☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TWO RIVER BANCORP | ||
(Exact Name of Registrant as Specified in Its Charter) |
New Jersey | 20-3700861 | |
(State of Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
766 Shrewsbury Avenue, Tinton Falls, New Jersey | 07724 | |
(Address of Principal Executive Offices) | (Zip Code) |
(732) 389-8722 | ||
(Registrant’s Telephone Number, Including Area Code) |
(Former name, former address and former fiscal year, if changed since last report) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, no par value per share | TRCB | The NASDAQ Stock Market LLC |
Large accelerated filer | ☐ | Accelerated filer | ☒ |
Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
Emerging growth company | ☐ |
Page | ||||
Consolidated Balance Sheets (unaudited) at September 30, 2019 and December 31, 2018 | ||||
Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2019 and 2018 | ||||
Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2019 and 2018 | ||||
Consolidated Statements of Shareholders' Equity (unaudited) for the three and nine months ended September 30, 2019 and 2018 | ||||
Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2019 and 2018 | ||||
September 30, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Cash and due from banks | $ | 28,416 | $ | 24,067 | |||
Interest-bearing deposits in bank | 35,004 | 24,059 | |||||
Cash and cash equivalents | 63,420 | 48,126 | |||||
Securities available for sale, at fair value (amortized cost of $21,374 and $25,017 at September 30, 2019 and December 31, 2018, respectively) | 21,031 | 24,407 | |||||
Securities held to maturity, at amortized cost (fair value of $41,515 and $47,266 at September 30, 2019 and December 31, 2018, respectively) | 39,935 | 47,455 | |||||
Equity securities, at fair value | 2,582 | 2,451 | |||||
Restricted investments, at cost | 6,772 | 6,082 | |||||
Loans held for sale | 1,357 | 1,496 | |||||
Loans | 959,864 | 921,301 | |||||
Allowance for loan losses | (11,811 | ) | (11,398 | ) | |||
Net loans | 948,053 | 909,903 | |||||
Other real estate owned ("OREO") | 2,501 | 585 | |||||
Bank owned life insurance | 22,315 | 22,098 | |||||
Premises and equipment, net | 6,658 | 5,917 | |||||
Operating lease right-of-use assets | 4,698 | — | |||||
Accrued interest receivable | 2,560 | 2,583 | |||||
Goodwill | 18,109 | 18,109 | |||||
Other assets | 7,003 | 7,207 | |||||
Total Assets | $ | 1,146,994 | $ | 1,096,419 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deposits: | |||||||
Non-interest-bearing | $ | 179,610 | $ | 176,655 | |||
Interest-bearing | 783,687 | 740,699 | |||||
Total Deposits | 963,297 | 917,354 | |||||
Securities sold under agreements to repurchase | 15,084 | 19,402 | |||||
FHLB and other borrowings | 19,700 | 22,500 | |||||
Subordinated debt | 9,951 | 9,923 | |||||
Accrued interest payable | 81 | 119 | |||||
Operating lease liabilities | 4,833 | — | |||||
Other liabilities | 10,676 | 10,623 | |||||
Total Liabilities | 1,023,622 | 979,921 | |||||
Shareholders' Equity | |||||||
Preferred stock, no par value; 6,500,000 shares authorized, no shares issued and outstanding | — | — | |||||
Common stock, no par value; 25,000,000 shares authorized; | |||||||
Issued – 9,076,305 and 8,935,437 at September 30, 2019 and December 31, 2018, respectively | |||||||
Outstanding – 8,715,338 and 8,606,992 at September 30, 2019 and December 31, 2018, respectively | 81,405 | 80,481 | |||||
Retained earnings | 45,355 | 39,109 | |||||
Treasury stock, at cost; 360,967 and 328,445 shares at September 30, 2019 and December 31, 2018, respectively | (3,135 | ) | (2,647 | ) | |||
Accumulated other comprehensive loss | (253 | ) | (445 | ) | |||
Total Shareholders' Equity | 123,372 | 116,498 | |||||
Total Liabilities and Shareholders’ Equity | $ | 1,146,994 | $ | 1,096,419 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Interest Income | |||||||||||||||
Loans, including fees | $ | 11,707 | $ | 10,656 | $ | 34,750 | $ | 30,720 | |||||||
Securities: | |||||||||||||||
Taxable | 293 | 274 | 922 | 861 | |||||||||||
Tax-exempt | 224 | 280 | 697 | 842 | |||||||||||
Interest-bearing deposits | 260 | 132 | 663 | 293 | |||||||||||
Total Interest Income | 12,484 | 11,342 | 37,032 | 32,716 | |||||||||||
Interest Expense | |||||||||||||||
Deposits | 2,981 | 1,924 | 8,170 | 4,923 | |||||||||||
Securities sold under agreements to repurchase | 10 | 14 | 30 | 43 | |||||||||||
FHLB and other borrowings | 99 | 136 | 332 | 382 | |||||||||||
Subordinated debt | 166 | 165 | 497 | 495 | |||||||||||
Total Interest Expense | 3,256 | 2,239 | 9,029 | 5,843 | |||||||||||
Net Interest Income | 9,228 | 9,103 | 28,003 | 26,873 | |||||||||||
Provision for Loan Losses | 125 | 150 | 650 | 775 | |||||||||||
Net Interest Income after Provision for Loan Losses | 9,103 | 8,953 | 27,353 | 26,098 | |||||||||||
Non-Interest Income | |||||||||||||||
Service fees on deposit accounts | 197 | 236 | 536 | 713 | |||||||||||
Mortgage banking | 373 | 239 | 1,077 | 986 | |||||||||||
Other loan fees | 155 | 378 | 453 | 626 | |||||||||||
Earnings from investment in bank owned life insurance | 127 | 133 | 398 | 395 | |||||||||||
Gain on sale of SBA loans | 42 | 203 | 378 | 921 | |||||||||||
Net realized gain on sale of securities | — | — | 1 | — | |||||||||||
Other income | 230 | 166 | 670 | 520 | |||||||||||
Total Non-Interest Income | 1,124 | 1,355 | 3,513 | 4,161 | |||||||||||
Non-Interest Expenses | |||||||||||||||
Salaries and employee benefits | 3,756 | 4,024 | 11,539 | 11,919 | |||||||||||
Occupancy and equipment | 1,076 | 966 | 3,148 | 3,099 | |||||||||||
Professional | 355 | 432 | 1,261 | 1,260 | |||||||||||
Insurance | 70 | 59 | 201 | 180 | |||||||||||
FDIC insurance and assessments | — | 128 | 238 | 374 | |||||||||||
Advertising | 90 | 90 | 280 | 280 | |||||||||||
Data processing | 209 | 184 | 571 | 510 | |||||||||||
Outside services fees | 65 | 89 | 179 | 250 | |||||||||||
OREO expenses, impairments and sales, net | 448 | 7 | 298 | (8 | ) | ||||||||||
Loan workout expenses | 8 | 28 | 17 | 124 | |||||||||||
Merger related expenses | 828 | — | 828 | — | |||||||||||
Other operating | 364 | 454 | 1,358 | 1,251 | |||||||||||
Total Non-Interest Expenses | 7,269 | 6,461 | 19,918 | 19,239 | |||||||||||
Income before Income Taxes | 2,958 | 3,847 | 10,948 | 11,020 | |||||||||||
Income tax expense | 843 | 1,013 | 3,002 | 2,860 | |||||||||||
Net Income | $ | 2,115 | $ | 2,834 | $ | 7,946 | $ | 8,160 | |||||||
Earnings Per Common Share: | |||||||||||||||
Basic | $ | 0.25 | $ | 0.33 | $ | 0.92 | $ | 0.96 | |||||||
Diluted | $ | 0.24 | $ | 0.33 | $ | 0.91 | $ | 0.94 | |||||||
Weighted average common shares outstanding | |||||||||||||||
Basic | 8,619 | 8,513 | 8,605 | 8,489 | |||||||||||
Diluted | 8,720 | 8,700 | 8,721 | 8,695 |
Three Months Ended | |||||||
September 30, | |||||||
2019 | 2018 | ||||||
Net income | $ | 2,115 | $ | 2,834 | |||
Other comprehensive income (loss): | |||||||
Unrealized holdings gain (loss) on securities available for sale, net of income tax expense (benefit) 2019: $5, 2018: ($11) | 13 | (24 | ) | ||||
Other comprehensive income (loss) | 13 | (24 | ) | ||||
Total comprehensive income | $ | 2,128 | $ | 2,810 |
Nine Months Ended | |||||||
September 30, | |||||||
2019 | 2018 | ||||||
Net income | $ | 7,946 | $ | 8,160 | |||
Other comprehensive income (loss): | |||||||
Unrealized holdings gain (loss) on securities available for sale, net of income tax expense (benefit) 2019: $75; 2018: ($85) | 192 | (218 | ) | ||||
Other comprehensive income (loss): | 192 | (218 | ) | ||||
Total comprehensive income | $ | 8,138 | $ | 7,942 | |||
Common Stock | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||||||
Outstanding Shares | Amount | Retained Earnings | Treasury Stock | |||||||||||||||||||
Balance, July 1, 2019 | 8,656,830 | $ | 80,954 | $ | 43,857 | $ | (3,129 | ) | $ | (266 | ) | $ | 121,416 | |||||||||
Net income | — | — | 2,115 | — | — | 2,115 | ||||||||||||||||
Other comprehensive income | — | — | — | — | 13 | 13 | ||||||||||||||||
Stock-based compensation expense | — | 117 | — | — | — | 117 | ||||||||||||||||
Cash dividends on common stock ($0.07 per share) | — | — | (617 | ) | — | — | (617 | ) | ||||||||||||||
Options exercised | 57,796 | 314 | — | — | — | 314 | ||||||||||||||||
Employee stock purchase program | 1,389 | 20 | — | — | — | 20 | ||||||||||||||||
Common stock repurchased | (277 | ) | (6 | ) | (6 | ) | ||||||||||||||||
Shares forfeited | (400 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Balance, September 30, 2019 | 8,715,338 | $ | 81,405 | $ | 45,355 | $ | (3,135 | ) | $ | (253 | ) | $ | 123,372 | |||||||||
Balance, July 1, 2018 | 8,555,243 | $ | 80,088 | $ | 34,173 | $ | (2,396 | ) | $ | (518 | ) | $ | 111,347 | |||||||||
Net income | — | — | 2,834 | — | — | 2,834 | ||||||||||||||||
Other comprehensive income | — | — | — | — | (24 | ) | (24 | ) | ||||||||||||||
Stock-based compensation expense | — | 82 | — | — | — | 82 | ||||||||||||||||
Cash dividends on common stock ($0.055 per share) | — | — | (472 | ) | — | — | (472 | ) | ||||||||||||||
Options exercised | 28,064 | 107 | — | — | — | 107 | ||||||||||||||||
Employee stock purchase program | 872 | 17 | — | — | — | 17 | ||||||||||||||||
Balance, September 30, 2018 | 8,584,179 | $ | 80,294 | $ | 36,535 | $ | (2,396 | ) | $ | (542 | ) | $ | 113,891 |
Common Stock | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||||||
Outstanding Shares | Amount | Retained Earnings | Treasury Stock | |||||||||||||||||||
Balance, January 1, 2019 | 8,606,992 | $ | 80,481 | $ | 39,109 | $ | (2,647 | ) | $ | (445 | ) | $ | 116,498 | |||||||||
Net income | — | — | 7,946 | — | — | 7,946 | ||||||||||||||||
Other comprehensive income | — | — | — | — | 192 | 192 | ||||||||||||||||
Stock-based compensation expense | — | 312 | — | — | — | 312 | ||||||||||||||||
Cash dividends on common stock ($0.195 per share) | — | — | (1,700 | ) | — | — | (1,700 | ) | ||||||||||||||
Options exercised | 116,561 | 558 | — | — | — | 558 | ||||||||||||||||
Employee stock purchase program | 3,557 | 54 | — | — | — | 54 | ||||||||||||||||
Common stock repurchased | (32,522 | ) | (488 | ) | (488 | ) | ||||||||||||||||
Restricted stock and other awards | 21,150 | — | — | — | — | — | ||||||||||||||||
Shares forfeited | (400 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Balance, September 30, 2019 | 8,715,338 | $ | 81,405 | $ | 45,355 | $ | (3,135 | ) | $ | (253 | ) | $ | 123,372 | |||||||||
Balance, January 1, 2018 | 8,470,030 | $ | 79,678 | $ | 29,593 | $ | (2,396 | ) | $ | (304 | ) | $ | 106,571 | |||||||||
Net income | — | — | 8,160 | — | — | 8,160 | ||||||||||||||||
Other comprehensive loss | — | — | — | — | (218 | ) | (218 | ) | ||||||||||||||
Stock-based compensation expense | — | 222 | — | — | — | 222 | ||||||||||||||||
Cash dividends on common stock ($0.145 per share) | — | — | (1,238 | ) | — | — | (1,238 | ) | ||||||||||||||
Options exercised | 92,560 | 345 | — | — | — | 345 | ||||||||||||||||
AOCI reclassification related to Tax Reform | — | — | 59 | — | (59 | ) | — | |||||||||||||||
AOCI reclassification due to adoption of ASU 2016-01 | — | — | (39 | ) | — | 39 | — | |||||||||||||||
Employee stock purchase program | 2,689 | 49 | — | — | — | 49 | ||||||||||||||||
Restricted stock and other awards | 19,400 | — | — | — | — | — | ||||||||||||||||
Shares forfeited | (500 | ) | — | — | — | — | — | |||||||||||||||
Balance, September 30, 2018 | 8,584,179 | $ | 80,294 | $ | 36,535 | $ | (2,396 | ) | $ | (542 | ) | $ | 113,891 |
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Cash Flows From Operating Activities | |||||||
Net income | $ | 7,946 | $ | 8,160 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 501 | 480 | |||||
Provision for loan losses | 650 | 775 | |||||
Amortization of subordinated debt issuance costs | 28 | 26 | |||||
Deferred income tax benefit | (41 | ) | (111 | ) | |||
Net amortization of securities premiums and discounts | 437 | 597 | |||||
Earnings from investment in bank owned life insurance | (381 | ) | (395 | ) | |||
Proceeds from sale of mortgage loans held for sale | 48,814 | 37,904 | |||||
Origination of mortgage loans held for sale | (47,787 | ) | (37,210 | ) | |||
Gain on sale of mortgage loans held for sale | (888 | ) | (655 | ) | |||
Gain on sale of loans transferred from held for investment to held for sale | (59 | ) | (200 | ) | |||
Net realized gain on sale of OREO | (188 | ) | — | ||||
OREO writedown | 411 | — | |||||
Stock-based compensation expense | 312 | 222 | |||||
Death benefit on bank owned life insurance | (17 | ) | — | ||||
Net realized gain on sale of securities available for sale | (1 | ) | — | ||||
Proceeds from sale of SBA loans held for sale | 5,194 | 3,088 | |||||
Origination of SBA loans held for sale | (4,816 | ) | (1,086 | ) | |||
Gain from sale of SBA loans held for sale | (378 | ) | (921 | ) | |||
Unrealized (gain) loss on equity securities | (86 | ) | 77 | ||||
Net non-cash operating lease right-of-use assets and lease liabilities | 135 | — | |||||
Decrease (increase) in assets: | |||||||
Accrued interest receivable | 23 | (428 | ) | ||||
Other assets | 125 | (922 | ) | ||||
Increase (decrease) in liabilities: | |||||||
Accrued interest payable | (38 | ) | 27 | ||||
Other liabilities | 53 | 1,207 | |||||
Net Cash Provided by Operating Activities | 9,949 | 10,635 | |||||
Cash Flows From Investing Activities | |||||||
Purchase of securities available for sale | (3,757 | ) | (4,245 | ) | |||
Purchase of securities held to maturity | — | (5,035 | ) | ||||
Proceeds from repayments, calls and maturities of securities available for sale | 4,545 | 7,148 | |||||
Proceeds from repayments, calls and maturities of securities held to maturity | 7,165 | 5,092 | |||||
Proceeds from sales of securities available for sale | 2,774 | — | |||||
Proceeds from sale of loans transferred from held for investment to held for sale | 3,079 | 10,030 | |||||
Net increase in loans | (44,637 | ) | (60,489 | ) | |||
Purchases of premises and equipment | (1,242 | ) | (252 | ) | |||
Purchase of restricted investments, net | (690 | ) | (567 | ) | |||
Proceeds from death benefit of bank owned life insurance | 181 | — | |||||
Proceeds from sale of OREO | 678 | — | |||||
Net Cash Used In Investing Activities | (31,904 | ) | (48,318 | ) | |||
Cash Flows From Financing Activities | |||||||
Net increase in deposits | 45,943 | 44,188 | |||||
Net decrease in securities sold under agreements to repurchase | (4,318 | ) | (4,967 | ) | |||
Proceeds from FHLB and other borrowings | 20,000 | — | |||||
Repayment of FHLB and other borrowings | (22,800 | ) | (1,300 | ) | |||
Cash dividends paid – common stock | (1,700 | ) | (1,238 | ) | |||
Proceeds from employee stock purchase plan | 54 | 49 | |||||
Proceeds from exercise of stock options | 558 | 345 | |||||
Common stock repurchased | (488 | ) | — | ||||
Net Cash Provided by Financing Activities | 37,249 | 37,077 | |||||
Net Increase (Decrease) in Cash and Cash Equivalents | 15,294 | (606 | ) | ||||
Cash and Cash Equivalents – Beginning | 48,126 | 48,219 | |||||
Cash and Cash Equivalents - Ending | $ | 63,420 | $ | 47,613 |
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Supplementary cash flow information: | |||||||
Interest paid | $ | 9,067 | $ | 3,577 | |||
Income taxes paid | $ | 3,251 | $ | 3,539 | |||
Supplemental schedule of non-cash activities: | |||||||
Other real estate acquired in settlement of loans | $ | 2,817 | $ | 585 | |||
Transfer of loans held for investment to loans held for sale | $ | 3,020 | $ | 9,830 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Dollars in Thousands) | |||||||||||||||
Non-Interest Income | |||||||||||||||
In-scope of Topic 606 | |||||||||||||||
Service fees on deposit accounts | $ | 197 | $ | 236 | $ | 536 | $ | 713 | |||||||
Other income | 163 | 127 | 472 | 405 | |||||||||||
Non-Interest Income (in-scope of Topic 606) | 360 | 363 | 1,008 | 1,118 | |||||||||||
Non-Interest Income (out-of-scope of Topic 606) | 764 | 992 | 2,505 | 3,043 | |||||||||||
Total Non-Interest Income | $ | 1,124 | $ | 1,355 | $ | 3,513 | $ | 4,161 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In Thousands, Except Per Share Data) | |||||||||||||||
Net income | $ | 2,115 | $ | 2,834 | $ | 7,946 | $ | 8,160 | |||||||
Weighted average common shares outstanding – Basic | 8,619 | 8,513 | 8,605 | 8,489 | |||||||||||
Effect of dilutive securities, stock options and restricted stock | 101 | 187 | 116 | 206 | |||||||||||
Weighted average common shares outstanding – Diluted | 8,720 | 8,700 | 8,721 | 8,695 | |||||||||||
Basic earnings per common share | $ | 0.25 | $ | 0.33 | $ | 0.92 | $ | 0.96 | |||||||
Diluted earnings per common share | $ | 0.24 | $ | 0.33 | $ | 0.91 | $ | 0.94 |
(In Thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
September 30, 2019: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agency securities | $ | 7,905 | $ | — | $ | (123 | ) | $ | 7,782 | |||||||
Municipal securities | 481 | 2 | — | 483 | ||||||||||||
U.S. Government-sponsored enterprises (“GSE”) – residential mortgage-backed securities | 7,177 | 26 | (66 | ) | 7,137 | |||||||||||
U.S. Government collateralized residential mortgage obligations | 3,812 | 30 | (121 | ) | 3,721 | |||||||||||
Corporate debt securities, primarily financial institutions | 1,999 | 2 | (93 | ) | 1,908 | |||||||||||
Total securities available for sale | $ | 21,374 | $ | 60 | $ | (403 | ) | $ | 21,031 | |||||||
Total equity securities | $ | 2,604 | $ | — | $ | (22 | ) | $ | 2,582 | |||||||
Securities held to maturity: | ||||||||||||||||
Municipal securities | $ | 30,712 | $ | 1,699 | $ | — | $ | 32,411 | ||||||||
GSE – Residential mortgage-backed securities | 5,913 | 13 | (14 | ) | 5,912 | |||||||||||
U.S. Government collateralized residential mortgage obligations | 1,480 | 7 | (7 | ) | 1,480 | |||||||||||
Corporate debt securities, primarily financial institutions | 1,830 | — | (118 | ) | 1,712 | |||||||||||
Total securities held to maturity | $ | 39,935 | $ | 1,719 | $ | (139 | ) | $ | 41,515 |
(In Thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
December 31, 2018: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agency securities | $ | 11,800 | $ | 5 | $ | (170 | ) | $ | 11,635 | |||||||
Municipal securities | 487 | — | — | 487 | ||||||||||||
GSE – residential mortgage-backed securities | 6,131 | 1 | (185 | ) | 5,947 | |||||||||||
U.S. Government collateralized residential mortgage obligations | 4,600 | 1 | (178 | ) | 4,423 | |||||||||||
Corporate debt securities, primarily financial institutions | 1,999 | 3 | (87 | ) | 1,915 | |||||||||||
Total securities available for sale | $ | 25,017 | $ | 10 | $ | (620 | ) | $ | 24,407 | |||||||
Total equity securities | $ | 2,559 | $ | — | $ | (108 | ) | $ | 2,451 | |||||||
Securities held to maturity: | ||||||||||||||||
Municipal securities | $ | 36,436 | $ | 389 | $ | (111 | ) | $ | 36,714 | |||||||
GSE – residential mortgage-backed securities | 7,423 | — | (211 | ) | 7,212 | |||||||||||
U.S. Government collateralized residential mortgage obligations | 1,769 | — | (57 | ) | 1,712 | |||||||||||
Corporate debt securities, primarily financial institutions | 1,827 | — | (199 | ) | 1,628 | |||||||||||
Total securities held to maturity | $ | 47,455 | $ | 389 | $ | (578 | ) | $ | 47,266 |
Available for Sale | Held to Maturity | |||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Due in one year or less | $ | 4,555 | $ | 4,555 | $ | 920 | $ | 921 | ||||||||
Due in one year through five years | 286 | 288 | 1,752 | 1,824 | ||||||||||||
Due in five years through ten years | 4,019 | 3,929 | 6,902 | 7,100 | ||||||||||||
Due after ten years | 1,525 | 1,401 | 22,968 | 24,278 | ||||||||||||
Sub-total | 10,385 | 10,173 | 32,542 | 34,123 | ||||||||||||
GSE – residential mortgage-backed securities | 7,177 | 7,137 | 5,913 | 5,912 | ||||||||||||
U.S. Government collateralized residential mortgage obligations | 3,812 | 3,721 | 1,480 | 1,480 | ||||||||||||
Total | $ | 21,374 | $ | 21,031 | $ | 39,935 | $ | 41,515 |
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
September 30, 2019: | (In Thousands) | |||||||||||||||||||||||
U.S. Government agency securities | $ | 1,120 | $ | (12 | ) | $ | 5,161 | $ | (111 | ) | $ | 6,281 | $ | (123 | ) | |||||||||
GSE – residential mortgage-backed securities | 3,535 | (7 | ) | 5,276 | (73 | ) | 8,811 | (80 | ) | |||||||||||||||
U.S. Government collateralized residential mortgage obligations | 493 | (3 | ) | 3,505 | (125 | ) | 3,998 | (128 | ) | |||||||||||||||
Corporate debt securities, primarily financial institutions | 499 | (1 | ) | 2,330 | (210 | ) | 2,829 | (211 | ) | |||||||||||||||
Total temporarily impaired securities | $ | 5,647 | $ | (23 | ) | $ | 16,272 | $ | (519 | ) | $ | 21,919 | $ | (542 | ) |
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
December 31, 2018: | (In Thousands) | |||||||||||||||||||||||
U.S. Government agency securities | $ | 4,842 | $ | (72 | ) | $ | 5,470 | $ | (98 | ) | $ | 10,312 | $ | (170 | ) | |||||||||
Municipal securities | 5,227 | (24 | ) | 8,378 | (87 | ) | 13,605 | (111 | ) | |||||||||||||||
GSE – residential mortgage-backed securities | 1,330 | (10 | ) | 11,675 | (386 | ) | 13,005 | (396 | ) | |||||||||||||||
U.S. Government collateralized residential mortgage obligations | 146 | — | 5,938 | (235 | ) | 6,084 | (235 | ) | ||||||||||||||||
Corporate debt securities, primarily financial institutions | 493 | (8 | ) | 2,548 | (278 | ) | 3,041 | (286 | ) | |||||||||||||||
Total temporarily impaired securities | $ | 12,038 | $ | (114 | ) | $ | 34,009 | $ | (1,084 | ) | $ | 46,047 | $ | (1,198 | ) |
1. | The loan’s observable market price; |
2. | The fair value of the underlying collateral; or |
3. | The present value (PV) of expected future cash flows. |
1. | Changes in lending policy and procedures, including changes in underwriting standards and collection practices not previously considered in estimating credit losses. |
2. | Changes in relevant economic and business conditions. |
3. | Changes in nature and volume of the loan portfolio and in the terms of loans. |
4. | Changes in experience, ability and depth of lending management and staff. |
5. | Changes in the volume and severity of past due loans, the volume of non-accrual loans and the volume and severity of adversely classified loans. |
6. | Changes in the quality of the loan review system. |
7. | Changes in the value of underlying collateral for collateral-dependent loans. |
8. | The existence and effect of any concentration of credit and changes in the level of such concentrations. |
9. | The effect of other external forces such as competition, legal and regulatory requirements on the level of estimated credit losses in the existing portfolio. |
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
(In Thousands) | ||||||||
Commercial and industrial | $ | 107,944 | $ | 109,362 | ||||
Real estate – construction | 144,577 | 144,865 | ||||||
Real estate – commercial | 579,214 | 552,549 | ||||||
Real estate – residential | 98,047 | 84,123 | ||||||
Consumer | 30,791 | 31,144 | ||||||
960,573 | 922,043 | |||||||
Allowance for loan losses | (11,811 | ) | (11,398 | ) | ||||
Net unearned fees | (709 | ) | (742 | ) | ||||
Net Loans | $ | 948,053 | $ | 909,903 |
30-59 Days Past Due | 60-89 Days Past Due | 90 Days & Greater | Total Past Due | Current | Total Loans Receivable | Loans Receivable >90 Days and Accruing | ||||||||||||||||||||||
September 30, 2019: | (In Thousands) | |||||||||||||||||||||||||||
Commercial and industrial | $ | 34 | $ | — | $ | 498 | $ | 532 | $ | 107,412 | $ | 107,944 | $ | — | ||||||||||||||
Real estate – construction | — | — | 150 | 150 | 144,427 | 144,577 | — | |||||||||||||||||||||
Real estate – commercial | 4,073 | — | — | 4,073 | 575,141 | 579,214 | — | |||||||||||||||||||||
Real estate – residential | — | 279 | 500 | 779 | 97,268 | 98,047 | — | |||||||||||||||||||||
Consumer | — | — | 193 | 193 | 30,598 | 30,791 | — | |||||||||||||||||||||
Total | $ | 4,107 | $ | 279 | $ | 1,341 | $ | 5,727 | $ | 954,846 | $ | 960,573 | $ | — |
30-59 Days Past Due | 60-89 Days Past Due | 90 Days & Greater | Total Past Due | Current | Total Loans Receivable | Loans Receivable >90 Days and Accruing | ||||||||||||||||||||||
December 31, 2018: | (In Thousands) | |||||||||||||||||||||||||||
Commercial and industrial | $ | 100 | $ | — | $ | 765 | $ | 865 | $ | 108,497 | $ | 109,362 | $ | — | ||||||||||||||
Real estate – construction | 3,575 | — | 150 | 3,725 | 141,140 | 144,865 | — | |||||||||||||||||||||
Real estate – commercial | 563 | — | 54 | 617 | 551,932 | 552,549 | — | |||||||||||||||||||||
Real estate – residential | — | 564 | 227 | 791 | 83,332 | 84,123 | — | |||||||||||||||||||||
Consumer | — | — | 194 | 194 | 30,950 | 31,144 | — | |||||||||||||||||||||
Total | $ | 4,238 | $ | 564 | $ | 1,390 | $ | 6,192 | $ | 915,851 | $ | 922,043 | $ | — |
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
(In Thousands) | ||||||||
Commercial and industrial | $ | 498 | $ | 765 | ||||
Real estate – construction | 150 | 150 | ||||||
Real estate – commercial | — | 54 | ||||||
Real estate – residential | 500 | 227 | ||||||
Consumer | 193 | 194 | ||||||
Total | $ | 1,341 | $ | 1,390 |
As of September 30, 2019 | For the three months ended September 30, 2019 | For the nine months ended September 30, 2019 | ||||||||||||||||||||||||||
Recorded Investment, Net of Charge-offs | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | 3,658 | $ | 3,658 | $ | — | $ | 3,683 | $ | 42 | $ | 3,782 | $ | 129 | ||||||||||||||
Real estate – construction | 1,659 | 1,659 | — | 1,624 | 19 | 4,187 | 85 | |||||||||||||||||||||
Real estate – commercial | — | — | — | — | — | 93 | 2 | |||||||||||||||||||||
Real estate – residential | 856 | 856 | — | 859 | 4 | 863 | 18 | |||||||||||||||||||||
Consumer | 193 | 193 | — | 194 | — | 194 | — | |||||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Real estate – construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Real estate – commercial | — | — | — | — | — | — | — | |||||||||||||||||||||
Real estate – residential | — | — | — | — | — | — | — | |||||||||||||||||||||
Consumer | — | — | — | — | — | — | — | |||||||||||||||||||||
Total: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | 3,658 | $ | 3,658 | $ | — | $ | 3,683 | $ | 42 | $ | 3,782 | $ | 129 | ||||||||||||||
Real estate – construction | 1,659 | 1,659 | — | 1,624 | 19 | 4,187 | 85 | |||||||||||||||||||||
Real estate – commercial | — | — | — | — | — | 93 | 2 | |||||||||||||||||||||
Real estate – residential | 856 | 856 | — | 859 | 4 | 863 | 18 | |||||||||||||||||||||
Consumer | 193 | 193 | — | 194 | — | 194 | — | |||||||||||||||||||||
Total | $ | 6,366 | $ | 6,366 | $ | — | $ | 6,360 | $ | 65 | $ | 9,119 | $ | 234 |
As of December 31, 2018 | For the three months ended September 30, 2018 | For the nine months ended September 30, 2018 | ||||||||||||||||||||||||||
Recorded Investment, Net of Charge-offs | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | 4,200 | $ | 4,200 | $ | — | $ | 3,080 | $ | 29 | $ | 3,190 | $ | 96 | ||||||||||||||
Real estate – construction | 3,082 | 3,082 | — | 3,101 | 34 | 3,126 | 101 | |||||||||||||||||||||
Real estate – commercial | 168 | 168 | — | 173 | 1 | 175 | 4 | |||||||||||||||||||||
Real estate – residential | 589 | 589 | — | 592 | 4 | 594 | 13 | |||||||||||||||||||||
Consumer | 194 | 194 | 194 | — | 194 | — | ||||||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Real estate – construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Real estate – commercial | — | — | — | — | — | — | — | |||||||||||||||||||||
Real estate – residential | — | — | — | — | — | — | — | |||||||||||||||||||||
Consumer | — | — | — | — | — | — | — | |||||||||||||||||||||
Total: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | 4,200 | $ | 4,200 | $ | — | $ | 3,080 | $ | 29 | $ | 3,190 | $ | 96 | ||||||||||||||
Real estate – construction | 3,082 | 3,082 | — | 3,101 | 34 | 3,126 | 101 | |||||||||||||||||||||
Real estate – commercial | 168 | 168 | — | 173 | 1 | 175 | 4 | |||||||||||||||||||||
Real estate – residential | 589 | 589 | — | 592 | 4 | 594 | 13 | |||||||||||||||||||||
Consumer | 194 | 194 | 194 | — | 194 | — | ||||||||||||||||||||||
Total | $ | 8,233 | $ | 8,233 | $ | — | $ | 7,140 | $ | 68 | $ | 7,279 | $ | 214 |
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
September 30, 2019: | ||||||||||||||||||||
Commercial and industrial | $ | 103,725 | $ | 101 | $ | 4,118 | $ | — | $ | 107,944 | ||||||||||
Real estate – construction | 142,918 | — | 1,659 | — | 144,577 | |||||||||||||||
Real estate – commercial | 578,628 | 47 | 539 | — | 579,214 | |||||||||||||||
Real estate – residential | 97,547 | — | 500 | — | 98,047 | |||||||||||||||
Consumer | 30,384 | — | 407 | — | 30,791 | |||||||||||||||
Total | $ | 953,202 | $ | 148 | $ | 7,223 | $ | — | $ | 960,573 |
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
December 31, 2018: | ||||||||||||||||||||
Commercial and industrial | $ | 104,557 | $ | 126 | $ | 4,679 | $ | — | $ | 109,362 | ||||||||||
Real estate – construction | 138,858 | 1,577 | 4,430 | — | 144,865 | |||||||||||||||
Real estate – commercial | 549,083 | 2,722 | 744 | — | 552,549 | |||||||||||||||
Real estate – residential | 83,896 | — | 227 | — | 84,123 | |||||||||||||||
Consumer | 30,782 | — | 362 | — | 31,144 | |||||||||||||||
Total | $ | 907,176 | $ | 4,425 | $ | 10,442 | $ | — | $ | 922,043 |
Allowance for Loan Losses | Loans Receivable | |||||||||||||||||||||||
Balance | Balance Related to Loans Individually Evaluated for Impairment | Balance Related to Loans Collectively Evaluated for Impairment | Balance | Balance Individually Evaluated for Impairment | Balance Collectively Evaluated for Impairment | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
September 30, 2019: | ||||||||||||||||||||||||
Commercial and industrial | $ | 828 | $ | — | $ | 828 | $ | 107,944 | $ | 3,657 | $ | 104,287 | ||||||||||||
Real estate – construction | 2,120 | — | 2,120 | 144,577 | 1,659 | 142,918 | ||||||||||||||||||
Real estate – commercial | 7,529 | — | 7,529 | 579,214 | — | 579,214 | ||||||||||||||||||
Real estate – residential | 778 | — | 778 | 98,047 | 856 | 97,191 | ||||||||||||||||||
Consumer | 131 | — | 131 | 30,791 | 194 | 30,597 | ||||||||||||||||||
Unallocated | 425 | — | 425 | — | — | — | ||||||||||||||||||
Total | $ | 11,811 | $ | — | $ | 11,811 | $ | 960,573 | $ | 6,366 | $ | 954,207 |
Allowance for Loan Losses | Loans Receivable | |||||||||||||||||||||||
Balance | Balance Related to Loans Individually Evaluated for Impairment | Balance Related to Loans Collectively Evaluated for Impairment | Balance | Balance Individually Evaluated for Impairment | Balance Collectively Evaluated for Impairment | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
December 31, 2018: | ||||||||||||||||||||||||
Commercial and industrial | $ | 745 | $ | — | $ | 745 | $ | 109,362 | $ | 4,200 | $ | 105,162 | ||||||||||||
Real estate – construction | 2,049 | — | 2,049 | 144,865 | 3,082 | 141,783 | ||||||||||||||||||
Real estate – commercial | 7,283 | — | 7,283 | 552,549 | 168 | 552,381 | ||||||||||||||||||
Real estate – residential | 668 | — | 668 | 84,123 | 589 | 83,534 | ||||||||||||||||||
Consumer | 147 | — | 147 | 31,144 | 194 | 30,950 | ||||||||||||||||||
Unallocated | 506 | — | 506 | — | — | — | ||||||||||||||||||
Total | $ | 11,398 | $ | — | $ | 11,398 | $ | 922,043 | $ | 8,233 | $ | 913,810 |
Allowance for Loan Losses | Commercial and Industrial | Real Estate - Construction | Real Estate - Commercial | Real Estate - Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
Beginning balance, July 1, 2019 | $ | 766 | $ | 2,129 | $ | 7,464 | $ | 736 | $ | 150 | $ | 439 | $ | 11,684 | ||||||||||||||
Charge-offs | — | — | — | — | — | — | — | |||||||||||||||||||||
Recoveries | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||
Provision | 62 | (9 | ) | 65 | 42 | (21 | ) | (14 | ) | 125 | ||||||||||||||||||
Ending balance, September 30, 2019 | $ | 828 | $ | 2,120 | $ | 7,529 | $ | 778 | $ | 131 | $ | 425 | $ | 11,811 |
Allowance for Loan Losses | Commercial and Industrial | Real Estate - Construction | Real Estate - Commercial | Real Estate - Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
Beginning balance, January 1, 2019 | $ | 745 | $ | 2,049 | $ | 7,283 | $ | 668 | $ | 147 | $ | 506 | $ | 11,398 | ||||||||||||||
Charge-offs | — | (242 | ) | — | — | (5 | ) | — | (247 | ) | ||||||||||||||||||
Recoveries | — | — | 4 | — | 6 | — | 10 | |||||||||||||||||||||
Provision | 83 | 313 | 242 | 110 | (17 | ) | (81 | ) | 650 | |||||||||||||||||||
Ending balance, September 30, 2019 | $ | 828 | $ | 2,120 | $ | 7,529 | $ | 778 | $ | 131 | $ | 425 | $ | 11,811 |
Allowance for Loan Losses | Commercial and Industrial | Real Estate - Construction | Real Estate - Commercial | Real Estate - Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
Beginning balance, July 1, 2018 | $ | 976 | $ | 1,572 | $ | 7,515 | $ | 520 | $ | 153 | $ | 465 | $ | 11,201 | ||||||||||||||
Charge-offs | — | — | — | — | — | — | — | |||||||||||||||||||||
Recoveries | 33 | — | 6 | — | — | — | 39 | |||||||||||||||||||||
Provision | (80 | ) | 102 | (53 | ) | 76 | (23 | ) | 128 | 150 | ||||||||||||||||||
Ending balance, September 30, 2018 | $ | 929 | $ | 1,674 | $ | 7,468 | $ | 596 | $ | 130 | $ | 593 | $ | 11,390 |
Allowance for Loan Losses | Commercial and Industrial | Real Estate - Construction | Real Estate - Commercial | Real Estate - Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
Beginning balance, January 1, 2018 | $ | 930 | $ | 1,389 | $ | 7,325 | $ | 502 | $ | 174 | $ | 348 | $ | 10,668 | ||||||||||||||
Charge-offs | (116 | ) | — | (12 | ) | — | — | — | (128 | ) | ||||||||||||||||||
Recoveries | 33 | 3 | 19 | — | 20 | — | 75 | |||||||||||||||||||||
Provision | 82 | 282 | 136 | 94 | (64 | ) | 245 | 775 | ||||||||||||||||||||
Ending balance, September 30, 2018 | $ | 929 | $ | 1,674 | $ | 7,468 | $ | 596 | $ | 130 | $ | 593 | $ | 11,390 |
(In thousands, except percentages and years) | September 30, 2019 | ||
Right-of-use asset | $ | 4,698 | |
Weighted remaining lease term in years | 4.15 | ||
Weighted average discount rate | 4.31 | % |
(In thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Operating cash flows from operating leases | $ | 387 | $ | 370 | $ | 1,141 | $ | 1,110 | |||||
Variable lease costs (1) | $ | 97 | $ | 76 | $ | 274 | $ | 244 |
(In thousands) | |||
Twelve months ended September 30, | |||
2020 | $ | 1,443 | |
2021 | 1,386 | ||
2022 | 1,091 | ||
2023 | 619 | ||
2024 | 425 | ||
Thereafter | 320 | ||
Total Lease Payments | $ | 5,284 | |
Interest | (451 | ) | |
Present Value of Lease Liabilities | $ | 4,833 |
Number of Shares | Weighted Average Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||
Options outstanding, December 31, 2018 | 242,533 | $ | 5.89 | ||||||||||
Options granted | — | — | |||||||||||
Options exercised | (116,561 | ) | 4.79 | ||||||||||
Options forfeited | (369 | ) | 8.68 | ||||||||||
Options outstanding, September 30, 2019 | 125,603 | $ | 6.91 | 3.94 | $ | 1,733,924 | |||||||
Options exercisable, September 30, 2019 | 108,092 | $ | 6.55 | 3.59 | $ | 1,532,876 | |||||||
Option exercise price range at September 30, 2019 | $4.94 to $11.21 |
Number of Shares | Weighted Average Price | ||||||
Unvested at December 31, 2018 | 68,040 | $ | 15.61 | ||||
Restricted stock earned | (14,514 | ) | 15.19 | ||||
Granted | 21,150 | 15.28 | |||||
Awards forfeited | (400 | ) | 15.10 | ||||
Unvested at September 30, 2019 | 74,276 | $ | 15.60 |
September 30, 2019 | December 31, 2018 | Rate | Original Term (Years) | Maturity | ||||||||||
(dollars in thousands) | ||||||||||||||
Fixed Rate Note | $ | — | $ | 1,800 | 1.59 | % | 4 | January 2019 | ||||||
Fixed Rate Note | — | 1,000 | 1.09 | % | 3 | July 2019 | ||||||||
Fixed Rate Note | 2,700 | 2,700 | 1.81 | % | 5 | January 2020 | ||||||||
Fixed Rate Note | 2,500 | 2,500 | 2.03 | % | 6 | January 2021 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.42 | % | 5 | July 2021 | ||||||||
Fixed Rate Note | 5,000 | 5,000 | 2.16 | % | 4 | October 2021 | ||||||||
Fixed Rate Note | 7,500 | 7,500 | 2.07 | % | 5 | August 2022 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.70 | % | 7 | July 2023 | ||||||||
Total FHLB borrowings | $ | 19,700 | $ | 22,500 |
Maturity of Repurchase Agreements | ||||||||||||||||||||
(dollars in thousands) | Overnight and Continuous | Up to 30 days | 30 to 90 days | Over 90 days | Total | |||||||||||||||
September 30, 2019 | ||||||||||||||||||||
Class of Collateral Pledged: | ||||||||||||||||||||
U.S. Government agency securities | $ | 7,078 | $ | — | $ | — | $ | — | $ | 7,078 | ||||||||||
GSE – residential mortgage-backed securities | 6,841 | — | — | — | 6,841 | |||||||||||||||
U.S. Government collateralized residential mortgage obligations | 3,662 | — | — | — | 3,662 | |||||||||||||||
Total | $ | 17,581 | $ | — | $ | — | $ | — | $ | 17,581 | ||||||||||
Gross amount of recognized liabilities for repurchase agreements and securities lending | $ | 15,084 | ||||||||||||||||||
Excess of collateral pledged over recognized liability | $ | 2,497 |
Maturity of Repurchase Agreements | ||||||||||||||||||||
(dollars in thousands) | Overnight and Continuous | Up to 30 days | 30 to 90 days | Over 90 days | Total | |||||||||||||||
December 31, 2018 | ||||||||||||||||||||
Class of Collateral Pledged: | ||||||||||||||||||||
U.S. Government agency securities | $ | 11,566 | $ | — | $ | — | $ | — | $ | 11,566 | ||||||||||
GSE – residential mortgage-backed securities | 4,289 | — | — | — | 4,289 | |||||||||||||||
U.S. Government collateralized residential mortgage obligations | 10,334 | — | — | — | 10,334 | |||||||||||||||
Total | $ | 26,189 | $ | — | $ | — | $ | — | $ | 26,189 | ||||||||||
Gross amount of recognized liabilities for repurchase agreements and securities lending | $ | 19,402 | ||||||||||||||||||
Excess of collateral pledged over recognized liability | $ | 6,787 |
Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
Level 2: | Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. |
Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity). |
Description | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | Total | ||||||||||||
(in thousands) | ||||||||||||||||
At September 30, 2019: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agency securities | $ | — | $ | 7,782 | $ | — | $ | 7,782 | ||||||||
Municipal securities | — | 483 | — | 483 | ||||||||||||
GSE – residential mortgage-backed securities | — | 7,137 | — | 7,137 | ||||||||||||
U.S. Government collateralized residential mortgage obligations | — | 3,721 | — | 3,721 | ||||||||||||
Corporate debt securities, primarily financial institutions | — | 1,908 | — | 1,908 | ||||||||||||
Total securities available for sale | $ | — | $ | 21,031 | $ | — | $ | 21,031 | ||||||||
Total equity securities | $ | 2,582 | $ | — | $ | — | $ | 2,582 |
Description | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | Total | ||||||||||||
(in thousands) | ||||||||||||||||
At December 31, 2018: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agency securities | $ | — | $ | 11,635 | $ | — | $ | 11,635 | ||||||||
Municipal securities | — | 487 | — | 487 | ||||||||||||
GSE – residential mortgage-backed securities | — | 5,947 | — | 5,947 | ||||||||||||
U.S. Government collateralized residential mortgage obligations | — | 4,423 | — | 4,423 | ||||||||||||
Corporate debt securities, primarily financial institutions | — | 1,915 | — | 1,915 | ||||||||||||
Total securities available for sale | $ | — | $ | 24,407 | $ | — | $ | 24,407 | ||||||||
Total equity securities | $ | 2,451 | $ | — | $ | — | $ | 2,451 |
Description | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | Total | ||||||||||||
(in thousands) | ||||||||||||||||
At September 30, 2019: | ||||||||||||||||
OREO | $ | — | $ | — | $ | 2,501 | $ | 2,501 | ||||||||
At December 31, 2018: | ||||||||||||||||
OREO | $ | — | $ | — | $ | 585 | $ | 585 | ||||||||
• | OREO – Real estate properties acquired through, or in lieu of, loan foreclosure are carried at fair value less cost to sell. Fair value is based upon the appraised value of the collateral, adjusted by management for factors such as economic conditions and other market factors. At September 30, 2019, the discount range and liquidation expenses for collateral adjustments to OREO ranged from 6.46% to 25.46% (weighted average of 6.88%). At December 31, 2018, the discount and liquidation expenses for collateral adjustments to our OREO was 9.5%. At September 30, 2019, OREO totaled $2.5 million consisting of three properties, one of which was acquired by deed in lieu of foreclosure, while the remaining two were acquired through foreclosure proceedings. All properties are carried at fair value less estimated selling costs based on current appraisals. These assets are included in Level 3 fair value |
Fair Value Measurements at September 30, 2019 | |||||||||||||||||||
(in thousands) | Carrying Amount | Estimated Fair Value | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | ||||||||||||||
Financial assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 63,420 | $ | 63,420 | $ | 63,420 | $ | — | $ | — | |||||||||
Securities available for sale | 21,031 | 21,031 | — | 21,031 | — | ||||||||||||||
Securities held to maturity | 39,935 | 41,515 | — | 41,515 | — | ||||||||||||||
Equity securities | 2,582 | 2,582 | 2,582 | — | — | ||||||||||||||
Restricted investments | 6,772 | 6,772 | — | — | 6,772 | ||||||||||||||
Loans held for sale | 1,357 | 1,381 | — | — | 1,381 | ||||||||||||||
Loans receivable, net | 948,053 | 960,972 | — | — | 960,972 | ||||||||||||||
Accrued interest receivable | 2,560 | 2,560 | — | 388 | 2,172 | ||||||||||||||
Financial liabilities: | |||||||||||||||||||
Deposits | 963,297 | 964,280 | — | 964,280 | — | ||||||||||||||
Securities sold under agreements to repurchase | 15,084 | 15,084 | — | 15,084 | — | ||||||||||||||
FHLB and other borrowings | 19,700 | 19,743 | — | 19,743 | — | ||||||||||||||
Subordinated debt | 9,951 | 10,126 | — | 10,126 | — | ||||||||||||||
Accrued interest payable | 81 | 81 | — | 81 | — |
Fair Value Measurements at December 31, 2018 | |||||||||||||||||||
(in thousands) | Carrying Amount | Estimated Fair Value | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | ||||||||||||||
Financial assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 48,126 | $ | 48,126 | $ | 48,126 | $ | — | $ | — | |||||||||
Securities available for sale | 24,407 | 24,407 | — | 24,407 | — | ||||||||||||||
Securities held to maturity | 47,455 | 47,266 | — | 47,266 | — | ||||||||||||||
Equity securities | 2,451 | 2,451 | 2,451 | — | — | ||||||||||||||
Restricted investments | 6,082 | 6,082 | — | — | 6,082 | ||||||||||||||
Loans held for sale | 1,496 | 1,525 | — | — | 1,525 | ||||||||||||||
Loans receivable, net | 909,903 | 887,374 | — | — | 887,374 | ||||||||||||||
Accrued interest receivable | 2,583 | 2,583 | — | 643 | 1,940 | ||||||||||||||
Financial liabilities: | |||||||||||||||||||
Deposits | 917,354 | 915,435 | — | 915,435 | — | ||||||||||||||
Securities sold under agreements to repurchase | 19,402 | 19,402 | — | 19,402 | — | ||||||||||||||
FHLB and other borrowings | 22,500 | 21,966 | — | 24,966 | — | ||||||||||||||
Subordinated debt | 9,923 | 9,999 | — | 9,999 | — | ||||||||||||||
Accrued interest payable | 119 | 119 | — | 119 | — |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Return on average assets | 0.73 | % | 1.04 | % | 0.93 | % | 1.03 | % | |||
Return on average tangible assets (1) | 0.74 | % | 1.06 | % | 0.95 | % | 1.04 | % | |||
Return on average shareholders' equity | 6.84 | % | 9.98 | % | 8.84 | % | 9.91 | % | |||
Return on average tangible shareholders' equity (1) | 8.03 | % | 11.90 | % | 10.41 | % | 11.86 | % | |||
Net interest margin | 3.40 | % | 3.55 | % | 3.51 | % | 3.59 | % | |||
Average equity to average assets | 10.61 | % | 10.43 | % | 10.53 | % | 10.35 | % | |||
Average tangible equity to average tangible assets (1) | 9.19 | % | 8.90 | % | 9.09 | % | 8.79 | % |
(in thousands except per share data and percentages) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Total shareholders' equity | $ | 123,372 | $ | 113,891 | $ | 123,372 | $ | 113,891 | ||||||
Less: goodwill and other intangible assets | (18,109 | ) | (18,109 | ) | (18,109 | ) | (18,109 | ) | ||||||
Tangible common shareholders’ equity | $ | 105,263 | $ | 95,782 | $ | 105,263 | $ | 95,782 | ||||||
Common shares outstanding (in thousands) | 8,715 | 8,584 | 8,715 | 8,584 | ||||||||||
Book value per common share | $ | 14.16 | $ | 13.27 | $ | 14.16 | $ | 13.27 | ||||||
Book value per common share | $ | 14.16 | $ | 13.27 | $ | 14.16 | $ | 13.27 | ||||||
Effect of intangible assets | (2.08 | ) | (2.11 | ) | (2.08 | ) | (2.11 | ) | ||||||
Tangible book value per common share | $ | 12.08 | $ | 11.16 | $ | 12.08 | $ | 11.16 | ||||||
Return on average assets | 0.73 | % | 1.04 | % | 0.93 | % | 1.03 | % | ||||||
Effect of intangible assets | 0.01 | % | 0.02 | % | 0.02 | % | 0.01 | % | ||||||
Return on average tangible assets | 0.74 | % | 1.06 | % | 0.95 | % | 1.04 | % | ||||||
Return on average equity | 6.84 | % | 9.98 | % | 8.84 | % | 9.91 | % | ||||||
Effect of average intangible assets | 1.19 | % | 1.92 | % | 1.57 | % | 1.95 | % | ||||||
Return on average tangible equity | 8.03 | % | 11.90 | % | 10.41 | % | 11.86 | % | ||||||
Average equity to average assets | 10.61 | % | 10.43 | % | 10.53 | % | 10.35 | % | ||||||
Effect of average intangible assets | (1.42 | )% | (1.53 | )% | (1.44 | )% | (1.56 | )% | ||||||
Average tangible equity to average tangible assets | 9.19 | % | 8.90 | % | 9.09 | % | 8.79 | % |
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | |||||||||||||||||||||
(dollars in thousands) | Average Balance | Interest Income/ Expense | Average Yield/ Rate | Average Balance | Interest Income/ Expense | Average Yield/ Rate | ||||||||||||||||
ASSETS | ||||||||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||||
Interest-bearing deposits in banks | $ | 46,051 | $ | 260 | 2.24 | % | $ | 26,337 | $ | 132 | 1.99 | % | ||||||||||
Investment securities | 74,158 | 517 | 2.79 | % | 93,341 | 554 | 2.37 | % | ||||||||||||||
Loans, net of unearned fees (1) (2) | 955,354 | 11,707 | 4.86 | % | 896,999 | 10,656 | 4.71 | % | ||||||||||||||
Total Interest-Earning Assets | 1,075,563 | 12,484 | 4.60 | % | 1,016,677 | 11,342 | 4.43 | % | ||||||||||||||
Non-Interest-Earning Assets: | ||||||||||||||||||||||
Allowance for loan losses | (11,735 | ) | (11,341 | ) | ||||||||||||||||||
All other assets | 92,141 | 75,038 | ||||||||||||||||||||
Total Assets | $ | 1,155,969 | $ | 1,080,374 | ||||||||||||||||||
LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||||||||||||||||
Interest-Bearing Liabilities: | ||||||||||||||||||||||
NOW deposits | $ | 206,541 | 461 | 0.89 | % | $ | 201,026 | 320 | 0.63 | % | ||||||||||||
Savings deposits | 248,914 | 665 | 1.06 | % | 267,025 | 568 | 0.84 | % | ||||||||||||||
Money market deposits | 36,851 | 21 | 0.23 | % | 48,606 | 22 | 0.18 | % | ||||||||||||||
Time deposits | 304,869 | 1,834 | 2.39 | % | 213,872 | 1,014 | 1.88 | % | ||||||||||||||
Securities sold under agreements to repurchase | 13,451 | 10 | 0.30 | % | 18,389 | 14 | 0.30 | % | ||||||||||||||
FHLB and other borrowings | 19,763 | 99 | 1.99 | % | 27,870 | 136 | 1.94 | % | ||||||||||||||
Subordinated debt | 9,948 | 166 | 6.67 | % | 9,911 | 165 | 6.66 | % | ||||||||||||||
Total Interest-Bearing Liabilities | 840,337 | 3,256 | 1.54 | % | 786,699 | 2,239 | 1.13 | % | ||||||||||||||
Non-Interest-Bearing Liabilities: | ||||||||||||||||||||||
Demand deposits | 176,982 | 171,729 | ||||||||||||||||||||
Other liabilities | 16,006 | 9,314 | ||||||||||||||||||||
Total Non-Interest-Bearing Liabilities | 192,988 | 181,043 | ||||||||||||||||||||
Shareholders' Equity | 122,644 | 112,632 | ||||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 1,155,969 | $ | 1,080,374 | ||||||||||||||||||
NET INTEREST INCOME | $ | 9,228 | $ | 9,103 | ||||||||||||||||||
NET INTEREST SPREAD (3) | 3.06 | % | 3.30 | % | ||||||||||||||||||
NET INTEREST MARGIN (4) | 3.40 | % | 3.55 | % |
(1) | Included in interest income on loans are net unearned loan fees. |
(2) | Includes non-performing loans. |
(3) | The interest rate spread is the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities. |
(4) | The interest rate margin is calculated by dividing annualized net interest income by average interest-earning assets. |
Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | |||||||||||||||||||||
(dollars in thousands) | Average Balance | Interest Income/ Expense | Average Yield/ Rate | Average Balance | Interest Income/ Expense | Average Yield/ Rate | ||||||||||||||||
ASSETS | ||||||||||||||||||||||
Interest-Earning Assets: | ||||||||||||||||||||||
Interest-bearing deposits in banks | $ | 37,164 | $ | 663 | 2.39 | % | $ | 21,923 | $ | 293 | 1.79 | % | ||||||||||
Investment securities | 76,925 | 1,619 | 2.81 | % | 95,574 | 1,703 | 2.38 | % | ||||||||||||||
Loans, net of unearned fees (1) (2) | 951,073 | 34,750 | 4.89 | % | 883,436 | 30,720 | 4.65 | % | ||||||||||||||
Total Interest-Earning Assets | 1,065,162 | 37,032 | 4.65 | % | 1,000,933 | 32,716 | 4.37 | % | ||||||||||||||
Non-Interest-Earning Assets: | ||||||||||||||||||||||
Allowance for loan losses | (11,625 | ) | (11,097 | ) | ||||||||||||||||||
All other assets | 87,535 | 74,168 | ||||||||||||||||||||
Total Assets | $ | 1,141,072 | $ | 1,064,004 | ||||||||||||||||||
LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||||||||||||||||
Interest-Bearing Liabilities: | ||||||||||||||||||||||
NOW deposits | $ | 208,155 | 1,296 | 0.83 | % | $ | 219,242 | 937 | 0.57 | % | ||||||||||||
Savings deposits | 251,672 | 1,893 | 1.01 | % | 259,365 | 1,415 | 0.73 | % | ||||||||||||||
Money market deposits | 39,020 | 64 | 0.22 | % | 53,413 | 70 | 0.18 | % | ||||||||||||||
Time deposits | 285,112 | 4,917 | 2.31 | % | 190,520 | 2,501 | 1.76 | % | ||||||||||||||
Securities sold under agreements to repurchase | 14,101 | 30 | 0.28 | % | 19,734 | 43 | 0.29 | % | ||||||||||||||
FHLB and other borrowings | 22,040 | 332 | 2.01 | % | 26,862 | 382 | 1.90 | % | ||||||||||||||
Subordinated debt | 9,939 | 497 | 6.67 | % | 9,902 | 495 | 6.67 | % | ||||||||||||||
Total Interest-Bearing Liabilities | 830,039 | 9,029 | 1.45 | % | 779,038 | 5,843 | 1.00 | % | ||||||||||||||
Non-Interest-Bearing Liabilities: | ||||||||||||||||||||||
Demand deposits | 174,968 | 165,778 | ||||||||||||||||||||
Other liabilities | 15,883 | 9,094 | ||||||||||||||||||||
Total Non-Interest-Bearing Liabilities | 190,851 | 174,872 | ||||||||||||||||||||
Shareholders' Equity | 120,182 | 110,094 | ||||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 1,141,072 | $ | 1,064,004 | ||||||||||||||||||
NET INTEREST INCOME | $ | 28,003 | $ | 26,873 | ||||||||||||||||||
NET INTEREST SPREAD (3) | 3.20 | % | 3.37 | % | ||||||||||||||||||
NET INTEREST MARGIN (4) | 3.51 | % | 3.59 | % |
(1) | Included in interest income on loans are net unearned loan fees. |
(2) | Includes non-performing loans. |
(3) | The interest rate spread is the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities. |
(4) | The interest rate margin is calculated by dividing annualized net interest income by average interest-earnings assets. |
Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018 | ||||||||||||||||||||||
Increase (decrease) due to change in | Increase (decrease) due to change in | ||||||||||||||||||||||
Volume | Rate | Net | Volume | Rate | Net | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Interest Earned On: | |||||||||||||||||||||||
Interest-bearing deposits in banks | $ | 99 | $ | 29 | $ | 128 | $ | 204 | $ | 166 | $ | 370 | |||||||||||
Investment securities | (114 | ) | 77 | (37 | ) | (333 | ) | 249 | (84 | ) | |||||||||||||
Loans, net of unearned fees | 693 | 358 | 1,051 | 2,352 | 1,678 | 4,030 | |||||||||||||||||
Total Interest Income | 678 | 464 | 1,142 | 2,223 | 2,093 | 4,316 | |||||||||||||||||
Interest Paid On: | |||||||||||||||||||||||
NOW deposits | 9 | 132 | 141 | (47 | ) | 406 | 359 | ||||||||||||||||
Savings deposits | (39 | ) | 136 | 97 | (42 | ) | 520 | 478 | |||||||||||||||
Money market deposits | (5 | ) | 4 | (1 | ) | (19 | ) | 13 | (6 | ) | |||||||||||||
Time deposits | 431 | 389 | 820 | 1,242 | 1,174 | 2,416 | |||||||||||||||||
Securities sold under agreements to repurchase | (4 | ) | — | (4 | ) | (12 | ) | (1 | ) | (13 | ) | ||||||||||||
FHLB and other borrowings | (40 | ) | 3 | (37 | ) | (69 | ) | 19 | (50 | ) | |||||||||||||
Subordinated debt | 1 | — | 1 | 2 | — | 2 | |||||||||||||||||
Total Interest Expense | 353 | 664 | 1,017 | 1,055 | 2,131 | 3,186 | |||||||||||||||||
Net Interest Income | $ | 325 | $ | (200 | ) | $ | 125 | $ | 1,168 | $ | (38 | ) | $ | 1,130 |
September 30, 2019 | December 31, 2018 | |||||||||||||
Amount | Percent | Amount | Percent | |||||||||||
(in thousands, except for percentages) | ||||||||||||||
Commercial and industrial | $ | 107,944 | 11.3 | % | $ | 109,362 | 11.9 | % | ||||||
Real estate – construction | 144,577 | 15.1 | % | 144,865 | 15.7 | % | ||||||||
Real estate – commercial | 579,214 | 60.3 | % | 552,549 | 60.0 | % | ||||||||
Real estate – residential | 98,047 | 10.2 | % | 84,123 | 9.1 | % | ||||||||
Consumer | 30,791 | 3.2 | % | 31,144 | 3.4 | % | ||||||||
Unearned fees | (709 | ) | (0.1 | )% | (742 | ) | (0.1 | )% | ||||||
Total loans | $ | 959,864 | 100.0 | % | $ | 921,301 | 100.0 | % |
September 30, 2019 | December 31, 2018 | |||||||
(dollars in thousands) | ||||||||
Non-Performing Assets: | ||||||||
Non-Accrual Loans: | ||||||||
Commercial and industrial | $ | 498 | $ | 765 | ||||
Real estate-construction | 150 | 150 | ||||||
Real estate-commercial | — | 54 | ||||||
Real estate-residential | 500 | 227 | ||||||
Consumer | 193 | 194 | ||||||
Total Non-Performing Loans | 1,341 | 1,390 | ||||||
OREO | 2,501 | 585 | ||||||
Total Non-Performing Assets | $ | 3,842 | $ | 1,975 | ||||
Ratios: | ||||||||
Non-Performing loans to total loans | 0.14 | % | 0.15 | % | ||||
Non-Performing assets to total assets | 0.33 | % | 0.18 | % | ||||
Troubled Debt Restructured Loans: | ||||||||
Performing | $ | 5,025 | $ | 6,842 | ||||
Non-performing (included in non-performing assets above) | 555 | 877 |
September 30, | December 31, | ||||||||||
2019 | 2018 | 2018 | |||||||||
(in thousands, except percentages) | |||||||||||
Balance at beginning of year | $ | 11,398 | $ | 10,668 | $ | 10,668 | |||||
Provision charged to expense | 650 | 775 | 775 | ||||||||
Recoveries (charge-offs), net | (237 | ) | (53 | ) | $ | (45 | ) | ||||
Balance of allowance at end of period | $ | 11,811 | $ | 11,390 | $ | 11,398 | |||||
Ratio of net charge-offs to average loans outstanding (annualized) | 0.03 | % | 0.01 | % | 0.01 | % | |||||
Balance of allowance as a percent of loans at period-end | 1.23 | % | 1.26 | % | 1.24 | % | |||||
Ratio of allowance to non-performing loans at period-end | 880.76 | % | 819.42 | % | 820.00 | % |
September 30, 2019 | December 31, 2018 | Rate | Original Term (years) | Maturity | ||||||||||
(dollars in thousands) | ||||||||||||||
Fixed Rate Note | $ | — | $ | 1,800 | 1.59 | % | 4 | January 2019 | ||||||
Fixed Rate Note | 2,700 | 2,700 | 1.81 | % | 5 | January 2020 | ||||||||
Fixed Rate Note | 2,500 | 2,500 | 2.03 | % | 6 | January 2021 | ||||||||
Fixed Rate Note | — | 1,000 | 1.09 | % | 3 | July 2019 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.42 | % | 5 | July 2021 | ||||||||
Fixed Rate Note | 7,500 | 7,500 | 2.07 | % | 5 | August 2022 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.70 | % | 7 | July 2023 | ||||||||
Fixed Rate Note | 5,000 | 5,000 | 2.16 | % | 4 | October 2021 | ||||||||
Total FHLB borrowings | $ | 19,700 | $ | 22,500 |
September 30, | December 31, | ||||||
2019 | 2018 | ||||||
(dollars in thousands) | |||||||
Lines of credit secured by 1 - 4 family residential properties | $ | 30,569 | $ | 25,828 | |||
Commitments to fund commercial real estate and construction loans | 141,928 | 177,650 | |||||
Commitments to fund commercial and industrial loans and other loans | 63,700 | 60,579 | |||||
Commercial and financial letters of credit | 3,197 | 4,245 | |||||
Total off-balance sheet commitments | $ | 239,394 | $ | 268,302 |
Company | Bank | Minimum Required For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Regulations* | |||||||||
As of September 30, 2019 | ||||||||||||
Common Equity Tier 1 Capital to Risk Weighted Assets | 10.41 | % | 11.30 | % | 4.50 | % | 6.50 | % | ||||
Tier 1 Capital to Average Assets (Leverage Ratio) | 9.27 | % | 10.07 | % | 4.00 | % | 5.00 | % | ||||
Tier 1 Capital to Risk Weighted Assets | 10.41 | % | 11.30 | % | 6.00 | % | 8.00 | % | ||||
Total Capital to Risk Weighted Assets | 12.56 | % | 12.47 | % | 8.00 | % | 10.00 | % | ||||
As of December 31, 2018 | ||||||||||||
Common Equity Tier 1 Capital to Risk Weighted Assets | 10.14 | % | 11.09 | % | 4.50 | % | 6.50 | % | ||||
Tier 1 Capital to Average Assets (Leverage Ratio) | 9.10 | % | 9.95 | % | 4.00 | % | 5.00 | % | ||||
Tier 1 Capital to Risk Weighted Assets | 10.14 | % | 11.09 | % | 6.00 | % | 8.00 | % | ||||
Total Capital to Risk Weighted Assets | 12.34 | % | 12.26 | % | 8.00 | % | 10.00 | % |
i. | a common equity Tier 1 capital ratio of 7.00%; |
ii. | a Tier 1 Risk based capital ratio of 8.50%; and |
iii. | a Total Risk based capital ratio of 10.50%. |
Period | Total Number of Shares Purchased | Average Price Paid Per Share ($) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ($) | ||||
July 1, 2019 through July 31, 2019 | — | — | — | 1,517,424 | ||||
August 1, 2019 through August 31, 2019 | — | — | — | 1,517,424 | ||||
September 1, 2019 through September 30, 2019 | 277 | 20.46 | 277 | 1,511,757 | ||||
Total | 277 | 20.46 | 277 | |||||
(1) All shares were repurchased under the Company’s share repurchase program, which was approved in January 2019 by the Board of Directors, pursuant to which the Company may repurchase up to $2.0 million of its common stock from January 1, 2019 to December 31, 2019. |
Agreement and Plan of Merger, dated as of August 9, 2019, by and among Two River Bancorp, OceanFirst Financial Corp. and Hammerhead Merger Sub Corp. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
Amendment to Employment Agreement between William D. Moss and Two River Bancorp and Two River Community Bank, dated August 9, 2019 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
Amendment to Change in Control Agreement between A. Richard Abrahamian and Two River Bancorp and Two River Community Bank, dated August 9, 2019 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
Amendment to Change in Control Agreement between Alan B. Turner and Two River Bancorp and Two River Community Bank, dated August 9, 2019 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
Amendment to Change in Control Agreement between Anthony Mero and Two River Bancorp and Two River Community Bank, dated August 9, 2019 (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
First Amendment to the Amended and Restated Two River Community Bank Supplemental Executive Retirement Agreement dated as of August 8, 2019, between Two River Community Bank and William D. Moss (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
Third Amendment to the Amended and Restated Two River Community Bank Supplemental Executive Retirement Agreement dated as of August 8, 2019, between Two River Community Bank and A. Richard Abrahamian (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
Sixth Amendment to the Amended and Restated Two River Community Bank Supplemental Executive Retirement Agreement dated as of August 8, 2019, between Two River Bancorp, Two River Community Bank and Alan B. Turner (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
First Amendment to the Amended and Restated Two River Community Bank Supplemental Executive Retirement Agreement dated as of August 8, 2019, between Two River Bancorp, Two River Community Bank and Anthony A. Mero (incorporated by reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
First Amendment to Deferred Compensation Agreement dated as of August 8, 2019, between Two River Community Bank and William D. Moss (incorporated by reference to Exhibit 10.9 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
Second Amendment to the Officer Supplemental Life Insurance Plan made as of August 8, 2019 by Two River Community Bank (incorporated by reference to Exhibit 10.10 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
Second Amendment to the Officer Supplemental Life Insurance Plan # 2 made as of August 8, 2019 by Two River Community Bank (incorporated by reference to Exhibit 10.11 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2019). | ||
* | Certification of principal executive officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) | |
* | Certification of principal financial officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) | |
* | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by the principal executive officer of the Company and the principal financial officer of the Company | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
TWO RIVER BANCORP | ||||
Date: | November 8, 2019 | By: | /s/ William D. Moss | |
William D. Moss | ||||
Chairman of the Board, President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
Date: | November 8, 2019 | By: | /s/ A. Richard Abrahamian | |
A. Richard Abrahamian | ||||
Executive Vice President and Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Two River Bancorp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ William D. Moss | |
Name: | William D. Moss |
Title: | Chairman of the Board, President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Two River Bancorp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ A. Richard Abrahamian | |
Name: | A. Richard Abrahamian |
Title: | Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ William D. Moss | |
Name: | William D. Moss |
Title: | Chairman of the Board, President and Chief Executive Officer |
Date: | November 8, 2019 |
/s/ A. Richard Abrahamian | |
Name: | A. Richard Abrahamian |
Title: | Executive Vice President and Chief Financial Officer |
Date: | November 8, 2019 |
New Accounting Standards |
9 Months Ended |
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Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
New Accounting Standards | NEW ACCOUNTING STANDARDS ASU 2016-02: In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize leases on-balance sheet, makes targeted changes to lessor accounting, and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. ASC 842 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2018. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) the effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company has elected to use the effective date, January 1, 2019, as the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. From the lessee's perspective, the new standard establishes a right-of-use ("ROU") model that requires a lessee to recognize a ROU asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months, subject to a policy election. The Company has elected the short-term lease recognition exemption such that the Company will not recognize ROU assets or lease liabilities for leases with a term of less than 12 months from the commencement date. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for a leasee. Additionally, the ASU expands quantitative and qualitative disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new leasing standard provides a number of optional practical expedients in transition. The Company has elected the "package of practical expedients," which permits the Company not to reassess prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the Company. ASC 842 also provides certain accounting policy elections for an entity's ongoing accounting. For operating leases wherein the Company is the lessee, the Company has elected the practical expedient to not separate lease and non-lease components. Under legacy lease accounting, all of the Company's leases, which primarily relate to office space and bank branches, were classified as operating leases and, as such, are not recognized on the Company's Consolidated Balance Sheet for periods prior to the adoption of ASC 842. The Company engaged a third-party vendor and used their software to assist in implementing this ASU. Due to the adoption of ASU 2016-02, the Company recognized an operating right-of-use asset of $4.7 million and a lease liability of $4.8 million on its balance sheet as of September 30, 2019. This negatively impacted the Company's capital ratios by approximately 5 basis points compared to December 31, 2018. See Note 8, Leases, for more information. ASU 2016-13: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This ASU requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. The ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. In April 2019, the FASB issued ASU 2019-04, which clarifies the scope of the credit losses standard and addresses issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. With respect to Topic 825, Financial Instruments, on recognizing and measuring financial instruments, ASU 2019-04 addresses the scope of the guidance, the requirement for remeasurement under ASC 820 when using the measurement alternative, certain disclosure requirements and which equity securities have to be remeasured at historical exchange rates. In May 2019, the FASB issued ASU No. 2019-05, "Financial Instruments - Credit Losses (Topic 326); Targeted Transition Relief." This ASU allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to held-to-maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. The Company does not expect to elect the fair value option. In October 2019, the FASB affirmed its decision to extend the deadline to implement these ASU's. For public entities that are SEC filers, excluding Smaller Reporting Companies, these ASUs are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. However for Smaller Reporting Companies, such as the Company, these ASU's are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has formed a CECL committee, which has assessed our data and system needs, and has engaged a third-party vendor to assist in analyzing our data and developing a CECL model. The Company, in conjunction with this vendor, has researched and analyzed modeling standards, loan segmentation, as well as potential external inputs to supplement our historical loss history. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the ASUs are effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of these ASUs on our consolidated financial statements. ASU 2017-04: In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350). ASU 2017-04 removes Step 2 from the goodwill impairment test. Under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. For public entities that are SEC filers, this ASU is effective for its annual, or any goodwill impairment tests in fiscal years, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the new guidance but has determined that this standard should not have a material impact on its consolidated financial statements. ASU 2017-08: In March 2017, the FASB issued ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 will be effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. We are currently evaluating this ASU to determine the impact on our consolidated financial statements. ASU 2018-13: In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 includes certain removals, modifications and additions to the disclosure requirements on fair value measurements in Topic 820. The updated guidance is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted. The Company is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. The impact on the consolidated financial statements of the Company will depend on the facts and circumstances of any specific future transactions. The Company has elected not to early adopt the additional disclosures required by the ASU until their effective date. ASU 2019-01: In March 2019, the FASB issued ASU No. 2019-01, Leases: Codification Improvements. This ASU (1) states that for lessors that are not manufacturers or dealers, the fair value of the underlying asset is its cost, less any volume or trade discounts, as long as there isn’t a significant amount of time between acquisition of the asset and lease commencement; (2) clarifies that lessors in the scope of ASC 942 (such as the Company) must classify principal payments received from sales-type and direct financing leases in investing activities in the statement of cash flows; and (3) clarifies the transition guidance related to certain interim disclosures provided in the year of adoption. To coincide with the adoption of ASU No. 2016-02, the Company elected to early adopt ASU 2019-01 on January 1, 2019. The adoption of this ASU did not have a material impact on its consolidated financial statements. |
Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | SECURITIES The amortized cost, gross unrealized gains and losses, and fair values of the Company’s securities are summarized as follows:
The amortized cost and fair value of the Company’s debt securities at September 30, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
The Company had no security sales for the three months ended September 30, 2019 and two security sales totaling $2.8 million for the nine months ended September 30, 2019 and recorded gross realized gains and losses of $8,000 and $7,000, respectively. There were no security sales for the three and nine months ended September 30, 2018. Investment securities with a carrying value of $23.4 million and $24.7 million at September 30, 2019 and December 31, 2018, respectively, were pledged as collateral to secure securities sold under agreements to repurchase and public deposits as required or permitted by law. The tables below indicate the length of time individual securities have been in a continuous unrealized loss position at September 30, 2019 and December 31, 2018:
The Company had 44 securities in an unrealized loss position at September 30, 2019. In management’s opinion, the unrealized losses in corporate debt, U.S. Government agencies, U.S. Government collateralized residential mortgage obligations and GSE residential mortgage-backed securities reflect changes in interest rates subsequent to the acquisition of specific securities. The unrealized loss for corporate debt securities also reflects a widening of spreads due to the liquidity and credit concerns in the financial markets. The Company may, if conditions warrant, elect to sell debt securities at a loss and redeploy the proceeds into other investments in an effort to improve returns, risk profile and overall portfolio diversification. The Company will recognize any losses when the decision is made. As of September 30, 2019, the Company did not intend to sell these debt securities prior to market recovery. Included in corporate debt securities are three individual trust preferred securities issued by large financial institutions, all with a Moody’s rating of Baa1. At September 30, 2019, all of these securities are current with their scheduled interest payments. These single issue securities are all from large money center banks. Management concluded that these securities were not other-than-temporarily impaired as of September 30, 2019. These three securities have an amortized cost value of $2.3 million and a fair value of $2.1 million at September 30, 2019. There were no other-than-temporary impairments recognized during the three and nine months ended September 30, 2019 and 2018. Equity securities consist solely of the Community Reinvestment Act ("CRA") Mutual Fund. As a result of the adoption of ASU 2016-01 in January 2018, the Company determined that the CRA Mutual Fund falls under the provisions of ASU 2016-01and accordingly, this fund was transferred from available for sale and reclassified into equity securities on the balance sheet. These securities are measured at fair value with unrealized holding gains and losses reflected in net income. Effective January 1, 2018, the Company recorded a cumulative effect adjustment of $39,000 as a reclassification from accumulated other comprehensive loss to retained earnings. Additionally as noted above, all future unrealized gains and losses will be recognized in the Statements of Operations. As such, during the three and nine months ended September 30, 2019, an unrealized gain of $19,000 and $86,000, respectively, was recorded in Other income. For the three and nine months ended September 30, 2018, an unrealized loss of $19,000 and $77,000, respectively, was recorded in Other income. |
Guarantees |
9 Months Ended |
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Sep. 30, 2019 | |
Guarantees [Abstract] | |
Guarantees | GUARANTEES The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the financial statements. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. 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. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment. The Company had commitments to extend credit, including unused lines of credit, of approximately $236.2 million and $264.1 million at September 30, 2019 and December 31, 2018, respectively. Standby letters of credit are conditional commitments issued by the Company to guarantee the financial performance of a customer to a third party. Those guarantees are primarily issued to support contracts entered into by customers. Most guarantees extend for one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company defines the fair value of these letters of credit as the fees paid by the customer or similar fees collected on similar instruments. The Company amortizes the fees collected over the life of the instrument. The Company generally obtains collateral, such as real estate or liens on customer assets for these types of commitments. The Company’s potential liability would be reduced by any proceeds obtained in liquidation of the collateral held. As of September 30, 2019 and December 31, 2018, the Company had $3.2 million and $4.2 million, respectively, of commercial and similar letters of credit. Management believes that the current amount of the liability as of September 30, 2019 and December 31, 2018 for guarantees under standby letters of credit issued is not material. |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:
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Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques | For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:
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Fair Value, by Balance Sheet Grouping | The estimated fair values of the Company’s financial instruments at September 30, 2019 and December 31, 2018 were as follows:
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Supplemental Information | (1) Variable lease costs represents variable payments, such as common area maintenance and utilities. The table below summarizes information related to our operating leases:
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Operating Lease Liability Maturity |
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Shareholders' Equity (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |
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Sep. 30, 2019 |
Sep. 30, 2019 |
Jan. 24, 2019 |
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Equity [Abstract] | |||
Stock repurchase program authorized amount | $ 2,000,000.0 | ||
Common stock repurchased (in shares) | 277 | 32,522 | |
Common stock repurchased | $ 6,000 | $ 488,000 |
FHLB And Other Borrowings (Details) - USD ($) |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Debt Instrument [Line Items] | ||
FHLB and other borrowings | $ 19,700,000 | $ 22,500,000 |
Municipal deposit letters issued by FHLB | 3,200,000 | 4,200,000 |
Federal Fund Borrowing Line | Atlantic Community Bankers Bank | ||
Debt Instrument [Line Items] | ||
Line of credit maximum borrowing capacity | 10,000,000 | |
Outstanding borrowings | 0 | 0 |
Federal Home Loan Bank | ||
Debt Instrument [Line Items] | ||
Line of credit remaining borrowing capacity | 30,700,000 | |
Current collateral pledged | 128,800,000 | |
FHLB and other borrowings | $ 19,700,000 | $ 22,500,000 |
FHLB advances weighted average interest rate | 2.00% | 1.93% |
Municipal deposit letters issued by FHLB | $ 75,100,000 | |
Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Line of credit maximum borrowing capacity | 36,000,000 | |
Outstanding borrowings | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Parentheticals) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
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Common Stock | ||
Cash dividends on common stock, per share (in dollars per share) | $ 0.195 | $ 0.09 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
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Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 843,000 | $ 1,013,000 | $ 3,002,000 | $ 2,860,000 | |
Effective income tax rate | 28.50% | 26.30% | 27.40% | 26.00% | |
Income tax benefit from equity-based compensation | $ 29,000 | $ 35,000 | $ 67,000 | $ 168,000 | |
Interest and penalties recognized | 0 | $ 0 | 0 | $ 0 | |
Interest and penalties accrued | $ 0 | $ 0 | $ 0 |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS Accounting guidance establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:
As of September 30, 2019 and December 31, 2018, there were no securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3). For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:
The Company’s policy is to recognize transfers between levels as of the beginning of the period. There were no transfers between Levels 1, 2 and 3 for the three and nine months ended September 30, 2019 and 2018. The following valuation techniques were used to measure fair value of assets in the tables above:
The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at September 30, 2019 and December 31, 2018: Securities: The fair value of securities available-for-sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). See Note 6, Securities, for more information regarding the CRA Mutual Fund. At September 30, 2019 and December 31, 2018, there were no Level 3 securities. The estimated fair values of the Company’s financial instruments at September 30, 2019 and December 31, 2018 were as follows:
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Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements include the accounts of Two River Bancorp (the “Company”), a bank holding company, and its wholly-owned subsidiary, Two River Community Bank (“Two River” or the “Bank”); Two River’s wholly-owned subsidiaries, TRCB Investment Corporation and TRCB Holdings Nine LLC. All inter-company balances and transactions have been eliminated in the consolidated financial statements. On August 9, 2019, the Company entered into a definitive merger agreement (the “Merger Agreement”) with OceanFirst Financial Corp. (NASDAQ: OCFC) (“OceanFirst”), a parent company of OceanFirst Bank N.A. (“OceanFirst Bank”). Under the Merger Agreement, the Company will merge into OceanFirst, and, upon completion of that merger, the Bank will merge into OceanFirst Bank. The mergers are expected to close in the first quarter of 2020, subject to the Company receiving the requisite approval of its shareholders, receipt of all required regulatory approvals, and fulfillment of other customary closing conditions. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for full year financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2019 (the “2018 Form 10-K”). For a description of the Company’s significant accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements in the 2018 Form 10-K. The Company has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2019 for items that should potentially be recognized or disclosed in these consolidated financial statements. |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 2,115 | $ 2,834 | $ 7,946 | $ 8,160 |
Other comprehensive income (loss): | ||||
Unrealized holdings gain (loss) on securities available for sale, net of income tax expense (benefit) | 13 | (24) | 192 | (218) |
Other comprehensive income (loss) | 13 | (24) | 192 | (218) |
Total comprehensive income | $ 2,128 | $ 2,810 | $ 8,138 | $ 7,942 |
Guarantees (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Guarantees [Abstract] | ||
Unused commitments to extend credit | $ 236.2 | $ 264.1 |
Commercial and similar letters of credit | $ 3.2 | $ 4.2 |
Subordinated Debentures (Details) - USD ($) $ in Thousands |
1 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Subordinated Borrowing [Line Items] | |||
Proceeds from issuance of subordinated long-term debt | $ 10,000 | ||
Subordinated borrowing, interest rate | 6.25% | ||
Subordinated debt | $ 9,951 | $ 9,923 | |
Subordinated Debt | |||
Subordinated Borrowing [Line Items] | |||
Unamortized debt issuance expense | $ 49 | $ 77 | |
Fixed rate note interest rate | 6.67% | ||
Subordinated Debt | London Interbank Offered Rate (LIBOR) | |||
Subordinated Borrowing [Line Items] | |||
Variable interest rate | 4.64% |
Document And Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2019 |
Nov. 06, 2019 |
|
Cover page. | ||
Entity Registrant Name | Two River Bancorp | |
Entity Central Index Key | 0001343034 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 8,723,977 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Interactive Data Current | Yes | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Small business | true | |
Entity Emerging Growth Company | false |
Subordinated Debentures |
9 Months Ended |
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Sep. 30, 2019 | |
Brokers and Dealers [Abstract] | |
Subordinated Debentures | SUBORDINATED DEBENTURES In December 2015, the Company completed a private placement of $10 million in aggregate principal amount of fixed to floating rate subordinated debentures to certain institutional accredited investors. The subordinated debentures have a maturity date of December 31, 2025 and bear interest, payable quarterly, at the rate of 6.25% per annum until January 1, 2021. On that date, the interest rate will be adjusted to float at an annual rate equal to the prevailing three-month LIBOR rate plus 464 basis points (4.64%) until maturity. The debentures include a right of prepayment, without penalty, on or after December 14, 2020 and, in certain limited circumstances, before that date. The indebtedness evidenced by the subordinated debentures, including principal and interest, is unsecured and subordinate and junior in right to payment to general and secured creditors of the Company and depositors and all other creditors of the Bank. The subordinated debentures have been structured to qualify as Tier 2 capital for regulatory purposes. Subordinated debentures totaled $10.0 million at September 30, 2019 and December 31, 2018, respectively, which includes $49,000 and $77,000, respectively, of remaining unamortized debt issuance costs at September 30, 2019 and December 31, 2018. The debt issuance costs are being amortized over the expected life of the issue. The effective interest rate of the subordinated debentures is 6.67%. |
Subsequent Event |
9 Months Ended |
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Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENT On October 16, 2019, the Board of Directors declared a quarterly cash dividend of $0.07 per share to common shareholders of record at the close of business on November 6, 2019, payable on November 29, 2019. |
Stock-Based Compensation Plans |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Plans | STOCK-BASED COMPENSATION PLANS The Two River Bancorp 2007 Equity Incentive Plan (the “Plan”) provides that the Compensation Committee of the Board of Directors (the “Committee”) may grant to those individuals who are eligible under the terms of the Plan stock options, shares of restricted stock, or such other equity incentive awards as the Committee may determine. As of September 30, 2019, the number of shares of Company common stock remaining and available for future issuance under the Plan is 91,037. Shares reserved under the Plan will be issued out of authorized and unissued shares, or treasury shares, or partly out of cash, as determined by the Board. From the adoption of the Plan until March 20, 2017, options awarded under the Plan were permitted to be either options that qualify as incentive stock options (“ISOs”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or options that do not, or cease to, qualify as incentive stock options under the Code (“nonqualified stock options” or “NQSOs”). However, after March 20, 2017, ISOs are no longer permitted to be awarded under the Plan. Awards may be granted under the Plan to directors and employees, and to consultants and other persons who provide substantial services to the Company. The exercise price per share purchasable under an option awarded under the Plan may not be less than the fair market value of a share of stock on the date of grant of the option. The Committee determines the vesting period and term of each option, provided that no ISO is permitted to have a term in excess of ten years after the date of grant. Restricted stock is stock which is subject to certain transfer restrictions and to a risk of forfeiture. The Committee will determine the period over which any restricted stock which is issued under the Plan will vest, and will impose such restrictions on transferability, risk of forfeiture and other restrictions as the Committee may in its discretion determine. Unless restricted by the Committee, a participant granted restricted stock will have all of the rights of a shareholder (except for the aforesaid transfer restrictions and risk of forfeitures), including the right to vote the restricted stock and the right to receive dividends with respect to that stock. Unless otherwise provided by the Committee in the award document or subject to other applicable restrictions, in the event of a Change in Control (as defined in the Plan) all non-forfeited options and awards carrying a right to exercise that was not previously exercisable and vested will become fully exercisable and vested as of the time of the Change in Control, and all restricted stock and awards subject to risk of forfeiture will become fully vested. Stock Options For the three and nine months ended September 30, 2019, there were no stock options granted. Stock-based compensation expense related to the vesting of stock options granted in prior periods was approximately $9,000 and $27,000 during the three and nine month period ended September 30, 2019, as compared to $14,000 and $46,000 for the same three and nine month period in 2018 and is included in salaries and employee benefits on the statement of operations. Total unrecognized compensation cost related to non-vested options granted under the Plan was $30,000 as of September 30, 2019 and will be recognized over the subsequent weighted average life of 0.9 years. The following table presents information regarding the Company’s outstanding stock options at September 30, 2019:
The total intrinsic value of options exercised during the three and nine months ended September 30, 2019 was $655,000 and $1,331,000, respectively. Cash received from such exercises was $314,000 and $558,000, respectively. The total intrinsic value of options exercised during the three and nine months ended September 30, 2018 was $401,000 and $1,294,000, respectively. Cash received from such exercises was $105,000 and $266,000, respectively. Income tax benefit of $29,000 and $67,000, respectively, was recognized in the three and nine months ended September 30, 2019, respectively, compared to $36,000 and $168,000, respectively, for the three and nine months ended September 30, 2018 relating to the adoption of ASU 2016-09, Compensation-Stock Compensation, Improvements to Employee Share-Based Payment Accounting attributable to stock options. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Restricted Stock Restricted stock is valued at the market value on the date of grant and expense is attributed to the period in which the restrictions lapse. Compensation expense related to restricted stock was $108,000 and $285,000 for the three and nine month period ended September 30, 2019, as compared to $69,000 and $177,000 for the three and nine month period ended September 30, 2018 and is included in salaries and employee benefits on the statement of operations. There was no income tax benefit recognized in the three and nine months ended September 30, 2019 and 2018 relating to the adoption of ASU 2016-09 attributable to restricted stock. Total unrecognized compensation cost related to restricted stock under the Plan as of September 30, 2019 was $1.0 million and will be recognized over the subsequent weighted average life of 3.5 years. The following table summarizes information about restricted stock at September 30, 2019:
Under the Merger Agreement, the Company is not permitted to grant any stock options, shares of restricted stock, or other equity incentive awards without the consent of OceanFirst. |
Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Two River Bancorp (the “Company”), a bank holding company, and its wholly-owned subsidiary, Two River Community Bank (“Two River” or the “Bank”); Two River’s wholly-owned subsidiaries, TRCB Investment Corporation and TRCB Holdings Nine LLC. All inter-company balances and transactions have been eliminated in the consolidated financial statements. On August 9, 2019, the Company entered into a definitive merger agreement (the “Merger Agreement”) with OceanFirst Financial Corp. (NASDAQ: OCFC) (“OceanFirst”), a parent company of OceanFirst Bank N.A. (“OceanFirst Bank”). Under the Merger Agreement, the Company will merge into OceanFirst, and, upon completion of that merger, the Bank will merge into OceanFirst Bank. The mergers are expected to close in the first quarter of 2020, subject to the Company receiving the requisite approval of its shareholders, receipt of all required regulatory approvals, and fulfillment of other customary closing conditions. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for full year financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2019 (the “2018 Form 10-K”). For a description of the Company’s significant accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements in the 2018 Form 10-K. The Company has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2019 for items that should potentially be recognized or disclosed in these consolidated financial statements. |
Earnings Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | EARNINGS PER COMMON SHARE Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding excluding restricted stock awards outstanding during the period. Diluted earnings per common share reflects additional shares of common stock that would have been outstanding if dilutive potential shares of common stock had been issued relating to outstanding stock options and restricted stock awards. Potential shares of common stock issuable upon the exercise of stock options are determined using the treasury stock method. The following table sets forth the computations of basic and diluted earnings per common share:
Dilutive securities in the table above exclude common stock options with exercise prices that exceed the average market price of the Company’s common stock during the periods presented. Inclusion of these common stock options would be anti-dilutive to the diluted earnings per common share calculation. There were no stock options that were anti-dilutive for the three and nine months ended September 30, 2019 and 2018. |
New Accounting Standards (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jan. 01, 2019 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 4,698 | |
Operating lease liabilities | $ 4,833 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 4,700 | |
Operating lease liabilities | $ 4,800 | |
Reduction in capital ratio | 0.05% |
Stock-Based Compensation Plans (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The following table presents information regarding the Company’s outstanding stock options at September 30, 2019:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The following table summarizes information about restricted stock at September 30, 2019:
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Leases - Operating Lease Liability Maturity (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
|
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Leases [Abstract] | |
2020 | $ 1,443 |
2021 | 1,386 |
2022 | 1,091 |
2023 | 619 |
2024 | 425 |
Thereafter | 320 |
Total Lease Payments | 5,284 |
Interest | (451) |
Present Value of Lease Liabilities | $ 4,833 |
Subsequent Event (Details) |
Oct. 16, 2019
$ / shares
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Subsequent Event | |
Subsequent Event [Line Items] | |
Cash dividends on common stock, per share (in dollars per share) | $ 0.07 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Statement of Financial Position [Abstract] | ||
Securities available-for-sale, amortized cost | $ 21,374 | $ 25,017 |
Securities held to maturity, fair value | $ 41,515 | $ 47,266 |
Preferred stock, shares authorized (in shares) | 6,500,000 | 6,500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock, shares issued (in shares) | 9,076,305 | 8,935,437 |
Common stock, shares outstanding (in shares) | 8,715,338 | 8,606,992 |
Treasury stock, shares (in shares) | 360,967 | 328,445 |
Loans Receivable And Allowance For Loan Losses - Financing Receivables, Non Accrual Status (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Financing Receivable, Past Due [Line Items] | ||
Non-accrual loans | $ 1,341 | $ 1,390 |
Commercial Portfolio Segment | Commercial and industrial | ||
Financing Receivable, Past Due [Line Items] | ||
Non-accrual loans | 498 | 765 |
Commercial Portfolio Segment | Real estate – construction | ||
Financing Receivable, Past Due [Line Items] | ||
Non-accrual loans | 150 | 150 |
Commercial Portfolio Segment | Real estate – commercial | ||
Financing Receivable, Past Due [Line Items] | ||
Non-accrual loans | 0 | 54 |
Consumer Portfolio Segment | Real estate – residential | ||
Financing Receivable, Past Due [Line Items] | ||
Non-accrual loans | 500 | 227 |
Consumer Portfolio Segment | Consumer | ||
Financing Receivable, Past Due [Line Items] | ||
Non-accrual loans | $ 193 | $ 194 |
Earnings Per Common Share (Details) - shares |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 | 0 | 0 |
FHLB And Other Borrowings |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FHLB And Other Borrowings | FHLB AND OTHER BORROWINGS The Bank utilizes its account relationship with Atlantic Community Bankers Bank to borrow funds through its Federal funds borrowing line in an aggregate amount up to $10.0 million. The Bank also has $36.0 million in unsecured credit facilities with three correspondent banks. These borrowings are priced on a daily basis. The Company had no borrowings outstanding on these lines at September 30, 2019 and December 31, 2018. The Bank also has a remaining borrowing capacity with the Federal Home Loan Bank of New York ("FHLB") of approximately $30.7 million based on the current loan collateral pledged of $128.8 million at September 30, 2019. At September 30, 2019 and December 31, 2018, FHLB and other borrowings consisted of advances from the FHLB, which amounted to $19.7 million and $22.5 million, respectively. These advances had an average interest rate of 2.00% and 1.93% at September 30, 2019 and December 31, 2018, respectively. These advances are contractually scheduled for repayment as follows:
As of September 30, 2019, the FHLB has issued $75.1 million in municipal deposit letters of credit in the name of the Bank naming the NJ Department of Banking and Insurance as beneficiary. This letter of credit will take the place of securities previously pledged to the State of New Jersey for the Bank’s various municipal deposits. |
Income Taxes |
9 Months Ended |
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Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The Company follows FASB ASC Topic 740, “Income Taxes,” which prescribes a threshold for the financial statement recognition of income taxes and provides criteria for the measurement of tax positions taken or expected to be taken in a tax return. ASC 740 also includes guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition of income taxes. On December 22, 2017, H.R.1 (originally known as the Tax Cuts and Jobs Act (the "Tax Act") was signed into law, lowering the corporate income tax rate from 34 percent to 21 percent. This provided significant tax benefits in 2018 by lowering the effective tax rate. On July 1, 2018, New Jersey's Assembly Bill 4202 was signed into law. The new Bill, effective January 1, 2018, imposed a temporary surtax on corporations earning New Jersey allocated income in excess of $1 million at a rate of 2.5% for tax years beginning on or after January 1, 2018, through December 31, 2019, and at 1.5% for tax years beginning on or after January 1, 2020, through December 31, 2021. In addition, effective for periods on or after January 1, 2019, New Jersey is adopting mandatory unitary combined reporting for its Corporation Business Tax. For the three months ended September 30, 2019, the Company reported income tax expense of $843,000 for an effective tax rate of 28.5%, compared to an income tax expense of $1.0 million for an effective tax rate of 26.3% for the same period last year. This was mainly due to the non-deductibility of certain merger related expenses and, to a lesser degree, a lower tax benefit related to the accounting treatment of equity-based compensation, in which a $29,000 benefit was recognized in the third quarter of 2019 compared to a $35,000 benefit from the same period last year. For the nine months ended September 30, 2019 the Company reported income tax expense of $3.0 million for an effective tax rate of 27.4%, compared to an income tax expense of $2.9 million for an effective tax rate of 26.0% for the same period last year. This was mainly due to a lower tax benefit related to the accounting treatment of equity-based compensation, in which a $67,000 benefit was recognized for the nine months ended September 30, 2019 compared to a $168,000 benefit from the same period last year. The Company did not recognize or accrue any interest or penalties related to income taxes during the three and nine months ended September 30, 2019 or 2018. The Company did not have an accrual for uncertain tax positions as of September 30, 2019 or December 31, 2018, as deductions taken and benefits accrued are based on widely understood administrative practices and procedures and are based on clear and unambiguous tax law. |
Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine months ended September 30, 2019 and 2018.
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Goodwill (Details) - USD ($) |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment loss | $ 0 | |
Goodwill | $ 18,109,000 | $ 18,109,000 |
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