CALIFORNIA | 77-0539125 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
7100 N. Financial Dr., Suite 101, Fresno, CA | 93720 | |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Name of Each Exchange on which Registered | |
Common Stock, no par value | NASDAQ Capital Market |
Large accelerated filer o | Accelerated filer x |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Emerging reporting company o |
Common Stock, Par Value | Outstanding at March 8, 2018 | |||
13,751,287 | shares |
ITEM 1 - | DESCRIPTION OF BUSINESS |
• | the loans must be made on substantially the same terms, including interest rates and collateral, as prevailing at the time for comparable transactions with persons not affiliated with the Bank; |
• | the Bank must follow credit underwriting procedures at least as stringent as those applicable to comparable transactions with persons who are not affiliated with the Bank; and |
• | the loans must not involve a greater than normal risk of non-payment or include other features not favorable to the Bank. |
• | assigning exposures secured by single-family residential properties to either a 50% risk weight for first-lien mortgages that meet prudent underwriting standards or a 100% risk weight category for all other mortgages; |
• | providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable (increased from 0% under the previous risk-based capital rules); |
• | assigning a 150% risk weight to all exposures that are nonaccrual or 90 days or more past due (increased from 100% under the previous risk-based capital rules), except for those secured by single-family residential properties, which will be assigned a 100% risk weight, consistent with the Basel I risk-based capital rules; |
• | applying a 150% risk weight instead of a 100% risk weight for certain high volatility CRE acquisition, development and construction loans; and |
• | applying a 250% risk weight to the portion of mortgage servicing rights and deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks that are not deducted from CET1 capital (increased from 100% under the previous Basel I risk-based capital rules). |
ITEM 1A - | RISK FACTORS |
• | loan delinquencies and defaults may increase; |
• | problem assets and foreclosures may increase; |
• | demand for our products and services may decline; |
• | low cost or noninterest bearing deposits may decrease; |
• | collateral for loans may decline in value, in turn reducing customers’ borrowing power, and reducing the value of assets and collateral as sources of repayment of existing loans; |
• | foreclosed assets may not be able to be sold; |
• | volatile securities market conditions could adversely affect valuations of investment portfolio assets; and |
• | reputational risk may increase due to public sentiment regarding the banking industry. |
• | inflation; |
• | recession; |
• | competition; |
• | a rise in unemployment; |
• | tightening money supply; |
• | international disorder; and |
• | instability in domestic and foreign financial markets. |
• | actual or anticipated quarterly fluctuations in our operating results and financial condition; |
• | changes in financial estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our common stock or those of other financial institutions; |
• | failure to meet analysts’ revenue or earnings estimates; |
• | speculation in the press or investment community generally or relating to our reputation, our market area, our competitors or the financial services industry in general; |
• | strategic actions by us or our competitors, such as acquisitions, restructurings, dispositions or financings; |
• | actions by our current shareholders, including sales of common stock by existing shareholders and/or directors and executive officers; |
• | fluctuations in the stock price and operating results of our competitors; |
• | future sales of our equity, equity-related or debt securities; |
• | changes in the frequency or amount of dividends or share repurchases; |
• | proposed or adopted regulatory changes or developments; |
• | anticipated or pending investigations, proceedings, or litigation that involves or affects us; |
• | trading activities in our common stock, including short-selling; |
• | domestic and international economic factors unrelated to our performance; and |
• | general market conditions and, in particular, developments related to market conditions for the financial services industry. |
ITEM 1B - | UNRESOLVED STAFF COMMENTS |
ITEM 2 - | DESCRIPTION OF PROPERTY |
ITEM 3 - | LEGAL PROCEEDINGS |
ITEM 4 - | MINE SAFETY DISCLOSURES |
ITEM 5 - | MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Quarter 1 2016 | Quarter 2 2016 | Quarter 3 2016 | Quarter 4 2016 | Quarter 1 2017 | Quarter 2 2017 | Quarter 3 2017 | Quarter 4 2017 | ||||||||||||||||||||||||
High | $ | 12.49 | $ | 14.64 | $ | 16.42 | $ | 20.00 | $ | 22.44 | $ | 23.94 | $ | 23.28 | $ | 22.75 | |||||||||||||||
Low | $ | 9.45 | $ | 10.78 | $ | 13.30 | $ | 13.75 | $ | 18.42 | $ | 17.62 | $ | 18.57 | $ | 19.06 | |||||||||||||||
Dividends per share | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.06 |
Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
Plan Category | (a) | (b) | (c) | ||||||||
Equity compensation plans approved by security holders | 232,870 | (1) | $ | 9.13 | 830,760 | (2) | |||||
Equity compensation plans not approved by security holders | N/A | N/A | N/A | ||||||||
Total | 232,870 | $ | 9.13 | 830,760 |
ITEM 6 - | SELECTED CONSOLIDATED FINANCIAL DATA |
Years Ended December 31, | ||||||||||||||||||||
(In thousands, except per-share amounts) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Statements of Income | ||||||||||||||||||||
Total interest income | $ | 57,376 | $ | 46,676 | $ | 41,822 | $ | 41,039 | $ | 34,836 | ||||||||||
Total interest expense | 1,137 | 1,096 | 1,047 | 1,156 | 1,385 | |||||||||||||||
Net interest income before provision for credit losses | 56,239 | 45,580 | 40,775 | 39,883 | 33,451 | |||||||||||||||
(Reversal of) Provision for credit losses | (1,150 | ) | (5,850 | ) | 600 | 7,985 | — | |||||||||||||
Net interest income after provision for credit losses | 57,389 | 51,430 | 40,175 | 31,898 | 33,451 | |||||||||||||||
Non-interest income | 10,836 | 9,591 | 9,387 | 8,164 | 7,831 | |||||||||||||||
Non-interest expenses | 44,406 | 38,922 | 36,016 | 35,338 | 31,685 | |||||||||||||||
Income before provision for (benefit from) income taxes | 23,819 | 22,099 | 13,546 | 4,724 | 9,597 | |||||||||||||||
Provision for (benefit from) income taxes | 9,793 | 6,917 | 2,582 | (570 | ) | 1,347 | ||||||||||||||
Net income | 14,026 | 15,182 | 10,964 | 5,294 | 8,250 | |||||||||||||||
Preferred stock dividends and accretion of discount | — | — | — | — | 350 | |||||||||||||||
Net income available to common shareholders | $ | 14,026 | $ | 15,182 | $ | 10,964 | $ | 5,294 | $ | 7,900 | ||||||||||
Basic earnings per share | $ | 1.12 | $ | 1.34 | $ | 1.00 | $ | 0.48 | $ | 0.77 | ||||||||||
Diluted earnings per share | $ | 1.10 | $ | 1.33 | $ | 1.00 | $ | 0.48 | $ | 0.77 | ||||||||||
Cash dividends declared per common share | $ | 0.24 | $ | 0.24 | $ | 0.18 | $ | 0.20 | $ | 0.20 |
December 31, | ||||||||||||||||||||
(In thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Balances at end of year: | ||||||||||||||||||||
Investment securities, Federal funds sold and deposits in other banks | $ | 604,801 | $ | 558,132 | $ | 580,544 | $ | 520,511 | $ | 529,398 | ||||||||||
Net loans | 891,901 | 747,302 | 588,501 | 564,280 | 503,149 | |||||||||||||||
Total deposits | 1,425,687 | 1,255,979 | 1,116,267 | 1,039,152 | 1,004,143 | |||||||||||||||
Total assets | 1,661,655 | 1,443,323 | 1,276,736 | 1,192,183 | 1,145,635 | |||||||||||||||
Shareholders’ equity | 209,559 | 164,033 | 139,323 | 131,045 | 120,043 | |||||||||||||||
Earning assets | 1,505,436 | 1,319,065 | 1,173,591 | 1,074,942 | 1,042,552 | |||||||||||||||
Average balances: | ||||||||||||||||||||
Investment securities, Federal funds sold and deposits in other banks | $ | 568,426 | $ | 560,860 | $ | 529,046 | $ | 513,866 | $ | 445,859 | ||||||||||
Net loans | 784,085 | 636,475 | 577,784 | 531,382 | 444,770 | |||||||||||||||
Total deposits | 1,284,305 | 1,144,231 | 1,065,798 | 1,006,560 | 848,493 | |||||||||||||||
Total assets | 1,491,696 | 1,321,007 | 1,222,526 | 1,157,483 | 986,924 | |||||||||||||||
Shareholders’ equity | 182,507 | 154,325 | 135,062 | 130,414 | 119,746 | |||||||||||||||
Earning assets | 1,364,839 | 1,210,082 | 1,112,758 | 1,052,097 | 895,330 |
ITEM 7 - | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | Year Ended December 31, 2015 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | ||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||||||
Interest-earning deposits in other banks | $ | 36,709 | $ | 424 | 1.16 | % | $ | 53,514 | $ | 289 | 0.54 | % | $ | 64,963 | $ | 209 | 0.32 | % | |||||||||||||||
Securities | |||||||||||||||||||||||||||||||||
Taxable securities | 310,876 | 6,526 | 2.10 | % | 313,006 | 5,876 | 1.88 | % | 285,585 | 4,793 | 1.68 | % | |||||||||||||||||||||
Non-taxable securities (1) | 220,806 | 10,443 | 4.73 | % | 194,224 | 9,787 | 5.04 | % | 178,247 | 9,569 | 5.37 | % | |||||||||||||||||||||
Total investment securities | 531,682 | 16,969 | 3.19 | % | 507,230 | 15,663 | 3.09 | % | 463,832 | 14,362 | 3.10 | % | |||||||||||||||||||||
Federal funds sold | 35 | — | 1.50 | % | 116 | — | 0.51 | % | 251 | 1 | 0.25 | % | |||||||||||||||||||||
Total securities and interest-earning deposits | 568,426 | 17,393 | 3.06 | % | 560,860 | 15,952 | 2.84 | % | 529,046 | 14,572 | 2.75 | % | |||||||||||||||||||||
Loans (2) (3) | 790,504 | 43,534 | 5.51 | % | 644,282 | 34,051 | 5.29 | % | 578,899 | 30,504 | 5.27 | % | |||||||||||||||||||||
Federal Home Loan Bank stock | 5,909 | 443 | 7.50 | % | 4,940 | 630 | 12.75 | % | 4,813 | 580 | 12.05 | % | |||||||||||||||||||||
Total interest-earning assets | 1,364,839 | $ | 61,370 | 4.50 | % | 1,210,082 | $ | 50,633 | 4.18 | % | 1,112,758 | $ | 45,656 | 4.10 | % | ||||||||||||||||||
Allowance for credit losses | (9,258 | ) | (10,098 | ) | (8,978 | ) | |||||||||||||||||||||||||||
Nonaccrual loans | 2,839 | 2,291 | 7,863 | ||||||||||||||||||||||||||||||
Cash and due from banks | 24,989 | 23,840 | 25,019 | ||||||||||||||||||||||||||||||
Bank premises and equipment | 9,310 | 9,053 | 9,664 | ||||||||||||||||||||||||||||||
Other non-earning assets | 98,977 | 85,839 | 76,200 | ||||||||||||||||||||||||||||||
Total average assets | $ | 1,491,696 | $ | 1,321,007 | $ | 1,222,526 | |||||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||
Savings and NOW accounts | $ | 382,071 | $ | 350 | 0.09 | % | $ | 337,804 | $ | 317 | 0.09 | % | $ | 300,741 | $ | 261 | 0.09 | % | |||||||||||||||
Money market accounts | 264,581 | 211 | 0.08 | % | 249,620 | 133 | 0.05 | % | 227,743 | 141 | 0.06 | % | |||||||||||||||||||||
Time certificates of deposit | 137,666 | 408 | 0.30 | % | 139,656 | 525 | 0.38 | % | 149,383 | 546 | 0.37 | % | |||||||||||||||||||||
Total interest-bearing deposits | 784,318 | 969 | 0.12 | % | 727,080 | 975 | 0.13 | % | 677,867 | 948 | 0.14 | % | |||||||||||||||||||||
Other borrowed funds | 6,930 | 168 | 2.42 | % | 5,157 | 121 | 2.35 | % | 5,156 | 99 | 1.89 | % | |||||||||||||||||||||
Total interest-bearing liabilities | 791,248 | $ | 1,137 | 0.14 | % | 732,237 | $ | 1,096 | 0.15 | % | 683,023 | $ | 1,047 | 0.15 | % | ||||||||||||||||||
Non-interest bearing demand deposits | 499,987 | 417,151 | 387,931 | ||||||||||||||||||||||||||||||
Other liabilities | 17,954 | 17,294 | 16,510 | ||||||||||||||||||||||||||||||
Shareholders’ equity | 182,507 | 154,325 | 135,062 | ||||||||||||||||||||||||||||||
Total average liabilities and shareholders’ equity | $ | 1,491,696 | $ | 1,321,007 | $ | 1,222,526 | |||||||||||||||||||||||||||
Interest income and rate earned on average earning assets | $ | 61,370 | 4.50 | % | $ | 50,633 | 4.18 | % | $ | 45,656 | 4.10 | % | |||||||||||||||||||||
Interest expense and interest cost related to average interest-bearing liabilities | 1,137 | 0.14 | % | 1,096 | 0.15 | % | 1,047 | 0.15 | % | ||||||||||||||||||||||||
Net interest income and net interest margin (4) | $ | 60,233 | 4.41 | % | $ | 49,537 | 4.09 | % | $ | 44,609 | 4.01 | % |
(1) | Interest income is calculated on a fully tax equivalent basis, which includes Federal tax benefits (at a 35% tax rate) relating to income earned on municipal bonds totaling $3,551, $3,327, and $3,254 in 2017, 2016, and 2015, respectively. |
(2) | Loan interest income includes loan fees of $684 in 2017, $134 in 2016, and $255 in 2015. |
(3) | Average loans do not include nonaccrual loans. |
(4) | Net interest margin is computed by dividing net interest income by total average interest-earning assets. |
Changes in Volume/Rate | For the Years Ended December 31, 2017 Compared to 2016 | For the Years Ended December 31, 2016 Compared to 2015 | ||||||||||||||||||||||
(In thousands) | Volume | Rate | Net | Volume | Rate | Net | ||||||||||||||||||
Increase (decrease) due to changes in: | ||||||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||
Interest-earning deposits in other banks | $ | (90 | ) | $ | 225 | $ | 135 | $ | (36 | ) | $ | 116 | $ | 80 | ||||||||||
Investment securities: | ||||||||||||||||||||||||
Taxable | (39 | ) | 689 | 650 | 460 | 623 | 1,083 | |||||||||||||||||
Non-taxable (1) | 1,339 | (683 | ) | 656 | 857 | (639 | ) | 218 | ||||||||||||||||
Total investment securities | 1,300 | 6 | 1,306 | 1,317 | (16 | ) | 1,301 | |||||||||||||||||
Federal funds sold | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||
Loans | 7,728 | 1,755 | 9,483 | 3,446 | 101 | 3,547 | ||||||||||||||||||
FHLB Stock | 123 | (310 | ) | (187 | ) | 16 | 34 | 50 | ||||||||||||||||
Total earning assets (1) | 9,061 | 1,676 | 10,737 | 4,742 | 235 | 4,977 | ||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Savings, NOW and MMA | 49 | 62 | 111 | 46 | 2 | 48 | ||||||||||||||||||
Time certificate of deposits | (7 | ) | (110 | ) | (117 | ) | (36 | ) | 14 | (22 | ) | |||||||||||||
Total interest-bearing deposits | 42 | (48 | ) | (6 | ) | 10 | 16 | 26 | ||||||||||||||||
Other borrowed funds | 41 | 6 | 47 | — | 22 | 22 | ||||||||||||||||||
Total interest bearing liabilities | 83 | (42 | ) | 41 | 10 | 38 | 48 | |||||||||||||||||
Net interest income (1) | $ | 8,978 | $ | 1,718 | $ | 10,696 | $ | 4,732 | $ | 197 | $ | 4,929 |
Loan Type | December 31, 2017 | December 31, 2016 | ||||||
Commercial: | ||||||||
Commercial and industrial | $ | 1,784 | $ | 1,884 | ||||
Agricultural land and production | 287 | 296 | ||||||
Real estate: | ||||||||
Owner occupied | 1,252 | 1,408 | ||||||
Real estate construction and other land loans | 1,004 | 698 | ||||||
Commercial real estate | 1,958 | 1,969 | ||||||
Agricultural real estate | 1,441 | 1,969 | ||||||
Other real estate | 140 | 156 | ||||||
Consumer: | ||||||||
Equity loans and lines of credit | 464 | 483 | ||||||
Consumer and installment | 361 | 369 | ||||||
Unallocated reserves | 87 | 94 | ||||||
Total allowance for credit losses | $ | 8,778 | $ | 9,326 |
For the years ended December 31, (Dollars in thousands) | Other Expense 2017 | % Average Assets | Other Expense 2016 | % Average Assets | Other Expense 2015 | % Average Assets | |||||||||||||||
Stationery/supplies | $ | 292 | 0.02 | % | $ | 247 | 0.02 | % | $ | 269 | 0.02 | % | |||||||||
Amortization of software | 289 | 0.02 | % | 257 | 0.02 | % | 240 | 0.02 | % | ||||||||||||
Telephone | 265 | 0.02 | % | 357 | 0.03 | % | 292 | 0.02 | % | ||||||||||||
Alarm | 130 | 0.01 | % | 103 | 0.01 | % | 108 | 0.01 | % | ||||||||||||
Postage | 205 | 0.01 | % | 200 | 0.02 | % | 212 | 0.01 | % | ||||||||||||
Armored courier fees | 266 | 0.02 | % | 227 | 0.02 | % | 218 | 0.01 | % | ||||||||||||
Risk management expense | 207 | 0.01 | % | 150 | 0.01 | % | 163 | 0.01 | % | ||||||||||||
Loss on sale or write-down of assets | 187 | 0.01 | % | 4 | — | % | 6 | — | % | ||||||||||||
Donations | 249 | 0.02 | % | 171 | 0.01 | % | 185 | 0.01 | % | ||||||||||||
Personnel other | 259 | 0.02 | % | 161 | 0.01 | % | 173 | 0.01 | % | ||||||||||||
Credit card expense | 245 | 0.02 | % | 196 | 0.02 | % | 124 | 0.01 | % | ||||||||||||
Education/training | 174 | 0.01 | % | 154 | 0.01 | % | 148 | 0.01 | % | ||||||||||||
Loan related expenses | 132 | 0.01 | % | 35 | — | % | 41 | — | % | ||||||||||||
General insurance | 159 | 0.01 | % | 159 | 0.01 | % | 150 | 0.01 | % | ||||||||||||
Mileage Expense | 138 | 0.01 | % | 88 | 0.01 | % | 114 | 0.01 | % | ||||||||||||
Operating losses | 187 | 0.01 | % | 175 | 0.01 | % | 56 | — | % | ||||||||||||
Other | 1,627 | 0.11 | % | 1,117 | 0.09 | % | 1,166 | 0.08 | % | ||||||||||||
Total other non-interest expense | $ | 5,011 | 0.34 | % | $ | 3,801 | 0.30 | % | $ | 3,665 | 0.25 | % |
Available-for-Sale Securities | Amortized Cost at December 31, | |||||||||||
(In thousands) | 2017 | 2016 | 2015 | |||||||||
U.S. Government agencies | $ | 65,994 | $ | 69,005 | $ | 52,803 | ||||||
Obligations of states and political subdivisions | 136,955 | 288,543 | 181,785 | |||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 237,210 | 181,785 | 225,636 | |||||||||
Private label mortgage and asset backed securities | 91,033 | 1,807 | 2,356 | |||||||||
Other equity securities | 7,500 | 7,500 | 7,500 | |||||||||
Total Available-for-Sale Securities | $ | 538,692 | $ | 548,640 | $ | 470,080 | ||||||
Held-to-Maturity Securities | ||||||||||||
(In thousands) | 2017 | 2016 | 2015 | |||||||||
Obligations of states and political subdivisions | $ | — | $ | — | $ | 31,712 |
(Dollars in thousands) | In one year or less | After one through five years | After five through ten years | After ten years | Total | ||||||||||||||||||||||||||||||
Available-for-Sale Securities | Amount | Yield(1) | Amount | Yield(1) | Amount | Yield(1) | Amount | Yield(1) | Amount | Yield(1) | |||||||||||||||||||||||||
Debt securities(1) | |||||||||||||||||||||||||||||||||||
U.S. Government agencies | $ | — | — | $ | — | — | $ | 8,492 | 5.18 | % | $ | 57,502 | 5.05 | % | $ | 65,994 | 5.07 | % | |||||||||||||||||
Obligations of states and political subdivisions (2) | 1,893 | 2.06 | % | 7,149 | 4.71 | % | 22,043 | 4.11 | % | 105,870 | 4.83 | % | 136,955 | 4.67 | % | ||||||||||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 7 | 4.65 | % | 887 | 4.80 | % | 421 | 4.99 | % | 235,895 | 3.80 | % | 237,210 | 3.81 | % | ||||||||||||||||||||
Private label residential mortgage backed securities | 5 | 1.00 | % | 79 | 4.75 | % | — | — | 90,949 | 3.68 | % | 91,033 | 3.68 | % | |||||||||||||||||||||
Other equity securities | 7,500 | 2.13 | % | — | — | — | — | — | — | 7,500 | 2.13 | % | |||||||||||||||||||||||
$ | 9,405 | 2.12 | % | $ | 8,115 | 4.72 | % | $ | 30,956 | 4.41 | % | $ | 490,216 | 4.15 | % | $ | 538,692 | 4.16 | % |
(1) | Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities will also differ from contractual maturities due to unscheduled principal pay downs. |
(2) | Not computed on a tax equivalent basis. |
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||||||||||
Loan Type (Dollars in thousands) | Amount | % of Total Loans | Amount | % of Total Loans | Amount | % of Total Loans | Amount | % of Total Loans | Amount | % of Total Loans | |||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | 100,856 | 11.2 | % | $ | 88,652 | 11.7 | % | $ | 102,197 | 17.1 | % | $ | 89,007 | 15.5 | % | $ | 87,082 | 17.0 | % | |||||||||||||||
Agricultural land and production | 14,956 | 1.7 | % | 25,509 | 3.4 | % | 30,472 | 5.1 | % | 39,140 | 6.8 | % | 31,649 | 6.1 | % | ||||||||||||||||||||
Total commercial | 115,812 | 12.9 | % | 114,161 | 15.1 | % | 132,669 | 22.2 | % | 128,147 | 22.3 | % | 118,731 | 23.1 | % | ||||||||||||||||||||
Real estate: | |||||||||||||||||||||||||||||||||||
Owner occupied | 204,452 | 22.7 | % | 191,665 | 25.3 | % | 168,910 | 28.2 | % | 176,804 | 30.9 | % | 156,781 | 30.6 | % | ||||||||||||||||||||
Real estate-construction and other land loans | 96,460 | 10.7 | % | 69,200 | 9.1 | % | 38,685 | 6.5 | % | 38,923 | 6.8 | % | 42,329 | 8.3 | % | ||||||||||||||||||||
Commercial real estate | 269,254 | 29.9 | % | 184,225 | 24.3 | % | 117,244 | 19.6 | % | 106,788 | 18.7 | % | 86,117 | 16.8 | % | ||||||||||||||||||||
Agricultural real estate | 76,081 | 8.4 | % | 86,761 | 11.5 | % | 74,867 | 12.5 | % | 57,501 | 10.0 | % | 44,164 | 8.6 | % | ||||||||||||||||||||
Other real estate | 31,220 | 3.5 | % | 18,945 | 2.7 | % | 10,520 | 1.8 | % | 6,611 | 1.2 | % | 4,548 | 0.9 | % | ||||||||||||||||||||
Total real estate | 677,467 | 75.2 | % | 550,796 | 72.9 | % | 410,226 | 68.6 | % | 386,627 | 67.6 | % | 333,939 | 65.2 | % | ||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||||||||||
Equity loans and lines of credit | 76,404 | 8.5 | % | 64,494 | 8.5 | % | 42,296 | 7.1 | % | 47,575 | 8.3 | % | 48,594 | 9.5 | % | ||||||||||||||||||||
Consumer and installment | 29,637 | 3.4 | % | 25,910 | 3.5 | % | 12,503 | 2.1 | % | 10,093 | 1.8 | % | 11,252 | 2.2 | % | ||||||||||||||||||||
Total consumer | 106,041 | 11.9 | % | 90,404 | 12.0 | % | 54,799 | 9.2 | % | 57,668 | 10.1 | % | 59,846 | 11.7 | % | ||||||||||||||||||||
Deferred loan fees, net | 1,359 | 1,267 | 417 | 146 | (159 | ) | |||||||||||||||||||||||||||||
Total gross loans (1) | 900,679 | 100.0 | % | 756,628 | 100.0 | % | 598,111 | 100.0 | % | 572,588 | 100.0 | % | 512,357 | 100.0 | % | ||||||||||||||||||||
Allowance for credit losses | (8,778 | ) | (9,326 | ) | (9,610 | ) | (8,308 | ) | (9,208 | ) | |||||||||||||||||||||||||
Total loans (1) | $ | 891,901 | $ | 747,302 | $ | 588,501 | $ | 564,280 | $ | 503,149 | |||||||||||||||||||||||||
(1) Includes nonaccrual loans of: | $ | 2,875 | $ | 2,180 | $ | 2,413 | $ | 14,052 | $ | 7,586 |
(In thousands) (net of deferred costs) | One Year or Less | After One Through Five Years | After Five Years | Total | ||||||||||||
Loan Maturities: | ||||||||||||||||
Commercial and agricultural | $ | 62,919 | $ | 23,060 | $ | 29,833 | $ | 115,812 | ||||||||
Real estate construction and other land loans | 87,124 | 5,347 | 3,989 | 96,460 | ||||||||||||
Other real estate | 45,190 | 86,795 | 449,022 | 581,007 | ||||||||||||
Consumer and installment | 9,822 | 12,023 | 84,196 | 106,041 | ||||||||||||
$ | 205,055 | $ | 127,225 | $ | 567,040 | $ | 899,320 | |||||||||
Sensitivity to Changes in Interest Rates: | ||||||||||||||||
Loans with fixed interest rates | $ | 79,586 | $ | 79,802 | $ | 105,032 | $ | 264,420 | ||||||||
Loans with floating interest rates (1) | 125,469 | 47,423 | 462,008 | 634,900 | ||||||||||||
$ | 205,055 | $ | 127,225 | $ | 567,040 | $ | 899,320 | |||||||||
(1) Includes floating rate loans which are currently at their floor rate in accordance with their respective loan agreement | $ | 9,838 | $ | 13,768 | $ | 276,408 | $ | 300,014 |
(As of December 31, Dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Nonaccrual Loans: | ||||||||||||||||||||
Commercial and industrial | $ | 356 | $ | 447 | $ | — | $ | 7,265 | $ | 335 | ||||||||||
Owner occupied real estate | — | 87 | 324 | 1,363 | 1,777 | |||||||||||||||
Real estate construction and other land loans | 1,397 | — | — | — | — | |||||||||||||||
Agricultural real estate | — | — | — | 360 | — | |||||||||||||||
Commercial real estate | 976 | 1,082 | 567 | 1,468 | 158 | |||||||||||||||
Equity loans and line of credit | 87 | 526 | 172 | 1,751 | 721 | |||||||||||||||
Consumer and installment | — | 18 | 13 | 19 | — | |||||||||||||||
Restructured loans (non-accruing): | ||||||||||||||||||||
Commercial and industrial | — | — | 29 | — | 1,192 | |||||||||||||||
Owner occupied | — | 20 | 23 | — | 384 | |||||||||||||||
Real estate construction and other land loans | — | — | — | 547 | 1,450 | |||||||||||||||
Equity loans and line of credit | 59 | — | 1,285 | 1,279 | 1,565 | |||||||||||||||
Consumer and Installment | — | — | — | — | 4 | |||||||||||||||
Total nonaccrual | 2,875 | 2,180 | 2,413 | 14,052 | 7,586 | |||||||||||||||
Accruing loans past due 90 days or more | — | — | — | — | — | |||||||||||||||
Total nonperforming loans | $ | 2,875 | $ | 2,180 | $ | 2,413 | $ | 14,052 | $ | 7,586 | ||||||||||
Interest foregone | $ | 210 | $ | 245 | $ | 340 | $ | 716 | $ | 661 | ||||||||||
Nonperforming loans to total loans | 0.32 | % | 0.29 | % | 0.40 | % | 2.45 | % | 1.48 | % | ||||||||||
Accruing loans past due 90 days or more | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Accruing troubled debt restructurings | $ | 3,491 | $ | 3,089 | $ | 4,286 | $ | 4,774 | $ | 5,771 | ||||||||||
Ratio of nonperforming loans to allowance for credit losses | 32.75 | % | 23.38 | % | 25.11 | % | 169.14 | % | 82.38 | % | ||||||||||
Loans considered to be impaired | $ | 6,366 | $ | 5,269 | $ | 6,699 | $ | 18,826 | $ | 13,357 | ||||||||||
Related allowance for credit losses on impaired loans | $ | 36 | $ | 307 | $ | 164 | $ | 612 | $ | 1,007 |
(In thousands) | Balances December 31, 2016 | Additions to Nonaccrual Loans | Net Pay Downs | Transfer to Foreclosed Collateral | Returns to Accrual Status | Charge Offs | Balances December 31, 2017 | |||||||||||||||||||||
Non-accrual loans: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | 447 | $ | 17 | $ | (98 | ) | $ | — | $ | — | $ | (10 | ) | $ | 356 | ||||||||||||
Real estate | 1,169 | — | (193 | ) | — | — | — | 976 | ||||||||||||||||||||
Real estate construction and land development | — | 1,494 | (97 | ) | — | — | — | 1,397 | ||||||||||||||||||||
Equity loans and lines of credit | 526 | 50 | (102 | ) | — | (240 | ) | (147 | ) | 87 | ||||||||||||||||||
Consumer | 18 | — | (13 | ) | — | — | (5 | ) | — | |||||||||||||||||||
Restructured loans (non-accruing): | ||||||||||||||||||||||||||||
Real estate | 20 | — | (1 | ) | — | — | (19 | ) | — | |||||||||||||||||||
Equity loans and lines of credit | — | 65 | (6 | ) | — | — | — | 59 | ||||||||||||||||||||
Total non-accrual | $ | 2,180 | $ | 1,626 | $ | (510 | ) | $ | — | $ | (240 | ) | $ | (181 | ) | $ | 2,875 |
(Dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Loans outstanding at December 31, | $ | 899,320 | $ | 755,361 | $ | 597,694 | $ | 572,442 | $ | 512,516 | ||||||||||
Average loans outstanding during the year | $ | 793,343 | $ | 646,573 | $ | 586,762 | $ | 539,529 | $ | 454,483 | ||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Balance at beginning of year | $ | 9,326 | $ | 9,610 | $ | 8,308 | $ | 9,208 | $ | 10,133 | ||||||||||
Deduct loans charged off: | ||||||||||||||||||||
Commercial and industrial | (197 | ) | (621 | ) | (802 | ) | (7,423 | ) | (713 | ) | ||||||||||
Agricultural production | (10 | ) | — | — | (1,722 | ) | — | |||||||||||||
Owner occupied | (22 | ) | — | — | (183 | ) | (281 | ) | ||||||||||||
Commercial real estate | — | — | — | — | (4 | ) | ||||||||||||||
Consumer loans | (235 | ) | (262 | ) | (159 | ) | (506 | ) | (448 | ) | ||||||||||
Total loans charged off | (464 | ) | (883 | ) | (961 | ) | (9,834 | ) | (1,446 | ) | ||||||||||
Add recoveries of loans previously charged off: | ||||||||||||||||||||
Commercial and industrial | 850 | 3,656 | 954 | 171 | 315 | |||||||||||||||
Agricultural production | 10 | 1,631 | 90 | — | — | |||||||||||||||
Owner occupied | 49 | — | — | 150 | — | |||||||||||||||
Real estate construction and other land loans | — | 702 | 32 | 364 | 16 | |||||||||||||||
Commercial real estate | 17 | 283 | — | — | — | |||||||||||||||
Consumer loans | 140 | 177 | 587 | 264 | 190 | |||||||||||||||
Total recoveries | 1,066 | 6,449 | 1,663 | 949 | 521 | |||||||||||||||
Net recoveries (charge offs) | 602 | 5,566 | 702 | (8,885 | ) | (925 | ) | |||||||||||||
(Reversal) Provision charged to credit losses | (1,150 | ) | (5,850 | ) | 600 | 7,985 | — | |||||||||||||
Balance at end of year | $ | 8,778 | $ | 9,326 | $ | 9,610 | $ | 8,308 | $ | 9,208 | ||||||||||
Allowance for credit losses as a percentage of outstanding loan balance | 0.98 | % | 1.23 | % | 1.61 | % | 1.45 | % | 1.80 | % | ||||||||||
Net recoveries (charge offs) to average loans outstanding | 0.08 | % | 0.86 | % | 0.12 | % | (1.65 | )% | (0.20 | )% |
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||||||||||
Loan Type (Dollars in thousands) | Amount | Percent of Loans in Each Category to Total Loans | Amount | Percent of Loans in Each Category to Total Loans | Amount | Percent of Loans in Each Category to Total Loans | Amount | Percent of Loans in Each Category to Total Loans | Amount | Percent of Loans in Each Category to Total Loans | |||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | 1,784 | 11.2 | % | $ | 1,884 | 11.7 | % | $ | 3,143 | 17.1 | % | $ | 2,753 | 15.5 | % | $ | 1,928 | 17.0 | % | |||||||||||||||
Agricultural land and production | 287 | 1.7 | % | 296 | 3.4 | % | 419 | 5.1 | % | 377 | 6.8 | % | 516 | 6.1 | % | ||||||||||||||||||||
Real estate: | |||||||||||||||||||||||||||||||||||
Owner occupied | 1,252 | 22.7 | % | 1,408 | 25.3 | % | 1,556 | 28.2 | % | 1,380 | 30.9 | % | 1,697 | 30.6 | % | ||||||||||||||||||||
Real estate construction and other land loans | 1,004 | 10.7 | % | 698 | 9.1 | % | 694 | 6.5 | % | 837 | 6.8 | % | 1,289 | 8.3 | % | ||||||||||||||||||||
Commercial real estate | 1,958 | 29.9 | % | 1,969 | 24.3 | % | 1,686 | 19.6 | % | 1,201 | 18.7 | % | 1,406 | 16.8 | % | ||||||||||||||||||||
Agricultural real estate | 1,441 | 8.4 | % | 1,969 | 11.5 | % | 1,149 | 12.5 | % | 564 | 10.0 | % | 672 | 8.6 | % | ||||||||||||||||||||
Other real estate | 140 | 3.5 | % | 156 | 2.7 | % | 119 | 1.8 | % | 76 | 1.2 | % | 110 | 0.9 | % | ||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||||||||||
Equity loans and lines of credit | 464 | 8.5 | % | 483 | 8.5 | % | 500 | 7.1 | % | 811 | 8.3 | % | 874 | 9.5 | % | ||||||||||||||||||||
Consumer and installment | 361 | 3.4 | % | 369 | 3.5 | % | 234 | 2.1 | % | 267 | 1.8 | % | 294 | 2.2 | % | ||||||||||||||||||||
Unallocated reserves | 87 | 94 | 110 | 42 | 422 | ||||||||||||||||||||||||||||||
Total allowance for credit losses | $ | 8,778 | 100 | % | $ | 9,326 | 100 | % | $ | 9,610 | 100 | % | $ | 8,308 | 100 | % | $ | 9,208 | 100 | % |
Years Ending December 31, | Estimated Core Deposit Intangible Amortization | |||
2018 | $ | 376 | ||
2019 | 376 | |||
2020 | 376 | |||
2021 | 376 | |||
2022 | 376 | |||
Thereafter | 1,147 | |||
Total | $ | 3,027 |
(Dollars in thousands) | December 31, 2017 | % of Total Deposits | Effective Rate | December 31, 2016 | % of Total Deposits | Effective Rate | ||||||||||||||
NOW accounts | $ | 296,406 | 20.8 | % | 0.12 | % | $ | 247,623 | 19.7 | % | 0.12 | % | ||||||||
MMA accounts | 299,638 | 21.0 | % | 0.08 | % | 250,749 | 19.9 | % | 0.05 | % | ||||||||||
Time deposits | 128,070 | 9.0 | % | 0.30 | % | 156,694 | 12.5 | % | 0.38 | % | ||||||||||
Savings deposits | 116,534 | 8.2 | % | 0.03 | % | 105,098 | 8.4 | % | 0.03 | % | ||||||||||
Total interest-bearing | 840,648 | 59.0 | % | 0.12 | % | 760,164 | 60.5 | % | 0.13 | % | ||||||||||
Non-interest bearing | 585,039 | 41.0 | % | 495,815 | 39.5 | % | ||||||||||||||
Total deposits | $ | 1,425,687 | 100.0 | % | $ | 1,255,979 | 100.0 | % |
2017 | 2016 | 2015 | |||||||||||||||||||
(Dollars in thousands) | Balance | Rate | Balance | Rate | Balance | Rate | |||||||||||||||
NOW accounts | $ | 271,456 | 0.12 | % | $ | 246,770 | 0.12 | % | $ | 222,839 | 0.10 | % | |||||||||
Money market accounts | $ | 264,581 | 0.08 | % | $ | 249,620 | 0.05 | % | $ | 227,743 | 0.06 | % | |||||||||
Time certificates of deposit | $ | 137,666 | 0.30 | % | $ | 139,656 | 0.38 | % | $ | 149,383 | 0.37 | % | |||||||||
Non-interest bearing demand | $ | 499,987 | — | $ | 417,151 | — | $ | 387,931 | — | ||||||||||||
Total deposits | $ | 1,284,305 | 0.08 | % | $ | 1,144,231 | 0.09 | % | $ | 1,065,798 | 0.09 | % |
(In thousands) | |||
Three months or less | $ | 30,844 | |
Over 3 through 6 months | 19,024 | ||
Over 6 through 12 months | 24,593 | ||
Over 12 months | 12,699 | ||
$ | 87,160 |
2017 | 2016 | 2015 | ||||||
Net income: | ||||||||
To average assets | 0.94 | % | 1.15 | % | 0.90 | % | ||
To average shareholders’ equity | 7.69 | % | 9.84 | % | 8.12 | % | ||
Dividends declared per share to net income per share | 23.53 | % | 19.20 | % | 18.00 | % | ||
Average shareholders’ equity to average assets | 12.23 | % | 11.68 | % | 11.05 | % |
(Dollars in thousands) | Actual Ratio | Minimum regulatory requirement (1) | ||||||||||||
December 31, 2017 | Amount | Ratio | Amount | Ratio | ||||||||||
Tier 1 Leverage Ratio | $ | 153,676 | 9.71 | % | $ | 63,338 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 149,186 | 12.90 | % | $ | 52,081 | 5.75 | % | ||||||
Tier 1 Risk-Based Capital Ratio | $ | 153,676 | 13.28 | % | $ | 69,441 | 7.25 | % | ||||||
Total Risk-Based Capital Ratio | $ | 162,780 | 14.07 | % | $ | 92,588 | 9.25 | % | ||||||
December 31, 2016 | ||||||||||||||
Tier 1 Leverage Ratio | $ | 122,601 | 8.75 | % | $ | 56,057 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 120,080 | 12.48 | % | $ | 43,426 | 5.13 | % | ||||||
Tier 1 Risk-Based Capital Ratio | $ | 122,601 | 12.74 | % | $ | 57,901 | 6.63 | % | ||||||
Total Risk-Based Capital Ratio | $ | 132,052 | 13.72 | % | $ | 77,202 | 8.63 | % | ||||||
(1) The 2017 and 2016 minimum regulatory requirement threshold includes the capital conservation buffer of 1.250% and 0.625%, respectively. These ratios are not reflected on a fully phased-in basis, which will occur in January 2019. |
(Dollars in thousands) | Actual Ratio | Minimum regulatory requirement (1) | ||||||||||||
December 31, 2017 | Amount | Ratio | Amount | Ratio | ||||||||||
Tier 1 Leverage Ratio | $ | 149,779 | 9.46 | % | $ | 63,332 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 149,779 | 12.96 | % | $ | 52,040 | 5.75 | % | ||||||
Tier 1 Risk-Based Capital Ratio | $ | 149,779 | 12.96 | % | $ | 69,387 | 7.25 | % | ||||||
Total Risk-Based Capital Ratio | $ | 158,882 | 13.74 | % | $ | 92,516 | 9.25 | % | ||||||
December 31, 2016 | ||||||||||||||
Tier 1 Leverage Ratio | $ | 121,079 | 8.64 | % | $ | 56,064 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 121,079 | 12.59 | % | $ | 43,383 | 5.13 | % | ||||||
Tier 1 Risk-Based Capital Ratio | $ | 121,079 | 12.59 | % | $ | 57,845 | 6.63 | % | ||||||
Total Risk-Based Capital Ratio | $ | 130,530 | 13.57 | % | $ | 77,126 | 8.63 | % | ||||||
(1) The 2017 and 2016 minimum regulatory requirement threshold includes the capital conservation buffer of 1.250% and 0.625%, respectively. These ratios are not reflected on a fully phased-in basis, which will occur in January 2019. |
Credit Lines (In thousands) | December 31, 2017 | December 31, 2016 | ||||||
Unsecured Credit Lines (interest rate varies with market): | ||||||||
Credit limit | $ | 40,000 | $ | 40,000 | ||||
Balance outstanding | $ | — | $ | 400 | ||||
Federal Home Loan Bank (interest rate at prevailing interest rate): | ||||||||
Credit limit | 234,689 | 174,576 | ||||||
Balance outstanding | $ | — | $ | — | ||||
Collateral pledged | $ | 357,393 | $ | 271,123 | ||||
Fair value of collateral | $ | 316,160 | $ | 237,879 | ||||
Federal Reserve Bank (interest rate at prevailing discount interest rate): | ||||||||
Credit limit | $ | 6,740 | $ | 9,102 | ||||
Balance outstanding | $ | — | $ | — | ||||
Collateral pledged | $ | 7,431 | $ | 9,315 | ||||
Fair value of collateral | $ | 7,437 | $ | 9,277 |
(In thousands) | Less Than One Year | One to Three Years | Three to Five Years | After Five Years | Total | ||||||||||||||
Deposits | $ | 1,404,965 | $ | 16,315 | $ | 3,288 | $ | 1,119 | $ | 1,425,687 | |||||||||
Subordinated debentures | — | — | — | 5,155 | 5,155 | ||||||||||||||
Operating leases | 2,511 | 3,442 | 2,452 | 4,316 | 12,721 | ||||||||||||||
Total | $ | 1,407,476 | $ | 19,757 | $ | 5,740 | $ | 10,590 | $ | 1,443,563 |
Hypothetical Change in Rates (Dollars in thousands) | Projected Net Interest Income | $ Change from Rates at December 31, 2017 | % Change from Rates at December 31, 2017 | ||||||||
Up 400 bps | $ | 71,988 | $ | 7,809 | 12.17 | % | |||||
Up 300 bps | 69,499 | 5,320 | 8.29 | % | |||||||
Up 200 bps | 67,711 | 3,532 | 5.50 | % | |||||||
Up 100 bps | 66,229 | 2,050 | 3.19 | % | |||||||
Unchanged | 64,179 | — | — | ||||||||
Down 100 bps | 61,173 | (3,006 | ) | (4.68 | )% |
December 31, 2017 | December 31, 2016 | |||||||||||||
Rate Type (Dollars in thousands) | Balance | Percent of Total | Balance | Percent of Total | ||||||||||
Variable rate | $ | 634,900 | 70.60 | % | $ | 571,325 | 75.64 | % | ||||||
Fixed rate | 264,420 | 29.40 | % | 184,036 | 24.36 | % | ||||||||
Total gross loans | $ | 899,320 | 100.00 | % | $ | 755,361 | 100.00 | % |
December 31, 2017 | December 31, 2016 | |||||||||||||
Repricing (Dollars in thousands) | Balance | Percent of Total | Balance | Percent of Total | ||||||||||
< 1 Year | $ | 318,985 | 35.47 | % | $ | 309,397 | 40.95 | % | ||||||
1-3 Years | 177,545 | 19.74 | % | 153,680 | 20.35 | % | ||||||||
3-5 Years | 200,471 | 22.29 | % | 183,834 | 24.34 | % | ||||||||
> 5 Years | 202,319 | 22.50 | % | 108,450 | 14.36 | % | ||||||||
Total gross loans | $ | 899,320 | 100.00 | % | $ | 755,361 | 100.00 | % |
ITEM 8 - | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
/s/ Crowe Horwath LLP | |
We have served as the Company’s auditor since 2011. | |
Sacramento, California | |
March 14, 2018 |
(In thousands, except share amounts) | 2017 | 2016 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 38,286 | $ | 28,185 | ||||
Interest-earning deposits in other banks | 62,080 | 10,368 | ||||||
Federal funds sold | 17 | 15 | ||||||
Total cash and cash equivalents | 100,383 | 38,568 | ||||||
Available-for-sale investment securities (Amortized cost of $538,692 at December 31, 2017 and $548,640 at December 31, 2016) | 542,704 | 547,749 | ||||||
Loans, less allowance for credit losses of $8,778 at December 31, 2017 and $9,326 at December 31, 2016 | 891,901 | 747,302 | ||||||
Bank premises and equipment, net | 9,398 | 9,407 | ||||||
Bank owned life insurance | 27,807 | 23,189 | ||||||
Federal Home Loan Bank stock | 6,843 | 5,594 | ||||||
Goodwill | 53,777 | 40,231 | ||||||
Core deposit intangibles | 3,027 | 1,383 | ||||||
Accrued interest receivable and other assets | 25,815 | 29,900 | ||||||
Total assets | $ | 1,661,655 | $ | 1,443,323 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Non-interest bearing | $ | 585,039 | $ | 495,815 | ||||
Interest bearing | 840,648 | 760,164 | ||||||
Total deposits | 1,425,687 | 1,255,979 | ||||||
Short-term borrowings | — | 400 | ||||||
Junior subordinated deferrable interest debentures | 5,155 | 5,155 | ||||||
Accrued interest payable and other liabilities | 21,254 | 17,756 | ||||||
Total liabilities | 1,452,096 | 1,279,290 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock, no par value, $1,000 per share liquidation preference; 10,000,000 shares authorized, none issued and outstanding | — | — | ||||||
Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 13,696,722 at December 31, 2017 and 12,143,815 at December 31, 2016 | 103,314 | 71,645 | ||||||
Retained earnings | 103,419 | 92,904 | ||||||
Accumulated other comprehensive (loss) income, net of tax | 2,826 | (516 | ) | |||||
Total shareholders’ equity | 209,559 | 164,033 | ||||||
Total liabilities and shareholders’ equity | $ | 1,661,655 | $ | 1,443,323 |
(In thousands, except per share amounts) | 2017 | 2016 | 2015 | |||||||||
Interest income: | ||||||||||||
Interest and fees on loans | $ | 43,534 | $ | 34,051 | $ | 30,504 | ||||||
Interest on deposits in other banks | 424 | 289 | 210 | |||||||||
Interest and dividends on investment securities: | ||||||||||||
Taxable | 6,526 | 5,876 | 4,793 | |||||||||
Exempt from Federal income taxes | 6,892 | 6,460 | 6,315 | |||||||||
Total interest income | 57,376 | 46,676 | 41,822 | |||||||||
Interest expense: | ||||||||||||
Interest on deposits | 969 | 975 | 948 | |||||||||
Interest on junior subordinated deferrable interest debentures | 147 | 121 | 99 | |||||||||
Other | 21 | — | — | |||||||||
Total interest expense | 1,137 | 1,096 | 1,047 | |||||||||
Net interest income before provision for credit losses | 56,239 | 45,580 | 40,775 | |||||||||
(Reversal of) Provision for credit losses | (1,150 | ) | (5,850 | ) | 600 | |||||||
Net interest income after provision for credit losses | 57,389 | 51,430 | 40,175 | |||||||||
Non-interest income: | ||||||||||||
Service charges | 3,053 | 2,849 | 2,970 | |||||||||
Appreciation in cash surrender value of bank owned life insurance | 621 | 558 | 596 | |||||||||
Interchange fees | 1,458 | 1,228 | 1,197 | |||||||||
Loan placement fees | 706 | 1,083 | 1,042 | |||||||||
Net realized gains on sales and calls of investment securities | 2,802 | 1,920 | 1,495 | |||||||||
Other-than-temporary impairment loss on investment securities | — | (136 | ) | — | ||||||||
Federal Home Loan Bank dividends | 443 | 630 | 580 | |||||||||
Other income | 1,753 | 1,459 | 1,507 | |||||||||
Total non-interest income | 10,836 | 9,591 | 9,387 | |||||||||
Non-interest expenses: | ||||||||||||
Salaries and employee benefits | 24,738 | 21,881 | 20,836 | |||||||||
Occupancy and equipment | 5,186 | 4,754 | 4,669 | |||||||||
Regulatory assessments | 652 | 642 | 1,059 | |||||||||
Data processing expense | 1,740 | 1,707 | 1,139 | |||||||||
Professional services | 1,509 | 1,258 | 1,504 | |||||||||
ATM/Debit card expenses | 750 | 633 | 548 | |||||||||
License & maintenance contracts | 818 | 531 | 520 | |||||||||
Directors’ expenses | 597 | 530 | 439 | |||||||||
Advertising | 638 | 576 | 608 | |||||||||
Internet banking expenses | 705 | 678 | 709 | |||||||||
Acquisition and integration expenses | 1,828 | 1,782 | — | |||||||||
Amortization of core deposit intangibles | 234 | 149 | 320 | |||||||||
Other expense | 5,011 | 3,801 | 3,665 | |||||||||
Total non-interest expenses | 44,406 | 38,922 | 36,016 | |||||||||
Income before provision for income taxes | 23,819 | 22,099 | 13,546 | |||||||||
Provision for income taxes | 9,793 | 6,917 | 2,582 | |||||||||
Net income available to common shareholders | $ | 14,026 | $ | 15,182 | $ | 10,964 | ||||||
Basic earnings per common share | $ | 1.12 | $ | 1.34 | $ | 1.00 | ||||||
Diluted earnings per common share | $ | 1.10 | $ | 1.33 | $ | 1.00 | ||||||
Cash dividends per common share | $ | 0.24 | $ | 0.24 | $ | 0.18 |
(In thousands) | 2017 | 2016 | 2015 | |||||||||
Net income | $ | 14,026 | $ | 15,182 | $ | 10,964 | ||||||
Other Comprehensive Income (Loss): | ||||||||||||
Unrealized gains (losses) on securities: | ||||||||||||
Unrealized holdings gains (losses) arising during the period | 7,705 | (9,924 | ) | 59 | ||||||||
Less: reclassification for net gains included in net income | 2,802 | 1,224 | 1,481 | |||||||||
Less: reclassification for other-than-temporary impairment loss included in net income | — | (136 | ) | — | ||||||||
Transfer of investment securities from held-to-maturity to available-for-sale | — | 2,647 | — | |||||||||
Amortization of net unrealized gains transferred | — | (64 | ) | (78 | ) | |||||||
Other comprehensive income (loss), before tax | 4,903 | (8,429 | ) | (1,500 | ) | |||||||
Tax (expense) benefit related to items of other comprehensive income | (2,062 | ) | 3,451 | 585 | ||||||||
Total other comprehensive income (loss) | 2,841 | (4,978 | ) | (915 | ) | |||||||
Comprehensive income | $ | 16,867 | $ | 10,204 | $ | 10,049 |
Common Stock | Accumulated Other Comprehensive Income (Loss) (Net of Taxes) | Total Shareholders’ Equity | |||||||||||||||||
Retained Earnings | |||||||||||||||||||
(In thousands, except share amounts) | Shares | Amount | |||||||||||||||||
Balance, January 1, 2015 | 10,980,440 | $ | 54,216 | $ | 71,452 | $ | 5,377 | $ | 131,045 | ||||||||||
Net income | — | — | 10,964 | — | 10,964 | ||||||||||||||
Other comprehensive loss | — | — | — | (915 | ) | (915 | ) | ||||||||||||
Restricted stock granted, forfeited and related tax benefit | 7,263 | (96 | ) | — | — | (96 | ) | ||||||||||||
Cash dividend ($0.18 per common share) | — | — | (1,979 | ) | — | (1,979 | ) | ||||||||||||
Stock-based compensation expense | — | 238 | — | — | 238 | ||||||||||||||
Stock options exercised and related tax benefit | 9,070 | 66 | — | — | 66 | ||||||||||||||
Balance, December 31, 2015 | 10,996,773 | 54,424 | 80,437 | 4,462 | 139,323 | ||||||||||||||
Net income | — | — | 15,182 | — | 15,182 | ||||||||||||||
Other comprehensive loss | — | — | — | (4,978 | ) | (4,978 | ) | ||||||||||||
Restricted stock granted, forfeited and related tax benefit | 52,911 | (2 | ) | — | — | (2 | ) | ||||||||||||
Stock issued for acquisition | 1,058,851 | 16,678 | — | — | 16,678 | ||||||||||||||
Stock-based compensation expense | — | 284 | — | — | 284 | ||||||||||||||
Cash dividend ($0.24 per common share) | — | — | (2,715 | ) | — | (2,715 | ) | ||||||||||||
Stock options exercised and related tax benefit | 35,280 | 261 | — | — | 261 | ||||||||||||||
Balance, December 31, 2016 | 12,143,815 | 71,645 | 92,904 | (516 | ) | 164,033 | |||||||||||||
Net income | — | — | 14,026 | — | 14,026 | ||||||||||||||
Other comprehensive income | — | — | — | 2,841 | 2,841 | ||||||||||||||
Reclassification associated with the adoption of ASU 2018-02 | — | — | (501 | ) | 501 | — | |||||||||||||
Stock issued for acquisition | 1,276,888 | 28,405 | — | — | 28,405 | ||||||||||||||
Restricted stock granted, (forfeited) and related tax benefit | (2,360 | ) | — | — | — | — | |||||||||||||
Stock issued under employee stock purchase plan | 2,441 | 45 | — | — | 45 | ||||||||||||||
Stock-based compensation expense | — | 384 | — | — | 384 | ||||||||||||||
Cash dividend ($0.24 per common share) | — | — | (3,010 | ) | — | (3,010 | ) | ||||||||||||
Stock options exercised and related tax benefit | 275,938 | 2,835 | — | — | 2,835 | ||||||||||||||
Balance, December 31, 2017 | 13,696,722 | $ | 103,314 | $ | 103,419 | $ | 2,826 | $ | 209,559 |
CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2017, 2016, and 2015 | ||||||||||||
(In thousands) | 2017 | 2016 | 2015 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 14,026 | $ | 15,182 | $ | 10,964 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Net increase in deferred loan costs | (92 | ) | (851 | ) | (270 | ) | ||||||
Depreciation | 1,429 | 1,320 | 1,392 | |||||||||
Accretion | (766 | ) | (1,142 | ) | (1,196 | ) | ||||||
Amortization | 8,519 | 7,912 | 8,024 | |||||||||
Stock-based compensation | 384 | 284 | 238 | |||||||||
Excess tax benefit from exercise of stock options | — | (30 | ) | (6 | ) | |||||||
(Reversal of) provision for credit losses | (1,150 | ) | (5,850 | ) | 600 | |||||||
Other than temporary impairment losses on investment securities | — | 136 | — | |||||||||
Net realized gains on sales and calls of available-for-sale investment securities | (2,802 | ) | (1,224 | ) | (1,481 | ) | ||||||
Net realized gains on sales or calls of held-to-maturity investment securities | — | (696 | ) | (14 | ) | |||||||
Net loss on sale and disposal of equipment | — | 4 | 6 | |||||||||
Net gain on sale of other real estate owned | — | — | (11 | ) | ||||||||
Increase in bank owned life insurance, net of expenses | (621 | ) | (558 | ) | (596 | ) | ||||||
Net gain on bank owned life insurance | — | (190 | ) | (345 | ) | |||||||
Net (increase) decrease in accrued interest receivable and other assets | (2,263 | ) | (4,711 | ) | 2,109 | |||||||
Net increase (decrease) in accrued interest payable and other liabilities | 1,370 | 821 | (963 | ) | ||||||||
Benefit (provision) for deferred income taxes | 7,184 | 2,592 | (933 | ) | ||||||||
Net cash provided by operating activities | 25,218 | 12,999 | 17,518 | |||||||||
Cash Flows From Investing Activities: | ||||||||||||
Net cash and cash equivalents acquired in acquisition | 26,279 | 13,241 | — | |||||||||
Purchases of available-for-sale investment securities | (226,740 | ) | (278,664 | ) | (198,851 | ) | ||||||
Proceeds from sales or calls of available-for-sale investment securities | 228,405 | 167,163 | 93,167 | |||||||||
Proceeds from sales or calls of held-to-maturity investment securities | — | 9,257 | 810 | |||||||||
Proceeds from maturity and principal repayment of available-for-sale investment securities | 44,956 | 50,531 | 53,593 | |||||||||
Net increase in loans | (25,542 | ) | (29,930 | ) | (24,776 | ) | ||||||
Proceeds from sale of other real estate owned | — | — | 359 | |||||||||
Purchases of premises and equipment | (859 | ) | (861 | ) | (741 | ) | ||||||
Purchases of bank owned life insurance | — | — | (325 | ) | ||||||||
FHLB stock purchased | — | — | (32 | ) | ||||||||
Proceeds from bank owned life insurance | — | 928 | 1,365 | |||||||||
Proceeds from sale of premises and equipment | — | 7 | — | |||||||||
Net cash provided by (used in) investing activities | 46,499 | (68,328 | ) | (75,431 | ) | |||||||
Cash Flows From Financing Activities: | ||||||||||||
Net increase in demand, interest-bearing and savings deposits | 45,672 | 26,372 | 90,732 | |||||||||
Net decrease in time deposits | (48,044 | ) | (25,038 | ) | (13,617 | ) | ||||||
Repayments of short-term borrowings to Federal Home Loan Bank | (7,000 | ) | — | — | ||||||||
Proceeds of borrowings from other financial institutions | — | 400 | — | |||||||||
Repayments of borrowings from other financial institutions | (400 | ) | — | — | ||||||||
Proceeds from stock issued under employee stock purchase plan | 45 | — | — | |||||||||
Proceeds from exercise of stock options | 2,835 | 231 | 60 | |||||||||
Excess tax benefit from exercise of stock options | — | 30 | 6 | |||||||||
Cash dividend payments on common stock | (3,010 | ) | (2,715 | ) | (1,979 | ) | ||||||
Net cash (used in) provided by financing activities | (9,902 | ) | (720 | ) | 75,202 | |||||||
Increase (decrease) in cash and cash equivalents | 61,815 | (56,049 | ) | 17,289 | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 38,568 | 94,617 | 77,328 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 100,383 | $ | 38,568 | $ | 94,617 | ||||||
CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) For the Years Ended December 31, 2017, 2016, and 2015 | ||||||||||||
(In thousands) | 2017 | 2016 | 2015 | |||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
Cash paid during the year for: | ||||||||||||
Interest | $ | 1,171 | $ | 1,053 | $ | 1,059 | ||||||
Income taxes | $ | 4,720 | $ | 5,840 | $ | 1,865 | ||||||
Non-cash investing and financing activities: | ||||||||||||
Transfer of securities from held-to-maturity to available-for-sale | $ | — | $ | 23,131 | $ | — | ||||||
Unrealized gain on transfer of securities from held-to-maturity to available-for-sale | $ | — | $ | 526 | $ | — | ||||||
Foreclosure of loan collateral and recognition of other real estate owned | $ | — | $ | — | $ | 227 | ||||||
Transfer of loans to other assets | $ | — | $ | 363 | $ | — | ||||||
Assumption of debt related to foreclosure of other real estate owned | $ | — | $ | — | $ | 121 | ||||||
Common stock issued in acquisitions | $ | 28,405 | $ | 16,678 | $ | — |
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
• | Available-for-sale securities, reported at fair value, with unrealized gains and losses excluded from earnings and reported, net of taxes, as accumulated other comprehensive income (loss) within shareholders’ equity. |
• | Held-to-maturity securities, which management has the positive intent and ability to hold to maturity, reported at amortized cost, adjusted for the accretion of discounts and amortization of premiums. |
Merger consideration: | |||
Common stock issued | $ | 28,475 | |
Fair Value of Total Consideration Transferred | $ | 28,475 | |
Recognized amounts of identifiable assets acquired and liabilities assumed: | |||
Cash and cash equivalents | $ | 26,279 | |
Loans, net | 117,815 | ||
Investments | 41,280 | ||
Core deposit intangible | 1,879 | ||
Premises and equipment | 561 | ||
Federal Home Loan Bank stock | 1,559 | ||
Deferred taxes and taxes receivable | 2,186 | ||
Bank owned life insurance | 3,997 | ||
Other assets | 592 | ||
Total assets acquired | 196,148 | ||
Deposits | 171,948 | ||
Deposit premium | 132 | ||
Short-term borrowings - Federal Home Loan Bank | 7,000 | ||
Other liabilities | 2,059 | ||
Total liabilities assumed | 181,139 | ||
Total identifiable net assets | 15,009 | ||
Goodwill | $ | 13,466 |
Merger consideration: | |||
Cash | $ | 9,468 | |
Common stock issued | 16,793 | ||
Fair Value of Total Consideration Transferred | $ | 26,261 | |
Recognized amounts of identifiable assets acquired and liabilities assumed: | |||
Cash and cash equivalents | $ | 22,709 | |
Loans, net | 122,533 | ||
Core deposit intangible | 508 | ||
Premises and equipment | 586 | ||
Federal Home Loan Bank stock | 771 | ||
Deferred taxes and taxes receivable | 4,417 | ||
Bank owned life insurance | 2,664 | ||
Other assets | 966 | ||
Total assets acquired | 155,154 | ||
Deposits | 138,236 | ||
Deposit premium | 142 | ||
Other liabilities | 829 | ||
Total liabilities assumed | 139,207 | ||
Total identifiable net assets | 15,947 | ||
Goodwill | $ | 10,314 |
For the Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Net interest income | $ | 61,059 | $ | 56,531 | $ | 52,413 | ||||||
Provision for (reversal of) credit losses | (1,150 | ) | (5,800 | ) | 570 | |||||||
Non-interest income | 11,240 | 10,205 | 10,063 | |||||||||
Non-interest expense | 51,415 | 52,131 | 45,692 | |||||||||
Income before provision for income taxes | 22,034 | 20,405 | 16,214 | |||||||||
Provision for income taxes | 9,168 | 6,381 | 3,669 | |||||||||
Net income | $ | 12,866 | $ | 14,024 | $ | 12,545 | ||||||
Net income available to common shareholders | $ | 12,866 | $ | 14,024 | $ | 12,545 | ||||||
Basic earnings per common share | $ | 1.03 | $ | 1.24 | $ | 1.15 | ||||||
Diluted earnings per common share | $ | 1.01 | $ | 1.23 | $ | 1.14 |
3. | FAIR VALUE MEASUREMENTS |
December 31, 2017 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 38,286 | $ | 38,286 | $ | — | $ | — | $ | 38,286 | ||||||||||
Interest-earning deposits in other banks | 62,080 | 62,080 | — | — | 62,080 | |||||||||||||||
Federal funds sold | 17 | 17 | — | — | 17 | |||||||||||||||
Available-for-sale investment securities | 542,704 | 7,423 | 535,281 | — | 542,704 | |||||||||||||||
Loans, net | 891,901 | — | — | 899,191 | 899,191 | |||||||||||||||
Federal Home Loan Bank stock | 6,843 | N/A | N/A | N/A | N/A | |||||||||||||||
Accrued interest receivable | 7,168 | 57 | 3,256 | 3,855 | 7,168 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 1,425,687 | 1,296,048 | 127,966 | — | 1,424,014 | |||||||||||||||
Short-term borrowings | — | — | — | — | — | |||||||||||||||
Junior subordinated deferrable interest debentures | 5,155 | — | — | 3,550 | 3,550 | |||||||||||||||
Accrued interest payable | 110 | — | 72 | 38 | 110 |
December 31, 2016 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 28,185 | $ | 28,185 | $ | — | $ | — | $ | 28,185 | ||||||||||
Interest-earning deposits in other banks | 10,368 | 10,368 | — | — | 10,368 | |||||||||||||||
Federal funds sold | 15 | 15 | — | — | 15 | |||||||||||||||
Available-for-sale investment securities | 547,749 | 7,416 | 540,333 | — | 547,749 | |||||||||||||||
Held-to-maturity investment securities | — | — | — | — | — | |||||||||||||||
Loans, net | 747,302 | — | — | 761,023 | 761,023 | |||||||||||||||
Federal Home Loan Bank stock | 5,594 | N/A | N/A | N/A | N/A | |||||||||||||||
Accrued interest receivable | 7,885 | 26 | 4,517 | 3,342 | 7,885 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 1,255,979 | 1,099,200 | 156,711 | — | 1,255,911 | |||||||||||||||
Short-term borrowings | 400 | — | 400 | — | 400 | |||||||||||||||
Junior subordinated deferrable interest debentures | 5,155 | — | — | 3,235 | 3,235 | |||||||||||||||
Accrued interest payable | 144 | — | 111 | 33 | 144 |
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Available-for-sale investment securities | ||||||||||||||||
Debt Securities: | ||||||||||||||||
U.S. Government agencies | $ | 66,587 | $ | — | $ | 66,587 | $ | — | ||||||||
Obligations of states and political subdivisions | 143,105 | — | 143,105 | — | ||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 234,908 | — | 234,908 | — | ||||||||||||
Private label residential mortgage and asset backed securities | 90,681 | — | 90,681 | — | ||||||||||||
Other equity securities | 7,423 | 7,423 | — | — | ||||||||||||
Total assets measured at fair value on a recurring basis | $ | 542,704 | $ | 7,423 | $ | 535,281 | $ | — |
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Other repossessed assets | $ | 70 | $ | — | $ | — | $ | 70 | ||||||||
Total assets measured at fair value on a non-recurring basis | $ | 70 | $ | — | $ | — | $ | 70 |
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Available-for-sale securities | ||||||||||||||||
Debt Securities: | ||||||||||||||||
U.S. Government agencies | $ | 68,970 | $ | — | $ | 68,970 | $ | — | ||||||||
Obligations of states and political subdivisions | 290,299 | — | 290,299 | — | ||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 178,221 | — | 178,221 | — | ||||||||||||
Private label residential mortgage and asset backed securities | 2,843 | — | 2,843 | — | ||||||||||||
Other equity securities | 7,416 | 7,416 | — | — | ||||||||||||
Total assets measured at fair value on a recurring basis | $ | 547,749 | $ | 7,416 | $ | 540,333 | $ | — |
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Impaired loans: | ||||||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | $ | 47 | $ | — | $ | — | $ | 47 | ||||||||
Total consumer | 47 | — | — | 47 | ||||||||||||
Total impaired loans | $ | 47 | $ | — | $ | — | $ | 47 | ||||||||
Other repossessed assets | $ | 362 | $ | — | $ | — | $ | 362 | ||||||||
Total assets measured at fair value on a non-recurring basis | $ | 409 | $ | — | $ | — | $ | 409 |
4. | INVESTMENT SECURITIES |
December 31, 2017 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Available-for-Sale Securities | |||||||||||||||
Debt Securities: | |||||||||||||||
U.S. Government agencies | $ | 65,994 | $ | 667 | $ | (74 | ) | $ | 66,587 | ||||||
Obligations of states and political subdivisions | 136,955 | 6,240 | (90 | ) | 143,105 | ||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 237,210 | 601 | (2,903 | ) | 234,908 | ||||||||||
Private label mortgage and asset backed securities | 91,033 | 924 | (1,276 | ) | 90,681 | ||||||||||
Other equity securities | 7,500 | — | (77 | ) | 7,423 | ||||||||||
$ | 538,692 | $ | 8,432 | $ | (4,420 | ) | $ | 542,704 |
December 31, 2016 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Available-for-Sale Securities | |||||||||||||||
Debt Securities: | |||||||||||||||
U.S. Government agencies | $ | 69,005 | $ | 242 | $ | (277 | ) | $ | 68,970 | ||||||
Obligations of states and political subdivisions | 288,543 | 6,109 | (4,353 | ) | 290,299 | ||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 181,785 | 484 | (4,048 | ) | 178,221 | ||||||||||
Private label mortgage and asset backed securities | 1,807 | 1,036 | — | 2,843 | |||||||||||
Other equity securities | 7,500 | — | (84 | ) | 7,416 | ||||||||||
` | $ | 548,640 | $ | 7,871 | $ | (8,762 | ) | $ | 547,749 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Available-for-Sale Securities | ||||||||||||
Proceeds from sales or calls | $ | 228,405 | $ | 167,163 | $ | 93,167 | ||||||
Gross realized gains from sales or calls | $ | 4,701 | $ | 2,223 | $ | 1,715 | ||||||
Gross realized losses from sales or calls | $ | (1,899 | ) | $ | (999 | ) | $ | (234 | ) | |||
Held-to-Maturity Securities | ||||||||||||
Proceeds from sales and calls | $ | — | $ | 9,257 | $ | 810 | ||||||
Gross realized gains from sales or calls | $ | — | $ | 696 | $ | 14 |
December 31, 2017 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
Available-for-Sale Securities | |||||||||||||||||||||||
Debt Securities: | |||||||||||||||||||||||
U.S. Government agencies | $ | 8,201 | $ | (47 | ) | $ | 6,741 | $ | (27 | ) | $ | 14,942 | $ | (74 | ) | ||||||||
Obligations of states and political subdivisions | 1,627 | (3 | ) | 3,357 | (87 | ) | 4,984 | (90 | ) | ||||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 82,604 | (822 | ) | 64,488 | (2,081 | ) | 147,092 | (2,903 | ) | ||||||||||||||
Private label residential mortgage and asset backed securities | 88,312 | (1,276 | ) | — | — | 88,312 | (1,276 | ) | |||||||||||||||
Other equity securities | 7,423 | (77 | ) | — | — | 7,423 | (77 | ) | |||||||||||||||
$ | 188,167 | $ | (2,225 | ) | $ | 74,586 | $ | (2,195 | ) | $ | 262,753 | $ | (4,420 | ) |
December 31, 2016 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
Available-for-Sale Securities | |||||||||||||||||||||||
Debt Securities: | |||||||||||||||||||||||
U.S. Government agencies | $ | 34,586 | $ | (198 | ) | $ | 10,438 | $ | (79 | ) | $ | 45,024 | $ | (277 | ) | ||||||||
Obligations of states and political subdivisions | 122,522 | (4,353 | ) | — | — | 122,522 | (4,353 | ) | |||||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 118,719 | (3,866 | ) | 7,666 | (182 | ) | 126,385 | (4,048 | ) | ||||||||||||||
Other equity securities | 7,416 | (84 | ) | — | — | 7,416 | (84 | ) | |||||||||||||||
$ | 283,243 | $ | (8,501 | ) | $ | 18,104 | $ | (261 | ) | $ | 301,347 | $ | (8,762 | ) |
Years ended December 31, | ||||||||
2017 | 2016 | |||||||
Beginning balance of credit losses recognized | $ | 874 | $ | 747 | ||||
Amounts related to credit loss for which an OTTI charge was not previously recognized | — | 136 | ||||||
Realized losses for securities sold | — | (9 | ) | |||||
Ending balance of credit losses recognized | $ | 874 | $ | 874 |
December 31, 2017 | December 31, 2016 | |||||||||||||||
Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | |||||||||||||
Within one year | $ | 1,893 | $ | 1,914 | $ | — | $ | — | ||||||||
After one year through five years | 7,149 | 7,316 | 15,145 | 15,484 | ||||||||||||
After five years through ten years | 22,043 | 22,696 | 35,667 | 35,614 | ||||||||||||
After ten years | 105,870 | 111,179 | 237,731 | 239,201 | ||||||||||||
136,955 | 143,105 | 288,543 | 290,299 | |||||||||||||
Investment securities not due at a single maturity date: | ||||||||||||||||
U.S. Government agencies | 65,994 | 66,587 | 69,005 | 68,970 | ||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 237,210 | 234,908 | 181,785 | 178,221 | ||||||||||||
Private label mortgage and asset backed securities | 91,033 | 90,681 | 1,807 | 2,843 | ||||||||||||
Other equity securities | 7,500 | 7,423 | 7,500 | 7,416 | ||||||||||||
$ | 538,692 | $ | 542,704 | $ | 548,640 | $ | 547,749 |
Loan Type | December 31, 2017 | % of Total loans | December 31, 2016 | % of Total loans | ||||||||||
Commercial: | ||||||||||||||
Commercial and industrial | $ | 100,856 | 11.2 | % | $ | 88,652 | 11.7 | % | ||||||
Agricultural land and production | 14,956 | 1.7 | % | 25,509 | 3.4 | % | ||||||||
Total commercial | 115,812 | 12.9 | % | 114,161 | 15.1 | % | ||||||||
Real estate: | ||||||||||||||
Owner occupied | 204,452 | 22.7 | % | 191,665 | 25.3 | % | ||||||||
Real estate construction and other land loans | 96,460 | 10.7 | % | 69,200 | 9.1 | % | ||||||||
Commercial real estate | 269,254 | 29.9 | % | 184,225 | 24.3 | % | ||||||||
Agricultural real estate | 76,081 | 8.4 | % | 86,761 | 11.5 | % | ||||||||
Other real estate | 31,220 | 3.5 | % | 18,945 | 2.7 | % | ||||||||
677,467 | 75.2 | % | 550,796 | 72.9 | % | |||||||||
Consumer: | ||||||||||||||
Equity loans and lines of credit | 76,404 | 8.5 | % | 64,494 | 8.5 | % | ||||||||
Consumer and installment | 29,637 | 3.4 | % | 25,910 | 3.5 | % | ||||||||
Total consumer | 106,041 | 11.9 | % | 90,404 | 12.0 | % | ||||||||
Net deferred origination costs | 1,359 | 1,267 | ||||||||||||
Total gross loans | 900,679 | 100.0 | % | 756,628 | 100.0 | % | ||||||||
Allowance for credit losses | (8,778 | ) | (9,326 | ) | ||||||||||
Total loans | $ | 891,901 | $ | 747,302 |
December 31, | ||||||||
2017 | 2016 | |||||||
Commercial | $ | 383 | $ | 612 | ||||
Outstanding balance | $ | 383 | $ | 612 | ||||
Carrying amount, net of allowance of $0 | $ | 383 | $ | 612 |
December 31, | ||||||||
2017 | 2016 | |||||||
Contractually required payments receivable on PCI loans at acquisition: | ||||||||
Commercial | $ | — | $ | 982 | ||||
Total | $ | — | $ | 982 | ||||
Cash flows expected to be collected at acquisition | $ | — | $ | 693 | ||||
Fair value of acquired loans at acquisition | $ | — | $ | 631 |
December 31, | ||||||||
2017 | 2016 | |||||||
Loans acquired during the year | $ | — | $ | 631 | ||||
Loans at the end of the year | $ | 383 | $ | 612 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Balance, beginning of year | $ | 9,326 | $ | 9,610 | $ | 8,308 | ||||||
(Reversal of) Provision charged to operations | (1,150 | ) | (5,850 | ) | 600 | |||||||
Losses charged to allowance | (464 | ) | (883 | ) | (961 | ) | ||||||
Recoveries | 1,066 | 6,449 | 1,663 | |||||||||
Balance, end of year | $ | 8,778 | $ | 9,326 | $ | 9,610 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, January 1, 2017 | $ | 2,180 | $ | 6,200 | $ | 852 | $ | 94 | $ | 9,326 | ||||||||||
(Reversal of ) Provision charged to operations | (762 | ) | (449 | ) | 68 | (7 | ) | (1,150 | ) | |||||||||||
Losses charged to allowance | (207 | ) | (22 | ) | (235 | ) | — | (464 | ) | |||||||||||
Recoveries | 860 | 66 | 140 | — | 1,066 | |||||||||||||||
Ending balance, December 31, 2017 | $ | 2,071 | $ | 5,795 | $ | 825 | $ | 87 | $ | 8,778 | ||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, January 1, 2016 | $ | 3,562 | $ | 5,204 | $ | 734 | $ | 110 | $ | 9,610 | ||||||||||
Provision charged to operations | (6,048 | ) | 11 | 203 | (16 | ) | (5,850 | ) | ||||||||||||
Losses charged to allowance | (621 | ) | — | (262 | ) | — | (883 | ) | ||||||||||||
Recoveries | 5,287 | 985 | 177 | — | 6,449 | |||||||||||||||
Ending balance, December 31, 2016 | $ | 2,180 | $ | 6,200 | $ | 852 | $ | 94 | $ | 9,326 | ||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, January 1, 2015 | $ | 3,130 | $ | 4,058 | $ | 1,078 | $ | 42 | $ | 8,308 | ||||||||||
Provision charged to operations | 190 | 1,114 | (772 | ) | 68 | 600 | ||||||||||||||
Losses charged to allowance | (802 | ) | — | (159 | ) | — | (961 | ) | ||||||||||||
Recoveries | 1,044 | 32 | 587 | — | 1,663 | |||||||||||||||
Ending balance, December 31, 2015 | $ | 3,562 | $ | 5,204 | $ | 734 | $ | 110 | $ | 9,610 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Ending balance, December 31, 2017 | $ | 2,071 | $ | 5,795 | $ | 825 | $ | 87 | $ | 8,778 | ||||||||||
Ending balance: individually evaluated for impairment | $ | 1 | $ | 1 | $ | 34 | $ | — | $ | 36 | ||||||||||
Ending balance: collectively evaluated for impairment | $ | 2,070 | $ | 5,794 | $ | 791 | $ | 87 | $ | 8,742 | ||||||||||
Ending balance, December 31, 2016 | $ | 2,180 | $ | 6,200 | $ | 852 | $ | 94 | $ | 9,326 | ||||||||||
Ending balance: individually evaluated for impairment | $ | 3 | $ | 241 | $ | 63 | $ | — | $ | 307 | ||||||||||
Ending balance: collectively evaluated for impairment | $ | 2,177 | $ | 5,959 | $ | 789 | $ | 94 | $ | 9,019 |
Commercial | Real Estate | Consumer | Total | |||||||||||||
Loans: | ||||||||||||||||
Ending balance, December 31, 2017 | $ | 115,812 | $ | 677,467 | $ | 106,041 | $ | 899,320 | ||||||||
Ending balance: individually evaluated for impairment | $ | 377 | $ | 4,846 | $ | 1,143 | $ | 6,366 | ||||||||
Ending balance: collectively evaluated for impairment | $ | 115,435 | $ | 672,621 | $ | 104,898 | $ | 892,954 | ||||||||
Loans: | ||||||||||||||||
Ending balance, December 31, 2016 | $ | 114,161 | $ | 550,796 | $ | 90,404 | $ | 755,361 | ||||||||
Ending balance: individually evaluated for impairment | $ | 487 | $ | 4,238 | $ | 544 | $ | 5,269 | ||||||||
Ending balance: collectively evaluated for impairment | $ | 113,674 | $ | 546,558 | $ | 89,860 | $ | 750,092 |
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 84,745 | $ | 8,217 | $ | 7,894 | $ | — | $ | 100,856 | ||||||||||
Agricultural land and production | 10,848 | 206 | 3,902 | — | 14,956 | |||||||||||||||
Real Estate: | ||||||||||||||||||||
Owner occupied | 196,838 | 4,795 | 2,819 | — | 204,452 | |||||||||||||||
Real estate construction and other land loans | 90,927 | 1,625 | 3,908 | — | 96,460 | |||||||||||||||
Commercial real estate | 261,746 | 4,147 | 3,361 | — | 269,254 | |||||||||||||||
Agricultural real estate | 48,274 | 1,270 | 26,537 | — | 76,081 | |||||||||||||||
Other real estate | 29,867 | 1,165 | 188 | — | 31,220 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Equity loans and lines of credit | 74,535 | 483 | 1,386 | — | 76,404 | |||||||||||||||
Consumer and installment | 29,634 | — | 3 | — | 29,637 | |||||||||||||||
Total | $ | 827,414 | $ | 21,908 | $ | 49,998 | $ | — | $ | 899,320 |
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 75,212 | $ | 907 | $ | 12,533 | $ | — | $ | 88,652 | ||||||||||
Agricultural land and production | 16,562 | 8,681 | 266 | — | 25,509 | |||||||||||||||
Real Estate: | ||||||||||||||||||||
Owner occupied | 184,987 | 2,865 | 3,813 | — | 191,665 | |||||||||||||||
Real estate construction and other land loans | 62,538 | 5,259 | 1,403 | — | 69,200 | |||||||||||||||
Commercial real estate | 179,966 | 1,548 | 2,711 | — | 184,225 | |||||||||||||||
Agricultural real estate | 49,270 | 10,390 | 27,101 | — | 86,761 | |||||||||||||||
Other real estate | 18,779 | 166 | — | — | 18,945 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Equity loans and lines of credit | 62,782 | 95 | 1,617 | — | 64,494 | |||||||||||||||
Consumer and installment | 25,890 | — | 20 | — | 25,910 | |||||||||||||||
Total | $ | 675,986 | $ | 29,911 | $ | 49,464 | $ | — | $ | 755,361 |
30-59 Days Past Due | 60-89 Days Past Due | Greater Than 90 Days Past Due | Total Past Due | Current | Total Loans | Recorded Investment > 90 Days Accruing | Non-accrual | |||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | 100,856 | $ | 100,856 | $ | — | $ | 356 | ||||||||||||||||
Agricultural land and production | — | — | — | — | 14,956 | 14,956 | — | — | ||||||||||||||||||||||||
Real estate: | — | — | — | |||||||||||||||||||||||||||||
Owner occupied | — | — | — | — | 204,452 | 204,452 | — | — | ||||||||||||||||||||||||
Real estate construction and other land loans | — | — | 1,397 | 1,397 | 95,063 | 96,460 | — | 1,397 | ||||||||||||||||||||||||
Commercial real estate | — | — | — | — | 269,254 | 269,254 | — | 976 | ||||||||||||||||||||||||
Agricultural real estate | — | — | — | — | 76,081 | 76,081 | — | — | ||||||||||||||||||||||||
Other real estate | — | 1,165 | — | 1,165 | 30,055 | 31,220 | — | — | ||||||||||||||||||||||||
Consumer: | — | — | ||||||||||||||||||||||||||||||
Equity loans and lines of credit | 149 | — | — | 149 | 76,255 | 76,404 | — | 146 | ||||||||||||||||||||||||
Consumer and installment | 26 | — | — | 26 | 29,611 | 29,637 | — | — | ||||||||||||||||||||||||
Total | $ | 175 | $ | 1,165 | $ | 1,397 | $ | 2,737 | $ | 896,583 | $ | 899,320 | $ | — | $ | 2,875 |
30-59 Days Past Due | 60-89 Days Past Due | Greater Than 90 Days Past Due | Total Past Due | Current | Total Loans | Recorded Investment > 90 Days Accruing | Non- accrual | |||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | 88,652 | $ | 88,652 | $ | — | $ | 447 | ||||||||||||||||
Agricultural land and production | — | — | — | — | 25,509 | 25,509 | — | — | ||||||||||||||||||||||||
Real estate: | — | — | ||||||||||||||||||||||||||||||
Owner occupied | 87 | — | — | 87 | 191,578 | 191,665 | — | 107 | ||||||||||||||||||||||||
Real estate construction and other land loans | — | — | — | — | 69,200 | 69,200 | — | — | ||||||||||||||||||||||||
Commercial real estate | 565 | — | — | 565 | 183,660 | 184,225 | — | 1,082 | ||||||||||||||||||||||||
Agricultural real estate | — | — | — | — | 86,761 | 86,761 | — | — | ||||||||||||||||||||||||
Other real estate | — | — | — | — | 18,945 | 18,945 | — | — | ||||||||||||||||||||||||
Consumer: | — | |||||||||||||||||||||||||||||||
Equity loans and lines of credit | 62 | 48 | — | 110 | 64,384 | 64,494 | — | 526 | ||||||||||||||||||||||||
Consumer and installment | 38 | — | — | 38 | 25,872 | 25,910 | — | 18 | ||||||||||||||||||||||||
Total | $ | 752 | $ | 48 | $ | — | $ | 800 | $ | 754,561 | $ | 755,361 | $ | — | $ | 2,180 |
Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||
With no related allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | $ | 355 | $ | 553 | $ | — | ||||||
Real estate: | ||||||||||||
Real estate construction and other land loans | 3,023 | 3,085 | — | |||||||||
Commercial real estate | 1,772 | 2,040 | — | |||||||||
Total real estate | 4,795 | 5,125 | — | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 146 | 206 | — | |||||||||
Total with no related allowance recorded | 5,296 | 5,884 | — | |||||||||
With an allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | 22 | 22 | 1 | |||||||||
Real estate: | ||||||||||||
Agricultural real estate | 51 | 51 | 1 | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 997 | 997 | 34 | |||||||||
Total with an allowance recorded | 1,070 | 1,070 | 36 | |||||||||
Total | $ | 6,366 | $ | 6,954 | $ | 36 |
Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||
With no related allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | $ | 447 | $ | 612 | $ | — | ||||||
Real estate: | ||||||||||||
Owner occupied | 107 | 111 | — | |||||||||
Commercial real estate | 827 | 967 | — | |||||||||
Total real estate | 934 | 1,078 | — | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 167 | 234 | — | |||||||||
Consumer and installment | 6 | 9 | — | |||||||||
Total consumer | 173 | 243 | — | |||||||||
Total with no related allowance recorded | 1,554 | 1,933 | — | |||||||||
With an allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | 40 | 40 | 3 | |||||||||
Real estate: | ||||||||||||
Real estate construction and other land loans | 2,222 | 2,222 | 79 | |||||||||
Commercial real estate | 1,082 | 1,146 | 162 | |||||||||
Total real estate | 3,304 | 3,368 | 241 | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 359 | 364 | 61 | |||||||||
Consumer and installment | 12 | 12 | 2 | |||||||||
Total consumer | 371 | 376 | 63 | |||||||||
Total with an allowance recorded | 3,715 | 3,784 | 307 | |||||||||
Total | $ | 5,269 | $ | 5,717 | $ | 307 |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | Year Ended December 31, 2015 | ||||||||||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||
Commercial and industrial | $ | 404 | $ | — | $ | 115 | $ | — | $ | 2,921 | $ | — | ||||||||||||
Agricultural land and production | — | — | 42 | — | — | — | ||||||||||||||||||
Total commercial | 404 | — | 157 | — | 2,921 | — | ||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Owner occupied | 24 | — | 162 | — | 770 | 231 | ||||||||||||||||||
Real estate construction and other land loans | 1,228 | 114 | 2,393 | 196 | 1,266 | 79 | ||||||||||||||||||
Commercial real estate | 1,370 | 53 | 903 | 55 | 1,939 | — | ||||||||||||||||||
Agricultural real estate | — | — | 173 | — | 211 | — | ||||||||||||||||||
Total real estate | 2,622 | 167 | 3,631 | 251 | 4,186 | 310 | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Equity loans and lines of credit | 132 | — | 598 | — | 1,858 | — | ||||||||||||||||||
Consumer and installment | 6 | — | 41 | — | — | — | ||||||||||||||||||
Total consumer | 138 | — | 639 | — | 1,858 | — | ||||||||||||||||||
Total with no related allowance recorded | 3,164 | 167 | 4,427 | 251 | 8,965 | 310 | ||||||||||||||||||
— | ||||||||||||||||||||||||
With an allowance recorded: | — | |||||||||||||||||||||||
Commercial: | — | |||||||||||||||||||||||
Commercial and industrial | 38 | 1 | 441 | 3 | 243 | — | ||||||||||||||||||
Agricultural land and production | — | — | 104 | — | — | — | ||||||||||||||||||
Total commercial | 38 | 1 | 545 | 3 | 243 | — | ||||||||||||||||||
Real estate: | — | — | — | |||||||||||||||||||||
Owner occupied | — | — | 120 | — | 190 | — | ||||||||||||||||||
Real estate construction and other land loans | 1,827 | — | 171 | — | 2,297 | — | ||||||||||||||||||
Commercial real estate | 470 | — | 548 | — | 753 | — | ||||||||||||||||||
Agricultural real estate | 43 | 3 | — | — | — | — | ||||||||||||||||||
Total real estate | 2,340 | 3 | 839 | — | 3,240 | — | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Equity loans and lines of credit | 239 | 32 | 203 | — | 328 | — | ||||||||||||||||||
Consumer and installment | 1 | — | 19 | — | 16 | — | ||||||||||||||||||
Total consumer | 240 | 32 | 222 | — | 344 | — | ||||||||||||||||||
Total with an allowance recorded | 2,618 | 36 | 1,606 | 3 | 3,827 | — | ||||||||||||||||||
Total | $ | 5,782 | $ | 203 | $ | 6,033 | $ | 254 | $ | 12,792 | $ | 310 |
Troubled Debt Restructurings: | Number of Loans | Pre-Modification Outstanding Recorded Investment (1) | Principal Modification | Post Modification Outstanding Recorded Investment (2) | Outstanding Recorded Investment | ||||||||||||||
Real Estate: | |||||||||||||||||||
Agricultural real estate | 1 | $ | 59 | — | $ | 59 | $ | 51 | |||||||||||
Consumer: | |||||||||||||||||||
Equity loans and line of credit | 2 | 490 | — | 1,066 | 1,059 | ||||||||||||||
Total | 3 | $ | 549 | $ | — | $ | 1,125 | $ | 1,110 |
(1) | Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any. |
(2) | Balance outstanding after principal modification, if any borrower reduction to recorded investment. |
Troubled Debt Restructurings: | Number of Loans | Pre-Modification Outstanding Recorded Investment (1) | Principal Modification | Post Modification Outstanding Recorded Investment (2) | Outstanding Recorded Investment | ||||||||||||||
Commercial: | |||||||||||||||||||
Commercial and Industrial | 2 | $ | 45 | $ | — | $ | 45 | $ | 40 |
(1) | Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any. |
(2) | Balance outstanding after principal modification, if any borrower reduction to recorded investment. |
Troubled Debt Restructurings: | Number of Loans | Pre-Modification Outstanding Recorded Investment (1) | Principal Modification | Post Modification Outstanding Recorded Investment (2) | Outstanding Recorded Investment | ||||||||||||||
Commercial: | |||||||||||||||||||
Commercial and Industrial | 2 | $ | 42 | $ | — | $ | 42 | $ | 30 |
(1) | Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any. |
(2) | Balance outstanding after principal modification, if any borrower reduction to recorded investment. |
6. | BANK PREMISES AND EQUIPMENT |
December 31, | ||||||||
2017 | 2016 | |||||||
Land | $ | 1,131 | $ | 1,131 | ||||
Buildings and improvements | 6,754 | 6,680 | ||||||
Furniture, fixtures and equipment | 12,345 | 11,521 | ||||||
Leasehold improvements | 4,594 | 4,100 | ||||||
24,824 | 23,432 | |||||||
Less accumulated depreciation and amortization | (15,426 | ) | (14,025 | ) | ||||
$ | 9,398 | $ | 9,407 |
2017 | 2016 | 2015 | |||||||||
Balance, beginning of year | $ | 40,231 | $ | 29,917 | $ | 29,917 | |||||
Acquired goodwill | 13,546 | 10,314 | — | ||||||||
Impairment | — | — | — | ||||||||
Balance, end of year | $ | 53,777 | $ | 40,231 | $ | 29,917 |
Years Ending December 31, | Estimated Core Deposit Intangible Amortization | |||
2018 | $ | 376 | ||
2019 | 376 | |||
2020 | 376 | |||
2021 | 376 | |||
2022 | 376 | |||
Thereafter | 1,147 | |||
Total | $ | 3,027 |
December 31, | ||||||||
2017 | 2016 | |||||||
Savings | $ | 116,534 | $ | 105,098 | ||||
Money market | 299,638 | 250,749 | ||||||
NOW accounts | 296,406 | 247,623 | ||||||
Time, $250,000 or more | 34,441 | 39,284 | ||||||
Time, under $250,000 | 93,629 | 117,410 | ||||||
$ | 840,648 | $ | 760,164 |
Years Ending December 31, | ||||
2018 | $ | 107,348 | ||
2019 | 13,229 | |||
2020 | 3,086 | |||
2021 | 1,519 | |||
2022 | 1,769 | |||
Thereafter | 1,119 | |||
$ | 128,070 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Savings | $ | 33 | $ | 27 | $ | 30 | ||||||
Money market | 211 | 133 | 141 | |||||||||
NOW accounts | 317 | 290 | 231 | |||||||||
Time certificates of deposit | 408 | 525 | 546 | |||||||||
$ | 969 | $ | 975 | $ | 948 |
Federal | State | Total | ||||||||||
2017 | ||||||||||||
Current | $ | 1,188 | $ | 1,224 | $ | 2,412 | ||||||
Deferred | 3,328 | 518 | 3,846 | |||||||||
Re-measurement resulting from Tax Act | 3,535 | — | 3,535 | |||||||||
Provision for income taxes | $ | 8,051 | $ | 1,742 | $ | 9,793 | ||||||
2016 | ||||||||||||
Current | $ | 3,720 | $ | 605 | $ | 4,325 | ||||||
Deferred | 1,100 | 1,492 | 2,592 | |||||||||
Provision for income taxes | $ | 4,820 | $ | 2,097 | $ | 6,917 | ||||||
2015 | ||||||||||||
Current | $ | 2,945 | $ | 570 | $ | 3,515 | ||||||
Deferred | (1,208 | ) | 275 | (933 | ) | |||||||
Provision for income taxes | $ | 1,737 | $ | 845 | $ | 2,582 |
December 31, | ||||||||
2017 | 2016 | |||||||
Deferred tax assets: | ||||||||
Allowance for credit losses | $ | 2,100 | $ | 3,267 | ||||
Deferred compensation | 4,415 | 5,304 | ||||||
Unrealized loss on available-for-sale investment securities | — | 375 | ||||||
Net operating loss carryovers | 2,549 | 3,816 | ||||||
Mark-to-market adjustment | 87 | 167 | ||||||
Other deferred | 386 | 338 | ||||||
Other-than-temporary impairment | 192 | 273 | ||||||
Loan and investment impairment | 1,793 | 1,285 | ||||||
State Enterprise Zone credit carry-forward | — | 209 | ||||||
Alternative minimum tax credit | — | 2,438 | ||||||
Partnership income | 68 | 114 | ||||||
State taxes | 375 | 297 | ||||||
Total deferred tax assets | 11,965 | 17,883 | ||||||
Deferred tax liabilities: | ||||||||
Finance leases | (365 | ) | (474 | ) | ||||
Unrealized gain on available-for-sale investment securities | (1,186 | ) | — | |||||
Core deposit intangible | (895 | ) | (582 | ) | ||||
FHLB stock | (234 | ) | (327 | ) | ||||
Loan origination costs | (783 | ) | (918 | ) | ||||
Bank premises and equipment | (478 | ) | (71 | ) | ||||
Total deferred tax liabilities | (3,941 | ) | (2,372 | ) | ||||
Net deferred tax assets | $ | 8,024 | $ | 15,511 |
2017 | 2016 | 2015 | ||||||
Federal income tax, at statutory rate | 35.0 | % | 35.0 | % | 34.0 | % | ||
State taxes, net of Federal tax benefit | 4.8 | % | 6.2 | % | 4.1 | % | ||
Tax exempt investment security income, net | (10.1 | )% | (10.3 | )% | (15.9 | )% | ||
Bank owned life insurance, net | (0.8 | )% | (1.1 | )% | (2.5 | )% | ||
Compensation - Stock Compensation | (2.8 | )% | — | % | — | % | ||
Re-measurement resulting from Tax Act | 14.8 | % | — | % | — | % | ||
Change in uncertain tax positions | (0.9 | )% | 0.1 | % | 0.8 | % | ||
Other | 1.1 | % | 1.4 | % | (1.4 | )% | ||
Effective tax rate | 41.1 | % | 31.3 | % | 19.1 | % |
December 31, | |||||||
2017 | 2016 | ||||||
Balance, beginning of year | $ | 298 | $ | 286 | |||
Additions based on tax positions related to prior years | — | 44 | |||||
Reductions for tax positions of prior years | (215 | ) | (32 | ) | |||
Balance, end of year | $ | 83 | $ | 298 |
Years Ending December 31, | |||
2018 | $ | 2,511 | |
2019 | 1,804 | ||
2020 | 1,638 | ||
2021 | 1,357 | ||
2022 | 1,095 | ||
Thereafter | 4,316 | ||
$ | 12,721 |
December 31, | ||||||||
2017 | 2016 | |||||||
Commitments to extend credit | $ | 347,001 | $ | 257,557 | ||||
Standby letters of credit | $ | 3,140 | $ | 1,858 |
(Dollars in thousands) | Actual Ratio | Minimum regulatory requirement (1) | ||||||||||||
December 31, 2017 | Amount | Ratio | Amount | Ratio | ||||||||||
Tier 1 Leverage Ratio | $ | 153,676 | 9.71 | % | $ | 63,338 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 149,186 | 12.90 | % | $ | 52,081 | 5.75 | % | ||||||
Tier 1 Risk-Based Capital Ratio | $ | 153,676 | 13.28 | % | $ | 69,441 | 7.25 | % | ||||||
Total Risk-Based Capital Ratio | $ | 162,780 | 14.07 | % | $ | 92,588 | 9.25 | % | ||||||
December 31, 2016 | ||||||||||||||
Tier 1 Leverage Ratio | $ | 122,601 | 8.75 | % | $ | 56,057 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 120,080 | 12.48 | % | $ | 43,426 | 5.13 | % | ||||||
Tier 1 Risk-Based Capital Ratio | $ | 122,601 | 12.74 | % | $ | 57,901 | 6.63 | % | ||||||
Total Risk-Based Capital Ratio | $ | 132,052 | 13.72 | % | $ | 77,202 | 8.63 | % | ||||||
(1) The 2017 and 2016 minimum regulatory requirement threshold includes the capital conservation buffer of 1.250% and 0.625%, respectively. These ratios are not reflected on a fully phased-in basis, which will occur in January 2019. |
(Dollars in thousands) | Actual Ratio | Minimum regulatory requirement (1) | ||||||||||||
December 31, 2017 | Amount | Ratio | Amount | Ratio | ||||||||||
Tier 1 Leverage Ratio | $ | 149,779 | 9.46 | % | $ | 63,332 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 149,779 | 12.96 | % | $ | 52,040 | 5.75 | % | ||||||
Tier 1 Risk-Based Capital Ratio | $ | 149,779 | 12.96 | % | $ | 69,387 | 7.25 | % | ||||||
Total Risk-Based Capital Ratio | $ | 158,882 | 13.74 | % | $ | 92,516 | 9.25 | % | ||||||
December 31, 2016 | ||||||||||||||
Tier 1 Leverage Ratio | $ | 121,079 | 8.64 | % | $ | 56,064 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 121,079 | 12.59 | % | $ | 43,383 | 5.13 | % | ||||||
Tier 1 Risk-Based Capital Ratio | $ | 121,079 | 12.59 | % | $ | 57,845 | 6.63 | % | ||||||
Total Risk-Based Capital Ratio | $ | 130,530 | 13.57 | % | $ | 77,126 | 8.63 | % | ||||||
(1) The 2017 and 2016 minimum regulatory requirement threshold includes the capital conservation buffer of 1.250% and 0.625%, respectively. These ratios are not reflected on a fully phased-in basis, which will occur in January 2019. |
For the Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Basic Earnings Per Common Share: | ||||||||||||
Net income | $ | 14,026 | $ | 15,182 | $ | 10,964 | ||||||
Weighted average shares outstanding | 12,472,095 | 11,331,166 | 10,931,927 | |||||||||
Net income per common share | $ | 1.12 | $ | 1.34 | $ | 1.00 | ||||||
Diluted Earnings Per Common Share: | ||||||||||||
Net income | $ | 14,026 | $ | 15,182 | $ | 10,964 | ||||||
Weighted average shares outstanding | 12,472,095 | 11,331,166 | 10,931,927 | |||||||||
Effect of dilutive stock options and warrants | 250,255 | 104,283 | 83,836 | |||||||||
Weighted average shares of common stock and common stock equivalents | 12,722,350 | 11,435,449 | 11,015,763 | |||||||||
Net income per diluted common share | $ | 1.10 | $ | 1.33 | $ | 1.00 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||
Options outstanding at December 31, 2014 | 368,360 | $ | 8.89 | ||||||||||
Options exercised | (9,070 | ) | $ | 6.64 | |||||||||
Options forfeited | (118,595 | ) | $ | 13.25 | 4.06 | $ | 1,251 | ||||||
Options outstanding at December 31, 2015 | 240,695 | $ | 6.83 | ||||||||||
Options exercised | (35,280 | ) | $ | 6.55 | |||||||||
Options forfeited | (3,200 | ) | $ | 8.77 | |||||||||
Options outstanding at December 31, 2016 | 202,215 | $ | 6.87 | 3.26 | $ | 2,647 | |||||||
Options assumed in acquisition | 313,360 | $ | 11.79 | ||||||||||
Options exercised | (281,125 | ) | $ | 10.47 | |||||||||
Options forfeited | (1,580 | ) | $ | 8.11 | |||||||||
Options outstanding at December 31, 2017 | 232,870 | $ | 9.13 | 2.87 | $ | 2,574 | |||||||
Options vested or expected to vest at December 31, 2017 | 232,870 | $ | 9.13 | 2.87 | $ | 2,574 | |||||||
Options exercisable at December 31, 2017 | 232,870 | $ | 9.13 | 2.87 | $ | 2,574 |
2017 | 2016 | 2015 | ||||||||||
Intrinsic value of options exercised | $ | 2,807 | $ | 235 | $ | 42 | ||||||
Cash received from options exercised | $ | 2,835 | $ | 231 | $ | 60 | ||||||
Excess tax benefit realized for option exercises | $ | 805 | $ | 30 | $ | 6 |
Shares | Weighted Average Grant Date Fair Value | ||||||
Nonvested outstanding shares at December 31, 2014 | 56,850 | $ | 12.68 | ||||
Granted | 9,268 | $ | 10.79 | ||||
Vested | (11,085 | ) | $ | 12.67 | |||
Forfeited | (2,005 | ) | $ | 12.95 | |||
Nonvested outstanding shares at December 31, 2015 | 53,028 | $ | 12.34 | ||||
Granted | 54,650 | $ | 14.10 | ||||
Vested | (12,438 | ) | $ | 12.38 | |||
Forfeited | (1,739 | ) | $ | 12.95 | |||
Nonvested outstanding shares at December 31, 2016 | 93,501 | $ | 13.35 | ||||
Vested | (27,373 | ) | $ | 13.34 | |||
Forfeited | (2,360 | ) | $ | 14.07 | |||
Nonvested outstanding shares at December 31, 2017 | 63,768 | $ | 13.33 |
Balance, January 1, 2017 | $ | 6,482 | |
Disbursements | 6,654 | ||
Amounts repaid | (1,251 | ) | |
Balance, December 31, 2017 | $ | 11,885 | |
Undisbursed commitments to related parties, December 31, 2017 | $ | 1,298 |
(In thousands) | 2017 | 2016 | ||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 3,296 | $ | 887 | ||||
Investment in Bank subsidiary | 210,816 | 167,666 | ||||||
Other assets | 750 | 790 | ||||||
Total assets | $ | 214,862 | $ | 169,343 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Junior subordinated debentures due to subsidiary grantor trust | $ | 5,155 | $ | 5,155 | ||||
Other liabilities | 148 | 155 | ||||||
Total liabilities | 5,303 | 5,310 | ||||||
Shareholders’ equity: | ||||||||
Common stock | 103,314 | 71,645 | ||||||
Retained earnings | 103,419 | 92,904 | ||||||
Accumulated other comprehensive (loss) income, net of tax | 2,826 | (516 | ) | |||||
Total shareholders’ equity | 209,559 | 164,033 | ||||||
Total liabilities and shareholders’ equity | $ | 214,862 | $ | 169,343 |
(In thousands) | 2017 | 2016 | 2015 | |||||||||
Income: | ||||||||||||
Dividends declared by Subsidiary - eliminated in consolidation | $ | 3,133 | $ | 13,010 | $ | 2,260 | ||||||
Other income | 4 | 4 | 3 | |||||||||
Total income | 3,137 | 13,014 | 2,263 | |||||||||
Expenses: | ||||||||||||
Interest on junior subordinated deferrable interest debentures | 147 | 121 | 99 | |||||||||
Professional fees | 231 | 133 | 156 | |||||||||
Other expenses | 1,019 | 779 | 411 | |||||||||
Total expenses | 1,397 | 1,033 | 666 | |||||||||
Income before equity in undistributed net income of Subsidiary | 1,740 | 11,981 | 1,597 | |||||||||
Equity in undistributed net income of Subsidiary, net of distributions | 11,754 | 2,852 | 9,080 | |||||||||
Income before income tax benefit | 13,494 | 14,833 | 10,677 | |||||||||
Benefit from income taxes | 532 | 349 | 287 | |||||||||
Income available to common shareholders | $ | 14,026 | $ | 15,182 | $ | 10,964 | ||||||
Comprehensive income | $ | 16,867 | $ | 10,204 | $ | 10,049 |
(In thousands) | 2017 | 2016 | 2015 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 14,026 | $ | 15,182 | $ | 10,964 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Undistributed net income of subsidiary, net of distributions | (11,754 | ) | (2,852 | ) | (9,080 | ) | ||||||
Stock-based compensation | 384 | 284 | 238 | |||||||||
Tax benefit from exercise of stock options | — | (30 | ) | (6 | ) | |||||||
Net (increase) decrease in other assets | (114 | ) | (405 | ) | 50 | |||||||
Net (decrease) increase in other liabilities | (7 | ) | 64 | (32 | ) | |||||||
Benefit from deferred income taxes | 155 | 98 | (5 | ) | ||||||||
Net cash provided by operating activities | 2,690 | 12,341 | 2,129 | |||||||||
Cash flows used in investing activities: | ||||||||||||
Investment in subsidiary | (151 | ) | (9,584 | ) | — | |||||||
Cash flows from financing activities: | ||||||||||||
Cash dividend payments on common stock | (3,010 | ) | (2,715 | ) | (1,979 | ) | ||||||
Proceeds from exercise of stock options | 2,880 | 231 | 60 | |||||||||
Tax benefit from exercise of stock options | — | 30 | 6 | |||||||||
Net cash used in financing activities | (130 | ) | (2,454 | ) | (1,913 | ) | ||||||
Increase in cash and cash equivalents | 2,409 | 303 | 216 | |||||||||
Cash and cash equivalents at beginning of year | 887 | 584 | 368 | |||||||||
Cash and cash equivalents at end of year | $ | 3,296 | $ | 887 | $ | 584 | ||||||
Supplemental Disclosure of Cash Flow Information: | ||||||||||||
Cash paid during the year for interest | $ | 142 | $ | 112 | $ | 97 | ||||||
Non-cash investing and financing activities: | ||||||||||||
Common stock issued in acquisitions | $ | 28,405 | $ | 16,678 | $ | — |
Q4 2017 | Q3 2017 | Q2 2017 | Q1 2017 | Q4 2016 | Q3 2016 | Q2 2016 | Q1 2016 | ||||||||||||||||||||||||
Net interest income | $ | 15,567 | $ | 13,578 | $ | 13,786 | $ | 13,308 | $ | 12,773 | $ | 10,995 | $ | 11,208 | $ | 10,604 | |||||||||||||||
Reversal of credit losses | — | (900 | ) | (150 | ) | (100 | ) | — | (1,000 | ) | (4,600 | ) | (250 | ) | |||||||||||||||||
Net interest income after provision for credit losses | 15,567 | 14,478 | 13,936 | 13,408 | 12,773 | 11,995 | 15,808 | 10,854 | |||||||||||||||||||||||
Other non-interest income | 1,947 | 2,385 | 1,939 | 1,764 | 2,154 | 1,849 | 2,094 | 1,574 | |||||||||||||||||||||||
Net realized (losses) gains on investment securities | (6 | ) | 169 | 2,157 | 482 | 84 | 286 | 420 | 1,130 | ||||||||||||||||||||||
Total non-interest expense | 13,109 | 10,394 | 10,789 | 10,113 | 10,913 | 9,655 | 9,377 | 8,977 | |||||||||||||||||||||||
Provision for income taxes | 4,064 | 2,144 | 2,295 | 1,291 | 1,492 | 1,361 | 2,887 | 1,177 | |||||||||||||||||||||||
Net income | $ | 335 | $ | 4,494 | $ | 4,948 | $ | 4,250 | $ | 2,606 | $ | 3,114 | $ | 6,058 | $ | 3,404 | |||||||||||||||
Net income available to common shareholders | $ | 335 | $ | 4,494 | $ | 4,948 | $ | 4,250 | $ | 2,606 | $ | 3,114 | $ | 6,058 | $ | 3,403 | |||||||||||||||
Basic earnings per share | $ | 0.02 | $ | 0.37 | $ | 0.41 | $ | 0.35 | $ | 0.21 | $ | 0.28 | $ | 0.55 | $ | 0.31 | |||||||||||||||
Diluted earnings per share | $ | 0.02 | $ | 0.36 | $ | 0.40 | $ | 0.35 | $ | 0.21 | $ | 0.28 | $ | 0.55 | $ | 0.31 |
ITEM 9 - | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
ITEM 9A - | CONTROLS AND PROCEDURES |
ITEM 9B - | OTHER INFORMATION |
ITEM 10 - | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. |
ITEM 11 - | EXECUTIVE COMPENSATION. |
ITEM 12 - | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
ITEM 13 - | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. |
ITEM 14 - | PRINCIPAL ACCOUNTING FEES AND SERVICES |
Exhibit | ||
Number | Exhibit | |
2.1 | ||
2.2 | ||
2.3 | ||
2.4 | ||
2.5 | ||
3.1 | ||
3.2 | ||
3.2 | ||
3.3 | ||
3.5 | ||
3.6 | ||
4.1 |
4.2 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
10.13 | ||
10.14 |
10.15 | ||
10.16 | ||
10.17 | ||
10.18 | ||
10.19 | ||
10.20 | ||
10.21 | ||
10.22 | ||
10.23 | ||
10.24 | ||
10.25 | ||
10.26 | ||
10.27 | ||
10.28 | ||
10.29 | ||
10.30 | ||
10.31 | ||
10.32 | ||
10.33 | ||
10.34 | ||
10.35 | ||
10.36 | ||
10.37 | ||
10.38 | ||
10.39 | ||
10.40 | ||
10.41 | ||
10.42 | ||
10.43 | ||
10.44 | ||
10.45 | ||
10.46 | ||
10.47 | ||
10.48 | ||
10.49 | ||
10.50 | ||
10.51 | ||
10.52 | ||
10.53 | ||
10.54 | ||
10.55 | ||
10.56 | ||
10.57 | ||
10.58 | ||
10.59 | ||
10.60 | ||
10.61 | ||
10.62 | ||
10.63 |
10.64 | ||
10.65 | ||
10.66 | ||
10.67 | ||
10.68 | ||
10.69 | ||
10.70 | ||
10.71 | ||
10.72 | ||
10.73 | ||
10.74 | ||
10.75 | ||
10.76 | ||
10.77 | ||
10.78 | ||
10.79 | ||
10.80 | ||
10.81 | ||
10.82 | ||
21 | ||
22 | N/A | |
23 | ||
24 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Link Document | |
CENTRAL VALLEY COMMUNITY BANCORP | ||||
Date: | March 14, 2018 | By: | /s/ James M. Ford | |
James M. Ford | ||||
President and Chief Executive Officer | ||||
(principal executive officer) | ||||
Date: | March 14, 2018 | By: | /s/ David A. Kinross | |
David A. Kinross | ||||
Executive Vice President and Chief Financial Officer | ||||
(principal accounting officer and principal financial officer) |
/s/ James M. Ford | Date: March 14, 2018 | ||
James M. Ford, | |||
President and Chief Executive Officer and Director (principal executive officer) | |||
/s/ David A. Kinross | Date: March 14, 2018 | ||
David A. Kinross, | |||
Executive Vice President and Chief Financial Officer | |||
(principal accounting officer and principal financial officer) | |||
/s/ Daniel J. Doyle | Date: March 14, 2018 | ||
Daniel J. Doyle, | |||
Chairman of the Board and Director | |||
/s/ Daniel N. Cunningham | Date: March 14, 2018 | ||
Daniel N. Cunningham, Lead Independent Director | |||
/s/ Edwin S. Darden | Date: March 14, 2018 | ||
Edwin S. Darden, Director | |||
/s/ F.T. “Tommy” Elliott, IV | Date: March 14, 2018 | ||
F.T. “Tommy” Elliott, IV, Director | |||
/s/ Robert J. Flautt | Date: March 14, 2018 | ||
Robert J. Flautt, Director | |||
/s/ Gary D. Gall | Date: March 14, 2018 | ||
Gary D. Gall, Director | |||
/s/ Steven D. McDonald | Date: March 14, 2018 | ||
Steven D. McDonald, Director | |||
/s/ Louis McMurray | Date: March 14, 2018 | ||
Louis McMurray, Director | |||
/s/ Karen Musson | Date: March 14, 2018 | ||
Karen Musson, Director | |||
/s/ William S. Smittcamp | Date: March 14, 2018 | ||
William S. Smittcamp, Director | |||
Name | State of Incorporation | |
Central Valley Community Bank | California | |
Service 1st Capital Trust I | Delaware |
/s/ Crowe Horwath LLP | |
Sacramento, California | |
March 14, 2018 |
/s/ James M. Ford | Date: 3/14/2018 | |
James M. Ford, |
/s/ David A. Kinross | Date: 3/14/2018 | |
David A. Kinross, |
/s/ James M. Ford | |
JAMES M. FORD | |
President and Chief Executive Officer |
/s/ David A. Kinross | |
DAVID A. KINROSS | |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Mar. 08, 2018 |
Jun. 30, 2017 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CENTRAL VALLEY COMMUNITY BANCORP | ||
Entity Central Index Key | 0001127371 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 13,751,287 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 222,959 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Available-for-sale investment securities, Amortized cost | $ 538,692 | $ 548,640 |
Loans, allowance for credit losses | $ 8,778 | $ 9,326 |
Preferred stock, liquidation preference (in dollars per share) | $ 1,000 | $ 1,000 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Common Stock, authorized (in shares) | 80,000,000 | 80,000,000 |
Common Stock, issued (in shares) | 13,696,722 | 12,143,815 |
Common Stock, outstanding (in shares) | 13,696,722 | 12,143,815 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 14,026 | $ 15,182 | $ 10,964 |
Unrealized gains (losses) on securities: | |||
Unrealized holdings gains (losses) arising during the period | 7,705 | (9,924) | 59 |
Less: reclassification for net gains included in net income | 2,802 | 1,224 | 1,481 |
Less: reclassification for other-than-temporary impairment loss included in net income | 0 | (136) | 0 |
Transfer of investment securities from held-to-maturity to available-for-sale | 0 | 2,647 | 0 |
Amortization of net unrealized gains transferred | 0 | (64) | (78) |
Other comprehensive income (loss), before tax | 4,903 | (8,429) | (1,500) |
Tax (expense) benefit related to items of other comprehensive income | (2,062) | 3,451 | 585 |
Total other comprehensive income (loss) | 2,841 | (4,978) | (915) |
Comprehensive income | $ 16,867 | $ 10,204 | $ 10,049 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends per common share (in dollars per share) | $ 0.24 | $ 0.24 | $ 0.18 |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||
Accounting Policies [Abstract] | |||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General - Central Valley Community Bancorp (the “Company”) was incorporated on February 7, 2000 and subsequently obtained approval from the Board of Governors of the Federal Reserve System to be a bank holding company in connection with its acquisition of Central Valley Community Bank (the “Bank”). The Company became the sole shareholder of the Bank on November 15, 2000 in a statutory merger, pursuant to which each outstanding share of the Bank’s common stock was exchanged for one share of common stock of the Company. Service 1st Capital Trust I (the Trust) is a business trust formed by Service 1st for the sole purpose of issuing trust preferred securities. The Company succeeded to all the rights and obligations of Service 1st in connection with the acquisition of Service 1st. The Trust is a wholly-owned subsidiary of the Company. The Bank operates 24 full service offices throughout California’s San Joaquin Valley and Greater Sacramento Region. The Bank’s primary source of revenue is providing loans to customers who are predominately small and middle-market businesses and individuals. The deposits of the Bank are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable legal limits. Depositors’ accounts at an insured depository institution, including all non-interest bearing transactions accounts, will be insured by the FDIC up to the standard maximum deposit insurance amount of $250,000 for each deposit insurance ownership category. The accounting and reporting policies of the Company and the Bank conform with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. Management has determined that because all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No customer accounts for more than 10 percent of revenues for the Company or the Bank. Principles of Consolidation - The consolidated financial statements include the accounts of the Company and the consolidated accounts of its wholly-owned subsidiary, the Bank. Intercompany transactions and balances are eliminated in consolidation. For financial reporting purposes, Service 1st Capital Trust I, is a wholly-owned subsidiary acquired in the merger of Service 1st Bancorp and formed for the exclusive purpose of issuing trust preferred securities. The Company is not considered the primary beneficiary of this trust (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability on the Company’s consolidated financial statements. The Company’s investment in the common stock of the Trust is included in accrued interest receivable and other assets on the consolidated balance sheet. Use of Estimates - The preparation of these financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. On an ongoing basis, management evaluates the estimates used. Estimates are based upon historical experience, current economic conditions and other factors that management considers reasonable under the circumstances. These estimates result in judgments regarding the carrying values of assets and liabilities when these values are not readily available from other sources, as well as assessing and identifying the accounting treatments of contingencies and commitments. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions. Cash and Cash Equivalents - For the purpose of the statement of cash flows, cash, due from banks with maturities less than 90 days, interest-earning deposits in other banks, and Federal funds sold are considered to be cash equivalents. Generally, Federal funds are sold and purchased for one-day periods. Net cash flows are reported for customer loan and deposit transactions, interest-bearing deposits in other banks, and Federal funds purchased. Investment Securities - Investments are classified into the following categories:
Management determines the appropriate classification of its investments at the time of purchase and may only change the classification in certain limited circumstances. All transfers between categories are accounted for at fair value in the period which the transfer occurs. During the year ended December 31, 2017, there were no transfers between categories. For the year ended December 31, 2016 management transferred $23.1 million of securities from held-to-maturity to available-for-sale. Due to the 2016 transfer, management is precluded from utilizing the held-to-maturity designation until the second quarter of 2018. Gains or losses on the sale of investment securities are computed on the specific identification method. Interest earned on investment securities is reported in interest income, net of applicable adjustments for accretion of discounts and amortization of premiums. Premiums and discounts on securities are amortized or accreted on the level yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. An investment security is impaired when its carrying value is greater than its fair value. Investment securities that are impaired are evaluated on at least a quarterly basis and more frequently when economic or market conditions warrant such an evaluation to determine whether such a decline in their fair value is other than temporary. Management utilizes criteria such as the magnitude and duration of the decline and the intent and ability of the Company to retain its investment in the securities for a period of time sufficient to allow for an anticipated recovery in fair value, in addition to the reasons underlying the decline, to determine whether the loss in value is other than temporary. The term “other than temporary” is not intended to indicate that the decline is permanent, but indicates that the prospect for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other than temporary, and management does not intend to sell the security or it is more likely than not that the Company will not be required to sell the security before recovery, for debt securities, only the portion of the impairment loss representing credit exposure is recognized as a charge to earnings, with the balance recognized as a charge to other comprehensive income. If management intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovering its forecasted cost, the entire impairment loss is recognized as a charge to earnings. Loans - All loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at principal balances outstanding net of deferred loan fees and costs, and the allowance for credit losses. Interest is accrued daily based upon outstanding loan principal balances. However, when a loan becomes impaired and the future collectability of interest and principal is in serious doubt, the loan is placed on nonaccrual status and the accrual of interest income is suspended. Any loan delinquent 90 days or more is automatically placed on nonaccrual status. Any interest accrued but unpaid is charged against income. Subsequent payments on these loans, or payments received on nonaccrual loans for which the ultimate collectability of principal is not in doubt, are applied first to principal until fully collected and then to interest. Interest income on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer and credit card loans are typically charged off no later than 90 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. A loan placed on non-accrual status may be restored to accrual status when principal and interest are no longer past due and unpaid, or the loan otherwise becomes both well secured and in the process of collection. When a loan is brought current, the Company must also have reasonable assurance that the obligor has the ability to meet all contractual obligations in the future, that the loan will be repaid within a reasonable period of time, and that a minimum of six months of satisfactory repayment performance has occurred. Substantially all loan origination fees, commitment fees, direct loan origination costs and purchase premiums and discounts on loans are deferred and recognized as an adjustment of yield, and amortized to interest income over the contractual term of the loan. The unamortized balance of deferred fees and costs is reported as a component of net loans. Acquired loans and Leases - Loans and leases acquired through purchase or through a business combination are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan and lease losses is not recorded at the acquisition date. Should the Company’s allowance for credit losses methodology indicate that the credit discount associated with acquired, non-purchased credit impaired loans, is no longer sufficient to cover probable losses inherent in those loans, the Company will establish an allowance for those loans through a charge to provision for credit losses. At the time of an acquisition, we evaluate loans to determine if they are purchase credit impaired loans. Purchased credit impaired loans are those acquired loans with evidence of credit deterioration for which collection of all contractual payments was not considered probable at the date of acquisition. This determination is made by considering past due and/or nonaccrual status, prior designation of a troubled debt restructuring, or other factors that may suggest we will not be able to collect all contractual payments. Purchased credit impaired loans are initially recorded at fair value with the difference between fair value and estimated future cash flows accreted over the expected cash flow period as income only to the extent we can reasonably estimate the timing and amount of future cash flows. In this case, these loans would be classified as accruing. In the event we are unable to reasonably estimate the timing and amount of future cash flows, or if the loan is acquired primarily for the rewards of ownership of the underlying collateral, the loan is classified as non-accrual. An acquired loan previously classified by the seller as a troubled debt restructuring is no longer classified as such at the date of acquisition. Past due status is reported based on contractual payment status. All loans not otherwise classified as purchase credit impaired are recorded at fair value with the discount to contractual value accreted over the life of the loan. Allowance for Credit Losses - The allowance for credit losses (the “allowance”) is a valuation allowance for probable incurred credit losses in the Company’s loan portfolio. The allowance is established through a provision for credit losses which is charged to expense. Additions to the allowance are made to maintain the adequacy of the total allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the allowance. Cash received on previously charged off amounts is recorded as a recovery to the allowance. The overall allowance consists of two primary components, specific reserves related to impaired loans and general reserves for inherent losses related to loans that are not impaired. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the original agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans determined to be impaired are individually evaluated for impairment. When a loan is impaired, the Company measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, it may measure impairment based on a loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is collateral dependent if the repayment of the loan is expected to come solely from the sale or operation of underlying collateral. A restructuring of a debt constitutes a troubled debt restructuring (TDR) if the Company for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Restructured workout loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDRs are considered impaired and measured for impairment as described above. When determining the allowance for loan losses on acquired loans, we bifurcate the allowance between legacy loans and acquired loans. Loans remain designated as acquired until either (i) loan is renewed or (ii) loan is substantially modified whereby modification results in a new loan. When determining the allowance on acquired loans, the Company estimates probable incurred credit losses as compared to the Company’s recorded investment, with the recorded investment being net of any unaccreted discounts from the acquisition. The determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of a simple average of historical losses by portfolio segment (and in certain cases peer loss data) over the most recent 20 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole. The Company segregates the allowance by portfolio segment. These portfolio segments include commercial, real estate, and consumer loans. The relative significance of risk considerations vary by portfolio segment. For commercial and real estate loans, the primary risk consideration is a borrower’s ability to generate sufficient cash flows to repay their loan. Secondary considerations include the creditworthiness of guarantors and the valuation of collateral. In addition to the creditworthiness of a borrower, the type and location of real estate collateral is an important risk factor for real estate loans. The primary risk considerations for consumer loans are a borrower’s personal cash flow and liquidity, as well as collateral value. The allowance for credit losses attributable to each portfolio segment, which includes both impaired loans and loans that are not impaired, is combined to determine the Company’s overall allowance, which is included on the consolidated balance sheet. Commercial: Commercial and industrial - Commercial and industrial loans are generally underwritten to existing cash flows of operating businesses. Additionally, economic trends influenced by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Past due payments may indicate the borrower’s capacity to repay their obligations may be deteriorating. Agricultural land and production - Loans secured by crop production and livestock are especially vulnerable to two risk factors that are largely outside the control of Company and borrowers: commodity prices and weather conditions. Real Estate: Owner-occupied commercial real estate - Real estate collateral secured by commercial or professional properties with repayment arising from the owner’s business cash flows. To meet this classification, the owner’s operation must occupy no less than 50% of the real estate held. Financial profitability and capacity to meet the cyclical nature of the industry and related real estate market over a significant timeframe is essential. Real estate construction and other land loans - Land and construction loans generally possess a higher inherent risk of loss than other real estate portfolio segments. A major risk arises from the necessity to complete projects within specified costs and time lines. Trends in the construction industry significantly impact the credit quality of these loans, as demand drives construction activity. In addition, trends in real estate values significantly impact the credit quality of these loans, as property values determine the economic viability of construction projects. Agricultural real estate - Agricultural loans secured by real estate generally possess a higher inherent risk of loss caused by changes in concentration of permanent plantings, government subsidies, and the value of the U.S. dollar affecting the export of commodities. Investor commercial real estate - Investor commercial real estate loans generally possess a higher inherent risk of loss than other real estate portfolio segments, except land and construction loans. Adverse economic developments or an overbuilt market impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for properties to produce sufficient cash flows to service debt obligations. Other real estate - Primarily loans secured by agricultural real estate for development and production of permanent plantings that have not reached maximum yields. Also real estate loans where agricultural vertical integration exists in packing and shipping of commodities. Risk is primarily based on the liquidity of the borrower to sustain payment during the development period. Consumer: Equity loans and lines of credit - The degree of risk in residential real estate lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. These loans generally possess a lower inherent risk of loss than other real estate portfolio segments. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends may indicate that the borrowers’ capacity to repay their obligations may be deteriorating. Installment and other consumer loans - An installment loan portfolio is usually comprised of a large number of small loans scheduled to be amortized over a specific period. Most installment loans are made directly for consumer purchases. Other consumer loans include credit card and other open ended unsecured consumer loans. Credit cards and open ended unsecured loans generally have a higher rate of default than all other portfolio segments and are also impacted by weak economic conditions and trends. Credit cards and open ended unsecured loans in homogeneous loan portfolio segments are not evaluated for specific impairment. Although management believes the allowance to be adequate, ultimate losses may vary from its estimates. At least quarterly, the Board of Directors reviews the adequacy of the allowance, including consideration of the relative risks in the portfolio, current economic conditions and other factors. If the Board of Directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, the Company’s primary regulators, the FDIC and California Department of Business Oversight, as an integral part of their examination process, review the adequacy of the allowance. These regulatory agencies may require additions to the allowance based on their judgment about information available at the time of their examinations. Risk Rating - The Company assigns a risk rating to all loans, and periodically performs detailed reviews of all such loans over a certain threshold to identify credit risks and to assess the overall collectability of the portfolio. The most recent review of risk rating was completed in December 2017. These risk ratings are also subject to examination by independent specialists engaged by the Company, and the Company’s regulators. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans. These credit quality indicators are used to assign a risk rating to each individual loan. The risk ratings can be grouped into five major categories, defined as follows: Pass - A pass loan is a strong credit with no existing or known potential weaknesses deserving of management’s close attention. Special Mention - A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date. Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard - A substandard loan is not adequately protected by the current sound worth and paying capacity of the borrower or the value of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Well-defined weaknesses include a project’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the project’s failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful - Loans classified doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans. Doubtful classification is considered temporary and short term. Loss - Loans classified as loss are considered uncollectible and charged off immediately. The general reserve component of the allowance for credit losses also consists of reserve factors that are based on management’s assessment of the following for each portfolio segment: (1) inherent credit risk, (2) historical losses and (3) other qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole. Inherent credit risk and qualitative reserve factors are inherently subjective and are driven by the repayment risk associated with each class of loans. Bank Premises and Equipment - Land is carried at cost. Bank premises and equipment are carried at cost less accumulated depreciation. Depreciation is determined using the straight-line method over the estimated useful lives of the related assets. The useful lives of Bank premises are estimated to be between twenty and forty years. The useful lives of improvements to Bank premises, furniture, fixtures and equipment are estimated to be three to ten years. Leasehold improvements are amortized over the life of the asset or the term of the related lease, whichever is shorter. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to expense as incurred. The Bank evaluates premises and equipment for financial impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable. Federal Home Loan Bank (FHLB) Stock - The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. Investments in Low Income Housing Tax Credit Funds - The Bank has invested in limited partnerships that were formed to develop and operate affordable housing projects for low or moderate income tenants throughout California. Our ownership in each limited partnership is less than two percent. In accordance with ASU No. 2014-01, Investments - Equity Method and Joint Ventures (Topic 323), we elected to account for the investments in qualified affordable housing tax credit funds using the proportional amortization method. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received and the net investment performance is recognized as part of income tax expense (benefit). Each of the partnerships must meet the regulatory minimum requirements for affordable housing for a minimum 15-year compliance period to fully utilize the tax credits. If the partnerships cease to qualify during the compliance period, the credit may be denied for any period in which the project is not in compliance and a portion of the credit previously taken is subject to recapture with interest. The Company’s investment in Low Income Housing Tax Credit Funds is reported in other assets on the consolidated balance sheet. Other Real Estate Owned - Other real estate owned (OREO) is comprised of property acquired through foreclosure proceedings or acceptance of deeds-in-lieu of foreclosure. Losses recognized at the time of acquiring property in full or partial satisfaction of debt are charged against the allowance for credit losses. OREO, when acquired, is initially recorded at fair value less estimated disposition costs, establishing a new cost basis. Fair value of OREO is generally based on an independent appraisal of the property. Subsequent to initial measurement, OREO is carried at the lower of the recorded investment or fair value less disposition costs. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through noninterest expense. Revenues and expenses associated with OREO are reported as a component of noninterest expense when incurred. Foreclosed Assets - Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through operations. Operating costs after acquisition are expensed. Gains and losses on disposition are included in noninterest expense. The carrying value of foreclosed assets was $70,000 at December 31, 2017 and $362,000 at December 31, 2016, and is included in other assets on the consolidated balance sheets. Bank Owned Life Insurance - The Company has purchased life insurance policies on certain key executives. Company owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Business Combinations - The Company accounts for acquisitions of businesses using the acquisition method of accounting. Under the acquisition method, assets and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques included discounted cash flow analyses to determine these fair values. Any excess of the purchase price over amounts allocated to the acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Goodwill - Business combinations involving the Bank’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill. Total goodwill at December 31, 2017 and 2016 represents the excess of the purchase price of acquired businesses over the net fair value of assets, including identified intangible assets, acquired and liabilities assumed in the transactions accounted for under the purchase method of accounting. The value of goodwill is ultimately derived from the Bank’s ability to generate net earnings after the acquisitions. A decline in net earnings could be indicative of a decline in the fair value of goodwill and result in impairment. For that reason, goodwill is assessed at least annually for impairment. The Company has selected September 30 as the date to perform the annual impairment test. Management assessed qualitative factors including performance trends and noted no factors indicating goodwill impairment. Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount. No such events or circumstances arose during the fourth quarter of 2017, so goodwill was not required to be retested. Goodwill is the only intangible asset with an indefinite life on our balance sheet. Intangible Assets - The intangible assets at December 31, 2017 represent the estimated fair value of the core deposit relationships acquired in business combinations. Core deposit intangibles are being amortized using the straight-line method over an estimated life of ten years from the date of acquisition. Management evaluates the remaining useful lives quarterly to determine whether events or circumstances warrant a revision to the remaining periods of amortization. Based on the evaluation, no changes to the remaining useful lives was required. Management performed an annual impairment test on core deposit intangibles as of September 30, 2017 and determined no impairment was necessary. Core deposit intangibles are also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount. No such events or circumstances arose during the fourth quarter of 2017, so core deposit intangibles were not required to be retested. Loan Commitments and Related Financial Instruments - Financial instruments include off‑balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount of these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. Income Taxes - The Company files its income taxes on a consolidated basis with the Bank. The allocation of income tax expense represents each entity’s proportionate share of the consolidated provision for income taxes. Income tax expense represents the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. On the balance sheet, net deferred tax assets are included in accrued interest receivable and other assets. The realization of deferred income tax assets is assessed and a valuation allowance is recorded if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized. “More likely than not” is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed. Accounting for Uncertainty in Income Taxes - The Company uses a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return. A tax position is recognized as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the more likely than not test, no tax benefit is recorded. Interest expense and penalties associated with unrecognized tax benefits, if any, are classified as income tax expense in the consolidated statement of income. Retirement Plans - Employee 401(k) plan expense is the amount of employer matching contributions. Profit sharing plan expense is the amount of employer contributions. Contributions to the profit sharing plan are determined at the discretion of the Board of Directors. Deferred compensation and supplemental retirement plan expense is allocated over years of service. Earnings Per Common Share - Basic earnings per common share (EPS), which excludes dilution, is computed by dividing income available to common shareholders (net income after deducting dividends, if any, on preferred stock and accretion of discount) by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options or warrants, result in the issuance of common stock which shares in the earnings of the Company. All data with respect to computing earnings per share is retroactively adjusted to reflect stock dividends and splits and the treasury stock method is applied to determine the dilutive effect of stock options in computing diluted EPS. Comprehensive Income - Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity. Loss Contingencies - Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements. Restrictions on Cash - Cash on hand or on deposit with the Federal Reserve Bank was required to meet regulatory reserve and clearing requirements. Share-Based Compensation - Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. A Black-Scholes-Merton model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Additionally, the compensation expense for the Company’s employee stock ownership plan is based on the market price of the shares as they are committed to be released to participant accounts. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. Dividend Restriction - Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the Company or by the Company to shareholders. Fair Value of Financial Instruments - Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 3. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates. Recently Issued Accounting Standards: FASB Accounting Standards Update (ASU) 2014-09 - Revenue from Contracts with Customers (Topic 606): Revenue from Contracts with Customers was issued in May 2014. This ASU is the result of a joint project initiated by the FASB and the International Accounting Standards Board (IASB) to clarify the principles for recognizing revenue, and to develop common revenue standards and disclosure requirements that would: (1) remove inconsistencies and weaknesses in revenue requirements; (2) provide a more robust framework for addressing revenue issues; (3) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (4) provide more useful information to users of financial statements through improved disclosures; and (5) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. The guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides steps to follow to achieve the core principle. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required with regard to contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amendments will be applied through the election of one of two retrospective methods. Substantially all of the Company’s revenue is generated from interest income related to loans and investment securities, which are not within the scope of this guidance. The contracts that are within the scope of this guidance include service charges and fees on deposit accounts interchange fees, and merchant income. The Company has substantially completed its overall assessment of revenue streams and review of related contracts and other agreements that are within the scope of this guidance and did not identify any material changes to the timing of revenue recognition. The Company adopted ASU 2014-09 on its required effective date of January 1, 2018 utilizing the modified retrospective approach. Since there was no net income impact upon adoption of the new guidance, a cumulative effect adjustment to opening retained earnings was not deemed necessary. The Company is completing its evaluation of the ASU’s expanded disclosure requirement effective for the March 31, 2018 Form 10-Q. The Company expects the expanded disclosures to be primarily qualitative in nature. The Company does not expect material additions or revisions to our quantitative disclosures. FASB Accounting Standards Update (ASU) 2016-01 - Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, was issued January 2016. The main provisions of the update are to eliminate the available-for-sale classification of accounting for equity securities and to adjust the fair value disclosures for financial instruments carried at amortized costs such that the disclosed fair values represent an exit price as opposed to an entry price. The provisions of this update will require that equity securities be carried at fair market value on the balance sheet and any periodic changes in value will be adjustments to the income statement. A practical expedient is provided for equity securities without a readily determinable fair value, such that these securities can be carried at cost less any impairment. ASU No. 2016-01 is effective for interim and annual reporting periods beginning after December 15, 2017. The Company has performed an evaluation of the provisions of ASU No. 2016-01 and based on this evaluation, has determined that ASU No. 2016-01 will not have a material impact on the Company’s financial position, results of operations or its cash flows. FASB Accounting Standards Update (ASU) 2016-02 - Leases - Overall (Subtopic 845), was issued February 2016. The update requires all leases, with the exception of short-term leases that have contractual terms of no greater than one year, to be recorded on the balance sheet. Under the provisions of the update, leases classified as operating will be reflected on the balance sheet with the recognition of both a right-of-use asset and a lease liability. Under the update, a distinction will exist between finance and operating type leases and the rules for determining which classification a lease will fall into are similar to existing rules. For public business entities, the amendments of this update are effective for interim and annual periods beginning after December 15, 2018. The update requires a modified retrospective transition under which comparative balance sheets from the earliest historical period presented will be revised to reflect what the financials would have looked like were the provisions of the update applied consistently in all prior periods. The Company is currently evaluating the provisions of ASU No. 2016-02 and has determined that the provisions of ASU No. 2016-02 will result in an increase in assets to recognize the present value of the lease obligations with a corresponding increase in liabilities; however, the Company does not expect this to have a material impact on the Company’s results of operations or cash flows. FASB Accounting Standards Update (ASU) 2016-09 - Compensation - Stock Compensation (Subtopic 718): Improvements to Employee Share-Based Payment Accounting, was issued March 2016. This ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. Some of the key provisions of this new ASU include: (1) companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, and APIC pools will be eliminated. The guidance also eliminates the requirement that excess tax benefits be realized before companies can recognize them. In addition, the guidance requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity; (2) increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. The new guidance will also require an employer to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on its statement of cash flows (current guidance did not specify how these cash flows should be classified); and (3) permit companies to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. ASU No. 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016. Early adoption was permitted, but all of the guidance must be adopted in the same period. Effective January 1, 2017, the Company adopted ASU 2016-09 “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” including the election to continue to treat option forfeitures on an expected basis and to provide cash flow disclosures on a prospective basis. During the year ended December 31, 2017 the adoption of this standard resulted in the recognition of $853,000 in tax benefits related to the exercise of stock options and vesting of restricted shares during the period. FASB Accounting Standards Update (ASU) 2016-13 - Measurement of Credit Losses on Financial Instruments (Subtopic 326): Financial Instruments - Credit Losses, commonly referred to as “CECL,” was issued June 2016. The provisions of the update eliminate the probable initial recognition threshold under current GAAP which requires reserves to be based on an incurred loss methodology. Under CECL, reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the contractual term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity (“HTM”) debt securities. Under the provisions of the update, credit losses recognized on available for sale (“AFS”) debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans, with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Under current GAAP a purchased loan’s contractual balance is adjusted to fair value through a credit discount and no reserve is recorded on the purchased loan upon acquisition. Since under CECL reserves will be established for purchased loans at the time of acquisition, the accounting for purchased loans is made more comparable to the accounting for originated loans. Finally, increased disclosure requirements under CECL require organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. The FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. For public business entities that are SEC filers, the amendments of the update will become effective beginning January 1, 2020. While the Company is currently evaluating the provisions of ASU No. 2016-13 to determine the potential impact the new standard will have on the Company’s Consolidated Financial Statements, it has taken steps to prepare for the implementation when it becomes effective, such as forming an internal task force, gathering pertinent data, consulting with outside professionals, and evaluating its current IT systems. Management expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the first reporting period in which the new standard is effective, but cannot yet estimate the magnitude of the one-time adjustment or the overall impact of the new guidance on the Company’s financial position, results of operations or cash flows. FASB Accounting Standards Update (ASU) 2017-04 - Intangibles Goodwill and Other (Subtopic 350): Simplifying the Test for Goodwill Impairment, was issued January 2017. The provisions of the update eliminate the existing second step of the goodwill impairment test which provides for the allocation of reporting unit fair value among existing assets and liabilities, with the net leftover amount representing the implied fair value of goodwill. In replacement of the existing goodwill impairment rule, the update will provide that impairment should be recognized as the excess of any of the reporting unit’s goodwill over the fair value of the reporting unit. Under the provisions of this update, the amount of the impairment is limited to the carrying value of the reporting unit’s goodwill. For public business entities that are SEC filers, the amendments of the update will become effective in fiscal years beginning after December 15, 2019. FASB Accounting Standards Update (ASU) 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, was issued March 2017. The provisions of the update require premiums recognized upon the purchase of callable debt securities to be amortized to the earliest call date in order to avoid losses recognized upon call. For public business entities that are SEC filers, the amendments of the update will become effective in fiscal years beginning after December 15, 2018. Management does not expect the requirements of this update to have a material impact on the Company’s financial position, results of operations or cash flows. FASB Accounting Standards Update (ASU) 2017-09 - Compensation - Stock Compensation (Subtopic 718): Scope of Modification Accounting, was issued May 2017. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following conditions are met: the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date. The amendments in this Update are effective for annual periods, and interim periods within those annual periods, beginning after December 31, 2017. Early adoption is permitted, including adoption in any interim period. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. FASB Accounting Standards Update (ASU) 2017-12 - Derivatives and Hedging (Topic 815); Targeted Improvements to Accounting for Hedging Activities, was issued August 2017. This ASU’s objectives are to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities; and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU No. 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018; early adoption is permitted. The Company currently does not designate any derivative financial instruments as formal hedging relationships, and therefore, does not utilize hedge accounting. However, the Company is currently evaluating this ASU to determine whether its provisions will enhance the Company’s ability to employ risk management strategies, while improving the transparency and understanding of those strategies for financial statement users. FASB Accounting Standards Update (ASU) 2018-02 - Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” ASU 2018-02, was issued to address the income tax accounting treatment of the stranded tax effects within other comprehensive income due to the prohibition of backward tracing due to an income tax rate change that was initially recorded in other comprehensive income. This issue came about from the enactment of the Tax Cuts and Jobs Act on December 22, 2017 that changed the Company’s income tax rate from 35% to 21%. The ASU changed current accounting whereby an entity may elect to reclassify the stranded tax effect from accumulated other comprehensive income to retained earnings. The ASU is effective for periods beginning after December 15, 2018 although early adoption is permitted. The Company adopted ASU 2018-02 in the fourth quarter of 2017 and reclassified its stranded tax debit of $501,000 within accumulated other comprehensive income to retained earnings at December 31, 2017. |
Acquisitions |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ACQUISITIONS On October 1, 2017, the Company completed the acquisition of Folsom Lake Bank (“FLB”) for an aggregate transaction value of $28,475,000. FLB was merged into the Bank, and the Company issued 1,276,888 shares of common stock to the former shareholders of FLB. The Company also assumed the outstanding FLB stock options. With the FLB acquisition, the Company added two full service branches, located in Folsom, and Rancho Cordova, California. The FLB Roseville branch was consolidated with the Company’s Roseville branch in October 2017. FLB’s assets as of October 1, 2017 totaled approximately $196,148,000. In accordance with GAAP guidance for business combinations, the Company recorded $13,466,000 of goodwill and $1,879,000 of other intangible assets on the acquisition date. The other intangible assets are primarily related to core deposits and are being amortized using a straight-line method over a period of ten years with no significant residual value. For tax purposes, purchase accounting adjustments including goodwill are all non-taxable and/or non-deductible. Acquisition related costs of $1,828,000 are included in the income statement for the year ended December 31, 2017. The acquisition was consistent with the Company’s strategy to build a regional presence in Central California. The acquisition offers the Company the opportunity to increase profitability by introducing existing products and services to the acquired customer base as well as add new customers in the expanded region. Goodwill arising from the acquisition consisted largely of synergies and the expected cost savings resulting from the combined operations. The following table summarizes the consideration paid for FLB and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date (in thousands):
The fair value of net assets acquired includes fair value adjustments to certain loans that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. As such, these loans were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans, which have shown evidence of credit deterioration since origination. Loans acquired that were not subject to these requirements include non-impaired loans and customer receivables with a fair value and gross contractual amounts receivable of $117,815,000 and $121,872,000, respectively, on the date of acquisition. See Note 5 for discussion of purchased credit impaired loans. On October 1, 2016, the Company acquired Sierra Vista Bank, headquartered in Folsom, California, wherein Sierra Vista Bank, with one branch in Folsom, one branch in Fair Oaks, and one branch in Cameron Park, merged with and into Central Valley Community Bancorp’s subsidiary, Central Valley Community Bank, in a combined cash and stock transaction. Sierra Vista Bank’s assets as of October 1, 2016 totaled approximately $155,154,000. The acquired assets and liabilities were recorded at fair value at the date of acquisition. Under the terms of the merger agreement, the Company issued an aggregate of approximately 1,058,851 shares of its common stock and cash totaling approximately $9,468,000 to the former shareholders of Sierra Vista Bank. In accordance with GAAP guidance for business combinations, the Company recorded $10,314,000 of goodwill and $508,000 of other intangible assets on the acquisition date. The other intangible assets are primarily related to core deposits and are being amortized using a straight-line method over a period of ten years with no significant residual value. For tax purposes, purchase accounting adjustments including goodwill are all non-taxable and/or non-deductible. Acquisition related costs of $1,782,000 are included in the income statement for the year ended December 31, 2016. The acquisition was consistent with the Company’s strategy to build a regional presence in Central California. The acquisition offers the Company the opportunity to increase profitability by introducing existing products and services to the acquired customer base as well as add new customers in the expanded region. Goodwill arising from the acquisition consisted largely of synergies and the cost savings resulting from the combined operations. The following table summarizes the consideration paid for Sierra Vista Bank and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date (in thousands):
The fair value of net assets acquired includes fair value adjustments to certain loans that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. As such, these loans were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans, which have shown evidence of credit deterioration since origination. Loans acquired that were not subject to these requirements include non-impaired loans and customer receivables with a fair value and gross contractual amounts receivable of $121,902,000 and $124,396,000, respectively, on the date of acquisition. See Note 5 for discussion of purchased credit impaired loans. Pro Forma Results of Operations The accompanying consolidated financial statements include the accounts of Sierra Vista Bank since October 1, 2016 and Folsom Lake Bank since October 1, 2017. The following table presents pro forma results of operations information for the periods presented as if the acquisitions had occurred on January 1, 2015 after giving effect to certain adjustments. The unaudited pro forma results of operations for the years ended December 31, 2017, 2016, and 2015 include the historical accounts of the Company, Folsom Lake Bank, and Sierra Vista Bank and pro forma adjustments as may be required, including the amortization of intangibles with definite lives and the amortization or accretion of any premiums or discounts arising from fair value adjustments for assets acquired and liabilities assumed. The pro forma information is intended for informational purposes only and is not necessarily indicative of the Company’s future operating results or operating results that would have occurred had the acquisitions been completed at the beginning of each respective year. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, expense efficiencies or asset dispositions. (In thousands, except per-share amounts):
|
Fair Value Measurements |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair Value Hierarchy Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In accordance with applicable guidance, the Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Valuations within these levels are based upon: Level 1 — Quoted market prices (unadjusted) for identical instruments traded in active exchange markets that the Company has the ability to access as of the measurement date. Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable or can be corroborated by observable market data. Level 3 — Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect the Company’s estimates of assumptions that market participants would use on pricing the asset or liability. Valuation techniques include management judgment and estimation which may be significant. Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, we report the transfer at the beginning of the reporting period. The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):
These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates. These estimates are made at a specific point in time based on relevant market data and information about the financial instruments. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding 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 fair values presented. The methods and assumptions used to estimate fair values are described as follows: (a) Cash and Cash Equivalents — The carrying amounts of cash and due from banks, interest-earning deposits in other banks, and Federal funds sold approximate fair values and are classified as Level 1. (b) Investment Securities — Investment securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for investment securities classified in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators. (c) Loans — Fair values of loans are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Purchased credit impaired (PCI) loans are measured at estimated fair value on the date of acquisition. Carrying value is calculated as the present value of expected cash flows and approximates fair value. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are initially valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. (d) FHLB Stock — It is not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. (e) Deposits — Fair value of demand deposit, savings, and money market accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair value for fixed and variable rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities resulting in a Level 2 classification. (f) Short-Term Borrowings — The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification. The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification. (g) Accrued Interest Receivable/Payable — The fair value of accrued interest receivable and payable is based on the fair value hierarchy of the related asset or liability. (h) Off-Balance Sheet Instruments — Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material. Assets Recorded at Fair Value The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2017: Recurring Basis The Company is required or permitted to record the following assets at fair value on a recurring basis under other accounting pronouncements (in thousands):
Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for available-for-sale investment securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators. Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the year ended December 31, 2017, no transfers between levels occurred. There were no Level 3 assets measured at fair value on a recurring basis at December 31, 2017. Also there were no liabilities measured at fair value on a recurring basis at December 31, 2017. Non-recurring Basis The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include the following assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2017 (in thousands):
At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. The fair value of impaired loans is based on the fair value of the collateral. Impaired loans were determined to be collateral dependent and categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn required the use of unobservable inputs and assumptions in fair value measurements. Impaired loans evaluated under the discounted cash flow method are excluded from the table above. The discounted cash flow method as prescribed by ASC 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest rate which is not a market rate. There were no changes in valuation techniques used during the year ended December 31, 2017. Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics. As of December 31, 2017, there were no loans measured using the fair value of the collateral for collateral dependent loans. During the year ended December 31, 2017 specific allocation for the allowance for credit losses related to loans carried at fair value was none, compared to $15,000 during the year ended December 31, 2016. There were no net charge-offs related to loans carried at fair value at December 31, 2017 and 2016. There were no liabilities measured at fair value on a non-recurring basis at December 31, 2017. The following two tables present information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of December 31, 2016: Recurring Basis The Company is required or permitted to record the following assets at fair value on a recurring basis under other accounting pronouncements (in thousands):
Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for available-for-sale investment securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators. There were no Level 3 assets measured at fair value on a recurring basis at December 31, 2016. Also there were no liabilities measured at fair value on a recurring basis at December 31, 2016. Non-recurring Basis The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include the following assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2016 (in thousands):
At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent real estate loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. The fair value of impaired loans is based on the fair value of the collateral. Impaired loans were determined to be collateral dependent and categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn required the use of unobservable inputs and assumptions in fair value measurements. Impaired loans evaluated under the discounted cash flow method are excluded from the table above. The discounted cash flow method as prescribed by ASC Topic 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest rate which is not a market rate. There were no changes in valuation techniques used during the year ended December 31, 2016. Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics. Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans had a principal balance of $62,000 with a valuation allowance of $15,000 at December 31, 2016, and a resulting fair value of $47,000. The valuation allowance represents specific allocations for the allowance for credit losses for impaired loans. Fair value of other repossessed assets is based on observable market data for other similar property as adjusted by management for depreciation and other asset conditions impacting value. During the year ended December 31, 2016, there was no provision for credit losses related to loans carried at fair value. During the year ended December 31, 2016, there was no net charge-offs related to loans carried at fair value. There were no liabilities measured at fair value on a non-recurring basis at December 31, 2016. |
Investment Securities |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities | INVESTMENT SECURITIES The fair value of the available-for-sale investment portfolio reflected an unrealized gain of $4,012,000 at December 31, 2017 compared to an unrealized loss of $891,000 at December 31, 2016. The unrealized gain/(loss) recorded is net of $1,186,000 and $(375,000) in tax liabilities (benefits) as accumulated other comprehensive income within shareholders’ equity at December 31, 2017 and 2016, respectively. The following tables set forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands):
During 2014, to better manage our interest rate risk, the Company transferred from available-for-sale to held-to-maturity selected municipal securities in our portfolio having a book value of approximately $31 million, a market value of approximately $32 million, and a net unrecognized gain of approximately $163,000. This transfer was completed after careful consideration of our intent and ability to hold these securities to maturity. During the first quarter of 2016, management sold certain investment securities of which management identified that five of the 13 securities sold were previously designated as held-to-maturity (HTM). Through an oversight during the portfolio restructuring analysis related to this transaction, management unintentionally sold these five HTM securities. The book value of the HTM securities sold was $8.5 million. The gain realized on the sale of the HTM securities was $696,000. As such, management was required to reclassify the remaining HTM securities with a fair value of $23.1 million to the AFS designation. Proceeds and gross realized gains (losses) on investment securities for the years ended December 31, 2017, 2016, and 2015 are shown below (in thousands):
Losses recognized in 2017, 2016, and 2015 were incurred in order to reposition the investment securities portfolio based on the current rate environment. The securities which were sold at a loss were acquired when the rate environment was not as volatile. The securities which were sold were primarily purchased several years ago to serve a purpose in the rate environment in which the securities were purchased. The Company addressed risks in the security portfolio by selling these securities and using the proceeds to purchase securities that fit with the Company’s current risk profile. The provision (benefit) for income taxes includes $1,178,000, $515,000, and $615,000 income tax impact from the reclassification of unrealized net gains on available-for-sale securities to realized net gains on available-for-sale securities for the years ended December 31, 2017, 2016, and 2015, respectively. Investment securities with unrealized losses at December 31, 2017 and 2016 are summarized and classified according to the duration of the loss period as follows (in thousands):
We periodically evaluate each investment security for other-than-temporary impairment, relying primarily on industry analyst reports, observation of market conditions and interest rate fluctuations. The portion of the impairment that is attributable to a shortage in the present value of expected future cash flows relative to the amortized cost should be recorded as a current period charge to earnings. The discount rate in this analysis is the original yield expected at time of purchase. As of December 31, 2017, the Company performed an analysis of the investment portfolio to determine whether any of the investments held in the portfolio had an other-than-temporary impairment (OTTI). Management evaluated all investment securities with an unrealized loss at December 31, 2017, and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at December 31, 2017 greater than 10% of the recorded book value on that date, or which had an unrealized loss of more than $10,000. Management also analyzed any securities that may have been downgraded by credit rating agencies. For those bonds that met the evaluation criteria, management obtained and reviewed the most recently published national credit ratings for those bonds. For those bonds that were obligations of states and political subdivisions with an investment grade rating by the rating agencies, management also evaluated the financial condition of the municipality and any applicable municipal bond insurance provider and concluded during March 2016 that a $136,000 credit related impairment related to one security with a fair value of $2,995,000 and a pre-impairment amortized cost of $3,131,000 existed. The Company recorded an other-than-temporary impairment loss of $136,000 during the twelve months ended December 31, 2016. There were no OTTI losses recorded during the twelve months ended December 31, 2017. U.S. Government Agencies - At December 31, 2017, the Company held 22 U.S. Government agency securities of which two were in a loss position for less than 12 months and two were in a loss position and had been in a loss position for 12 months or more. The unrealized losses on the Company’s investments in U.S. Government Agencies were caused by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized costs of the investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2017. Obligations of States and Political Subdivisions - At December 31, 2017, the Company held 91 obligations of states and political subdivision securities of which one was in a loss position for less than 12 months and one was in a loss position or had been in a loss position for 12 months or more. The unrealized losses on the Company’s investments in obligations of states and political subdivision securities were caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2017. U.S. Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations - At December 31, 2017, the Company held 150 U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligation securities of which 42 were in a loss position for less than 12 months and 27 in a loss position for more than 12 months. The unrealized losses on the Company’s investments in U.S. Government sponsored entity and agencies collateralized by residential mortgage obligations were caused by interest rate changes. The contractual cash flows of those investments are guaranteed or supported by an agency or sponsored entity of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2017. Private Label Mortgage and Asset Backed Securities - At December 31, 2017, the Company had a total of 30 PLMBS with a remaining principal balance of $91,033,000 and a gross and net unrealized loss of approximately $352,000. 17 of these securities had an unrealized loss at December 31, 2017. Ten of these PLMBS with a remaining principal balance of $1,359,000 had credit ratings below investment grade. The Company continues to monitor these securities for changes in credit ratings or other indications of credit deterioration. The following table provides a rollforward for the years ended December 31, 2017 and 2016 of investment securities credit losses recorded in earnings (in thousands). The beginning balance represents the credit loss component for which OTTI occurred on debt securities in prior periods. Additions represent the first time a debt security was credit impaired or when subsequent credit impairments have occurred on securities for which OTTI credit losses have been previously recognized.
The amortized cost and estimated fair value of available-for-sale investment securities at December 31, 2017 and 2016 by contractual maturity are shown in the two tables below (in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.
Investment securities with amortized costs totaling $88,930,000 and $86,418,000 and fair values totaling $90,541,000 and $88,903,000 were pledged as collateral for borrowing arrangements, public funds and for other purposes at December 31, 2017 and 2016, respectively. |
Loans and Allowance for Credit Losses |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Allowance for Credit Losses | LOANS AND ALLOWANCE FOR CREDIT LOSSES Outstanding loans are summarized as follows (in thousands):
At December 31, 2017 and 2016, loans originated under Small Business Administration (SBA) programs totaling $25,925,000 and $16,590,000, respectively, were included in the real estate and commercial categories. Approximately $356,977,000 in loans were pledged under a blanket lien as collateral to the FHLB for the Bank’s remaining borrowing capacity of $234,689,000 as of December 31, 2017. The Bank’s credit limit varies according to the amount and composition of the investment and loan portfolios pledged as collateral. Salaries and employee benefits totaling $2,593,000, $2,344,000, and $2,056,000 have been deferred as loan origination costs for the years ended December 31, 2017, 2016, and 2015, respectively. Purchased Credit Impaired Loans The Company has loans that were acquired in acquisitions for which there was at acquisition evidence of deterioration of credit quality since origination, and for which it was probable at acquisition that all contractually required payments would not be collected. The carrying amount of those loans is included in the balance sheet amounts of loans receivable at December 31. The amounts of loans at December 31 are as follows (in thousands):
Purchased credit impaired (PCI) loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. The Company estimates the amount and timing of expected cash flows for each loan and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income. Loans acquired during each year for which it was probable at acquisition that all contractually required payments would not be collected are as follows (in thousands):
Certain of the loans acquired by the Company that are within the scope of Topic ASC 310-30 are not accounted for using the income recognition model of the Topic because the Company cannot reliably estimate cash flows expected to be collected. The carrying amounts of such loans (which are included in the carrying amount, net of allowance, described above) are as follows.
Allowance for Credit Losses The allowance for credit losses (the “allowance”) is a valuation allowance for probable incurred credit losses in the Company’s loan portfolio. The allowance is established through a provision for credit losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the allowance. Cash received on previously charged-off credits is recorded as a recovery to the allowance. The overall allowance consists of two primary components, specific reserves related to impaired loans and general reserves for probable incurred losses related to loans that are not impaired. For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment (and in certain cases peer loss data) over the most recent 20 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole. Changes in the allowance for credit losses were as follows (in thousands):
The following table shows the summary of activities for the allowance for credit losses as of and for the years ended December 31, 2017, 2016, and 2015 by portfolio segment (in thousands):
The following is a summary of the allowance for credit losses by impairment methodology and portfolio segment as of December 31, 2017 and December 31, 2016 (in thousands):
The following table shows the ending balances of loans as of December 31, 2017 and December 31, 2016 by portfolio segment and by impairment methodology (in thousands):
The following table shows the loan portfolio by class allocated by management’s internal risk ratings at December 31, 2017 (in thousands):
The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2016 (in thousands):
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2017 (in thousands):
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2016 (in thousands):
The following table shows information related to impaired loans by class at December 31, 2017 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following table shows information related to impaired loans by class at December 31, 2016 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2017, 2016, and 2015 (in thousands):
Foregone interest on nonaccrual loans totaled $210,000, $245,000, and $340,000 for the years ended December 31, 2017, 2016, and 2015, respectively. Interest income recognized on cash basis during the years presented above was not considered significant for financial reporting purposes. Troubled Debt Restructurings: As of December 31, 2017 and 2016, the Company has a recorded investment in troubled debt restructurings of $3,551,000 and, $3,109,000, respectively. The Company has allocated $36,000 and $82,000 of specific reserves for those loans at December 31, 2017 and 2016, respectively. The Company has committed to lend no additional amounts as of December 31, 2017 to customers with outstanding loans that are classified as troubled debt restructurings. For the years ended December 31, 2017, 2016, and 2015 the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. During the same periods, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower were forgiven. The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2017 (dollars in thousands):
The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2016 (dollars in thousands):
The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2015 (dollars in thousands):
A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings within 12 months following the modification during the years ended December 31, 2017, 2016, and 2015. |
Bank Premises and Equipment |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank Premises and Equipment | BANK PREMISES AND EQUIPMENT Bank premises and equipment consisted of the following (in thousands):
Depreciation and amortization included in occupancy and equipment expense totaled $1,429,000, $1,320,000 and $1,392,000 for the years ended December 31, 2017, 2016, and 2015, respectively. |
Goodwill and Intangible Assets |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS The change in goodwill during the years ended December 31, 2017, 2016, and 2015 is as follows (in thousands):
Business combinations involving the Company’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill. Total goodwill at December 31, 2017 and 2016 was $53,777,000 and $40,231,000, respectively. Total goodwill at December 31, 2017 consisted of $13,466,000, $10,394,000, $6,340,000, $14,643,000, and $8,934,000 representing the excess of the cost of Folsom Lake Bank, Sierra Vista Bank, Visalia Community Bank, Service 1st Bancorp, and Bank of Madera County, respectively, over the net of the amounts assigned to assets acquired and liabilities assumed in the transactions accounted for under the purchase method of accounting. During the year ended December 31, 2017, the Company determined that a measurement adjustment was appropriate to the goodwill recorded as part of the Sierra Vista Bank acquisitions which resulted in an $80,000 increase to goodwill. The value of goodwill is ultimately derived from the Company’s ability to generate net earnings after the acquisitions and is not deductible for tax purposes. A decline in net earnings could be indicative of a decline in the fair value of goodwill and result in impairment. For that reason, goodwill is assessed at least annually for impairment. The Company has selected September 30 as the date to perform the annual impairment test. Management assessed qualitative factors including performance trends and noted no factors indicating goodwill impairment. Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount. No such events or circumstances arose during the fourth quarter of 2017, so goodwill was not required to be retested. The intangible assets at December 31, 2017 represent the estimated fair value of the core deposit relationships acquired in the acquisition of Folsom Lake Bank in 2017 of $1,879,000, Sierra Vista Bank in 2016 of $508,000 and the 2013 acquisition of Visalia Community Bank of $1,365,000. Core deposit intangibles are being amortized using the straight-line method over an estimated life of ten years from the date of acquisition. At December 31, 2017, the weighted average remaining amortization period is eight years. The carrying value of intangible assets at December 31, 2017 was $3,027,000, net of $725,000 in accumulated amortization expense. The carrying value at December 31, 2016 was $1,383,000, net of $490,000 in accumulated amortization expense. Management evaluates the remaining useful lives quarterly to determine whether events or circumstances warrant a revision to the remaining periods of amortization. Based on the evaluation, no changes to the remaining useful lives was required. Management performed an annual impairment test on core deposit intangibles as of September 30, 2017 and determined no impairment was necessary. Amortization expense recognized was $234,000 for 2017, $149,000 for 2016, and $320,000 for 2015. The following table summarizes the Company’s estimated core deposit intangible amortization expense for each of the next five years (in thousands):
|
Deposits |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | DEPOSITS Interest-bearing deposits consisted of the following (in thousands):
Aggregate annual maturities of time deposits are as follows (in thousands):
Interest expense recognized on interest-bearing deposits consisted of the following (in thousands):
|
Borrowing Arrangements |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Banking and Thrift [Abstract] | |
Borrowing Arrangements | BORROWING ARRANGEMENTS Federal Home Loan Bank Advances - As of December 31, 2017 and 2016, the Company had no Federal Home Loan Bank (FHLB) of San Francisco advances. Approximately $356,977,000 in loans were pledged under a blanket lien as collateral to the FHLB for the Bank’s remaining borrowing capacity of $234,689,000 as of December 31, 2017. FHLB advances are also secured by investment securities with amortized costs totaling $416,000 and $584,000 and market values totaling $440,000 and $637,000 at December 31, 2017 and 2016, respectively. The Bank’s credit limit varies according to the amount and composition of the investment and loan portfolios pledged as collateral. Lines of Credit - The Bank had unsecured lines of credit with its correspondent banks which, in the aggregate, amounted to $40,000,000 at December 31, 2017 and 2016, at interest rates which vary with market conditions. As of December 31, 2017, the Company had no in Federal funds purchased. The Company had $400,000 overnight borrowings outstanding under these credit facilities at December 31, 2016. Federal Reserve Line of Credit - The Bank has a line of credit in the amount of $6,740,000 and $9,102,000 with the Federal Reserve Bank of San Francisco (FRB) at December 31, 2017 and 2016, respectively, which bears interest at the prevailing discount rate collateralized by investment securities with amortized costs totaling $7,431,000 and $9,315,000 and market values totaling $7,437,000 and $9,277,000, respectively. At December 31, 2017 and 2016, the Bank had no outstanding borrowings with the FRB. |
Junior Subordinated Deferrable Interest Debentures |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Brokers and Dealers [Abstract] | |
Junior Subordinated Deferrable Interest Debentures | JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES Service 1st Capital Trust I is a Delaware business trust formed by Service 1st. The Company succeeded to all of the rights and obligations of Service 1st in connection with the merger with Service 1st as of November 12, 2008. The Trust was formed on August 17, 2006 for the sole purpose of issuing trust preferred securities fully and unconditionally guaranteed by Service 1st. Under applicable regulatory guidance, the amount of trust preferred securities that is eligible as Tier 1 capital is limited to 25% of the Company’s Tier 1 capital on a pro forma basis. At December 31, 2017, all of the trust preferred securities that have been issued qualify as Tier 1 capital. The trust preferred securities mature on October 7, 2036, are redeemable at the Company’s option, and require quarterly distributions by the Trust to the holder of the trust preferred securities at a variable interest rate which will adjust quarterly to equal the three month LIBOR plus 1.60%. The Trust used the proceeds from the sale of the trust preferred securities to purchase approximately $5,155,000 in aggregate principal amount of Service 1st’s junior subordinated notes (the Notes). The Notes bear interest at the same variable interest rate during the same quarterly periods as the trust preferred securities. The Notes are redeemable by the Company on any January 7, April 7, July 7, or October 7 or at any time within 90 days following the occurrence of certain events, such as: (i) a change in the regulatory capital treatment of the Notes (ii) in the event the Trust is deemed an investment company or (iii) upon the occurrence of certain adverse tax events. In each such case, the Company may redeem the Notes for their aggregate principal amount, plus any accrued but unpaid interest. The Notes may be declared immediately due and payable at the election of the trustee or holders of 25% of the aggregate principal amount of outstanding Notes in the event that the Company defaults in the payment of any interest following the nonpayment of any such interest for 20 or more consecutive quarterly periods. Holders of the trust preferred securities are entitled to a cumulative cash distribution on the liquidation amount of $1,000 per security. For each January 7, April 7, July 7 or October 7 of each year, the rate will be adjusted to equal the three month LIBOR plus 1.60%. As of December 31, 2017, the rate was 2.96%. Interest expense recognized by the Company for the years ended December 31, 2017, 2016, and 2015 was $147,000, $121,000 and $99,000, respectively. |
Income Taxes |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES The provision for income taxes for the years ended December 31, 2017, 2016, and 2015 consisted of the following (in thousands):
The determination of the amount of deferred income tax assets which are more likely than not to be realized is primarily dependent on projections of future earnings, which are subject to uncertainty and estimates that may change given economic conditions and other factors. The realization of deferred income tax assets is assessed and a valuation allowance is recorded if it is more likely than not that all or a portion of the deferred tax asset will not be realized. More likely than not is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of the evidence, a valuation allowance is needed. Thus, Management concludes no valuation allowance is necessary against deferred tax assets. Deferred tax assets (liabilities) consisted of the following (in thousands):
The provision for income taxes differs from amounts computed by applying the statutory Federal income tax rates to operating income before income taxes. The significant items comprising these differences for the years ended December 31, 2017, 2016, and 2015 consisted of the following:
As of December 31, 2017, the Company had Federal and California net operating loss (“NOL”) carry-forwards of $8,527,000 and $8,850,000, respectively. These NOLs were acquired through business combinations and are subject to IRC 382 and begin expiring in 2028, for federal and California purposes. While they are subject to IRC Section 382, management has determined that all of the NOLs are more than likely than not to be utilized. As a result of the enactment of the Tax Cuts and Jobs Act (the “ Tax Act”) on December 22, 2017, the federal tax rate applied to the Company’s net deferred tax assets were re-measured to reflect the 2018 tax rates (the rates at which the deferred tax items are expected to reverse). The change to the tax rates (including the rate change applied to deferred taxes reflected in other comprehensive income and certain tax-advantaged investments as reflected in other assets) resulted in an increase to the Company’s tax provision of $3,535,000. As part of the Tax Act for tax years beginning after December 31, 2017, alternative minimum tax credit carryforwards are refundable and are expected to be fully refunded by 2022. As such, they are not dependent on future taxable income to be realized and have been classified as a current tax receivable. During the year ended December 31, 2017, the Company adopted ASU 2016-09 “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” which due to the exercise of stock options in the current period, resulted in the recognition of $853,000 in tax benefits. The Company and its subsidiary file income tax returns in the U.S. federal and California jurisdictions. The Company conducts all of its business activities in the State of California. There are no pending U.S. federal or California Franchise Tax Board income tax examinations by those taxing authorities. The Company is no longer subject to the examination by U.S. federal taxing authorities for the years ended before December 31, 2014 and by the state and local taxing authorities for the years ended before December 31, 2013. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
This represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The Company does expect the amount of unrecognized tax benefits to decrease in the next 12 months due to closure of statues of limitations in the taxing jurisdictions. During the years ended December 31, 2017 and 2016, the Company recorded $0 and $44,000, respectively, in interest or penalties related to uncertain tax positions. |
Commitments and Contingencies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Leases - The Bank leases certain of its branch facilities and administrative offices under noncancelable operating leases. Rental expense included in occupancy and equipment and other expenses totaled $2,533,000, $2,300,000 and $2,273,000 for the years ended December 31, 2017, 2016, and 2015, respectively. Future minimum lease payments on noncancelable operating leases are as follows (in thousands):
Federal Reserve Requirements - Banks are required to maintain reserves with the Federal Reserve Bank equal to a percentage of their reservable deposits. The amount of such reserve balances required at December 31, 2017 was $13,823,000. Correspondent Banking Agreements - The Bank maintains funds on deposit with other federally insured financial institutions under correspondent banking agreements. Uninsured deposits totaled $306,000 at December 31, 2017. Financial Instruments With Off-Balance-Sheet Risk - The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments consist of commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized on the balance sheet. The Bank’s exposure to credit loss in the event of nonperformance by the other party for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and standby letters of credit as it does for loans included on the balance sheet. The following financial instruments represent off-balance-sheet credit risk (in thousands):
Commitments to extend credit consist primarily of unfunded commercial loan commitments and revolving lines of credit, single-family residential equity lines of credit and commercial real estate construction loans. Construction loans are established under standard underwriting guidelines and policies and are secured by deeds of trust, with disbursements made over the course of construction. Commercial revolving lines of credit have a high degree of industry diversification. 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. Standby letters of credit are generally secured and are issued by the Bank to guarantee the financial obligation or performance of a customer to a third party. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. The fair value of the liability related to these standby letters of credit, which represents the fees received for issuing the guarantees, was not significant at December 31, 2017 and 2016. The Company recognizes these fees as revenue over the term of the commitment or when the commitment is used. At December 31, 2017, commercial loan commitments represent 50% of total commitments and are generally secured by collateral other than real estate or unsecured. Real estate loan commitments represent 39% of total commitments and are generally secured by property with a loan-to-value ratio not to exceed 80%. Consumer loan commitments represent the remaining 10% of total commitments and are generally unsecured. In addition, the majority of the Bank’s loan commitments have variable interest rates. At December 31, 2017 and 2016, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $326,000 and $125,000, respectively. The contingent allocation for probable loan loss experience on unfunded obligations is calculated by management using an appropriate, systematic, and consistently applied process. While related to credit losses, this allocation is not a part of the ALLL and is considered separately as a liability for accounting and regulatory reporting purposes. Changes in this contingent allocation are recorded in other non-interest expense. Concentrations of Credit Risk - At December 31, 2017, in management’s judgment, a concentration of loans existed in commercial loans and real-estate-related loans, representing approximately 96.6% of total loans of which 12.9% were commercial and 83.7% were real-estate-related. At December 31, 2016, in management’s judgment, a concentration of loans existed in commercial loans and real-estate-related loans, representing approximately 96.5% of total loans of which 15.1% were commercial and 81.4% were real-estate-related. Management believes the loans within these concentrations have no more than the typical risks of collectability. However, in light of the current economic environment, additional declines in the performance of the economy in general, or a continued decline in real estate values or drought-related decline in agricultural business in the Company’s primary market area could have an adverse impact on collectability, increase the level of real-estate-related nonperforming loans, or have other adverse effects which alone or in the aggregate could have a material adverse effect on the financial condition, results of operations and cash flows of the Company. Contingencies - The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to such actions will not materially affect the consolidated financial position or consolidated results of operations of the Company. |
Shareholders' Equity |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | SHAREHOLDERS’ EQUITY Regulatory Capital - The Company and the Bank are subject to certain regulatory capital requirements administered by the Board of Governors of the Federal Reserve System and the FDIC. Failure to meet these minimum capital requirements could result in mandatory or, discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. The Company and the Bank each meet specific capital guidelines that involve quantitative measures of their respective assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. These quantitative measures are established by regulation and require that the Company and the Bank maintain minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Bank is also subject to additional capital guidelines under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. The most recent notification from the FDIC categorized the Bank as well capitalized under these guidelines. Management knows of no conditions or events since that notification that would change the Bank’s category. Capital ratios are reviewed by Management on a regular basis to ensure that capital exceeds the prescribed regulatory minimums and is adequate to meet our anticipated future needs. For all periods presented, the Bank’s ratios exceed the regulatory definition of well capitalized under the regulatory framework for prompt correct action and the Company’s ratios exceed the required minimum ratios for capital adequacy purposes. Effective January 1, 2015, bank holding companies with consolidated assets of $1 billion or more and banks like Central Valley Community Bank must comply with new minimum capital ratio requirements to be phased-in between January 1, 2015 and January 1, 2019, which consist of the following: (i) a new common equity Tier 1 capital to total risk weighted assets ratio of 4.5%; (ii) a Tier 1 capital to total risk weighted assets ratio of 6% (increased from 4%); (iii) a total capital to total risk weighted assets ratio of 8% (unchanged from current rules); and (iv) a Tier 1 capital to adjusted average total assets (“leverage”) ratio of 4%. In addition, a “capital conversation buffer” is established which, when fully phased-in, will require maintenance of a minimum of 2.5% of common equity Tier 1 capital to total risk weighted assets in excess of the regulatory minimum capital ratio requirements described above. The 2.5% buffer will increase the minimum capital ratios to (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. The new buffer requirement is being phased-in between January 1, 2016 and January 1, 2019. The capital conservation buffer as of December 31, 2017 was 1.250% and 0.625% as of December 31, 2016. If the capital ratio levels of a banking organization fall below the capital conservation buffer amount, the organization will be subject to limitations on (i) the payment of dividends; (ii) discretionary bonus payments; (iii) discretionary payments under Tier 1 instruments; and (iv) engaging in share repurchases. Management believes that the Company and the Bank met all their capital adequacy requirements as of December 31, 2017 and 2016. There are no conditions or events since those notifications that management believes have changed those categories. The capital ratios for the Company and the Bank are presented in the table below (exclusive of the capital conservation buffer). The following table presents the Company’s regulatory capital ratios as of December 31, 2017 and December 31, 2016.
The following table presents the Bank’s regulatory capital ratios as of December 31, 2017 and December 31, 2016.
Dividends - During 2017, the Bank declared and paid cash dividends to the Company in the amount of $3,133,000 in connection with the cash dividends to the Company’s shareholders approved by the Company’s Board of Directors. The Bank may not pay any dividend that would cause it to be deemed not “well capitalized” under applicable banking laws and regulations. The Company declared and paid a total of $3,010,000 or $0.24 per common share cash dividend to shareholders of record during the year ended December 31, 2017. During 2016, the Bank declared and paid cash dividends to the Company in the amount of $13,010,000, in connection with the SVB acquisition, and cash dividends to the Company’s shareholders approved by the Company’s Board of Directors. The Company declared and paid a total of $2,715,000 or $0.24 per common share cash dividend to shareholders of record during the year ended December 31, 2016. During 2015, the Bank declared and paid cash dividends to the Company in the amount of $2,260,000, in connection with the cash dividends approved by the Company’s Board of Directors. The Company declared and paid a total of $1,979,000 or $0.18 per common share cash dividend to shareholders of record during the year ended December 31, 2015. The Company’s primary source of income with which to pay cash dividends is dividends from the Bank. The California Financial Code restricts the total amount of dividends payable by a bank at any time without obtaining the prior approval of the California Department of Business Oversight to the lesser of (1) the Bank’s retained earnings or (2) the Bank’s net income for its last three fiscal years, less distributions made to shareholders during the same three-year period. At December 31, 2017, $23,185,000 of the Bank’s retained earnings were free of these restrictions. A reconciliation of the numerators and denominators of the basic and diluted earnings per common share computations is as follows (in thousands, except share and per share amounts):
No outstanding options and restricted stock awards were anti-dilutive at December 31, 2017 and 2016. Outstanding options and restricted stock of 26,704 were not factored into the calculation of dilutive stock options at December 31, 2015, because they were anti-dilutive. |
Share-Based Compensation |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | SHARED-BASED COMPENSATION On December 31, 2017, the Company had five share-based compensation plans, which are described below. The Plans do not provide for the settlement of awards in cash and new shares are issued upon option exercise or restricted share grants. The Central Valley Community Bancorp 2000 Stock Option Plan (2000 Plan) expired on November 15, 2010. The Central Valley Community Bancorp 2005 Omnibus Incentive Plan (2005 Plan) was adopted in May 2005 and expired March 16, 2015. While outstanding arrangements to issue shares under these plans, including options, continue in force until their expiration, no new options will be granted under these plans. The plans require that the exercise price may not be less than the fair market value of the stock at the date the option is granted, and that the option price must be paid in full at the time it is exercised. The options and awards under the plans expire on dates determined by the Board of Directors, but not later than ten years from the date of grant. The vesting period for the options, restricted common stock awards and option related stock appreciation rights is determined by the Board of Directors and is generally over five years. In May 2015, the Company adopted the Central Valley Community Bancorp 2015 Omnibus Incentive Plan (2015 Plan). The plan provides for awards in the form of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. The plan also allows for performance awards that may be in the form of cash or shares of the Company, including restricted stock. The 2015 plan requires that the exercise price may not be less than the fair market value of the stock at the date the option is granted, and that the option price must be paid in full at the time it is exercised. The options and awards under the plan expire on dates determined by the Board of Directors, but not later than ten years from the date of grant. The vesting period for the options, restricted common stock awards and option related stock appreciation rights is determined by the Board of Directors and is generally over five years. The maximum number of shares that can be issued with respect to all awards under the plan is 875,000. Currently under the 2015 Plan, there are 830,760 shares remain reserved for future grants as of December 31, 2017. Effective June 2, 2017, the Company adopted an Employee Stock Purchase Plan whereby our employees may purchase Company common shares through payroll deductions of between one percent and 15 percent of pay in each pay period. Shares are purchased at the end of an offering period at a discount of 10 percent from the closing market price on the last day of each offering period. The plan calls for 500,000 common shares to be set aside for employee purchases, and there were 497,559 shares available for future purchase under the plan as of December 31, 2017. In October 2017, the Company adopted the Folsom Lake Bank 2007 Equity Incentive Plan (2007 Plan). The plan provides for awards in the form of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. While outstanding arrangements to issue shares under this plan, including options, continue in force until their expiration, no new options will be granted under this plan. The options and awards under the plan expire on dates determined by the Board of Directors, but not later than ten years from the date of grant. The vesting period for the options, restricted common stock awards and option related stock appreciation rights is determined by the Board of Directors and is generally over five years. The maximum number of shares that can be issued with respect to all awards under the plan is 313,360. For the years ended December 31, 2017, 2016, and 2015, the compensation cost recognized for share-based compensation was $384,000, $284,000, and $238,000, respectively. The recognized tax benefit for share-based compensation expense was $805,000, $44,000, and $14,000 for 2017, 2016, and 2015, respectively. Stock Options - The Company bases the fair value of the options granted on the date of grant using a Black-Scholes Merton option pricing model that uses assumptions based on expected option life and the level of estimated forfeitures, expected stock volatility, risk free interest rate, and dividend yield. The expected term and level of estimated forfeitures of the Company’s options are based on the Company’s own historical experience. Stock volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U. S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of grant. The compensation cost for options granted is based on the weighted average grant date fair value per share. No options to purchase shares of the Company’s common stock were granted during the years ending December 31, 2017, 2016 and 2015 from any of the Company’s stock based compensation plans. A summary of the combined activity of the Plans during the years then ended is presented below (dollars in thousands, except per share amounts):
Information related to the stock option plan during each year follows (in thousands):
As of December 31, 2017, there is no unrecognized compensation cost related to stock options granted under all Plans. All options are fully vested. The total fair value of options vested was $170,000 and $15,220 for the years ended December 31, 2017 and 2016, respectively. Restricted Common Stock Awards - The 2005 Plan and 2015 Plan provide for the issuance of shares to directors and officers. Restricted common stock grants typically vest over a five-year period. Restricted common stock (all of which are shares of our common stock) is subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of our common stock on the date of the grant. The following table presents the activity for restricted stock during the years then ended:
During the years ended December 31, 2017, 2016, and 2015, 0, 54,650, and 9,268 shares of restricted common stock were granted from outstanding grants under the 2005 and 2015 Plans. The restricted common stock had a weighted average fair value of $14.10, and $10.79 per share on the date of grant during the years ended December 31, 2016 and 2015, respectively. These restricted common stock awards vest 20% after the first year. Thereafter, 20% of the remaining restricted stock will vest on each anniversary of the initial award commencement date and will be fully vested on the fifth such anniversary. As of December 31, 2017, there were 63,768 shares of restricted stock that are nonvested and expected to vest. Share-based compensation cost charged against income for restricted stock awards was $349,000 for the year ended December 31, 2017, $235,000 for the year ended December 31, 2016, and $161,000 for the year ended December 31, 2015. As of December 31, 2017, there was $696,000 of total unrecognized compensation cost related to nonvested restricted common stock. Restricted stock compensation expense is recognized on a straight-line basis over the vesting period. This cost is expected to be recognized over a weighted average remaining period of 2.90 years and will be adjusted for subsequent changes in estimated forfeitures. Restricted common stock awards had an intrinsic value of $1,598,000 at December 31, 2017. |
Employee Benefits |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefits | EMPLOYEE BENEFITS 401(k) and Profit Sharing Plan - The Bank has established a 401(k) and profit sharing plan. The 401(k) plan covers substantially all employees who have completed a one-month employment period. Participants in the profit sharing plan are eligible to receive employer contributions after completion of 2 years of service. Bank contributions to the profit sharing plan are determined at the discretion of the Board of Directors. Participants are automatically vested 100% in all employer contributions. The Bank contributed $600,000 and $380,000 to the profit sharing plan in 2017 and 2016, respectively. There was $270,000 contribution by the Bank to the profit sharing plan in 2015. Additionally, the Bank may elect to make a matching contribution to the participants’ 401(k) plan accounts. The amount to be contributed is announced by the Bank at the beginning of the plan year. For the years ended December 31, 2017, 2016, and 2015, the Bank made a 100% matching contribution on all deferred amounts up to 3% of eligible compensation and a 50% matching contribution on all deferred amounts above 3% to a maximum of 5%. For the years ended December 31, 2017, 2016, and 2015, the Bank made matching contributions totaling $686,000, $604,000, and $585,000, respectively. Deferred Compensation Plans - The Bank has a nonqualified Deferred Compensation Plan which provides directors with an unfunded, deferred compensation program. Under the plan, eligible participants may elect to defer some or all of their current compensation or director fees. Deferred amounts earn interest at an annual rate determined by the Board of Directors (2.68% at December 31, 2017). At December 31, 2017 and 2016, the total net deferrals included in accrued interest payable and other liabilities were $3,713,000 and $3,440,000, respectively. In connection with the implementation of the above plan, single premium universal life insurance policies on the life of each participant were purchased by the Bank, which is the beneficiary and owner of the policies. The cash surrender value of the policies totaled $3,375,000 and $3,297,000 and at December 31, 2017 and 2016, respectively. Income recognized on these policies, net of related expenses, for the years ended December 31, 2017, 2016, and 2015, was $78,000, $83,000, and $105,000, respectively. In October 2015, the Board of Directors of the Company and the Bank adopted a board resolution to create the Central Valley Community Bank Executive Deferred Compensation Plan (the Executive Plan). Pursuant to the Executive Plan, all eligible executives of the Bank may elect to defer up to 50 percent of their compensation for each deferral year. Deferred amounts earn interest at an annual rate determined by the Board of Directors (2.68% at December 31, 2017). At December 31, 2017 and 2016, the total net deferrals included in accrued interest payable and other liabilities were $86,000 and $52,000, respectively. Salary Continuation Plans - The Board of Directors approved salary continuation plans for certain key executives during 2002 and subsequently amended the plans in 2006. Under these plans, the Bank is obligated to provide the executives with annual benefits for 15 years after retirement. These benefits are substantially equivalent to those available under split-dollar life insurance policies purchased by the Bank on the life of the executives. The expense recognized under these plans for the years ended December 31, 2017, 2016, and 2015, totaled $561,000, $489,000, and $447,000, respectively. Accrued compensation payable under the salary continuation plans totaled $5,786,000 and $5,572,000 at December 31, 2017 and 2016, respectively. In connection with these plans, the Bank purchased single premium life insurance policies with cash surrender values totaling $6,355,000 and $6,196,000 at December 31, 2017 and 2016, respectively. Income recognized on these policies, net of related expense, for the years ended December 31, 2017, 2016, and 2015 totaled $159,000, $159,000, and $167,000, respectively. In connection with the acquisitions of Folsom Lake Bank (FLB), Service 1st Bank, and Visalia Community Bank (VCB), the Bank assumed a liability for the estimated present value of future benefits payable to former key executives of FLB, Service 1st, and VCB . The liability relates to change in control benefits associated with their salary continuation plans. The benefits are payable to the individuals when they reach retirement age. At December 31, 2017 and 2016, the total amount of the liability was $4,557,000 and $2,788,000, respectively. Expense recognized by the Bank in 2017, 2016 and 2015 associated with these plans was $163,000, $120,000, and $78,000, respectively. These benefits are substantially equivalent to those available under split-dollar life insurance policies acquired. These single premium life insurance policies had cash surrender values totaling $15,326,000, and $11,014,000 at December 31, 2017 and 2016, respectively. Income recognized on these policies, net of related expenses, for the years ended December 31, 2017, 2016, and 2015, was $315,000, $298,000, and $194,000, respectively. The current annual tax-free interest rate on all life insurance policies is 3.97%. Employee Stock Purchase Plan - During 2017, the Company adopted an Employee Stock Purchase Plan which allows employees to purchase the Company’s stock at a discount to fair market value as of the date of purchase. The Company bears all costs of administering the plan, including broker’s fees, commissions, postage and other costs actually incurred. |
Loans To Related Parties |
12 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||
Loans to Related Parties | LOANS TO RELATED PARTIES During the normal course of business, the Bank enters into loans with related parties, including executive officers and directors. The following is a summary of the aggregate activity involving related-party borrowers (in thousands):
|
Parent Only Condensed Financial Statements |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parent Only Condensed Financial Statements | PARENT ONLY CONDENSED FINANCIAL STATEMENTS CONDENSED BALANCE SHEETS December 31, 2017 and 2016
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Years Ended December 31, 2017, 2016, and 2015
CONDENSED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2017, 2016, and 2015
|
Summary of Significant Accounting Policies (Policies) |
12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||
Accounting Policies [Abstract] | |||||||||
General | General - Central Valley Community Bancorp (the “Company”) was incorporated on February 7, 2000 and subsequently obtained approval from the Board of Governors of the Federal Reserve System to be a bank holding company in connection with its acquisition of Central Valley Community Bank (the “Bank”). The Company became the sole shareholder of the Bank on November 15, 2000 in a statutory merger, pursuant to which each outstanding share of the Bank’s common stock was exchanged for one share of common stock of the Company. Service 1st Capital Trust I (the Trust) is a business trust formed by Service 1st for the sole purpose of issuing trust preferred securities. The Company succeeded to all the rights and obligations of Service 1st in connection with the acquisition of Service 1st. The Trust is a wholly-owned subsidiary of the Company. The Bank operates 24 full service offices throughout California’s San Joaquin Valley and Greater Sacramento Region. The Bank’s primary source of revenue is providing loans to customers who are predominately small and middle-market businesses and individuals. The deposits of the Bank are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable legal limits. Depositors’ accounts at an insured depository institution, including all non-interest bearing transactions accounts, will be insured by the FDIC up to the standard maximum deposit insurance amount of $250,000 for each deposit insurance ownership category. The accounting and reporting policies of the Company and the Bank conform with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. Management has determined that because all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No customer accounts for more than 10 percent of revenues for the Company or the Bank. |
||||||||
Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the accounts of the Company and the consolidated accounts of its wholly-owned subsidiary, the Bank. Intercompany transactions and balances are eliminated in consolidation. For financial reporting purposes, Service 1st Capital Trust I, is a wholly-owned subsidiary acquired in the merger of Service 1st Bancorp and formed for the exclusive purpose of issuing trust preferred securities. The Company is not considered the primary beneficiary of this trust (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability on the Company’s consolidated financial statements. The Company’s investment in the common stock of the Trust is included in accrued interest receivable and other assets on the consolidated balance sheet. |
||||||||
Use of Estimates | Use of Estimates - The preparation of these financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. On an ongoing basis, management evaluates the estimates used. Estimates are based upon historical experience, current economic conditions and other factors that management considers reasonable under the circumstances. These estimates result in judgments regarding the carrying values of assets and liabilities when these values are not readily available from other sources, as well as assessing and identifying the accounting treatments of contingencies and commitments. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions. |
||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents - For the purpose of the statement of cash flows, cash, due from banks with maturities less than 90 days, interest-earning deposits in other banks, and Federal funds sold are considered to be cash equivalents. Generally, Federal funds are sold and purchased for one-day periods. Net cash flows are reported for customer loan and deposit transactions, interest-bearing deposits in other banks, and Federal funds purchased. |
||||||||
Investment Securities | Investment Securities - Investments are classified into the following categories:
Management determines the appropriate classification of its investments at the time of purchase and may only change the classification in certain limited circumstances. All transfers between categories are accounted for at fair value in the period which the transfer occurs. During the year ended December 31, 2017, there were no transfers between categories. For the year ended December 31, 2016 management transferred $23.1 million of securities from held-to-maturity to available-for-sale. Due to the 2016 transfer, management is precluded from utilizing the held-to-maturity designation until the second quarter of 2018. Gains or losses on the sale of investment securities are computed on the specific identification method. Interest earned on investment securities is reported in interest income, net of applicable adjustments for accretion of discounts and amortization of premiums. Premiums and discounts on securities are amortized or accreted on the level yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. An investment security is impaired when its carrying value is greater than its fair value. Investment securities that are impaired are evaluated on at least a quarterly basis and more frequently when economic or market conditions warrant such an evaluation to determine whether such a decline in their fair value is other than temporary. Management utilizes criteria such as the magnitude and duration of the decline and the intent and ability of the Company to retain its investment in the securities for a period of time sufficient to allow for an anticipated recovery in fair value, in addition to the reasons underlying the decline, to determine whether the loss in value is other than temporary. The term “other than temporary” is not intended to indicate that the decline is permanent, but indicates that the prospect for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other than temporary, and management does not intend to sell the security or it is more likely than not that the Company will not be required to sell the security before recovery, for debt securities, only the portion of the impairment loss representing credit exposure is recognized as a charge to earnings, with the balance recognized as a charge to other comprehensive income. If management intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovering its forecasted cost, the entire impairment loss is recognized as a charge to earnings. |
||||||||
Loans and Acquired Loans and Leases | Loans - All loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at principal balances outstanding net of deferred loan fees and costs, and the allowance for credit losses. Interest is accrued daily based upon outstanding loan principal balances. However, when a loan becomes impaired and the future collectability of interest and principal is in serious doubt, the loan is placed on nonaccrual status and the accrual of interest income is suspended. Any loan delinquent 90 days or more is automatically placed on nonaccrual status. Any interest accrued but unpaid is charged against income. Subsequent payments on these loans, or payments received on nonaccrual loans for which the ultimate collectability of principal is not in doubt, are applied first to principal until fully collected and then to interest. Interest income on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer and credit card loans are typically charged off no later than 90 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. A loan placed on non-accrual status may be restored to accrual status when principal and interest are no longer past due and unpaid, or the loan otherwise becomes both well secured and in the process of collection. When a loan is brought current, the Company must also have reasonable assurance that the obligor has the ability to meet all contractual obligations in the future, that the loan will be repaid within a reasonable period of time, and that a minimum of six months of satisfactory repayment performance has occurred. Substantially all loan origination fees, commitment fees, direct loan origination costs and purchase premiums and discounts on loans are deferred and recognized as an adjustment of yield, and amortized to interest income over the contractual term of the loan. The unamortized balance of deferred fees and costs is reported as a component of net loans. Acquired loans and Leases - Loans and leases acquired through purchase or through a business combination are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan and lease losses is not recorded at the acquisition date. Should the Company’s allowance for credit losses methodology indicate that the credit discount associated with acquired, non-purchased credit impaired loans, is no longer sufficient to cover probable losses inherent in those loans, the Company will establish an allowance for those loans through a charge to provision for credit losses. At the time of an acquisition, we evaluate loans to determine if they are purchase credit impaired loans. Purchased credit impaired loans are those acquired loans with evidence of credit deterioration for which collection of all contractual payments was not considered probable at the date of acquisition. This determination is made by considering past due and/or nonaccrual status, prior designation of a troubled debt restructuring, or other factors that may suggest we will not be able to collect all contractual payments. Purchased credit impaired loans are initially recorded at fair value with the difference between fair value and estimated future cash flows accreted over the expected cash flow period as income only to the extent we can reasonably estimate the timing and amount of future cash flows. In this case, these loans would be classified as accruing. In the event we are unable to reasonably estimate the timing and amount of future cash flows, or if the loan is acquired primarily for the rewards of ownership of the underlying collateral, the loan is classified as non-accrual. An acquired loan previously classified by the seller as a troubled debt restructuring is no longer classified as such at the date of acquisition. Past due status is reported based on contractual payment status. All loans not otherwise classified as purchase credit impaired are recorded at fair value with the discount to contractual value accreted over the life of the loan. |
||||||||
Allowance for Credit Losses | Allowance for Credit Losses - The allowance for credit losses (the “allowance”) is a valuation allowance for probable incurred credit losses in the Company’s loan portfolio. The allowance is established through a provision for credit losses which is charged to expense. Additions to the allowance are made to maintain the adequacy of the total allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the allowance. Cash received on previously charged off amounts is recorded as a recovery to the allowance. The overall allowance consists of two primary components, specific reserves related to impaired loans and general reserves for inherent losses related to loans that are not impaired. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the original agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans determined to be impaired are individually evaluated for impairment. When a loan is impaired, the Company measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, it may measure impairment based on a loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is collateral dependent if the repayment of the loan is expected to come solely from the sale or operation of underlying collateral. A restructuring of a debt constitutes a troubled debt restructuring (TDR) if the Company for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Restructured workout loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDRs are considered impaired and measured for impairment as described above. When determining the allowance for loan losses on acquired loans, we bifurcate the allowance between legacy loans and acquired loans. Loans remain designated as acquired until either (i) loan is renewed or (ii) loan is substantially modified whereby modification results in a new loan. When determining the allowance on acquired loans, the Company estimates probable incurred credit losses as compared to the Company’s recorded investment, with the recorded investment being net of any unaccreted discounts from the acquisition. The determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of a simple average of historical losses by portfolio segment (and in certain cases peer loss data) over the most recent 20 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole. The Company segregates the allowance by portfolio segment. These portfolio segments include commercial, real estate, and consumer loans. The relative significance of risk considerations vary by portfolio segment. For commercial and real estate loans, the primary risk consideration is a borrower’s ability to generate sufficient cash flows to repay their loan. Secondary considerations include the creditworthiness of guarantors and the valuation of collateral. In addition to the creditworthiness of a borrower, the type and location of real estate collateral is an important risk factor for real estate loans. The primary risk considerations for consumer loans are a borrower’s personal cash flow and liquidity, as well as collateral value. The allowance for credit losses attributable to each portfolio segment, which includes both impaired loans and loans that are not impaired, is combined to determine the Company’s overall allowance, which is included on the consolidated balance sheet. Commercial: Commercial and industrial - Commercial and industrial loans are generally underwritten to existing cash flows of operating businesses. Additionally, economic trends influenced by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Past due payments may indicate the borrower’s capacity to repay their obligations may be deteriorating. Agricultural land and production - Loans secured by crop production and livestock are especially vulnerable to two risk factors that are largely outside the control of Company and borrowers: commodity prices and weather conditions. Real Estate: Owner-occupied commercial real estate - Real estate collateral secured by commercial or professional properties with repayment arising from the owner’s business cash flows. To meet this classification, the owner’s operation must occupy no less than 50% of the real estate held. Financial profitability and capacity to meet the cyclical nature of the industry and related real estate market over a significant timeframe is essential. Real estate construction and other land loans - Land and construction loans generally possess a higher inherent risk of loss than other real estate portfolio segments. A major risk arises from the necessity to complete projects within specified costs and time lines. Trends in the construction industry significantly impact the credit quality of these loans, as demand drives construction activity. In addition, trends in real estate values significantly impact the credit quality of these loans, as property values determine the economic viability of construction projects. Agricultural real estate - Agricultural loans secured by real estate generally possess a higher inherent risk of loss caused by changes in concentration of permanent plantings, government subsidies, and the value of the U.S. dollar affecting the export of commodities. Investor commercial real estate - Investor commercial real estate loans generally possess a higher inherent risk of loss than other real estate portfolio segments, except land and construction loans. Adverse economic developments or an overbuilt market impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for properties to produce sufficient cash flows to service debt obligations. Other real estate - Primarily loans secured by agricultural real estate for development and production of permanent plantings that have not reached maximum yields. Also real estate loans where agricultural vertical integration exists in packing and shipping of commodities. Risk is primarily based on the liquidity of the borrower to sustain payment during the development period. Consumer: Equity loans and lines of credit - The degree of risk in residential real estate lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. These loans generally possess a lower inherent risk of loss than other real estate portfolio segments. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends may indicate that the borrowers’ capacity to repay their obligations may be deteriorating. Installment and other consumer loans - An installment loan portfolio is usually comprised of a large number of small loans scheduled to be amortized over a specific period. Most installment loans are made directly for consumer purchases. Other consumer loans include credit card and other open ended unsecured consumer loans. Credit cards and open ended unsecured loans generally have a higher rate of default than all other portfolio segments and are also impacted by weak economic conditions and trends. Credit cards and open ended unsecured loans in homogeneous loan portfolio segments are not evaluated for specific impairment. Although management believes the allowance to be adequate, ultimate losses may vary from its estimates. At least quarterly, the Board of Directors reviews the adequacy of the allowance, including consideration of the relative risks in the portfolio, current economic conditions and other factors. If the Board of Directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, the Company’s primary regulators, the FDIC and California Department of Business Oversight, as an integral part of their examination process, review the adequacy of the allowance. These regulatory agencies may require additions to the allowance based on their judgment about information available at the time of their examinations. Risk Rating - The Company assigns a risk rating to all loans, and periodically performs detailed reviews of all such loans over a certain threshold to identify credit risks and to assess the overall collectability of the portfolio. The most recent review of risk rating was completed in December 2017. These risk ratings are also subject to examination by independent specialists engaged by the Company, and the Company’s regulators. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans. These credit quality indicators are used to assign a risk rating to each individual loan. The risk ratings can be grouped into five major categories, defined as follows: Pass - A pass loan is a strong credit with no existing or known potential weaknesses deserving of management’s close attention. Special Mention - A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date. Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard - A substandard loan is not adequately protected by the current sound worth and paying capacity of the borrower or the value of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Well-defined weaknesses include a project’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the project’s failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful - Loans classified doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans. Doubtful classification is considered temporary and short term. Loss - Loans classified as loss are considered uncollectible and charged off immediately. The general reserve component of the allowance for credit losses also consists of reserve factors that are based on management’s assessment of the following for each portfolio segment: (1) inherent credit risk, (2) historical losses and (3) other qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole. Inherent credit risk and qualitative reserve factors are inherently subjective and are driven by the repayment risk associated with each class of loans. |
||||||||
Bank Premises and Equipment | Bank Premises and Equipment - Land is carried at cost. Bank premises and equipment are carried at cost less accumulated depreciation. Depreciation is determined using the straight-line method over the estimated useful lives of the related assets. The useful lives of Bank premises are estimated to be between twenty and forty years. The useful lives of improvements to Bank premises, furniture, fixtures and equipment are estimated to be three to ten years. Leasehold improvements are amortized over the life of the asset or the term of the related lease, whichever is shorter. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to expense as incurred. The Bank evaluates premises and equipment for financial impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable. |
||||||||
Federal Home Loan Bank (FHLB) Stock | Federal Home Loan Bank (FHLB) Stock - The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. |
||||||||
Investments in Low Income Housing Tax Credit Funds | Investments in Low Income Housing Tax Credit Funds - The Bank has invested in limited partnerships that were formed to develop and operate affordable housing projects for low or moderate income tenants throughout California. Our ownership in each limited partnership is less than two percent. In accordance with ASU No. 2014-01, Investments - Equity Method and Joint Ventures (Topic 323), we elected to account for the investments in qualified affordable housing tax credit funds using the proportional amortization method. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received and the net investment performance is recognized as part of income tax expense (benefit). Each of the partnerships must meet the regulatory minimum requirements for affordable housing for a minimum 15-year compliance period to fully utilize the tax credits. If the partnerships cease to qualify during the compliance period, the credit may be denied for any period in which the project is not in compliance and a portion of the credit previously taken is subject to recapture with interest. The Company’s investment in Low Income Housing Tax Credit Funds is reported in other assets on the consolidated balance sheet. |
||||||||
Other Real Estate Owned | Other Real Estate Owned - Other real estate owned (OREO) is comprised of property acquired through foreclosure proceedings or acceptance of deeds-in-lieu of foreclosure. Losses recognized at the time of acquiring property in full or partial satisfaction of debt are charged against the allowance for credit losses. OREO, when acquired, is initially recorded at fair value less estimated disposition costs, establishing a new cost basis. Fair value of OREO is generally based on an independent appraisal of the property. Subsequent to initial measurement, OREO is carried at the lower of the recorded investment or fair value less disposition costs. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through noninterest expense. Revenues and expenses associated with OREO are reported as a component of noninterest expense when incurred. |
||||||||
Foreclosed Assets | Foreclosed Assets - Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through operations. Operating costs after acquisition are expensed. Gains and losses on disposition are included in noninterest expense. The carrying value of foreclosed assets was $70,000 at December 31, 2017 and $362,000 at December 31, 2016, and is included in other assets on the consolidated balance sheets. |
||||||||
Bank Owned Life Insurance | Bank Owned Life Insurance - The Company has purchased life insurance policies on certain key executives. Company owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. |
||||||||
Business Combinations | Business Combinations - The Company accounts for acquisitions of businesses using the acquisition method of accounting. Under the acquisition method, assets and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques included discounted cash flow analyses to determine these fair values. Any excess of the purchase price over amounts allocated to the acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. |
||||||||
Goodwill | Goodwill - Business combinations involving the Bank’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill. Total goodwill at December 31, 2017 and 2016 represents the excess of the purchase price of acquired businesses over the net fair value of assets, including identified intangible assets, acquired and liabilities assumed in the transactions accounted for under the purchase method of accounting. The value of goodwill is ultimately derived from the Bank’s ability to generate net earnings after the acquisitions. A decline in net earnings could be indicative of a decline in the fair value of goodwill and result in impairment. For that reason, goodwill is assessed at least annually for impairment. The Company has selected September 30 as the date to perform the annual impairment test. Management assessed qualitative factors including performance trends and noted no factors indicating goodwill impairment. Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount. No such events or circumstances arose during the fourth quarter of 2017, so goodwill was not required to be retested. Goodwill is the only intangible asset with an indefinite life on our balance sheet. |
||||||||
Intangible Assets | Intangible Assets - The intangible assets at December 31, 2017 represent the estimated fair value of the core deposit relationships acquired in business combinations. Core deposit intangibles are being amortized using the straight-line method over an estimated life of ten years from the date of acquisition. Management evaluates the remaining useful lives quarterly to determine whether events or circumstances warrant a revision to the remaining periods of amortization. Based on the evaluation, no changes to the remaining useful lives was required. Management performed an annual impairment test on core deposit intangibles as of September 30, 2017 and determined no impairment was necessary. Core deposit intangibles are also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount. No such events or circumstances arose during the fourth quarter of 2017, so core deposit intangibles were not required to be retested. |
||||||||
Loan Commitments and Related Financial Instruments | Loan Commitments and Related Financial Instruments - Financial instruments include off‑balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount of these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. |
||||||||
Income Taxes and Accounting for Uncertainty in Income Taxes | Income Taxes - The Company files its income taxes on a consolidated basis with the Bank. The allocation of income tax expense represents each entity’s proportionate share of the consolidated provision for income taxes. Income tax expense represents the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. On the balance sheet, net deferred tax assets are included in accrued interest receivable and other assets. The realization of deferred income tax assets is assessed and a valuation allowance is recorded if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized. “More likely than not” is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed. Accounting for Uncertainty in Income Taxes - The Company uses a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return. A tax position is recognized as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the more likely than not test, no tax benefit is recorded. Interest expense and penalties associated with unrecognized tax benefits, if any, are classified as income tax expense in the consolidated statement of income |
||||||||
Retirement Plans | Retirement Plans - Employee 401(k) plan expense is the amount of employer matching contributions. Profit sharing plan expense is the amount of employer contributions. Contributions to the profit sharing plan are determined at the discretion of the Board of Directors. Deferred compensation and supplemental retirement plan expense is allocated over years of service. |
||||||||
Earnings Per Common Share | Earnings Per Common Share - Basic earnings per common share (EPS), which excludes dilution, is computed by dividing income available to common shareholders (net income after deducting dividends, if any, on preferred stock and accretion of discount) by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options or warrants, result in the issuance of common stock which shares in the earnings of the Company. All data with respect to computing earnings per share is retroactively adjusted to reflect stock dividends and splits and the treasury stock method is applied to determine the dilutive effect of stock options in computing diluted EPS. |
||||||||
Comprehensive Income | Comprehensive Income - Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity. |
||||||||
Loss Contingencies | Loss Contingencies - Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements. |
||||||||
Restrictions on Cash | Restrictions on Cash - Cash on hand or on deposit with the Federal Reserve Bank was required to meet regulatory reserve and clearing requirements. |
||||||||
Share-Based Compensation | Share-Based Compensation - Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. A Black-Scholes-Merton model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Additionally, the compensation expense for the Company’s employee stock ownership plan is based on the market price of the shares as they are committed to be released to participant accounts. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. |
||||||||
Dividend Restriction | Dividend Restriction - Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the Company or by the Company to shareholders. |
||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments - Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 3. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates. |
||||||||
Recently Issued Accounting Standards | Recently Issued Accounting Standards: FASB Accounting Standards Update (ASU) 2014-09 - Revenue from Contracts with Customers (Topic 606): Revenue from Contracts with Customers was issued in May 2014. This ASU is the result of a joint project initiated by the FASB and the International Accounting Standards Board (IASB) to clarify the principles for recognizing revenue, and to develop common revenue standards and disclosure requirements that would: (1) remove inconsistencies and weaknesses in revenue requirements; (2) provide a more robust framework for addressing revenue issues; (3) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (4) provide more useful information to users of financial statements through improved disclosures; and (5) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. The guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides steps to follow to achieve the core principle. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required with regard to contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amendments will be applied through the election of one of two retrospective methods. Substantially all of the Company’s revenue is generated from interest income related to loans and investment securities, which are not within the scope of this guidance. The contracts that are within the scope of this guidance include service charges and fees on deposit accounts interchange fees, and merchant income. The Company has substantially completed its overall assessment of revenue streams and review of related contracts and other agreements that are within the scope of this guidance and did not identify any material changes to the timing of revenue recognition. The Company adopted ASU 2014-09 on its required effective date of January 1, 2018 utilizing the modified retrospective approach. Since there was no net income impact upon adoption of the new guidance, a cumulative effect adjustment to opening retained earnings was not deemed necessary. The Company is completing its evaluation of the ASU’s expanded disclosure requirement effective for the March 31, 2018 Form 10-Q. The Company expects the expanded disclosures to be primarily qualitative in nature. The Company does not expect material additions or revisions to our quantitative disclosures. FASB Accounting Standards Update (ASU) 2016-01 - Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, was issued January 2016. The main provisions of the update are to eliminate the available-for-sale classification of accounting for equity securities and to adjust the fair value disclosures for financial instruments carried at amortized costs such that the disclosed fair values represent an exit price as opposed to an entry price. The provisions of this update will require that equity securities be carried at fair market value on the balance sheet and any periodic changes in value will be adjustments to the income statement. A practical expedient is provided for equity securities without a readily determinable fair value, such that these securities can be carried at cost less any impairment. ASU No. 2016-01 is effective for interim and annual reporting periods beginning after December 15, 2017. The Company has performed an evaluation of the provisions of ASU No. 2016-01 and based on this evaluation, has determined that ASU No. 2016-01 will not have a material impact on the Company’s financial position, results of operations or its cash flows. FASB Accounting Standards Update (ASU) 2016-02 - Leases - Overall (Subtopic 845), was issued February 2016. The update requires all leases, with the exception of short-term leases that have contractual terms of no greater than one year, to be recorded on the balance sheet. Under the provisions of the update, leases classified as operating will be reflected on the balance sheet with the recognition of both a right-of-use asset and a lease liability. Under the update, a distinction will exist between finance and operating type leases and the rules for determining which classification a lease will fall into are similar to existing rules. For public business entities, the amendments of this update are effective for interim and annual periods beginning after December 15, 2018. The update requires a modified retrospective transition under which comparative balance sheets from the earliest historical period presented will be revised to reflect what the financials would have looked like were the provisions of the update applied consistently in all prior periods. The Company is currently evaluating the provisions of ASU No. 2016-02 and has determined that the provisions of ASU No. 2016-02 will result in an increase in assets to recognize the present value of the lease obligations with a corresponding increase in liabilities; however, the Company does not expect this to have a material impact on the Company’s results of operations or cash flows. FASB Accounting Standards Update (ASU) 2016-09 - Compensation - Stock Compensation (Subtopic 718): Improvements to Employee Share-Based Payment Accounting, was issued March 2016. This ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. Some of the key provisions of this new ASU include: (1) companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, and APIC pools will be eliminated. The guidance also eliminates the requirement that excess tax benefits be realized before companies can recognize them. In addition, the guidance requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity; (2) increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. The new guidance will also require an employer to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on its statement of cash flows (current guidance did not specify how these cash flows should be classified); and (3) permit companies to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. ASU No. 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016. Early adoption was permitted, but all of the guidance must be adopted in the same period. Effective January 1, 2017, the Company adopted ASU 2016-09 “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” including the election to continue to treat option forfeitures on an expected basis and to provide cash flow disclosures on a prospective basis. During the year ended December 31, 2017 the adoption of this standard resulted in the recognition of $853,000 in tax benefits related to the exercise of stock options and vesting of restricted shares during the period. FASB Accounting Standards Update (ASU) 2016-13 - Measurement of Credit Losses on Financial Instruments (Subtopic 326): Financial Instruments - Credit Losses, commonly referred to as “CECL,” was issued June 2016. The provisions of the update eliminate the probable initial recognition threshold under current GAAP which requires reserves to be based on an incurred loss methodology. Under CECL, reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the contractual term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity (“HTM”) debt securities. Under the provisions of the update, credit losses recognized on available for sale (“AFS”) debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans, with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Under current GAAP a purchased loan’s contractual balance is adjusted to fair value through a credit discount and no reserve is recorded on the purchased loan upon acquisition. Since under CECL reserves will be established for purchased loans at the time of acquisition, the accounting for purchased loans is made more comparable to the accounting for originated loans. Finally, increased disclosure requirements under CECL require organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. The FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. For public business entities that are SEC filers, the amendments of the update will become effective beginning January 1, 2020. While the Company is currently evaluating the provisions of ASU No. 2016-13 to determine the potential impact the new standard will have on the Company’s Consolidated Financial Statements, it has taken steps to prepare for the implementation when it becomes effective, such as forming an internal task force, gathering pertinent data, consulting with outside professionals, and evaluating its current IT systems. Management expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the first reporting period in which the new standard is effective, but cannot yet estimate the magnitude of the one-time adjustment or the overall impact of the new guidance on the Company’s financial position, results of operations or cash flows. FASB Accounting Standards Update (ASU) 2017-04 - Intangibles Goodwill and Other (Subtopic 350): Simplifying the Test for Goodwill Impairment, was issued January 2017. The provisions of the update eliminate the existing second step of the goodwill impairment test which provides for the allocation of reporting unit fair value among existing assets and liabilities, with the net leftover amount representing the implied fair value of goodwill. In replacement of the existing goodwill impairment rule, the update will provide that impairment should be recognized as the excess of any of the reporting unit’s goodwill over the fair value of the reporting unit. Under the provisions of this update, the amount of the impairment is limited to the carrying value of the reporting unit’s goodwill. For public business entities that are SEC filers, the amendments of the update will become effective in fiscal years beginning after December 15, 2019. FASB Accounting Standards Update (ASU) 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, was issued March 2017. The provisions of the update require premiums recognized upon the purchase of callable debt securities to be amortized to the earliest call date in order to avoid losses recognized upon call. For public business entities that are SEC filers, the amendments of the update will become effective in fiscal years beginning after December 15, 2018. Management does not expect the requirements of this update to have a material impact on the Company’s financial position, results of operations or cash flows. FASB Accounting Standards Update (ASU) 2017-09 - Compensation - Stock Compensation (Subtopic 718): Scope of Modification Accounting, was issued May 2017. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following conditions are met: the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date. The amendments in this Update are effective for annual periods, and interim periods within those annual periods, beginning after December 31, 2017. Early adoption is permitted, including adoption in any interim period. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. FASB Accounting Standards Update (ASU) 2017-12 - Derivatives and Hedging (Topic 815); Targeted Improvements to Accounting for Hedging Activities, was issued August 2017. This ASU’s objectives are to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities; and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU No. 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018; early adoption is permitted. The Company currently does not designate any derivative financial instruments as formal hedging relationships, and therefore, does not utilize hedge accounting. However, the Company is currently evaluating this ASU to determine whether its provisions will enhance the Company’s ability to employ risk management strategies, while improving the transparency and understanding of those strategies for financial statement users. FASB Accounting Standards Update (ASU) 2018-02 - Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” ASU 2018-02, was issued to address the income tax accounting treatment of the stranded tax effects within other comprehensive income due to the prohibition of backward tracing due to an income tax rate change that was initially recorded in other comprehensive income. This issue came about from the enactment of the Tax Cuts and Jobs Act on December 22, 2017 that changed the Company’s income tax rate from 35% to 21%. The ASU changed current accounting whereby an entity may elect to reclassify the stranded tax effect from accumulated other comprehensive income to retained earnings. The ASU is effective for periods beginning after December 15, 2018 although early adoption is permitted. The Company adopted ASU 2018-02 in the fourth quarter of 2017 and reclassified its stranded tax debit of $501,000 within accumulated other comprehensive income to retained earnings at December 31, 2017. |
Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid for Sierra Vista Bank and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date (in thousands):
The following table summarizes the consideration paid for FLB and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro Forma Results of Operations | The following table presents pro forma results of operations information for the periods presented as if the acquisitions had occurred on January 1, 2015 after giving effect to certain adjustments. The unaudited pro forma results of operations for the years ended December 31, 2017, 2016, and 2015 include the historical accounts of the Company, Folsom Lake Bank, and Sierra Vista Bank and pro forma adjustments as may be required, including the amortization of intangibles with definite lives and the amortization or accretion of any premiums or discounts arising from fair value adjustments for assets acquired and liabilities assumed. The pro forma information is intended for informational purposes only and is not necessarily indicative of the Company’s future operating results or operating results that would have occurred had the acquisitions been completed at the beginning of each respective year. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, expense efficiencies or asset dispositions. (In thousands, except per-share amounts):
|
Fair Value Measurements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value of Financial Instruments | The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets on a Recurring Basis | The Company is required or permitted to record the following assets at fair value on a recurring basis under other accounting pronouncements (in thousands):
The Company is required or permitted to record the following assets at fair value on a recurring basis under other accounting pronouncements (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets on a Non-recurring Basis | The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include the following assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2016 (in thousands):
The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include the following assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2017 (in thousands):
|
Investment Securities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale securities reconciliation | The following tables set forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities in a continuous unrealized loss position | Investment securities with unrealized losses at December 31, 2017 and 2016 are summarized and classified according to the duration of the loss period as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized gains and losses | Proceeds and gross realized gains (losses) on investment securities for the years ended December 31, 2017, 2016, and 2015 are shown below (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit losses recorded in earnings | The following table provides a rollforward for the years ended December 31, 2017 and 2016 of investment securities credit losses recorded in earnings (in thousands). The beginning balance represents the credit loss component for which OTTI occurred on debt securities in prior periods. Additions represent the first time a debt security was credit impaired or when subsequent credit impairments have occurred on securities for which OTTI credit losses have been previously recognized.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments by contractual maturity | The amortized cost and estimated fair value of available-for-sale investment securities at December 31, 2017 and 2016 by contractual maturity are shown in the two tables below (in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.
|
Loans and Allowance for Credit Losses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding loans | Outstanding loans are summarized as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses | Changes in the allowance for credit losses were as follows (in thousands):
The following table shows the summary of activities for the allowance for credit losses as of and for the years ended December 31, 2017, 2016, and 2015 by portfolio segment (in thousands):
The following is a summary of the allowance for credit losses by impairment methodology and portfolio segment as of December 31, 2017 and December 31, 2016 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans by impairment methdology | The following table shows the ending balances of loans as of December 31, 2017 and December 31, 2016 by portfolio segment and by impairment methodology (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan portfolio by internal risk rating | The following table shows the loan portfolio by class allocated by management’s internal risk ratings at December 31, 2017 (in thousands):
The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2016 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan portfolio by time past due | The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2017 (in thousands):
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2016 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impaired loans | The following table shows information related to impaired loans by class at December 31, 2017 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following table shows information related to impaired loans by class at December 31, 2016 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2017, 2016, and 2015 (in thousands):
The carrying amount of those loans is included in the balance sheet amounts of loans receivable at December 31. The amounts of loans at December 31 are as follows (in thousands):
Purchased credit impaired (PCI) loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. The Company estimates the amount and timing of expected cash flows for each loan and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income. Loans acquired during each year for which it was probable at acquisition that all contractually required payments would not be collected are as follows (in thousands):
Certain of the loans acquired by the Company that are within the scope of Topic ASC 310-30 are not accounted for using the income recognition model of the Topic because the Company cannot reliably estimate cash flows expected to be collected. The carrying amounts of such loans (which are included in the carrying amount, net of allowance, described above) are as follows.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Troubled Debt Restructurings | The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2017 (dollars in thousands):
The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2016 (dollars in thousands):
The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2015 (dollars in thousands):
|
Bank Premises and Equipment (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of bank premises and equipment | Bank premises and equipment consisted of the following (in thousands):
|
Goodwill and Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The change in goodwill during the years ended December 31, 2017, 2016, and 2015 is as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Expected Amortization Expense | The following table summarizes the Company’s estimated core deposit intangible amortization expense for each of the next five years (in thousands):
|
Deposits (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of interest-bearing deposits | Interest-bearing deposits consisted of the following (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate annual maturities of time deposits | Aggregate annual maturities of time deposits are as follows (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of interest expense recognized on interest-bearing deposits | Interest expense recognized on interest-bearing deposits consisted of the following (in thousands):
|
Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of income tax expense | The provision for income taxes for the years ended December 31, 2017, 2016, and 2015 consisted of the following (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of deferred tax assets and liabilities | Deferred tax assets (liabilities) consisted of the following (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of effective tax rate | The significant items comprising these differences for the years ended December 31, 2017, 2016, and 2015 consisted of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rollforward of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|
Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future minimum lease payments on noncancelable operating leases | Future minimum lease payments on noncancelable operating leases are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Off-balance-sheet credit risk | The following financial instruments represent off-balance-sheet credit risk (in thousands):
|
Shareholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of compliance with regulatory capital requirements | The following table presents the Company’s regulatory capital ratios as of December 31, 2017 and December 31, 2016.
The following table presents the Bank’s regulatory capital ratios as of December 31, 2017 and December 31, 2016.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted earnings per common share | A reconciliation of the numerators and denominators of the basic and diluted earnings per common share computations is as follows (in thousands, except share and per share amounts):
|
Share-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option activity | A summary of the combined activity of the Plans during the years then ended is presented below (dollars in thousands, except per share amounts):
Information related to the stock option plan during each year follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock activity | The following table presents the activity for restricted stock during the years then ended:
|
Loans To Related Parties (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||
Summary of aggregate activity involving related party borrowers | The following is a summary of the aggregate activity involving related-party borrowers (in thousands):
|
Parent Only Condensed Financial Statements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Balance Sheets | CONDENSED BALANCE SHEETS December 31, 2017 and 2016
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Statements of Income and Comprehensive Income | CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Years Ended December 31, 2017, 2016, and 2015
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Statements of Cash Flows | CONDENSED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2017, 2016, and 2015
|
Acquisitions - Proforma Results of Operations (Details) - Sierra Vista Bank and Folsom Lake Bank [Member] - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Business Acquisition [Line Items] | |||
Net interest income | $ 61,059 | $ 56,531 | $ 52,413 |
Provision for (reversal of) credit losses | (1,150) | (5,800) | 570 |
Non-interest income | 11,240 | 10,205 | 10,063 |
Non-interest expense | 51,415 | 52,131 | 45,692 |
Income before provision for income taxes | 22,034 | 20,405 | 16,214 |
Provision for income taxes | 9,168 | 6,381 | 3,669 |
Net income | 12,866 | 14,024 | 12,545 |
Net income available to common shareholders | $ 12,866 | $ 14,024 | $ 12,545 |
Basic earnings per common share (in dollars per share) | $ 1.03 | $ 1.24 | $ 1.15 |
Diluted earnings per common share (in dollars per share) | $ 1.01 | $ 1.23 | $ 1.14 |
Investment Securities - Realized gains and losses (Details) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Available-for-Sale Securities | |||
Proceeds from sales or calls | $ 228,405 | $ 167,163 | $ 93,167 |
Gross realized gains from sales or calls | 4,701 | 2,223 | 1,715 |
Gross realized losses from sales or calls | (1,899) | (999) | (234) |
Held-to-Maturity Securities | |||
Proceeds from calls | 0 | 9,257 | 810 |
Gross realized gains from sales or calls | $ 0 | $ 696 | $ 14 |
Investment Securities - Gross realized gains and losses (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Available-for-Sale Securities | |||
Proceeds from sales or calls | $ 228,405 | $ 167,163 | $ 93,167 |
Gross realized gains from sales or calls | 4,701 | 2,223 | 1,715 |
Gross realized losses from sales or calls | $ (1,899) | $ (999) | $ (234) |
Investment Securities - Credit loss rollforward (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||
Beginning balance of credit losses recognized | $ 874 | $ 747 |
Amounts related to credit loss for which an OTTI charge was not previously recognized | 0 | 136 |
Realized losses for securities sold | 0 | (9) |
Ending balance of credit losses recognized | $ 874 | $ 874 |
Loans and Allowance for Credit Losses - Purchased credit-impaired loans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Purchased credit impaired loans | $ 6,366 | $ 5,269 |
Contractually required payments receivable on PCI loans at acquisition: | 6,954 | 5,717 |
Cash flows expected to be collected at acquisition | 1,070 | 3,715 |
Purchased Credit Impaired Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Purchased credit impaired loans | 383 | 612 |
Contractually required payments receivable on PCI loans at acquisition: | 0 | 982 |
Fair value of acquired loans at acquisition | 0 | 631 |
Commercial | Purchased Credit Impaired Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Purchased credit impaired loans | 383 | 612 |
Contractually required payments receivable on PCI loans at acquisition: | 0 | 982 |
Cash flows expected to be collected at acquisition | $ 0 | $ 693 |
Bank Premises and Equipment (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | $ 24,824 | $ 23,432 | |
Less accumulated depreciation and amortization | (15,426) | (14,025) | |
Bank premises and equipment, net | 9,398 | 9,407 | |
Depreciation and amortization | 1,429 | 1,320 | $ 1,392 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 1,131 | 1,131 | |
Buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 6,754 | 6,680 | |
Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 12,345 | 11,521 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | $ 4,594 | $ 4,100 |
Goodwill and Intangible Assets - Change in Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Goodwill [Roll Forward] | |||
Beginning of year | $ 40,231 | $ 29,917 | $ 29,917 |
Acquired goodwill | 13,546 | 10,314 | 0 |
Impairment | 0 | 0 | 0 |
End of year | $ 53,777 | $ 40,231 | $ 29,917 |
Goodwill and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2018 | $ 376 | |
2019 | 376 | |
2020 | 376 | |
2021 | 376 | |
2022 | 376 | |
Thereafter | 1,147 | |
Total | $ 3,027 | $ 1,383 |
Deposits - Components of deposit liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deposits by type: | ||
Savings | $ 116,534 | $ 105,098 |
Money market | 299,638 | 250,749 |
NOW accounts | 296,406 | 247,623 |
Time, $250,000 or more | 34,441 | 39,284 |
Time, under $250,000 | 93,629 | 117,410 |
Total deposit liabilities | $ 840,648 | $ 760,164 |
Deposits - Aggregate maturities of time deposits (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Aggregate maturities of time deposits: | |
2018 | $ 107,348 |
2019 | 13,229 |
2020 | 3,086 |
2021 | 1,519 |
2022 | 1,769 |
Thereafter | 1,119 |
Total time deposits | $ 128,070 |
Deposits - Components of interest expense recognized on interest-bearing deposits (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Interest expense recognized on interest-bearing deposits | |||
Savings | $ 33 | $ 27 | $ 30 |
Money market | 211 | 133 | 141 |
NOW accounts | 317 | 290 | 231 |
Time certificates of deposit | 408 | 525 | 546 |
Total interest expense recognized | $ 969 | $ 975 | $ 948 |
Junior Subordinated Deferrable Interest Debentures (Details) $ / security in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017
USD ($)
quarter
$ / security
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Debt Instrument [Line Items] | |||
Percentage of Trust Preferred Securities eligible as Tier 1 capital | 25.00% | ||
Spread on LIBOR | 1.60% | ||
Redemption period | 90 days | ||
Percentage of notes outstanding required to call payment | 25.00% | ||
Number of consecutive quarterly periods of nonpayment required to call notes | quarter | 20 | ||
Liquidation value per security | $ / security | 1 | ||
Interest rate at period end | 2.96% | ||
Interest expense for the period | $ 147,000 | $ 121,000 | $ 99,000 |
Service 1st Bank | |||
Debt Instrument [Line Items] | |||
Aggregate Principal Amount Junior Subordinated Notes | $ 5,155,000 |
Income Taxes - Components of income tax expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Current Federal income tax expense | $ 1,188 | $ 3,720 | $ 2,945 |
Current State income tax expense (benefit) | 1,224 | 605 | 570 |
Total current income tax expense | 2,412 | 4,325 | 3,515 |
Deferred Federal income tax expense (benefit) | 3,328 | 1,100 | (1,208) |
Deferred State income tax expense (benefit) | 518 | 1,492 | 275 |
Total deferred income tax expense (benefit) | 3,846 | 2,592 | (933) |
Remeasurement resulting from Tax Act, Federal | 3,535 | ||
Remeasurement resulting from Tax Act, State | 0 | ||
Remeasurement resulting from Tax Act | 3,535 | ||
Provision (benefit) from income taxes, Federal | 8,051 | 4,820 | 1,737 |
Provision (benefit) from income taxes, State | 1,742 | 2,097 | 845 |
Provision for income taxes | $ 9,793 | $ 6,917 | $ 2,582 |
Income Taxes - Components of deferred income taxes (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred tax assets: | ||
Allowance for credit losses | $ 2,100 | $ 3,267 |
Deferred compensation | 4,415 | 5,304 |
Unrealized loss on available-for-sale investment securities | 0 | 375 |
Net operating loss carryovers | 2,549 | 3,816 |
Mark-to-market adjustment | 87 | 167 |
Other deferred | 386 | 338 |
Other-than-temporary impairment | 192 | 273 |
Loan and investment impairment | 1,793 | 1,285 |
State Enterprise Zone credit carry-forward | 0 | 209 |
Alternative minimum tax credit | 0 | 2,438 |
Partnership income | 68 | 114 |
State taxes | 375 | 297 |
Total deferred tax assets | 11,965 | 17,883 |
Deferred tax liabilities: | ||
Finance leases | (365) | (474) |
Unrealized gain on available-for-sale investment securities | (1,186) | 0 |
Core deposit intangible | (895) | (582) |
FHLB stock | (234) | (327) |
Loan origination costs | (783) | (918) |
Bank premises and equipment | (478) | (71) |
Total deferred tax liabilities | (3,941) | (2,372) |
Net deferred tax assets | $ 8,024 | $ 15,511 |
Income Taxes - Reconciliation of effective tax rate (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Federal income tax, at statutory rate | 35.00% | 35.00% | 34.00% |
State taxes, net of Federal tax benefit | 4.80% | 6.20% | 4.10% |
Tax exempt investment security income, net | (10.10%) | (10.30%) | (15.90%) |
Bank owned life insurance, net | (0.80%) | (1.10%) | (2.50%) |
Compensation - Stock Compensation | (2.80%) | (0.00%) | (0.00%) |
Re-measurement resulting from Tax Act | 14.80% | 0.00% | 0.00% |
Change in uncertain tax positions | (0.90%) | 0.10% | 0.80% |
Other | 1.10% | 1.40% | (1.40%) |
Effective tax rate | 41.10% | 31.30% | 19.10% |
Income Taxes - Rollforward of uncertain tax positions (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance, beginning of year | $ 298 | $ 286 |
Additions based on tax positions related to prior years | 0 | 44 |
Reductions for tax positions of prior years | (215) | (32) |
Balance, end of year | $ 83 | $ 298 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Operating Loss Carryforwards [Line Items] | |||
Alternative minimum tax credit | $ 0 | $ 2,438 | |
Additions based on tax positions related to prior years | 0 | 44 | |
Provision for income taxes | 9,793 | $ 6,917 | $ 2,582 |
Remeasurement resulting from Tax Act | 3,535 | ||
Excess tax benefit from exercise of stock options and vesting of restricted shares | 853 | ||
California | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 8,850 | ||
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $ 8,527 |
Commitments and Contingencies - Leases (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Rental expense for period | $ 2,533 | $ 2,300 | $ 2,273 |
2018 | 2,511 | ||
2019 | 1,804 | ||
2020 | 1,638 | ||
2021 | 1,357 | ||
2022 | 1,095 | ||
Thereafter | 4,316 | ||
Total future minimum lease payments | $ 12,721 |
Shareholders' Equity - Dividends and Share Repurchases (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Dividends | |||
Dividends declared and paid by subsidiary | $ 3,133 | $ 13,010 | $ 2,260 |
Dividends declared and paid during the period | $ 3,010 | $ 2,715 | $ 1,979 |
Dividends declared, per share | $ 0.24 | $ 0.24 | $ 0.18 |
California | |||
Class of Stock [Line Items] | |||
Dividends available for distribution free of restrictions | $ 23,185 |
Shareholders' Equity - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Equity [Abstract] | |||
Net income | $ 14,026 | $ 15,182 | $ 10,964 |
Income available to common shareholders | $ 14,026 | $ 15,182 | $ 10,964 |
Weighted average shares outstanding | 12,472,095 | 11,331,166 | 10,931,927 |
Net income per common share (in dollars per share) | $ 1.12 | $ 1.34 | $ 1.00 |
Effect of dilutive stock options and warrants | 250,255 | 104,283 | 83,836 |
Weighted average shares of common stock and common stock equivalents | 12,722,350 | 11,435,449 | 11,015,763 |
Net income per diluted common share (in dollars per share) | $ 1.10 | $ 1.33 | $ 1.00 |
Antidilutive options and warrants excluded from computation of earnings per share | 0 | 0 | 26,704 |
Share-Based Compensation - Restricted Common Stock Awards (Details) - Restricted Stock - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Number of Shares | |||
Nonvested outstanding shares at beginning of period (shares) | 93,501 | 53,028 | 56,850 |
Granted (shares) | 54,650 | 9,268 | |
Vested (shares) | (27,373) | (12,438) | (11,085) |
Forfeited (shares) | (2,360) | (1,739) | (2,005) |
Nonvested outstanding shares at end of period (shares) | 63,768 | 93,501 | 53,028 |
Weighted Average Grant Date Fair Value | |||
Nonvested outstanding shares at beginning of period (in dollars per share) | $ 13.35 | $ 12.34 | $ 12.68 |
Granted (in dollars per share) | 14.10 | 10.79 | |
Vested (in dollars per share) | 13.34 | 12.38 | 12.67 |
Forfeited (in dollars per share) | 14.07 | 12.95 | 12.95 |
Nonvested outstanding shares at end of period (in dollars per share) | $ 13.33 | $ 13.35 | $ 12.34 |
Employee Benefits - 401(k) and profit sharing plan (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
401(k) plan | |||
Schedule of Defined Contribution Plans Disclosures [Line Items] | |||
Requisite service period | 1 month | ||
Employer contribution amount | $ 686 | $ 604 | $ 585 |
Profit sharing plan | |||
Schedule of Defined Contribution Plans Disclosures [Line Items] | |||
Requisite service period | 2 years | ||
Percentage vesting annually | 100.00% | ||
Employer contribution amount | $ 600 | $ 380 | $ 270 |
Minimum | 401(k) plan | |||
Schedule of Defined Contribution Plans Disclosures [Line Items] | |||
Employer matching of employee contributions, percentage | 50.00% | ||
Employer matching contribution, percentage of compensation | 3.00% | ||
Maximum | 401(k) plan | |||
Schedule of Defined Contribution Plans Disclosures [Line Items] | |||
Employer matching of employee contributions, percentage | 100.00% | ||
Employer matching contribution, percentage of compensation | 5.00% |
Loans To Related Parties (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Loans to related parties | |
Balance at beginning of year | $ 6,482 |
Disbursements | 6,654 |
Amounts repaid | (1,251) |
Balance at end of year | 11,885 |
Undisbursed commitments to related parties | $ 1,298 |
8^!: "=V( QP!O:O-C)0S,4VLBN:I92^Q/8
M0#( #.G9!-X]>D269+1USNW]6?
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MO1I;?SP8V4]3C @;'W()4I<0=1Y0E\ !R0FA:7"M; A9C1E+/BT*TB(
M<)IG%(;'"+YO$81?A!CZ?Q
M>IGZ_PB3 W *P%L F$\#]!2@24!V=38.]:>R+U>+MKG,VNMLG/O"&U>K-GHLJE^I1
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M9DU4IXF-INXT%(W2=-4"J@BGUIQL !7*8@HC1R!R!-2
?4G!MU*<^#]PO@U/-A4F$9[\H?!VFR#=)$@C0?K?$K=B[OY*PE8]U6":
M.$V6E#AT<9)7WF5@[WE\D_?P:=J_"M/(SI(+.O^RL?\UH@,O97?C1ZCU'VPQ
M%-0N'#_XLYG&;#(<]O,/8LLW+GX#4$L#!!0 ( ,-:;DRIVM
_\W//<^>(CZX5\4S6 ]CXX:U7N
MUUIW.T)460.GZD%TT)J3LY"<:F/*BJA. CVY(,Y(& 1KPFG3^D7F? =99.*B
M6=/"07KJPCF5?_; 1)_[*__3\=)4M;8.4F0=K> GZ%_=01J+3"RGAD.K&M%Z
M$LZY_[C:[5>!#7"(UP9Z-=M[MI2C$&_6^';*_R
A%
8\(-/I 1C%&F;I$8%KB@T60W$2BNJ@%H!>
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M.TPW;']G[:&HI?CS&A?#"+I>$XE@$97G
B>3H
'?[
")SA'"]8'1@(#>QPO#<08X[X=1!RA.4R@H36J(Z
M;P@QLF @SQUDMH-D\B#E"5\E9M_XHRKQW$&..Y&- O+
@8&UFVYC?8G%HE
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M8( )(L_WMT"+^A*1@^DH&F4+LIKB@AOFHQH\2%U'U?(9';>R3R/4R84^*"
MRA-//12#2F\ E6)0*0+5;CT4>78CZMDV$7WV[@U%GIK#&/%;L"*8:R82XS;$B":9_:;!HKL-TTT^8;N#C4_\F9?U&WP+)7^
M'#%I;_0=02P,$
M% @ Q%IN3*