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) |
Common Stock, no par value | CVCY | NASDAQ Capital Market | ||
(Title of Each Class) | (Trading Symbol) | (Name of Each Exchange on which Registered) |
Large accelerated filer o | Accelerated filer ý | |
Non-accelerated filer o | Small reporting company ý | |
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) | March 31, 2020 | December 31, 2019 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 22,713 | $ | 24,195 | ||||
Interest-earning deposits in other banks | 13,449 | 28,379 | ||||||
Total cash and cash equivalents | 36,162 | 52,574 | ||||||
Available-for-sale debt securities | 522,943 | 470,746 | ||||||
Equity securities | 7,592 | 7,472 | ||||||
Loans, less allowance for credit losses of $10,546 at March 31, 2020 and $9,130 at December 31, 2019 | 919,223 | 934,250 | ||||||
Bank premises and equipment, net | 7,410 | 7,618 | ||||||
Bank-owned life insurance | 29,945 | 30,230 | ||||||
Federal Home Loan Bank stock | 6,062 | 6,062 | ||||||
Goodwill | 53,777 | 53,777 | ||||||
Core deposit intangibles | 1,704 | 1,878 | ||||||
Accrued interest receivable and other assets | 33,828 | 32,148 | ||||||
Total assets | $ | 1,618,646 | $ | 1,596,755 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Non-interest bearing | $ | 603,998 | $ | 594,627 | ||||
Interest bearing | 746,593 | 738,658 | ||||||
Total deposits | 1,350,591 | 1,333,285 | ||||||
Junior subordinated deferrable interest debentures | 5,155 | 5,155 | ||||||
Accrued interest payable and other liabilities | 44,227 | 30,187 | ||||||
Total liabilities | 1,399,973 | 1,368,627 | ||||||
Commitments and contingencies (Note 6) | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock, no par value; 10,000,000 shares authorized, none issued and outstanding | — | — | ||||||
Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 12,472,939 at March 31, 2020 and 13,052,407 at December 31, 2019 | 78,854 | 89,379 | ||||||
Retained earnings | 141,147 | 135,932 | ||||||
Accumulated other comprehensive income (loss), net of tax | (1,328 | ) | 2,817 | |||||
Total shareholders’ equity | 218,673 | 228,128 | ||||||
Total liabilities and shareholders’ equity | $ | 1,618,646 | $ | 1,596,755 |
For the Quarter Ended March 31, | ||||||||
(In thousands, except share and per-share amounts) | 2020 | 2019 | ||||||
INTEREST INCOME: | ||||||||
Interest and fees on loans | $ | 12,898 | $ | 12,554 | ||||
Interest on deposits in other banks | 183 | 150 | ||||||
Interest and dividends on investment securities: | ||||||||
Taxable | 3,266 | 3,023 | ||||||
Exempt from Federal income taxes | 159 | 562 | ||||||
Total interest income | 16,506 | 16,289 | ||||||
INTEREST EXPENSE: | ||||||||
Interest on deposits | 432 | 393 | ||||||
Interest on junior subordinated deferrable interest debentures | 45 | 57 | ||||||
Other | — | 4 | ||||||
Total interest expense | 477 | 454 | ||||||
Net interest income before provision for credit losses | 16,029 | 15,835 | ||||||
PROVISION FOR (REVERSAL OF) CREDIT LOSSES | 1,375 | (25 | ) | |||||
Net interest income after provision for credit losses | 14,654 | 15,860 | ||||||
NON-INTEREST INCOME: | ||||||||
Service charges | 646 | 690 | ||||||
Appreciation in cash surrender value of bank-owned life insurance | 182 | 171 | ||||||
Interchange fees | 333 | 343 | ||||||
Net realized gains on sales of investment securities | 4,198 | 1,052 | ||||||
Federal Home Loan Bank dividends | 107 | 121 | ||||||
Loan placement fees | 299 | 139 | ||||||
Other income | 776 | 460 | ||||||
Total non-interest income | 6,541 | 2,976 | ||||||
NON-INTEREST EXPENSES: | ||||||||
Salaries and employee benefits | 7,512 | 6,490 | ||||||
Occupancy and equipment | 1,144 | 1,479 | ||||||
Professional services | 458 | 327 | ||||||
Data processing | 336 | 395 | ||||||
Regulatory assessments | 47 | 152 | ||||||
ATM/Debit card expenses | 294 | 191 | ||||||
Information technology | 608 | 777 | ||||||
Directors’ expenses | 192 | 176 | ||||||
Advertising | 173 | 202 | ||||||
Internet banking expense | 196 | 194 | ||||||
Amortization of core deposit intangibles | 174 | 174 | ||||||
Other | 944 | 1,110 | ||||||
Total non-interest expenses | 12,078 | 11,667 | ||||||
Income before provision for income taxes | 9,117 | 7,169 | ||||||
Provision for income taxes | 2,494 | 1,953 | ||||||
Net income | $ | 6,623 | $ | 5,216 | ||||
Earnings per common share: | ||||||||
Basic earnings per share | $ | 0.52 | $ | 0.38 | ||||
Weighted average common shares used in basic computation | 12,734,971 | 13,646,489 | ||||||
Diluted earnings per share | $ | 0.52 | $ | 0.38 | ||||
Weighted average common shares used in diluted computation | 12,779,096 | 13,755,615 | ||||||
Cash dividend per common share | $ | 0.11 | $ | 0.10 |
For the Quarter Ended March 31, | ||||||||
(In thousands) | 2020 | 2019 | ||||||
Net income | $ | 6,623 | $ | 5,216 | ||||
Other Comprehensive Income: | ||||||||
Unrealized gains (losses) on securities: | ||||||||
Unrealized holding gains (losses) arising during the period | (1,687 | ) | 8,618 | |||||
Reclassification of net gains included in net income | (4,198 | ) | (1,052 | ) | ||||
Other comprehensive income (loss), before tax | (5,885 | ) | 7,566 | |||||
Tax effect | 1,740 | (2,237 | ) | |||||
Total other comprehensive income (loss) | (4,145 | ) | 5,329 | |||||
Comprehensive income | $ | 2,478 | $ | 10,545 |
Common Stock | Accumulated Other Comprehensive Income (Loss) (Net of Taxes) | Total Shareholders’ Equity | |||||||||||||||||
Retained Earnings | |||||||||||||||||||
(In thousands, except share amounts) | Shares | Amount | |||||||||||||||||
Balance, January 1, 2019 | 13,754,965 | $ | 103,851 | $ | 120,294 | $ | (4,407 | ) | $ | 219,738 | |||||||||
Net income | — | — | 5,216 | — | 5,216 | ||||||||||||||
Other comprehensive income | — | — | — | 5,329 | 5,329 | ||||||||||||||
Restricted stock granted, net of forfeitures | (90 | ) | — | — | — | — | |||||||||||||
Stock issued under employee stock purchase plan | 4,603 | 80 | 80 | ||||||||||||||||
Stock awarded to employees | 5,295 | 100 | 100 | ||||||||||||||||
Stock-based compensation expense | — | 143 | — | — | 143 | ||||||||||||||
Cash dividend | — | — | (1,372 | ) | — | (1,372 | ) | ||||||||||||
Stock options exercised | 13,636 | 95 | — | — | 95 | ||||||||||||||
Repurchase and retirement of common stock | (97,479 | ) | (1,874 | ) | (1,874 | ) | |||||||||||||
Balance, March 31, 2019 | 13,680,930 | $ | 102,395 | $ | 124,138 | $ | 922 | $ | 227,455 | ||||||||||
Balance, January 1, 2020 | 13,052,407 | $ | 89,379 | $ | 135,932 | $ | 2,817 | $ | 228,128 | ||||||||||
Net income | — | — | 6,623 | — | 6,623 | ||||||||||||||
Other comprehensive loss | — | — | — | (4,145 | ) | (4,145 | ) | ||||||||||||
Stock issued under employee stock purchase plan | 3,633 | 58 | — | — | 58 | ||||||||||||||
Stock awarded to employees | 6,548 | 141 | — | — | 141 | ||||||||||||||
Stock-based compensation expense | — | 121 | — | — | 121 | ||||||||||||||
Cash dividend | — | — | (1,408 | ) | — | (1,408 | ) | ||||||||||||
Stock options exercised | 31,730 | 207 | — | — | 207 | ||||||||||||||
Repurchase and retirement of common stock | (621,379 | ) | (11,052 | ) | — | — | (11,052 | ) | |||||||||||
Balance, March 31, 2020 | 12,472,939 | $ | 78,854 | $ | 141,147 | $ | (1,328 | ) | $ | 218,673 |
For the Quarter Ended March 31, | ||||||||
(In thousands) | 2020 | 2019 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 6,623 | $ | 5,216 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Net decrease in deferred loan costs | 36 | 163 | ||||||
Depreciation | 240 | 521 | ||||||
Accretion | (338 | ) | (200 | ) | ||||
Amortization | 942 | 1,335 | ||||||
Stock-based compensation | 121 | 143 | ||||||
Provision for (reversal of) credit losses | 1,375 | (25 | ) | |||||
Net realized gains on sales of available-for-sale investment securities | (4,198 | ) | (1,052 | ) | ||||
Net change in equity securities | (120 | ) | (92 | ) | ||||
Increase in bank-owned life insurance, net of expenses | (182 | ) | (171 | ) | ||||
Net gain on bank-owned life insurance | (64 | ) | — | |||||
Net decrease (increase) in accrued interest receivable and other assets | 644 | (8,420 | ) | |||||
Net increase in accrued interest payable and other liabilities | 1,464 | 9,702 | ||||||
Provision for deferred income taxes | (612 | ) | (218 | ) | ||||
Net cash provided by operating activities | 5,931 | 6,902 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of available-for-sale investment securities | (155,742 | ) | (65,253 | ) | ||||
Proceeds from sales or calls of available-for-sale investment securities | 106,037 | 52,985 | ||||||
Proceeds from maturity and principal repayments of available-for-sale investment securities | 8,136 | 6,051 | ||||||
Net decrease (increase) in loans | 13,616 | (3,239 | ) | |||||
Purchases of premises and equipment | (32 | ) | (133 | ) | ||||
Purchases of bank-owned life insurance | — | (1,000 | ) | |||||
Proceeds from bank-owned life insurance | 531 | — | ||||||
Net cash used in investing activities | (27,454 | ) | (10,589 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net increase in demand, interest bearing and savings deposits | 21,196 | 9,167 | ||||||
Net (decrease) increase in time deposits | (3,890 | ) | 1,099 | |||||
Proceeds from short-term borrowings from Federal Home Loan Bank | — | 14,000 | ||||||
Repayments of short-term borrowings to Federal Home Loan Bank | — | (17,000 | ) | |||||
Proceeds of borrowings from other financial institutions | — | 1,370 | ||||||
Repayments of borrowings from other financial institutions | — | (1,370 | ) | |||||
Purchase and retirement of common stock | (11,052 | ) | (1,874 | ) | ||||
Proceeds from stock issued under employee stock purchase plan | 58 | 80 | ||||||
Proceeds from exercise of stock options | 207 | 95 | ||||||
Cash dividend payments on common stock | (1,408 | ) | (1,372 | ) | ||||
Net cash provided by financing activities | 5,111 | 4,195 | ||||||
(Decrease) increase in cash and cash equivalents | (16,412 | ) | 508 | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 52,574 | 31,727 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 36,162 | $ | 32,235 |
For the Quarter Ended March 31, | ||||||||
(In thousands) | 2020 | 2019 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 502 | $ | 425 | ||||
Operating cash flows from operating leases | $ | 559 | $ | 545 | ||||
Non-cash investing and financing activities: | ||||||||
Initial recognition of operating lease right-of-use assets | $ | — | $ | 10,129 | ||||
Purchases of available-for-sale investment securities, not yet settled | $ | 12,718 | $ | 1,816 |
March 31, 2020 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 22,713 | $ | 22,713 | $ | — | $ | — | $ | 22,713 | ||||||||||
Interest-earning deposits in other banks | 13,449 | 13,449 | — | — | 13,449 | |||||||||||||||
Available-for-sale debt securities | 522,943 | — | 522,943 | — | 522,943 | |||||||||||||||
Equity securities | 7,592 | 7,592 | — | — | 7,592 | |||||||||||||||
Loans, net | 919,223 | — | — | 915,066 | 915,066 | |||||||||||||||
Federal Home Loan Bank stock | 6,062 | N/A | N/A | N/A | N/A | |||||||||||||||
Accrued interest receivable | 5,710 | 15 | 2,647 | 3,048 | 5,710 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 1,350,591 | 1,211,581 | 90,133 | — | 1,301,714 | |||||||||||||||
Junior subordinated deferrable interest debentures | 5,155 | — | — | 2,661 | 2,661 | |||||||||||||||
Accrued interest payable | 151 | — | 106 | 45 | 151 |
December 31, 2019 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 24,195 | $ | 24,195 | $ | — | $ | — | $ | 24,195 | ||||||||||
Interest-earning deposits in other banks | 28,379 | 28,379 | — | — | 28,379 | |||||||||||||||
Federal funds sold | — | — | — | — | — | |||||||||||||||
Available-for-sale debt securities | 470,746 | — | 470,746 | — | 470,746 | |||||||||||||||
Equity securities | 7,472 | 7,472 | — | — | 7,472 | |||||||||||||||
Loans, net | 934,250 | — | — | 928,807 | 928,807 | |||||||||||||||
Federal Home Loan Bank stock | 6,062 | N/A | N/A | N/A | N/A | |||||||||||||||
Accrued interest receivable | 5,591 | 33 | 1,798 | 3,760 | 5,591 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 1,333,285 | 1,160,224 | 93,395 | — | 1,253,619 | |||||||||||||||
Junior subordinated deferrable interest debentures | 5,155 | — | — | 3,976 | 3,976 | |||||||||||||||
Accrued interest payable | 176 | — | 129 | 47 | 176 |
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale debt securities: | ||||||||||||||||
U.S. Government agencies | $ | 43,212 | $ | — | $ | 43,212 | $ | — | ||||||||
Obligations of states and political subdivisions | 205,254 | — | 205,254 | — | ||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 202,305 | — | 202,305 | — | ||||||||||||
Private label mortgage and asset backed securities | 63,923 | — | 63,923 | — | ||||||||||||
Corporate debt securities | 8,249 | — | 8,249 | — | ||||||||||||
Equity securities | 7,592 | 7,592 | — | — | ||||||||||||
Total assets measured at fair value on a recurring basis | $ | 530,535 | $ | 7,592 | $ | 522,943 | $ | — |
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale debt securities: | ||||||||||||||||
U.S. Government agencies | $ | 14,494 | $ | — | $ | 14,494 | $ | — | ||||||||
Obligations of states and political subdivisions | 91,111 | — | 91,111 | — | ||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 196,719 | — | 196,719 | — | ||||||||||||
Private label mortgage and asset backed securities | 159,378 | — | 159,378 | — | ||||||||||||
Corporate debt securities | 9,044 | — | 9,044 | — | ||||||||||||
Equity securities | 7,472 | 7,472 | — | — | ||||||||||||
Total assets measured at fair value on a recurring basis | $ | 478,218 | $ | 7,472 | $ | 470,746 | $ | — |
March 31, 2020 | ||||||||||||||||
Available-for-Sale Securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Debt securities: | ||||||||||||||||
U.S. Government agencies | $ | 43,550 | $ | 28 | $ | (366 | ) | $ | 43,212 | |||||||
Obligations of states and political subdivisions | 200,677 | 6,393 | (1,816 | ) | 205,254 | |||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 205,987 | 2,804 | (6,486 | ) | 202,305 | |||||||||||
Private label mortgage and asset backed securities | 65,615 | 679 | (2,371 | ) | 63,923 | |||||||||||
Corporate debt securities | 9,000 | — | (751 | ) | 8,249 | |||||||||||
Total available-for-sale | $ | 524,829 | $ | 9,904 | $ | (11,790 | ) | $ | 522,943 |
December 31, 2019 | ||||||||||||||||
Available-for-Sale Securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Debt securities: | ||||||||||||||||
U.S. Government agencies | $ | 14,740 | $ | 12 | $ | (258 | ) | $ | 14,494 | |||||||
Obligations of states and political subdivisions | 89,574 | 2,965 | (1,428 | ) | 91,111 | |||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 198,125 | 1,409 | (2,815 | ) | 196,719 | |||||||||||
Private label mortgage and asset backed securities | 155,308 | 4,223 | (153 | ) | 159,378 | |||||||||||
Corporate debt securities | 9,000 | 79 | (35 | ) | 9,044 | |||||||||||
Total available-for-sale | $ | 466,747 | $ | 8,688 | $ | (4,689 | ) | $ | 470,746 |
For the Quarter Ended March 31, | ||||||||
Available-for-Sale Securities | 2020 | 2019 | ||||||
Proceeds from sales or calls | $ | 106,037 | $ | 52,985 | ||||
Gross realized gains from sales or calls | 4,198 | 1,099 | ||||||
Gross realized losses from sales or calls | — | (47 | ) |
March 31, 2020 | ||||||||||||||||||||||||
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 | $ | 28,966 | $ | (151 | ) | $ | 13,457 | $ | (215 | ) | $ | 42,423 | $ | (366 | ) | |||||||||
Obligations of states and political subdivisions | 50,756 | (1,816 | ) | — | — | 50,756 | (1,816 | ) | ||||||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 54,165 | (1,327 | ) | 75,561 | (5,159 | ) | 129,726 | (6,486 | ) | |||||||||||||||
Private label mortgage and asset backed securities | 47,232 | (2,359 | ) | 5,674 | (12 | ) | 52,906 | (2,371 | ) | |||||||||||||||
Corporate debt securities | 8,249 | (751 | ) | — | — | 8,249 | (751 | ) | ||||||||||||||||
Total available-for-sale | $ | 189,368 | $ | (6,404 | ) | $ | 94,692 | $ | (5,386 | ) | $ | 284,060 | $ | (11,790 | ) |
December 31, 2019 | ||||||||||||||||||||||||
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 | $ | — | $ | — | $ | 13,713 | $ | (258 | ) | $ | 13,713 | $ | (258 | ) | ||||||||||
Obligations of states and political subdivisions | 65,606 | (1,428 | ) | — | — | 65,606 | (1,428 | ) | ||||||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 71,650 | (932 | ) | 69,518 | (1,883 | ) | 141,168 | (2,815 | ) | |||||||||||||||
Private label mortgage and asset backed securities | 17,811 | (81 | ) | 5,624 | (72 | ) | 23,435 | (153 | ) | |||||||||||||||
Corporate debt securities | 3,965 | (35 | ) | — | — | 3,965 | (35 | ) | ||||||||||||||||
Total available-for-sale | $ | 159,032 | $ | (2,476 | ) | $ | 88,855 | $ | (2,213 | ) | $ | 247,887 | $ | (4,689 | ) |
March 31, 2020 | ||||||||
Available-for-Sale Securities | Amortized Cost | Estimated Fair Value | ||||||
Within one year | $ | — | $ | — | ||||
After one year through five years | 1,577 | 1,705 | ||||||
After five years through ten years | 23,097 | 24,616 | ||||||
After ten years | 176,003 | 178,933 | ||||||
200,677 | 205,254 | |||||||
Investment securities not due at a single maturity date: | ||||||||
U.S. Government agencies | 43,550 | 43,212 | ||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 205,987 | 202,305 | ||||||
Private label mortgage and asset backed securities | 65,615 | 63,923 | ||||||
Corporate debt securities | 9,000 | 8,249 | ||||||
Total available-for-sale | $ | 524,829 | $ | 522,943 |
Loan Type (Dollars in thousands) | March 31, 2020 | % of Total Loans | December 31, 2019 | % of Total Loans | ||||||||||
Commercial: | ||||||||||||||
Commercial and industrial | $ | 102,606 | 11.0 | % | $ | 102,541 | 10.9 | % | ||||||
Agricultural production | 17,162 | 1.9 | % | 23,159 | 2.6 | % | ||||||||
Total commercial | 119,768 | 12.9 | % | 125,700 | 13.5 | % | ||||||||
Real estate: | ||||||||||||||
Owner occupied | 198,551 | 21.4 | % | 197,946 | 21.0 | % | ||||||||
Real estate construction and other land loans | 79,794 | 8.6 | % | 73,718 | 7.8 | % | ||||||||
Commercial real estate | 326,044 | 35.2 | % | 329,333 | 34.9 | % | ||||||||
Agricultural real estate | 67,935 | 7.3 | % | 76,304 | 8.1 | % | ||||||||
Other real estate | 33,184 | 3.6 | % | 31,241 | 3.3 | % | ||||||||
Total real estate | 705,508 | 76.1 | % | 708,542 | 75.1 | % | ||||||||
Consumer: | ||||||||||||||
Equity loans and lines of credit | 61,601 | 6.6 | % | 64,841 | 6.9 | % | ||||||||
Consumer and installment | 41,341 | 4.4 | % | 42,782 | 4.5 | % | ||||||||
Total consumer | 102,942 | 11.0 | % | 107,623 | 11.4 | % | ||||||||
Net deferred origination costs | 1,551 | 1,515 | ||||||||||||
Total gross loans | 929,769 | 100.0 | % | 943,380 | 100.0 | % | ||||||||
Allowance for credit losses | (10,546 | ) | (9,130 | ) | ||||||||||
Total loans | $ | 919,223 | $ | 934,250 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, January 1, 2020 | $ | 1,428 | $ | 6,769 | $ | 897 | $ | 36 | $ | 9,130 | ||||||||||
Provision charged to operations | 225 | 786 | 302 | 62 | 1,375 | |||||||||||||||
Losses charged to allowance | (28 | ) | — | (15 | ) | — | (43 | ) | ||||||||||||
Recoveries | 32 | — | 52 | — | 84 | |||||||||||||||
Ending balance, March 31, 2020 | $ | 1,657 | $ | 7,555 | $ | 1,236 | $ | 98 | $ | 10,546 | ||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, January 1, 2019 | $ | 1,671 | $ | 6,539 | $ | 826 | $ | 68 | $ | 9,104 | ||||||||||
(Reversal) provision charged to operations | (252 | ) | 170 | 61 | (4 | ) | (25 | ) | ||||||||||||
Losses charged to allowance | — | — | (9 | ) | — | (9 | ) | |||||||||||||
Recoveries | 31 | — | 17 | — | 48 | |||||||||||||||
Ending balance, March 31, 2019 | $ | 1,450 | $ | 6,709 | $ | 895 | $ | 64 | $ | 9,118 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Ending balance, March 31, 2020 | $ | 1,657 | $ | 7,555 | $ | 1,236 | $ | 98 | $ | 10,546 | ||||||||||
Ending balance: individually evaluated for impairment | $ | 175 | $ | 3 | $ | 16 | $ | — | $ | 194 | ||||||||||
Ending balance: collectively evaluated for impairment | $ | 1,482 | $ | 7,552 | $ | 1,220 | $ | 98 | $ | 10,352 | ||||||||||
Ending balance, December 31, 2019 | $ | 1,428 | $ | 6,769 | $ | 897 | $ | 36 | $ | 9,130 | ||||||||||
Ending balance: individually evaluated for impairment | $ | 2 | $ | 3 | $ | 35 | $ | — | $ | 40 | ||||||||||
Ending balance: collectively evaluated for impairment | $ | 1,426 | $ | 6,766 | $ | 862 | $ | 36 | $ | 9,090 |
Commercial | Real Estate | Consumer | Total | |||||||||||||
Loans: | ||||||||||||||||
Ending balance, March 31, 2020 | $ | 119,768 | $ | 705,508 | $ | 102,942 | $ | 928,218 | ||||||||
Ending balance: individually evaluated for impairment | $ | 12,995 | $ | 1,876 | $ | 1,242 | $ | 16,113 | ||||||||
Ending balance: collectively evaluated for impairment | $ | 106,773 | $ | 703,632 | $ | 101,700 | $ | 912,105 | ||||||||
Loans: | ||||||||||||||||
Ending balance, December 31, 2019 | $ | 125,700 | $ | 708,542 | $ | 107,623 | $ | 941,865 | ||||||||
Ending balance: individually evaluated for impairment | $ | 187 | $ | 2,036 | $ | 1,511 | $ | 3,734 | ||||||||
Ending balance: collectively evaluated for impairment | $ | 125,513 | $ | 706,506 | $ | 106,112 | $ | 938,131 |
Pass | Special Mention | Sub-Standard | Doubtful | Total | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 87,749 | $ | 2,364 | $ | 12,493 | $ | — | $ | 102,606 | ||||||||||
Agricultural production | 11,284 | — | 5,878 | — | 17,162 | |||||||||||||||
Real Estate: | ||||||||||||||||||||
Owner occupied | 187,015 | 6,870 | 4,666 | — | 198,551 | |||||||||||||||
Real estate construction and other land loans | 77,411 | 333 | 2,050 | — | 79,794 | |||||||||||||||
Commercial real estate | 324,088 | 854 | 1,102 | — | 326,044 | |||||||||||||||
Agricultural real estate | 60,058 | 1,000 | 6,877 | — | 67,935 | |||||||||||||||
Other real estate | 33,184 | — | — | — | 33,184 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Equity loans and lines of credit | 59,732 | 515 | 1,354 | — | 61,601 | |||||||||||||||
Consumer and installment | 41,341 | — | — | — | 41,341 | |||||||||||||||
Total | $ | 881,862 | $ | 11,936 | $ | 34,420 | $ | — | $ | 928,218 |
Pass | Special Mention | Sub-Standard | Doubtful | Total | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 86,705 | $ | 2,635 | $ | 13,201 | $ | — | $ | 102,541 | ||||||||||
Agricultural production | 18,814 | — | 4,345 | — | 23,159 | |||||||||||||||
Real Estate: | ||||||||||||||||||||
Owner occupied | 186,370 | 6,881 | 4,695 | — | 197,946 | |||||||||||||||
Real estate construction and other land loans | 72,142 | — | 1,576 | — | 73,718 | |||||||||||||||
Commercial real estate | 310,982 | 17,202 | 1,149 | — | 329,333 | |||||||||||||||
Agricultural real estate | 68,032 | 946 | 7,326 | — | 76,304 | |||||||||||||||
Other real estate | 31,241 | — | — | — | 31,241 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Equity loans and lines of credit | 62,776 | 519 | 1,546 | — | 64,841 | |||||||||||||||
Consumer and installment | 42,782 | — | — | — | 42,782 | |||||||||||||||
Total | $ | 879,844 | $ | 28,183 | $ | 33,838 | $ | — | $ | 941,865 |
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 | $ | 209 | $ | — | $ | — | $ | 209 | $ | 102,397 | $ | 102,606 | $ | — | $ | 20 | ||||||||||||||||
Agricultural production | — | — | — | — | 17,162 | 17,162 | — | — | ||||||||||||||||||||||||
Real estate: | — | — | ||||||||||||||||||||||||||||||
Owner occupied | — | — | 218 | 218 | 198,333 | 198,551 | — | 411 | ||||||||||||||||||||||||
Real estate construction and other land loans | 191 | — | — | 191 | 79,603 | 79,794 | — | — | ||||||||||||||||||||||||
Commercial real estate | 205 | — | — | 205 | 325,839 | 326,044 | — | 360 | ||||||||||||||||||||||||
Agricultural real estate | 324 | — | — | 324 | 67,611 | 67,935 | — | 195 | ||||||||||||||||||||||||
Other real estate | — | — | — | — | 33,184 | 33,184 | — | — | ||||||||||||||||||||||||
Consumer: | — | |||||||||||||||||||||||||||||||
Equity loans and lines of credit | 11 | — | — | 11 | 61,590 | 61,601 | — | 129 | ||||||||||||||||||||||||
Consumer and installment | 178 | — | — | 178 | 41,163 | 41,341 | — | — | ||||||||||||||||||||||||
Total | $ | 1,118 | $ | — | $ | 218 | $ | 1,336 | $ | 926,882 | $ | 928,218 | $ | — | $ | 1,115 |
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 | $ | 17 | $ | — | $ | — | $ | 17 | $ | 102,524 | $ | 102,541 | $ | — | $ | 187 | ||||||||||||||||
Agricultural production | — | — | — | — | 23,159 | 23,159 | — | — | ||||||||||||||||||||||||
Real estate: | — | |||||||||||||||||||||||||||||||
Owner occupied | — | 218 | — | 218 | 197,728 | 197,946 | — | 416 | ||||||||||||||||||||||||
Real estate construction and other land loans | — | — | — | — | 73,718 | 73,718 | — | — | ||||||||||||||||||||||||
Commercial real estate | — | 381 | — | 381 | 328,952 | 329,333 | — | 381 | ||||||||||||||||||||||||
Agricultural real estate | — | — | — | — | 76,304 | 76,304 | — | 321 | ||||||||||||||||||||||||
Other real estate | — | — | — | — | 31,241 | 31,241 | — | — | ||||||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||||||
Equity loans and lines of credit | — | — | — | — | 64,841 | 64,841 | — | 388 | ||||||||||||||||||||||||
Consumer and installment | 168 | — | — | 168 | 42,614 | 42,782 | — | — | ||||||||||||||||||||||||
Total | $ | 185 | $ | 599 | $ | — | $ | 784 | $ | 941,081 | $ | 941,865 | $ | — | $ | 1,693 |
Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||
With no related allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | $ | 13 | $ | 14 | $ | — | ||||||
Real estate: | ||||||||||||
Owner occupied | 411 | 424 | — | |||||||||
Commercial real estate | 1,083 | 1,351 | — | |||||||||
Agricultural real estate | 232 | 237 | — | |||||||||
Total real estate | 1,726 | 2,012 | — | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 279 | 325 | — | |||||||||
Total with no related allowance recorded | 2,018 | 2,351 | — | |||||||||
With an allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | 12,132 | 12,134 | 158 | |||||||||
Agricultural production | 850 | 850 | 17 | |||||||||
Total commercial | 12,982 | 12,984 | 175 | |||||||||
Real estate: | ||||||||||||
Commercial real estate | 150 | 151 | 3 | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 963 | 963 | 16 | |||||||||
Total with an allowance recorded | 14,095 | 14,098 | 194 | |||||||||
Total | $ | 16,113 | $ | 16,449 | $ | 194 |
Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||
With no related allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | $ | 163 | $ | 432 | $ | — | ||||||
Real estate: | ||||||||||||
Owner occupied | 416 | 426 | — | |||||||||
Real estate construction and other land loans | — | — | — | |||||||||
Commercial real estate | 1,110 | 1,361 | — | |||||||||
Agricultural real estate | 321 | 321 | — | |||||||||
Total real estate | 1,847 | 2,108 | — | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 220 | 256 | — | |||||||||
Total with no related allowance recorded | 2,230 | 2,796 | — | |||||||||
With an allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | 24 | 27 | 2 | |||||||||
Real estate: | ||||||||||||
Commercial real estate | 152 | 153 | 3 | |||||||||
Agricultural real estate | 37 | 37 | — | |||||||||
Total real estate | 189 | 190 | 3 | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 1,291 | 1,292 | 35 | |||||||||
Total with an allowance recorded | 1,504 | 1,509 | 40 | |||||||||
Total | $ | 3,734 | $ | 4,305 | $ | 40 |
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||
With no related allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | $ | 121 | $ | — | $ | 249 | $ | — | ||||||||
Real estate: | ||||||||||||||||
Owner occupied | 413 | — | 213 | — | ||||||||||||
Real estate construction and other land loans | — | — | 2,217 | 16 | ||||||||||||
Commercial real estate | 1,101 | 12 | 1,171 | 12 | ||||||||||||
Agricultural real estate | 258 | — | — | — | ||||||||||||
Total real estate | 1,772 | 12 | 3,601 | 28 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | 300 | 3 | 196 | 1 | ||||||||||||
Total with no related allowance recorded | 2,193 | 15 | 4,046 | 29 | ||||||||||||
With an allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | 3,048 | 173 | 84 | 1 | ||||||||||||
Agricultural production | 212 | 12 | — | — | ||||||||||||
Total commercial | 3,260 | 185 | 84 | 1 | ||||||||||||
Real estate: | ||||||||||||||||
Commercial real estate | 151 | 3 | 572 | 3 | ||||||||||||
Agricultural real estate | 19 | — | 44 | 1 | ||||||||||||
Total real estate | 170 | 3 | 616 | 4 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | 1,124 | 14 | 1,105 | 14 | ||||||||||||
Consumer and installment | 3 | — | — | — | ||||||||||||
Total consumer | 1,127 | 14 | 1,105 | 14 | ||||||||||||
Total with an allowance recorded | 4,557 | 202 | 1,805 | 19 | ||||||||||||
Total | $ | 6,750 | $ | 217 | $ | 5,851 | $ | 48 |
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 | $ | 12,925 | $ | — | $ | 12,925 | $ | 12,125 | ||||||||||
Agricultural production | 1 | 850 | — | 850 | 850 | ||||||||||||||
Total | 2 | $ | 13,775 | $ | — | $ | 13,775 | $ | 12,975 |
(1) | Amounts represent the recorded investment in loans before recognizing effects of the Troubled Debt Restructurings, 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 | ||||||||||||||
Consumer: | |||||||||||||||||||
Equity loans and lines of credit | 1 | $ | 13 | — | $ | 13 | $ | 13 | |||||||||||
Total | 1 | $ | 13 | $ | — | $ | 13 | $ | 13 |
Troubled Debt Restructuring |
Troubled Debt Restructuring |
Basic Earnings Per Share | For the Quarter Ended March 31, | |||||||
(In thousands, except share and per share amounts) | 2020 | 2019 | ||||||
Net income | $ | 6,623 | $ | 5,216 | ||||
Weighted average shares outstanding | 12,734,971 | 13,646,489 | ||||||
Basic earnings per share | $ | 0.52 | $ | 0.38 |
Diluted Earnings Per Share | For the Quarter Ended March 31, | |||||||
(In thousands, except share and per share amounts) | 2020 | 2019 | ||||||
Net income | $ | 6,623 | $ | 5,216 | ||||
Weighted average shares outstanding | 12,734,971 | 13,646,489 | ||||||
Effect of dilutive stock options | 44,125 | 109,126 | ||||||
Weighted average shares of common stock and common stock equivalents | 12,779,096 | 13,755,615 | ||||||
Diluted earnings per share | $ | 0.52 | $ | 0.38 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (In thousands) | ||||||||||
Options outstanding at January 1, 2020 | 121,120 | $ | 8.73 | ||||||||||
Options exercised | (31,730 | ) | $ | 6.54 | |||||||||
Options forfeited | (400 | ) | $ | 8.02 | |||||||||
Options outstanding at March 31, 2020 | 88,990 | $ | 9.51 | 2.05 | $ | 343 | |||||||
Options vested or expected to vest at March 31, 2020 | 88,990 | $ | 9.51 | 2.05 | $ | 343 | |||||||
Options exercisable at March 31, 2020 | 88,990 | $ | 9.51 | 2.05 | $ | 343 |
For the Quarter Ended March 31, | ||||||||
2020 | 2019 | |||||||
Intrinsic value of options exercised | $ | 349 | $ | 167 | ||||
Cash received from options exercised | $ | 207 | $ | 95 | ||||
Excess tax benefit realized for option exercises | $ | 72 | $ | 17 |
Shares | Weighted Average Grant-Date Fair Value | ||||||
Nonvested outstanding shares at January 1, 2020 | 45,160 | $ | 17.38 | ||||
Granted | 6,548 | $ | 21.59 | ||||
Vested | (10,380 | ) | $ | 17.86 | |||
Forfeited | — | $ | — | ||||
Nonvested outstanding shares at March 31, 2020 | 41,328 | $ | 17.93 |
For the Three Months Ended March 31, 2020 | For the Three Months Ended March 31, 2019 | |||||||||||||||||||||
(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 | $ | 53,796 | $ | 183 | 1.36 | % | $ | 24,676 | $ | 150 | 2.43 | % | ||||||||||
Securities: | ||||||||||||||||||||||
Taxable securities | 451,558 | 3,266 | 2.89 | % | 398,866 | 3,023 | 3.03 | % | ||||||||||||||
Non-taxable securities (1) | 16,313 | 201 | 4.93 | % | 72,263 | 712 | 3.94 | % | ||||||||||||||
Total investment securities | 467,871 | 3,467 | 2.96 | % | 471,129 | 3,735 | 3.17 | % | ||||||||||||||
Total securities and interest-earning deposits | 521,667 | 3,650 | 2.80 | % | 495,805 | 3,885 | 3.13 | % | ||||||||||||||
Loans (2) (3) | 923,208 | 12,898 | 5.62 | % | 903,415 | 12,554 | 5.64 | % | ||||||||||||||
Total interest-earning assets | 1,444,875 | $ | 16,548 | 4.61 | % | 1,399,220 | $ | 16,439 | 4.76 | % | ||||||||||||
Allowance for credit losses | (9,243 | ) | (9,124 | ) | ||||||||||||||||||
Nonaccrual loans | 1,403 | 2,696 | ||||||||||||||||||||
Cash and due from banks | 25,606 | 26,011 | ||||||||||||||||||||
Bank premises and equipment | 7,553 | 8,393 | ||||||||||||||||||||
Other assets | 127,870 | 113,525 | ||||||||||||||||||||
Total average assets | $ | 1,598,064 | $ | 1,540,721 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Savings and NOW accounts | $ | 377,137 | $ | 101 | 0.11 | % | $ | 372,457 | $ | 113 | 0.12 | % | ||||||||||
Money market accounts | 275,581 | 144 | 0.21 | % | 276,680 | 148 | 0.22 | % | ||||||||||||||
Time certificates of deposit | 91,505 | 187 | 0.82 | % | 97,738 | 132 | 0.55 | % | ||||||||||||||
Total interest-bearing deposits | 744,223 | 432 | 0.23 | % | 746,875 | 393 | 0.21 | % | ||||||||||||||
Other borrowed funds | 5,155 | 45 | 3.49 | % | 5,766 | 61 | 4.23 | % | ||||||||||||||
Total interest-bearing liabilities | 749,378 | $ | 477 | 0.26 | % | 752,641 | $ | 454 | 0.24 | % | ||||||||||||
Non-interest bearing demand deposits | 590,180 | 543,137 | ||||||||||||||||||||
Other liabilities | 30,505 | 23,433 | ||||||||||||||||||||
Shareholders’ equity | 228,001 | 221,510 | ||||||||||||||||||||
Total average liabilities and shareholders’ equity | $ | 1,598,064 | $ | 1,540,721 | ||||||||||||||||||
Interest income and rate earned on average earning assets | $ | 16,548 | 4.61 | % | $ | 16,439 | 4.76 | % | ||||||||||||||
Interest expense and interest cost related to average interest-bearing liabilities | 477 | 0.26 | % | 454 | 0.24 | % | ||||||||||||||||
Net interest income and net interest margin (4) | $ | 16,071 | 4.47 | % | $ | 15,985 | 4.63 | % |
(1) | Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $42 and $150 in 2020 and 2019, respectively. |
(2) | Loan interest income includes loan fees of $117 in 2020 and $27 in 2019. |
(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 Three Months Ended March 31, 2020 and 2019 | |||||||||||
(In thousands) | Volume | Rate | Net | |||||||||
Increase (decrease) due to changes in: | ||||||||||||
Interest income: | ||||||||||||
Interest-earning deposits in other banks | $ | 177 | $ | (144 | ) | $ | 33 | |||||
Investment securities: | ||||||||||||
Taxable | 399 | (156 | ) | 243 | ||||||||
Non-taxable (1) | (551 | ) | 40 | (511 | ) | |||||||
Total investment securities | (152 | ) | (116 | ) | (268 | ) | ||||||
Federal funds sold | — | — | — | |||||||||
Loans | 276 | 68 | 344 | |||||||||
Total earning assets (1) | 301 | (192 | ) | 109 | ||||||||
Interest expense: | ||||||||||||
Deposits: | ||||||||||||
Savings, NOW and MMA | 1 | (17 | ) | (16 | ) | |||||||
Time certificate of deposits | (8 | ) | 63 | 55 | ||||||||
Total interest-bearing deposits | (7 | ) | 46 | 39 | ||||||||
Other borrowed funds | (7 | ) | (9 | ) | (16 | ) | ||||||
Total interest-bearing liabilities | (14 | ) | 37 | 23 | ||||||||
Net interest income (1) | $ | 315 | $ | (229 | ) | $ | 86 |
Loan Type | March 31, 2020 | December 31, 2019 | ||||||
Commercial: | ||||||||
Commercial and industrial | $ | 1,437 | $ | 1,115 | ||||
Agricultural production | 220 | 313 | ||||||
Total commercial | 1,657 | 1,428 | ||||||
Real estate: | ||||||||
Owner occupied | 1,597 | 1,319 | ||||||
Real estate construction and other land loans | 1,012 | 932 | ||||||
Commercial real estate | 4,072 | 3,453 | ||||||
Agricultural real estate | 674 | 925 | ||||||
Other real estate | 200 | 140 | ||||||
Total real estate | 7,555 | 6,769 | ||||||
Consumer: | ||||||||
Equity loans and lines of credit | 434 | 425 | ||||||
Consumer and installment | 802 | 472 | ||||||
Total consumer | 1,236 | 897 | ||||||
Unallocated reserves | 98 | 36 | ||||||
Total allowance for credit losses | $ | 10,546 | $ | 9,130 |
For the Quarter Ended March 31, | ||||||||||||||
2020 | 2019 | |||||||||||||
(Dollars in thousands) | Other Expense | % Average Assets | Other Expense | % Average Assets | ||||||||||
Stationery/supplies | $ | 65 | 0.02 | % | $ | 44 | 0.01 | % | ||||||
Amortization of software | 49 | 0.01 | % | 82 | 0.02 | % | ||||||||
Postage | 54 | 0.01 | % | 53 | 0.01 | % | ||||||||
Risk management expense | 59 | 0.01 | % | 57 | 0.01 | % | ||||||||
Shareholder services | 23 | 0.01 | % | 20 | 0.01 | % | ||||||||
Personnel other | 61 | 0.02 | % | 63 | 0.02 | % | ||||||||
Armored courier fees | 71 | 0.02 | % | 42 | 0.01 | % | ||||||||
Credit card expense | — | — | % | 114 | 0.03 | % | ||||||||
Telephone | 53 | 0.01 | % | 55 | 0.01 | % | ||||||||
Alarm | 18 | — | % | 22 | 0.01 | % | ||||||||
Donations | 52 | 0.01 | % | 68 | 0.02 | % | ||||||||
Education/training | 52 | 0.01 | % | 24 | 0.01 | % | ||||||||
Loan related expenses | 14 | — | % | 33 | 0.01 | % | ||||||||
General insurance | 41 | 0.01 | % | 42 | 0.01 | % | ||||||||
Travel and mileage expense | 67 | 0.02 | % | 50 | 0.01 | % | ||||||||
Operating losses | 41 | 0.01 | % | 7 | — | % | ||||||||
Other | 224 | 0.06 | % | 334 | 0.09 | % | ||||||||
Total other non-interest expense | $ | 944 | 0.24 | % | $ | 1,110 | 0.29 | % |
Loan Type (dollars in thousands) | March 31, 2020 | % of Total Loans | December 31, 2019 | % of Total Loans | ||||||||||
Commercial: | ||||||||||||||
Commercial and industrial | $ | 102,606 | 11.0 | % | $ | 102,541 | 10.9 | % | ||||||
Agricultural production | 17,162 | 1.9 | % | 23,159 | 2.6 | % | ||||||||
Total commercial | 119,768 | 12.9 | % | 125,700 | 13.5 | % | ||||||||
Real estate: | ||||||||||||||
Owner occupied | 198,551 | 21.4 | % | 197,946 | 21.0 | % | ||||||||
Real estate construction and other land loans | 79,794 | 8.6 | % | 73,718 | 7.8 | % | ||||||||
Commercial real estate | 326,044 | 35.2 | % | 329,333 | 34.9 | % | ||||||||
Agricultural real estate | 67,935 | 7.3 | % | 76,304 | 8.1 | % | ||||||||
Other real estate | 33,184 | 3.6 | % | 31,241 | 3.3 | % | ||||||||
Total real estate | 705,508 | 76.1 | % | 708,542 | 75.1 | % | ||||||||
Consumer: | ||||||||||||||
Equity loans and lines of credit | 61,601 | 6.6 | % | 64,841 | 6.9 | % | ||||||||
Consumer and installment | 41,341 | 4.4 | % | 42,782 | 4.5 | % | ||||||||
Total consumer | 102,942 | 11.0 | % | 107,623 | 11.4 | % | ||||||||
Net deferred origination costs | 1,551 | 1,515 | ||||||||||||
Total gross loans | 929,769 | 100.0 | % | 943,380 | 100.0 | % | ||||||||
Allowance for credit losses | (10,546 | ) | (9,130 | ) | ||||||||||
Total loans | $ | 919,223 | $ | 934,250 |
(In thousands) | March 31, 2020 | December 31, 2019 | ||||||
Nonaccrual loans: | ||||||||
Commercial and industrial | $ | 20 | $ | 187 | ||||
Owner occupied real estate | 411 | 416 | ||||||
Agricultural real estate | 195 | 321 | ||||||
Commercial real estate | 360 | 381 | ||||||
Equity loans and lines of credit | 42 | 66 | ||||||
Troubled debt restructured loans (non-accruing): | ||||||||
Equity loans and lines of credit | 87 | 322 | ||||||
Total nonaccrual | 1,115 | 1,693 | ||||||
Accruing loans past due 90 days or more | — | — | ||||||
Total nonperforming loans | $ | 1,115 | $ | 1,693 | ||||
Ratio of nonperforming loans to total loans | 0.12 | % | 0.18 | % | ||||
Ratio of allowance for credit losses to nonperforming loans | 945.8 | % | 539.3 | % | ||||
Loans considered to be impaired | $ | 16,113 | $ | 3,734 | ||||
Related allowance for credit losses on impaired loans | $ | 194 | $ | 40 |
(In thousands) | Balance, December 31, 2019 | Additions to Nonaccrual Loans | Net Pay Downs | Transfers to Foreclosed Collateral and OREO | Returns to Accrual Status | Charge- Offs | Balance, March 31, 2020 | |||||||||||||||||||||
Nonaccrual loans: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | 187 | $ | — | $ | (20 | ) | $ | — | $ | (147 | ) | $ | — | $ | 20 | ||||||||||||
Real estate | 797 | — | (26 | ) | — | — | — | 771 | ||||||||||||||||||||
Real estate construction and other land loans | — | — | — | — | — | — | — | |||||||||||||||||||||
Agricultural real estate | 321 | — | (126 | ) | — | — | — | 195 | ||||||||||||||||||||
Equity loans and lines of credit | 66 | — | (24 | ) | — | — | — | 42 | ||||||||||||||||||||
Consumer | — | — | — | — | — | — | — | |||||||||||||||||||||
Restructured loans (non-accruing): | ||||||||||||||||||||||||||||
Equity loans and lines of credit | 322 | — | (235 | ) | — | — | — | 87 | ||||||||||||||||||||
Total nonaccrual | $ | 1,693 | $ | — | $ | (431 | ) | $ | — | $ | (147 | ) | $ | — | $ | 1,115 |
For the Quarter Ended March 31, | For the Year Ended December 31, | For the Quarter Ended March 31, | ||||||||||
(Dollars in thousands) | 2020 | 2019 | 2019 | |||||||||
Balance, beginning of period | $ | 9,130 | $ | 9,104 | $ | 9,104 | ||||||
Provision for credit losses | 1,375 | 1,025 | (25 | ) | ||||||||
Losses charged to allowance | (43 | ) | (1,196 | ) | (9 | ) | ||||||
Recoveries | 84 | 197 | 48 | |||||||||
Balance, end of period | $ | 10,546 | $ | 9,130 | $ | 9,118 | ||||||
Allowance for credit losses to total loans at end of period | 1.13 | % | 0.97 | % | 0.99 | % |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||||||||||||||
(Dollars in thousands) | Balance | % to Total Loans | Balance | % to Total Loans | Balance | % to Total Loans | |||||||||||||||
Impaired loans with specific reserves | $ | 14,095 | 1.52 | % | $ | 1,504 | 0.16 | % | $ | 1,930 | 0.21 | % | |||||||||
Past due loans | 1,325 | 0.14 | % | 784 | 0.08 | % | 2,206 | 0.24 | % | ||||||||||||
Nonaccrual loans | 1,115 | 0.12 | % | 1,693 | 0.18 | % | 1,548 | 0.17 | % |
Industry Segments (Dollars in thousands) | Outstanding Loan Balance | Percent of Total Loan Portfolio | |||||
Hospitality | $ | 74,675 | 8.04 | % | |||
Restaurants | 16,203 | 1.75 | % | ||||
Retail | 69,127 | 7.45 | % | ||||
Assisted living facilities | 21,200 | 2.28 | % | ||||
Childcare/Education | 13,018 | 1.40 | % | ||||
Entertainment | 20,027 | 2.16 | % | ||||
Oil/Gas | — | — | % | ||||
Shared national credits | — | — | % | ||||
Credit cards | — | — | % | ||||
Total | $ | 214,250 | 23.08 | % |
Years Ended | Estimated Core Deposit Intangible Amortization | |||
2020 | $ | 522 | ||
2021 | 661 | |||
2022 | 455 | |||
2023 | 66 | |||
$ | 1,704 |
(Dollars in thousands) | March 31, 2020 | % of Total Deposits | Average Effective Rate | December 31, 2019 | % of Total Deposits | Average Effective Rate | ||||||||||||||
NOW accounts | $ | 263,199 | 19.5 | % | 0.14 | % | $ | 266,048 | 20.0 | % | 0.21 | % | ||||||||
MMA accounts | 276,869 | 20.5 | % | 0.21 | % | 266,609 | 20.0 | % | 0.24 | % | ||||||||||
Time deposits | 89,840 | 6.7 | % | 0.82 | % | 93,730 | 7.0 | % | 0.73 | % | ||||||||||
Savings deposits | 116,685 | 8.6 | % | 0.03 | % | 112,271 | 8.4 | % | 0.02 | % | ||||||||||
Total interest-bearing | 746,593 | 55.3 | % | 0.23 | % | 738,658 | 55.4 | % | 0.26 | % | ||||||||||
Non-interest bearing | 603,998 | 44.7 | % | 594,627 | 44.6 | % | ||||||||||||||
Total deposits | $ | 1,350,591 | 100.0 | % | $ | 1,333,285 | 100.0 | % |
(Dollars in thousands) | Actual Ratio | Minimum regulatory requirement (1) | |||||||||
March 31, 2020 | Amount | Ratio | Amount | Ratio | |||||||
Tier 1 Leverage Ratio | $ | 167,899 | 10.93 | % | N/A | N/A | |||||
Common Equity Tier 1 Ratio (CET 1) | $ | 162,899 | 13.97 | % | N/A | N/A | |||||
Tier 1 Risk-Based Capital Ratio | $ | 167,899 | 14.40 | % | N/A | N/A | |||||
Total Risk-Based Capital Ratio | $ | 178,620 | 15.32 | % | N/A | N/A | |||||
December 31, 2019 | |||||||||||
Tier 1 Leverage Ratio | $ | 172,945 | 11.38 | % | N/A | N/A | |||||
Common Equity Tier 1 Ratio (CET 1) | $ | 167,945 | 14.55 | % | N/A | N/A | |||||
Tier 1 Risk-Based Capital Ratio | $ | 172,945 | 14.98 | % | N/A | N/A | |||||
Total Risk-Based Capital Ratio | $ | 182,325 | 15.79 | % | N/A | N/A | |||||
(1) Effective August 30, 2018, the minimum regulatory requirements were eliminated for bank holding companies with less than $3 billion of assets. |
(Dollars in thousands) | Actual Ratio | Minimum regulatory requirement (1) | Minimum requirement for “Well-Capitalized” Institution | ||||||||||||||||||
March 31, 2020 | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
Tier 1 Leverage Ratio | $ | 166,799 | 10.86 | % | $ | 61,455 | 4.00 | % | $ | 76,819 | 5.00 | % | |||||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 166,799 | 14.31 | % | $ | 52,457 | 4.50 | % | $ | 75,771 | 6.50 | % | |||||||||
Tier 1 Risk-Based Capital Ratio | $ | 166,799 | 14.31 | % | $ | 69,943 | 6.00 | % | $ | 93,257 | 8.00 | % | |||||||||
Total Risk-Based Capital Ratio | $ | 177,520 | 15.23 | % | $ | 93,257 | 8.00 | % | $ | 116,571 | 10.00 | % | |||||||||
December 31, 2019 | |||||||||||||||||||||
Tier 1 Leverage Ratio | $ | 171,332 | 11.27 | % | $ | 60,810 | 4.00 | % | $ | 76,012 | 5.00 | % | |||||||||
Common Equity Tier 1 Ratio (CET 1) | $ | 171,332 | 14.85 | % | $ | 51,930 | 7.00 | % | $ | 75,010 | 6.50 | % | |||||||||
Tier 1 Risk-Based Capital Ratio | $ | 171,332 | 14.85 | % | $ | 69,240 | 8.50 | % | $ | 92,320 | 8.00 | % | |||||||||
Total Risk-Based Capital Ratio | $ | 180,712 | 15.66 | % | $ | 92,320 | 10.50 | % | $ | 115,400 | 10.00 | % | |||||||||
(1) The 2019 minimum regulatory requirement threshold includes the capital conservation buffer of 2.50%. |
Credit Lines (In thousands) | March 31, 2020 | December 31, 2019 | ||||||
Unsecured Credit Lines | ||||||||
(interest rate varies with market): | ||||||||
Credit limit | $ | 70,000 | $ | 70,000 | ||||
Balance outstanding | $ | — | $ | — | ||||
Federal Home Loan Bank | ||||||||
(interest rate at prevailing interest rate): | ||||||||
Credit limit | $ | 257,146 | $ | 304,987 | ||||
Balance outstanding | $ | — | $ | — | ||||
Collateral pledged | $ | 440,862 | $ | 446,742 | ||||
Fair value of collateral | $ | 392,694 | $ | 410,788 | ||||
Federal Reserve Bank | ||||||||
(interest rate at prevailing discount interest rate): | ||||||||
Credit limit | $ | 15,547 | $ | 4,931 | ||||
Balance outstanding | $ | — | $ | — | ||||
Collateral pledged | $ | 4,882 | $ | 5,065 | ||||
Fair value of collateral | $ | 4,781 | $ | 5,036 |
• | demand for our products and services may decline, making it difficult to grow assets and income; |
• | if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; |
• | collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; |
• | our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income; |
• | the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; |
• | as the result of the decline in the Federal Reserve Board’s target federal funds rate, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; |
• | a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend; |
• | a prolonged weakness in economic conditions resulting in a reduction of future projected earnings could result in our recording a valuation allowance against our current outstanding deferred tax assets; |
• | we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and |
• | Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs. |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans (1) (2) (3) | Approximate dollar value of shares that may yet be purchased under current plans (in thousands) | ||||||||||
01/1/2020 - 01/31/2020 | 167,223 | $ | 20.05 | 167,223 | $ | 7,694 | ||||||||
02/1/2020 - 02/28/2020 | 211,233 | $ | 19.31 | 211,233 | $ | 3,610 | ||||||||
03/1/2020 - 03/31/2020 | 242,923 | $ | 14.83 | 242,923 | $ | — | ||||||||
Total | 621,379 | $ | 17.76 | 621,379 |
3.1 | |||
3.2 | |||
10.86 | |||
10.87 | |||
10.88 | |||
10.89 | |||
10.90 | |||
10.91 | |||
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 | ||
* Management contract |
Central Valley Community Bancorp | |
Date: May 6, 2020 | /s/ James M. Ford |
James M. Ford | |
President and Chief Executive Officer | |
Date: May 6, 2020 | /s/ David A. Kinross |
David A. Kinross | |
Executive Vice President and Chief Financial Officer |
A. | This Agreement amends and supersedes the prior Executive Salary Continuation Agreement between the Parties, dated February 1, 2019. |
B. | The Executive is a valued executive of the Bank, and currently serves as the Bank’s Executive Vice President and Chief Operating Officer. |
C. | The Bank’s Board of Directors (the “Board”) has determined that the Executive’s services to the Bank are valuable. The Bank and the Executive desire to enter into this Agreement under which the Bank has agreed to make certain payments to the Executive following the termination of employment. |
D. | The Parties intend that this Agreement shall constitute an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The parties further intend that this Agreement shall constitute a nonqualified deferred compensation arrangement under the Internal Revenue Code (“Code”). The Executive is fully advised of the Bank’s financial status and has had substantial input in the design of and benefits provided under this Agreement. |
Month | Year | Annual Amount | Month | Year | Annual Amount | Month | Year | Annual Amount | ||||||||||
March | 2033 | $ | 40,000 | November | 2034 | $53,334 | July | 2036 | $66,667 | |||||||||
April | 2033 | $40,667 | December | 2034 | $54,000 | August | 2036 | $67,334 | ||||||||||
May | 2033 | $41,334 | January | 2035 | $54,667 | September | 2036 | $68,000 | ||||||||||
June | 2033 | $42,000 | February | 2035 | $55,334 | October | 2036 | $68,667 | ||||||||||
July | 2033 | $42,667 | March | 2035 | $56,000 | November | 2036 | $69,334 | ||||||||||
August | 2033 | $43,334 | April | 2035 | $56,667 | December | 2036 | $70,000 | ||||||||||
September | 2033 | $44,000 | May | 2035 | $57,334 | January | 2037 | $70,667 | ||||||||||
October | 2033 | $44,667 | June | 2035 | $58,000 | February | 2037 | $71,334 | ||||||||||
November | 2033 | $45,334 | July | 2035 | $58,667 | March | 2037 | $72,000 | ||||||||||
December | 2033 | $46,000 | August | 2035 | $59,334 | April | 2037 | $72,667 | ||||||||||
January | 2034 | $46,667 | September | 2035 | $60,000 | May | 2037 | $73,334 | ||||||||||
February | 2034 | $47,334 | October | 2035 | $60,667 | June | 2037 | $74,000 | ||||||||||
March | 2034 | $48,000 | November | 2035 | $61,334 | July | 2037 | $74,667 | ||||||||||
April | 2034 | $48,667 | December | 2035 | $62,000 | August | 2037 | $75,334 | ||||||||||
May | 2034 | $49,334 | January | 2036 | $62,667 | September | 2037 | $76,000 | ||||||||||
June | 2034 | $50,000 | February | 2036 | $63,334 | October | 2037 | $76,667 | ||||||||||
July | 2034 | $50,667 | March | 2036 | $64,000 | November | 2037 | $77,334 | ||||||||||
August | 2034 | $51,334 | April | 2036 | $64,667 | December | 2037 | $78,000 | ||||||||||
September | 2034 | $52,000 | May | 2036 | $65,334 | January | 2038 | $78,667 | ||||||||||
October | 2034 | $52,667 | June | 2036 | $66,000 | February | 2038 | $79,334 | ||||||||||
March | 2038 | $80,000 |
A. | Definitions and Construction. |
A. | Restrictions on Contracts and Payments for Insured Depository Institutions in Troubled Status. |
Discount Rate: | The discount rate as used in the calculations for this Agreement shall comply with the accounting standards contained in ASC 715. The initial rate shall be two and 71/100 percent (2.71%) and shall be adjusted quarterly. |
XI. | TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW, RULES OR REGULATIONS |
XIII. | USE OF TRADE SECRETS AND SOLICITATION AFTER TERMINATION OF EMPLOYMENT |
BANK: CENTRAL VALLEY COMMUNITY BANK By: /s/James Ford James Ford President and Chief Executive Officer Dated: 4/23/2020 | EXECUTIVE: JAMES J. KIM /s/ James J. Kim James J. Kim EVP COO Dated: 4/23/2020 |
NOTE: | To name a trust as beneficiary, please provide the name of the trustee and the exact date of the trust agreement. |
I. | DEFINITIONS |
II. | POLICY TITLE AND OWNERSHIP |
III. | BENEFICIARY DESIGNATION RIGHTS |
IV. | PREMIUM PAYMENT METHOD |
V. | TAXABLE BENEFIT |
VI. | DIVISION OF DEATH PROCEEDS |
A. | Upon death of the Insured prior to a Termination of Employment with the Bank, the Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to a lump sum payment equal to the present value of the Retirement Benefit under that certain Executive Salary Continuation Agreement between the Bank and Insured dated of even date herewith (the "Salary Continuation Agreement"), assuming that the payments would begin on the date of death and continue for one hundred and eighty months, or one hundred percent (100%) of the total proceeds of the policy as of the date of death, whichever amount is less. Present value calculations shall be made using the assumptions set forth in Section IX(K) of the Salary Continuation Agreement. |
B. | Upon death of the Insured following Retirement or Termination of Employment with the Bank, the Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to a lump sum payment equal to the present value of one hundred percent (100%) of the sum of all remaining payments, if any, that would have been made under the Salary Continuation Agreement but for the Insured's death, or one hundred percent (100%) of the total proceeds of the policy as of the date of death, whichever amount is less. If no benefits are payable to the Insured pursuant to the Salary Continuation Agreement following Termination of Employment, no benefit shall be payable under this Agreement. Present value calculations shall be made using the assumptions set forth in Section IX(K) of the Salary Continuation Agreement. |
C. | The Bank shall be entitled to the remainder of such proceeds. |
D. | The Bank and the Insured (or assignees) shall share in any interest due on the death proceeds on a pro rata basis as the proceeds due each respectively bears to the total proceeds, excluding any such interest. |
E. | For purposes of this Agreement, "Termination of Employment", "Retirement", "Retirement Benefit" and "Change In Control" shall have the same meanings as set forth in the Salary Continuation Agreement. |
VII. | DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY |
VIII. | RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS |
IX. | TERMINATION OF AGREEMENT |
1. | In the event benefits become payable to the Insured following a Change In Control pursuant to Section VI of the Salary Continuation Agreement; |
2. | The Insured shall be discharged from employment with the Bank for cause. The term for "cause" shall mean any of the following that result in an adverse effect on the Bank: (i) gross negligence or gross neglect; (ii) the commission of a felony or gross misdemeanor involving moral turpitude, fraud, or dishonesty; (iii) the willful violation of any law, rule, or regulation (other than a traffic violation or similar offense); (iv) an intentional failure to perform stated duties; or (v) a breach of fiduciary duty involving personal profit; or |
3. | Surrender, lapse, or other termination of the Policy by the Bank. |
(a) | The Bank's share of the cash value of the policy on the date of such assignment, as defined in this Agreement; or |
(b) | The amount of the premiums which have been paid by the Bank prior to the date of such assignment, plus interest. |
X. | INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS |
XI. | AGREEMENT BINDING UPON THE PARTIES |
XII. | ERISA PROVISIONS |
A. | Named Fiduciary and Plan Administrator |
B. | Funding Policy |
C. | Basis of Payment of Benefits |
D. | Claim Procedures |
XIII. | GENDER |
XIV. | INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT |
XV. | AMENDMENT OR REVOCATION |
XVI. | EFFECTIVE DATE |
XVII. | SEVERABILITY AND INTERPRETATION |
XVIII. | APPLICABLE LAW |
XIX. | USE OF TRADE SECRETS AND SOLICITATION AFTER TERMINATION OF EMPLOYMENT |
BANK CENTRAL VALLEY COMMUNITY BANK By: /s/James Ford James Ford President and Chief Executive Officer | INSURED /s/ James J. Kim James J. Kim EVP COO |
A. | The Executive is a valued executive of the Bank, and currently serves as the Bank’s EVP Market Executive. |
B. | The Bank’s Board of Directors (the “Board”) has determined that the Executive’s services to the Bank are valuable. The Bank and the Executive desire to enter into this Agreement under which the Bank has agreed to make certain payments to the Executive following the termination of employment. |
C. | The Parties intend that this Agreement shall constitute an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The parties further intend that this Agreement shall constitute a nonqualified deferred compensation arrangement under the Internal Revenue Code (“Code”). The Executive is fully advised of the Bank’s financial status and has had substantial input in the design of and benefits provided under this Agreement. |
Month | Year | Annual Amount | Month | Year | Annual Amount | Month | Year | Annual Amount | ||||||||||
March | 2026 | $20,000 | November | 2027 | $26,667 | July | 2029 | $33,333 | ||||||||||
April | 2026 | $20,333 | December | 2027 | $27,000 | August | 2029 | $33,667 | ||||||||||
May | 2026 | $20,667 | January | 2028 | $27,333 | September | 2029 | $34,000 | ||||||||||
June | 2026 | $21,000 | February | 2028 | $27,667 | October | 2029 | $34,333 | ||||||||||
July | 2026 | $21,333 | March | 2028 | $28,000 | November | 2029 | $34,667 | ||||||||||
August | 2026 | $21,667 | April | 2028 | $28,333 | December | 2029 | $35,000 | ||||||||||
September | 2026 | $22,000 | May | 2028 | $28,667 | January | 2030 | $35,333 | ||||||||||
October | 2026 | $22,333 | June | 2028 | $29,000 | February | 2030 | $35,667 | ||||||||||
November | 2026 | $22,667 | July | 2028 | $29,333 | March | 2030 | $36,000 | ||||||||||
December | 2026 | $23,000 | August | 2028 | $29,667 | April | 2030 | $36,333 | ||||||||||
January | 2027 | $23,333 | September | 2028 | $30,000 | May | 2030 | $36,667 | ||||||||||
February | 2027 | $23,667 | October | 2028 | $30,333 | June | 2030 | $37,000 | ||||||||||
March | 2027 | $24,000 | November | 2028 | $30,667 | July | 2030 | $37,333 | ||||||||||
April | 2027 | $24,333 | December | 2028 | $31,000 | August | 2030 | $37,667 | ||||||||||
May | 2027 | $24,667 | January | 2029 | $31,333 | September | 2030 | $38,000 | ||||||||||
June | 2027 | $25,000 | February | 2029 | $31,667 | October | 2030 | $38,333 | ||||||||||
July | 2027 | $25,333 | March | 2029 | $32,000 | November | 2030 | $38,667 | ||||||||||
August | 2027 | $25,667 | April | 2029 | $32,333 | December | 2030 | $39,000 | ||||||||||
September | 2027 | $26,000 | May | 2029 | $32,667 | January | 2031 | $39,333 | ||||||||||
October | 2027 | $26,333 | June | 2029 | $33,000 | February | 2031 | $39,667 | ||||||||||
March | 2031 | $40,000 |
A. | Definitions and Construction. |
A. | Restrictions on Contracts and Payments for Insured Depository Institutions in Troubled Status. |
Discount Rate: | The discount rate as used in the calculations for this Agreement shall comply with the accounting standards contained in ASC 715. The initial rate shall be two and 71/100 percent (2.71%) and shall be adjusted quarterly. |
XI. | TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW, RULES OR REGULATIONS |
XIII. | USE OF TRADE SECRETS AND SOLICITATION AFTER TERMINATION OF EMPLOYMENT |
BANK: CENTRAL VALLEY COMMUNITY BANK By: /s/James Ford James Ford President and Chief Executive Officer Dated: 4/23/2020 | EXECUTIVE: KEN RAMOS /a/Ken Ramos Ken Ramos Dated: 4/23/2020 |
NOTE: | To name a trust as beneficiary, please provide the name of the trustee and the exact date of the trust agreement. |
I. | DEFINITIONS |
II. | POLICY TITLE AND OWNERSHIP |
III. | BENEFICIARY DESIGNATION RIGHTS |
IV. | PREMIUM PAYMENT METHOD |
V. | TAXABLE BENEFIT |
VI. | DIVISION OF DEATH PROCEEDS |
A. | Upon death of the Insured prior to a Termination of Employment with the Bank, the Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to a lump sum payment equal to the present value of the Retirement Benefit under that certain Executive Salary Continuation Agreement between the Bank and Insured dated of even date herewith (the "Salary Continuation Agreement"), assuming that the payments would begin on the date of death and continue for one hundred and eighty months, or one hundred percent (100%) of the total proceeds of the policy as of the date of death, whichever amount is less. Present value calculations shall be made using the assumptions set forth in Section IX(K) of the Salary Continuation Agreement. |
B. | Upon death of the Insured following Retirement or Termination of Employment with the Bank, the Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to a lump sum payment equal to the present value of one hundred percent (100%) of the sum of all remaining payments, if any, that would have been made under the Salary Continuation Agreement but for the Insured's death, or one hundred percent (100%) of the total proceeds of the policy as of the date of death, whichever amount is less. If no benefits are payable to the Insured pursuant to the Salary Continuation Agreement following Termination of Employment, no benefit shall be payable under this Agreement. Present value calculations shall be made using the assumptions set forth in Section IX(K) of the Salary Continuation Agreement. |
C. | The Bank shall be entitled to the remainder of such proceeds. |
D. | The Bank and the Insured (or assignees) shall share in any interest due on the death proceeds on a pro rata basis as the proceeds due each respectively bears to the total proceeds, excluding any such interest. |
E. | For purposes of this Agreement, "Termination of Employment", "Retirement", "Retirement Benefit" and "Change In Control" shall have the same meanings as set forth in the Salary Continuation Agreement. |
VII. | DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY |
VIII. | RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS |
IX. | TERMINATION OF AGREEMENT |
1. | In the event benefits become payable to the Insured following a Change In Control pursuant to Section VI of the Salary Continuation Agreement; |
2. | The Insured shall be discharged from employment with the Bank for cause. The term for "cause" shall mean any of the following that result in an adverse effect on the Bank: (i) gross negligence or gross neglect; (ii) the commission of a felony or gross misdemeanor involving moral turpitude, fraud, or dishonesty; (iii) the willful violation of any law, rule, or regulation (other than a traffic violation or similar offense); (iv) an intentional failure to perform stated duties; or (v) a breach of fiduciary duty involving personal profit; or |
3. | Surrender, lapse, or other termination of the Policy by the Bank. |
(a) | The Bank's share of the cash value of the policy on the date of such assignment, as defined in this Agreement; or |
(b) | The amount of the premiums which have been paid by the Bank prior to the date of such assignment, plus interest. |
X. | INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS |
XI. | AGREEMENT BINDING UPON THE PARTIES |
XII. | ERISA PROVISIONS |
A. | Named Fiduciary and Plan Administrator |
B. | Funding Policy |
C. | Basis of Payment of Benefits |
D. | Claim Procedures |
XIII. | GENDER |
XIV. | INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT |
XV. | AMENDMENT OR REVOCATION |
XVI. | EFFECTIVE DATE |
XVII. | SEVERABILITY AND INTERPRETATION |
XVIII. | APPLICABLE LAW |
XIX. | USE OF TRADE SECRETS AND SOLICITATION AFTER TERMINATION OF EMPLOYMENT |
BANK CENTRAL VALLEY COMMUNITY BANK By: /s/ James Ford James Ford President and Chief Executive Officer | INSURED /s/ Ken Ramos Ken Ramos EVP Market Executive |
A. | This Agreement amends and supersedes the Second Amended Executive Salary Continuation Agreement between the Parties, dated January 1, 2012. |
B. | The Executive is a valued executive of the Bank, and currently serves as the Bank's Chief Financial Officer. |
C. | The Bank's Board of Directors (the "Board") has determined that the Executive's services to the Bank are valuable. The Bank and the Executive desire to enter into this Agreement under which the Bank has agreed to make certain payments to the Executive following the termination of employment. |
D. | The Parties intend that this Agreement shall constitute an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The parties further intend that this Agreement shall constitute a nonqualified deferred compensation arrangement under the Internal Revenue Code ("Code"). The Executive is fully advised of the Bank's financial status and has had substantial input in the design of and benefits provided under this Agreement. |
Month | Year | Annual Amount | Month | Year | Annual Amount | Month | Year | Annual Amount | ||||||||
June | 2024 | $40,000.00 | May | 2025 | $54,666.66 | March | 2026 | $68,000.00 | ||||||||
July | 2024 | $41,333.33 | June | 2025 | $56,000.00 | April | 2026 | $69,333.33 | ||||||||
Aug. | 2024 | $42,666.66 | July | 2025 | $57,333.33 | May | 2026 | $70,666.66 | ||||||||
Sept. | 2024 | $44,000.00 | Aug. | 2025 | $58,666.66 | June | 2026 | $72,000.00 | ||||||||
Oct. | 2024 | $45,333.33 | Sept. | 2025 | $60,000.00 | July | 2026 | $73,333.33 | ||||||||
Nov. | 2024 | $46,666.66 | Oct. | 2025 | $61,333.33 | Aug. | 2026 | $74,666.66 | ||||||||
Dec. | 2024 | $48,000.00 | Nov. | 2025 | $62,666.66 | Sept. | 2026 | $76,000.00 | ||||||||
Jan. | 2025 | $49,333.33 | Dec. | 2025 | $64,000.00 | Oct. | 2026 | $77,333.33 | ||||||||
Feb. | 2025 | $50,666.66 | Jan. | 2026 | $65,133.33 | Nov. | 2026 | $78,666.66 | ||||||||
March | 2025 | $52,000.00 | Feb. | 2026 | $66,666.66 | Dec. | 2026 | $80,000.00 | ||||||||
April | 2025 | $53,333.33 |
A. | Definitions and Construction |
A. | Restrictions on Contracts and Payments for Insured Depository Institutions in Troubled Status |
Discount Rate: | The discount rate as used in the calculations for this Agreement shall comply with the accounting standards contained in ASC 715. The initial rate shall be two and 71/100 percent (2.71%) and shall be adjusted quarterly. |
XI. | TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW, RULES OR REGULATIONS |
XIII. | USE OF TRADE SECRETS AND SOLICITATION AFTER TERMINATION OF EMPLOYMENT |
BANK CENTRAL VALLEY COMMUNITY BANK By: /s/ James Ford James Ford President and Chief Executive Officer DATED: 4/23/2020 | EXECUTIVE /s/ David A. Kinross David A. Kinross DATED: 4/23/2020 |
I. | DEFINITIONS |
II. | POLICY TITLE AND OWNERSHIP |
III. | BENEFICIARY DESIGNATION RIGHTS |
IV. | PREMIUM PAYMENT METHOD |
V. | TAXABLE BENEFIT |
VI. | DIVISION OF DEATH PROCEEDS |
A. | Upon the death of the Insured prior to a Termination of Employment with the Bank, the Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to a lump sum payment equal to the present value of the Retirement Benefit under that certain Third Amended Executive Salary Continuation Agreement between the Bank and Insured dated concurrently herewith (the “Salary Continuation Agreement”), assuming that the payments would begin on the date of death and continue for one hundred and eighty months, or one hundred percent (100%) of the total Policy proceeds, whichever amount is less. Present value calculations shall be made using the assumptions set forth in Section IX(K) of the Salary Continuation Agreement. |
B. | Upon the death of the Insured following Retirement or Termination of Employment with the Bank, the Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to a lump sum payment equal to the present value of one hundred percent (100%) of the sum of all remaining payments, if any, that would have been made under the Salary Continuation Agreement but for the Insured's death, or one hundred percent (100%) of the total Policy proceeds, whichever amount is less. Present value calculations shall be made using the assumptions set forth in Section IX(K) of the Salary Continuation Agreement. |
C. | The Bank shall be entitled to the remainder of the insurance Policy proceeds payable on the death of the Insured. |
D. | The Bank and the Insured (or assignees) shall share in any interest due on the death proceeds on a pro rata basis as the proceeds due each respectively bear to the total proceeds, excluding any such interest. |
E. | For purposes of this Agreement, “Termination of Employment”, “Retirement”, “Retirement Benefit”, and “Change In Control” shall have the same meanings as set forth in the Salary Continuation Agreement. |
VII. | DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY |
VIII. | RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS |
IX. | TERMINATION OF AGREEMENT |
1. | In the event benefits become payable to the Insured following a Change In Control pursuant to Section VI of the Salary Continuation Agreement; or |
2. | The Insured shall be discharged from employment with the Bank for cause. The term for “cause” shall mean any of the following that result in an adverse effect on the Bank: (i) gross negligence or gross neglect; (ii) the commission of a felony or gross misdemeanor involving moral turpitude, fraud, or dishonesty; (iii) the willful violation of any Jaw, rule, or regulation (other than a traffic violation or similar offense); (iv) an intentional failure to perform stated duties; or (v) a breach of fiduciary duty involving personal profit; or |
3. | Surrender, lapse, or other termination of the Policy by the Bank. |
(a) | The Bank's share of the Policy's cash value on the date of assignment; or |
(b) | The sum of the premiums paid by the Bank prior to the date of assignment, plus interest. |
X. | INSURED’S OR ASSIGNEE’S ASSIGNMENT RIGHTS |
XI. | AGREEMENT BINDING UPON THE PARTIES |
XII. | ERISA PROVISIONS |
A. | Named Fiduciary and Plan Administrator. |
B. | Funding Policy. |
C. | Basis of Payment of Benefits. |
D. | Claim Procedures. |
XIII. | GENDER |
XIV. | INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT |
XV. | AMENDMENT OR REVOCATION |
XVI. | EFFECTIVE DATE |
XVII. | SEVERABILITY AND INTERPRETATION |
XVIII. | APPLICABLE LAW |
XIX. | USE OF TRADE SECRETS AND SOLICITATION AFTER TERMINATION OF EMPLOYMENT |
BANK: CENTRAL VALLEY COMMUNITY BANK By: /s/ James Ford James Ford President and Chief Executive Officer | INSURED: DAVID KINROSS /s/ David Kinross David Kinross |
/s/ James M. Ford | Date: May 6, 2020 | |
James M. Ford, |
/s/ David A. Kinross | Date: May 6, 2020 | |
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 |
Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
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 2019 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 March 31, 2020, and the results of its operations and its cash flows for the three-month interim periods ended March 31, 2020 and 2019 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. Risks and Uncertainties In December 2019, a novel strain of coronavirus, COVID-19, was reported in Wuhan, China. COVID-19 continues to aggressively spread globally and has spread to over 185 countries, including all 50 states in the United States. A prolonged COVID-19 outbreak, or any other epidemic that harms the global economy, U.S. economy, or the economies in which we operate, could adversely affect our operations. While the spread of COVID-19 has minimally affected our operations as of March 31, 2020, it has caused significant economic disruption throughout the United States as state and local governments issued “shelter at home” orders along with the closing of non-essential businesses. The potential financial impact is unknown at this time. However, if these actions are sustained, it may adversely affect several industries within our geographic footprint and impair the ability of our customers to fulfill their contractual obligations to the Company. This could cause the Company to experience a material adverse effect on our business operations, asset valuations, financial condition, and results of operations. Material adverse impacts may include all or a combination of valuation impairments on our intangible assets, investments, loans, or deferred tax assets. Impact of New Financial Accounting Standards: 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. On August 15, 2019, the FASB issued a proposed Accounting Standards Update (ASU), “Financial Instruments -Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” that would provide private entities and certain small public companies additional time to implement the standards on CECL, leases, and hedging. The final ASU extends the effective date for SEC filers, such as the Company, that are classified as smaller reporting companies to January 1, 2023. The Company has formed an internal task force that is responsible for oversight of the Company’s implementation strategy for compliance with provisions of the new standard. The Company has also established a project management governance process to manage the implementation across affected disciplines. An external provider specializing in community bank loss driver and CECL reserving model design as well as other related consulting services has been retained, and we have begun to evaluate potential CECL modeling alternatives. As part of this process, the Company has determined potential loan pool segmentation and sub-segmentation under CECL, as well as begun to evaluate the key economic loss drivers for each segment. Further, the Company has begun developing internal controls around the CECL process, data, calculations and implementation. The Company presently plans to generate and evaluate model scenarios under CECL in tandem with its current reserving processes for interim and annual reporting periods during 2020 due to the fact the Company elected to delay implementation of the CECL process as allowed by FASB. While the Company is currently unable to reasonably estimate the impact of adopting this new guidance, management expects the impact of adoption will be significantly influenced by the composition and quality of the Company’s loans as well as the economic conditions as of the date of adoption. The Company also anticipates significant changes to the processes and procedures for calculating the reserve for credit losses and continues to evaluate the potential impact on our 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. The Company adopted this ASU effective January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements and disclosures. FASB Accounting Standards Update (ASU) 2020-04 - Reference Rate Reform (Subtopic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, was issued March 2020. This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. The ASU is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is in the process of evaluating the provisions of this ASU and its effects on our consolidated financial statements. In April 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, (“the agencies”) issued a revised interagency statement encouraging financial institutions to work with customers affected by the novel coronavirus pandemic (“COVID-19”) and providing additional information regarding loan modifications. The revised interagency statement clarifies the interaction between the interagency statement issued on March 22, 2020 and the temporary relief provided by Section 4013 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Section 4013 allows financial institutions to suspend the requirements to classify certain loan modifications as troubled debt restructurings (“TDRs”). The revised statement also provides supervisory interpretations on past due and nonaccrual regulatory reporting of loan modification programs and regulatory capital. This interagency guidance is expected to reduce the number of TDRs that will be reported in future periods; however, the amount is indeterminable and will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic. |
Borrowing Arrangements |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Banking and Thrift [Abstract] | |
Borrowing Arrangements | Borrowing Arrangements As of March 31, 2020 and December 31, 2019, the Company had no Federal Home Loan Bank (“FHLB”) of San Francisco advances. Approximately $440,626,000 in loans were pledged under a blanket lien as collateral to the FHLB for the Bank’s remaining borrowing capacity of $257,146,000 as of March 31, 2020. FHLB advances are also secured by investment securities with amortized costs totaling $236,000 and $248,000 and market values totaling $243,000 and $256,000 at March 31, 2020 and December 31, 2019, respectively. The Bank’s credit limit varies according to the amount and composition of the investment and loan portfolios pledged as collateral. As of March 31, 2020, and December 31, 2019 the Company had no Federal funds purchased. |
Basis of Presentation (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
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 2019 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 March 31, 2020, and the results of its operations and its cash flows for the three-month interim periods ended March 31, 2020 and 2019 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) 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. On August 15, 2019, the FASB issued a proposed Accounting Standards Update (ASU), “Financial Instruments -Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” that would provide private entities and certain small public companies additional time to implement the standards on CECL, leases, and hedging. The final ASU extends the effective date for SEC filers, such as the Company, that are classified as smaller reporting companies to January 1, 2023. The Company has formed an internal task force that is responsible for oversight of the Company’s implementation strategy for compliance with provisions of the new standard. The Company has also established a project management governance process to manage the implementation across affected disciplines. An external provider specializing in community bank loss driver and CECL reserving model design as well as other related consulting services has been retained, and we have begun to evaluate potential CECL modeling alternatives. As part of this process, the Company has determined potential loan pool segmentation and sub-segmentation under CECL, as well as begun to evaluate the key economic loss drivers for each segment. Further, the Company has begun developing internal controls around the CECL process, data, calculations and implementation. The Company presently plans to generate and evaluate model scenarios under CECL in tandem with its current reserving processes for interim and annual reporting periods during 2020 due to the fact the Company elected to delay implementation of the CECL process as allowed by FASB. While the Company is currently unable to reasonably estimate the impact of adopting this new guidance, management expects the impact of adoption will be significantly influenced by the composition and quality of the Company’s loans as well as the economic conditions as of the date of adoption. The Company also anticipates significant changes to the processes and procedures for calculating the reserve for credit losses and continues to evaluate the potential impact on our 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. The Company adopted this ASU effective January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements and disclosures. FASB Accounting Standards Update (ASU) 2020-04 - Reference Rate Reform (Subtopic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, was issued March 2020. This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. The ASU is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is in the process of evaluating the provisions of this ASU and its effects on our consolidated financial statements. In April 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, (“the agencies”) issued a revised interagency statement encouraging financial institutions to work with customers affected by the novel coronavirus pandemic (“COVID-19”) and providing additional information regarding loan modifications. The revised interagency statement clarifies the interaction between the interagency statement issued on March 22, 2020 and the temporary relief provided by Section 4013 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Section 4013 allows financial institutions to suspend the requirements to classify certain loan modifications as troubled debt restructurings (“TDRs”). The revised statement also provides supervisory interpretations on past due and nonaccrual regulatory reporting of loan modification programs and regulatory capital. This interagency guidance is expected to reduce the number of TDRs that will be reported in future periods; however, the amount is indeterminable and will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic. |
Earnings Per Share - Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Diluted Earnings Per share | ||
Net income available to common shareholders | $ 6,623 | $ 5,216 |
Weighted average shares outstanding (in shares) | 12,734,971 | 13,646,489 |
Effect of dilutive stock options (in shares) | 44,125 | 109,126 |
Weighted average shares of common stock and common stock equivalents (in shares) | 12,779,096 | 13,755,615 |
Diluted earnings per share (in dollars per share) | $ 0.52 | $ 0.38 |
Anti-dilutive options and restricted stock awards (in shares) | 0 | 0 |
Commitments and Contingencies |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Financial Instruments With Off-Balance-Sheet Risk - 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 $290,231,000 and $291,182,000 were outstanding at March 31, 2020 and December 31, 2019, 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 $288,027,000 and $289,465,000 at March 31, 2020 and December 31, 2019, 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 $57,930,000 and $74,019,000 as of March 31, 2020 and December 31, 2019, 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 $2,204,000 and $1,717,000 were outstanding at March 31, 2020 and December 31, 2019, 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 financial 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 March 31, 2020 or December 31, 2019. 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 March 31, 2020 and December 31, 2019, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $175,000 and $250,000, 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. In 2018, the Company sold its credit card portfolio to a third party vendor. Part of the sale of the portfolio was to provide a guarantee of certain accounts beginning in March 2019. As of March 31, 2020, the total commitment was $2,289,000. 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. |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value of Financial Instruments | The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):
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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 December 31, 2019 (in thousands).
The Company is required or permitted to record the following assets at fair value on a recurring basis as of March 31, 2020 (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. As of December 31, 2019 there were no loans or assets that were measured at the lower of cost or fair value. |
Earnings Per Share - Basic (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Basic Earnings Per share | ||
Net income | $ 6,623 | $ 5,216 |
Weighted average shares outstanding (in shares) | 12,734,971 | 13,646,489 |
Basic earnings per share (in dollars per share) | $ 0.52 | $ 0.38 |
Share-Based Compensation (Tables) |
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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 three months ended ended March 31, 2020 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 and performance award activity for the three months ended ended March 31, 2020 as follows:
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 6,623 | $ 5,216 |
Unrealized gains (losses) on securities: | ||
Unrealized holding gains (losses) arising during the period | (1,687) | 8,618 |
Reclassification of net gains included in net income | 4,198 | 1,052 |
Other comprehensive income (loss), before tax | (5,885) | 7,566 |
Tax effect | 1,740 | (2,237) |
Total other comprehensive income (loss) | (4,145) | 5,329 |
Comprehensive income | $ 2,478 | $ 10,545 |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2020 |
May 01, 2020 |
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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 | Mar. 31, 2020 | |
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 | 12,475,439 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false |
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 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. (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 March 31, 2020: Recurring Basis The Company is required or permitted to record the following assets at fair value on a recurring basis as of March 31, 2020 (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 three months ended March 31, 2020, no transfers between levels occurred. There were no Level 3 assets measured at fair value on a recurring basis at or during the three months ended March 31, 2020. Also there were no liabilities measured at fair value on a recurring basis at March 31, 2020. 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. As of March 31, 2020 there were no impaired loans or assets that were measured at the lower of cost or fair value. 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 three months ended ended March 31, 2020. Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics. As of March 31, 2020, there were no loans measured using the fair value of the collateral for the collateral dependent loans. There were no liabilities measured at fair value on a non-recurring basis at March 31, 2020. 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, 2019: Recurring Basis The Company is required or permitted to record the following assets at fair value on a recurring basis as of December 31, 2019 (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, 2019, 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, 2019. Also there were no liabilities measured at fair value on a recurring basis at December 31, 2019. 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. As of December 31, 2019 there were no loans or assets that were measured at the lower of cost or fair value. There were no liabilities measured at fair value on a non-recurring basis at December 31, 2019. |
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