest receivable and other assets |
Commercial Real Estate [Member] | ||
Loan Portfolio by Loan Class [Abstract] | ||
Number of categories of loans | Category | 2 |
ACCOUNTING POLICIES, Business Combinations (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2023
USD ($)
| |
Business Combinations [Abstract] | |
Goodwill | $ 0 |
Core Deposit Intangible [Member] | |
Business Combinations [Abstract] | |
Estimated useful life | 10 years |
ACCOUNTING POLICIES, Accounting Standards Adopted (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Accounting Standards Update and Change in Accounting Principle [Abstract] | ||
Retained earnings | $ 67,945 | $ 54,492 |
ASU 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | ||
Accounting Standards Update and Change in Accounting Principle [Abstract] | ||
Reserve for unfunded commitments | 1,300 | |
Retained earnings | (916) | |
Deferred taxes | $ (384) |
INVESTMENT SECURITIES, Contractual or Expected Maturity (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Maturity in years [Abstract] | ||
Due in one year or less | $ 89,660 | |
Due after one year through five years | 135,601 | |
Due after five years through ten years | 24,901 | |
Due after ten years | 26,610 | |
Subtotal | 276,772 | |
Mortgage-backed securities & Collateralized mortgage obligations | 360,131 | |
Amortized cost | 636,903 | $ 683,784 |
Maturity in years [Abstract] | ||
Due in one year or less | 87,943 | |
Due after one year through five years | 125,056 | |
Due after five years through ten years | 21,549 | |
Due after ten years | 21,878 | |
Subtotal | 256,426 | |
Mortgage-backed securities & Collateralized mortgage obligations | 310,983 | |
Estimated fair value | $ 567,409 | $ 618,092 |
LOANS AND ALLOWANCE FOR CREDIT LOSSES, Foreclosure Proceedings (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Residential Real Estate [Member] | ||
Foreclosure Proceedings [Abstract] | ||
Amount of mortgage loans in process of foreclosure | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS, Key Methods and Assumptions Used (Details) - Collateral, Market, Income, Enterprise, Liquidation and Discounted Cash Flows [Member] - Selling Costs [Member] |
Sep. 30, 2023 |
---|---|
Key methods and assumptions used in measuring fair value [Abstract] | |
Impaired loans, measurement input | 0.08 |
Minimum [Member] | |
Key methods and assumptions used in measuring fair value [Abstract] | |
Impaired loans, measurement input | 0.06 |
Maximum [Member] | |
Key methods and assumptions used in measuring fair value [Abstract] | |
Impaired loans, measurement input | 0.10 |
STOCK PLANS, Dividends (Details) |
9 Months Ended | |
---|---|---|
Jan. 26, 2023 |
Sep. 30, 2023 |
|
Dividends [Abstract] | ||
Stock dividend percentage | 5.00% | |
Dividends, date declared | Jan. 26, 2023 | |
Dividends, date to be paid | Mar. 24, 2023 | |
Dividends, date of record | Feb. 28, 2023 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Activity in accumulated other comprehensive loss [Roll Forward] | ||||||||
Balance | $ 136,730 | $ 135,785 | $ 125,040 | $ 127,134 | $ 134,130 | $ 150,911 | $ 125,040 | $ 150,911 |
Current period other comprehensive income (loss) | (4,999) | (3,690) | 6,013 | (18,492) | (10,641) | (19,963) | (2,676) | (49,096) |
Balance | 136,486 | 136,730 | 135,785 | 113,360 | 127,134 | 134,130 | 136,486 | 113,360 |
Accumulated Other Comprehensive Income (Loss) [Member] | ||||||||
Activity in accumulated other comprehensive loss [Roll Forward] | ||||||||
Balance | (44,205) | (40,515) | (46,528) | (34,801) | (24,160) | (4,197) | (46,528) | (4,197) |
Current period other comprehensive income (loss) | (4,999) | (3,690) | 6,013 | (18,492) | (10,641) | (19,963) | (2,676) | (49,096) |
Balance | (49,204) | (44,205) | (40,515) | (53,293) | (34,801) | (24,160) | (49,204) | (53,293) |
Unrealized Gains (Losses) on Securities [Member] | ||||||||
Activity in accumulated other comprehensive loss [Roll Forward] | ||||||||
Balance | (43,950) | (46,273) | (33,368) | (2,764) | (46,273) | (2,764) | ||
Current period other comprehensive income (loss) | (4,999) | (18,492) | (2,676) | (49,096) | ||||
Balance | (48,949) | (43,950) | (51,860) | (33,368) | (48,949) | (51,860) | ||
Officers' Retirement Plan [Member] | ||||||||
Activity in accumulated other comprehensive loss [Roll Forward] | ||||||||
Balance | (308) | (308) | (1,420) | (1,420) | (308) | (1,420) | ||
Current period other comprehensive income (loss) | 0 | 0 | 0 | 0 | ||||
Balance | (308) | (308) | (1,420) | (1,420) | (308) | (1,420) | ||
Directors' Retirement Plan [Member] | ||||||||
Activity in accumulated other comprehensive loss [Roll Forward] | ||||||||
Balance | 53 | $ 53 | (13) | $ (13) | 53 | (13) | ||
Current period other comprehensive income (loss) | 0 | 0 | 0 | 0 | ||||
Balance | $ 53 | $ 53 | $ (13) | $ (13) | $ 53 | $ (13) |
0-_ONMIS"ENU9;C.;VG*!9V&[(YV\RGGON/-H MS>-EE3ALAS7V>LR1G?$'$'^PUWVE(!I1T>!95'0:]']QE/(IU) M&KH&O=$;.<\]$]# -1RFD#;4BXF'7L"6S5)6_W54&3\M03"&BB6/D4+ WNJ6 MD UB ;%H!^R:]7$OXXX?A()L[B;_4OU@X0.H+Z2Y]"9!W\.VBSL@UJR-[=[. MY#9BBRC.]]*9$6(OZ__;!N6]K!TZ6Q,_[F?^& H>=^^S28?S##;_$8I=6F3!DUR3F!;' #)#7)D7Z2 MJ_ACPWXUR".N"Z!Q/FNS&0YHT"S09C':D:RD)C[23WQ%=&^/8&S3%_9 D MB=(D""M!.FB$[,VW_4PW%4D2Y=-*L?]#D2HH!CP-]=3R\4XHCKQ/1O#_86A% MQN'W_QLZ=+[F4-+/H7G_NA8Q-*_R [K.>U0CF9)W)=/WLG;H=4VFY,@8#4L. ME"2U\]#9"MA;Y=QYCFRBBU5>7^6:9;H1WJJUR/(!TSA2#1$,7+TZK2'K'.D) M##X%Q?95)9)RJ\7U]MXJ"=WL4G-H]Q0')ER'#&&S'#?QIC&/M!L#C%W/;54, MHYP5=- PJ1L(TM] 3)8PR4*S '5CPZ+E* ,<-O=0. UJ>.(T"'0 MNE\@_?W"#ZX8/((!B66I[AR,^-IM@.L%M'E29!!S*.TZ,2!ULT#ZFX5)&&Z3 M;9P?K!1\$8H$MM-:GS;O>'Y@T#G6D79?<$H/YHH2O$D.LK)CY"=U T&.-! Y M>YC*DQ&NH8^P7>HW.S.3'+0G7:T$J5L)\I968H_L\DWX9OB!X5#1-$R9!(W# MU&CO[%O_\/"-94]1*J%?7(&F]=F#$&3%67YQH\0F/PY?"*5$DE^N.0/@6@#> MKP3P8'FC3]BK7U3&_P!02P,$% @ 9F]I5T(@3G-O P L@H !@ !X M;"]W;W)K TS(XTM(I2HDI3=[M?O4%)47Q2W*>('F9 ,YVIBI5H7E[:MXA0RJBY$ 3G.+(7,J,:N7-FJD$"3"I1QVW. 2J#++J/QQ!5QL)I9K/0]\9JM4FP$['!=T!1'HA^).8L]N MO20L@UPQD1,)RXDU=2]GKF, E<47!ANUU29&RJ,03Z9SG4PLQS "#K$V+BC^ MK6$&G!M/R.-;X]1JUS3 [?:S]W\J\2CFD2J8"?Z5)3J=6$.+)+"D)=>?Q>8C M-(+ZQE\LN*J^9-/8.A:)2Z5%UH"10<;R^I]^;P*Q!7![+P"\!N#]+L!O 'XE MM&96R9I33<.Q%!LBC35Z,XTJ-A4:U;#<;&.D)
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