California | 77-0539125 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
7100 N. Financial Dr., Suite 101, Fresno, California | 93720 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer o | Accelerated filer ý | |
Non-accelerated filer o | (Do not check if a smaller reporting company) | |
Small reporting company o | ||
Emerging growth company o |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | ||
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | ||
(In thousands, except share amounts) | September 30, 2018 | December 31, 2017 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 29,748 | $ | 38,286 | ||||
Interest-earning deposits in other banks | 17,528 | 62,080 | ||||||
Federal funds sold | 31 | 17 | ||||||
Total cash and cash equivalents | 47,307 | 100,383 | ||||||
Available-for-sale debt securities | 434,697 | 535,281 | ||||||
Equity securities | 7,184 | 7,423 | ||||||
Loans, less allowance for credit losses of $9,025 at September 30, 2018 and $8,778 at December 31, 2017 | 902,852 | 891,901 | ||||||
Bank premises and equipment, net | 8,869 | 9,398 | ||||||
Bank-owned life insurance | 28,329 | 27,807 | ||||||
Federal Home Loan Bank stock | 6,843 | 6,843 | ||||||
Goodwill | 53,777 | 53,777 | ||||||
Core deposit intangibles | 2,746 | 3,027 | ||||||
Accrued interest receivable and other assets | 26,822 | 25,815 | ||||||
Total assets | $ | 1,519,426 | $ | 1,661,655 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Non-interest bearing | $ | 534,636 | $ | 585,039 | ||||
Interest bearing | 740,893 | 840,648 | ||||||
Total deposits | 1,275,529 | 1,425,687 | ||||||
Short-term borrowings | — | — | ||||||
Junior subordinated deferrable interest debentures | 5,155 | 5,155 | ||||||
Accrued interest payable and other liabilities | 25,307 | 21,254 | ||||||
Total liabilities | 1,305,991 | 1,452,096 | ||||||
Commitments and contingencies (Note 8) | ||||||||
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: 13,796,489 at September 30, 2018 and 13,696,722 at December 31, 2017 | 104,506 | 103,314 | ||||||
Retained earnings | 116,255 | 103,419 | ||||||
Accumulated other comprehensive income (loss), net of tax | (7,326 | ) | 2,826 | |||||
Total shareholders’ equity | 213,435 | 209,559 | ||||||
Total liabilities and shareholders’ equity | $ | 1,519,426 | $ | 1,661,655 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
(In thousands, except share and per-share amounts) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
INTEREST INCOME: | ||||||||||||||||
Interest and fees on loans | $ | 12,691 | $ | 10,423 | $ | 37,216 | $ | 31,287 | ||||||||
Interest on deposits in other banks | 170 | 53 | 312 | 204 | ||||||||||||
Interest and dividends on investment securities: | ||||||||||||||||
Taxable | 2,533 | 1,818 | 7,277 | 4,564 | ||||||||||||
Exempt from Federal income taxes | 896 | 1,531 | 3,008 | 5,428 | ||||||||||||
Total interest income | 16,290 | 13,825 | 47,813 | 41,483 | ||||||||||||
INTEREST EXPENSE: | ||||||||||||||||
Interest on deposits | 320 | 200 | 810 | 690 | ||||||||||||
Interest on junior subordinated deferrable interest debentures | 52 | 39 | 147 | 108 | ||||||||||||
Other | 11 | 8 | 126 | 13 | ||||||||||||
Total interest expense | 383 | 247 | 1,083 | 811 | ||||||||||||
Net interest income before provision for credit losses | 15,907 | 13,578 | 46,730 | 40,672 | ||||||||||||
PROVISION FOR (REVERSAL OF) CREDIT LOSSES | — | (900 | ) | 50 | (1,150 | ) | ||||||||||
Net interest income after provision for credit losses | 15,907 | 14,478 | 46,680 | 41,822 | ||||||||||||
NON-INTEREST INCOME: | ||||||||||||||||
Service charges | 739 | 765 | 2,220 | 2,285 | ||||||||||||
Appreciation in cash surrender value of bank-owned life insurance | 175 | 150 | 522 | 450 | ||||||||||||
Interchange fees | 381 | 378 | 1,106 | 1,075 | ||||||||||||
Net realized gains on sale of credit card portfolio | (116 | ) | — | 462 | — | |||||||||||
Net realized gains on sales of investment securities | 380 | 169 | 1,277 | 2,808 | ||||||||||||
Federal Home Loan Bank dividends | 119 | 98 | 358 | 322 | ||||||||||||
Loan placement fees | 207 | 279 | 546 | 526 | ||||||||||||
Other income | 578 | 715 | 1,429 | 1,430 | ||||||||||||
Total non-interest income | 2,463 | 2,554 | 7,920 | 8,896 | ||||||||||||
NON-INTEREST EXPENSES: | ||||||||||||||||
Salaries and employee benefits | 6,387 | 5,989 | 19,636 | 17,865 | ||||||||||||
Occupancy and equipment | 1,489 | 1,286 | 4,603 | 3,676 | ||||||||||||
Professional services | 343 | 258 | 1,144 | 1,104 | ||||||||||||
Data processing | 409 | 407 | 1,259 | 1,250 | ||||||||||||
Regulatory assessments | 154 | 161 | 476 | 482 | ||||||||||||
ATM/Debit card expenses | 192 | 216 | 569 | 553 | ||||||||||||
License and maintenance contracts | 174 | 188 | 608 | 590 | ||||||||||||
Directors’ expenses | 158 | 135 | 381 | 492 | ||||||||||||
Advertising | 192 | 154 | 569 | 484 | ||||||||||||
Internet banking expense | 172 | 181 | 542 | 523 | ||||||||||||
Acquisition and integration | — | 163 | 217 | 618 | ||||||||||||
Amortization of core deposit intangibles | 94 | 47 | 281 | 141 | ||||||||||||
Other | 1,027 | 1,209 | 3,373 | 3,519 | ||||||||||||
Total non-interest expenses | 10,791 | 10,394 | 33,658 | 31,297 | ||||||||||||
Income before provision for income taxes | 7,579 | 6,638 | 20,942 | 19,421 | ||||||||||||
Provision for income taxes | 1,827 | 2,144 | 4,934 | 5,730 | ||||||||||||
Net income | $ | 5,752 | $ | 4,494 | $ | 16,008 | $ | 13,691 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic earnings per share | $ | 0.42 | $ | 0.37 | $ | 1.17 | $ | 1.12 | ||||||||
Weighted average common shares used in basic computation | 13,715,141 | 12,208,313 | 13,692,657 | 12,183,363 | ||||||||||||
Diluted earnings per share | $ | 0.42 | $ | 0.36 | $ | 1.16 | $ | 1.11 | ||||||||
Weighted average common shares used in diluted computation | 13,836,828 | 12,325,254 | 13,821,828 | 12,315,850 | ||||||||||||
Cash dividend per common share | $ | 0.08 | $ | 0.06 | $ | 0.22 | $ | 0.18 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 5,752 | $ | 4,494 | $ | 16,008 | $ | 13,691 | ||||||||
Other Comprehensive Income: | ||||||||||||||||
Unrealized gains (losses) on securities: | ||||||||||||||||
Unrealized holding (losses) gains arising during the period | (3,509 | ) | 547 | (13,340 | ) | 11,299 | ||||||||||
Less: reclassification of net gains included in net income | 380 | 169 | 1,277 | 2,808 | ||||||||||||
Other comprehensive (loss) income, before tax | (3,889 | ) | 378 | (14,617 | ) | 8,491 | ||||||||||
Tax benefit (expense) related to items of other comprehensive income | 1,210 | (159 | ) | 4,321 | (3,570 | ) | ||||||||||
Total other comprehensive (loss) income | (2,679 | ) | 219 | (10,296 | ) | 4,921 | ||||||||||
Comprehensive income | $ | 3,073 | $ | 4,713 | $ | 5,712 | $ | 18,612 |
For the Nine Months Ended September 30, | ||||||||
(In thousands) | 2018 | 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 16,008 | $ | 13,691 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Net decrease in deferred loan costs | 83 | 284 | ||||||
Depreciation | 1,282 | 1,019 | ||||||
Accretion | (694 | ) | (573 | ) | ||||
Amortization | 5,183 | 6,469 | ||||||
Stock-based compensation | 332 | 310 | ||||||
Provision for (reversal of) credit losses | 50 | (1,150 | ) | |||||
Net realized gains on sales of available-for-sale investment securities | (1,277 | ) | (2,808 | ) | ||||
Net loss on disposal of premises and equipment | 2 | — | ||||||
Decrease in fair value of equity securities | 112 | — | ||||||
Increase in bank-owned life insurance, net of expenses | (522 | ) | (450 | ) | ||||
Net gain on sale of credit card portfolio | (462 | ) | — | |||||
Net decrease in accrued interest receivable and other assets | 3,005 | 2,594 | ||||||
Net (decrease) increase in accrued interest payable and other liabilities | (1,086 | ) | 498 | |||||
Benefit for deferred income taxes | 227 | 831 | ||||||
Net cash provided by operating activities | 22,243 | 20,715 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of available-for-sale investment securities | (176,842 | ) | (96,765 | ) | ||||
Proceeds from sales or calls of available-for-sale investment securities | 234,175 | 101,286 | ||||||
Proceeds from maturity and principal repayments of available-for-sale investment securities | 31,063 | 33,777 | ||||||
Proceeds from sale of credit card portfolio | 2,954 | — | ||||||
Net increase in loans | (13,588 | ) | (21,642 | ) | ||||
Purchases of premises and equipment | (755 | ) | (532 | ) | ||||
Net cash provided by investing activities | 77,007 | 16,124 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net decrease in demand, interest bearing and savings deposits | (125,485 | ) | (884 | ) | ||||
Net decrease in time deposits | (24,673 | ) | (36,711 | ) | ||||
Proceeds from short-term borrowings from Federal Home Loan Bank | 550,000 | — | ||||||
Repayments of short-term borrowings to Federal Home Loan Bank | (550,000 | ) | — | |||||
Proceeds of borrowings from other financial institutions | 11,500 | — | ||||||
Repayments of borrowings from other financial institutions | (11,500 | ) | (400 | ) | ||||
Proceeds from stock issued under employee stock purchase plan | 141 | — | ||||||
Proceeds from exercise of stock options | 719 | 473 | ||||||
Cash dividend payments on common stock | (3,028 | ) | (2,196 | ) | ||||
Net cash used in financing activities | (152,326 | ) | (39,718 | ) | ||||
Decrease in cash and cash equivalents | (53,076 | ) | (2,879 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 100,383 | 38,568 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 47,307 | $ | 35,689 |
For the Nine Months Ended September 30, | ||||||||
(In thousands) | 2018 | 2017 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 1,074 | $ | 852 | ||||
Income taxes | $ | 1,530 | $ | 2,420 | ||||
Non-cash investing and financing activities: | ||||||||
Purchases of available-for-sale investment securities, not yet settled | $ | 5,150 | $ | — |
Pro Forma Results of Operations | For the Nine Months Ended September 30, | |||
(In thousands, except per share amounts) | 2017 | |||
Net interest income | $ | 45,516 | ||
(Reversal of) provision for credit losses | (1,150 | ) | ||
Non-interest income | 9,300 | |||
Non-interest expense | 38,319 | |||
Income before provision for income taxes | 17,647 | |||
Provision for income taxes | 5,105 | |||
Net income | $ | 12,542 | ||
Basic earnings per common share | $ | 1.03 | ||
Diluted earnings per common share | $ | 1.02 |
September 30, 2018 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 29,748 | $ | 29,748 | $ | — | $ | — | $ | 29,748 | ||||||||||
Interest-earning deposits in other banks | 17,528 | 17,528 | — | — | 17,528 | |||||||||||||||
Federal funds sold | 31 | 31 | — | — | 31 | |||||||||||||||
Available-for-sale debt securities | 434,697 | — | 434,697 | — | 434,697 | |||||||||||||||
Equity securities | 7,184 | 7,184 | — | — | 7,184 | |||||||||||||||
Loans, net | 902,852 | — | — | 896,241 | 896,241 | |||||||||||||||
Federal Home Loan Bank stock | 6,843 | N/A | N/A | N/A | N/A | |||||||||||||||
Accrued interest receivable | 5,898 | 18 | 1,988 | 3,892 | 5,898 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 1,275,529 | 1,016,266 | 102,208 | — | 1,118,474 | |||||||||||||||
Short-term borrowings | — | — | — | — | — | |||||||||||||||
Junior subordinated deferrable interest debentures | 5,155 | — | — | 4,180 | 4,180 | |||||||||||||||
Accrued interest payable | 119 | — | 67 | 52 | 119 |
December 31, 2017 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
(In thousands) | 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 debt securities | 535,281 | — | 535,281 | — | 535,281 | |||||||||||||||
Equity securities | 7,423 | 7,423 | — | — | 7,423 | |||||||||||||||
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 | |||||||||||||||
Junior subordinated deferrable interest debentures | 5,155 | — | — | 3,550 | 3,550 | |||||||||||||||
Accrued interest payable | 110 | — | 72 | 38 | 110 |
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale debt securities: | ||||||||||||||||
U.S. Government agencies | $ | 22,243 | $ | — | $ | 22,243 | $ | — | ||||||||
Obligations of states and political subdivisions | 66,114 | — | 66,114 | — | ||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 243,948 | — | 243,948 | — | ||||||||||||
Private label mortgage and asset backed securities | 102,392 | — | 102,392 | — | ||||||||||||
Equity securities | 7,184 | 7,184 | — | — | ||||||||||||
Total assets measured at fair value on a recurring basis | $ | 441,881 | $ | 7,184 | $ | 434,697 | $ | — |
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale 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 mortgage and asset backed securities | 90,681 | — | 90,681 | — | ||||||||||||
Equity securities | 7,423 | 7,423 | — | — | ||||||||||||
Total assets measured at fair value on a recurring basis | $ | 542,704 | $ | 7,423 | $ | 535,281 | $ | — |
Description | 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 |
September 30, 2018 | ||||||||||||||||
Available-for-Sale Securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Debt securities: | ||||||||||||||||
U.S. Government agencies | $ | 22,728 | $ | — | $ | (485 | ) | $ | 22,243 | |||||||
Obligations of states and political subdivisions | 65,839 | 1,566 | (1,291 | ) | 66,114 | |||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 250,331 | 249 | (6,632 | ) | 243,948 | |||||||||||
Private label mortgage and asset backed securities | 106,200 | 749 | (4,557 | ) | 102,392 | |||||||||||
Total available-for-sale | $ | 445,098 | $ | 2,564 | $ | (12,965 | ) | $ | 434,697 |
December 31, 2017 | ||||||||||||||||
Available-for-Sale Securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
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 | |||||||||||
Total available-for-sale | $ | 531,192 | $ | 8,432 | $ | (4,343 | ) | $ | 535,281 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
Available-for-Sale Securities | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Proceeds from sales or calls | $ | 102,555 | $ | 26,286 | $ | 234,175 | $ | 101,286 | ||||||||
Gross realized gains from sales or calls | 580 | 210 | 1,896 | 3,601 | ||||||||||||
Gross realized losses from sales or calls | (200 | ) | (41 | ) | (619 | ) | (793 | ) |
September 30, 2018 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Available-for-Sale Securities | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
U.S. Government agencies | $ | 16,539 | $ | (349 | ) | $ | 5,704 | $ | (136 | ) | $ | 22,243 | $ | (485 | ) | |||||||||
Obligations of states and political subdivisions | 42,967 | (1,139 | ) | 3,080 | (152 | ) | 46,047 | (1,291 | ) | |||||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 130,925 | (3,482 | ) | 52,418 | (3,150 | ) | 183,343 | (6,632 | ) | |||||||||||||||
Private label mortgage and asset backed securities | 44,766 | (1,921 | ) | 50,442 | (2,636 | ) | 95,208 | (4,557 | ) | |||||||||||||||
Total available-for-sale | $ | 235,197 | $ | (6,891 | ) | $ | 111,644 | $ | (6,074 | ) | $ | 346,841 | $ | (12,965 | ) |
December 31, 2017 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Available-for-Sale Securities | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
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 mortgage and asset backed securities | 88,312 | (1,276 | ) | — | — | 88,312 | (1,276 | ) | ||||||||||||||||
Total available-for-sale | $ | 180,744 | $ | (2,148 | ) | $ | 74,586 | $ | (2,195 | ) | $ | 255,330 | $ | (4,343 | ) |
For the Nine Months Ended September 30, | ||||||||
(In thousands) | 2018 | 2017 | ||||||
Beginning balance | $ | 874 | $ | 874 | ||||
Amounts related to credit loss for which an OTTI charge was not previously recognized | — | — | ||||||
Increases to the amount related to credit loss for which OTTI was previously recognized | — | — | ||||||
Realized gain for securities sold | — | — | ||||||
Ending balance | $ | 874 | $ | 874 |
September 30, 2018 | ||||||||
Available-for-Sale Securities | Amortized Cost | Estimated Fair Value | ||||||
Within one year | $ | — | $ | — | ||||
After one year through five years | 2,754 | 2,874 | ||||||
After five years through ten years | 14,275 | 14,272 | ||||||
After ten years | 48,810 | 48,968 | ||||||
65,839 | 66,114 | |||||||
Investment securities not due at a single maturity date: | ||||||||
U.S. Government agencies | 22,728 | 22,243 | ||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 250,331 | 243,948 | ||||||
Private label mortgage and asset backed securities | 106,200 | 102,392 | ||||||
Total available-for-sale | $ | 445,098 | $ | 434,697 |
Loan Type (Dollars in thousands) | September 30, 2018 | % of Total Loans | December 31, 2017 | % of Total Loans | ||||||||||
Commercial: | ||||||||||||||
Commercial and industrial | $ | 102,352 | 11.2 | % | $ | 100,856 | 11.2 | % | ||||||
Agricultural production | 10,516 | 1.2 | % | 14,956 | 1.7 | % | ||||||||
Total commercial | 112,868 | 12.4 | % | 115,812 | 12.9 | % | ||||||||
Real estate: | ||||||||||||||
Owner occupied | 186,997 | 20.5 | % | 204,452 | 22.7 | % | ||||||||
Real estate construction and other land loans | 95,656 | 10.5 | % | 96,460 | 10.7 | % | ||||||||
Commercial real estate | 306,778 | 33.6 | % | 269,254 | 29.9 | % | ||||||||
Agricultural real estate | 70,580 | 7.7 | % | 76,081 | 8.4 | % | ||||||||
Other real estate | 33,526 | 3.9 | % | 31,220 | 3.5 | % | ||||||||
Total real estate | 693,537 | 76.2 | % | 677,467 | 75.2 | % | ||||||||
Consumer: | ||||||||||||||
Equity loans and lines of credit | 70,518 | 7.7 | % | 76,404 | 8.5 | % | ||||||||
Consumer and installment | 33,512 | 3.7 | % | 29,637 | 3.4 | % | ||||||||
Total consumer | 104,030 | 11.4 | % | 106,041 | 11.9 | % | ||||||||
Net deferred origination costs | 1,442 | 1,359 | ||||||||||||
Total gross loans | 911,877 | 100.0 | % | 900,679 | 100.0 | % | ||||||||
Allowance for credit losses | (9,025 | ) | (8,778 | ) | ||||||||||
Total loans | $ | 902,852 | $ | 891,901 |
September 30, 2018 | December 31, 2017 | |||||||
Commercial | $ | 291 | $ | 383 | ||||
Outstanding balance | $ | 291 | $ | 383 | ||||
Carrying amount, net of allowance of $0 | $ | 291 | $ | 383 |
September 30, 2018 | December 31, 2017 | |||||||
Loans acquired during the year | $ | — | $ | — | ||||
Loans at the end of the period | $ | 291 | $ | 383 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, July 1, 2018 | $ | 1,938 | $ | 6,155 | $ | 793 | $ | 34 | $ | 8,920 | ||||||||||
(Reversal) provision charged to operations | (273 | ) | 203 | 16 | 54 | — | ||||||||||||||
Losses charged to allowance | — | — | (23 | ) | — | (23 | ) | |||||||||||||
Recoveries | 29 | 20 | 79 | — | 128 | |||||||||||||||
Ending balance, September 30, 2018 | $ | 1,694 | $ | 6,378 | $ | 865 | $ | 88 | $ | 9,025 | ||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, July 1, 2017 | $ | 2,196 | $ | 5,931 | $ | 793 | $ | 377 | $ | 9,297 | ||||||||||
(Reversal) provision charged to operations | (532 | ) | (251 | ) | (35 | ) | (82 | ) | (900 | ) | ||||||||||
Losses charged to allowance | (4 | ) | — | (18 | ) | — | (22 | ) | ||||||||||||
Recoveries | 514 | 5 | 22 | — | 541 | |||||||||||||||
Ending balance, September 30, 2017 | $ | 2,174 | $ | 5,685 | $ | 762 | $ | 295 | $ | 8,916 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, January 1, 2018 | $ | 2,071 | $ | 5,795 | $ | 825 | $ | 87 | $ | 8,778 | ||||||||||
(Reversal) provision charged to operations | (422 | ) | 481 | (10 | ) | 1 | 50 | |||||||||||||
Losses charged to allowance | (87 | ) | — | (88 | ) | — | (175 | ) | ||||||||||||
Recoveries | 132 | 102 | 138 | — | 372 | |||||||||||||||
Ending balance, September 30, 2018 | $ | 1,694 | $ | 6,378 | $ | 865 | $ | 88 | $ | 9,025 | ||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, January 1, 2017 | $ | 2,180 | $ | 6,200 | $ | 852 | $ | 94 | $ | 9,326 | ||||||||||
(Reversal) provision charged to operations | (776 | ) | (554 | ) | (21 | ) | 201 | (1,150 | ) | |||||||||||
Losses charged to allowance | (48 | ) | (22 | ) | (162 | ) | — | (232 | ) | |||||||||||
Recoveries | 818 | 61 | 93 | — | 972 | |||||||||||||||
Ending balance, September 30, 2017 | $ | 2,174 | $ | 5,685 | $ | 762 | $ | 295 | $ | 8,916 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Ending balance, September 30, 2018 | $ | 1,694 | $ | 6,378 | $ | 865 | $ | 88 | $ | 9,025 | ||||||||||
Ending balance: individually evaluated for impairment | $ | 1 | $ | 163 | $ | 58 | $ | — | $ | 222 | ||||||||||
Ending balance: collectively evaluated for impairment | $ | 1,693 | $ | 6,215 | $ | 807 | $ | 88 | $ | 8,803 | ||||||||||
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 |
Commercial | Real Estate | Consumer | Total | |||||||||||||
Loans: | ||||||||||||||||
Ending balance, September 30, 2018 | $ | 112,868 | $ | 693,537 | $ | 104,030 | $ | 910,435 | ||||||||
Ending balance: individually evaluated for impairment | $ | 342 | $ | 5,768 | $ | 1,363 | $ | 7,473 | ||||||||
Ending balance: collectively evaluated for impairment | $ | 112,526 | $ | 687,769 | $ | 102,667 | $ | 902,962 | ||||||||
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 |
Pass | Special Mention | Sub-Standard | Doubtful | Total | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 90,893 | $ | 10,200 | $ | 1,259 | $ | — | $ | 102,352 | ||||||||||
Agricultural production | 6,516 | 2,636 | 1,364 | — | 10,516 | |||||||||||||||
Real Estate: | ||||||||||||||||||||
Owner occupied | 183,013 | 3,080 | 904 | — | 186,997 | |||||||||||||||
Real estate construction and other land loans | 91,289 | 1,325 | 3,042 | — | 95,656 | |||||||||||||||
Commercial real estate | 300,450 | 2,503 | 3,825 | — | 306,778 | |||||||||||||||
Agricultural real estate | 46,196 | 688 | 23,696 | — | 70,580 | |||||||||||||||
Other real estate | 32,409 | — | 1,117 | — | 33,526 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Equity loans and lines of credit | 68,329 | 383 | 1,806 | — | 70,518 | |||||||||||||||
Consumer and installment | 33,510 | — | 2 | — | 33,512 | |||||||||||||||
Total | $ | 852,605 | $ | 20,815 | $ | 37,015 | $ | — | $ | 910,435 |
Pass | Special Mention | Sub-Standard | Doubtful | Total | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 84,745 | $ | 8,217 | $ | 7,894 | $ | — | $ | 100,856 | ||||||||||
Agricultural 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 |
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 | $ | — | $ | — | $ | — | $ | — | $ | 102,352 | $ | 102,352 | $ | — | $ | 291 | ||||||||||||||||
Agricultural production | — | — | — | — | 10,516 | 10,516 | — | — | ||||||||||||||||||||||||
Real estate: | — | — | — | — | ||||||||||||||||||||||||||||
Owner occupied | — | — | — | — | 186,997 | 186,997 | — | — | ||||||||||||||||||||||||
Real estate construction and other land loans | — | — | 1,439 | 1,439 | 94,217 | 95,656 | — | 1,439 | ||||||||||||||||||||||||
Commercial real estate | — | — | — | — | 306,778 | 306,778 | — | 908 | ||||||||||||||||||||||||
Agricultural real estate | — | — | — | — | 70,580 | 70,580 | — | — | ||||||||||||||||||||||||
Other real estate | — | — | 1,117 | 1,117 | 32,409 | 33,526 | — | 1,117 | ||||||||||||||||||||||||
Consumer: | — | — | — | |||||||||||||||||||||||||||||
Equity loans and lines of credit | — | — | — | — | 70,518 | 70,518 | — | 378 | ||||||||||||||||||||||||
Consumer and installment | 19 | — | — | 19 | 33,493 | 33,512 | — | — | ||||||||||||||||||||||||
Total | $ | 19 | $ | — | $ | 2,556 | $ | 2,575 | $ | 907,860 | $ | 910,435 | $ | — | $ | 4,133 |
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 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 |
Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||
With no related allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | $ | 290 | $ | 513 | $ | — | ||||||
Real estate: | ||||||||||||
Real estate construction and other land loans | 2,764 | 2,827 | — | |||||||||
Commercial real estate | 1,680 | 1,993 | — | |||||||||
Other real estate | 1,117 | 1,180 | — | |||||||||
Total real estate | 5,561 | 6,000 | — | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 255 | 287 | — | |||||||||
Total with no related allowance recorded | 6,106 | 6,800 | — | |||||||||
With an allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | 52 | 52 | 1 | |||||||||
Real estate: | ||||||||||||
Commercial real estate | 163 | 164 | 162 | |||||||||
Agricultural real estate | 44 | 44 | 1 | |||||||||
Total real estate | 207 | 208 | 163 | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 1,108 | 1,111 | 58 | |||||||||
Total with an allowance recorded | 1,367 | 1,371 | 222 | |||||||||
Total | $ | 7,473 | $ | 8,171 | $ | 222 |
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 |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | |||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||
With no related allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | $ | 298 | $ | — | $ | 390 | $ | — | ||||||||
Real estate: | ||||||||||||||||
Real estate construction and other land loans | 2,851 | 21 | 1,423 | — | ||||||||||||
Commercial real estate | 1,695 | 13 | 1,822 | 13 | ||||||||||||
Agricultural real estate | 2,288 | — | — | — | ||||||||||||
Other real estate | 836 | — | — | — | ||||||||||||
Total real estate | 7,670 | 34 | 3,245 | 13 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | 224 | — | 142 | — | ||||||||||||
Consumer and installment | — | — | 15 | — | ||||||||||||
Total consumer | 224 | — | 157 | — | ||||||||||||
Total with no related allowance recorded | 8,192 | 34 | 3,792 | 13 | ||||||||||||
With an allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | 53 | 1 | 22 | — | ||||||||||||
Real estate: | ||||||||||||||||
Real estate construction and other land loans | — | — | 1,859 | 27 | ||||||||||||
Commercial real estate | 164 | 3 | — | — | ||||||||||||
Agricultural real estate | 50 | 1 | 57 | 1 | ||||||||||||
Other real estate | 279 | — | — | — | ||||||||||||
Total real estate | 493 | 4 | 1,916 | 28 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | 1,111 | 14 | 46 | — | ||||||||||||
Consumer and installment | 3 | — | — | — | ||||||||||||
Total consumer | 1,114 | 14 | 46 | — | ||||||||||||
Total with an allowance recorded | 1,660 | 19 | 1,984 | 28 | ||||||||||||
Total | $ | 9,852 | $ | 53 | $ | 5,776 | $ | 41 |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | |||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||
With no related allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | $ | 324 | $ | — | $ | 416 | $ | — | ||||||||
Real estate: | ||||||||||||||||
Owner occupied | — | — | 32 | — | ||||||||||||
Real estate construction and other land loans | 2,918 | 66 | 1,014 | — | ||||||||||||
Commercial real estate | 1,648 | 39 | 1,325 | 40 | ||||||||||||
Agricultural real estate | 1,525 | 119 | — | — | ||||||||||||
Other real estate | 913 | — | — | — | ||||||||||||
Total real estate | 7,004 | 224 | 2,371 | 40 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | 207 | — | 127 | — | ||||||||||||
Consumer and installment | — | — | 8 | — | ||||||||||||
Total consumer | 207 | — | 135 | — | ||||||||||||
Total with no related allowance recorded | 7,535 | 224 | 2,922 | 40 | ||||||||||||
With an allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | 52 | 3 | 28 | 1 | ||||||||||||
Real estate: | ||||||||||||||||
Real estate construction and other land loans | — | — | 2,025 | 88 | ||||||||||||
Commercial real estate | 211 | 9 | 532 | — | ||||||||||||
Agricultural real estate | 50 | 2 | 40 | 2 | ||||||||||||
Other real estate | 112 | — | — | — | ||||||||||||
Total real estate | 373 | 11 | 2,597 | 90 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | 1,040 | 43 | 102 | — | ||||||||||||
Consumer and installment | 4 | — | 1 | — | ||||||||||||
Total consumer | 1,044 | 43 | 103 | — | ||||||||||||
Total with an allowance recorded | 1,469 | 57 | 2,728 | 91 | ||||||||||||
Total | $ | 9,004 | $ | 281 | $ | 5,650 | $ | 131 |
Troubled Debt Restructurings: | Number of Loans | Pre-Modification Outstanding Recorded Investment (1) | Principal Modification (2) | Post Modification Outstanding Recorded Investment (3) | Outstanding Recorded Investment | ||||||||||||||
Commercial: | |||||||||||||||||||
Commercial and Industrial | 1 | $ | 38 | $ | — | $ | 38 | $ | 31 | ||||||||||
Real Estate: | |||||||||||||||||||
Commercial real estate | 1 | 166 | — | 166 | 163 | ||||||||||||||
Total | 2 | $ | 204 | $ | — | $ | 204 | $ | 194 |
(1) | Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any. |
(2) | Principal Modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate. |
(3) | 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 (2) | Post Modification Outstanding Recorded Investment (3) | Outstanding Recorded Investment | ||||||||||||||
Real Estate: | |||||||||||||||||||
Agricultural real estate | 1 | $ | 59 | $— | $ | 59 | $ | 51 | |||||||||||
Consumer: | |||||||||||||||||||
Equity loans and lines of credit | 1 | 62 | — | 66 | 62 | ||||||||||||||
Total | 2 | $ | 121 | $ | — | $ | 125 | $ | 113 |
Basic Earnings Per Share | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
(In thousands, except share and per share amounts) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 5,752 | $ | 4,494 | $ | 16,008 | $ | 13,691 | ||||||||
Weighted average shares outstanding | 13,715,141 | 12,208,313 | 13,692,657 | 12,183,363 | ||||||||||||
Basic earnings per share | $ | 0.42 | $ | 0.37 | $ | 1.17 | $ | 1.12 |
Diluted Earnings Per Share | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
(In thousands, except share and per share amounts) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 5,752 | $ | 4,494 | $ | 16,008 | $ | 13,691 | ||||||||
Weighted average shares outstanding | 13,715,141 | 12,208,313 | 13,692,657 | 12,183,363 | ||||||||||||
Effect of dilutive stock options | 121,687 | 116,941 | 129,171 | 132,487 | ||||||||||||
Weighted average shares of common stock and common stock equivalents | 13,836,828 | 12,325,254 | 13,821,828 | 12,315,850 | ||||||||||||
Diluted earnings per share | $ | 0.42 | $ | 0.36 | $ | 1.16 | $ | 1.11 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (In thousands) | ||||||||||
Options outstanding at January 1, 2018 | 232,870 | $ | 9.13 | ||||||||||
Options exercised | (71,470 | ) | $ | 10.04 | |||||||||
Options forfeited | (4,000 | ) | $ | 11.25 | |||||||||
Options outstanding at September 30, 2018 | 157,400 | $ | 8.66 | 3.07 | $ | 2,038 | |||||||
Options vested or expected to vest at September 30, 2018 | 157,400 | $ | 8.66 | 3.07 | $ | 2,038 | |||||||
Options exercisable at September 30, 2018 | 157,400 | $ | 8.66 | 3.07 | $ | 2,038 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Intrinsic value of options exercised | $ | 83 | $ | 13 | $ | 736 | $ | 964 | ||||||||
Cash received from options exercised | $ | 79 | $ | 7 | $ | 719 | $ | 473 | ||||||||
Excess tax benefit realized for option exercises | $ | 3 | $ | — | $ | 142 | $ | 104 |
Shares | Weighted Average Grant-Date Fair Value | ||||||
Nonvested outstanding shares at January 1, 2018 | 63,768 | $ | 13.33 | ||||
Granted | 22,204 | $ | 20.76 | ||||
Vested | (20,733 | ) | $ | 13.09 | |||
Forfeited | (1,685 | ) | $ | 14.39 | |||
Nonvested outstanding shares at September 30, 2018 | 63,554 | $ | 15.98 |
For the Nine Months Ended September 30, 2018 | For the Nine Months Ended September 30, 2017 | |||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | ||||||||||||||||
ASSETS | ||||||||||||||||||||||
Interest-earning deposits in other banks | $ | 23,509 | $ | 312 | 1.77 | % | $ | 27,232 | $ | 204 | 1.00 | % | ||||||||||
Securities: | ||||||||||||||||||||||
Taxable securities | 388,055 | 7,276 | 2.50 | % | 296,563 | 4,564 | 2.05 | % | ||||||||||||||
Non-taxable securities (1) | 125,948 | 3,808 | 4.03 | % | 231,999 | 8,225 | 4.73 | % | ||||||||||||||
Total investment securities | 514,003 | 11,084 | 2.88 | % | 528,562 | 12,789 | 3.23 | % | ||||||||||||||
Federal funds sold | 39 | — | 1.79 | % | 45 | — | 1.25 | % | ||||||||||||||
Total securities and interest-earning deposits | 537,551 | 11,396 | 2.83 | % | 555,839 | 12,993 | 3.12 | % | ||||||||||||||
Loans (2) (3) | 907,779 | 37,216 | 5.48 | % | 757,859 | 31,287 | 5.52 | % | ||||||||||||||
Total interest-earning assets | 1,445,330 | $ | 48,612 | 4.50 | % | 1,313,698 | $ | 44,280 | 4.51 | % | ||||||||||||
Allowance for credit losses | (8,873 | ) | (9,376 | ) | ||||||||||||||||||
Nonaccrual loans | 4,083 | 2,793 | ||||||||||||||||||||
Cash and due from banks | 26,960 | 24,433 | ||||||||||||||||||||
Bank premises and equipment | 9,279 | 9,220 | ||||||||||||||||||||
Other assets | 112,586 | 99,371 | ||||||||||||||||||||
Total average assets | $ | 1,589,365 | $ | 1,440,139 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Savings and NOW accounts | $ | 389,779 | $ | 326 | 0.11 | % | $ | 379,490 | $ | 270 | 0.10 | % | ||||||||||
Money market accounts | 289,140 | 280 | 0.13 | % | 247,669 | 94 | 0.05 | % | ||||||||||||||
Time certificates of deposit | 115,114 | 204 | 0.24 | % | 139,100 | 326 | 0.31 | % | ||||||||||||||
Total interest-bearing deposits | 794,033 | 810 | 0.14 | % | 766,259 | 690 | 0.12 | % | ||||||||||||||
Other borrowed funds | 14,203 | 273 | 2.56 | % | 6,540 | 121 | 2.47 | % | ||||||||||||||
Total interest-bearing liabilities | 808,236 | $ | 1,083 | 0.18 | % | 772,799 | $ | 811 | 0.14 | % | ||||||||||||
Non-interest bearing demand deposits | 551,165 | 477,076 | ||||||||||||||||||||
Other liabilities | 19,914 | 17,248 | ||||||||||||||||||||
Shareholders’ equity | 210,050 | 173,016 | ||||||||||||||||||||
Total average liabilities and shareholders’ equity | $ | 1,589,365 | $ | 1,440,139 | ||||||||||||||||||
Interest income and rate earned on average earning assets | $ | 48,612 | 4.50 | % | $ | 44,280 | 4.51 | % | ||||||||||||||
Interest expense and interest cost related to average interest-bearing liabilities | 1,083 | 0.18 | % | 811 | 0.14 | % | ||||||||||||||||
Net interest income and net interest margin (4) | $ | 47,529 | 4.40 | % | $ | 43,469 | 4.42 | % |
(1) | Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $800 and $2,797 in 2018 and 2017, respectively. |
(2) | Loan interest income includes loan fees of $404 in 2018 and $420 in 2017. |
(3) | Average loans do not include nonaccrual loans but do include interest income recovered from previously charged off loans. |
(4) | Net interest margin is computed by dividing net interest income by total average interest-earning assets. |
Changes in Volume/Rate | For the Nine Months Ended September 30, 2018 and 2017 | |||||||||||
(In thousands) | Volume | Rate | Net | |||||||||
Increase (decrease) due to changes in: | ||||||||||||
Interest income: | ||||||||||||
Interest-earning deposits in other banks | $ | (27 | ) | $ | 135 | $ | 108 | |||||
Investment securities: | ||||||||||||
Taxable | 1,409 | 1,303 | 2,712 | |||||||||
Non-taxable (1) | (3,760 | ) | (657 | ) | (4,417 | ) | ||||||
Total investment securities | (2,351 | ) | 646 | (1,705 | ) | |||||||
Loans | 6,189 | (260 | ) | 5,929 | ||||||||
Total earning assets (1) | 3,811 | 521 | 4,332 | |||||||||
Interest expense: | ||||||||||||
Deposits: | ||||||||||||
Savings, NOW and MMA | 22 | 220 | 242 | |||||||||
Time certificate of deposits | (56 | ) | (66 | ) | (122 | ) | ||||||
Total interest-bearing deposits | (34 | ) | 154 | 120 | ||||||||
Other borrowed funds | 141 | 11 | 152 | |||||||||
Total interest bearing liabilities | 107 | 165 | 272 | |||||||||
Net interest income (1) | $ | 3,704 | $ | 356 | $ | 4,060 |
Loan Type | September 30, 2018 | December 31, 2017 | ||||||
Commercial: | ||||||||
Commercial and industrial | $ | 1,579 | $ | 1,784 | ||||
Agricultural production | 115 | 287 | ||||||
Total commercial | 1,694 | 2,071 | ||||||
Real estate: | ||||||||
Owner occupied | 1,147 | 1,252 | ||||||
Real estate construction and other land loans | 1,123 | 1,004 | ||||||
Commercial real estate | 3,065 | 1,958 | ||||||
Agricultural real estate | 876 | 1,441 | ||||||
Other real estate | 167 | 140 | ||||||
Total real estate | 6,378 | 5,795 | ||||||
Consumer: | ||||||||
Equity loans and lines of credit | 489 | 464 | ||||||
Consumer and installment | 376 | 361 | ||||||
Total consumer | 865 | 825 | ||||||
Unallocated reserves | 88 | 87 | ||||||
Total allowance for credit losses | $ | 9,025 | $ | 8,778 |
For the Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | |||||||||||||
(Dollars in thousands) | Other Expense | % Average Assets | Other Expense | % Average Assets | ||||||||||
Stationery/supplies | $ | 202 | 0.02 | % | $ | 216 | 0.02 | % | ||||||
Amortization of software | 226 | 0.02 | % | 208 | 0.02 | % | ||||||||
Postage | 157 | 0.01 | % | 150 | 0.01 | % | ||||||||
Risk management expense | 136 | 0.01 | % | 135 | 0.01 | % | ||||||||
Shareholder services | 106 | 0.01 | % | 82 | 0.01 | % | ||||||||
Personnel other | 106 | 0.01 | % | 170 | 0.02 | % | ||||||||
Armored courier fees | 208 | 0.02 | % | 197 | 0.02 | % | ||||||||
Credit card expense | 121 | 0.01 | % | 182 | 0.02 | % | ||||||||
Telephone | 167 | 0.01 | % | 196 | 0.02 | % | ||||||||
Alarm | 65 | 0.01 | % | 76 | 0.01 | % | ||||||||
Donations | 181 | 0.02 | % | 173 | 0.02 | % | ||||||||
Education/training | 126 | 0.01 | % | 139 | 0.01 | % | ||||||||
Loan related expenses | 62 | 0.01 | % | 124 | 0.01 | % | ||||||||
General insurance | 126 | 0.01 | % | 117 | 0.01 | % | ||||||||
Travel and mileage Expense | 197 | 0.02 | % | 152 | 0.01 | % | ||||||||
Loss on sale or write-down of assets | 2 | — | % | 63 | 0.01 | % | ||||||||
Operating losses | 193 | 0.02 | % | 143 | 0.01 | % | ||||||||
Other | 992 | 0.08 | % | 996 | 0.09 | % | ||||||||
Total other non-interest expense | $ | 3,373 | 0.28 | % | $ | 3,519 | 0.33 | % |
For the Three Months Ended September 30, 2018 | For the Three Months Ended September 30, 2017 | |||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | ||||||||||||||||
ASSETS | ||||||||||||||||||||||
Interest-earning deposits in other banks | $ | 33,939 | $ | 169 | 1.99 | % | $ | 16,316 | $ | 53 | 1.30 | % | ||||||||||
Securities | ||||||||||||||||||||||
Taxable securities | 356,355 | 2,534 | 2.84 | % | 320,261 | 1,818 | 2.27 | % | ||||||||||||||
Non-taxable securities (1) | 112,889 | 1,134 | 4.02 | % | 195,262 | 2,320 | 4.75 | % | ||||||||||||||
Total investment securities | 469,244 | 3,668 | 3.13 | % | 515,523 | 4,138 | 3.21 | % | ||||||||||||||
Federal funds sold | 22 | — | 1.95 | % | 87 | — | 1.25 | % | ||||||||||||||
Total securities and interest-earning deposits | 503,205 | 3,837 | 3.05 | % | 531,926 | 4,191 | 3.15 | % | ||||||||||||||
Loans (2) (3) | 910,164 | 12,691 | 5.53 | % | 767,770 | 10,423 | 5.39 | % | ||||||||||||||
Total interest-earning assets | 1,413,369 | $ | 16,528 | 4.64 | % | 1,299,696 | $ | 14,614 | 4.46 | % | ||||||||||||
Allowance for credit losses | (9,005 | ) | (9,382 | ) | ||||||||||||||||||
Non-accrual loans | 4,121 | 3,007 | ||||||||||||||||||||
Cash and due from banks | 27,206 | 24,610 | ||||||||||||||||||||
Bank premises and equipment | 9,036 | 9,106 | ||||||||||||||||||||
Other assets | 110,977 | 100,033 | ||||||||||||||||||||
Total average assets | $ | 1,555,704 | $ | 1,427,070 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Savings and NOW accounts | $ | 371,897 | $ | 158 | 0.17 | % | $ | 375,949 | $ | 85 | 0.09 | % | ||||||||||
Money market accounts | 283,733 | 97 | 0.14 | % | 232,832 | 30 | 0.05 | % | ||||||||||||||
Time certificates of deposit | 106,106 | 66 | 0.25 | % | 125,898 | 85 | 0.27 | % | ||||||||||||||
Total interest-bearing deposits | 761,736 | 321 | 0.17 | % | 734,679 | 200 | 0.11 | % | ||||||||||||||
Other borrowed funds | 7,052 | 62 | 3.52 | % | 7,297 | 47 | 2.58 | % | ||||||||||||||
Total interest-bearing liabilities | 768,788 | $ | 383 | 0.20 | % | 741,976 | $ | 247 | 0.13 | % | ||||||||||||
Non-interest bearing demand deposits | 553,714 | 488,246 | ||||||||||||||||||||
Other liabilities | 20,174 | 18,075 | ||||||||||||||||||||
Shareholders’ equity | 213,028 | 178,773 | ||||||||||||||||||||
Total average liabilities and shareholders’ equity | $ | 1,555,704 | $ | 1,427,070 | ||||||||||||||||||
Interest income and rate earned on average earning assets | $ | 16,528 | 4.64 | % | $ | 14,614 | 4.46 | % | ||||||||||||||
Interest expense and interest cost related to average interest-bearing liabilities | 383 | 0.20 | % | 247 | 0.13 | % | ||||||||||||||||
Net interest income and net interest margin (4) | $ | 16,145 | 4.53 | % | $ | 14,367 | 4.39 | % |
(1) | Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $238 and $789 in 2018 and 2017, respectively. |
(2) | Loan interest income includes loan fees (costs) of $176 in 2018 and $(49) in 2017. |
(3) | Average loans do not include non-accrual loans but do include interest income recovered from previously charged off loans. |
(4) | Net interest margin is computed by dividing net interest income by total average interest-earning assets. |
Changes in Volume/Rate | For the Three Months Ended September 30, 2018 and 2017 | |||||||||||
(In thousands) | Volume | Rate | Net | |||||||||
Increase (decrease) due to changes in: | ||||||||||||
Interest income: | ||||||||||||
Interest-earning deposits in other banks | $ | 57 | $ | 59 | $ | 116 | ||||||
Investment securities: | ||||||||||||
Taxable | 204 | 512 | 716 | |||||||||
Non-taxable (1) | (979 | ) | (207 | ) | (1,186 | ) | ||||||
Total investment securities | (775 | ) | 305 | (470 | ) | |||||||
Federal funds sold | — | — | — | |||||||||
Loans | 1,934 | 334 | 2,268 | |||||||||
Total earning assets (1) | 1,216 | 698 | 1,914 | |||||||||
Interest expense: | ||||||||||||
Deposits: | ||||||||||||
Savings, NOW and MMA | 6 | 134 | 140 | |||||||||
Time certificate of deposits | (13 | ) | (6 | ) | (19 | ) | ||||||
Total interest-bearing deposits | (7 | ) | 128 | 121 | ||||||||
Other borrowed funds | (1 | ) | 16 | 15 | ||||||||
Total interest bearing liabilities | (8 | ) | 144 | 136 | ||||||||
Net interest income (1) | $ | 1,224 | $ | 554 | $ | 1,778 |
Loan Type (dollars in thousands) | September 30, 2018 | % of Total Loans | December 31, 2017 | % of Total Loans | ||||||||||
Commercial: | ||||||||||||||
Commercial and industrial | $ | 102,352 | 11.2 | % | $ | 100,856 | 11.2 | % | ||||||
Agricultural production | 10,516 | 1.2 | % | 14,956 | 1.7 | % | ||||||||
Total commercial | 112,868 | 12.4 | % | 115,812 | 12.9 | % | ||||||||
Real estate: | ||||||||||||||
Owner occupied | 186,997 | 20.5 | % | 204,452 | 22.7 | % | ||||||||
Real estate construction and other land loans | 95,656 | 10.5 | % | 96,460 | 10.7 | % | ||||||||
Commercial real estate | 306,778 | 33.6 | % | 269,254 | 29.9 | % | ||||||||
Agricultural real estate | 70,580 | 7.7 | % | 76,081 | 8.4 | % | ||||||||
Other real estate | 33,526 | 3.9 | % | 31,220 | 3.5 | % | ||||||||
Total real estate | 693,537 | 76.2 | % | 677,467 | 75.2 | % | ||||||||
Consumer: | ||||||||||||||
Equity loans and lines of credit | 70,518 | 7.7 | % | 76,404 | 8.5 | % | ||||||||
Consumer and installment | 33,512 | 3.7 | % | 29,637 | 3.4 | % | ||||||||
Total consumer | 104,030 | 11.4 | % | 106,041 | 11.9 | % | ||||||||
Net deferred origination costs | 1,442 | 1,359 | ||||||||||||
Total gross loans | 911,877 | 100.0 | % | 900,679 | 100.0 | % | ||||||||
Allowance for credit losses | (9,025 | ) | (8,778 | ) | ||||||||||
Total loans | $ | 902,852 | $ | 891,901 |
(In thousands) | September 30, 2018 | December 31, 2017 | ||||||
Nonaccrual loans: | ||||||||
Commercial and industrial | $ | 291 | $ | 356 | ||||
Real estate construction and other land loans | 1,439 | 1,397 | ||||||
Other real estate | 1,117 | — | ||||||
Commercial real estate | 908 | 976 | ||||||
Equity loans and lines of credit | 325 | 87 | ||||||
Troubled debt restructured loans (non-accruing): | ||||||||
Equity loans and lines of credit | 53 | 59 | ||||||
Total nonaccrual | 4,133 | 2,875 | ||||||
Accruing loans past due 90 days or more | — | — | ||||||
Total nonperforming loans | $ | 4,133 | $ | 2,875 | ||||
Ratio of nonperforming loans to total loans | 0.45 | % | 0.32 | % | ||||
Ratio of allowance for credit losses to nonperforming loans | 218.4 | % | 305.3 | % | ||||
Loans considered to be impaired | $ | 7,473 | $ | 6,366 | ||||
Related allowance for credit losses on impaired loans | $ | 222 | $ | 36 |
(In thousands) | Balance, December 31, 2017 | Additions to Nonaccrual Loans | Net Pay Downs | Transfers to Foreclosed Collateral and OREO | Returns to Accrual Status | Charge- Offs | Balance, September 30, 2018 | |||||||||||||||||||||
Nonaccrual loans: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | 356 | $ | — | $ | (65 | ) | $ | — | $ | — | $ | — | $ | 291 | |||||||||||||
Real estate | 976 | 1,165 | (116 | ) | — | — | — | 2,025 | ||||||||||||||||||||
Real estate construction and other land loans | 1,397 | 42 | — | — | — | — | 1,439 | |||||||||||||||||||||
Equity loans and lines of credit | 87 | 283 | (37 | ) | — | (8 | ) | — | 325 | |||||||||||||||||||
Consumer | — | 12 | — | — | — | (12 | ) | — | ||||||||||||||||||||
Restructured loans (non-accruing): | ||||||||||||||||||||||||||||
Equity loans and lines of credit | 59 | — | (6 | ) | — | — | — | 53 | ||||||||||||||||||||
Total nonaccrual | $ | 2,875 | $ | 1,502 | $ | (224 | ) | $ | — | $ | (8 | ) | $ | (12 | ) | $ | 4,133 |
For the Nine Months Ended September 30, | For the Year Ended December 31, | For the Nine Months Ended September 30, | ||||||||||
(Dollars in thousands) | 2018 | 2017 | 2017 | |||||||||
Balance, beginning of period | $ | 8,778 | $ | 9,326 | $ | 9,326 | ||||||
Provision (Reversal) charged to operations | 50 | (1,150 | ) | (1,150 | ) | |||||||
Losses charged to allowance | (175 | ) | (464 | ) | (232 | ) | ||||||
Recoveries | 372 | 1,066 | 972 | |||||||||
Balance, end of period | $ | 9,025 | $ | 8,778 | $ | 8,916 | ||||||
Allowance for credit losses to total loans at end of period | 0.99 | % | 0.97 | % | 1.14 | % |
September 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||||||
(Dollars in thousands) | Balance | % to Total Loans | Balance | % to Total Loans | Balance | % to Total Loans | |||||||||||||||
Impaired loans with specific reserves | $ | 1,367 | 0.15 | % | $ | 1,069 | 0.12 | % | $ | 1,901 | 0.24 | % | |||||||||
Past due loans | 2,575 | 0.28 | % | 2,737 | 0.30 | % | 1,430 | 0.18 | % | ||||||||||||
Nonaccrual loans | 4,133 | 0.45 | % | 2,875 | 0.32 | % | 2,968 | 0.38 | % |
Years Ended | Estimated Core Deposit Intangible Amortization | |||
2018 | $ | 95 | ||
2019 | 376 | |||
2020 | 376 | |||
2021 | 376 | |||
2022 | 376 | |||
Thereafter | 1,147 | |||
$ | 2,746 |
(Dollars in thousands) | September 30, 2018 | % of Total Deposits | Average Effective Rate | December 31, 2017 | % of Total Deposits | Average Effective Rate | ||||||||||||||
NOW accounts | $ | 245,927 | 19.3 | % | 0.15 | % | $ | 296,406 | 20.8 | % | 0.12 | % | ||||||||
MMA accounts | 276,175 | 21.7 | % | 0.13 | % | 299,638 | 21.0 | % | 0.08 | % | ||||||||||
Time deposits | 103,398 | 8.1 | % | 0.24 | % | 128,070 | 9.0 | % | 0.30 | % | ||||||||||
Savings deposits | 115,393 | 9.0 | % | 0.03 | % | 116,534 | 8.2 | % | 0.03 | % | ||||||||||
Total interest-bearing | 740,893 | 58.1 | % | 0.14 | % | 840,648 | 59.0 | % | 0.12 | % | ||||||||||
Non-interest bearing | 534,636 | 41.9 | % | 585,039 | 41.0 | % | ||||||||||||||
Total deposits | $ | 1,275,529 | 100.0 | % | $ | 1,425,687 | 100.0 | % |
(Dollars in thousands) | Actual Ratio | Minimum regulatory requirement (1) | ||||||||||||
September 30, 2018 | Amount | Ratio | Amount | Ratio | ||||||||||
Tier 1 Leverage Ratio | $ | 167,642 | 11.16 | % | $ | 60,099 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 162,642 | 15.17 | % | $ | 48,230 | 6.38 | % | ||||||
Tier 1 Risk-Based Capital Ratio | $ | 167,642 | 15.64 | % | $ | 64,307 | 7.88 | % | ||||||
Total Risk-Based Capital Ratio | $ | 176,943 | 16.51 | % | $ | 85,742 | 9.88 | % | ||||||
December 31, 2017 | ||||||||||||||
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 | % | ||||||
(1) The 2018 and 2017 minimum regulatory requirement threshold includes the capital conservation buffer of 1.875% and 1.250%, 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) | Minimum requirement for “Well-Capitalized” Institution | ||||||||||||||||||
September 30, 2018 | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
Tier 1 Leverage Ratio | $ | 166,093 | 11.06 | % | $ | 60,054 | 4.00 | % | $ | 75,067 | 5.00 | % | |||||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 166,093 | 15.51 | % | $ | 48,201 | 6.38 | % | $ | 69,624 | 6.50 | % | |||||||||
Tier 1 Risk-Based Capital Ratio | $ | 166,093 | 15.51 | % | $ | 64,268 | 7.88 | % | $ | 85,691 | 8.00 | % | |||||||||
Total Risk-Based Capital Ratio | $ | 175,394 | 16.37 | % | $ | 85,691 | 9.88 | % | $ | 107,113 | 10.00 | % | |||||||||
December 31, 2017 | |||||||||||||||||||||
Tier 1 Leverage Ratio | $ | 149,779 | 9.46 | % | $ | 63,332 | 4.00 | % | $ | 79,166 | 5.00 | % | |||||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 149,779 | 12.96 | % | $ | 52,040 | 5.75 | % | $ | 75,169 | 6.50 | % | |||||||||
Tier 1 Risk-Based Capital Ratio | $ | 149,779 | 12.96 | % | $ | 69,387 | 7.25 | % | $ | 92,516 | 8.00 | % | |||||||||
Total Risk-Based Capital Ratio | $ | 158,882 | 13.74 | % | $ | 92,516 | 9.25 | % | $ | 115,645 | 10.00 | % | |||||||||
(1) The 2018 and 2017 minimum regulatory requirement threshold includes the capital conservation buffer of 1.875% and 1.250%, respectively. These ratios are not reflected on a fully phased-in basis, which will occur in January 2019. |
Credit Lines (In thousands) | September 30, 2018 | December 31, 2017 | ||||||
Unsecured Credit Lines | ||||||||
(interest rate varies with market): | ||||||||
Credit limit | $ | 40,000 | $ | 40,000 | ||||
Balance outstanding | $ | — | $ | — | ||||
Federal Home Loan Bank | ||||||||
(interest rate at prevailing interest rate): | ||||||||
Credit limit | $ | 304,857 | $ | 234,689 | ||||
Balance outstanding | $ | — | $ | — | ||||
Collateral pledged | $ | 460,501 | $ | 357,393 | ||||
Fair value of collateral | $ | 409,839 | $ | 316,160 | ||||
Federal Reserve Bank | ||||||||
(interest rate at prevailing discount interest rate): | ||||||||
Credit limit | $ | 4,867 | $ | 6,740 | ||||
Balance outstanding | $ | — | $ | — | ||||
Collateral pledged | $ | 5,054 | $ | 7,431 | ||||
Fair value of collateral | $ | 4,993 | $ | 7,437 |
3.1 | |||
3.2 | |||
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: November 7, 2018 | /s/ James M. Ford |
James M. Ford | |
President and Chief Executive Officer | |
Date: November 7, 2018 | /s/ David A. Kinross |
David A. Kinross | |
Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX | |||
Exhibit Number | Description | ||
3.1 | Amended and Restated Articles of Incorporation of Central Valley Community Bancorp (incorporated by reference to the Registrant's Annual Report on Form 10Q filed with the Commission on August 16, 2016). | ||
3.2 | Bylaws of the Company as amended to date, filed as Exhibit to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, and incorporated herein by reference. | ||
31.1 | Certification of Principal Executive Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934. | ||
31.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934. | ||
32.1 | Certification of Principal Executive Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | ||
32.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | ||
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 |
/s/ James M. Ford | Date: November 7, 2018 | |
James M. Ford, |
/s/ David A. Kinross | Date: November 7, 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 - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 02, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CENTRAL VALLEY COMMUNITY BANCORP | |
Entity Central Index Key | 0001127371 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
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 | 13,796,549 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS (Unaudited) CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Debt securities, amortized cost | $ 445,098 | |
Amortized cost of debt securities | 445,098 | $ 531,192 |
Allowance for credit losses on loans | $ 9,025 | $ 8,778 |
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 |
Common stock, authorized (in shares) | 80,000,000 | 80,000,000 |
Common stock, issued (in shares) | 13,796,489 | 13,696,722 |
Common stock, outstanding (in shares) | 13,796,489 | 13,696,722 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 5,752 | $ 4,494 | $ 16,008 | $ 13,691 |
Unrealized gains (losses) on securities: | ||||
Unrealized holding (losses) gains arising during the period | (3,509) | 547 | (13,340) | 11,299 |
Less: reclassification of net gains included in net income | 380 | 169 | 1,277 | 2,808 |
Other comprehensive (loss) income, before tax | (3,889) | 378 | (14,617) | 8,491 |
Tax benefit (expense) related to items of other comprehensive income | 1,210 | (159) | 4,321 | (3,570) |
Total other comprehensive (loss) income | (2,679) | 219 | (10,296) | 4,921 |
Comprehensive income | $ 3,073 | $ 4,713 | $ 5,712 | $ 18,612 |
Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The interim unaudited condensed consolidated financial statements of Central Valley Community Bancorp and subsidiary have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). These interim condensed consolidated financial statements include the accounts of Central Valley Community Bancorp and its wholly owned subsidiary Central Valley Community Bank (the Bank) (collectively, the Company). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2017 Annual Report to Shareholders on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at September 30, 2018, and the results of its operations and its cash flows for the three month interim periods ended September 30, 2018 and 2017 have been included. The results of operations for interim periods are not necessarily indicative of results for the full year. The preparation of these interim unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. 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 periods. Actual results could differ from those estimates. Management has determined that since 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. Impact of New Financial 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 therein, with early adoption permitted for reporting periods beginning after December 15, 2016. The Company adopted ASU 2014-09 on January 1, 2018 utilizing the modified retrospective approach. Since the guidance does not apply to revenue associated with financial instruments such as loans and investments, which are accounted for under other provisions of GAAP, there was no impact to interest income, our largest component of income. The Company adopted this ASU effective January 1, 2018 and it did not have a material impact on the Company’s consolidated financial position, cash flows or results of operations. No cumulative adjustment was required upon adoption. The Company performed an overall assessment of revenue streams potentially affected by the ASU, including certain deposit related fees and interchange fees, to determine the potential impact of this guidance on our consolidated financial statements. Approximately 91% of our revenue, including all of our net interest income and a portion of our noninterest income, is out of scope of the guidance. The contracts that are in scope of the guidance are primarily related to service charges and fees on deposit accounts, debit card fees, ATM processing fees, and other service charges, commissions and fees. We have completed analyzing the individual contracts in scope and determined our revenue recognition practices within the scope of the ASU as described below did not change in any material regard upon adoption of the ASU. Service Charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance. Merchant and Debit Card Fees: The Company earns interchange fees from cardholder transactions conducted through the payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. 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 was effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The impact of adoption of this ASU by the Company was not material, but did result in a reclassification of an equity investment from securities available-for-sale to equity securities. The Company was required to adopt the ASU provisions on January 1, 2018, and for those equity securities with readily determinable fair values, the Company elected the modified retrospective transition approach with a cumulative effect adjustment to the balance sheet. The impact of the adoption of this accounting standard on the Company’s consolidated financial statements will be subject to the price volatility of the equity investments. As a result of the adoption, $144,000 of after-tax unrealized losses on equity securities was reclassified on January 1, 2018, from accumulated other comprehensive income to retained earnings. In addition, the fair value disclosures for financial instruments in Note 3 are computed using an exit price notion as required by the ASU. 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) 2016-13 - 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. The Company adopted this ASU effective January 1, 2018 and it did not have a material impact on the Company’s Consolidated Financial Statements. FASB Accounting Standards Update (ASU) 2018-13 - Fair Value Measurement (Subtopic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, was issued August 2018. The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures, which are required for public companies only, until their effective date. Management is currently evaluating the impact these changes will have on the Company’s consolidated financial statements and disclosures. |
Acquisitions |
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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 $217,000 are included in the income statement for the nine months ended September 30, 2018. 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. Pro Forma Results of Operations The following table presents pro forma results of operations information for the periods presented as if the acquisition had occurred on January 1, 2017 after giving effect to certain adjustments. The unaudited pro forma results of operations for the six months ended September 30, 2017 include the historical accounts of the Company and FLB 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 acquisition been completed at the beginning of 2017. 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):
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Fair Value Measurements |
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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 and included in Level 3. 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 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. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. The estimated fair values of financial instruments disclosed above as of September 30, 2018 follow the guidance in ASU 2016-01 which prescribes an “exit price” approach in estimating and disclosing fair value of financial instruments incorporating discounts for credit, liquidity, and marketability factors. The fair values shown as of December 31, 2017 use an “entry price” approach. (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 fair values of the Company’s federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, are based on the market rates for similar types of borrowing arrangements resulting in a Level 2 classification. (g) Other Borrowings — The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements 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. (h) 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. (i) 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 considered significant for financial reporting purposes. 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 September 30, 2018: Recurring Basis The Company is required or permitted to record the following assets at fair value on a recurring basis as of September 30, 2018 (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 debt 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 nine months ended September 30, 2018, no transfers between levels occurred. There were no Level 3 assets measured at fair value on a recurring basis at or during the nine months ended September 30, 2018. Also there were no liabilities measured at fair value on a recurring basis at September 30, 2018. 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 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 September 30, 2018. 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 methods 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 nine months month period ended September 30, 2018. 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 in which the collateral value did not exceed the loan balance had a principal balance of $163,000 with a valuation allowance of $163,000 at September 30, 2018, resulting in fair value of $0. The valuation allowance represent specific allocation for the allowance for credit losses for impaired loans. There were no charge-offs related to loans carried at fair value during the nine months ended September 30, 2018 and 2017. Activity related to changes in the allowance for loan losses related to impaired loans for the three months ended September 30, 2018 and 2017 was not considered significant for disclosure purposes. There were no liabilities measured at fair value on a non-recurring basis at September 30, 2018. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring 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 as of December 31, 2017 (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 debt 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 or during the year ended 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 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).
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 $0. During the year ended December 31, 2017, 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, 2017. |
Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments The investment portfolio consists primarily of U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label mortgage and asset backed securities (PLMABS), and obligations of states and political subdivisions securities. As of September 30, 2018, $81,989,000 of these securities were held as collateral for borrowing arrangements, public funds, and for other purposes. The Company adopted ASU 2016-01 on January 1, 2018, and applied it prospectively without prior period amounts restated. Upon adoption, equity securities included in the available-for-sale portfolio were reclassified to equity securities. The December 31, 2017 cost and fair value of the equity securities transferred were $7,500,000 and $7,423,000, respectively. The fair value of the available-for-sale investment portfolio reflected a net unrealized loss of $10,401,000 at September 30, 2018 compared to an unrealized gain of $4,089,000 at December 31, 2017. The unrealized gain/(loss) recorded is net of $(3,075,000) and $1,186,000 in tax (benefits) liabilities as accumulated other comprehensive income within shareholders’ equity at September 30, 2018 and December 31, 2017, respectively. The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands):
Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended September 30, 2018 and 2017 are shown below (in thousands):
Losses recognized in 2018 and 2017 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. As market interest rates or risks associated with a security’s issuer continue to change and impact the actual or perceived values of investment securities, the Company may determine that selling these securities and using proceeds to purchase securities that fit with the Company’s current risk profile is appropriate and beneficial to the Company. The provision for income taxes includes $377,000 and $1,181,000 income tax impact from the reclassification of unrealized net gains on securities to realized net gains on securities for the nine months September 30, 2018 and 2017, respectively. The provision for income taxes includes $112,000 and $71,000 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 three months ended September 30, 2018 and 2017, respectively. Investment securities, aggregated by investment category, with unrealized losses as of the dates indicated are summarized and classified according to the duration of the loss period as follows (in thousands):
The Company periodically evaluates 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 September 30, 2018, 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). The Company evaluated all individual available-for-sale investment securities with an unrealized loss at September 30, 2018 and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at September 30, 2018 greater than 10% of the recorded book value on that date, or which had an unrealized loss of more than $10,000. The Company also analyzed any securities that may have been downgraded by credit rating agencies. For those investment securities that met the evaluation criteria, management obtained and reviewed the most recently published national credit ratings for those investment securities. For those bonds that were obligations of states and political subdivisions with an investment grade rating by the rating agencies, the Company also evaluated the financial condition of the municipality and any applicable municipal bond insurance provider and concluded there were no OTTI losses recorded during the nine months ended September 30, 2018. There were no OTTI losses recorded during the nine months ended September 30, 2017. U.S. Government Agencies At September 30, 2018, the Company held six U.S. Government agency securities of which five were in a loss position for less than 12 months and one had been in a loss position for 12 months or more. The unrealized losses on the Company’s investments in direct obligations of 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 has the ability and intent to hold, 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 the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2018. Obligations of States and Political Subdivisions At September 30, 2018, the Company held 41 obligations of states and political subdivision securities of which 12 were in a loss position for less than 12 months and one 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 has the ability to hold and 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 September 30, 2018. U.S. Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations At September 30, 2018, the Company held 142 U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations of which 43 were in a loss position for less than 12 months and 34 have been in a loss position for more than 12 months. The unrealized losses on the Company’s investments in U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations were caused by interest rate changes. The contractual cash flows of those investments are guaranteed 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 has the ability to hold and 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 September 30, 2018. Private Label Mortgage and Asset Backed Securities At September 30, 2018, the Company had a total of 31 Private Label Mortgage and Asset Backed Securities (PLMABS) with a remaining principal balance of $106,200,000 and a net unrealized loss of approximately $3,808,000. Ten of the PLMABS securities were in a loss position for less than 12 months and 11 have been in loss for more than 12 months at September 30, 2018. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, 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 the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2018. The Company continues to monitor these securities for indications that declines in value, if any, may be other-than-temporary. The following tables provide a roll forward for the nine months month periods ended September 30, 2018 and 2017 of investment securities credit losses recorded in earnings. 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 September 30, 2018 by contractual maturity is shown 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.
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Loans and Allowance for Credit Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Allowance for Credit Losses | Loans and Allowance for Credit Losses Outstanding loans are summarized as follows:
At September 30, 2018 and December 31, 2017, loans originated under Small Business Administration (SBA) programs totaling $26,223,000 and $25,925,000, respectively, were included in the real estate and commercial categories, of which, $19,403,000 or 74% and $19,182,000 or 74%, respectively, are secured by government guarantees. 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 September 30, 2018 and December 31, 2017. The amounts of loans at September 30, 2018 and December 31, 2017 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. 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 (in thousands):
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 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 following table shows the summary of activities for the Allowance as of and for the three months ended September 30, 2018 and 2017 by portfolio segment (in thousands):
The following table shows the summary of activities for the allowance for loan losses as of and for the nine months ended September 30, 2018 and 2017 by portfolio segment of loans (in thousands):
The following is a summary of the Allowance by impairment methodology and portfolio segment as of September 30, 2018 and December 31, 2017 (in thousands):
The following table shows the loan portfolio by class allocated by management’s internal risk ratings at September 30, 2018 (in thousands):
The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings 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 September 30, 2018 (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 information related to impaired loans by class at September 30, 2018 (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, 2017 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended September 30, 2018 and 2017 (in thousands).
Foregone interest on nonaccrual loans totaled $293,000 and $159,000 for the nine month periods ended September 30, 2018 and 2017, respectively. Foregone interest on nonaccrual loans totaled $106,000 and $54,000 for the three month periods ended September 30, 2018 and 2017, respectively. Troubled Debt Restructurings: As of September 30, 2018 and December 31, 2017, the Company has a recorded investment in troubled debt restructurings of $3,393,000 and $3,551,000, respectively. The Company has allocated $189,000 and $36,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of September 30, 2018 and December 31, 2017, respectively. The Company has committed to lend no additional amounts as of September 30, 2018 to customers with outstanding loans that are classified as troubled debt restructurings. During the nine months month period ended September 30, 2018 two 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 period, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven or which resulted in a charge-off or change to the allowance for loan losses. The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2018 (in thousands):
The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2017 (in thousands):
During the quarter ended September 30, 2018 and September 30, 2017 no loans were modified as troubled debt restructuring. 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 twelve months following the modification, during the nine months ended September 30, 2018 or September 30, 2017. |
Income Taxes |
9 Months Ended |
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files its income taxes on a consolidated basis with its subsidiary. The allocation of income tax expense (benefit) represents each entity’s proportionate share of the consolidated provision for income taxes. 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 consolidated balance sheets, net deferred tax assets are included in accrued interest receivable and other assets. The Company establishes a tax valuation allowance when it is more likely than not that a recorded tax benefit is not expected to be fully realized. The expense to create the tax valuation allowance is recorded as an additional income tax expense in the period the tax valuation allowance is created. Effective January 1, 2017, the Company adopted ASU 2016-09 “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” which resulted in the recognition $142,000 and $104,000 in excess tax benefits related to the exercise of stock options during the nine months ended September 30, 2018 and 2017, respectively. During the three months ended September 30, 2018 and 2017, $3,000 and $0 in excess tax benefits related to the exercise of stock options were recognized, respectively. Accounting for uncertainty in income taxes - The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of tax expense in the consolidated statements of income. As of September 30, 2018 and December 31, 2017, the reserve for uncertain tax positions attributable to tax deductions related to enterprise zone activities in California was $0 and $83,000, respectively. The Company's unrecognized tax benefits decreased to zero as a result of the California statute of limitations expiring during the nine months ended September 30, 2018. |
Borrowing Arrangements |
9 Months Ended |
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Sep. 30, 2018 | |
Banking and Thrift [Abstract] | |
Borrowing Arrangements | Borrowing Arrangements As of September 30, 2018 and December 31, 2017, the Company had no Federal Home Loan Bank (FHLB) of San Francisco advances. Approximately $460,153,000 in loans were pledged under a blanket lien as collateral to the FHLB for the Bank’s remaining borrowing capacity of $304,857,000 as of September 30, 2018. FHLB advances are also secured by investment securities with amortized costs totaling $348,000 and $416,000 and market values totaling $360,000 and $440,000 at September 30, 2018 and December 31, 2017, respectively. The Bank’s credit limit varies according to the amount and composition of the investment and loan portfolios pledged as collateral. As of September 30, 2018, and December 31, 2017 the Company had no Federal funds purchased. |
Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments include 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 in the balance sheets. The contract or notional amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for loans. Commitments to extend credit amounting to $321,624,000 and $350,141,000 were outstanding at September 30, 2018 and December 31, 2017, respectively. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract unless waived by the Bank. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Included in commitments to extend credit are undisbursed lines of credit totaling $318,744,000 and $347,001,000 at September 30, 2018 and December 31, 2017, respectively. Undisbursed lines of credit include credits whereby customers can repay principal and request principal advances during the term of the loan at their discretion and most expire between one and 12 months. Included in undisbursed lines of credit are commitments for the undisbursed portions of construction loans totaling $80,336,000 and $88,658,000 as of September 30, 2018 and December 31, 2017, respectively. These commitments are agreements to lend to customers, subject to meeting certain construction progress requirements established in the contracts. The underlying construction loans have fixed expiration dates. Standby letters of credit and financial guarantees amounting to $2,880,000 and $3,140,000 were outstanding at September 30, 2018 and December 31, 2017, respectively. Standby letters of credit and financial guarantees are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing arrangements. Most standby letters of credit and guarantees carry a one year term or less. The fair value of the liability related to these standby letters of credit, which represents the fees received for their issuance, was not significant at September 30, 2018 or December 31, 2017. The Company recognizes these fees as revenue over the term of the commitment or when the commitment is used. The Company generally requires collateral or other security to support financial instruments with credit risk. Management does not anticipate any material loss will result from the outstanding commitments to extend credit, standby letters of credit and financial guarantees. At September 30, 2018 and December 31, 2017, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $276,000 and $326,000, 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 allowance for credit losses and is considered separately as a liability for accounting and regulatory reporting purposes, and is included in Other Liabilities on the Company’s balance sheet. 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. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per share (EPS), which excludes dilution, is computed by dividing income available to common shareholders 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, stock appreciation rights settled in stock or restricted stock awards, result in the issuance of common stock which shares in the earnings of the Company. A reconciliation of the numerators and denominators of the basic and diluted EPS computations is as follows:
No outstanding options or restricted stock awards were anti-dilutive for the nine months ended September 30, 2018 and 2017. During the three-month periods ended September 30, 2018 and 2017, no outstanding options or restricted stock awards were anti-dilutive. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation The Company has five share-based compensation plans as described below. Share-based compensation cost recognized for those plans was $332,000 and $310,000 for the nine months ended September 30, 2018 and 2017, respectively. For the quarters ended September 30, 2018 and 2017, share-based compensation expense was $148,000 and $77,000, respectively. The recognized tax benefits for the share-based compensation expense, forfeitures of restricted stock, and exercise of stock options, resulted in the recognition of $142,000 and $102,000, respectively, for the nine months ended September 30, 2018 and 2017. For the quarters ended September 30, 2018 and 2017, recognized tax benefits were $3,000 and $0, respectively. 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. The Central Valley Community Bancorp 2015 Omnibus Incentive Plan (2015 Plan) was adopted in May 2015. In October 2017, the Company assumed the Folsom Lake Bank 2007 Equity Incentive Plan (2007 Plan). The plans provide for awards in the form of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. Both plans allow for performance awards that may be in the form of cash or shares of the Company, including restricted stock. Outstanding arrangements to issue shares under this plan including options, will continue in force until expiration according to their respective terms. Effective June 2, 2017, the Company adopted an Employee Stock Purchase Plan (ESPP) whereby our employees may purchase Company common stock through payroll deductions of between one percent and 15 percent of pay in each pay period. Shares are purchased at the end of each of the three-month offering periods at a 10 percent discount from the lower of the closing market price on the Offering Date (first trading day of each offering period) or the Investment Date (last trading day of each offering period). The Company reserved 500,000 common shares to be set aside for the ESPP, and there were 489,781 shares available for future purchase under the plan as of September 30, 2018. Stock Option Plan 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 nine months ended September 30, 2018 and 2017. A summary of the combined activity of the Company’s stock option compensation plans for the nine months ended September 30, 2018 follows (in thousands, except per share amounts):
Information related to the stock option plan is as follows (in thousands):
As of September 30, 2018, there was no remaining unrecognized compensation cost related to stock options granted under all plans. No options vested during the nine months ended September 30, 2018. The total fair value of options vested was $46,000 during the nine months ended September 30, 2017. Restricted Common Stock Awards The 2015 Plan provides for the issuance of restricted common stock to directors and officers. Restricted common stock grants typically vest over a one to 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 summarizes restricted stock activity for the nine months ended September 30, 2018 as follows:
During the quarter ended September 30, 2018, 22,204 shares of restricted stock were granted under the 2015 Plan. During the nine months ended September 30, 2018, 22,204 shares of restricted common stock were granted. The restricted common stock had a weighted average grant date fair market value of $20.76 per share on the date of grant during the nine months ended September 30, 2018. These restricted common stock awards’ fully vest after year 1, or vest ratably until fully vested in year 3 or year 5 depending on agreement terms. As of September 30, 2018, there were 63,554 shares of restricted stock that are nonvested and expected to vest. As of September 30, 2018, there was $821,000 of total unrecognized compensation cost related to nonvested restricted common stock awards. 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 2.15 years and will be adjusted for subsequent changes in estimated forfeitures. Restricted common stock awards had an intrinsic value of $1,308,000 at September 30, 2018. |
Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The interim unaudited condensed consolidated financial statements of Central Valley Community Bancorp and subsidiary have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). These interim condensed consolidated financial statements include the accounts of Central Valley Community Bancorp and its wholly owned subsidiary Central Valley Community Bank (the Bank) (collectively, the Company). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2017 Annual Report to Shareholders on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at September 30, 2018, and the results of its operations and its cash flows for the three month interim periods ended September 30, 2018 and 2017 have been included. The results of operations for interim periods are not necessarily indicative of results for the full year. The preparation of these interim unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. 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 periods. Actual results could differ from those estimates. |
Segment Reporting | Management has determined that since 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. |
Concentration of Credit Risk | No customer accounts for more than 10 percent of revenues for the Company or the Bank. |
Impact of New Financial Accounting Standards | Impact of New Financial 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 therein, with early adoption permitted for reporting periods beginning after December 15, 2016. The Company adopted ASU 2014-09 on January 1, 2018 utilizing the modified retrospective approach. Since the guidance does not apply to revenue associated with financial instruments such as loans and investments, which are accounted for under other provisions of GAAP, there was no impact to interest income, our largest component of income. The Company adopted this ASU effective January 1, 2018 and it did not have a material impact on the Company’s consolidated financial position, cash flows or results of operations. No cumulative adjustment was required upon adoption. The Company performed an overall assessment of revenue streams potentially affected by the ASU, including certain deposit related fees and interchange fees, to determine the potential impact of this guidance on our consolidated financial statements. Approximately 91% of our revenue, including all of our net interest income and a portion of our noninterest income, is out of scope of the guidance. The contracts that are in scope of the guidance are primarily related to service charges and fees on deposit accounts, debit card fees, ATM processing fees, and other service charges, commissions and fees. We have completed analyzing the individual contracts in scope and determined our revenue recognition practices within the scope of the ASU as described below did not change in any material regard upon adoption of the ASU. Service Charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance. Merchant and Debit Card Fees: The Company earns interchange fees from cardholder transactions conducted through the payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. 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 was effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The impact of adoption of this ASU by the Company was not material, but did result in a reclassification of an equity investment from securities available-for-sale to equity securities. The Company was required to adopt the ASU provisions on January 1, 2018, and for those equity securities with readily determinable fair values, the Company elected the modified retrospective transition approach with a cumulative effect adjustment to the balance sheet. The impact of the adoption of this accounting standard on the Company’s consolidated financial statements will be subject to the price volatility of the equity investments. As a result of the adoption, $144,000 of after-tax unrealized losses on equity securities was reclassified on January 1, 2018, from accumulated other comprehensive income to retained earnings. In addition, the fair value disclosures for financial instruments in Note 3 are computed using an exit price notion as required by the ASU. 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) 2016-13 - 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. The Company adopted this ASU effective January 1, 2018 and it did not have a material impact on the Company’s Consolidated Financial Statements. FASB Accounting Standards Update (ASU) 2018-13 - Fair Value Measurement (Subtopic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, was issued August 2018. The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures, which are required for public companies only, until their effective date. Management is currently evaluating the impact these changes will have on the Company’s consolidated financial statements and disclosures. |
Acquisitions (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro Forma Results of Operations | 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 acquisition been completed at the beginning of 2017. 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):
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Fair Value Measurements (Tables) |
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Estimated Fair Value of Financial Instruments | The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):
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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 as of September 30, 2018 (in thousands).
The Company is required or permitted to record the following assets at fair value on a recurring basis as of December 31, 2017 (in thousands).
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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 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).
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale securities reconciliation | The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands):
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Realized gains and losses | Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended September 30, 2018 and 2017 are shown below (in thousands):
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Securities in a continuous unrealized loss position | Investment securities, aggregated by investment category, with unrealized losses as of the dates indicated are summarized and classified according to the duration of the loss period as follows (in thousands):
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Credit losses recorded in earnings | The following tables provide a roll forward for the nine months month periods ended September 30, 2018 and 2017 of investment securities credit losses recorded in earnings. 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.
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Investments by contractual maturity |
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Loans and Allowance for Credit Losses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding loans | Outstanding loans are summarized as follows:
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Impaired loans | The following table shows information related to impaired loans by class at September 30, 2018 (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, 2017 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended September 30, 2018 and 2017 (in thousands).
The carrying amount of those loans is included in the balance sheet amounts of loans receivable at September 30, 2018 and December 31, 2017. The amounts of loans at September 30, 2018 and December 31, 2017 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. 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 (in thousands):
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Allowance for credit losses | The following table shows the summary of activities for the Allowance as of and for the three months ended September 30, 2018 and 2017 by portfolio segment (in thousands):
The following table shows the summary of activities for the allowance for loan losses as of and for the nine months ended September 30, 2018 and 2017 by portfolio segment of loans (in thousands):
The following is a summary of the Allowance by impairment methodology and portfolio segment as of September 30, 2018 and December 31, 2017 (in thousands):
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Schedule of receivable by impairment methodology |
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Loan portfolio by internal risk rating | The following table shows the loan portfolio by class allocated by management’s internal risk ratings at September 30, 2018 (in thousands):
The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2017 (in thousands):
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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 September 30, 2018 (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):
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Troubled debt restructurings | The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2018 (in thousands):
The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2017 (in thousands):
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | A reconciliation of the numerators and denominators of the basic and diluted EPS computations is as follows:
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Share-Based Compensation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option activity | A summary of the combined activity of the Company’s stock option compensation plans for the nine months ended September 30, 2018 follows (in thousands, except per share amounts):
Information related to the stock option plan is as follows (in thousands):
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Restricted common stock activity | The following table summarizes restricted stock activity for the nine months ended September 30, 2018 as follows:
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Basis of Presentation (Details) $ in Thousands |
Jan. 01, 2018
USD ($)
|
---|---|
Accounting Standards Update 2016-01 | Retained earnings | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect adjustment | $ 144 |
Acquisitions - Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Oct. 01, 2017
USD ($)
branch
shares
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Business Acquisition [Line Items] | ||||||
Goodwill | $ 53,777 | $ 53,777 | $ 53,777 | |||
Acquisition and integration | $ 0 | $ 163 | $ 217 | $ 618 | ||
Folsom Lake Bank | ||||||
Business Acquisition [Line Items] | ||||||
Consideration transferred | $ 28,475 | |||||
Equity interest issued (in shares) | shares | 1,276,888 | |||||
Total assets | $ 196,148 | |||||
Goodwill | 13,466 | |||||
Intangible assets other than goodwill | $ 1,879 | |||||
Folsom Lake Bank | Folsom, and Rancho Cordova, California | ||||||
Business Acquisition [Line Items] | ||||||
Number of branches acquired | branch | 2 | |||||
Folsom Lake Bank | Core deposits | ||||||
Business Acquisition [Line Items] | ||||||
Acquired finite-lived intangible assets useful life | 10 years |
Acquisitions - Proforma Results of Operations (Details) - Folsom Lake Bank $ / shares in Units, $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
$ / shares
| |
Business Acquisition [Line Items] | |
Net interest income | $ 45,516 |
(Reversal of) provision for credit losses | (1,150) |
Non-interest income | 9,300 |
Non-interest expense | 38,319 |
Income before provision for income taxes | 17,647 |
Provision for income taxes | 5,105 |
Net income | $ 12,542 |
Basic earnings per common share (in dollars per share) | $ / shares | $ 1.03 |
Diluted earnings per common share (in dollars per share) | $ / shares | $ 1.02 |
Investments - Realized gains and losses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Available-for-sale Securities [Abstract] | ||||
Proceeds from sales or calls | $ 102,555 | $ 26,286 | $ 234,175 | $ 101,286 |
Gross realized gains from sales or calls | 580 | 210 | 1,896 | 3,601 |
Gross realized losses from sales or calls | $ (200) | $ (41) | $ (619) | $ (793) |
Investments - Credit loss rollforward (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||
Beginning balance | $ 874 | $ 874 |
Amounts related to credit loss for which an OTTI charge was not previously recognized | 0 | 0 |
Increases to the amount related to credit loss for which OTTI was previously recognized | 0 | 0 |
Realized gain for securities sold | 0 | 0 |
Ending balance | $ 874 | $ 874 |
Loans and Allowance for Credit Losses - Purchased credit-impaired loans (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Loans | |||
Total Recorded Investment | $ 7,473 | $ 6,366 | |
Related Allowance | 222 | 36 | |
Purchased Credit Impaired Loans | |||
Loans | |||
Total Recorded Investment | 291 | 383 | |
Related Allowance | 0 | 0 | |
Fair value of acquired loans at acquisition | 0 | $ 0 | |
Commercial | Purchased Credit Impaired Loans | |||
Loans | |||
Total Recorded Investment | $ 291 | $ 383 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Income Taxes | |||||
Recognition of excess tax benefit | $ 3,000 | $ 0 | $ 142,000 | $ 104,000 | |
CALIFORNIA | |||||
Income Taxes | |||||
Reserve for uncertain tax positions | 0 | 0 | $ 83,000 | ||
Amount of unrecognized tax benefits decrease in next 12 months | $ 0 | $ 0 |
Borrowing Arrangements (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Borrowing Arrangements | ||
Investments securing FHLB advances, amortized cost | $ 445,098,000 | |
Available-for-sale debt securities | 434,697,000 | $ 535,281,000 |
Federal funds purchased | 0 | 0 |
Federal Home Loan Bank Advances | ||
Borrowing Arrangements | ||
Loans Pledged as Collateral | 460,153,000 | |
Remaining borrowing capacity | 304,857,000 | |
Federal Home Loan Bank Advances | Securities Pledged as Collateral | ||
Borrowing Arrangements | ||
Investments securing FHLB advances, amortized cost | 348,000 | 416,000 |
Available-for-sale debt securities | 360,000 | 440,000 |
San Fransisco Branch | ||
Borrowing Arrangements | ||
Advances from FHLB | $ 0 | $ 0 |
Earnings Per Share - Basic (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Basic Earnings Per share | ||||
Net income | $ 5,752 | $ 4,494 | $ 16,008 | $ 13,691 |
Weighted average shares outstanding (in shares) | 13,715,141 | 12,208,313 | 13,692,657 | 12,183,363 |
Basic earnings per share (in dollars per share) | $ 0.42 | $ 0.37 | $ 1.17 | $ 1.12 |
Earnings Per Share - Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Diluted Earnings Per share | ||||
Net income available to common shareholders | $ 5,752 | $ 4,494 | $ 16,008 | $ 13,691 |
Weighted average shares outstanding (in shares) | 13,715,141 | 12,208,313 | 13,692,657 | 12,183,363 |
Effect of dilutive stock options (in shares) | 121,687 | 116,941 | 129,171 | 132,487 |
Weighted average shares of common stock and common stock equivalents (in shares) | 13,836,828 | 12,325,254 | 13,821,828 | 12,315,850 |
Diluted earnings per share (in dollars per share) | $ 0.42 | $ 0.36 | $ 1.16 | $ 1.11 |
Anti-dilutive options and restricted stock awards (in shares) | 0 | 0 | 0 | 0 |
Share-Based Compensation - Restricted Common Stock Awards (Details) - Restricted Common Stock |
9 Months Ended |
---|---|
Sep. 30, 2018
$ / shares
shares
| |
Shares | |
Nonvested outstanding shares beginning balance (in shares) | shares | 63,768 |
Granted (in shares) | shares | 22,204 |
Vested (in shares) | shares | (20,733) |
Forfeited (in shares) | shares | (1,685) |
Nonvested outstanding shares ending balance (in shares) | shares | 63,554 |
Weighted Average Grant-Date Fair Value | |
Nonvested outstanding shares beginning balance (in dollars per share) | $ / shares | $ 13.33 |
Granted (in dollars per share) | $ / shares | 20.76 |
Vested (in dollars per share) | $ / shares | 13.09 |
Forfeited (in dollars per share) | $ / shares | 14.39 |
Nonvested outstanding shares ending balance (in dollars per share) | $ / shares | $ 15.98 |
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