Connecticut (State or other jurisdiction of Incorporation or organization) | 20-8251355 (I.R.S. Employer Identification No.) |
Large accelerated filer ¨ | Accelerated filer þ |
Non-accelerated filer ¨ | Smaller reporting company þ |
Emerging growth company þ |
• | Local, regional and national business or economic conditions may differ from those expected; |
• | Credit risk and resulting losses in our loan portfolio; |
• | Our allowance for loan losses may not be adequate to absorb loan losses; |
• | Changes in real estate values could also increase our credit risk; |
• | Changes in our key management personnel; |
• | Inability to successfully execute our management team’s strategic initiatives; |
• | Our ability to successfully execute our growth initiatives such as branch openings and acquisitions; |
• | Volatility and direction of market interest rates; |
• | Increased competition within our market area which may limit our growth and profitability; |
• | Economic, market, operational, liquidity, credit and interest rate risks associated with our business; |
• | The effects of and changes in trade, monetary and fiscal policies and laws, including the Federal Reserve Board’s interest rate policies; |
• | Changes in accounting policies and practices, as may be adopted by regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board; |
• | Changes in law and regulatory requirements (including those concerning taxes, banking, securities and insurance); and |
• | Further governmental intervention in the U.S. financial system. |
• | Responsive, Customer-Centric Products and Services and a Community Focus. We offer a broad array of products and services which we customize to allow us to focus on building long-term relationships with our customers through high-quality, responsive and personal customer service. By focusing on the entire customer relationship, we build the trust of our customers which leads to long-term relationships and generates our organic growth. In addition, we are committed to meeting the needs of the communities that we serve. Our employees are involved in many civic and community organizations which we support through sponsorships. As a result, customers and potential customers within our market know about us and frequently interact with our employees which allows us to develop long-term customer relationships without extensive advertising. |
• | Strategic Acquisitions. To complement our organic growth, we focus on strategic acquisitions in or around our existing markets that further our objectives. We believe there are banking institutions that continue to face credit challenges, capital constraints and liquidity issues and that lack the scale and management expertise to manage the increasing regulatory burden and will likely need to partner with an institution like ours. As we evaluate potential acquisitions, we will continue to seek acquisitions that provide meaningful financial benefits, long-term organic growth opportunities and expense reductions, without compromising our risk profile. |
• | Utilization of Efficient and Scalable Infrastructure. We employ a systematic and calculated approach to increasing our profitability and improving our efficiencies. We continually upgrade our operating infrastructure, particularly in the areas of technology, data processing, compliance and personnel. We believe that our scalable infrastructure provides us with an efficient operating platform from which to grow in the near term, while continuing to deliver our high-quality, responsive customer service, which will enhance our ability to grow and increase our returns. |
• | Disciplined Focus on Risk Management. Effective risk management is a key component of our strong corporate culture. We use our strong risk management process to monitor our existing loan and investment securities portfolios, support operational decision-making and improve our ability to generate earning assets with strong credit quality. To maintain our strong credit quality, we use a comprehensive underwriting process and we seek to maintain a diversified loan portfolio and a conservative investment securities portfolio. Board-approved policies contain approval authorities, as appropriate, |
• | Our Market. Our current market is defined as the New York metropolitan area, including Fairfield and New Haven Counties, Connecticut. The Stamford market area includes numerous affluent suburban communities of professionals who work and commute into New York City, approximately 50 miles from our headquarters, and many small to mid-sized businesses which support these communities. Fairfield County is the wealthiest county in Connecticut based on median household income according to estimates from the United States Census Bureau. We believe that this market has economic and competitive dynamics that are favorable to executing our growth strategy. |
• | Experienced and Respected Management Team with a Proven and Successful Track Record. Our executive management team is comprised of seasoned professionals with significant banking experience, a history of high performance at local financial institutions and success in identifying, acquiring and integrating financial institutions. Our senior management team includes Christopher R. Gruseke, President and Chief Executive Officer (four years with us), Heidi S. DeWyngaert, Executive Vice President, Chief Lending Officer (fourteen years with us), Penko Ivanov, Executive Vice President, Chief Financial Officer (over two years with us), David Dineen, Executive Vice President, Head of Community Banking (three years with us), Christine A. Chivily, Executive Vice President, Chief Risk and Credit Officer (six years with us), and Laura Waitz, Executive Vice President, Chief of Staff (in her second year with us). |
• | Dedicated Board of Directors with Strong Community Involvement. Our Board of Directors is comprised of a group of local business leaders who understand the need for strong community banks that focus on serving the financial needs of their customers. The interests of our executive management team and directors are aligned with those of our shareholders through common stock ownership. By capitalizing on the close community ties and business relationships of our executive management team and directors, we are positioned to continue taking advantage of the market opportunity present in our primary market. |
• | Strong Capital Position. At December 31, 2018, we had a 9.16% tangible common equity ratio, and the Bank had a 10.14% tier 1 leverage ratio and an 11.56% tier 1 risk-based ratio. We believe that our ability to attract and generate capital has facilitated our growth and is an integral component to the execution of our business plan. |
• | Scalable Operating Platform. We provide banking technology, including remote deposit capture, internet banking and mobile banking, to offer our customers maximum flexibility and to create a scalable platform to accommodate our future growth aspirations. We believe that our advanced technology combined with responsive and personal service provides our customers with a superior banking experience. |
At December 31, | ||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||
Amount | Percent of Loan Portfolio | Amount | Percent of Loan Portfolio | Amount | Percent of Loan Portfolio | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||
Residential | $ | 178,079 | 11.10 | % | $ | 193,524 | 12.54 | % | $ | 195,729 | 14.33 | % | ||||||||
Commercial | 1,094,066 | 68.18 | 987,242 | 63.98 | 845,322 | 61.89 | ||||||||||||||
Construction | 73,191 | 4.56 | 101,636 | 6.59 | 107,441 | 7.86 | ||||||||||||||
1,345,336 | 83.84 | 1,282,402 | 83.11 | 1,148,492 | 84.08 | |||||||||||||||
Commercial business | 258,978 | 16.14 | 259,995 | 16.85 | 215,914 | 15.81 | ||||||||||||||
Consumer | 412 | 0.02 | 619 | 0.04 | 1,533 | 0.11 | ||||||||||||||
Total loans | $ | 1,604,726 | 100.00 | % | $ | 1,543,016 | 100.00 | % | $ | 1,365,939 | 100.00 | % |
At December 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Amount | Percent of Loan Portfolio | Amount | Percent of Loan Portfolio | ||||||||||
(In thousands) | |||||||||||||
Real estate loans: | |||||||||||||
Residential | $ | 193,110 | 16.83 | % | $ | 193,197 | 20.78 | % | |||||
Commercial | 697,542 | 60.79 | 521,181 | 56.06 | |||||||||
Construction | 82,273 | 7.17 | 63,229 | 6.80 | |||||||||
972,925 | 84.79 | 777,607 | 83.64 | ||||||||||
Commercial business | 172,853 | 15.06 | 149,259 | 16.05 | |||||||||
Consumer | 1,735 | 0.15 | 2,896 | 0.31 | |||||||||
Total loans | $ | 1,147,513 | 100.00 | % | $ | 929,762 | 100.00 | % |
• | Truth-In-Savings Act, requiring certain disclosures for consumer deposit accounts; |
• | Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; |
• | Electronic Fund Transfer Act and Regulation E issued by the Consumer Financial Protection Bureau to implement that act, which govern electronic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and |
• | Rules and regulations of the various federal banking agencies charged with the responsibility of implementing these federal laws. |
• | A lending test, to evaluate the bank’s record of making loans in its assessment areas; |
• | An investment test, to evaluate the bank’s record of investing in community development projects, affordable housing, and programs benefiting low or moderate income individuals and businesses; and |
• | A service test, to evaluate the bank’s delivery of services through its branches, ATMs, and other offices. |
• | Federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; |
• | Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; |
• | Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, color, religion or other prohibited factors in extending credit; |
• | Fair Credit Reporting Act of 1978, governing the use of consumer credit reports and the provision of information to credit reporting agencies; |
• | Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by collection agencies; |
• | Real Estate Settlement Procedures Act, governing closing costs and settlement procedures and disclosures to consumers related thereto; |
• | Service members Civil Relief Act of 2004, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service; and |
• | Rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws. |
• | Our ability to build and maintain long-term customer relationships while ensuring high ethical standards and safe and sound banking practices; |
• | The scope, relevance and pricing of products and services that we offer; |
• | Customer satisfaction with our products and personalized services; |
• | Industry and general economic trends; and |
• | Our ability to keep pace with technological advances and to invest in new technology. |
• | Incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operation of our existing business; |
• | Using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; |
• | Intense competition from other banking organizations and other inquirers for acquisitions; |
• | Potential exposure to unknown or contingent liabilities of banks and businesses we acquire; |
• | The time and expense required to integrate the operations and personnel of the combined businesses; |
• | Experiencing higher operating expenses relative to operating income from the new operations; |
• | Creating an adverse short-term effect on our results of operations; |
• | Losing key employees and customers as a result of an acquisition that is poorly received; |
• | Significant problems relating to the conversion of the financial and customer data of the entity; |
• | Inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the acquisition; or |
• | Risks of impairment to goodwill or other than temporary impairment. |
Branch | Address | Owned or Leased | ||
Elm Street | 208 Elm Street New Canaan, CT 06840 | Lease (expires 2021) | ||
Cherry Street | 156 Cherry Street New Canaan, CT 06840 | Lease (expires 2021) | ||
Bedford | 612 Bedford Street Stamford, CT 06901 | Lease (expires 2020) | ||
High Ridge | 1095 High Ridge Road, Stamford, CT 06905 | Lease (expires 2028) | ||
Black Rock | 2220 Black Rock Turnpike Fairfield, CT 06825 | Lease (expires 2024) | ||
Sasco Hill | One Sasco Hill Road Fairfield, CT 06824 | Lease (expires 2024) | ||
Wilton | 47 Old Ridgefield Road Wilton, CT 06897 | Own | ||
Norwalk | 370 Westport Avenue Norwalk, CT 06851 | Lease (expires 2030) | ||
Hamden | 2704 Dixwell Avenue Hamden, CT 06518 | Own | ||
North Haven | 24 Washington Avenue North Haven, CT 06473 | Lease (expires 2019) | ||
Westport | 100 Post Road East, Westport, CT 06880 | Lease (expires 2028) | ||
Darien | 1065 Post Road, Darien, CT 06820 | Lease (expires 2028) |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Index | 5/15/2014 | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | ||||||
Bankwell Financial Group, Inc. | 100.00 | 116.67 | 110.28 | 180.56 | 190.78 | 159.50 | ||||||
Nasdaq Composite Index | 100.00 | 116.39 | 123.05 | 132.29 | 169.65 | 163.06 | ||||||
Nasdaq Bank Index | 100.00 | 109.89 | 117.17 | 158.21 | 163.76 | 134.44 |
At or For the Years Ended December 31, | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Statements of Income: | ||||||||||||||||||||
Interest income | $ | 80,064 | $ | 71,201 | $ | 60,990 | $ | 50,754 | $ | 35,589 | ||||||||||
Interest expense | 23,738 | 16,837 | 11,898 | 7,966 | 3,929 | |||||||||||||||
Net interest income | 56,326 | 54,364 | 49,092 | 42,788 | 31,660 | |||||||||||||||
Provision for loan losses | 3,440 | 1,341 | 3,914 | 3,230 | 2,152 | |||||||||||||||
Net interest income after provision for loan losses | 52,886 | 53,023 | 45,178 | 39,558 | 29,508 | |||||||||||||||
Noninterest income | 3,900 | 4,629 | 2,676 | 3,484 | 3,041 | |||||||||||||||
Noninterest expense | 35,633 | 32,523 | 29,544 | 29,171 | 25,812 | |||||||||||||||
Income before income tax | 21,153 | 25,129 | 18,310 | 13,871 | 6,737 | |||||||||||||||
Income tax expense | 3,720 | 11,299 | 5,960 | 4,841 | 2,169 | |||||||||||||||
Net income | 17,433 | 13,830 | 12,350 | 9,030 | 4,568 | |||||||||||||||
Net income attributable to common shareholders | $ | 17,433 | $ | 13,830 | $ | 12,350 | $ | 8,905 | $ | 4,458 | ||||||||||
Per Share Data: | ||||||||||||||||||||
Basic earnings per share | $ | 2.23 | $ | 1.80 | $ | 1.64 | $ | 1.23 | $ | 0.78 | ||||||||||
Diluted earnings per share | $ | 2.21 | $ | 1.78 | $ | 1.62 | $ | 1.21 | $ | 0.78 | ||||||||||
Book value per share (end of period)(a) | 22.43 | 20.98 | 19.39 | 17.87 | 16.84 | |||||||||||||||
Tangible book value per share (end of period)(a)(b) | 22.06 | 20.59 | 18.98 | 17.43 | 16.35 | |||||||||||||||
Dividend payout ratio(f) | 21.56 | % | 15.54 | % | 13.45 | % | 4.16 | % | — | % | ||||||||||
Shares outstanding (end of period)(a) | 7,764,647 | 7,676,238 | 7,524,069 | 7,372,968 | 7,019,620 | |||||||||||||||
Weighted average shares outstanding–basic | 7,722,175 | 7,572,409 | 7,396,019 | 7,071,550 | 5,577,942 | |||||||||||||||
Weighted average shares outstanding–diluted | 7,775,480 | 7,670,413 | 7,491,052 | 7,140,558 | 5,605,512 | |||||||||||||||
Performance Ratios: | ||||||||||||||||||||
Return on average assets(c) | 0.94 | % | 0.80 | % | 0.85 | % | 0.75 | % | 0.52 | % | ||||||||||
Return on average common shareholders’ equity | 10.19 | % | 8.93 | % | 8.94 | % | 6.67 | % | 5.13 | % | ||||||||||
Return on average shareholders’ equity(c) | 10.19 | % | 8.93 | % | 8.94 | % | 6.76 | % | 4.66 | % | ||||||||||
Average shareholders’ equity to average assets | 9.24 | % | 8.97 | % | 9.47 | % | 11.08 | % | 11.14 | % | ||||||||||
Net interest margin | 3.18 | % | 3.30 | % | 3.54 | % | 3.77 | % | 3.84 | % | ||||||||||
Efficiency ratio(b) | 59.2 | % | 54.9 | % | 56.5 | % | 62.3 | % | 68.7 | % | ||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Total past due loans to total loans(d) | 0.78 | % | 1.67 | % | 0.47 | % | 0.51 | % | 0.86 | % | ||||||||||
Nonperforming loans to total loans(d) | 0.88 | % | 0.36 | % | 0.22 | % | 0.33 | % | 0.36 | % | ||||||||||
Nonperforming assets to total assets(e) | 0.75 | % | 0.31 | % | 0.20 | % | 0.38 | % | 0.39 | % | ||||||||||
Allowance for loan losses to nonperforming loans | 109.80 | % | 344.90 | % | 612.26 | % | 373.76 | % | 323.02 | % | ||||||||||
Allowance for loan losses to total loans(d) | 0.96 | % | 1.23 | % | 1.32 | % | 1.23 | % | 1.17 | % | ||||||||||
Net charge-offs (recoveries) to average loans(d) | 0.44 | % | 0.03 | % | 0.01 | % | (0.01 | )% | (0.05 | )% | ||||||||||
Statements of Financial Condition: | ||||||||||||||||||||
Total assets | $ | 1,873,665 | $ | 1,796,607 | $ | 1,628,919 | $ | 1,330,372 | $ | 1,099,531 | ||||||||||
Gross portfolio loans(d) | 1,604,726 | 1,543,016 | 1,365,939 | 1,147,513 | 929,762 | |||||||||||||||
Investment securities | 116,584 | 113,767 | 104,610 | 50,807 | 76,463 | |||||||||||||||
Deposits | 1,502,244 | 1,398,405 | 1,289,037 | 1,046,942 | 835,439 | |||||||||||||||
FHLB borrowings | 160,000 | 199,000 | 160,000 | 120,000 | 129,000 | |||||||||||||||
Subordinated debt | 25,155 | 25,103 | 25,051 | 25,000 | — | |||||||||||||||
Total equity | 174,196 | 161,027 | 145,895 | 131,769 | 129,210 | |||||||||||||||
Capital Ratios: | ||||||||||||||||||||
Tier 1 capital to average assets | ||||||||||||||||||||
Bankwell Bank | 10.14 | % | 9.61 | % | 10.10 | % | 10.84 | % | 11.12 | % | ||||||||||
Tier 1 capital to risk-weighted assets | ||||||||||||||||||||
Bankwell Bank | 11.56 | % | 10.99 | % | 11.59 | % | 12.18 | % | 12.47 | % | ||||||||||
Total capital to risk-weighted assets | ||||||||||||||||||||
Bankwell Bank | 12.50 | % | 12.19 | % | 12.85 | % | 13.39 | % | 13.55 | % | ||||||||||
Total shareholders’ equity to total assets | 9.30 | % | 8.96 | % | 8.96 | % | 9.90 | % | 11.75 | % | ||||||||||
Tangible common equity ratio(b) | 9.16 | % | 8.81 | % | 8.78 | % | 9.68 | % | 10.47 | % |
(a) | Excludes preferred stock and unvested restricted stock awards. |
(b) | This measure is not a measure recognized under GAAP and is therefore considered to be a non-GAAP financial measure. See “Non-GAAP Financial Measures” for a description of this measure and a reconciliation of this measure to its most directly comparable GAAP measure. |
(c) | Calculated based on net income before preferred stock dividend. |
(d) | Calculated using the principal amounts outstanding on loans. |
(e) | Nonperforming assets consist of nonperforming loans and other real estate owned. |
(f) | The Company paid its first quarterly dividend to shareholders in the fourth quarter of 2015. |
Years Ended December 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Efficiency Ratio | |||||||||||||||||||
Noninterest expense | $ | 35,633 | $ | 32,523 | $ | 29,544 | $ | 29,171 | $ | 25,812 | |||||||||
Less: foreclosed real estate expenses | — | 70 | 157 | 168 | 36 | ||||||||||||||
Less: Amortization of Intangibles | 92 | 118 | 151 | 196 | 133 | ||||||||||||||
Less: merger and acquisition expenses | — | — | — | 2 | 1,801 | ||||||||||||||
Adjusted noninterest expense (numerator) | $ | 35,541 | $ | 32,335 | $ | 29,236 | $ | 28,805 | $ | 23,842 | |||||||||
Net interest income | $ | 56,326 | $ | 54,364 | $ | 49,092 | $ | 42,788 | $ | 31,660 | |||||||||
Noninterest income | 3,900 | 4,629 | 2,676 | 3,484 | 3,041 | ||||||||||||||
Adjustments for: gains/(losses) on sales of securities | 222 | 165 | (115 | ) | — | — | |||||||||||||
Adjustments for: (losses) gains on sale of foreclosed real estate | — | (78 | ) | 128 | — | — | |||||||||||||
Adjusted operating revenue (denominator) | $ | 60,004 | $ | 58,906 | $ | 51,755 | $ | 46,272 | $ | 34,701 | |||||||||
Efficiency ratio | 59.2 | % | 54.9 | % | 56.5 | % | 62.3 | % | 68.7 | % | |||||||||
Tangible Common Equity and Tangible Common Equity/Tangible Assets | |||||||||||||||||||
Total shareholders’ equity | $ | 174,196 | $ | 161,027 | $ | 145,895 | $ | 131,769 | $ | 129,210 | |||||||||
Less: preferred stock | — | — | — | — | 10,980 | ||||||||||||||
Common shareholders’ equity | 174,196 | 161,027 | 145,895 | 131,769 | 118,230 | ||||||||||||||
Less: Intangible assets | 2,879 | 2,971 | 3,090 | 3,241 | 3,437 | ||||||||||||||
Tangible Common shareholders’ equity | $ | 171,317 | $ | 158,056 | $ | 142,805 | $ | 128,528 | $ | 114,793 | |||||||||
Total assets | $ | 1,873,665 | $ | 1,796,607 | $ | 1,628,919 | $ | 1,330,372 | $ | 1,099,531 | |||||||||
Less: Intangible assets | 2,879 | 2,971 | 3,090 | 3,241 | 3,437 | ||||||||||||||
Tangible assets | $ | 1,870,786 | $ | 1,793,636 | $ | 1,625,829 | $ | 1,327,131 | $ | 1,096,094 | |||||||||
Tangible common shareholders’ equity to tangible assets | 9.16 | % | 8.81 | % | 8.78 | % | 9.68 | % | 10.47 | % | |||||||||
Tangible Book Value per Share | |||||||||||||||||||
Total shareholders’ equity | $ | 174,196 | $ | 161,027 | $ | 145,895 | $ | 131,769 | $ | 129,210 | |||||||||
Less: preferred stock | — | — | — | — | 10,980 | ||||||||||||||
Common shareholders’ equity | 174,196 | 161,027 | 145,895 | 131,769 | 118,230 | ||||||||||||||
Less: Intangible assets | 2,879 | 2,971 | 3,090 | 3,241 | 3,437 | ||||||||||||||
Tangible common shareholders’ equity | $ | 171,317 | $ | 158,056 | $ | 142,805 | $ | 128,528 | $ | 114,793 | |||||||||
Common shares issued | 7,842,271 | 7,751,424 | 7,620,663 | 7,516,291 | 7,185,482 | ||||||||||||||
Less: shares of unvested restricted stock | 77,624 | 75,186 | 96,594 | 143,323 | 165,862 | ||||||||||||||
Common shares outstanding | 7,764,647 | 7,676,238 | 7,524,069 | 7,372,968 | 7,019,620 | ||||||||||||||
Book value per share | $ | 22.43 | $ | 20.98 | $ | 19.39 | $ | 17.87 | $ | 16.84 | |||||||||
Less: effects of intangible assets | 0.37 | 0.39 | 0.41 | 0.44 | 0.49 | ||||||||||||||
Tangible Book Value per Common Share | $ | 22.06 | $ | 20.59 | $ | 18.98 | $ | 17.43 | $ | 16.35 | |||||||||
Total Revenue | |||||||||||||||||||
Net Interest income | $ | 56,326 | $ | 54,364 | $ | 49,092 | $ | 42,788 | $ | 31,660 | |||||||||
Add: noninterest income | 3,900 | 4,629 | 2,676 | 3,484 | 3,041 | ||||||||||||||
Total Revenue | $ | 60,226 | $ | 58,993 | $ | 51,768 | $ | 46,272 | $ | 34,701 | |||||||||
Noninterest income as a percentage of total revenue | 6.48 | % | 7.85 | % | 5.17 | % | 7.53 | % | 8.76 | % | |||||||||
Return on Average Common Shareholders’ Equity | |||||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 17,433 | $ | 13,830 | $ | 12,350 | $ | 8,905 | $ | 4,458 | |||||||||
Total average shareholders’ equity | $ | 171,024 | $ | 154,929 | $ | 138,131 | $ | 133,553 | $ | 97,921 | |||||||||
Less: average preferred stock | — | — | — | — | 10,980 | ||||||||||||||
Average Common Shareholders’ Equity | 171,024 | 154,929 | 138,131 | 133,553 | 86,941 | ||||||||||||||
Return on Average Common Shareholders’ Equity | 10.19 | % | 8.93 | % | 8.94 | % | 6.67 | % | 5.13 | % |
• | Responsive, customer-centric products and services and a community focus; |
• | Strategic acquisitions; |
• | Utilization of efficient and scalable infrastructure; and |
• | Disciplined focus on risk management. |
Key Financial Measures(a) | |||||||||||
At or For the Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(Dollars in thousands, except per share data) | |||||||||||
Selected balance sheet measures: | |||||||||||
Total assets | $ | 1,873,665 | $ | 1,796,607 | $ | 1,628,919 | |||||
Gross portfolio loans | 1,604,726 | 1,543,016 | 1,365,939 | ||||||||
Deposits | 1,502,244 | 1,398,405 | 1,289,037 | ||||||||
FHLB borrowings | 160,000 | 199,000 | 160,000 | ||||||||
Subordinated debt | 25,155 | 25,103 | 25,051 | ||||||||
Total equity | 174,196 | 161,027 | 145,895 | ||||||||
Selected statement of income measures: | |||||||||||
Total revenue(c) | 60,226 | 58,993 | 51,768 | ||||||||
Net interest income before provision for loan losses | 56,326 | 54,364 | 49,092 | ||||||||
Income before income tax expense | 21,153 | 25,129 | 18,310 | ||||||||
Net income | 17,433 | 13,830 | 12,350 | ||||||||
Basic earnings per share | $ | 2.23 | $ | 1.80 | $ | 1.64 | |||||
Diluted earnings per share | $ | 2.21 | $ | 1.78 | $ | 1.62 |
Key Financial Measures(a) | |||||||||||
At or For the Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Other financial measures and ratios: | |||||||||||
Return on average assets | 0.94 | % | 0.80 | % | 0.85 | % | |||||
Return on average common shareholders’ equity(c) | 10.19 | % | 8.93 | % | 8.94 | % | |||||
Net interest margin | 3.18 | % | 3.30 | % | 3.54 | % | |||||
Efficiency ratio(c) | 59.2 | % | 54.9 | % | 56.5 | % | |||||
Tangible book value per share (end of period)(c)(d) | $ | 22.06 | $ | 20.59 | $ | 18.98 | |||||
Net charge-offs to average loans(b) | 0.44 | % | 0.03 | % | 0.01 | % | |||||
Nonperforming assets to total assets(e) | 0.75 | % | 0.31 | % | 0.20 | % | |||||
Allowance for loan losses to nonperforming loans | 109.80 | % | 344.90 | % | 612.26 | % | |||||
Allowance for loan losses to total loans(b) | 0.96 | % | 1.23 | % | 1.32 | % |
(a) | We have derived the selected balance sheet measures as of December 31, 2018 and 2017 and the selected statement of income measures for the years ended December 31, 2018, 2017 and 2016 from our audited consolidated financial statements included elsewhere in this annual report. Average balances have been computed using daily averages. Our historical results may not be indicative of our results for any future period. |
(b) | Calculated using the principal amounts outstanding on loans. |
(c) | This measure is not a measure recognized under GAAP and is therefore considered to be a non-GAAP financial measure. See “Non-GAAP Financial Measures” for a description of this measure and a reconciliation of this measure to its most directly comparable GAAP measure. |
(d) | Excludes unvested restricted stock awards. |
(e) | Nonperforming assets consist of nonperforming loans and other real estate owned. |
Years Ended December 31, | ||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||||||||||||||
Average Balance | Interest | Yield/ Rate(5) | Average Balance | Interest | Yield/ Rate(5) | Average Balance | Interest | Yield/ Rate(5) | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash and fed funds sold | $ | 77,923 | $ | 1,428 | 1.84 | % | $ | 85,308 | $ | 790 | 0.93 | % | $ | 41,838 | $ | 173 | 0.41 | % | ||||||||||||||
Securities(1) | 118,311 | 3,686 | 3.12 | 108,775 | 3,830 | 3.52 | 99,905 | 3,046 | 3.05 | |||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||
Commercial real estate | 1,014,255 | 47,967 | 4.66 | 907,223 | 41,638 | 4.53 | 772,890 | 36,572 | 4.65 | |||||||||||||||||||||||
Residential real estate | 189,121 | 7,016 | 3.71 | 194,344 | 6,983 | 3.51 | 194,047 | 7,031 | 3.62 | |||||||||||||||||||||||
Construction(2) | 90,773 | 4,667 | 5.07 | 107,752 | 5,195 | 4.75 | 100,611 | 4,602 | 4.50 | |||||||||||||||||||||||
Commercial business | 282,425 | 15,037 | 5.25 | 253,868 | 12,981 | 5.04 | 185,523 | 9,791 | 5.19 | |||||||||||||||||||||||
Consumer | 481 | 28 | 5.88 | 1,227 | 44 | 3.62 | 1,560 | 81 | 5.17 | |||||||||||||||||||||||
Total loans | 1,577,055 | 74,715 | 4.67 | 1,464,414 | 66,841 | 4.50 | 1,254,631 | 58,077 | 4.55 | |||||||||||||||||||||||
Federal Home Loan Bank stock | 9,177 | 517 | 5.63 | 8,486 | 337 | 3.97 | 7,366 | 255 | 3.46 | |||||||||||||||||||||||
Total earning assets | 1,782,466 | $ | 80,346 | 4.45 | % | 1,666,983 | $ | 71,798 | 4.25 | % | 1,403,740 | $ | 61,551 | 4.31 | % | |||||||||||||||||
Other assets | 68,002 | 60,904 | 54,580 | |||||||||||||||||||||||||||||
Total assets | $ | 1,850,468 | $ | 1,727,887 | $ | 1,458,320 | ||||||||||||||||||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||||||||||||||
Interest -bearing liabilities: | ||||||||||||||||||||||||||||||||
NOW | $ | 60,410 | $ | 157 | 0.26 | % | $ | 57,712 | $ | 93 | 0.16 | % | $ | 56,123 | $ | 109 | 0.19 | % | ||||||||||||||
Money market | 482,886 | 6,431 | 1.33 | 404,848 | 3,427 | 0.85 | 317,210 | 1,836 | 0.58 | |||||||||||||||||||||||
Savings | 124,214 | 1,649 | 1.33 | 102,915 | 763 | 0.74 | 72,800 | 315 | 0.43 | |||||||||||||||||||||||
Time | 619,448 | 10,714 | 1.73 | 633,260 | 8,411 | 1.33 | 524,237 | 6,040 | 1.15 | |||||||||||||||||||||||
Total interest-bearing deposits | 1,286,958 | 18,951 | 1.47 | 1,198,735 | 12,694 | 1.06 | 970,370 | 8,300 | 0.86 | |||||||||||||||||||||||
Borrowed money | 213,546 | 4,787 | 2.21 | 194,875 | 4,143 | 2.10 | 164,450 | 3,598 | 2.19 | |||||||||||||||||||||||
Total interest-bearing liabilities | 1,500,504 | $ | 23,738 | 1.58 | % | 1,393,610 | $ | 16,837 | 1.21 | % | 1,134,820 | $ | 11,898 | 1.05 | % | |||||||||||||||||
Noninterest-bearing deposits | 166,566 | 169,250 | 172,098 | |||||||||||||||||||||||||||||
Other liabilities | 12,374 | 10,098 | 13,271 | |||||||||||||||||||||||||||||
Total liabilities | 1,679,444 | 1,572,958 | 1,320,189 | |||||||||||||||||||||||||||||
Shareholders’ equity | 171,024 | 154,929 | 138,131 | |||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,850,468 | $ | 1,727,887 | $ | 1,458,320 | ||||||||||||||||||||||||||
Net interest income(3) | $ | 56,608 | $ | 54,961 | $ | 49,653 | ||||||||||||||||||||||||||
Interest rate spread | 2.87 | % | 3.04 | % | 3.26 | % | ||||||||||||||||||||||||||
Net interest margin(4) | 3.18 | % | 3.30 | % | 3.54 | % |
(1) | Average balances and yields for securities are based on amortized cost. |
(2) | Includes commercial and residential real estate construction loans. |
(3) | The adjustment for securities and loans taxable equivalency was $282 thousand, $597 thousand and $561 thousand, respectively, for the years ended December 31, 2018, 2017 and 2016. Tax exempt income was converted to a fully taxable equivalent basis at a 20 percent tax rate for 2018 and a 30 percent tax rate for 2017 and 2016. |
(4) | Net interest income as a percentage of total earning assets. |
(5) | Yields are calculated using the contractual day count convention for each respective product type. |
Year Ended December 31, 2018 vs 2017 Increase (Decrease) | Year Ended December 31, 2017 vs 2016 Increase (Decrease) | ||||||||||||||||||||||
Volume | Rate | Total | Volume | Rate | Total | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Interest and dividend income: | |||||||||||||||||||||||
Cash and fed funds sold | $ | (74 | ) | $ | 712 | $ | 638 | $ | 281 | $ | 336 | $ | 617 | ||||||||||
Securities | 319 | (463 | ) | (144 | ) | 286 | 498 | 784 | |||||||||||||||
Loans: | |||||||||||||||||||||||
Commercial real estate | 5,031 | 1,298 | 6,329 | 6,206 | (1,140 | ) | 5,066 | ||||||||||||||||
Residential real estate | (190 | ) | 223 | 33 | 4 | (52 | ) | (48 | ) | ||||||||||||||
Construction | (857 | ) | 329 | (528 | ) | 337 | 256 | 593 | |||||||||||||||
Commercial business | 1,504 | 552 | 2,056 | 3,513 | (323 | ) | 3,190 | ||||||||||||||||
Consumer | (35 | ) | 19 | (16 | ) | (15 | ) | (22 | ) | (37 | ) | ||||||||||||
Total loans | 5,453 | 2,421 | 7,874 | 10,045 | (1,281 | ) | 8,764 | ||||||||||||||||
Federal Home Loan Bank stock | 29 | 151 | 180 | 42 | 40 | 82 | |||||||||||||||||
Total change in interest and dividend income | $ | 5,727 | $ | 2,821 | $ | 8,548 | $ | 10,654 | $ | (407 | ) | $ | 10,247 | ||||||||||
Interest expense: | |||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||
NOW | $ | 5 | $ | 59 | $ | 64 | $ | 3 | $ | (19 | ) | $ | (16 | ) | |||||||||
Money market | 756 | 2,248 | 3,004 | 594 | 997 | 1,591 | |||||||||||||||||
Savings | 184 | 702 | 886 | 164 | 284 | 448 | |||||||||||||||||
Time | (187 | ) | 2,490 | 2,303 | 1,366 | 1,005 | 2,371 | ||||||||||||||||
Total deposits | 758 | 5,499 | 6,257 | 2,127 | 2,267 | 4,394 | |||||||||||||||||
Borrowed money | 411 | 233 | 644 | 654 | (109 | ) | 545 | ||||||||||||||||
Total change in interest expense | 1,169 | 5,732 | 6,901 | 2,781 | 2,158 | 4,939 | |||||||||||||||||
Change in net interest income | $ | 4,558 | $ | (2,911 | ) | $ | 1,647 | $ | 7,873 | $ | (2,565 | ) | $ | 5,308 |
Years Ended December 31, | 2018/2017 Change | 2017/2016 Change | |||||||||||||||||||||||
2018 | 2017 | 2016 | $ | % | $ | % | |||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Service charges and fees | $ | 1,090 | $ | 1,007 | $ | 963 | $ | 83 | 8 | % | $ | 44 | 5 | % | |||||||||||
Bank owned life insurance | 1,057 | 1,170 | 693 | (113 | ) | (10 | ) | 477 | 69 | ||||||||||||||||
Gains and fees from sales of loans | 984 | 1,427 | 466 | (443 | ) | (31 | ) | 961 | 206 | ||||||||||||||||
Net gain (loss) on sale of available for sale securities | 222 | 165 | (115 | ) | 57 | 35 | 280 | (243 | ) | ||||||||||||||||
(Loss) gain on sale of foreclosed real estate | — | (78 | ) | 128 | 78 | (100 | ) | (206 | ) | (161 | ) | ||||||||||||||
Other | 547 | 938 | 541 | (391 | ) | (42 | ) | 397 | 73 | ||||||||||||||||
Total noninterest income | $ | 3,900 | $ | 4,629 | $ | 2,676 | $ | (729 | ) | (16 | )% | $ | 1,953 | 73 | % |
Years Ended December 31, | 2018/2017 Change | 2017/2016 Change | |||||||||||||||||||||||
2018 | 2017 | 2016 | $ | % | $ | % | |||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Salaries and employee benefits | $ | 18,973 | $ | 16,284 | $ | 15,655 | $ | 2,689 | 17 | % | $ | 629 | 4 | % | |||||||||||
Occupancy and equipment | 6,790 | 6,165 | 5,811 | 625 | 10 | 354 | 6 | ||||||||||||||||||
Professional services | 2,103 | 2,072 | 1,654 | 31 | 1 | 418 | 25 | ||||||||||||||||||
Data processing | 2,033 | 1,866 | 1,603 | 167 | 9 | 263 | 16 | ||||||||||||||||||
Marketing | 1,587 | 1,193 | 948 | 394 | 33 | 245 | 26 | ||||||||||||||||||
Director fees | 1,044 | 912 | 859 | 132 | 14 | 53 | 6 | ||||||||||||||||||
FDIC insurance | 779 | 1,116 | 660 | (337 | ) | (30 | ) | 456 | 69 | ||||||||||||||||
Amortization of intangibles | 92 | 118 | 151 | (26 | ) | (22 | ) | (33 | ) | (22 | ) | ||||||||||||||
Other | 2,232 | 2,797 | 2,203 | (565 | ) | (20 | ) | 594 | 27 | ||||||||||||||||
Total noninterest expense | $ | 35,633 | $ | 32,523 | $ | 29,544 | $ | 3,110 | 10 | % | $ | 2,979 | 10 | % |
2018 | 2017 | Change | |||||||||||||||
Total | % | Total | % | Total | |||||||||||||
(In thousands) | |||||||||||||||||
Real estate loans: | |||||||||||||||||
Residential | $ | 178,079 | 11.10 | % | $ | 193,524 | 12.54 | % | $ | (15,445 | ) | ||||||
Commercial | 1,094,066 | 68.18 | 987,242 | 63.98 | 106,824 | ||||||||||||
Construction | 73,191 | 4.56 | 101,636 | 6.59 | (28,445 | ) | |||||||||||
1,345,336 | 83.84 | 1,282,402 | 83.11 | 62,934 | |||||||||||||
Commercial business | 258,978 | 16.14 | 259,995 | 16.85 | (1,017 | ) | |||||||||||
Consumer | 412 | 0.02 | 619 | 0.04 | (207 | ) | |||||||||||
Total loans | $ | 1,604,726 | 100.00 | % | $ | 1,543,016 | 100.00 | % | $ | 61,710 |
December 31, 2018 | |||||||||||||||
Commercial Real Estate | Commercial Construction | Commercial Business | Total | ||||||||||||
(In thousands) | |||||||||||||||
Amounts due: | |||||||||||||||
One year or less | $ | 44,252 | $ | 11,816 | $ | 15,117 | $ | 71,185 | |||||||
After one year: | |||||||||||||||
One to five years | 384,320 | 10,909 | 130,020 | 525,249 | |||||||||||
Over five years | 665,494 | 17,567 | 113,841 | 796,902 | |||||||||||
Total due after one year | 1,049,814 | 28,476 | 243,861 | 1,322,151 | |||||||||||
Total | $ | 1,094,066 | $ | 40,292 | $ | 258,978 | $ | 1,393,336 |
December 31, 2018 | |||||||||||
Adjustable Interest Rate | Fixed Interest Rate | Total | |||||||||
(In thousands) | |||||||||||
Commercial real estate | $ | 310,382 | $ | 739,432 | $ | 1,049,814 | |||||
Commercial construction | — | 28,476 | 28,476 | ||||||||
Commercial business | 150,392 | 93,469 | 243,861 | ||||||||
Total loans due after one year | $ | 460,774 | $ | 861,377 | $ | 1,322,151 |
At December 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Nonaccrual loans: | |||||||||||||||||||
Real estate loans: | |||||||||||||||||||
Residential | $ | 3,812 | $ | 1,590 | $ | 1,612 | $ | 1,365 | $ | — | |||||||||
Commercial | 5,950 | 3,371 | 446 | 1,264 | 3,220 | ||||||||||||||
Commercial business | 4,320 | 520 | 538 | 1,160 | — | ||||||||||||||
Consumer | — | — | 341 | 2 | 142 | ||||||||||||||
Total non accrual loans | 14,082 | 5,481 | 2,937 | 3,791 | 3,362 | ||||||||||||||
Property acquired through foreclosure or repossession, net | — | — | 272 | 1,248 | 950 | ||||||||||||||
Total nonperforming assets | $ | 14,082 | $ | 5,481 | $ | 3,209 | $ | 5,039 | $ | 4,312 | |||||||||
Nonperforming assets to total assets | 0.75 | % | 0.31 | % | 0.20 | % | 0.38 | % | 0.39 | % | |||||||||
Nonperforming loans to total loans | 0.88 | % | 0.36 | % | 0.22 | % | 0.33 | % | 0.36 | % | |||||||||
Total past due loans to total loans | 0.78 | % | 1.67 | % | 0.47 | % | 0.51 | % | 0.86 | % |
30–59 Days Past Due | 60–89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | ||||||||||||
(In thousands) | |||||||||||||||
As of December 31, 2018 | |||||||||||||||
Residential real estate | $ | 994 | $ | — | $ | 2,203 | $ | 3,197 | |||||||
Commercial real estate | 668 | 133 | 4,386 | 5,187 | |||||||||||
Commercial business | — | 1 | 4,076 | 4,077 | |||||||||||
Total loans | $ | 1,662 | $ | 134 | $ | 10,665 | $ | 12,461 | |||||||
As of December 31, 2017 | |||||||||||||||
Residential real estate | $ | 1,248 | $ | 2,244 | $ | 1,161 | $ | 4,653 | |||||||
Commercial real estate | 10,028 | 4,116 | 2,074 | 16,218 | |||||||||||
Commercial business | 4,318 | 162 | 481 | 4,961 | |||||||||||
Consumer | 3 | — | 2 | 5 | |||||||||||
Total loans | $ | 15,597 | $ | 6,522 | $ | 3,718 | $ | 25,837 |
At December 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Accruing troubled debt restructured loans: | |||||||||||||||||||
Residential real estate | $ | 2,722 | $ | 2,957 | $ | 69 | $ | 944 | $ | 2,057 | |||||||||
Commercial real estate | 37 | 51 | 402 | 4,518 | 216 | ||||||||||||||
Commercial business | 923 | 1,346 | 893 | 779 | 1,338 | ||||||||||||||
Accruing troubled debt restructured loans | 3,682 | 4,354 | 1,364 | 6,241 | 3,611 | ||||||||||||||
Nonaccrual troubled debt restructured loans: | |||||||||||||||||||
Residential real estate | $ | 3,008 | $ | — | $ | — | $ | — | $ | — | |||||||||
Commercial real estate | 334 | 334 | — | 970 | — | ||||||||||||||
Commercial business | 217 | 219 | 66 | 90 | — | ||||||||||||||
Nonaccrual troubled debt restructured loans | 3,559 | 553 | 66 | 1,060 | — | ||||||||||||||
Total troubled debt restructured loans | $ | 7,241 | $ | 4,907 | $ | 1,430 | $ | 7,301 | $ | 3,611 |
At December 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Balance at beginning of period | $ | 18,904 | $ | 17,982 | $ | 14,169 | $ | 10,860 | $ | 8,382 | |||||||||
Charge-offs: | |||||||||||||||||||
Residential real estate | (420 | ) | — | — | — | — | |||||||||||||
Commercial real estate | (5,614 | ) | — | — | — | — | |||||||||||||
Construction | — | — | (7 | ) | — | (100 | ) | ||||||||||||
Commercial business | (815 | ) | (521 | ) | (69 | ) | (15 | ) | — | ||||||||||
Consumer | (77 | ) | (51 | ) | (35 | ) | (15 | ) | (3 | ) | |||||||||
Total charge-offs | (6,926 | ) | (572 | ) | (111 | ) | (30 | ) | (103 | ) | |||||||||
Recoveries: | |||||||||||||||||||
Residential real estate | — | 146 | — | — | — | ||||||||||||||
Commercial real estate | 18 | — | — | — | — | ||||||||||||||
Consumer | 7 | 3 | 10 | 9 | 425 | ||||||||||||||
Commercial Business | 19 | 4 | — | 100 | 4 | ||||||||||||||
Total recoveries | 44 | 153 | 10 | 109 | 429 | ||||||||||||||
Net (charge-offs) recoveries | (6,882 | ) | (419 | ) | (101 | ) | 79 | 326 | |||||||||||
Provision charged to earnings | 3,440 | 1,341 | 3,914 | 3,230 | 2,152 | ||||||||||||||
Balance at end of period | $ | 15,462 | $ | 18,904 | $ | 17,982 | $ | 14,169 | $ | 10,860 | |||||||||
Net charge-offs (recoveries) to average loans | 0.44 | % | 0.03 | % | 0.01 | % | (0.01 | )% | (0.05 | )% | |||||||||
Allowance for loan losses to total loans | 0.96 | % | 1.23 | % | 1.32 | % | 1.23 | % | 1.17 | % |
At December 31, | ||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||
Amount | Percent of Loan Portfolio | Amount | Percent of Loan Portfolio | Amount | Percent of Loan Portfolio | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Residential real estate | $ | 857 | 11.10 | % | $ | 1,721 | 12.54 | % | $ | 1,802 | 14.33 | % | ||||||||
Commercial real estate | 11,562 | 68.18 | 12,777 | 63.98 | 9,415 | 61.89 | ||||||||||||||
Construction | 140 | 4.56 | 907 | 6.59 | 2,105 | 7.86 | ||||||||||||||
Commercial business | 2,902 | 16.14 | 3,498 | 16.85 | 4,283 | 15.81 | ||||||||||||||
Consumer | 1 | 0.02 | 1 | 0.04 | 377 | 0.11 | ||||||||||||||
Total allowance for loan losses | $ | 15,462 | 100.00 | % | $ | 18,904 | 100.00 | % | $ | 17,982 | 100.00 | % |
At December 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Amount | Percent of Loan Portfolio | Amount | Percent of Loan Portfolio | ||||||||||
(Dollars in thousands) | |||||||||||||
Residential real estate | $ | 1,618 | 16.83 | % | $ | 1,636 | 20.78 | % | |||||
Commercial real estate | 7,705 | 60.79 | 5,480 | 56.06 | |||||||||
Construction | 1,504 | 7.17 | 1,102 | 6.80 | |||||||||
Commercial business | 3,334 | 15.06 | 2,638 | 16.05 | |||||||||
Consumer | 8 | 0.15 | 4 | 0.31 | |||||||||
Total allowance for loan losses | $ | 14,169 | 100.00 | % | $ | 10,860 | 100.00 | % |
At December 31, | |||||||||||||||||||||||
2018 | 2017 | 2016 | |||||||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Marketable equity securities | $ | 2,003 | $ | 2,009 | $ | — | $ | — | $ | — | $ | — | |||||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. Government and agency obligations | 83,815 | 82,136 | 73,024 | 72,774 | 62,457 | 62,698 | |||||||||||||||||
State agency and municipal obligations | 4,023 | 4,007 | 11,959 | 12,277 | 14,495 | 14,763 | |||||||||||||||||
Corporate bonds | 7,061 | 7,011 | 7,096 | 7,137 | 10,167 | 10,290 | |||||||||||||||||
Total securities available for sale | $ | 94,899 | $ | 93,154 | $ | 92,079 | $ | 92,188 | $ | 87,119 | $ | 87,751 | |||||||||||
Securities held to maturity: | |||||||||||||||||||||||
State agency and municipal obligations | 20,328 | 20,890 | 20,465 | 21,717 | 15,710 | 15,710 | |||||||||||||||||
Corporate bonds | 1,000 | 1,000 | 1,000 | 995 | 1,000 | 977 | |||||||||||||||||
Government mortgage-backed securities | 93 | 98 | 114 | 124 | 149 | 164 | |||||||||||||||||
Total securities held to maturity | $ | 21,421 | $ | 21,988 | $ | 21,579 | $ | 22,836 | $ | 16,859 | $ | 16,851 |
Due Within 1 Year | Due 1–5 Years | Due 5–10 Years | Due After 10 Years | ||||||||||||||||||||||||
At December 31, 2018 | Amortized Cost | Yield | Amortized Cost | Yield | Amortized Cost | Yield | Amortized Cost | Yield | |||||||||||||||||||
(Dollars In thousands) | |||||||||||||||||||||||||||
Marketable equity securities | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | 2,003 | 2.09 | % | |||||||||||
Securities available for sale: | |||||||||||||||||||||||||||
U.S. Government and agency obligations | 1,000 | 1.40 | 12,025 | 1.94 | 100 | 2.50 | 70,690 | 2.60 | |||||||||||||||||||
State agency and municipal obligations | — | — | 2,234 | 2.36 | 1,261 | 3.43 | 528 | 2.82 | |||||||||||||||||||
Corporate bonds | — | — | 7,061 | 2.46 | — | — | — | — | |||||||||||||||||||
Total securities available for sale | $ | 1,000 | 1.40 | % | $ | 21,320 | 2.16 | % | $ | 1,361 | 3.36 | % | $ | 71,218 | 2.60 | % | |||||||||||
Securities held to maturity: | |||||||||||||||||||||||||||
State agency and municipal obligations | $ | 3,894 | 4.21 | % | $ | — | — | % | $ | — | — | % | $ | 16,434 | 5.06 | % | |||||||||||
Corporate bonds | 1,000 | 2.23 | — | — | — | — | — | — | |||||||||||||||||||
Government mortgage-backed securities | — | — | — | — | — | — | 93 | 5.35 | |||||||||||||||||||
Total securities held to maturity | $ | 4,894 | 3.81 | % | $ | — | — | % | $ | — | — | % | $ | 16,527 | 5.06 | % |
Due Within 1 Year | Due 1–5 Years | Due 5–10 Years | Due After 10 Years | ||||||||||||||||||||||||
At December 31, 2017 | Amortized Cost | Yield | Amortized Cost | Yield | Amortized Cost | Yield | Amortized Cost | Yield | |||||||||||||||||||
(Dollars In thousands) | |||||||||||||||||||||||||||
Securities available for sale: | |||||||||||||||||||||||||||
U.S. Government and agency obligations | $ | — | —% | $ | 13,000 | 1.90 | % | $ | 100 | 2.50 | % | $ | 59,924 | 2.48 | % | ||||||||||||
State agency and municipal obligations | — | — | 2,873 | 2.70 | 7,386 | 3.54 | 1,700 | 3.36 | |||||||||||||||||||
Corporate bonds | — | — | 7,096 | 2.46 | — | — | — | — | |||||||||||||||||||
Total securities available for sale | $ | — | —% | $ | 22,969 | 2.17 | % | $ | 7,486 | 3.53 | % | $ | 61,624 | 2.50 | % | ||||||||||||
Securities held to maturity: | |||||||||||||||||||||||||||
State agency and municipal obligations | $ | 198 | 4.90 | % | $ | 3,880 | 4.08 | % | $ | — | —% | $ | 16,387 | 5.03 | % | ||||||||||||
Corporate bonds | — | — | 1,000 | 2.23 | — | — | — | — | |||||||||||||||||||
Government mortgage-backed securities | — | — | — | — | — | — | 114 | 5.35 | |||||||||||||||||||
Total securities held to maturity | $ | 198 | 4.90 | % | $ | 4,880 | 3.70 | % | $ | — | —% | $ | 16,501 | 5.04 | % |
At December 31, | |||||||||||||||||||
2018 | 2017 | ||||||||||||||||||
Amount | Percent | Weighted Average Rate | Amount | Percent | Weighted Average Rate | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Noninterest-bearing demand | $ | 173,198 | 11.53 | % | —% | $ | 172,638 | 12.35 | % | —% | |||||||||
NOW | 61,869 | 4.12 | 0.26 | 58,942 | 4.21 | 0.16 | |||||||||||||
Money market | 471,968 | 31.42 | 1.33 | 451,804 | 32.31 | 0.85 | |||||||||||||
Savings | 180,487 | 12.01 | 1.33 | 83,758 | 5.99 | 0.74 | |||||||||||||
Time | 614,722 | 40.92 | 1.73 | 631,263 | 45.14 | 1.33 | |||||||||||||
Total deposits | $ | 1,502,244 | 100.00 | % | 1.47 | % | $ | 1,398,405 | 100.00 | % | 1.06 | % |
At December 31, | |||||||
2018 | 2017 | ||||||
(Dollars in thousands) | |||||||
Maturing: | |||||||
Within 3 months | $ | 107,516 | $ | 63,575 | |||
After 3 but within 6 months | 136,494 | 114,511 | |||||
After 6 months but within 1 year | 102,722 | 149,782 | |||||
After 1 year | 147,062 | 179,655 | |||||
Total | $ | 493,794 | $ | 507,523 |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(Dollars in thousands) | |||||||||||
As of and for the period ending: | |||||||||||
Average amount outstanding during the period | $ | 163,419 | $ | 144,800 | $ | 114,426 | |||||
Amount outstanding at end of period | 135,000 | 174,000 | 135,000 | ||||||||
Highest month end balance during the period | 174,000 | 175,000 | 150,000 | ||||||||
Weighted average interest rate at end of period | 2.55 | % | 1.44 | % | 0.73 | % | |||||
Weighted average interest rate during the period | 1.76 | % | 1.54 | % | 0.69 | % |
Notional Amount | Original Maturity | Received | Paid | Fair Value Asset (Liability) | |||||||||
(Dollars in thousands) | |||||||||||||
Cash flow hedge: | |||||||||||||
Interest rate swap | $ | 25,000 | 4.7 years | 3-month LIBOR | 1.62% | $ | 1 | ||||||
Interest rate swap | 25,000 | 5.0 years | 3-month LIBOR | 1.83% | 220 | ||||||||
Interest rate swap | 25,000 | 5.0 years | 3-month LIBOR | 1.48% | 475 | ||||||||
Interest rate swap | 25,000 | 5.0 years | 3-month LIBOR | 1.22% | 828 | ||||||||
Interest rate swap | 25,000 | 7.0 years | 3-month LIBOR | 2.04% | 675 | ||||||||
Interest rate swap | 25,000 | 7.0 years | 3-month LIBOR | 2.04% | 668 | ||||||||
Forward-starting interest rate swap(1) | 25,000 | 15.0 years | 3-month LIBOR | 3.01% | (807 | ) | |||||||
Forward-starting interest rate swap(1) | 25,000 | 15.0 years | 3-month LIBOR | 3.03% | (819 | ) | |||||||
Forward-starting interest rate swap(1) | 25,000 | 15.0 years | 3-month LIBOR | 3.05% | (811 | ) | |||||||
$ | 225,000 | $ | 430 |
Notional Amount | Original Maturity | Received | Paid | Fair Value Asset (Liability) | |||||||||
(Dollars in thousands) | |||||||||||||
Cash flow hedge: | |||||||||||||
Interest rate swap | $ | 25,000 | 4.7 years | 3-month LIBOR | 1.62% | $ | 62 | ||||||
Interest rate swap | 25,000 | 5.0 years | 3-month LIBOR | 1.83% | 105 | ||||||||
Interest rate swap | 25,000 | 5.0 years | 3-month LIBOR | 1.48% | 398 | ||||||||
Interest rate swap | 25,000 | 5.0 years | 3-month LIBOR | 1.22% | 793 | ||||||||
Interest rate swap | 25,000 | 7.0 years | 3-month LIBOR | 2.04% | 342 | ||||||||
Interest rate swap | 25,000 | 7.0 years | 3-month LIBOR | 2.04% | 334 | ||||||||
$ | 150,000 | $ | 2,034 |
Payments Due by Period | |||||||||||||||||||
Total | Less Than 1 Year | 1–3 Years | 4–5 Years | After 5 Years | |||||||||||||||
(in thousands) | |||||||||||||||||||
Contractual Obligations: | |||||||||||||||||||
FHLB advances | $ | 160,000 | $ | 135,000 | $ | 25,000 | $ | — | $ | — | |||||||||
Subordinated Debt | 25,500 | — | — | — | 25,500 | ||||||||||||||
Operating lease agreements | 23,703 | 1,972 | 3,581 | 2,252 | 15,898 | ||||||||||||||
Time deposits with stated maturity dates | 614,722 | 411,818 | 202,067 | 837 | — | ||||||||||||||
Total contractual obligations | $ | 823,925 | $ | 548,790 | $ | 230,648 | $ | 3,089 | $ | 41,398 |
Amount of Commitment Expiration per Period | |||||||||||||||||||
Total | Less Than 1 Year | 1–3 Years | 4–5 Years | After 5 Years | |||||||||||||||
(in thousands) | |||||||||||||||||||
Other Commitments: | |||||||||||||||||||
Loan commitments | $ | 190,661 | $ | 100,119 | $ | 37,167 | $ | 23,731 | $ | 29,644 | |||||||||
Undisbursed construction loans | 68,151 | 6,906 | 17,652 | 23,328 | 20,265 | ||||||||||||||
Unused home equity lines of credit | 7,445 | 519 | 578 | 210 | 6,138 | ||||||||||||||
Total other commitments | $ | 266,257 | $ | 107,544 | $ | 55,397 | $ | 47,269 | $ | 56,047 |
Amount of Commitment Expiration per Period | |||||||||||||||||||
Total | Less Than 1 Year | 1–3 Years | 4–5 Years | After 5 Years | |||||||||||||||
(in thousands) | |||||||||||||||||||
Other Commitments: | |||||||||||||||||||
Loan commitments | $ | 112,649 | $ | 39,298 | $ | 35,372 | $ | 3,708 | $ | 34,271 | |||||||||
Undisbursed construction loans | 80,064 | 17,569 | 6,441 | 24,876 | 31,178 | ||||||||||||||
Unused home equity lines of credit | 7,573 | 365 | 295 | 343 | 6,570 | ||||||||||||||
Total other commitments | $ | 200,286 | $ | 57,232 | $ | 42,108 | $ | 28,927 | $ | 72,019 |
Estimated Percent Change in Net Interest Income | ||||||
At December 31, | ||||||
Rate Changes (basis points) | 2018 | 2017 | ||||
(100) | 3.50 | % | (2.00)% | |||
200 | (8.20 | ) | (4.30 | ) |
Estimated Percent Change in Net Interest Income | ||||||
At December 31, | ||||||
Rate Changes (basis points) | 2018 | 2017 | ||||
(100) | 5.20 | % | (4.70)% | |||
100 | (7.30 | ) | (3.40 | ) | ||
200 | (15.20 | ) | (7.30 | ) | ||
300 | (22.70 | ) | (11.50 | ) |
Estimated Percent Change in Economic Value of Equity | ||||||
At December 31, | ||||||
Rate Changes (basis points) | 2018 | 2017 | ||||
(100) | 2.50% | (1.60)% | ||||
100 | (7.80 | ) | (10.10 | ) | ||
200 | (18.60 | ) | (22.90 | ) | ||
300 | (27.40 | ) | (32.80 | ) |
December 31, | |||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Cash and due from banks | $ | 75,411 | $ | 70,545 | |||
Federal funds sold | 2,701 | 186 | |||||
Cash and cash equivalents | 78,112 | 70,731 | |||||
Investment securities | |||||||
Marketable equity securities, at fair value | 2,009 | — | |||||
Available for sale investment securities, at fair value | 93,154 | 92,188 | |||||
Held to maturity investment securities, at amortized cost (fair values of $21,988 and $22,836 at December 31, 2018 and 2017, respectively) | 21,421 | 21,579 | |||||
Total investment securities | 116,584 | 113,767 | |||||
Loans receivable (net of allowance for loan losses of $15,462 and $18,904 at December 31, 2018 and 2017, respectively) | 1,586,775 | 1,520,879 | |||||
Accrued interest receivable | 6,375 | 5,910 | |||||
Federal Home Loan Bank stock, at cost | 8,110 | 9,183 | |||||
Premises and equipment, net | 19,771 | 18,196 | |||||
Bank-owned life insurance | 40,675 | 39,618 | |||||
Goodwill | 2,589 | 2,589 | |||||
Other intangible assets | 290 | 382 | |||||
Deferred income taxes, net | 4,347 | 4,904 | |||||
Other assets | 10,037 | 10,448 | |||||
Total assets | $ | 1,873,665 | $ | 1,796,607 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Liabilities | |||||||
Deposits | |||||||
Noninterest bearing deposits | $ | 173,198 | $ | 172,638 | |||
Interest bearing deposits | 1,329,046 | 1,225,767 | |||||
Total deposits | 1,502,244 | 1,398,405 | |||||
Advances from the Federal Home Loan Bank | 160,000 | 199,000 | |||||
Subordinated debentures ($25,500 face, less unamortized debt issuance costs of $345 and $397 at December 31, 2018 and 2017, respectively) | 25,155 | 25,103 | |||||
Accrued expenses and other liabilities | 12,070 | 13,072 | |||||
Total liabilities | 1,699,469 | 1,635,580 | |||||
Commitments and contingencies (Note 11) | |||||||
Shareholders’ equity | |||||||
Common stock, no par value; 10,000,000 shares authorized, 7,842,271 and 7,751,424 shares issued and outstanding at December 31, 2018 and 2017, respectively | 120,527 | 118,301 | |||||
Retained earnings | 54,706 | 41,032 | |||||
Accumulated other comprehensive (loss) income | (1,037 | ) | 1,694 | ||||
Total shareholders’ equity | 174,196 | 161,027 | |||||
Total liabilities and shareholders’ equity | $ | 1,873,665 | $ | 1,796,607 |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Interest and dividend income | |||||||||||
Interest and fees on loans | $ | 74,715 | $ | 66,841 | $ | 58,077 | |||||
Interest and dividends on securities | 3,921 | 3,570 | 2,740 | ||||||||
Interest on cash and cash equivalents | 1,428 | 790 | 173 | ||||||||
Total interest and dividend income | 80,064 | 71,201 | 60,990 | ||||||||
Interest expense | |||||||||||
Interest expense on deposits | 18,951 | 12,694 | 8,300 | ||||||||
Interest expense on borrowings | 4,787 | 4,143 | 3,598 | ||||||||
Total interest expense | 23,738 | 16,837 | 11,898 | ||||||||
Net interest income | 56,326 | 54,364 | 49,092 | ||||||||
Provision for loan losses | 3,440 | 1,341 | 3,914 | ||||||||
Net interest income after provision for loan losses | 52,886 | 53,023 | 45,178 | ||||||||
Noninterest income | |||||||||||
Service charges and fees | 1,090 | 1,007 | 963 | ||||||||
Bank owned life insurance | 1,057 | 1,170 | 693 | ||||||||
Gains and fees from sales of loans | 984 | 1,427 | 466 | ||||||||
Net gain (loss) on sale of available for sale securities | 222 | 165 | (115 | ) | |||||||
(Loss) gain on sale of foreclosed real estate | — | (78 | ) | 128 | |||||||
Other | 547 | 938 | 541 | ||||||||
Total noninterest income | 3,900 | 4,629 | 2,676 | ||||||||
Noninterest expense | |||||||||||
Salaries and employee benefits | 18,973 | 16,284 | 15,655 | ||||||||
Occupancy and equipment | 6,790 | 6,165 | 5,811 | ||||||||
Professional services | 2,103 | 2,072 | 1,654 | ||||||||
Data processing | 2,033 | 1,866 | 1,603 | ||||||||
Marketing | 1,587 | 1,193 | 948 | ||||||||
Director fees | 1,044 | 912 | 859 | ||||||||
FDIC insurance | 779 | 1,116 | 660 | ||||||||
Amortization of intangibles | 92 | 118 | 151 | ||||||||
Other | 2,232 | 2,797 | 2,203 | ||||||||
Total noninterest expense | 35,633 | 32,523 | 29,544 | ||||||||
Income before income tax expense | 21,153 | 25,129 | 18,310 | ||||||||
Income tax expense | 3,720 | 11,299 | 5,960 | ||||||||
Net income | $ | 17,433 | $ | 13,830 | $ | 12,350 | |||||
Earnings Per Common Share: | |||||||||||
Basic | $ | 2.23 | $ | 1.80 | $ | 1.64 | |||||
Diluted | $ | 2.21 | $ | 1.78 | $ | 1.62 | |||||
Weighted Average Common Shares Outstanding: | |||||||||||
Basic | 7,722,175 | 7,572,409 | 7,396,019 | ||||||||
Diluted | 7,775,480 | 7,670,413 | 7,491,052 | ||||||||
Dividends per common share | $ | 0.48 | $ | 0.28 | $ | 0.22 |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net income | $ | 17,433 | $ | 13,830 | $ | 12,350 | |||||
Other comprehensive (loss) income: | |||||||||||
Unrealized (losses) gains on securities: | |||||||||||
Unrealized holding losses on available for sale securities | (1,632 | ) | (357 | ) | (109 | ) | |||||
Reclassification adjustment for (gain) loss realized in net income | (222 | ) | (165 | ) | 115 | ||||||
Net change in unrealized (loss) gain | (1,854 | ) | (522 | ) | 6 | ||||||
Income tax effect–benefit (expense) | 390 | 182 | (2 | ) | |||||||
Unrealized (losses) gains on securities, net of tax | (1,464 | ) | (340 | ) | 4 | ||||||
Unrealized (losses) gains on interest rate swaps: | |||||||||||
Unrealized (losses) gains on interest rate swaps designated as cash flow hedges | (1,604 | ) | 1,297 | 1,013 | |||||||
Income tax effect–benefit (expense) | 337 | (454 | ) | (354 | ) | ||||||
Unrealized (losses) gains on interest rate swaps, net of tax | (1,267 | ) | 843 | 659 | |||||||
Total other comprehensive (loss) income, net of tax | (2,731 | ) | 503 | 663 | |||||||
Comprehensive income | $ | 14,702 | $ | 14,333 | $ | 13,013 |
Number of Outstanding Shares | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||
Balance at January 1, 2016 | 7,516,291 | $ | 112,579 | $ | 18,963 | $ | 227 | $ | 131,769 | |||||||||
Net income | — | — | 12,350 | — | 12,350 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 663 | 663 | |||||||||||||
Cash dividends declared ($0.22 per share) | — | — | (1,661 | ) | — | (1,661 | ) | |||||||||||
Stock-based compensation expense | — | 1,188 | — | — | 1,188 | |||||||||||||
Warrants exercised | 11,200 | 200 | — | — | 200 | |||||||||||||
Issuance of restricted stock | 29,935 | — | — | — | — | |||||||||||||
Forfeitures of restricted stock | (883 | ) | — | — | — | — | ||||||||||||
Stock options exercised | 64,120 | 1,106 | — | — | 1,106 | |||||||||||||
Net tax benefit related to stock-based compensation | — | 280 | — | — | 280 | |||||||||||||
Balance at December 31, 2016 | 7,620,663 | 115,353 | 29,652 | 890 | 145,895 | |||||||||||||
Net income | — | — | 13,830 | — | 13,830 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 503 | 503 | |||||||||||||
Cash dividends declared ($0.28 per share) | — | — | (2,149 | ) | — | (2,149 | ) | |||||||||||
Stock-based compensation expense | — | 917 | — | — | 917 | |||||||||||||
Warrants exercised | 35,000 | 663 | — | — | 663 | |||||||||||||
Issuance of restricted stock | 40,250 | — | — | — | — | |||||||||||||
Forfeitures of restricted stock | (18,227 | ) | — | — | — | — | ||||||||||||
Stock options exercised | 73,738 | 1,368 | — | — | 1,368 | |||||||||||||
Reclass adjustment resulting from tax law change | — | — | (301 | ) | 301 | — | ||||||||||||
Balance at December 31, 2017 | 7,751,424 | 118,301 | 41,032 | 1,694 | 161,027 | |||||||||||||
Net income | — | — | 17,433 | — | 17,433 | |||||||||||||
Other comprehensive loss, net of tax | — | — | — | (2,731 | ) | (2,731 | ) | |||||||||||
Cash dividends declared ($0.48 per share) | — | — | (3,759 | ) | — | (3,759 | ) | |||||||||||
Stock-based compensation expense | — | 1,290 | — | — | 1,290 | |||||||||||||
Warrants exercised | 22,400 | 400 | — | — | 400 | |||||||||||||
Issuance of restricted stock | 44,300 | — | — | — | — | |||||||||||||
Forfeitures of restricted stock | (3,873 | ) | — | — | — | — | ||||||||||||
Stock options exercised | 28,020 | 536 | — | — | 536 | |||||||||||||
Balance at December 31, 2018 | 7,842,271 | $ | 120,527 | $ | 54,706 | $ | (1,037 | ) | $ | 174,196 |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 17,433 | $ | 13,830 | $ | 12,350 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Net (accretion) amortization of premiums and discounts on investment securities | (54 | ) | (31 | ) | 1,737 | ||||||
Provision for loan losses | 3,440 | 1,341 | 3,914 | ||||||||
Provision (benefit) for deferred taxes | 1,284 | 3,908 | (1,104 | ) | |||||||
Net (gain) loss on sales of available for sale securities | (222 | ) | (165 | ) | 115 | ||||||
Depreciation and amortization | 1,732 | 1,513 | 1,729 | ||||||||
Amortization of debt issuance costs | 52 | 52 | 51 | ||||||||
Increase in cash surrender value of bank-owned life insurance | (1,057 | ) | (1,170 | ) | (693 | ) | |||||
Loan principal sold from loans originated for sale | — | (3,485 | ) | (3,313 | ) | ||||||
Proceeds from sales of loans originated for sale | — | 4,626 | 3,381 | ||||||||
Originations of loans held for sale | — | — | (254 | ) | |||||||
Net gain on sales of loans | (984 | ) | (1,427 | ) | (466 | ) | |||||
Stock-based compensation | 1,290 | 917 | 1,188 | ||||||||
Net amortization (accretion) of purchase accounting adjustments | 239 | (80 | ) | (136 | ) | ||||||
Loss on sale of premises and equipment | 44 | — | — | ||||||||
Loss on sale and write-downs of foreclosed real estate | — | 128 | 25 | ||||||||
Net change in: | |||||||||||
Deferred loan fees | (745 | ) | (829 | ) | 466 | ||||||
Accrued interest receivable | (465 | ) | (952 | ) | (887 | ) | |||||
Other assets | (1,008 | ) | (1,740 | ) | (3,006 | ) | |||||
Accrued expenses and other liabilities | (1,002 | ) | 4,136 | 2,275 | |||||||
Net cash provided by operating activities | 19,977 | 20,572 | 17,372 | ||||||||
Cash flows from investing activities | |||||||||||
Proceeds from principal repayments on available for sale securities | 9,430 | 5,217 | 770 | ||||||||
Proceeds from principal repayments on held to maturity securities | 180 | 212 | 205 | ||||||||
Net proceeds from sales and calls of available for sale securities | 12,377 | 54,705 | 60,696 | ||||||||
Net proceeds from sales and calls of held to maturity securities | — | 5,690 | — | ||||||||
Purchases of available for sale securities | (24,379 | ) | (64,700 | ) | (110,485 | ) | |||||
Purchases of marketable equity securities | (2,003 | ) | — | — | |||||||
Purchase of held to maturity securities | — | (10,609 | ) | (6,835 | ) | ||||||
Purchase of bank-owned life insurance | — | (5,000 | ) | (9,000 | ) | ||||||
Net increase in loans | (68,923 | ) | (177,549 | ) | (218,603 | ) | |||||
Loan principal sold from loans not originated for sale | (8,980 | ) | (14,264 | ) | (4,069 | ) | |||||
Proceeds from sales of loans not originated for sale | 9,964 | 14,805 | 4,467 | ||||||||
Purchases of premises and equipment | (3,351 | ) | (1,874 | ) | (8,401 | ) | |||||
Net redemption (purchase) of Federal Home Loan Bank stock | 1,073 | (1,239 | ) | (1,389 | ) | ||||||
Proceeds from sale of foreclosed real estate | — | 144 | 951 | ||||||||
Net cash used in investing activities | (74,612 | ) | (194,462 | ) | (291,693 | ) | |||||
Cash flows from financing activities | |||||||||||
Net change in time certificates of deposit | (16,541 | ) | 29,417 | 165,224 | |||||||
Net change in other deposits | 120,380 | 79,967 | 76,930 | ||||||||
Net change in FHLB advances | (39,000 | ) | 39,000 | 40,000 |
Proceeds from exercise of warrants | 400 | 663 | 200 | ||||||||
Proceeds from exercise of options | 536 | 1,368 | 1,106 | ||||||||
Dividends paid on common stock | (3,759 | ) | (2,149 | ) | (1,661 | ) | |||||
Net tax benefit related to stock-based compensation | — | — | 280 | ||||||||
Net cash provided by financing activities | 62,016 | 148,266 | 282,079 | ||||||||
Net increase (decrease) in cash and cash equivalents | 7,381 | (25,624 | ) | 7,758 | |||||||
Cash and cash equivalents: | |||||||||||
Beginning of year | 70,731 | 96,355 | 88,597 | ||||||||
End of period | $ | 78,112 | $ | 70,731 | $ | 96,355 | |||||
Supplemental disclosures of cash flows information: | |||||||||||
Cash paid for: | |||||||||||
Interest | $ | 18,662 | $ | 16,582 | $ | 11,793 | |||||
Income taxes | 3,685 | 8,020 | 8,584 | ||||||||
Noncash investing and financing activities | |||||||||||
Net change in unrealized losses or gains on available-for-sale securities | (1,854 | ) | (522 | ) | 6 | ||||||
Net change in unrealized losses or gains on interest rate swaps | (1,267 | ) | 843 | 659 |
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||
(In thousands) | |||||||
Balance, beginning of the period | $ | 2,589 | $ | 2,589 | |||
Impairment | — | — | |||||
Balance, end of the period | $ | 2,589 | $ | 2,589 |
Gross Intangible Asset | Accumulated Amortization | Net Intangible Asset | |||||||||
(In thousands) | |||||||||||
December 31, 2018 | |||||||||||
Core deposit intangible | $ | 1,029 | $ | 739 | $ | 290 | |||||
December 31, 2017 | |||||||||||
Core deposit intangible | $ | 1,029 | $ | 647 | $ | 382 |
December 31, 2018 | |||||||||||||||
Amortized Cost | Gross Unrealized | Fair Value | |||||||||||||
Gains | Losses | ||||||||||||||
(In thousands) | |||||||||||||||
Available for sale securities: | |||||||||||||||
U.S. Government and agency obligations | |||||||||||||||
Less than one year | $ | 1,000 | $ | — | $ | (11 | ) | $ | 989 | ||||||
Due from one through five years | 12,025 | — | (161 | ) | 11,864 | ||||||||||
Due from five through ten years | 100 | — | (5 | ) | 95 | ||||||||||
Due after ten years | 70,690 | 7 | (1,509 | ) | 69,188 | ||||||||||
83,815 | 7 | (1,686 | ) | 82,136 | |||||||||||
State agency and municipal obligations | |||||||||||||||
Due from one through five years | 2,234 | 18 | — | 2,252 | |||||||||||
Due from five through ten years | 1,261 | 18 | — | 1,279 | |||||||||||
Due after ten years | 528 | — | (52 | ) | 476 | ||||||||||
4,023 | 36 | (52 | ) | 4,007 | |||||||||||
Corporate bonds | |||||||||||||||
Due from one through five years | 7,061 | — | (50 | ) | 7,011 | ||||||||||
Total available for sale securities | $ | 94,899 | $ | 43 | $ | (1,788 | ) | $ | 93,154 | ||||||
Held to maturity securities: | |||||||||||||||
State agency and municipal obligations | |||||||||||||||
Less than one year | $ | 3,894 | $ | 6 | $ | — | $ | 3,900 | |||||||
Due after ten years | 16,434 | 669 | (113 | ) | 16,990 | ||||||||||
20,328 | 675 | (113 | ) | 20,890 | |||||||||||
Corporate bonds | |||||||||||||||
Less than one year | 1,000 | — | — | 1,000 | |||||||||||
Government-sponsored mortgage backed securities | |||||||||||||||
No contractual maturity | 93 | 5 | — | 98 | |||||||||||
Total held to maturity securities | $ | 21,421 | $ | 680 | $ | (113 | ) | $ | 21,988 |
December 31, 2017 | |||||||||||||||
Amortized Cost | Gross Unrealized | Fair Value | |||||||||||||
Gains | Losses | ||||||||||||||
(In thousands) | |||||||||||||||
Available for sale securities: | |||||||||||||||
U.S. Government and agency obligations | |||||||||||||||
Due from one through five years | $ | 13,000 | $ | — | $ | (82 | ) | $ | 12,918 | ||||||
Due from five through ten years | 100 | — | (4 | ) | 96 | ||||||||||
Due after ten years | 59,924 | 10 | (174 | ) | 59,760 | ||||||||||
73,024 | 10 | (260 | ) | 72,774 | |||||||||||
State agency and municipal obligations | |||||||||||||||
Due from one through five years | 2,873 | 84 | — | 2,957 | |||||||||||
Due from five through ten years | 7,386 | 228 | — | 7,614 | |||||||||||
Due after ten years | 1,700 | 33 | (27 | ) | 1,706 | ||||||||||
11,959 | 345 | (27 | ) | 12,277 | |||||||||||
Corporate bonds | |||||||||||||||
Due from one through five years | 7,096 | 41 | — | 7,137 | |||||||||||
Total available for sale securities | $ | 92,079 | $ | 396 | $ | (287 | ) | $ | 92,188 | ||||||
Held to maturity securities: | |||||||||||||||
State agency and municipal obligations | |||||||||||||||
Less than one year | $ | 198 | $ | 5 | $ | — | $ | 203 | |||||||
Due from one through five years | 3,880 | 20 | — | 3,900 | |||||||||||
Due after ten years | 16,387 | 1,227 | — | 17,614 | |||||||||||
20,465 | 1,252 | — | 21,717 | ||||||||||||
Corporate bonds | |||||||||||||||
Due from one through five years | 1,000 | — | (5 | ) | 995 | ||||||||||
Government-sponsored mortgage backed securities | |||||||||||||||
No contractual maturity | 114 | 10 | — | 124 | |||||||||||
Total held to maturity securities | $ | 21,579 | $ | 1,262 | $ | (5 | ) | $ | 22,836 |
Length of Time in Continuous Unrealized Loss Position | ||||||||||||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||||
Fair Value | Unrealized Loss | Percent Decline from Amortized Cost | Fair Value | Unrealized Loss | Percent Decline from Amortized Cost | Fair Value | Unrealized Loss | Percent Decline from Amortized Cost | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||||||||||
U.S. Government and agency obligations | $ | 4,990 | $ | (38 | ) | 0.75 | % | $ | 72,676 | $ | (1,648 | ) | 2.22 | % | $ | 77,666 | $ | (1,686 | ) | 2.12 | % | |||||||||||
State agency and municipal obligations | 8,212 | (113 | ) | 1.36 | % | 476 | (52 | ) | 9.87 | % | 8,688 | (165 | ) | 1.87 | % | |||||||||||||||||
Corporate bonds | 2,033 | (11 | ) | 0.51 | % | 4,978 | (39 | ) | 0.78 | % | 7,011 | (50 | ) | 0.70 | % | |||||||||||||||||
Total investment securities | $ | 15,235 | $ | (162 | ) | 1.05 | % | $ | 78,130 | $ | (1,739 | ) | 2.18 | % | $ | 93,365 | $ | (1,901 | ) | 2.00 | % | |||||||||||
December 31, 2017 | ||||||||||||||||||||||||||||||||
U.S. Government and agency obligations | $ | 70,419 | $ | (225 | ) | 0.32 | % | $ | 2,064 | $ | (35 | ) | 1.67 | % | $ | 72,483 | $ | (260 | ) | 0.36 | % | |||||||||||
State agency and municipal obligations | 92 | — | 0.16 | % | 656 | (27 | ) | 3.95 | % | 748 | (27 | ) | 3.50 | % | ||||||||||||||||||
Corporate bonds | — | — | — | % | 995 | (5 | ) | 0.50 | % | 995 | (5 | ) | 0.50 | % | ||||||||||||||||||
Total investment securities | $ | 70,511 | $ | (225 | ) | 0.32 | % | $ | 3,715 | $ | (67 | ) | 1.77 | % | $ | 74,226 | $ | (292 | ) | 0.39 | % |
December 31, 2018 | December 31, 2017 | |||||||
(In thousands) | ||||||||
Real estate loans: | ||||||||
Residential | $ | 178,079 | $ | 193,524 | ||||
Commercial | 1,094,066 | 987,242 | ||||||
Construction | 73,191 | 101,636 | ||||||
1,345,336 | 1,282,402 | |||||||
Commercial business | 258,978 | 259,995 | ||||||
Consumer | 412 | 619 | ||||||
Total loans | 1,604,726 | 1,543,016 | ||||||
Allowance for loan losses | (15,462 | ) | (18,904 | ) | ||||
Deferred loan origination fees, net | (2,497 | ) | (3,242 | ) | ||||
Unamortized loan premiums | 8 | 9 | ||||||
Loans receivable, net | $ | 1,586,775 | $ | 1,520,879 |
Residential Real Estate | Commercial Real Estate | Construction | Commercial Business | Consumer | Total | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
For the Year Ended December 31, 2018 | |||||||||||||||||||||||
Beginning balance | $ | 1,721 | $ | 12,777 | $ | 907 | $ | 3,498 | $ | 1 | $ | 18,904 | |||||||||||
Charge-offs | (420 | ) | (5,614 | ) | — | (815 | ) | (77 | ) | (6,926 | ) | ||||||||||||
Recoveries | — | 18 | — | 19 | 7 | 44 | |||||||||||||||||
(Credits) provisions | (444 | ) | 4,381 | (767 | ) | 200 | 70 | 3,440 | |||||||||||||||
Ending balance | $ | 857 | $ | 11,562 | $ | 140 | $ | 2,902 | $ | 1 | $ | 15,462 |
Residential Real Estate | Commercial Real Estate | Construction | Commercial Business | Consumer | Total | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
For the Year Ended December 31, 2017 | |||||||||||||||||||||||
Beginning balance | $ | 1,802 | $ | 9,415 | $ | 2,105 | $ | 4,283 | $ | 377 | $ | 17,982 | |||||||||||
Charge-offs | — | — | — | (521 | ) | (51 | ) | (572 | ) | ||||||||||||||
Recoveries | 146 | — | — | 4 | 3 | 153 | |||||||||||||||||
(Credits) provisions | (227 | ) | 3,362 | (1,198 | ) | (268 | ) | (328 | ) | 1,341 | |||||||||||||
Ending balance | $ | 1,721 | $ | 12,777 | $ | 907 | $ | 3,498 | $ | 1 | $ | 18,904 |
Residential Real Estate | Commercial Real Estate | Construction | Commercial Business | Consumer | Total | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
For the Year Ended December 31, 2016 | |||||||||||||||||||||||
Beginning balance | $ | 1,618 | $ | 7,705 | $ | 1,504 | $ | 3,334 | $ | 8 | $ | 14,169 | |||||||||||
Charge-offs | — | — | (7 | ) | (69 | ) | (35 | ) | (111 | ) | |||||||||||||
Recoveries | — | — | — | — | 10 | 10 | |||||||||||||||||
Provisions | 184 | 1,710 | 608 | 1,018 | 394 | 3,914 | |||||||||||||||||
Ending balance | $ | 1,802 | $ | 9,415 | $ | 2,105 | $ | 4,283 | $ | 377 | $ | 17,982 |
Portfolio | Allowance | ||||||
(In thousands) | |||||||
December 31, 2018 | |||||||
Loans individually evaluated for impairment: | |||||||
Residential real estate | $ | 6,534 | $ | 233 | |||
Commercial real estate | 6,383 | — | |||||
Commercial business | 6,155 | 133 | |||||
Consumer | 3 | — | |||||
Subtotal | 19,075 | 366 | |||||
Loans collectively evaluated for impairment: | |||||||
Residential real estate | 171,545 | 624 | |||||
Commercial real estate | 1,087,683 | 11,562 | |||||
Construction | 73,191 | 140 | |||||
Commercial business | 252,823 | 2,769 | |||||
Consumer | 409 | 1 | |||||
Subtotal | 1,585,651 | 15,096 | |||||
Total | $ | 1,604,726 | $ | 15,462 |
Portfolio | Allowance | ||||||
(In thousands) | |||||||
December 31, 2017 | |||||||
Loans individually evaluated for impairment: | |||||||
Residential real estate | $ | 4,607 | $ | 8 | |||
Commercial real estate | 7,586 | 876 | |||||
Commercial business | 2,660 | 71 | |||||
Subtotal | 14,853 | 955 | |||||
Loans collectively evaluated for impairment: | |||||||
Residential real estate | 188,917 | 1,713 | |||||
Commercial real estate | 979,656 | 11,901 | |||||
Construction | 101,636 | 907 | |||||
Commercial business | 257,335 | 3,427 | |||||
Consumer | 619 | 1 | |||||
Subtotal | 1,528,163 | 17,949 | |||||
Total | $ | 1,543,016 | $ | 18,904 |
Commercial Credit Quality Indicators | |||||||||||||||||||||||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||
Commercial Real Estate | Construction | Commercial Business | Total | Commercial Real Estate | Construction | Commercial Business | Total | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Pass | $ | 1,084,695 | $ | 73,191 | $ | 237,933 | $ | 1,395,819 | $ | 960,902 | $ | 101,636 | $ | 252,570 | $ | 1,315,108 | |||||||||||||||
Special mention | 2,988 | — | 14,890 | 17,878 | 9,371 | — | 4,019 | 13,390 | |||||||||||||||||||||||
Substandard | 2,516 | — | 2,592 | 5,108 | 16,969 | — | 3,297 | 20,266 | |||||||||||||||||||||||
Doubtful | 3,867 | — | 3,563 | 7,430 | — | — | 109 | 109 | |||||||||||||||||||||||
Loss | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Total loans | $ | 1,094,066 | $ | 73,191 | $ | 258,978 | $ | 1,426,235 | $ | 987,242 | $ | 101,636 | $ | 259,995 | $ | 1,348,873 |
Residential and Consumer Credit Quality Indicators | |||||||||||||||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
Residential Real Estate | Consumer | Total | Residential Real Estate | Consumer | Total | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Pass | $ | 171,415 | $ | 409 | $ | 171,824 | $ | 188,917 | $ | 619 | $ | 189,536 | |||||||||||
Special mention | 130 | — | 130 | — | — | — | |||||||||||||||||
Substandard | 6,534 | 3 | 6,537 | 4,607 | — | 4,607 | |||||||||||||||||
Doubtful | — | — | — | — | — | — | |||||||||||||||||
Loss | — | — | — | — | — | — | |||||||||||||||||
Total loans | $ | 178,079 | $ | 412 | $ | 178,491 | $ | 193,524 | $ | 619 | $ | 194,143 |
December 31, 2018 | |||||||||||||||||||||||
30–59 Days Past Due | 60–89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Current | Total Loans | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Originated loans | |||||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Residential real estate | $ | 994 | $ | — | $ | 2,203 | $ | 3,197 | $ | 174,882 | $ | 178,079 | |||||||||||
Commercial real estate | 668 | 133 | 4,386 | 5,187 | 1,088,879 | 1,094,066 | |||||||||||||||||
Construction | — | — | — | — | 73,191 | 73,191 | |||||||||||||||||
Commercial business | — | 1 | 4,076 | 4,077 | 254,901 | 258,978 | |||||||||||||||||
Consumer | — | — | — | — | 412 | 412 | |||||||||||||||||
Total loans | $ | 1,662 | $ | 134 | $ | 10,665 | $ | 12,461 | $ | 1,592,265 | $ | 1,604,726 |
December 31, 2017 | |||||||||||||||||||||||
30–59 Days Past Due | 60–89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Current | Total Loans | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Residential real estate | $ | 1,248 | $ | 2,244 | $ | 1,161 | $ | 4,653 | $ | 188,871 | $ | 193,524 | |||||||||||
Commercial real estate | 10,028 | 4,116 | 2,074 | 16,218 | 971,024 | 987,242 | |||||||||||||||||
Construction | — | — | — | — | 101,636 | 101,636 | |||||||||||||||||
Commercial business | 4,318 | 162 | 481 | 4,961 | 255,034 | 259,995 | |||||||||||||||||
Consumer | 3 | — | 2 | 5 | 614 | 619 | |||||||||||||||||
Total loans | $ | 15,597 | $ | 6,522 | $ | 3,718 | $ | 25,837 | $ | 1,517,179 | $ | 1,543,016 |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Residential real estate | $ | 3,812 | $ | 1,590 | |||
Commercial real estate | 5,950 | 3,371 | |||||
Commercial business | 4,320 | 520 | |||||
Total | $ | 14,082 | $ | 5,481 |
As of and for the Year Ended December 31, 2018 | |||||||||||||||||||
Carrying Amount | Unpaid Principal Balance | Associated Allowance | Average Carrying Amount | Interest Income Recognized | |||||||||||||||
(In thousands) | |||||||||||||||||||
Impaired loans without a valuation allowance: | |||||||||||||||||||
Residential real estate | $ | 4,520 | $ | 4,613 | $ | — | $ | 4,906 | $ | 106 | |||||||||
Commercial real estate | 6,383 | 12,191 | — | 11,713 | 20 | ||||||||||||||
Construction | — | — | — | — | — | ||||||||||||||
Commercial business | 5,212 | 6,051 | — | 4,945 | 297 | ||||||||||||||
Consumer | 3 | 3 | — | 4 | — | ||||||||||||||
Total impaired loans without a valuation allowance | 16,118 | 22,858 | — | 21,568 | 423 | ||||||||||||||
Impaired loans with a valuation allowance: | |||||||||||||||||||
Residential real estate | 2,014 | 2,054 | 233 | 2,049 | |||||||||||||||
Commercial real estate | — | — | — | — | — | ||||||||||||||
Commercial business | 943 | 945 | 133 | 684 | 25 | ||||||||||||||
Total impaired loans with a valuation allowance | 2,957 | 2,999 | 366 | 2,733 | 25 | ||||||||||||||
Total impaired loans | $ | 19,075 | $ | 25,857 | $ | 366 | $ | 24,301 | $ | 448 |
As of and for the Year Ended December 31, 2017 | |||||||||||||||||||
Carrying Amount | Unpaid Principal Balance | Associated Allowance | Average Carrying Amount | Interest Income Recognized | |||||||||||||||
(In thousands) | |||||||||||||||||||
Impaired loans without a valuation allowance: | |||||||||||||||||||
Residential real estate | $ | 3,515 | $ | 3,556 | $ | — | $ | 3,530 | $ | — | |||||||||
Commercial real estate | 1,841 | 1,915 | — | 1,916 | 21 | ||||||||||||||
Commercial business | 1,950 | 2,024 | — | 2,109 | 89 | ||||||||||||||
Total impaired loans without a valuation allowance | 7,306 | 7,495 | — | 7,555 | 110 | ||||||||||||||
Impaired loans with a valuation allowance: | |||||||||||||||||||
Residential real estate | 1,092 | 1,092 | 8 | 1,100 | — | ||||||||||||||
Commercial real estate | 5,745 | 5,745 | 876 | 5,854 | 261 | ||||||||||||||
Commercial business | 710 | 712 | 71 | 873 | 47 | ||||||||||||||
Total impaired loans with a valuation allowance | 7,547 | 7,549 | 955 | 7,827 | 308 | ||||||||||||||
Total impaired loans | $ | 14,853 | $ | 15,044 | $ | 955 | $ | 15,382 | $ | 418 |
As of and for the Year Ended December 31, 2016 | |||||||||||||||||||
Carrying Amount | Unpaid Principal Balance | Associated Allowance | Average Carrying Amount | Interest Income Recognized | |||||||||||||||
(In thousands) | |||||||||||||||||||
Impaired loans without a valuation allowance: | |||||||||||||||||||
Residential real estate | $ | 1,681 | $ | 1,700 | $ | — | $ | 1,692 | $ | 19 | |||||||||
Commercial real estate | 651 | 651 | — | 668 | 29 | ||||||||||||||
Commercial business | 1,123 | 1,177 | — | 1,616 | 112 | ||||||||||||||
Total impaired loans without a valuation allowance | 3,455 | 3,528 | — | 3,976 | 160 | ||||||||||||||
Impaired loans with a valuation allowance: | |||||||||||||||||||
Commercial real estate | 267 | 267 | 8 | 272 | 6 | ||||||||||||||
Commercial business | 759 | 759 | 42 | 823 | 41 | ||||||||||||||
Consumer | 368 | 368 | 368 | 368 | — | ||||||||||||||
Total impaired loans with a valuation allowance | 1,394 | 1,394 | 418 | 1,463 | 47 | ||||||||||||||
Total impaired loans | $ | 4,849 | $ | 4,922 | $ | 418 | $ | 5,439 | $ | 207 |
Outstanding Recorded Investment | ||||||||||||||||||||||||||||||||
Number of Loans | Pre-Modification | Post-Modification | ||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||||||||||||||
Commercial real estate | 1 | — | 1 | $ | 37 | $ | — | $ | 62 | $ | 29 | $ | — | $ | 62 | |||||||||||||||||
Residential real estate | 3 | 2 | — | 3,394 | 2,957 | — | 3,390 | 2,957 | — | |||||||||||||||||||||||
Commercial business | 1 | 4 | 2 | 608 | 371 | 237 | 608 | 741 | 237 | |||||||||||||||||||||||
Total | 5 | 6 | 3 | $ | 4,039 | $ | 3,328 | $ | 299 | $ | 4,027 | $ | 3,698 | $ | 299 |
December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Maturity Concession | $ | — | $ | 638 | $ | 299 | |||||
Maturity and payment concession | 750 | 1,925 | — | ||||||||
Maturity and rate concession | 608 | 1,032 | — | ||||||||
Payment concession | 2,669 | 103 | — | ||||||||
Total | $ | 4,027 | $ | 3,698 | $ | 299 |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Land | $ | 2,300 | $ | 2,300 | |||
Building | 14,126 | 14,030 | |||||
Leasehold improvements | 6,082 | 4,558 | |||||
Furniture and fixtures | 3,584 | 3,096 | |||||
Equipment | 4,155 | 4,478 | |||||
Automobiles | 67 | 67 | |||||
30,314 | 28,529 | ||||||
Accumulated depreciation and amortization | (10,543 | ) | (10,333 | ) | |||
Premises and equipment, net | $ | 19,771 | $ | 18,196 |
December 31, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Deferred compensation | $ | 2,618 | $ | 4,097 | |||
Servicing assets, net of valuation allowance | 870 | 1,113 | |||||
Derivative assets | 2,868 | 2,034 | |||||
Other | 3,681 | 3,204 | |||||
Total Other Assets | $ | 10,037 | $ | 10,448 |
December 31, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Loan Servicing Rights: | |||||||
Balance at beginning of year | $ | 1,113 | $ | — | |||
Servicing rights capitalized | 224 | 1,171 | |||||
Servicing rights amortized | (136 | ) | (58 | ) | |||
Servicing rights disposed | (109 | ) | — | ||||
Change in valuation allowance | (222 | ) | — | ||||
Balance at end of year | $ | 870 | $ | 1,113 |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Noninterest bearing demand deposit accounts | $ | 173,198 | $ | 172,638 | |||
Interest bearing accounts: | |||||||
NOW | 61,869 | 58,942 | |||||
Money market | 471,968 | 451,804 | |||||
Savings | 180,487 | 83,758 | |||||
Time certificates of deposit | 614,722 | 631,263 | |||||
Total interest bearing accounts | 1,329,046 | 1,225,767 | |||||
Total deposits | $ | 1,502,244 | $ | 1,398,405 |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
2018 | $ | — | $ | 391,509 | |||
2019 | 411,818 | 214,383 | |||||
2020 | 171,452 | 24,466 | |||||
2021 | 30,615 | 373 | |||||
2022 | 579 | 532 | |||||
2023 | 258 | — | |||||
Total | $ | 614,722 | $ | 631,263 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
NOW | $ | 157 | $ | 93 | $ | 109 | |||||
Money market | 6,431 | 3,427 | 1,836 | ||||||||
Savings | 1,649 | 763 | 315 | ||||||||
Time certificates of deposit | 10,714 | 8,411 | 6,040 | ||||||||
Total interest expense on deposits | $ | 18,951 | $ | 12,694 | $ | 8,300 |
December 31, | |||||||||||||
2018 | 2017 | ||||||||||||
Amount Due | Weighted Average Rate | Amount Due | Weighted Average Rate | ||||||||||
(Dollars in thousands) | |||||||||||||
Year of Maturity: | |||||||||||||
2018 | $ | — | — | % | $ | 174,000 | 1.44 | % | |||||
2019 | 135,000 | 2.55 | — | — | |||||||||
2020 | 25,000 | 1.99 | 25,000 | 1.99 | |||||||||
Total advances | $ | 160,000 | 2.46 | % | $ | 199,000 | 1.51 | % |
December 31, 2018 | |||||||
Total Line of Credit | Total Outstanding | ||||||
(In Thousands) | |||||||
FHLB | $ | 450 | $ | — | |||
Atlantic Community Bankers Bank | 7,500 | — | |||||
Zions Bank | 25,000 | — | |||||
Texas Capital Bank | 5,000 | — | |||||
Total | $ | 37,950 | $ | — |
2018 | |||
(In thousands) | |||
Period Ending December 31, | |||
2019 | $ | 1,972 | |
2020 | 1,842 | ||
2021 | 1,739 | ||
2022 | 1,118 | ||
2023 | 1,134 | ||
Thereafter | 15,898 | ||
Total | $ | 23,703 |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Commitments to extend credit: | |||||||
Loan commitments | $ | 190,661 | $ | 112,649 | |||
Undisbursed construction loans | 68,151 | 80,064 | |||||
Unused home equity lines of credit | 7,445 | 7,573 | |||||
$ | 266,257 | $ | 200,286 |
December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Current provision: | |||||||||||
Federal | $ | 2,251 | $ | 6,960 | $ | 6,838 | |||||
State | 185 | 431 | 226 | ||||||||
Total current | 2,436 | 7,391 | 7,064 | ||||||||
Deferred provision (benefit): | |||||||||||
Federal | 1,284 | 3,908 | (1,104 | ) | |||||||
Total income tax expense | $ | 3,720 | $ | 11,299 | $ | 5,960 |
December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Income tax expense at statutory federal rate | $ | 4,442 | $ | 8,795 | $ | 6,409 | |||||
State tax expense, net of federal tax effect | 99 | 280 | 147 | ||||||||
Statutory rate reductions | — | 3,270 | — | ||||||||
Income exempt from tax | (403 | ) | (822 | ) | (687 | ) | |||||
Benefits related to stock compensation | (68 | ) | (490 | ) | — | ||||||
Deferred director fees | (100 | ) | — | — | |||||||
Other items, net | (250 | ) | 266 | 91 | |||||||
Income tax expense | $ | 3,720 | $ | 11,299 | $ | 5,960 |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Deferred tax assets: | |||||||
Allowance for loan losses | $ | 3,284 | $ | 4,022 | |||
Net operating loss carryforwards | 518 | 555 | |||||
Purchase accounting adjustments | — | 14 | |||||
Deferred fees | 1,152 | 1,162 | |||||
Deferred director fees | 31 | — | |||||
Start-up costs | 118 | 144 | |||||
Depreciation | — | 67 | |||||
Unrealized loss on available for sale securities | 367 | — | |||||
Other | 204 | 88 | |||||
Gross deferred tax assets | 5,674 | 6,052 | |||||
Deferred tax liabilities: | |||||||
Deferred expenses | 628 | 482 | |||||
Servicing rights | 166 | 216 | |||||
Purchase accounting adjustments | 61 | — | |||||
Depreciation | 382 | — | |||||
Unrealized gain on derivatives | 90 | 427 | |||||
Unrealized gain on available for sale securities | — | 23 | |||||
Gross deferred tax liabilities | 1,327 | 1,148 | |||||
Net deferred tax asset | $ | 4,347 | $ | 4,904 |
At December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Balance, beginning of year | $ | 393 | $ | 95 | $ | — | |||||
(Reductions) additions relating to potential liability with taxing authorities | (200 | ) | 298 | 95 | |||||||
Balance, end of year | $ | 193 | $ | 393 | $ | 95 |
For the Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands, except per share data) | |||||||||||
Net income | $ | 17,433 | $ | 13,830 | $ | 12,350 | |||||
Dividends to participating securities(1) | (51 | ) | (28 | ) | (27 | ) | |||||
Undistributed earnings allocated to participating securities(1) | (178 | ) | (151 | ) | (211 | ) | |||||
Net income for earnings per share calculation | $ | 17,204 | $ | 13,651 | $ | 12,112 | |||||
Weighted average shares outstanding, basic | 7,722 | 7,572 | 7,396 | ||||||||
Effect of dilutive equity-based awards(2) | 53 | 98 | 95 | ||||||||
Weighted average shares outstanding, diluted | 7,775 | 7,670 | 7,491 | ||||||||
Net earnings per common share: | |||||||||||
Basic earnings per common share | $ | 2.23 | $ | 1.80 | $ | 1.64 | |||||
Diluted earnings per common share | $ | 2.21 | $ | 1.78 | $ | 1.62 |
December 31, 2018 | ||||||
Number of Shares | Weighted Average Exercise Price | |||||
Options outstanding at beginning of period | 47,050 | $ | 17.83 | |||
Exercised | (28,020 | ) | 19.14 | |||
Options outstanding at end of period | 19,030 | 15.91 | ||||
Options exercisable at end of period | 19,030 | 15.91 |
Range of Exercise Prices | Number of Shares | Weighted- Average Remaining Contractual Life (years) | Weighted- Average Exercise Price | ||||||
$11.00–17.86 | 19,030 | 3.2 | $ | 15.91 |
December 31, 2018 | ||||||
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Unvested at beginning of period | 75,186 | $ | 26.39 | |||
Granted | 44,300 | (1) | 32.81 | |||
Vested | (37,989 | ) | 24.85 | |||
Forfeited | (3,873 | ) | 27.02 | |||
Unvested at end of period | 77,624 | 30.78 |
(1) | Includes 11,250 shares of performance based restricted stock |
Net Unrealized Gain (Loss) on Available for Sale Securities | Net Unrealized Gain (Loss) on Interest Rate Swaps | Total | |||||||||
(In thousands) | |||||||||||
Balance at December 31, 2017 | $ | 85 | $ | 1,609 | $ | 1,694 | |||||
Other comprehensive loss before reclassifications, net of tax | (1,289 | ) | (1,267 | ) | (2,556 | ) | |||||
Amounts reclassified from accumulated other comprehensive income, net of tax | (175 | ) | — | (175 | ) | ||||||
Net other comprehensive loss | (1,464 | ) | (1,267 | ) | (2,731 | ) | |||||
Balance at December 31, 2018 | $ | (1,379 | ) | $ | 342 | $ | (1,037 | ) |
Net Unrealized Gain (Loss) on Available for Sale Securities | Net Unrealized Gain (Loss) on Interest Rate Swaps | Total | |||||||||
(In thousands) | |||||||||||
Balance at December 31, 2016 | $ | 409 | $ | 481 | $ | 890 | |||||
Other comprehensive (loss) income before reclassifications, net of tax | (232 | ) | 843 | 611 | |||||||
Amounts reclassified from accumulated other comprehensive income, net of tax | (108 | ) | — | (108 | ) | ||||||
Net other comprehensive income | (340 | ) | 843 | 503 | |||||||
Amounts reclassified for tax rate changes | 16 | 285 | 301 | ||||||||
Balance at December 31, 2017 | $ | 85 | $ | 1,609 | $ | 1,694 |
Net Unrealized Gain (Loss) on Available for Sale Securities | Net Unrealized Gain (Loss) on Interest Rate Swaps | Total | |||||||||
(In thousands) | |||||||||||
Balance at December 31, 2015 | $ | 405 | $ | (178 | ) | $ | 227 | ||||
Other comprehensive (loss) income before reclassifications, net of tax | (71 | ) | 659 | 588 | |||||||
Amounts reclassified from accumulated other comprehensive income, net of tax | 75 | — | 75 | ||||||||
Net other comprehensive income | 4 | 659 | 663 | ||||||||
Balance at December 31, 2016 | $ | 409 | $ | 481 | $ | 890 |
Accumulated Other Comprehensive Income (Loss) Components | For the Years Ended December 31, | Associated Line Item in the Consolidated Statements Of Income | ||||||||||||
2018 | 2017 | 2016 | ||||||||||||
(In thousands) | ||||||||||||||
Available-for-sale securities: | ||||||||||||||
Unrealized gains (losses) on investments | $ | 222 | $ | 165 | $ | (115 | ) | Gain (loss) on sale of available for sale securities, net | ||||||
Tax (expense) benefit | (47 | ) | (57 | ) | 40 | Income tax expense | ||||||||
Net of tax | $ | 175 | $ | 108 | $ | (75 | ) |
Notional Amount | Original Maturity | Received | Paid | Fair Value Asset (Liability) | ||||||||||
(Dollars in thousands) | ||||||||||||||
Cash flow hedge: | ||||||||||||||
Interest rate swap | $ | 25,000 | 4.7 years | 3-month USD LIBOR | 1.62 | % | $ | 1 | ||||||
Interest rate swap | 25,000 | 5.0 years | 3-month USD LIBOR | 1.83 | % | 220 | ||||||||
Interest rate swap | 25,000 | 5.0 years | 3-month USD LIBOR | 1.48 | % | 475 | ||||||||
Interest rate swap | 25,000 | 5.0 years | 3-month USD LIBOR | 1.22 | % | 828 | ||||||||
Interest rate swap | 25,000 | 7.0 years | 3-month USD LIBOR | 2.04 | % | 675 | ||||||||
Interest rate swap | 25,000 | 7.0 years | 3-month USD LIBOR | 2.04 | % | 668 | ||||||||
Forward-starting interest rate swap(1) | 25,000 | 15.0 years | 3-month USD LIBOR | 3.01 | % | (807 | ) | |||||||
Forward-starting interest rate swap(1) | 25,000 | 15.0 years | 3-month USD LIBOR | 3.03 | % | (819 | ) | |||||||
Forward-starting interest rate swap(1) | 25,000 | 15.0 years | 3-month USD LIBOR | 3.05 | % | (811 | ) | |||||||
$ | 225,000 | $ | 430 |
Notional Amount | Original Maturity | Received | Paid | Fair Value Asset (Liability) | ||||||||||
(Dollars in thousands) | ||||||||||||||
Cash flow hedge: | ||||||||||||||
Interest rate swap | $ | 25,000 | 4.7 years | 3-month LIBOR | 1.62 | % | $ | 62 | ||||||
Interest rate swap | 25,000 | 5.0 years | 3-month LIBOR | 1.83 | % | 105 | ||||||||
Interest rate swap | 25,000 | 5.0 years | 3-month LIBOR | 1.48 | % | 398 | ||||||||
Interest rate swap | 25,000 | 5.0 years | 3-month LIBOR | 1.22 | % | 793 | ||||||||
Interest rate swap | 25,000 | 7.0 years | 3-month LIBOR | 2.04 | % | 342 | ||||||||
Interest rate swap | 25,000 | 7.0 years | 3-month LIBOR | 2.04 | % | 334 | ||||||||
$ | 150,000 | $ | 2,034 |
Notional Amount | Effective Date of Hedging Relationship | Duration of Interest Rate Swap | Counterparty | |||
(Dollars in thousands) | ||||||
$25,000 | April 1, 2014 | 4.7 years | Bank of Montreal | |||
25,000 | January 2, 2015 | 5.0 years | Bank of Montreal | |||
25,000 | August 26, 2015 | 5.0 years | Bank of Montreal | |||
25,000 | July 1, 2016 | 5.0 years | Bank of Montreal | |||
25,000 | August 25, 2017 | 7.0 years | Bank of Montreal | |||
25,000 | August 25, 2017 | 7.0 years | FTN Financial Capital Markets | |||
$150,000 |
December 31, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Interest rate swap on FHLB advances and brokered CD's: | |||||||
Unrealized (loss) gain recognized in accumulated other comprehensive income | $ | (1,604 | ) | $ | 1,297 | ||
Income tax benefit (expense) on items recognized in accumulated other comprehensive income | 337 | (454 | ) | ||||
Other comprehensive (loss) income | (1,267 | ) | 843 | ||||
Amount recognized in interest expense on hedged FHLB advances and brokered CD's | $ | 2,552 | $ | 1,909 |
December 31, 2018 | |||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheets | |||||||||||||||||||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Financial Position | Net Amounts of Assets presented in the Statement of Financial Position | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
Derivative Assets | $ | 3,091 | $ | — | $ | 3,091 | $ | 2,310 | $ | 60 | $ | 721 |
December 31, 2018 | |||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheets | |||||||||||||||||||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Financial Position | Net Amounts of Liabilities presented in the Statement of Financial Position | Financial Instruments | Cash Collateral Posted | Net Amount | ||||||||||||||||||
Derivative Liabilities | $ | 2,437 | $ | — | $ | 2,437 | $ | 2,310 | $ | — | $ | 127 |
December 31, 2017 | |||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheets | |||||||||||||||||||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Financial Position | Net Amounts of Assets presented in the Statement of Financial Position | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
Derivative Assets | $ | 1,964 | $ | — | $ | 1,964 | $ | — | $ | 1,780 | $ | 184 |
December 31, 2018 | |||||||||||||||||||
Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Financial Assets: | |||||||||||||||||||
Cash and due from banks | $ | 75,411 | $ | 75,411 | $ | 75,411 | $ | — | $ | — | |||||||||
Federal funds sold | 2,701 | 2,701 | 2,701 | — | — | ||||||||||||||
Marketable equity securities | 2,009 | 2,009 | 2,009 | — | — | ||||||||||||||
Available for sale securities | 93,154 | 93,154 | 9,798 | 83,356 | — | ||||||||||||||
Held to maturity securities | 21,421 | 21,988 | — | 1,098 | 20,890 | ||||||||||||||
Loans receivable, net | 1,586,775 | 1,584,858 | — | — | 1,584,858 | ||||||||||||||
Accrued interest receivable | 6,375 | 6,375 | — | 6,375 | — | ||||||||||||||
FHLB stock | 8,110 | 8,110 | — | 8,110 | — | ||||||||||||||
Servicing asset, net of valuation allowance | 870 | 870 | — | — | 870 | ||||||||||||||
Derivative asset, net | 430 | 430 | — | 430 | — | ||||||||||||||
Financial Liabilities: | |||||||||||||||||||
Demand deposits | $ | 173,198 | $ | 173,198 | $ | — | $ | 173,198 | $ | — | |||||||||
NOW and money market | 533,837 | 533,837 | — | 533,837 | — | ||||||||||||||
Savings | 180,487 | 180,487 | — | 180,487 | — | ||||||||||||||
Time deposits | 614,722 | 616,973 | — | — | 616,973 | ||||||||||||||
Accrued interest payable | 1,381 | 1,381 | — | 1,381 | — | ||||||||||||||
Advances from the FHLB | 160,000 | 159,753 | — | — | 159,753 | ||||||||||||||
Subordinated debentures | 25,155 | 24,211 | — | — | 24,211 | ||||||||||||||
Servicing liability | 73 | 73 | — | — | 73 |
December 31, 2017 | |||||||||||||||||||
Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Financial Assets: | |||||||||||||||||||
Cash and due from banks | $ | 70,545 | $ | 70,545 | $ | 70,545 | $ | — | $ | — | |||||||||
Federal funds sold | 186 | 186 | 186 | — | — | ||||||||||||||
Available for sale securities | 92,188 | 92,188 | 9,861 | 82,327 | — | ||||||||||||||
Held to maturity securities | 21,579 | 22,836 | — | 1,119 | 21,717 | ||||||||||||||
Loans receivable, net | 1,520,879 | 1,494,599 | — | — | 1,494,599 | ||||||||||||||
Accrued interest receivable | 5,910 | 5,910 | — | 5,910 | — | ||||||||||||||
FHLB stock | 9,183 | 9,183 | — | 9,183 | — | ||||||||||||||
Servicing asset | 1,113 | 1,113 | — | — | 1,113 | ||||||||||||||
Derivative asset, net | 2,034 | 2,034 | — | 2,034 | — | ||||||||||||||
Financial Liabilities: | |||||||||||||||||||
Demand deposits | $ | 172,638 | $ | 172,638 | $ | — | $ | 172,638 | $ | — | |||||||||
NOW and money market | 510,746 | 510,746 | — | 510,746 | — | ||||||||||||||
Savings | 83,758 | 83,758 | — | 83,758 | — | ||||||||||||||
Time deposits | 631,263 | 629,532 | — | — | 629,532 | ||||||||||||||
Accrued interest payable | 1,092 | 1,092 | — | 1,092 | — | ||||||||||||||
Advances from the FHLB | 199,000 | 198,932 | — | — | 198,932 | ||||||||||||||
Subordinated debentures | 25,103 | 25,457 | — | — | 25,457 | ||||||||||||||
Service liability | 83 | 83 | — | — | 83 |
Fair Value | |||||||||||
Level 1 | Level 2 | Level 3 | |||||||||
(In thousands) | |||||||||||
December 31, 2018 | |||||||||||
Marketable equity securities | $ | 2,009 | $ | — | $ | — | |||||
Available for sale investment securities: | |||||||||||
U.S. Government and agency obligations | 9,798 | 72,338 | — | ||||||||
State agency and municipal obligations | — | 4,007 | — | ||||||||
Corporate bonds | — | 7,011 | — | ||||||||
Derivative asset, net | — | 430 | — | ||||||||
December 31, 2017 | |||||||||||
Available for sale investment securities: | |||||||||||
U.S. Government and agency obligations | $ | 9,861 | $ | 62,913 | $ | — | |||||
State agency and municipal obligations | — | 12,277 | — | ||||||||
Corporate bonds | — | 7,137 | — | ||||||||
Derivative asset, net | — | 2,034 | — |
Fair Value | |||||||||||
Level 1 | Level 2 | Level 3 | |||||||||
(In thousands) | |||||||||||
December 31, 2018 | |||||||||||
Impaired loans | $ | — | $ | — | $ | 18,709 | |||||
Servicing asset, net | — | — | 797 | ||||||||
December 31, 2017 | |||||||||||
Impaired loans | $ | — | $ | — | $ | 13,898 | |||||
Servicing asset, net | — | — | 1,030 |
Fair Value | Valuation Methodology | Unobservable Input | Range | |||||||
(Dollars in thousands) | ||||||||||
December 31, 2018 | ||||||||||
Impaired loans | $ | 10,188 | Appraisals | Discount to appraised value | 5.00–8.00% | |||||
8,521 | Discounted cash flows | Discount rate | 3.25–8.00% | |||||||
$ | 18,709 | |||||||||
Servicing asset, net | $ | 797 | Discounted cash flows | Discount rate | 10.00-12.00% | (1) | ||||
Prepayment rate | 3.00-15.00% | |||||||||
December 31, 2017 | ||||||||||
Impaired loans | $ | 7,711 | Appraisals | Discount to appraised value | 8.00–24.00% | |||||
7,142 | Discounted cash flows | Discount rate | 3.25–6.75% | |||||||
$ | 14,853 | |||||||||
Servicing asset, net | $ | 1,030 | Discounted cash flows | Discount rate | 7.00-12.00% | |||||
Prepayment rate | 7.00-9.00% |
Actual Capital | Minimum Regulatory Capital Required for Capital Adequacy plus Capital Conservation Buffer | Minimum Regulatory Capital to be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Bankwell Bank | ||||||||||||||||||||
December 31, 2018 | ||||||||||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets | $ | 191,128 | 11.56 | % | $ | 105,392 | 6.38 | % | $ | 107,459 | 6.50 | % | ||||||||
Total Capital to Risk-Weighted Assets | 206,593 | 12.50 | % | 163,255 | 9.88 | % | 165,321 | 10.00 | % | |||||||||||
Tier I Capital to Risk-Weighted Assets | 191,128 | 11.56 | % | 130,190 | 7.88 | % | 132,257 | 8.00 | % | |||||||||||
Tier I Capital to Average Assets | 191,128 | 10.14 | % | 75,432 | 4.00 | % | 94,290 | 5.00 | % | |||||||||||
Bankwell Financial Group, Inc. | ||||||||||||||||||||
December 31, 2018 | ||||||||||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets | 172,415 | 10.41 | % | 105,575 | 6.38 | % | N/A | N/A | ||||||||||||
Total Capital to Risk-Weighted Assets | 213,035 | 12.86 | % | 163,537 | 9.88 | % | N/A | N/A | ||||||||||||
Tier I Capital to Risk-Weighted Assets | 172,415 | 10.41 | % | 130,416 | 7.88 | % | N/A | N/A | ||||||||||||
Tier I Capital to Average Assets | 172,415 | 9.13 | % | 75,567 | 4.00 | % | N/A | N/A |
Actual Capital | Minimum Regulatory Capital Required for Capital Adequacy plus Capital Conservation Buffer | Minimum Regulatory Capital to be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Bankwell Bank | ||||||||||||||||||||
December 31, 2017 | ||||||||||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets | $ | 173,728 | 10.99 | % | $ | 90,858 | 5.75 | % | $ | 102,709 | 6.50 | % | ||||||||
Total Capital to Risk-Weighted Assets | 192,632 | 12.19 | % | 146,162 | 9.25 | % | 158,014 | 10.00 | % | |||||||||||
Tier I Capital to Risk-Weighted Assets | 173,728 | 10.99 | % | 114,560 | 7.25 | % | 126,411 | 8.00 | % | |||||||||||
Tier I Capital to Average Assets | 173,728 | 9.61 | % | 72,349 | 4.00 | % | 90,437 | 5.00 | % | |||||||||||
Bankwell Financial Group, Inc. | ||||||||||||||||||||
December 31, 2017 | ||||||||||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets | 155,977 | 9.83 | % | 91,194 | 5.75 | % | N/A | N/A | ||||||||||||
Total Capital to Risk-Weighted Assets | 199,984 | 12.61 | % | 146,703 | 9.25 | % | N/A | N/A | ||||||||||||
Tier I Capital to Risk-Weighted Assets | 155,977 | 9.83 | % | 114,983 | 7.25 | % | N/A | N/A | ||||||||||||
Tier I Capital to Average Assets | 155,977 | 8.59 | % | 72,663 | 4.00 | % | N/A | N/A |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Balance, beginning of year | $ | 20,721 | $ | 22,471 | |||
Additional loans | 1,702 | 3,067 | |||||
Repayments | (9,417 | ) | (4,831 | ) | |||
Effect of changes in related parties | (4,333 | ) | 14 | ||||
Balance, end of year | $ | 8,673 | $ | 20,721 |
At December 31, | |||||||
2018 | 2017 | ||||||
(Dollars in Thousands) | |||||||
ASSETS | |||||||
Cash and due from banks | $ | 6,349 | $ | 2,494 | |||
Investment in subsidiary | 192,909 | 178,778 | |||||
Premises and equipment, net | 11 | 17 | |||||
Deferred income taxes, net | 129 | 53 | |||||
Other assets | 2,937 | 9,068 | |||||
Total assets | $ | 202,335 | $ | 190,410 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Subordinated debentures | $ | 25,155 | $ | 25,103 | |||
Accrued expenses and other liabilities | 2,984 | 4,280 | |||||
Shareholders’ equity | 174,196 | 161,027 | |||||
Total liabilities and shareholders’ equity | $ | 202,335 | $ | 190,410 |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(Dollars in Thousands) | |||||||||||
Interest income | $ | 15 | $ | 13 | $ | 23 | |||||
Dividend income from subsidiary | 4,000 | — | — | ||||||||
Total income | 4,015 | 13 | 23 | ||||||||
Expenses | 3,444 | 2,295 | 3,444 | ||||||||
Income (loss) before equity in undistributed earnings of subsidiaries | 571 | (2,282 | ) | (3,421 | ) | ||||||
Equity in undistributed earnings of subsidiaries | 16,862 | 16,112 | 15,771 | ||||||||
Net Income | $ | 17,433 | $ | 13,830 | $ | 12,350 |
For the Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(Dollars in Thousands) | |||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 17,433 | $ | 13,830 | $ | 12,350 | |||||
Adjustments to reconcile net income to net cash used by operating activities: | |||||||||||
Equity in undistributed earnings | (16,862 | ) | (16,112 | ) | (15,771 | ) | |||||
Decrease (increase) in other assets | 6,131 | (5,179 | ) | (1,828 | ) | ||||||
(Increase) decrease in deferred income taxes, net | (76 | ) | 3,010 | 2,385 | |||||||
(Decrease) increase in other liabilities | (1,296 | ) | 380 | 1,620 | |||||||
Stock-based compensation | 1,290 | 917 | 1,188 | ||||||||
Amortization of debt issuance costs | 52 | 52 | 51 | ||||||||
Net cash provided by (used in) operating activities | 6,672 | (3,102 | ) | (5 | ) | ||||||
Cash flows from investing activities | |||||||||||
Decrease in premises and equipment, net | 6 | 37 | 65 | ||||||||
Net cash provided by investing activities | 6 | 37 | 65 | ||||||||
Cash flows from financing activities | |||||||||||
Proceeds from exercise of options & warrants | 936 | 2,031 | 1,106 | ||||||||
Dividends paid on common stock | (3,759 | ) | (2,149 | ) | (1,661 | ) | |||||
Proceeds from issuance of common stock | — | — | 200 | ||||||||
Net tax benefit related to stock-based compensation | — | — | 280 | ||||||||
Net cash used in financing activities | (2,823 | ) | (118 | ) | (75 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 3,855 | (3,183 | ) | (15 | ) | ||||||
Cash and cash equivalents: | |||||||||||
Beginning of year | 2,494 | 5,677 | 5,692 | ||||||||
End of year | $ | 6,349 | $ | 2,494 | $ | 5,677 | |||||
Supplemental disclosures of cash flows information: | |||||||||||
Cash paid for: | |||||||||||
Interest | — | — | — | ||||||||
Income taxes | — | — | — |
2018 | |||||||||||||||
4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | ||||||||||||
(Dollars in Thousands, except per share amounts) | |||||||||||||||
Total interest income | $ | 21,543 | $ | 20,500 | $ | 19,414 | $ | 18,607 | |||||||
Total interest expense | 7,076 | 6,254 | 5,506 | 4,902 | |||||||||||
Net interest income | 14,467 | 14,246 | 13,908 | 13,705 | |||||||||||
Provision for loan losses | 2,795 | 322 | 310 | 13 | |||||||||||
Noninterest income | 601 | 859 | 1,107 | 1,333 | |||||||||||
Noninterest expense | 8,796 | 8,870 | 8,764 | 9,203 | |||||||||||
Income before income tax expense | 3,477 | 5,913 | 5,941 | 5,822 | |||||||||||
Income tax expense | 216 | 1,056 | 1,226 | 1,222 | |||||||||||
Net income | $ | 3,261 | $ | 4,857 | $ | 4,715 | $ | 4,600 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.42 | $ | 0.62 | $ | 0.60 | $ | 0.59 | |||||||
Diluted | $ | 0.41 | $ | 0.62 | $ | 0.60 | $ | 0.59 |
2017 | |||||||||||||||
4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | ||||||||||||
(Dollars in Thousands, except per share amounts) | |||||||||||||||
Total interest income | $ | 18,729 | $ | 18,348 | $ | 17,688 | $ | 16,436 | |||||||
Total interest expense | 4,815 | 4,487 | 4,047 | 3,488 | |||||||||||
Net interest income | 13,914 | 13,861 | 13,641 | 12,948 | |||||||||||
(Credit) Provision for loan losses | (495 | ) | 398 | 895 | 543 | ||||||||||
Noninterest income | 1,541 | 824 | 998 | 1,266 | |||||||||||
Noninterest expense | 8,579 | 8,129 | 7,581 | 8,234 | |||||||||||
Income before income tax expense | 7,371 | 6,158 | 6,163 | 5,437 | |||||||||||
Income tax expense | 5,275 | 1,895 | 2,394 | 1,735 | |||||||||||
Net income | $ | 2,096 | $ | 4,263 | $ | 3,769 | $ | 3,702 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.27 | $ | 0.55 | $ | 0.49 | $ | 0.49 | |||||||
Diluted | $ | 0.27 | $ | 0.55 | $ | 0.49 | $ | 0.48 |
Number | Description | |
Exhibit 3.1 | ||
Exhibit 3.2 | ||
Exhibit 10.1† | ||
Exhibit 10.4† | ||
Exhibit 10.5† | ||
Exhibit 10.6† | ||
Exhibit 10.7† | ||
Exhibit 10.8† | ||
Exhibit 10.9† | ||
Exhibit 10.10† | ||
Exhibit 10.11† | ||
Exhibit 10.14† | ||
Exhibit 10.15† | ||
Exhibit 10.16 | ||
Exhibit 10.17 | ||
Exhibit 10.18† | ||
Exhibit 21.1 | ||
Exhibit 23.2 | ||
Exhibit 23.3 | ||
Exhibit 31.1 | ||
Exhibit 31.2 | ||
Exhibit 32 | ||
101 | The following materials from Bankwell Financial Group, Inc.’s Annual Report on Form 10-K for the period ended December 31, 2018, formatted in extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated statements of Comprehensive Income; (iv) Consolidated Statements of Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. |
BANKWELL FINANCIAL GROUP, INC. | ||
By: | /s/ Christopher R. Gruseke | |
Christopher R. Gruseke President and Chief Executive Officer |
Signature & Title | Date | |
/s/ Christopher R. Gruseke | March 4, 2019 | |
Christopher R. Gruseke President and Chief Executive Officer (principal executive officer) | ||
/s/ Penko Ivanov | March 4, 2019 | |
Penko Ivanov Executive Vice President & Chief Financial Officer (principal financial and accounting officer) | ||
/s/ George P. Bauer | March 4, 2019 | |
George P. Bauer Director | ||
/s/ Gail Brathwaite | March 4, 2019 | |
Gail Brathwaite Director | ||
/s/ Richard Castiglioni | March 4, 2019 | |
Richard Castiglioni Director | ||
/s/ Eric J. Dale | March 4, 2019 | |
Eric J. Dale Director | ||
/s/ Blake S. Drexler | March 4, 2019 | |
Blake S. Drexler Director | ||
/s/ James M. Garnett | March 4, 2019 | |
James M. Garnett Director | ||
/s/ Daniel S. Jones | March 4, 2019 | |
Daniel S. Jones Director | ||
/s/ Todd Lampert | March 4, 2019 | |
Todd Lampert Director | ||
/s/ Victor S. Liss | March 4, 2019 | |
Victor S. Liss Director | ||
/s/ Carl M. Porto | March 4, 2019 | |
Carl M. Porto Director |
/s/ Christopher R. Gruseke Christopher R. Gruseke President and Chief Executive Officer |
/s/ Penko Ivanov Penko Ivanov Executive Vice President and Chief Financial Officer |
/s/ Christopher R. Gruseke | ||
Christopher R. Gruseke President and Chief Executive Officer Date: March 4, 2019 | ||
/s/ Penko Ivanov | ||
Penko Ivanov Executive Vice President and Chief Financial Officer Date: March 4, 2019 |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Feb. 25, 2019 |
Jun. 30, 2018 |
|
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Bankwell Financial Group, Inc. | ||
Entity Central Index Key | 0001505732 | ||
Trading Symbol | bwfg | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Common Stock, Shares Outstanding | 7,849,621 | ||
Entity Public Float | $ 196,751,216 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Small Business | true | ||
Entity Shell Company | false |
Consolidated Balance Sheets (Parentheticals) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Held to maturity debt securities, fair value | $ 21,988,000 | $ 22,836,000 |
Allowance for loan losses | $ 15,462,000 | $ 18,904,000 |
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, share authorized (shares) | 10,000,000 | 10,000,000 |
Common stock, share issued (shares) | 7,842,271 | 7,751,424 |
Common shares outstanding (shares) | 7,842,271 | 7,751,424 |
Subordinated debentures | ||
Debt instrument face amount | $ 25,500,000 | $ 25,500,000 |
Unamortized debt issuance costs | $ 345,000 | $ 397,000 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 17,433 | $ 13,830 | $ 12,350 |
Unrealized (losses) gains on securities: | |||
Unrealized holding losses on available for sale securities | (1,632) | (357) | (109) |
Reclassification adjustment for (gain) loss realized in net income | (222) | (165) | 115 |
Net change in unrealized (loss) gain | (1,854) | (522) | 6 |
Income tax effect–benefit (expense) | 390 | 182 | (2) |
Unrealized (losses) gains on securities, net of tax | (1,464) | (340) | 4 |
Unrealized (losses) gains on interest rate swaps: | |||
Unrealized (losses) gains on interest rate swaps designated as cash flow hedges | (1,604) | 1,297 | 1,013 |
Income tax effect–benefit (expense) | 337 | (454) | (354) |
Unrealized (losses) gains on interest rate swaps, net of tax | (1,267) | 843 | 659 |
Total other comprehensive (loss) income, net of tax | (2,731) | 503 | 663 |
Comprehensive income | $ 14,702 | $ 14,333 | $ 13,013 |
Consolidated Statements of Shareholders' Equity (Parentheticals) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Statement of Stockholders' Equity [Abstract] | |||
Dividends per common share (in dollars per share) | $ 0.48 | $ 0.28 | $ 0.22 |
Nature of Operations and Summary of Significant Accounting Policies |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Summary of Significant Accounting Policies | Nature of Operations and Summary of Significant Accounting Policies Bankwell Financial Group, Inc. is a bank holding company headquartered in New Canaan, Connecticut. The Company offers a broad range of financial services through its banking subsidiary, Bankwell Bank (collectively the Company or the Bank). In November 2013, the Bank acquired The Wilton Bank (“Wilton”), which added one branch and approximately $25.1 million in loans and $64.2 million in deposits. In October 2014, the Bank acquired Quinnipiac Bank and Trust Company (“Quinnipiac”) which added two branches and approximately $97.8 million in loans and $100.6 million in deposits. The Bank is a Connecticut state chartered commercial bank, founded in 2002, whose deposits are insured under the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (“FDIC”). The Bank provides a full range of banking services to commercial and consumer customers, primarily concentrated in the New York metropolitan area and throughout Connecticut, with the majority of our loans in Fairfield and New Haven Counties, Connecticut, with branch locations in New Canaan, Stamford, Fairfield, Wilton, Norwalk, Hamden, Westport, Darien and North Haven Connecticut. Many of the Company’s activities are with customers located in the New York Metropolitan area and throughout Fairfield and New Haven Counties and the surrounding region of Connecticut, and declines in property values in these areas could significantly impact the Company. The Company has significant concentrations in commercial real estate loans. Management does not believe they present any special risk. The Company does not have any significant concentrations in any one industry or customer. Principles of consolidation The consolidated financial statements include the accounts of the Company and the Bank, including its wholly owned passive investment company subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of estimates The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities as of the date of the consolidated balance sheet and revenue and expenses for the period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the allowance for loan losses, stock-based compensation, derivative instrument valuation, investment securities valuation, evaluation of investment securities for other than temporary impairment and deferred income taxes valuation. Segments The Company has one reportable segment. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and borrowings while managing the interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment or unit. Basis of consolidated financial statement presentation The consolidated financial statements have been prepared in accordance with GAAP and general practices within the banking industry. Such policies have been followed on a consistent basis. Cash and Cash Equivalents and Statement of Cash Flows Cash and due from banks and federal funds sold are recognized as cash equivalents in the consolidated statements of cash flows. Federal funds sold generally mature in one day. For purposes of reporting cash flows, all highly liquid debt instruments purchased with an original maturity of three months or less are considered to be cash equivalents. Cash flows from loans and deposits are reported net. The balances of cash and due from banks and federal funds sold, at times, may exceed federally insured limits. The Company has not experienced any losses from such concentrations. Investment Securities Management determines the appropriate classifications of investment securities at the date individual investment securities are acquired, and the appropriateness of such classifications is reaffirmed at each balance sheet date. The Company’s investments are categorized as marketable equity, available for sale or held to maturity securities. Held to maturity investments are carried at amortized cost. Available for sale securities are carried at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss) as a separate component of capital, net of estimated income taxes. Marketable equity securities are carried at fair value, with any changes in fair value reported in earnings. Investment securities in the available for sale and held-to-maturity portfolios are reviewed quarterly for other-than-temporary impairment ("OTTI"). If the fair value of a debt security is below amortized cost, other-than-temporary impairment is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the security. OTTI is required to be recognized regardless of the credit loss component if the Company intends to sell the security or if it is “more-likely-than-not” that the Company will be required to sell the security before recovery of its amortized cost basis. The credit loss component of an other-than-temporary impairment write-down is recorded in earnings, while the remaining portion of the impairment loss is recognized in other comprehensive income (loss), provided the Company does not intend to sell the underlying debt security and it is more-likely-than-not that the Company will not be required to sell the debt security prior to recovery. In determining whether a credit loss exists and the period over which the fair value of the debt security is expected to recover, management considers the following factors: the length of time and extent that fair value has been less than cost, the financial condition and near term prospects of the issuer, any external credit ratings, the level of excess cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities and the level of credit enhancement provided by the structure. The sale of a held to maturity security within three months of its maturity date or after collection of at least 85% of the principal outstanding at the time the security was acquired is considered a maturity for purposes of classification and disclosure. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains or losses on the sales of securities are recognized at trade date utilizing the specific identification method. Transfers of debt securities into the held to maturity classification from the available for sale classification are made at fair value on the date of transfer. The unrealized holding gain or loss on the date of transfer is retained in accumulated other comprehensive income and in the carrying value of the held to maturity securities. Such amounts are amortized over the remaining contractual lives of the securities. When transfers of debt securities into the available for sale classification from the held to maturity classification occur, any unrealized holding gains or losses on the transfer date are recognized in other comprehensive income. Bank Owned Life Insurance The investment in bank owned life insurance (“BOLI”) represents the cash surrender value of life insurance policies on the lives of certain Bank employees who have provided positive consent allowing the Bank to be the beneficiary of such policies. Increases in the cash value of the policies, as well as insurance proceeds received, are recorded in noninterest income, and are not subject to income taxes. The financial strength of the insurance carrier is reviewed prior to the purchase of BOLI and annually thereafter. Federal Home Loan Bank Stock Federal Home Loan Bank of Boston (“FHLB”) stock is a non-marketable equity security that is carried at cost. There are no quoted market prices for this security and the security is not liquid. The Company can sell these securities back to the FHLB at par. Loans Held For Sale Loans held for sale are those loans which management has the intent to sell in the foreseeable future, and are carried at the lower of aggregate cost or market value. Net unrealized losses, if any, are recognized by a valuation allowance through a charge to noninterest income. Realized gains and losses on the sale of loans are recognized on the trade date and are determined by the difference between the sale proceeds and the carrying value of the loans. Loans may be sold with servicing rights released or retained. At the time of the sale, management records a servicing asset for the value of any retained servicing rights, which represents the present value of the differential between the contractual servicing fee and adequate compensation, defined as the fee a sub-servicer would require to assume the role of servicer, after considering the estimated effects of prepayments. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the transferor does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call. Loans Receivable Loans receivable that management has the ability and intent to hold for the foreseeable future or until maturity or payoff are stated at their current unpaid principal balances, net of the allowance for loan losses, charge-offs, recoveries, net deferred loan origination fees and unamortized loan premiums. Past due or delinquency status for all loans is based on the number of days past due in accordance with its contractual payment terms. A loan is considered impaired when it is probable that all contractual principal or interest payments due will not be collected in accordance with the terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral, if the loan is collateral dependent. The amount of impairment, if any, and any subsequent changes are recorded as adjustments to the allowance for loan losses. Impaired loans also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. Loans greater than 90 days past due are put on nonaccrual status (excluding certain acquired credit impaired loans). Loans are also placed on nonaccrual status when, in the opinion of management, full collection of principal and interest is doubtful. Interest previously accrued, but uncollected, is reversed against current period income. Subsequent payments are recognized on a cash basis or principal recapture basis depending on a number of factors including probability of collection and if impairment is identified. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectability of interest and principal is no longer in doubt. Management reviews all nonaccrual loans, other loans past due 90 days or more, and restructured loans for impairment. In most cases, loan payments that are past due less than 90 days are considered minor collection delays and the related loans may not be impaired. Consumer installment loans are considered to be pools of small balance homogeneous loans, which are collectively evaluated for impairment. Modifications to a loan are considered to be a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulties and 2) the modification constitutes a concession that is not in line with market rates and/or terms. Modified terms are dependent upon the financial position and needs of the individual borrower. Debt may be bifurcated with separate terms for each tranche of the restructured debt. The decision to restructure a loan, versus aggressively enforcing the collection of the loan, may benefit the Company by increasing the ultimate probability of collection. If a performing loan is restructured into a TDR it remains in performing status. If a nonperforming loan is restructured into a TDR, it continues to be carried in nonaccrual status. Nonaccrual classification may be removed if the borrower demonstrates compliance with the modified terms for a minimum of six months. TDR’s are reported as such for at least one year from the date of restructuring. In years after the restructuring, troubled debt restructured loans are removed from this classification if the restructuring agreement specifies a market rate of interest equal to that which would be provided to a borrower with similar credit at the time of restructuring and the loan is not deemed to be impaired based on the modified terms. Acquired Loans Loans that the Company acquires in acquisitions are initially recorded at fair value with no carryover of the related allowance for credit losses. Determining the fair value of acquired loans involves estimating the amount and timing of principal and interest cash flows initially expected to be collected on the loans and discounting those cash flows at an appropriate market rate of interest. For loans which meet the criteria stipulated in Accounting Standards Codification (“ASC”) 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality”, the Company recognizes an accretable yield, which is defined as the excess of all cash flows expected at acquisition over the initial fair value of the loan, as interest income on a level-yield basis over the expected remaining life of the loan. The excess of the loan’s contractually required payments over the cash flows expected to be collected is the nonaccretable difference. The nonaccretable difference is not recognized as an adjustment of yield, a loss accrual, or a valuation allowance. After the initial acquisition, the Company continues to evaluate whether the timing and the amount of cash to be collected are reasonably estimated. Subsequent significant increases in cash flows the Company expects to collect will first reduce previously recognized valuation allowance and then be reflected prospectively as an increase to the level yield. Subsequent decreases in expected cash flows may result in the loan being considered impaired. Interest income is not recognized to the extent that the net investment in the loan would increase to an amount greater than the estimated payoff amount. For ASC 310-30 loans, the expected cash flows reflect anticipated prepayments, determined on a loan by loan basis, according to the anticipated collection plan of these loans. Prepayments result in the recognition of the nonaccretable balance as current period yield. Changes in prepayment assumptions may change the amount of interest income and principal expected to be collected. The expected prepayments used to determine the accretable yield are consistent between the cash flows expected to be collected and projections of contractual cash flows so as to not affect the nonaccretable difference. For loans that do not meet the ASC 310-30 criteria, the Company records interest income on a level yield basis using the contractually required cash flows. The Company subjects loans that do not meet the ASC 310-30 criteria to ASC Topic 450, “Contingencies”, by collectively evaluating these loans for an allowance for loan loss, using the same methodology as loans originated by the Company. Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition are considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if the Company can reasonably estimate the timing and amount of the expected cash flows on such loans and if the Company expects to fully collect the new carrying value of the loans. As such, the Company may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield. The Company has determined that it can reasonably estimate future cash flows on the Company’s current portfolio of acquired loans that are past due 90 days or more, and on which the Company is accruing interest and the Company expects to fully collect the carrying value of the loans. Allowance For Loan Losses (ALLL) The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance for loan losses when management believes the non-collectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses consists of specific and general components. The specific component relates to impaired loans that are classified as "doubtful", "substandard" or "special mention". For these loans, an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers non classified loans and is based on historical loss experience, including appropriate peer data, adjusted for qualitative factors. Management believes the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies have the authority to require additions to the allowance or charge-offs based on the agencies’ judgments about information available to them at the time of their examination. Reserve for Unfunded Commitments The reserve for unfunded commitments provides for probable losses inherent with funding the unused portion of legal commitments to lend. The unfunded reserve calculation includes factors that are consistent with the ALLL methodology for our loan portfolio as well as a draw down factor applied to the various commitments. The reserve for unfunded commitments is included within other liabilities in the accompanying Consolidated Balance Sheets, and changes in the reserve are reported as a component of other expense in the accompanying Consolidated Statements of Income. See Note 11: Commitments and Contingencies for further information. Interest and Fees on Loans Interest on loans is accrued and included in income based on contractual rates applied to principal amounts outstanding. Accrual of interest is discontinued when loan payments are 90 days or more past due, based on contractual terms, or when, in the judgment of management, collectability of the loan or loan interest becomes uncertain. When interest accrual is discontinued, all unpaid accrued interest is reversed against interest income. Subsequent recognition of income occurs only to the extent payment is received subject to management’s assessment of the collectability of the remaining interest and principal. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectability of interest and principal is no longer in doubt. Loan origination fees, net of direct loan origination costs, are deferred and amortized as an adjustment to the loan’s yield generally over the contractual life of the loan, utilizing the interest method. Goodwill and Intangibles Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Intangible assets are assets acquired in a business combination that lack physical substance but can be distinguished from goodwill because the intangible asset is capable of being sold or exchanged on its own or in combination with related contracts, assets or liabilities. Intangible assets are amortized on a straight-line or accelerated basis over estimated lives. Goodwill is not amortized. Goodwill and identifiable intangible assets are evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying value of these assets may not be recoverable. When these assets are evaluated for impairment, if the carrying amount exceeds fair value, an impairment charge is recorded to income. The fair value is based on observable market prices, when practicable. Other valuation techniques may be used when market prices are unavailable, including estimated discounted cash flows. This type of analysis contains uncertainties because it requires management to make assumptions and to apply judgment to estimate industry economic factors and the profitability of future business strategies. In the event of future changes in fair value, the Company may be exposed to an impairment charge that could be material. Foreclosed Real Estate Assets acquired through deed in lieu or loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. Premises and Equipment Premises and equipment are stated at cost, net of accumulated depreciation and amortization. Leasehold improvements are capitalized and amortized over the shorter of the terms of the related leases or the estimated economic lives of the improvements. Depreciation and amortization is charged to operations using the straight-line method over the estimated useful lives of the related assets which range from three to thirty-nine years. Gains and losses on dispositions are recognized upon realization. Maintenance and repairs are expensed as incurred and improvements are capitalized. Impairment of Long-Lived Assets Long-lived assets, including premises and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment is indicated by that review, the asset is written down to its estimated fair value through a charge to noninterest expense. Servicing Rights When loans are sold, on a servicing retained basis, servicing rights are initially recorded at fair value with the income statement effect recorded in service charges and fees income. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the life of the underlying loans. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Any impairment is reported as a valuation allowance, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to income. Changes in the valuation allowance are reported with service charges and fees income on the consolidated statements of income. The fair values of servicing rights are subject to fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Loans serviced for others are not included in the accompanying consolidated balance sheets. Servicing fee income, which is included in service charges and fees on the income statement, is recorded for fees earned for servicing loans. Fees earned for servicing loans are based on a contractual percentage of the outstanding principal amount of the loan and are recorded as income when earned. The amortization of servicing rights is netted against income from service charges and fees. Income Taxes The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that all or some portion of the deferred tax assets will not be realized. In the ordinary course of business there is inherent uncertainty in quantifying the Company’s income tax positions. Income tax positions and recorded tax benefits assessed for all years are subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have determined the amount of the tax benefit to be recognized by estimating the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company has $193 thousand and $393 thousand of liabilities for uncertain tax positions at December 31, 2018 and 2017, respectively. Where applicable, associated interest and penalties have also been recognized. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Stock Compensation The Company measures and recognizes compensation cost relating to share-based payment transactions based on the grant-date fair value of the equity instruments issued. The fair value of time-based restricted stock is recorded based on the grant date fair value of the Company’s common stock. The fair value of market-based restricted stock is based on values derived using a Monte Carlo based pricing model. The fair value of stock options is determined using the Black-Scholes Option Pricing model. Stock-based compensation costs are recognized over the requisite service period for the awards. Compensation expense reflects the number of awards expected to vest and is adjusted based on awards that ultimately vest. The Company recognizes forfeitures as they occur. Earnings Per Share Unvested restricted stock awards that contain non-forfeitable rights to dividends, are participating securities, and are included in the computation of EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted stock awards qualify as participating securities. Net income is allocated between the common stock and participating securities pursuant to the two-class method. Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period, excluding participating unvested restricted stock awards. Diluted EPS is computed in a similar manner, except that the denominator includes the number of additional common shares that would have been outstanding if potentially dilutive common shares were issued using the treasury stock method. Comprehensive Income Comprehensive income represents the sum of net income and items of other comprehensive income or loss, including net unrealized gains or losses on securities available for sale and net unrealized gains or losses on derivatives accounted for as cash flow hedges. The Company’s total comprehensive income or loss for the years ended December 31, 2018, 2017 and 2016 is reported in the Consolidated Statements of Comprehensive Income. Fair Values of Financial Instruments The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in certain instances, there are no quoted market prices for certain assets or liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the asset or liability. Fair value measurements focus on exit prices in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at either December 31, 2018 or December 31, 2017. The estimated fair value amounts have been measured as of the respective period-ends, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end. Derivative Instruments The effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges is reported in other comprehensive income and subsequently reclassified to earnings in the same period or periods during which the hedged forecasted transaction affects earnings. The Bank assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction. The interest rate swap assets are presented in other assets and the interest rate swap liabilities are presented in accrued expenses and other liabilities in the consolidated balance sheets. The hedge strategy converts the rate of interest on short term rolling FHLB advances or Brokered CDs to long term fixed interest rates, thereby protecting the Bank from interest rate variability. The Company does not offset derivative assets and derivative liabilities for financial statement presentation purposes. Related Party Transactions Directors and officers of the Company and their affiliates have been customers of and have had transactions with the Company, and it is expected that such persons will continue to have such transactions in the future. Management believes that all deposit accounts, loans, services and commitments comprising such transactions were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers who are not directors or officers. In the opinion of management, the transactions with related parties did not involve more than normal risks of collectability, nor favored treatment or terms, nor present other unfavorable features. Note 21 contains details regarding related party transactions. Reclassification Certain prior period amounts have been reclassified to conform to the 2018 financial statement presentation. These reclassifications only changed the reporting categories and did not affect the results of operations or consolidated financial position. Recent accounting pronouncements The following section includes changes in accounting principles and potential effects of new accounting guidance and pronouncements. ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606): This ASU clarifies the principles for recognizing revenue. The guidance notes that an entity should apply the following steps when recognizing revenue: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In 2016, the FASB issued further implementation guidance regarding revenue recognition. This additional guidance included clarification on certain principal versus agent considerations within the implementation of the guidance as well as clarification related to identifying performance obligations and licensing. The guidance also requires new qualitative and quantitative disclosures, including disaggregation of revenues and descriptions of performance obligations. The guidance along with its updates is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted the guidance on January 1, 2018 using the modified retrospective method. In evaluating this standard, management has determined that the majority of revenue earned by the Company is from revenue streams not included in the scope of this standard and for in-scope revenue streams management determined that a cumulative-effect adjustment to opening retained earnings as a result of adopting this standard is not needed. The Company recognizes revenue from contracts with customers when it satisfies its performance obligations. The Company’s performance obligations are generally satisfied as services are rendered and can either be satisfied at a point in time or over time. Unsatisfied performance obligations at the report date are not material to our consolidated financial statements. For the revenue that is within scope of Topic 606, the following is a description of principal activities from which the Company generates its revenue from contracts with customers. Revenues for the Company in scope under Topic 606 include service charges and fees and gains or losses on the sale of foreclosed real estate. Service charges and fees include revenue that is recognized at a point in time, including ATM fees, wire transfer fees, overdraft charge fees, and stop-payment and returned check fees. Such revenue is derived from transactional information and is recognized as revenue immediately as the transactions occur or upon providing the service to complete the customer’s transaction. In addition, service charges and fees include fee income earned on customer deposit accounts, that is recognized over a period of time, generally monthly, as services are performed and performance obligations are satisfied. Generally, these services are cancellable with little to no notice needed. The revenue generated from service charges and fees totaled $1.1 million and $1.0 million for years ended December 31, 2018 and 2017, respectively. Noninterest income recognized from the gain or loss of foreclosed real estate was immaterial for the year ended December 31, 2017. There was no income recognized from the gain or loss of foreclosed real estate for the year ended December 31, 2018. ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” The ASU has been issued to improve the recognition and measurement of financial instruments by requiring 1) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; 2) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; 3) the use of the exit price notion when measuring fair value of financial instruments for disclosure purposes; and 4) separate presentation by the reporting organization in other comprehensive income for the portion of the total change in the fair value of a liability resulting from the change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The standard was effective for the Company beginning on January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2016-02, Leases (Topic 842): The amendments in this ASU require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. Accounting by lessors will remain largely unchanged. In July 2018, the FASB issued a subsequent update which introduced a new transition method, under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The guidance will be effective for the Company on January 1, 2019, with early adoption permitted. The Company recognized $0.6 million as a cumulative-effect adjustment to the opening balance of retained earnings at the time of adoption on January 1, 2019. In addition, the impact of the new standard is expected to be immaterial to the Company as it relates to recognizing operating leases on the balance sheet. The Company estimates the right of use asset and lease liability to be approximately $10 million on day 1, depending on the final discount rate utilized. ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments.” The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and can result in the earlier recognition of credit losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. The amendments in this update will be effective for the Company on January 1, 2020, including interim periods within that fiscal year. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is currently working with third party consultants and continues to evaluate the impact of its pending adoption of this guidance on the Company’s financial statements. ASU No. 2016-15, Statement of Cash Flows (Topic 230): “Classification of Certain Cash Receipts and Cash Payments.” This ASU changes how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The amendments address the classification of the following eight items in the statement of cash flows; debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the Predominance Principle. The amendments in this update were effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2016-18, Statement of Cash Flows (Topic 230): “Restricted Cash.” This ASU provide guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update were effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment.” This ASU simplifies the test for goodwill impairment by eliminating step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity was required to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, 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. In addition, this ASU 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. The amendments will be effective for the Company for its annual or any interim 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 does not expect the application of this guidance to have a material impact on the Company’s financial statements. ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (subtopic 310-20): “Premium Amortization on Purchased Callable Debt Securities.” The amendments in this update shorten 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. The amendments were effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption was permitted, including adoption in an interim period. If an entity early adopted the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this update were effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2017-12, Derivatives and Hedging: “Targeted Improvements to Accounting for Hedging Activities” (Topic 815): The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 was effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. This ASU requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): This update requires a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the newly enacted federal corporate tax rate. The amount of the reclassification would be the difference between the historical 35% corporate income tax rate and the newly enacted 21% corporate tax rate. The amendments were effective for all entities for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption of the amendments was permitted including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued and all other entities for reporting periods for which financial statements have not yet been made available for issuance. An entity would apply the amendments in the update retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act of 2017 is recognized. The Company elected to adopt this update and recorded a $0.3 million reduction to retained earnings and increase to accumulated other comprehensive income as of December 31, 2017. ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): The purpose of this update is to clarify certain aspects of the guidance in ASU No. 2016-01 regarding equity securities without a readily determinable fair value, forward contracts and purchased options, presentation requirements for certain fair value option liabilities, fair value option liabilities denominated in a foreign currency, and transition guidance for equity securities without a readily determinable fair value. Public business entities with fiscal years beginning between December 15, 2017 and June 15, 2018, were not required to adopt these amendments until the interim period beginning after June 15, 2018 and public business entities with fiscal years beginning between June 15, 2018 and December 15, 2018 were not required to adopt these amendments before adopting the amendments in update 2016-01. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): "Improvements to Nonemployee Share-Based Payment Accounting” (ASU 2018-07). The amendments in this update expand the scope of Topic 718 to include share based payments to nonemployees. An entity is required to apply the requirements of Topic 718 to nonemployee awards except for specific guidance related to option pricing models and the attribution of cost. ASU 2018-07 was effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods in the year of adoption. Early adoption was permitted for any interim or annual period. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2018-13, Fair Value Measurement (Topic 820): "Changes to the Disclosure Requirements for Fair Value Measurement." The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The following disclosure requirements were removed from topic 820 for public entities; (1) The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy (2) The policy for timing of transfers between levels and (3) The valuation processes for Level 3 fair value measurements. This update also modified and added disclosure requirements to Topic 820, including adding (1) The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (2) The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 will be effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods in the year of adoption. Early adoption is permitted for any interim or annual period. The Company does not expect the application of this guidance to have a material impact on the Company’s financial statements. |
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Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Common stock The Company has 10,000,000 shares authorized and 7,842,271 shares issued and outstanding at December 31, 2018 and 10,000,000 shares authorized and 7,751,424 shares issued and outstanding at December 31, 2017. The Company's stock is traded on the NASDAQ stock exchange under the ticker symbol BWFG. Warrants On October 1, 2014, the Company acquired Quinnipiac Bank and Trust Co. and, in connection therewith, the Company issued 68,600 warrants to former Quinnipiac warrant holders in accordance with the merger agreement. Each warrant was automatically converted into a warrant to purchase 0.56 shares of the Company’s common stock for an exercise price of $17.86. During the first quarter of 2018, all remaining warrants were exercised. The Company does not have any warrants outstanding as of December 31, 2018. Dividends The Company’s shareholders are entitled to dividends when and if declared by the Board of Directors, out of funds legally available. The ability of the Company to pay dividends depends, in part, on the ability of the Bank to pay dividends to the Company. In accordance with Connecticut statutes, regulatory approval is required to pay dividends in excess of the Bank’s profits retained in the current year plus retained profits from the previous two years. The Bank is also prohibited from paying dividends that would reduce its capital ratios below minimum regulatory requirements. The Company did not repurchase any of its common stock during 2018 or 2017. |
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Goodwill and other intangible assets | Goodwill and other intangible assets Information on goodwill for the year ended December 31, 2018 and 2017 is as follows:
The Company tests for goodwill impairment annually as of June 30th. No impairment was required to be recorded on goodwill for 2018 or 2017. The table below provides information regarding the carrying amounts and accumulated amortization of amortized intangible assets as of the dates set forth below. The remaining net intangible asset as of December 31, 2018 will be amortized over a period of approximately 4 years.
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Investment Securities | Investment Securities The amortized cost, gross unrealized gains and losses and fair values of available for sale and held to maturity securities segregated by contractual maturity at December 31, 2018 were as follows:
The amortized cost, gross unrealized gains and losses and fair values of available for sale and held to maturity securities segregated by contractual maturity at December 31, 2017 were as follows:
The gross realized gains on the sale of investment securities totaled $0.2 million for the year ended December 31, 2018. Sales proceeds and calls totaled $12.4 million for the year ended December 31, 2018. The gross realized losses on the sale of investment securities totaled $2.0 thousand for the year ended December 31, 2018. The gross realized gains on the sale of investment securities totaled $0.2 million for the year ended December 31, 2017. There were no gross realized losses on the sale of investment securities for the year ended December 31, 2017. Sales proceeds and calls were $60.4 million for the year ended December 31, 2017. At December 31, 2018 and December 31, 2017, none of the Company's securities were pledged as collateral with the Federal Home Loan Bank ("FHLB") or any other institution. As of December 31, 2018, the actual duration of the Company's available for sale securities were significantly shorter than the notional maturities. At December 31, 2018 the Company held marketable equity securities with a fair value and amortized cost of $2.0 million. These securities represent an investment in mutual funds whose primary purpose is to make investments for CRA purposes. The Company did not hold any marketable equity securities at December 31, 2017. The following table provides information regarding investment securities with unrealized losses, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position at December 31, 2018 and 2017:
There were twenty-five and fifteen individual investment securities as of December 31, 2018 and December 31, 2017, respectively, in which the fair value of the security was less than the amortized cost of the security. The U.S. Government and agency obligations owned are either direct obligations of the U.S. Government or guaranteed by the U.S. Government, therefore the contractual cash flows are guaranteed and as a result the securities in this portfolio are not considered other than temporarily impaired. The Company continually monitors its state agency, municipal and corporate bond portfolios and at this time these portfolios have minimal default risk because state agency, municipal and corporate bonds are all rated investment grade or deemed to be of investment grade quality. The Company has the intent and ability to retain its investment securities in an unrealized loss position at December 31, 2018 until the decline in value has recovered or the security has matured. |
Loans Receivable and Allowance for Loan Losses |
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Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable and Allowance for Loan Losses | Loans Receivable and Allowance for Loan Losses The following table sets forth a summary of the loan portfolio at December 31, 2018 and 2017:
Lending activities are conducted principally in the New York metropolitan area, including Fairfield and New Haven Counties of Connecticut, and consist of residential and commercial real estate loans, commercial business loans and a variety of consumer loans. Loans may also be granted for the construction of residential homes and commercial properties. All residential and commercial mortgage loans are collateralized by first or second mortgages on real estate. Risk management The Company has established credit policies applicable to each type of lending activity in which it engages. The Company evaluates the creditworthiness of each customer and extends credit of up to 80% of the market value of the collateral, depending on the borrower's creditworthiness and the type of collateral. The borrower’s ability to service the debt is monitored on an ongoing basis. Real estate is the primary form of collateral. Other important forms of collateral are business assets, time deposits and marketable securities. While collateral provides assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment for commercial loans, to be based on the borrower’s ability to generate continuing cash flows. In the fourth quarter of 2017 management made the strategic decision to no longer originate residential mortgage loans. The Company’s policy for residential lending generally required that, the amount of the loan may not exceed 80% of the original appraised value of the property. In certain situations, the amount may have exceeded 80% LTV either with private mortgage insurance being required for that portion of the residential loan in excess of 80% of the appraised value of the property or where secondary financing is provided by a housing authority program second mortgage, a community’s low/moderate income housing program, or a religious or civic organization. Credit quality of loans and the allowance for loan losses Management segregates the loan portfolio into defined segments, which are used to develop and document a systematic method for determining its allowance for loan losses. The portfolio segments are segregated based on loan types and the underlying risk factors present in each loan type. Such risk factors are periodically reviewed by management and revised as deemed appropriate. The Company’s loan portfolio is segregated into the following portfolio segments: Residential Real Estate: This portfolio segment consists of the origination of first mortgage loans secured by one-to-four family owner occupied residential properties for personal use located in our market area. This segment also includes home equity loans and home equity lines of credit secured by owner occupied one-to-four family residential properties. Loans of this type were written at a combined maximum of 80% of the appraised value of the property and the Company requires a first or second lien position on the property. These loans can be affected by economic conditions and the values of the underlying properties. Commercial Real Estate: This portfolio segment includes loans secured by commercial real estate, multi-family dwellings and investor-owned one-to-four family dwellings. Loans secured by commercial real estate generally have larger loan balances and more credit risk than owner occupied one-to-four family mortgage loans. Construction: This portfolio segment includes commercial construction loans for commercial development projects, including condominiums, apartment buildings, and single family subdivisions as well as office buildings, retail and other income producing properties and land loans, which are loans made with land as collateral. In addition, this portfolio includes residential construction loans to individuals to finance the construction of residential dwellings for personal use located in our market area. Construction and land development financing generally involves greater credit risk than long-term financing on improved, owner-occupied or leased real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of construction cost proves to be inaccurate, the Company may be required to advance additional funds beyond the amount originally committed in order to protect the value of the property. Moreover, if the estimated value of the completed project proves to be inaccurate, the borrower may hold a property with a value that is insufficient to assure full repayment through sale or refinance. Construction loans also expose the Company to the risks that improvements will not be completed on time in accordance with specifications and projected costs and that repayment will depend on the successful operation or sale of the properties, which may cause some borrowers to be unable to continue paying debt service, which exposes the Company to greater risk of non-payment and loss. Commercial Business: This portfolio segment includes commercial business loans secured by assignments of corporate assets and personal guarantees of the business owners. Commercial business loans generally have higher interest rates and shorter terms than other loans, but they also have increased difficulty of loan monitoring and a higher risk of default since their repayment generally depends on the successful operation of the borrower’s business. Consumer: This portfolio segment includes loans secured by savings or certificate accounts, or automobiles, as well as unsecured personal loans and overdraft lines of credit. This type of loan entails greater risk than residential mortgage loans, particularly in the case of loans that are unsecured or secured by assets that depreciate rapidly. Allowance for loan losses During the fourth quarter of 2018, the Company recognized a charge-off totaling $6.2 million attributable to one lending relationship, affecting the commercial real estate and commercial business segments. As of December 31, 2017, the Company has changed its methodology to estimate its allowance for loan losses. The change in methodology resulted in an update to the underlying loan loss assumptions, incorporating the most recent industry, peer and product loss trends. This resulted in a non-recurring, pretax $1.3 million reduction in the reserve during the fourth quarter of 2017 and for the year ended December 31, 2017. The following tables set forth the activity in the Company’s allowance for loan losses for the years ended December 31, 2018, 2017 and 2016, by portfolio segment:
Loans evaluated for impairment and the related allowance for loan losses as of December 31, 2018 and 2017 were as follows:
Credit quality indicators To measure credit risk for the loan portfolios, the Company employs a credit risk rating system. This risk rating represents an assessed level of the loan’s risk based on the character and creditworthiness of the borrower/guarantor, the capacity of the borrower to adequately service the debt, any credit enhancements or additional sources of repayment, and the quality, value and coverage of the collateral, if any. The objectives of the Company’s risk rating system are to provide the Board of Directors and senior management with an objective assessment of the overall quality of the loan portfolio, to promptly and accurately identify loans with well-defined credit weaknesses so that timely action can be taken to minimize credit loss, to identify relevant trends affecting the collectability of the loan portfolio and to isolate potential problem areas and to provide essential information for determining the adequacy of the allowance for loan losses. The Company’s credit risk rating system has nine grades, with each grade corresponding to a progressively greater risk of default. Risk ratings of 1 through 5 are "pass" categories and risk ratings of 6 through 9 are criticized asset categories as defined by the regulatory agencies. A “special mention” (6) credit has a potential weakness which, if uncorrected, may result in a deterioration of the repayment prospects or inadequately protect the Company’s credit position at some time in the future. “Substandard” (7) loans are credits that have a well-defined weakness or weaknesses that jeopardize the full repayment of the debt. An asset rated “doubtful” (8) has all the weaknesses inherent in a substandard asset and which, in addition, make collection or liquidation in full highly questionable and improbable, when considering existing facts, conditions, and values. Loans classified as “loss” (9) are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value; rather, it is not practical or desirable to defer writing-off this basically worthless asset even though partial recovery may be made in the future. Risk ratings are assigned as necessary to differentiate risk within the portfolio. They are reviewed on an ongoing basis through the annual loan review process performed by Company personnel, normal renewal activity and the quarterly watchlist and watched asset report process. They are revised to reflect changes in the borrower's financial condition and outlook, debt service coverage capability, repayment performance, collateral value and coverage as well as other considerations. In addition to internal review at multiple points, outsourced loan review opines on risk ratings with regard to the sample of loans their review covers. The following table presents credit risk ratings by loan segment as of December 31, 2018 and 2017:
Loan portfolio aging analysis When a loan is 15 days past due, the Company sends the borrower a late notice. The Company attempts to contact the borrower by phone if the delinquency is not corrected promptly after the notice has been sent. When the loan is 30 days past due, the Company mails the borrower a letter reminding the borrower of the delinquency, and attempts to contact the borrower personally to determine the reason for the delinquency and ensure the borrower understands the terms of the loan. If necessary, on the subsequent 90th day of delinquency, the Company may take other appropriate legal action. A summary report of all loans 30 days or more past due is provided to the Board of Directors of the Company periodically. Loans greater than 90 days past due are generally put on nonaccrual status. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectability of interest and principal is no longer in doubt. A loan is considered to be no longer delinquent when timely payments are made for a period of at least six months (one year for loans providing for quarterly or semi-annual payments) by the borrower in accordance with the contractual terms. The following tables set forth certain information with respect to our loan portfolio delinquencies by portfolio segment and amount as of December 31, 2018 and December 31, 2017:
There were no loans delinquent greater than 90 days and still accruing as of December 31, 2018 or December 31, 2017. Loans on nonaccrual status The following is a summary of nonaccrual loans by portfolio segment as of December 31, 2018 and 2017:
Lost interest income on loans that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms for the years ended December 31, 2018, 2017 and 2016 was $1.1 million, $0.2 million and $17 thousand, respectively. The amount of actual interest income recognized on these loans was $11 thousand, $0.1 million and $0.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. At December 31, 2018 and 2017, there were no commitments to lend additional funds to borrowers on nonaccrual status, respectively. Nonaccrual loans with no specific reserve totaled $11.5 million and $3.5 million at December 31, 2018 and 2017, respectively. Impaired loans An impaired loan is generally one for which it is probable, based on current information, that the Company will not collect all the amounts due in accordance with the contractual terms of the loan. Such loans are individually evaluated for impairment. When the Company classifies a problem loan as impaired, it evaluates whether a specific valuation allowance is required for that portion of the asset that is estimated to be impaired. The following tables summarize impaired loans by portfolio segment and the average carrying amount and interest income recognized on impaired loans by portfolio segment as of December 31, 2018, 2017 and 2016:
Troubled debt restructurings (TDRs) Modifications to a loan are considered to be a troubled debt restructuring when both of the following conditions are met: 1) the borrower is experiencing financial difficulties and 2) the modification constitutes a concession that is not in line with market rates and/or terms. Modified terms are dependent upon the financial position and needs of the individual borrower. Troubled debt restructurings are classified as impaired loans. If a performing loan is restructured into a TDR it remains in performing status. If a nonperforming loan is restructured into a TDR, it continues to be carried in nonaccrual status. Nonaccrual classification may be removed if the borrower demonstrates compliance with the modified terms for a minimum of six months. Loans classified as TDRs totaled $7.2 million at December 31, 2018 and $4.9 million at December 31, 2017. The following table presents loans whose terms were modified as TDRs during the periods presented:
At December 31, 2018 and December 31, 2017, there were six non-accrual loans identified as TDRs totaling $3.6 million and four non-accrual loans identified as TDRs totaling $0.6 million, respectively. The following table provides information on how loans were modified as a TDR for the years ended December 31, 2018 and 2017.
One loan previously modified as a TDR, in the amount of $2.0 million re-defaulted during the year ended December 31, 2018. Three loans previously modified as TDRs, in the amount of $1.2 million re-defaulted during the year ended December 31, 2017. |
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Premises and Equipment | Premises and Equipment At December 31, 2018 and 2017, premises and equipment consisted of the following:
For the years ended December 31, 2018, 2017 and 2016, depreciation and amortization expense related to premises and equipment totaled $1.7 million, $1.5 million and $1.7 million, respectively. |
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Other Assets | Other Assets The components of other assets as of December 31, 2018 and 2017 are summarized below:
Deferred compensation The Company has a non-qualified deferred compensation plan for the Board of Directors that allows for the deferral of fees earned related to services rendered for the Company. The deferred compensation balance declined $1.5 million for the year ended December 31, 2018 compared to the year ended December 31, 2017. The decline was primarily driven by distributions from the plan. Loan servicing The Bank sells loans in the secondary market and retains the ability to service many of these loans. The Bank earns fees for the servicing provided. Loans serviced for others are not included in the accompanying consolidated balance sheets. The balance of loans serviced for others was $122.4 million and $122.8 million at December 31, 2018 and 2017, respectively. The risks inherent in servicing assets relate primarily to changes in the timing of prepayments that result from shifts in interest rates. The significant assumptions used in the valuation at year-end 2018 for servicing assets included a discount rate ranging from 10% to 12% and pre-payment speed assumptions ranging from 3% to 15%. The significant assumptions used in the valuation at year-end 2017 for servicing assets included a discount rate ranging from 7% to 12% and pre-payment speed assumptions ranging from 7% to 9%. The carrying value of loan servicing rights was $0.9 million and $1.1 million as of December 31, 2018 and 2017, respectively. The following table presents the changes in carrying value for loan servicing assets:
Included in accrued expenses and other liabilities, as of December 31, 2018 and 2017, respectively, are $73 thousand and $83 thousand for loan servicing liabilities related to loans serviced for others for which the Company does not receive a servicing fee. As of December 31, 2018, the Company established a servicing asset valuation allowance in the amount of $222 thousand. Prior to 2018, the Company was not required to have a servicing asset valuation allowance. |
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Deposits | Deposits At December 31, 2018 and 2017, deposits consisted of the following:
Maturities of time certificates of deposit as of December 31, 2018 and 2017 are summarized below:
The aggregate amount of individual certificate accounts, including brokered deposits with balances of $250,000 or more, were approximately $227.8 million and $197.3 million at December 31, 2018 and 2017, respectively. Brokered certificate of deposits totaled $91.8 million and $44.3 million at December 31, 2018 and 2017, respectively. Certificates of deposits from national listing services totaled $101.5 million at December 31, 2018 and $163.0 million at December 31, 2017. The following table summarizes interest expense by account type for the years ended December 31, 2018, 2017 and 2016:
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Federal Loan Bank Advances and Other Borrowings |
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Advances from Federal Home Loan Banks [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal Loan Bank Advances and Other Borrowings | Federal Home Loan Bank Advances and Other Borrowings The following is a summary of FHLB advances with maturity dates and weighted average rates at December 31, 2018 and 2017:
$125 million of the above mentioned FHLB advances as of December 31, 2018 are subject to interest rate swap transactions, see note 17. Interest expense on FHLB advances totaled $3.9 million, $2.0 million and $1.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Bank has additional borrowing capacity at the FHLB up to a certain percentage of the value of qualified collateral. In accordance with agreements with the FHLB, the qualified collateral must be free and clear of liens, pledges and encumbrances. At December 31, 2018, the Company had pledged eligible loans with a book value of $939.8 million as collateral to support borrowing capacity at the FHLB of Boston. As of December 31, 2018 the Company has immediate availability to borrow an additional $385.1 million based on qualified collateral. At December 31, 2018, the Bank had a secured line of credit with the FHLB and unsecured lines of credit with Atlantic Community Bankers Bank, Zions Bank and Texas Capital Bank. The total line of credit and the amount outstanding at December 31, 2018 is summarized below:
Federal Home Loan Bank Stock As a member of the FHLB, the Bank is required to maintain investments in their capital stock. The Bank owned 81,096 shares and 91,827 shares at December 31, 2018 and 2017, respectively. There is no ready market or quoted market values for the stock and as such is classified as restricted stock. The shares have a par value of $100 and are carried on the consolidated balance sheets at cost, and evaluated for impairment, as the stock is only redeemable at par subject to the redemption practices of the FHLB. The determination of whether the par value will ultimately be recovered is influenced by criteria such as the following: (a) the significance of the decline in net assets of the Federal Home Loan Bank as compared to the capital stock amount and the length of time this situation has persisted; (b) commitments by the Federal Home Loan Bank to make payments required by law or regulation and the level of such payments in relation to the operating performance; (c) the impact of legislative and regulatory changes on the customer base of the Federal Home Loan Bank; and (d) the liquidity position of the Federal Home Loan Bank. Management evaluated the stock and concluded that the stock was not impaired as of December 31, 2018 or 2017. |
Subordinated Debentures |
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Dec. 31, 2018 | |
Subordinated Borrowings [Abstract] | |
Subordinated Debentures | Subordinated Debentures On August 19, 2015, the Company completed a private placement of $25.5 million in aggregate principal amount of fixed rate subordinated notes (the “Notes”) to certain institutional investors. The Notes are non-callable for five years, have a stated maturity of August 15, 2025, and bear interest at a quarterly pay fixed rate of 5.75% per annum to the maturity date or the early redemption date, August 2020 and annually thereafter. The Notes have been structured to qualify for the Company as Tier 2 capital under regulatory guidelines. We used the net proceeds for general corporate purposes, which included maintaining liquidity at the holding company, providing equity capital to the Bank to fund balance sheet growth and our working capital needs. The Notes were assigned an investment grade rating of BBB by Kroll Bond Rating Agency, which was reaffirmed in the third quarter of 2018. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Leases The Company leases all but three locations, plus certain equipment under operating lease agreements, which expire at various dates through 2029. In addition to rental payments, the leases require payment of property taxes and certain common area maintenance fees. Total future lease obligations totaled $23.7 million and $21.7 million at December 31, 2018 and 2017, respectively. The lease obligations at December 31, 2018 include a land lease with a municipality related to a building purchased in December, 2016. The land lease has a 98 year and 11 month term which commenced on September 1, 2001. The current lease payment is approximately $173 thousand per year and may be adjusted to fair market value in subsequent years. Future minimum rental commitments under the terms of these leases for the year ended December 31, 2018 was as follows:
Total rental expense approximated $2.0 million, $1.8 million and $2.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. Legal matters The Company is involved in various legal proceedings which have arisen in the normal course of business. Management believes that resolution of these matters will not have a material effect on the Company’s financial condition or results of operations. Off-balance sheet instruments In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers. These financial instruments include commitments to extend credit and involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the financial statements. The contractual amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The contractual amounts of commitments to extend credit represent the amounts of potential accounting loss should the contract be fully drawn upon, the customers default, and the value of any existing collateral becomes worthless. Management uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments and evaluates each customer’s creditworthiness on a case-by-case basis. Management believes that they control the credit risk of these financial instruments through credit approvals, credit limits, monitoring procedures and the receipt of collateral as deemed necessary. Financial instruments whose contract amounts represented credit risk at December 31, 2018 and 2017 were as follows:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract or certain milestones in the case of construction loans or otherwise required collateral under borrowing base limits are met. Commitments to extend credit generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Since these commitments could expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counter party. Collateral held varies, but may include residential and commercial property, deposits and securities. These commitments subject the Company to potential exposure in excess of amounts recorded in the financial statements, and therefore, management maintains a specific reserve for unfunded credit commitments. This reserve is reported as a component of accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets. The reserve for unfunded commitments totaled $175 thousand at December 31, 2018 and $250 thousand at December 31, 2017. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of income tax expense for the years ended December 31, 2018, 2017 and 2016 consisted of:
In October, 2015, the Company created Bankwell Loan Servicing Group, Inc., a Passive Investment Company (“PIC”) organized for state income tax purposes. The PIC is a wholly-owned subsidiary of the Bank operating in accordance with Connecticut statutes. The PIC’s activities are limited in scope to holding and managing loans that are collateralized by real estate. Income earned by a PIC is determined in accordance with the statutory requirements for a passive investment company and the dividends paid by the PIC to the Bank are not taxable income for Connecticut income tax purposes. As a result of the formation of the PIC, the Bank no longer expects to be subject to Connecticut income taxes. State taxes are being recognized for income taxes on income earned in other states. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. As a result, the corporate tax rate was reduced from 35% to 21%. Companies were required to recognize the effect of tax law changes in the period of enactment in accordance with GAAP. As result of the tax law changes the Company recognized a write-down of its deferred tax asset in the amount of $3.3 million for the year ended December 31, 2017. A reconciliation of the anticipated income tax expense, computed by applying the statutory federal income tax rate of 21% for the year ended December 31, 2018 and 35% for the years ended December 31, 2017 and 2016 to the income before income taxes, to the amount reported in the consolidated statements of income for the years ended December 31, 2018, 2017, and 2016 was as follows:
At December 31, 2018 and 2017, the components of deferred tax assets and liabilities were as follows:
A valuation allowance against deferred tax assets is required if, based on the weight of available evidence, it is more-likely-than-not that some or all of the deferred tax assets will not be realized. Management evaluated its remaining deferred tax assets and believes no valuation allowances are needed at December 31, 2018. At December 31, 2018, the Company had federal net operating loss carryovers of $2.5 million. The carryovers were transferred to the Company upon the merger with The Wilton Bank. The losses will expire after 2032 and are subject to certain annual limitations which amount to $176 thousand per annum. Management regularly analyzes their tax positions and at December 31, 2018 management has established a reserve for uncertain tax positions in conjunction with the Company's out of state lending activity. The total reserve for uncertain tax positions totaled $193 thousand as of December 31, 2018. The tax years 2015 and subsequent are subject to examination by federal and state taxing authorities. The statute of limitations has expired on the years before 2015. No examinations are currently in process. The following table reflects a reconciliation of the beginning and ending balances of the Company’s uncertain tax positions:
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401(K) Profit Sharing Plan |
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Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
401(K) Profit Sharing Plan | 401(K) Profit Sharing Plan The Company’s employees are eligible to participate in The Bankwell Financial Group, Inc. and its Subsidiaries and Affiliates 401(k) Plan (the “401k Plan”). The 401k Plan covers substantially all employees who are at least 21 years of age. Under the terms of the 401k Plan, participants can contribute up to a certain percentage of their compensation, subject to federal limitations. The Company matches eligible contributions and may make discretionary matching and/or profit sharing contributions. Participants are immediately vested in their contributions and become fully vested in the Company’s contributions after completing five years of service. The Company expensed $265 thousand, $257 thousand and $227 thousand related to the 401k Plan during the years ended December 31, 2018, 2017 and 2016, respectively. |
Earnings Per Share (EPS) |
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Earnings Per Share (EPS) | Earnings Per Share (EPS) Unvested restricted stock awards that contain non-forfeitable rights to dividends, are participating securities, and are included in the computation of EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted stock awards qualify as participating securities. Net income is allocated between the common stock and participating securities pursuant to the two-class method. Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period, excluding participating unvested restricted stock awards. Diluted EPS is computed in a similar manner, except that the denominator includes the number of additional common shares that would have been outstanding if potentially dilutive common shares were issued using the treasury stock method. The following is a reconciliation of earnings available to common shareholders and basic weighted average common shares outstanding to diluted weighted average common shares outstanding, reflecting the application of the two-class method:
(1) Represents dividends paid and undistributed earnings allocated to unvested stock-based awards that contain non-forfeitable rights to dividends. (2) Represents the effect of the assumed exercise of stock options and warrants and the vesting of restricted shares, as applicable, utilizing the treasury stock method. |
Stock Based Compensation Plans |
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Stock Based Compensation Plans | Stock Based Compensation Plans Equity award plans The Company has stock options or unvested restricted stock outstanding under three equity award plans, which are collectively referred to as the “Plan.” The current plan under which any future issuances of equity awards will be made is the 2012 BNC Financial Group, Inc. Stock Plan, or the “2012 Plan,” amended on June 26, 2013. All equity awards made under the 2012 Plan are made by means of an award agreement, which contains the specific terms and conditions of the grant. To date, all equity awards have been in the form of share options or restricted stock. At December 31, 2018, there were 590,079 shares reserved for future issuance under the 2012 Plan. Stock options: The Company accounts for stock options based on the fair value at the date of grant and records an expense over the vesting period of such awards on a straight line basis. There were no options granted during the years ended December 31, 2018, 2017 or 2016. A summary of the status of outstanding stock options at December 31, 2018 is presented below:
Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date. The total intrinsic value of stock options exercised during the years ended December 31, 2018, 2017 and 2016 was $0.4 million, $1.1 million and $0.6 million, respectively. The range of exercise prices for the 19,030 options exercisable at December 31, 2018 was $11.00 to $17.86 per share. The weighted average remaining contractual life for these options was 3.2 years at December 31, 2018. At December 31, 2018, as all awarded options have vested, all of the outstanding options are exercisable, and the aggregate intrinsic value of these options was$0.2 million. The following table summarizes information for options, all of which are both outstanding and exercisable, at December 31, 2018:
Restricted stock: Restricted stock provides grantees with rights to shares of common stock upon completion of a service period. Shares of unvested restricted stock are considered participating securities. Restricted stock awards generally vest over one to five years. The following table presents the activity for restricted stock for the year ended December 31, 2018:
The total fair value of restricted stock awards vested during the year ended December 31, 2018 was $1.1 million. The Company’s restricted stock expense for the years ended December 31, 2018, 2017 and 2016 was $1.3 million, $0.9 million and $1.2 million, respectively. At December 31, 2018 there was $1.8 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 1.7 years. Performance based restricted stock: On February 20, 2018, the Company issued 11,250 shares of restricted stock with performance and service conditions pursuant to the Company’s 2012 Stock Plan. The awards vest over a 3 year service period, provided certain performance metrics are met. The share quantity, which can range between 0% and 200%, of the grant is dependent on the degree to which the performance metrics are met. The Company records an expense over the vesting period based on (a) the probability that the performance metric will be met and (b) the fair market value of the Company’s stock at the date of the grant. |
Comprehensive Income |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income | Comprehensive Income Comprehensive income represents the sum of net income and items of other comprehensive income or loss, including net unrealized gains or losses on securities available for sale and net unrealized gains or losses on derivatives accounted for as cash flow hedges. The Company’s total comprehensive income or loss for the years ended December 31, 2018, 2017 and 2016 is reported in the Consolidated Statements of Comprehensive Income. The following tables present the changes in accumulated other comprehensive (loss) income by component, net of tax for the years ended December 31, 2018, 2017 and 2016:
The following table provides information for the items reclassified from accumulated other comprehensive income or loss:
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments The Company manages economic risks, including interest rate, liquidity, and credit risk by managing the amount, sources, and duration of its funding along with the use of interest rate derivative financial instruments, namely interest rate swaps. The Company does not use derivatives for speculative purposes. As of December 31, 2018, the Bank was a party to nine interest rate swaps to add stability to interest expense and to manage its exposure to interest rate movements. The notional amount for each swap is $25 million and in each case, the Bank has entered into pay-fixed LIBOR interest rate swaps to convert short term rolling Federal Home Loan Bank advances or brokered CD's to long term fixed rates. As of December 31, 2018, three of the Company's nine interest rate swaps represent forward-starting interest rate swaps on probable future FHLB advances or brokered deposits. The Company accounts for its interest rate swaps as effective cash flow hedges (see Note 1). None of the interest rate swap agreements contain any credit risk related contingent features. A hedging instrument is expected at inception to be highly effective at offsetting changes in the hedged transactions attributable to the changes in the hedged risk. Interest rate swaps with a positive fair value are recorded as other assets and interest rate swaps with a negative fair value are recorded as other liabilities on the consolidated balance sheets. Information about derivative instruments for the years ended December 31, 2018 and 2017 were as follows: December 31, 2018:
(1) The effective date of the forward-starting interest rate swaps listed above are January 2, 2019, January 2, 2020 and August 26, 2020, respectively. Accrued interest receivable related to interest rate swaps as of December 31, 2018 totaled $224 thousand and is excluded from the fair value presented in the table above. The fair value of interest rate swaps including accrued interest totaled $654 thousand as of December 31, 2018. December 31, 2017:
Accrued interest payable related to interest rate swaps as of December 31, 2017 totaled $70 thousand and is excluded from the fair value presented in the table above. The fair value of interest rate swaps including accrued interest totaled $1,964 thousand as of December 31, 2017. The effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges is reported in other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company's rolling short term debt or brokered deposits. The Company expects to reclassify $1.1 million as a reduction to interest expense during the next 12 months. The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction. The interest rate swap assets are presented in other assets and the interest rate swap liabilities are presented in accrued expenses and other liabilities in the Consolidated Balance Sheets. The Company's cash flow hedge positions consist of interest rate swap transactions as detailed in the table below:
This hedge strategy converts the rate of interest on short term rolling FHLB advances or brokered deposits to long term fixed interest rates, thereby protecting the Company from interest rate variability. Changes in the consolidated statements of comprehensive income related to interest rate derivatives designated as hedges of cash flows were as follows for the years ended December 31, 2018 and 2017:
The following tables summarize gross and net information about derivative instruments that are offset in the Consolidated Balance Sheets at December 31, 2018 and 2017:
In addition to cash collateral received the Company has also received investment securities as collateral with a fair market value of $1.2 million as of December 31, 2018.
In addition to cash collateral received the Company has also received investment securities as collateral with a fair market value of $0.3 million as of December 31, 2017. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the statements of condition, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rates and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction. The estimated fair value amounts have been measured as of the respective period-ends, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end. The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. However, borrowers with fixed rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk. The carrying values, fair values and placement in the fair value hierarchy of the Company’s financial instruments at December 31, 2018 and 2017 were as follows:
The following methods and assumptions were used by management in estimating the fair value of its financial instruments: Cash and due from banks, federal funds sold, accrued interest receivable and accrued interest payable: The carrying amount is a reasonable estimate of fair value. Marketable equity securities, available for sale securities and held to maturity securities: Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. The majority of the available for sale securities are considered to be Level 2 as other observable inputs are utilized, such as quoted prices for similar securities. Level 1 investment securities include investments in a U.S. treasury note and in marketable equity securities for which a quoted price is readily available in the market. Level 3 held to maturity securities represent private placement municipal housing authority bonds for which no quoted market price is available. The fair value for these securities is estimated using a discounted cash flow model, using discount rates ranging from 4.7% to 5.1% as of December 31, 2018 and 4.5% to 4.8% as of December 31, 2017. These securities are CRA eligible investments. FHLB stock: The carrying value of FHLB stock approximates fair value based on the most recent redemption provisions of the FHLB. Loans receivable: For variable rate loans which reprice frequently and have no significant change in credit risk, fair values are based on carrying values. The fair value of fixed rate loans are estimated by discounting the future cash flows using the rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The fair value methodology includes prepayment, default and loss severity assumptions applied by type of loan. The fair value estimate of the loans includes an expected credit loss. Derivative asset (liability): The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Bank also considers the creditworthiness of each counterparty for assets and the creditworthiness of the Bank for liabilities. Servicing Asset (liability): Servicing assets and liabilities do not trade in an active, open market with readily observable prices. The Company estimates the fair value of servicing assets and liabilities using discounted cash flow models, incorporating numerous assumptions from the perspective of a market participant, including market discount rates. Deposits: The fair value of demand deposits, regular savings and certain money market deposits is the amount payable on demand at the reporting date. The fair value of certificates of deposit and other time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities to a schedule of aggregated expected maturities on such deposits. Borrowings and Subordinated Debentures: The fair value of the Company’s borrowings and subordinated debentures is estimated using a discounted cash flow calculation that applies discount rates currently offered based on similar maturities. The Bank also considers its own creditworthiness in determining the fair value of its borrowings and subordinated debt. Contractual cash flows for the subordinated debt are reduced based on the estimated rates of default, the severity of losses to be incurred on a default, and the rates at which the subordinated debt is expected to prepay after the call date. Off-balance-sheet instruments: Loan commitments on which the committed interest rate is less than the current market rate are insignificant at December 31, 2018 and 2017. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company is required to account for certain assets at fair value on a recurring or non-recurring basis. As discussed in Note 1, the Company determines fair value in accordance with GAAP, which defines fair value and establishes a framework for measuring fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values: Level 1— Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 — Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 — Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Valuation techniques based on unobservable inputs are highly subjective and require judgments regarding significant matters such as the amount and timing of future cash flows and the selection of discount rates that may appropriately reflect market and credit risks. Changes in these judgments often have a material impact on the fair value estimates. In addition, since these estimates are as of a specific point in time they are susceptible to material near-term changes. Financial instruments measured at fair value on a recurring basis The following table details the financial instruments carried at fair value on a recurring basis at December 31, 2018 and 2017, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value. The Company had no transfers into or out of Levels 1, 2 or 3 during the years ended December 31, 2018 and 2017, except for the Company's investment in a U.S.Treasury note that was transferred from Level 2 to Level 1 for the year ended December 31, 2017.
Marketable equity securities and available for sale securities: The fair value of the Company’s investment securities are estimated by using pricing models or quoted prices of securities with similar characteristics (i.e. matrix pricing) and are classified within Level 1 or Level 2 of the valuation hierarchy. The pricing is primarily sourced from third party pricing services, overseen by management. Derivative assets and liabilities: The Company’s derivative assets and liabilities consist of transactions as part of management’s strategy to manage interest rate risk. The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy. Financial instruments measured at fair value on a nonrecurring basis Certain assets and liabilities are measured at fair value on a non-recurring basis in accordance with GAAP. These include assets that are measured at the-lower-of-cost-or market that were recognized at fair value below cost at the end of the period as well as assets that are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The following table details the financial instruments carried at fair value on a nonrecurring basis at December 31, 2018 and 2017, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:
The following table presents information about quantitative inputs and assumptions for Level 3 financial instruments carried at fair value on a nonrecurring basis at December 31, 2018 and 2017:
(1) Servicing liabilities totaling $73 thousand were valued using a discount rate of 2.8%. Impaired loans: Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans calculated in accordance with ASC 310-10 when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. Collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or other assumptions. Estimates of fair value based on collateral are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3. For those loans where the primary source of repayment is cash flow from operations, adjustments include impairment amounts calculated based on the perceived collectability of interest payments on the basis of a discounted cash flow analysis utilizing a discount rate equivalent to the original note rate. Foreclosed real estate: The Company classifies property acquired through foreclosure or acceptance of deed-in-lieu of foreclosure as foreclosed real estate and repossessed assets in its financial statements. Upon foreclosure, the property securing the loan is written down to fair value less selling costs. The write-down is based upon differences between the appraised value and the book value. Appraisals are based on observable market data such as comparable sales, however assumptions made in determining comparability are unobservable and therefore these assets are classified as Level 3 within the valuation hierarchy. Servicing assets and liabilities: When loans are sold, on a servicing retained basis, servicing rights are initially recorded at fair value. All classes of servicing assets are subsequently measured using the amortization method which required servicing rights to be amortized. The fair value of servicing assets and liabilities are not measured on an ongoing basis but are subject to fair value adjustments when and if the assets are deemed to be impaired. |
Regulatory Matters |
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Regulatory Matters | Regulatory Matters The Federal Reserve, the FDIC and the other federal and state bank regulatory agencies establish regulatory capital guidelines for U.S. banking organizations. As of January 1, 2015, the Company and the Bank became subject to new capital rules set forth by the Federal Reserve, the FDIC and the other federal and state bank regulatory agencies. The capital rules revise the banking agencies’ leverage and risk-based capital requirements and the method for calculating risk weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act (the Basel III Capital Rules). The Basel III Capital Rules establish a minimum common equity Tier 1 capital requirement of 4.5% of risk-weighted assets; set the minimum leverage ratio at 4% of total assets; increased the minimum Tier 1 capital to risk-weighted assets requirement from 4% to 6%; and retained the minimum total capital to risk weighted assets requirement at 8.0%. A “well-capitalized” institution must generally maintain capital ratios 100 to 200 basis points higher than the minimum guidelines. The Basel III Capital Rules also change the risk weights assigned to certain assets. The Basel III Capital Rules assigned a higher risk weight (150%) to loans that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The Basel III Capital Rules also alter the risk weighting for other assets, including marketable equity securities that are risk weighted generally at 300%. The Basel III Capital Rules require certain components of accumulated other comprehensive income (loss) to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out is exercised. The Bank did exercise its opt-out option and will exclude the unrealized gain (loss) on investment securities component of accumulated other comprehensive income (loss) from regulatory capital. The Basel III Capital Rules limit a banking organization’s capital distributions and certain discretionary bonus payments to executive officers if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of regulatory risk based capital ratios in addition to the amount necessary to meet its minimum risk-based capital requirements. As of December 31, 2018 the conservation buffer to be added was 1.875%, increasing to 2.5% on January 1, 2019. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. As of December 31, 2018, the Bank and Company have met all capital adequacy requirements to which they are subject. There are no conditions or events since then that management believes have changed this conclusion. The capital amounts and ratios for the Bank and the Company at December 31, 2018 were as follows:
The capital amounts and ratios for the Bank and Company at December 31, 2017 were as follows:
Regulatory restrictions on dividends The ability of the Company to pay dividends depends, in part, on the ability of the Bank to pay dividends to the Company. In accordance with Connecticut statutes, regulatory approval is required to pay dividends in excess of the Bank’s profits retained in the current year plus retained profits from the previous two years. The Bank is also prohibited from paying dividends that would reduce its capital ratios below minimum regulatory requirements. Reserve requirements on cash The Bank is required to maintain a minimum reserve balance of $16.8 million and $11.1 million in the Federal Reserve Bank at December 31, 2018 and 2017, respectively. The Bank is also required to maintain a minimum reserve balance of $4.5 million and $7.5 million at the Atlantic Community Bankers Bank (formerly Bankers' Bank Northeast) at December 31, 2018 and 2017, respectively. These balances are maintained for clearing purposes in the ordinary course of business and do not represent restricted cash. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions In the normal course of business, the Company may grant loans to executive officers, directors and members of their immediate families, as defined, and to entities in which these individuals have more than a 10% equity ownership. Such loans are transacted at terms including interest rates, similar to those available to unrelated customers. Changes in loans outstanding to such related parties during the years ending December 31, 2018 and 2017 were as follows:
Related party deposits aggregated approximately $46.7 million and $45.4 million at December 31, 2018 and 2017, respectively. During the years ended December 31, 2018 and 2017, the Company paid approximately $60 thousand and $133 thousand, respectively, to related parties for services provided to the Company. The payments were primarily for consulting and legal services. |
Parent Company Only Financial Statements |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parent Company Only Financial Statements | Parent Company Only Financial Statements Bankwell Financial Group, Inc., The Parent Company, operates its wholly-owned subsidiary, Bankwell Bank. The earnings of this subsidiary are recognized by the Parent Company using the equity method of accounting. Accordingly, earnings are recorded as increases in the Parent Company’s investment in the subsidiary and dividends paid reduce the investment in the subsidiary. Condensed financial statements of the Parent Company only are as follows: Condensed Statements of Financial Condition
Condensed Statements of Income
Condensed Statements of Cash Flows
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Quarterly Financial Information of Bankwell Financial Group, Inc. (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information of Bankwell Financial Group, Inc. (Unaudited) | Quarterly Financial Information of Bankwell Financial Group, Inc. (Unaudited) The following tables present selected quarterly financial information (unaudited):
Note: Due to rounding, quarterly earnings per share may not sum to reported annual earnings per share. During the fourth quarter of 2018, the Company recognized a $6.2 million charge-off attributable to one lending relationship. During the fourth quarter of 2017, the Company had changed its methodology to estimate its allowance for loan losses. The change in methodology resulted in an update to the underlying loan loss assumptions, incorporating the most recent industry, peer and product loss trends. This resulted in a non-recurring, pretax $1.3 million reduction in the allowance for loan loss reserve. In addition, On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. As a result, the corporate tax rate was reduced from 35% to 21%. Companies were required to recognize the effect of tax law changes in the period of enactment in accordance with GAAP. As result of the tax law changes the Company recognized a write-down of its deferred tax asset in the amount of $3.3 million. |
Subsequent Events |
12 Months Ended |
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Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company's Board of Directors declared a $0.13 per share cash dividend, payable February 25, 2019 to shareholders of record on February 15, 2019, representing an 8% increase when compared to last quarter's dividend. |
Nature of Operations and Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
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Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of the Company and the Bank, including its wholly owned passive investment company subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of estimates | Use of estimates The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities as of the date of the consolidated balance sheet and revenue and expenses for the period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the allowance for loan losses, stock-based compensation, derivative instrument valuation, investment securities valuation, evaluation of investment securities for other than temporary impairment and deferred income taxes valuation. |
Segments | Segments The Company has one reportable segment. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and borrowings while managing the interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment or unit. |
Basis of consolidated financial statement presentation | Basis of consolidated financial statement presentation The consolidated financial statements have been prepared in accordance with GAAP and general practices within the banking industry. Such policies have been followed on a consistent basis. |
Cash and Cash Equivalents and Statement of Cash Flows | Cash and Cash Equivalents and Statement of Cash Flows Cash and due from banks and federal funds sold are recognized as cash equivalents in the consolidated statements of cash flows. Federal funds sold generally mature in one day. For purposes of reporting cash flows, all highly liquid debt instruments purchased with an original maturity of three months or less are considered to be cash equivalents. Cash flows from loans and deposits are reported net. The balances of cash and due from banks and federal funds sold, at times, may exceed federally insured limits. The Company has not experienced any losses from such concentrations. |
Investment Securities | Investment Securities Management determines the appropriate classifications of investment securities at the date individual investment securities are acquired, and the appropriateness of such classifications is reaffirmed at each balance sheet date. The Company’s investments are categorized as marketable equity, available for sale or held to maturity securities. Held to maturity investments are carried at amortized cost. Available for sale securities are carried at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss) as a separate component of capital, net of estimated income taxes. Marketable equity securities are carried at fair value, with any changes in fair value reported in earnings. Investment securities in the available for sale and held-to-maturity portfolios are reviewed quarterly for other-than-temporary impairment ("OTTI"). If the fair value of a debt security is below amortized cost, other-than-temporary impairment is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the security. OTTI is required to be recognized regardless of the credit loss component if the Company intends to sell the security or if it is “more-likely-than-not” that the Company will be required to sell the security before recovery of its amortized cost basis. The credit loss component of an other-than-temporary impairment write-down is recorded in earnings, while the remaining portion of the impairment loss is recognized in other comprehensive income (loss), provided the Company does not intend to sell the underlying debt security and it is more-likely-than-not that the Company will not be required to sell the debt security prior to recovery. In determining whether a credit loss exists and the period over which the fair value of the debt security is expected to recover, management considers the following factors: the length of time and extent that fair value has been less than cost, the financial condition and near term prospects of the issuer, any external credit ratings, the level of excess cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities and the level of credit enhancement provided by the structure. The sale of a held to maturity security within three months of its maturity date or after collection of at least 85% of the principal outstanding at the time the security was acquired is considered a maturity for purposes of classification and disclosure. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains or losses on the sales of securities are recognized at trade date utilizing the specific identification method. Transfers of debt securities into the held to maturity classification from the available for sale classification are made at fair value on the date of transfer. The unrealized holding gain or loss on the date of transfer is retained in accumulated other comprehensive income and in the carrying value of the held to maturity securities. Such amounts are amortized over the remaining contractual lives of the securities. When transfers of debt securities into the available for sale classification from the held to maturity classification occur, any unrealized holding gains or losses on the transfer date are recognized in other comprehensive income |
Bank Owned Life Insurance | Bank Owned Life Insurance The investment in bank owned life insurance (“BOLI”) represents the cash surrender value of life insurance policies on the lives of certain Bank employees who have provided positive consent allowing the Bank to be the beneficiary of such policies. Increases in the cash value of the policies, as well as insurance proceeds received, are recorded in noninterest income, and are not subject to income taxes. The financial strength of the insurance carrier is reviewed prior to the purchase of BOLI and annually thereafter. |
Federal Home Loan Bank Stock | Federal Home Loan Bank Stock Federal Home Loan Bank of Boston (“FHLB”) stock is a non-marketable equity security that is carried at cost. There are no quoted market prices for this security and the security is not liquid. The Company can sell these securities back to the FHLB at par. |
Loans Held For Sale | Loans Held For Sale Loans held for sale are those loans which management has the intent to sell in the foreseeable future, and are carried at the lower of aggregate cost or market value. Net unrealized losses, if any, are recognized by a valuation allowance through a charge to noninterest income. Realized gains and losses on the sale of loans are recognized on the trade date and are determined by the difference between the sale proceeds and the carrying value of the loans. Loans may be sold with servicing rights released or retained. At the time of the sale, management records a servicing asset for the value of any retained servicing rights, which represents the present value of the differential between the contractual servicing fee and adequate compensation, defined as the fee a sub-servicer would require to assume the role of servicer, after considering the estimated effects of prepayments. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the transferor does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call. |
Loans Receivable | Loans Receivable Loans receivable that management has the ability and intent to hold for the foreseeable future or until maturity or payoff are stated at their current unpaid principal balances, net of the allowance for loan losses, charge-offs, recoveries, net deferred loan origination fees and unamortized loan premiums. Past due or delinquency status for all loans is based on the number of days past due in accordance with its contractual payment terms. A loan is considered impaired when it is probable that all contractual principal or interest payments due will not be collected in accordance with the terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral, if the loan is collateral dependent. The amount of impairment, if any, and any subsequent changes are recorded as adjustments to the allowance for loan losses. Impaired loans also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. Loans greater than 90 days past due are put on nonaccrual status (excluding certain acquired credit impaired loans). Loans are also placed on nonaccrual status when, in the opinion of management, full collection of principal and interest is doubtful. Interest previously accrued, but uncollected, is reversed against current period income. Subsequent payments are recognized on a cash basis or principal recapture basis depending on a number of factors including probability of collection and if impairment is identified. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectability of interest and principal is no longer in doubt. Management reviews all nonaccrual loans, other loans past due 90 days or more, and restructured loans for impairment. In most cases, loan payments that are past due less than 90 days are considered minor collection delays and the related loans may not be impaired. Consumer installment loans are considered to be pools of small balance homogeneous loans, which are collectively evaluated for impairment. Modifications to a loan are considered to be a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulties and 2) the modification constitutes a concession that is not in line with market rates and/or terms. Modified terms are dependent upon the financial position and needs of the individual borrower. Debt may be bifurcated with separate terms for each tranche of the restructured debt. The decision to restructure a loan, versus aggressively enforcing the collection of the loan, may benefit the Company by increasing the ultimate probability of collection. If a performing loan is restructured into a TDR it remains in performing status. If a nonperforming loan is restructured into a TDR, it continues to be carried in nonaccrual status. Nonaccrual classification may be removed if the borrower demonstrates compliance with the modified terms for a minimum of six months. TDR’s are reported as such for at least one year from the date of restructuring. In years after the restructuring, troubled debt restructured loans are removed from this classification if the restructuring agreement specifies a market rate of interest equal to that which would be provided to a borrower with similar credit at the time of restructuring and the loan is not deemed to be impaired based on the modified terms. |
Acquired Loans | Acquired Loans Loans that the Company acquires in acquisitions are initially recorded at fair value with no carryover of the related allowance for credit losses. Determining the fair value of acquired loans involves estimating the amount and timing of principal and interest cash flows initially expected to be collected on the loans and discounting those cash flows at an appropriate market rate of interest. For loans which meet the criteria stipulated in Accounting Standards Codification (“ASC”) 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality”, the Company recognizes an accretable yield, which is defined as the excess of all cash flows expected at acquisition over the initial fair value of the loan, as interest income on a level-yield basis over the expected remaining life of the loan. The excess of the loan’s contractually required payments over the cash flows expected to be collected is the nonaccretable difference. The nonaccretable difference is not recognized as an adjustment of yield, a loss accrual, or a valuation allowance. After the initial acquisition, the Company continues to evaluate whether the timing and the amount of cash to be collected are reasonably estimated. Subsequent significant increases in cash flows the Company expects to collect will first reduce previously recognized valuation allowance and then be reflected prospectively as an increase to the level yield. Subsequent decreases in expected cash flows may result in the loan being considered impaired. Interest income is not recognized to the extent that the net investment in the loan would increase to an amount greater than the estimated payoff amount. For ASC 310-30 loans, the expected cash flows reflect anticipated prepayments, determined on a loan by loan basis, according to the anticipated collection plan of these loans. Prepayments result in the recognition of the nonaccretable balance as current period yield. Changes in prepayment assumptions may change the amount of interest income and principal expected to be collected. The expected prepayments used to determine the accretable yield are consistent between the cash flows expected to be collected and projections of contractual cash flows so as to not affect the nonaccretable difference. For loans that do not meet the ASC 310-30 criteria, the Company records interest income on a level yield basis using the contractually required cash flows. The Company subjects loans that do not meet the ASC 310-30 criteria to ASC Topic 450, “Contingencies”, by collectively evaluating these loans for an allowance for loan loss, using the same methodology as loans originated by the Company. Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition are considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if the Company can reasonably estimate the timing and amount of the expected cash flows on such loans and if the Company expects to fully collect the new carrying value of the loans. As such, the Company may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield. The Company has determined that it can reasonably estimate future cash flows on the Company’s current portfolio of acquired loans that are past due 90 days or more, and on which the Company is accruing interest and the Company expects to fully collect the carrying value of the loans. |
Allowance For Loan Losses (ALLL) | Allowance For Loan Losses (ALLL) The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance for loan losses when management believes the non-collectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses consists of specific and general components. The specific component relates to impaired loans that are classified as "doubtful", "substandard" or "special mention". For these loans, an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers non classified loans and is based on historical loss experience, including appropriate peer data, adjusted for qualitative factors. Management believes the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies have the authority to require additions to the allowance or charge-offs based on the agencies’ judgments about information available to them at the time of their examination. |
Reserve for Unfunded Commitments | Reserve for Unfunded Commitments The reserve for unfunded commitments provides for probable losses inherent with funding the unused portion of legal commitments to lend. The unfunded reserve calculation includes factors that are consistent with the ALLL methodology for our loan portfolio as well as a draw down factor applied to the various commitments. The reserve for unfunded commitments is included within other liabilities in the accompanying Consolidated Balance Sheets, and changes in the reserve are reported as a component of other expense in the accompanying Consolidated Statements of Income. See Note 11: Commitments and Contingencies for further information. |
Interest and Fees on Loans | Interest and Fees on Loans Interest on loans is accrued and included in income based on contractual rates applied to principal amounts outstanding. Accrual of interest is discontinued when loan payments are 90 days or more past due, based on contractual terms, or when, in the judgment of management, collectability of the loan or loan interest becomes uncertain. When interest accrual is discontinued, all unpaid accrued interest is reversed against interest income. Subsequent recognition of income occurs only to the extent payment is received subject to management’s assessment of the collectability of the remaining interest and principal. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectability of interest and principal is no longer in doubt. Loan origination fees, net of direct loan origination costs, are deferred and amortized as an adjustment to the loan’s yield generally over the contractual life of the loan, utilizing the interest method. |
Goodwill and Intangibles | Goodwill and Intangibles Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Intangible assets are assets acquired in a business combination that lack physical substance but can be distinguished from goodwill because the intangible asset is capable of being sold or exchanged on its own or in combination with related contracts, assets or liabilities. Intangible assets are amortized on a straight-line or accelerated basis over estimated lives. Goodwill is not amortized. Goodwill and identifiable intangible assets are evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying value of these assets may not be recoverable. When these assets are evaluated for impairment, if the carrying amount exceeds fair value, an impairment charge is recorded to income. The fair value is based on observable market prices, when practicable. Other valuation techniques may be used when market prices are unavailable, including estimated discounted cash flows. This type of analysis contains uncertainties because it requires management to make assumptions and to apply judgment to estimate industry economic factors and the profitability of future business strategies. In the event of future changes in fair value, the Company may be exposed to an impairment charge that could be material. |
Foreclosed Real Estate | Foreclosed Real Estate Assets acquired through deed in lieu or loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. |
Premises and Equipment | Premises and Equipment Premises and equipment are stated at cost, net of accumulated depreciation and amortization. Leasehold improvements are capitalized and amortized over the shorter of the terms of the related leases or the estimated economic lives of the improvements. Depreciation and amortization is charged to operations using the straight-line method over the estimated useful lives of the related assets which range from three to thirty-nine years. Gains and losses on dispositions are recognized upon realization. Maintenance and repairs are expensed as incurred and improvements are capitalized. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, including premises and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment is indicated by that review, the asset is written down to its estimated fair value through a charge to noninterest expense. |
Servicing Rights | Servicing Rights When loans are sold, on a servicing retained basis, servicing rights are initially recorded at fair value with the income statement effect recorded in service charges and fees income. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the life of the underlying loans. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Any impairment is reported as a valuation allowance, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to income. Changes in the valuation allowance are reported with service charges and fees income on the consolidated statements of income. The fair values of servicing rights are subject to fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Loans serviced for others are not included in the accompanying consolidated balance sheets. Servicing fee income, which is included in service charges and fees on the income statement, is recorded for fees earned for servicing loans. Fees earned for servicing loans are based on a contractual percentage of the outstanding principal amount of the loan and are recorded as income when earned. The amortization of servicing rights is netted against income from service charges and fees. |
Income Taxes | Income Taxes The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that all or some portion of the deferred tax assets will not be realized. In the ordinary course of business there is inherent uncertainty in quantifying the Company’s income tax positions. Income tax positions and recorded tax benefits assessed for all years are subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have determined the amount of the tax benefit to be recognized by estimating the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company has $193 thousand and $393 thousand of liabilities for uncertain tax positions at December 31, 2018 and 2017, respectively. Where applicable, associated interest and penalties have also been recognized. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. |
Stock Compensation | Stock Compensation The Company measures and recognizes compensation cost relating to share-based payment transactions based on the grant-date fair value of the equity instruments issued. The fair value of time-based restricted stock is recorded based on the grant date fair value of the Company’s common stock. The fair value of market-based restricted stock is based on values derived using a Monte Carlo based pricing model. The fair value of stock options is determined using the Black-Scholes Option Pricing model. Stock-based compensation costs are recognized over the requisite service period for the awards. Compensation expense reflects the number of awards expected to vest and is adjusted based on awards that ultimately vest. The Company recognizes forfeitures as they occur. |
Earnings Per Share | Earnings Per Share Unvested restricted stock awards that contain non-forfeitable rights to dividends, are participating securities, and are included in the computation of EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted stock awards qualify as participating securities. Net income is allocated between the common stock and participating securities pursuant to the two-class method. Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period, excluding participating unvested restricted stock awards. Diluted EPS is computed in a similar manner, except that the denominator includes the number of additional common shares that would have been outstanding if potentially dilutive common shares were issued using the treasury stock method. |
Comprehensive Income | Comprehensive Income Comprehensive income represents the sum of net income and items of other comprehensive income or loss, including net unrealized gains or losses on securities available for sale and net unrealized gains or losses on derivatives accounted for as cash flow hedges. The Company’s total comprehensive income or loss for the years ended December 31, 2018, 2017 and 2016 is reported in the Consolidated Statements of Comprehensive Income. |
Fair Values of Financial Instruments | Fair Values of Financial Instruments The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in certain instances, there are no quoted market prices for certain assets or liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the asset or liability. Fair value measurements focus on exit prices in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at either December 31, 2018 or December 31, 2017. The estimated fair value amounts have been measured as of the respective period-ends, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end. |
Derivative Instruments | Derivative Instruments The effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges is reported in other comprehensive income and subsequently reclassified to earnings in the same period or periods during which the hedged forecasted transaction affects earnings. The Bank assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction. The interest rate swap assets are presented in other assets and the interest rate swap liabilities are presented in accrued expenses and other liabilities in the consolidated balance sheets. The hedge strategy converts the rate of interest on short term rolling FHLB advances or Brokered CDs to long term fixed interest rates, thereby protecting the Bank from interest rate variability. |
Related Party Transactions | Related Party Transactions Directors and officers of the Company and their affiliates have been customers of and have had transactions with the Company, and it is expected that such persons will continue to have such transactions in the future. Management believes that all deposit accounts, loans, services and commitments comprising such transactions were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers who are not directors or officers. In the opinion of management, the transactions with related parties did not involve more than normal risks of collectability, nor favored treatment or terms, nor present other unfavorable features. Note 21 contains details regarding related party transactions. |
Reclassification | Reclassification Certain prior period amounts have been reclassified to conform to the 2018 financial statement presentation. These reclassifications only changed the reporting categories and did not affect the results of operations or consolidated financial position. |
Recent accounting pronouncements | Recent accounting pronouncements The following section includes changes in accounting principles and potential effects of new accounting guidance and pronouncements. ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606): This ASU clarifies the principles for recognizing revenue. The guidance notes that an entity should apply the following steps when recognizing revenue: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In 2016, the FASB issued further implementation guidance regarding revenue recognition. This additional guidance included clarification on certain principal versus agent considerations within the implementation of the guidance as well as clarification related to identifying performance obligations and licensing. The guidance also requires new qualitative and quantitative disclosures, including disaggregation of revenues and descriptions of performance obligations. The guidance along with its updates is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted the guidance on January 1, 2018 using the modified retrospective method. In evaluating this standard, management has determined that the majority of revenue earned by the Company is from revenue streams not included in the scope of this standard and for in-scope revenue streams management determined that a cumulative-effect adjustment to opening retained earnings as a result of adopting this standard is not needed. The Company recognizes revenue from contracts with customers when it satisfies its performance obligations. The Company’s performance obligations are generally satisfied as services are rendered and can either be satisfied at a point in time or over time. Unsatisfied performance obligations at the report date are not material to our consolidated financial statements. For the revenue that is within scope of Topic 606, the following is a description of principal activities from which the Company generates its revenue from contracts with customers. Revenues for the Company in scope under Topic 606 include service charges and fees and gains or losses on the sale of foreclosed real estate. Service charges and fees include revenue that is recognized at a point in time, including ATM fees, wire transfer fees, overdraft charge fees, and stop-payment and returned check fees. Such revenue is derived from transactional information and is recognized as revenue immediately as the transactions occur or upon providing the service to complete the customer’s transaction. In addition, service charges and fees include fee income earned on customer deposit accounts, that is recognized over a period of time, generally monthly, as services are performed and performance obligations are satisfied. Generally, these services are cancellable with little to no notice needed. The revenue generated from service charges and fees totaled $1.1 million and $1.0 million for years ended December 31, 2018 and 2017, respectively. Noninterest income recognized from the gain or loss of foreclosed real estate was immaterial for the year ended December 31, 2017. There was no income recognized from the gain or loss of foreclosed real estate for the year ended December 31, 2018. ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” The ASU has been issued to improve the recognition and measurement of financial instruments by requiring 1) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; 2) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; 3) the use of the exit price notion when measuring fair value of financial instruments for disclosure purposes; and 4) separate presentation by the reporting organization in other comprehensive income for the portion of the total change in the fair value of a liability resulting from the change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The standard was effective for the Company beginning on January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2016-02, Leases (Topic 842): The amendments in this ASU require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. Accounting by lessors will remain largely unchanged. In July 2018, the FASB issued a subsequent update which introduced a new transition method, under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The guidance will be effective for the Company on January 1, 2019, with early adoption permitted. The Company recognized $0.6 million as a cumulative-effect adjustment to the opening balance of retained earnings at the time of adoption on January 1, 2019. In addition, the impact of the new standard is expected to be immaterial to the Company as it relates to recognizing operating leases on the balance sheet. The Company estimates the right of use asset and lease liability to be approximately $10 million on day 1, depending on the final discount rate utilized. ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments.” The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and can result in the earlier recognition of credit losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. The amendments in this update will be effective for the Company on January 1, 2020, including interim periods within that fiscal year. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is currently working with third party consultants and continues to evaluate the impact of its pending adoption of this guidance on the Company’s financial statements. ASU No. 2016-15, Statement of Cash Flows (Topic 230): “Classification of Certain Cash Receipts and Cash Payments.” This ASU changes how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The amendments address the classification of the following eight items in the statement of cash flows; debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the Predominance Principle. The amendments in this update were effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2016-18, Statement of Cash Flows (Topic 230): “Restricted Cash.” This ASU provide guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update were effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment.” This ASU simplifies the test for goodwill impairment by eliminating step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity was required to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, 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. In addition, this ASU 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. The amendments will be effective for the Company for its annual or any interim 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 does not expect the application of this guidance to have a material impact on the Company’s financial statements. ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (subtopic 310-20): “Premium Amortization on Purchased Callable Debt Securities.” The amendments in this update shorten 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. The amendments were effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption was permitted, including adoption in an interim period. If an entity early adopted the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this update were effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2017-12, Derivatives and Hedging: “Targeted Improvements to Accounting for Hedging Activities” (Topic 815): The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 was effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. This ASU requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): This update requires a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the newly enacted federal corporate tax rate. The amount of the reclassification would be the difference between the historical 35% corporate income tax rate and the newly enacted 21% corporate tax rate. The amendments were effective for all entities for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption of the amendments was permitted including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued and all other entities for reporting periods for which financial statements have not yet been made available for issuance. An entity would apply the amendments in the update retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act of 2017 is recognized. The Company elected to adopt this update and recorded a $0.3 million reduction to retained earnings and increase to accumulated other comprehensive income as of December 31, 2017. ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): The purpose of this update is to clarify certain aspects of the guidance in ASU No. 2016-01 regarding equity securities without a readily determinable fair value, forward contracts and purchased options, presentation requirements for certain fair value option liabilities, fair value option liabilities denominated in a foreign currency, and transition guidance for equity securities without a readily determinable fair value. Public business entities with fiscal years beginning between December 15, 2017 and June 15, 2018, were not required to adopt these amendments until the interim period beginning after June 15, 2018 and public business entities with fiscal years beginning between June 15, 2018 and December 15, 2018 were not required to adopt these amendments before adopting the amendments in update 2016-01. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): "Improvements to Nonemployee Share-Based Payment Accounting” (ASU 2018-07). The amendments in this update expand the scope of Topic 718 to include share based payments to nonemployees. An entity is required to apply the requirements of Topic 718 to nonemployee awards except for specific guidance related to option pricing models and the attribution of cost. ASU 2018-07 was effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods in the year of adoption. Early adoption was permitted for any interim or annual period. The adoption of this ASU did not have a material impact on the Company’s financial statements. ASU No. 2018-13, Fair Value Measurement (Topic 820): "Changes to the Disclosure Requirements for Fair Value Measurement." The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The following disclosure requirements were removed from topic 820 for public entities; (1) The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy (2) The policy for timing of transfers between levels and (3) The valuation processes for Level 3 fair value measurements. This update also modified and added disclosure requirements to Topic 820, including adding (1) The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (2) The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 will be effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods in the year of adoption. Early adoption is permitted for any interim or annual period. The Company does not expect the application of this guidance to have a material impact on the Company’s financial statements. |
Goodwill and other intangible assets (Tables) |
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Schedule of goodwill | Information on goodwill for the year ended December 31, 2018 and 2017 is as follows:
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Schedule of carrying amounts and accumulated amortization of amortized intangible assets | The table below provides information regarding the carrying amounts and accumulated amortization of amortized intangible assets as of the dates set forth below. The remaining net intangible asset as of December 31, 2018 will be amortized over a period of approximately 4 years.
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of amortized cost, gross unrealized gains and losses and fair values of available for sale and held to maturity securities | The amortized cost, gross unrealized gains and losses and fair values of available for sale and held to maturity securities segregated by contractual maturity at December 31, 2018 were as follows:
The amortized cost, gross unrealized gains and losses and fair values of available for sale and held to maturity securities segregated by contractual maturity at December 31, 2017 were as follows:
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Schedule of fair value and related unrealized losses of temporarily impaired investment securities, aggregated by investment category | The following table provides information regarding investment securities with unrealized losses, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position at December 31, 2018 and 2017:
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Loans Receivable and Allowance for Loan Losses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of summary of the loan portfolio | The following table sets forth a summary of the loan portfolio at December 31, 2018 and 2017:
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Schedule of allowance for loan losses | The following tables set forth the activity in the Company’s allowance for loan losses for the years ended December 31, 2018, 2017 and 2016, by portfolio segment:
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Schedule of portfolio segment and impairment methodology, of the allowance for loan losses and related portfolio | Loans evaluated for impairment and the related allowance for loan losses as of December 31, 2018 and 2017 were as follows:
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Schedule of loan portfolio quality indicators by portfolio segment | The following table presents credit risk ratings by loan segment as of December 31, 2018 and 2017:
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Schedule of information with respect to our loan portfolio delinquencies by portfolio segment and amount | The following tables set forth certain information with respect to our loan portfolio delinquencies by portfolio segment and amount as of December 31, 2018 and December 31, 2017:
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Schedule of nonaccrual loans by portfolio segment | The following is a summary of nonaccrual loans by portfolio segment as of December 31, 2018 and 2017:
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Schedule of summarizes impaired loans | The following tables summarize impaired loans by portfolio segment and the average carrying amount and interest income recognized on impaired loans by portfolio segment as of December 31, 2018, 2017 and 2016:
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Schedule of loans whose terms were modified as TDRs during the periods | The following table presents loans whose terms were modified as TDRs during the periods presented:
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Schedule of information on how loans were modified as a TDR | The following table provides information on how loans were modified as a TDR for the years ended December 31, 2018 and 2017.
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Premises and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of premises and equipment | At December 31, 2018 and 2017, premises and equipment consisted of the following:
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Other Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of other assets | The components of other assets as of December 31, 2018 and 2017 are summarized below:
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Rollforward of loan servicing assets | The following table presents the changes in carrying value for loan servicing assets:
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Deposits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of deposits | At December 31, 2018 and 2017, deposits consisted of the following:
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Schedule of contractual maturities of time certificates of deposit | Maturities of time certificates of deposit as of December 31, 2018 and 2017 are summarized below:
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Schedule of interest expense by account type | The following table summarizes interest expense by account type for the years ended December 31, 2018, 2017 and 2016:
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Federal Loan Bank Advances and Other Borrowings (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advances from Federal Home Loan Banks [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of FHLB advances with maturity dates and weighted average rates | The following is a summary of FHLB advances with maturity dates and weighted average rates at December 31, 2018 and 2017:
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Summary of line of credit outstanding | The total line of credit and the amount outstanding at December 31, 2018 is summarized below:
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum rental commitments under operating lease | Future minimum rental commitments under the terms of these leases for the year ended December 31, 2018 was as follows:
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Schedule of Off-balance sheet instruments | Financial instruments whose contract amounts represented credit risk at December 31, 2018 and 2017 were as follows:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of income tax expense | The components of income tax expense for the years ended December 31, 2018, 2017 and 2016 consisted of:
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Schedule of reconciliation of the anticipated income tax expense | A reconciliation of the anticipated income tax expense, computed by applying the statutory federal income tax rate of 21% for the year ended December 31, 2018 and 35% for the years ended December 31, 2017 and 2016 to the income before income taxes, to the amount reported in the consolidated statements of income for the years ended December 31, 2018, 2017, and 2016 was as follows:
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Schedule of components of deferred tax assets and liabilities | At December 31, 2018 and 2017, the components of deferred tax assets and liabilities were as follows:
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Schedule of reflects a reconciliation of the beginning and ending balances | The following table reflects a reconciliation of the beginning and ending balances of the Company’s uncertain tax positions:
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Earnings Per Share (EPS) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of earnings available to common stockholders and basic weighted-average common shares outstanding to diluted weighted average common shares outstanding | The following is a reconciliation of earnings available to common shareholders and basic weighted average common shares outstanding to diluted weighted average common shares outstanding, reflecting the application of the two-class method:
(1) Represents dividends paid and undistributed earnings allocated to unvested stock-based awards that contain non-forfeitable rights to dividends. (2) Represents the effect of the assumed exercise of stock options and warrants and the vesting of restricted shares, as applicable, utilizing the treasury stock method. |
Stock Based Compensation Plans (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of status of outstanding stock options | A summary of the status of outstanding stock options at December 31, 2018 is presented below:
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Schedule of both outstanding and exercisable | The following table summarizes information for options, all of which are both outstanding and exercisable, at December 31, 2018:
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Schedule of activity for restricted stock | The following table presents the activity for restricted stock for the year ended December 31, 2018:
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Comprehensive Income (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in accumulated other comprehensive income (loss) by component | The following tables present the changes in accumulated other comprehensive (loss) income by component, net of tax for the years ended December 31, 2018, 2017 and 2016:
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Schedule of reclassified from accumulated other comprehensive income or loss | The following table provides information for the items reclassified from accumulated other comprehensive income or loss:
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Derivative Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments | December 31, 2017:
Information about derivative instruments for the years ended December 31, 2018 and 2017 were as follows: December 31, 2018:
(1) The effective date of the forward-starting interest rate swaps listed above are January 2, 2019, January 2, 2020 and August 26, 2020, respectively. |
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Schedule of interest rate swap transactions | The Company's cash flow hedge positions consist of interest rate swap transactions as detailed in the table below:
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Schedule of changes in the consolidated statements of comprehensive income related to interest rate derivatives designated as hedges of cash flows | Changes in the consolidated statements of comprehensive income related to interest rate derivatives designated as hedges of cash flows were as follows for the years ended December 31, 2018 and 2017:
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Summarized gross and net information abut derivative instruments that are offset in the Consolidated Balance Sheets |
The following tables summarize gross and net information about derivative instruments that are offset in the Consolidated Balance Sheets at December 31, 2018 and 2017:
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Fair Value of Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of carrying values and fair values of the Company s financial instruments | The carrying values, fair values and placement in the fair value hierarchy of the Company’s financial instruments at December 31, 2018 and 2017 were as follows:
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table details the financial instruments carried at fair value on a recurring basis at December 31, 2018 and 2017, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value. The Company had no transfers into or out of Levels 1, 2 or 3 during the years ended December 31, 2018 and 2017, except for the Company's investment in a U.S.Treasury note that was transferred from Level 2 to Level 1 for the year ended December 31, 2017.
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Schedule of financial instruments carried at fair value on a nonrecurring basis | The following table details the financial instruments carried at fair value on a nonrecurring basis at December 31, 2018 and 2017, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:
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Schedule of quantitative inputs and assumptions for Level 3 financial instruments carried at fair value on a nonrecurring basis | The following table presents information about quantitative inputs and assumptions for Level 3 financial instruments carried at fair value on a nonrecurring basis at December 31, 2018 and 2017:
(1) Servicing liabilities totaling $73 thousand were valued using a discount rate of 2.8%. |
Regulatory Matters (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of capital amounts and ratios | The capital amounts and ratios for the Bank and the Company at December 31, 2018 were as follows:
The capital amounts and ratios for the Bank and Company at December 31, 2017 were as follows:
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Related Party Transactions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in loans outstanding of related parties | Changes in loans outstanding to such related parties during the years ending December 31, 2018 and 2017 were as follows:
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Parent Company Only Financial Statements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed Statements of Financial Condition | Condensed financial statements of the Parent Company only are as follows: Condensed Statements of Financial Condition
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Schedule of condensed Statements of Income | Condensed Statements of Income
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Schedule of condensed Statements of Cash Flows | Condensed Statements of Cash Flows
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Quarterly Financial Information of Bankwell Financial Group, Inc. (Unaudited) (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly financial information | The following tables present selected quarterly financial information (unaudited):
|
Shareholders' Equity - Common Stock (Details) - shares |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Stockholders' Equity Note [Abstract] | ||
Common stock, share authorized (shares) | 10,000,000 | 10,000,000 |
Common stock, share issued (shares) | 7,842,271 | 7,751,424 |
Common shares outstanding (shares) | 7,842,271 | 7,751,424 |
Shareholders' Equity - Warrants (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Oct. 01, 2014 |
|
Stockholders' Equity | |||
Shares repurchased (shares) | 0 | 0 | |
Quinnipiac Bank and Trust Company | |||
Stockholders' Equity | |||
Number of warrants issued | 68,600 | ||
Number of common stock shares purchased under each warrant | 0.56 | ||
Exercise price of warrant (usd per share) | $ 17.86 |
Goodwill and other intangible assets - Summary of goodwill (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill | ||
Balance, beginning of the period | $ 2,589,000 | $ 2,589,000 |
Impairment | 0 | 0 |
Balance, end of the period | $ 2,589,000 | $ 2,589,000 |
Goodwill and other intangible assets - Information regarding the carrying amounts and accumulated amortization of amortized intangible assets (Details 1) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Net Intangible Asset | $ 290 | $ 382 |
Core deposit intangible | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Asset | 1,029 | 1,029 |
Accumulated Amortization | 739 | 647 |
Net Intangible Asset | $ 290 | $ 382 |
Goodwill and other intangible assets - Narratives (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment | $ 0 | $ 0 |
Period of remaining net intangible asset (years) | 4 years |
Investment Securities - Narratives (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
Security
|
Dec. 31, 2017
USD ($)
Security
|
|
Investments, Debt and Equity Securities [Abstract] | ||
Available for sale debt securities, realized gain | $ 200,000 | $ 200,000 |
Proceeds from sales of securities | 12,400,000 | 60,400,000 |
Available for sale debt securities, realized loss | 2,000 | |
Marketable equity securities, at fair value | $ 2,009,000 | $ 0 |
Number of available for sales debt securities in continuous loss position (positions) | Security | 25 | 15 |
Loans Receivable and Allowance for Loan Losses - Rollforward of allowance for loan losses by portfolio segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Allowance for Loan and Lease Losses | ||||
Beginning balance | $ 18,904 | $ 17,982 | $ 14,169 | |
Charge-offs | $ (6,200) | (6,926) | (572) | (111) |
Recoveries | 44 | 153 | 10 | |
(Credits) provisions | (3,440) | (1,341) | (3,914) | |
Ending balance | 15,462 | 15,462 | 18,904 | 17,982 |
Residential Real Estate | ||||
Allowance for Loan and Lease Losses | ||||
Beginning balance | 1,721 | 1,802 | 1,618 | |
Charge-offs | (420) | 0 | 0 | |
Recoveries | 0 | 146 | 0 | |
(Credits) provisions | 444 | 227 | (184) | |
Ending balance | 857 | 857 | 1,721 | 1,802 |
Commercial Real Estate | ||||
Allowance for Loan and Lease Losses | ||||
Beginning balance | 12,777 | 9,415 | 7,705 | |
Charge-offs | (5,614) | 0 | 0 | |
Recoveries | 18 | 0 | 0 | |
(Credits) provisions | (4,381) | (3,362) | (1,710) | |
Ending balance | 11,562 | 11,562 | 12,777 | 9,415 |
Construction | ||||
Allowance for Loan and Lease Losses | ||||
Beginning balance | 907 | 2,105 | 1,504 | |
Charge-offs | 0 | 0 | (7) | |
Recoveries | 0 | 0 | 0 | |
(Credits) provisions | 767 | 1,198 | (608) | |
Ending balance | 140 | 140 | 907 | 2,105 |
Commercial business | ||||
Allowance for Loan and Lease Losses | ||||
Beginning balance | 3,498 | 4,283 | 3,334 | |
Charge-offs | (6,200) | (815) | (521) | (69) |
Recoveries | 19 | 4 | 0 | |
(Credits) provisions | (200) | 268 | (1,018) | |
Ending balance | 2,902 | 2,902 | 3,498 | 4,283 |
Consumer | ||||
Allowance for Loan and Lease Losses | ||||
Beginning balance | 1 | 377 | 8 | |
Charge-offs | (77) | (51) | (35) | |
Recoveries | 7 | 3 | 10 | |
(Credits) provisions | (70) | 328 | (394) | |
Ending balance | $ 1 | $ 1 | $ 1 | $ 377 |
Loans Receivable and Allowance for Loan Losses - Summary of nonaccrual loans by portfolio segment (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Financing Receivable, Recorded Investment, Past Due | ||
Total nonaccrual loans | $ 14,082 | $ 5,481 |
Residential Real Estate | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total nonaccrual loans | 3,812 | 1,590 |
Commercial Real Estate | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total nonaccrual loans | 5,950 | 3,371 |
Commercial business | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total nonaccrual loans | $ 4,320 | $ 520 |
Loans Receivable and Allowance for Loan Losses - Summary of loans were modified as TDR (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Financing Receivable, Modifications | |||
Outstanding recorded investment post-modification | $ 4,027 | $ 3,698 | $ 299 |
Maturity Concession | |||
Financing Receivable, Modifications | |||
Outstanding recorded investment post-modification | 0 | 638 | 299 |
Maturity and payment concession | |||
Financing Receivable, Modifications | |||
Outstanding recorded investment post-modification | 750 | 1,925 | 0 |
Maturity and rate concession | |||
Financing Receivable, Modifications | |||
Outstanding recorded investment post-modification | 608 | 1,032 | 0 |
Payment concession | |||
Financing Receivable, Modifications | |||
Outstanding recorded investment post-modification | $ 2,669 | $ 103 | $ 0 |
Premises and Equipment (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment | ||
Premises and equipment, gross | $ 30,314 | $ 28,529 |
Accumulated depreciation and amortization | (10,543) | (10,333) |
Premises and equipment, net | 19,771 | 18,196 |
Land | ||
Property, Plant and Equipment | ||
Premises and equipment, gross | 2,300 | 2,300 |
Building | ||
Property, Plant and Equipment | ||
Premises and equipment, gross | 14,126 | 14,030 |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Premises and equipment, gross | 6,082 | 4,558 |
Furniture and fixtures | ||
Property, Plant and Equipment | ||
Premises and equipment, gross | 3,584 | 3,096 |
Equipment | ||
Property, Plant and Equipment | ||
Premises and equipment, gross | 4,155 | 4,478 |
Automobiles | ||
Property, Plant and Equipment | ||
Premises and equipment, gross | $ 67 | $ 67 |
Premises and Equipment - Narratives (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense | $ 1,732 | $ 1,513 | $ 1,729 |
Other Assets - Summary of components of other assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Other Assets [Abstract] | |||
Deferred compensation | $ 2,618 | $ 4,097 | |
Servicing assets, net of valuation allowance | 870 | 1,113 | $ 0 |
Derivative assets | 2,868 | 2,034 | |
Other | 3,681 | 3,204 | |
Total Other Assets | $ 10,037 | $ 10,448 |
Other Assets - Servicing Assets Rollforward (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Loan Servicing Rights: | ||
Balance at beginning of year | $ 1,113 | $ 0 |
Servicing rights capitalized | 224 | 1,171 |
Servicing rights amortized | (136) | (58) |
Servicing rights disposed | (109) | 0 |
Change in valuation allowance | (222) | 0 |
Balance at end of year | $ 870 | $ 1,113 |
Other Assets - Narratives (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Servicing Assets at Fair Value | |||
Decrease in deferred compensation | $ 1,500,000 | ||
Loans serviced for others | 122,400,000 | $ 122,800,000 | |
Servicing asset, net of valuation allowance | 870,000 | 1,113,000 | $ 0 |
Servicing liability | 73,000 | 83,000 | |
Vaulation allowance for servicing asset | $ 222,000 | $ 0 | |
Minimum | |||
Servicing Assets at Fair Value | |||
Pre-payment speed assumptions | 3.00% | 7.00% | |
Maximum | |||
Servicing Assets at Fair Value | |||
Pre-payment speed assumptions | 15.00% | 9.00% | |
Discount rate | Minimum | |||
Servicing Assets at Fair Value | |||
Servicing asset, measurement input (percent) | 0.10 | 0.07 | |
Discount rate | Maximum | |||
Servicing Assets at Fair Value | |||
Servicing asset, measurement input (percent) | 0.12 | 0.12 |
Deposits - Components of deposits (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deposits [Abstract] | ||
Noninterest bearing demand deposit accounts | $ 173,198 | $ 172,638 |
Interest bearing accounts: | ||
NOW | 61,869 | 58,942 |
Money market | 471,968 | 451,804 |
Savings | 180,487 | 83,758 |
Time certificates of deposit | 614,722 | 631,263 |
Total interest bearing accounts | 1,329,046 | 1,225,767 |
Total deposits | $ 1,502,244 | $ 1,398,405 |
Deposits - Contractual maturities of time certificates of deposit (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deposits [Abstract] | ||
2019 | $ 0 | $ 391,509 |
2020 | 411,818 | 214,383 |
2021 | 171,452 | 24,466 |
2022 | 30,615 | 373 |
2023 | 579 | 532 |
2024 | 258 | 0 |
Total time certificates of deposit | $ 614,722 | $ 631,263 |
Deposits - Interest expense by account type (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Deposits [Abstract] | |||
NOW | $ 157 | $ 93 | $ 109 |
Money market | 6,431 | 3,427 | 1,836 |
Savings | 1,649 | 763 | 315 |
Time certificates of deposit | 10,714 | 8,411 | 6,040 |
Total interest expense on deposits | $ 18,951 | $ 12,694 | $ 8,300 |
Deposits- Narratives (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deposits [Abstract] | ||
Individual certificate with balances of $250,000 or more | $ 227.8 | $ 197.3 |
Brokered deposits | 91.8 | 44.3 |
Certificates of deposit from national listing service | $ 101.5 | $ 163.0 |
Federal Loan Bank Advances and Other Borrowings - Summary of FHLB advances with maturity dates and weighted average rates (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Year of Maturity: Amount Due | ||
Maturing in one year | $ 135,000 | $ 174,000 |
Maturing in two years | 25,000 | 0 |
Maturing in three years | 25,000 | |
Total advances Amount Due | $ 160,000 | $ 199,000 |
Year of Maturity: Weighted Average Rate | ||
Weighted average rate for FHLB maturing in one year | 2.55% | 1.44% |
Weighted average rate for FHLB maturing in two years | 1.99% | 0.00% |
Weighted average rate for FHLB maturing in three years | 1.99% | |
Total advances Weighted Average Rate | 2.46% | 1.51% |
Federal Loan Bank Advances and Other Borrowings - Narratives (Details) - FHLB - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
FHLB advances subject to interest rate swap | $ 125.0 | ||
Interest expense on FHLB advances | 3.9 | $ 2.0 | $ 1.3 |
Loans pledge as collateral for borrowing at FHLB of Boston | 939.8 | ||
FHLB advances, immediate availability to borrow | $ 385.1 | ||
Number of FHLB shares owned | 81,096 | 91,827 | |
Par value of shares owned (usd per share) | $ 100 |
Subordinated Debentures (Details) - Fixed rated subordinated notes $ in Millions |
Aug. 19, 2015
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Aggregate principal amount | $ 25.5 |
Notes non-callable term (in years) | 5 years |
Stated maturity date of notes | Aug. 15, 2025 |
Quarterly pay fixed interest rate of notes | 5.75% |
Commitments and Contingencies - Future minimum rental lease (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
2019 | $ 1,972 | |
2020 | 1,842 | |
2021 | 1,739 | |
2022 | 1,118 | |
2023 | 1,134 | |
Thereafter | 15,898 | |
Total | $ 23,703 | $ 21,700 |
Commitments and Contingencies - Commitments to extend credit (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information | ||
Outstanding commitments | $ 266,257 | $ 200,286 |
Loan commitments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information | ||
Outstanding commitments | 190,661 | 112,649 |
Undisbursed construction loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information | ||
Outstanding commitments | 68,151 | 80,064 |
Unused home equity lines of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information | ||
Outstanding commitments | $ 7,445 | $ 7,573 |
Commitments and Contingencies - Narratives (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Future lease obligations | $ 23,703 | $ 21,700 | |
Term of lease contract | 98 years 11 months | ||
Current lease payment per year | $ 173 | ||
Rental expenses | 2,000 | 1,800 | $ 2,000 |
Reserve for unfunded commitments | $ 175 | $ 250 |
Income Taxes - Narratives (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Operating Loss Carryforwards | |||||
Write-down of deferred tax asset due to tax law changes | $ (3,300) | $ 3,300 | |||
Uncertain tax positions | $ 393 | $ 393 | $ 193 | $ 95 | $ 0 |
Federal | |||||
Operating Loss Carryforwards | |||||
Operating loss carryovers | 2,500 | ||||
Operating loss carryforward annual limitations | $ 176 |
Income Taxes - Components of income tax expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Current provision: | |||||||||||
Federal | $ 2,251 | $ 6,960 | $ 6,838 | ||||||||
State | 185 | 431 | 226 | ||||||||
Total current | 2,436 | 7,391 | 7,064 | ||||||||
Deferred provision (benefit): | |||||||||||
Federal | 1,284 | 3,908 | (1,104) | ||||||||
Total income tax expense | $ 216 | $ 1,056 | $ 1,226 | $ 1,222 | $ 5,275 | $ 1,895 | $ 2,394 | $ 1,735 | $ 3,720 | $ 11,299 | $ 5,960 |
Income Taxes - Reconciliation of income tax expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||||||||||
Income tax expense at statutory federal rate | $ 4,442 | $ 8,795 | $ 6,409 | ||||||||
State tax expense, net of federal tax effect | 99 | 280 | 147 | ||||||||
Statutory rate reductions | 0 | 3,270 | 0 | ||||||||
Income exempt from tax | (403) | (822) | (687) | ||||||||
Benefits related to stock compensation | (68) | (490) | 0 | ||||||||
Deferred director fees | (100) | 0 | 0 | ||||||||
Other items, net | (250) | 266 | 91 | ||||||||
Total income tax expense | $ 216 | $ 1,056 | $ 1,226 | $ 1,222 | $ 5,275 | $ 1,895 | $ 2,394 | $ 1,735 | $ 3,720 | $ 11,299 | $ 5,960 |
Income Taxes - Components of deferred tax assets and liabilities (Details 2) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets: | ||
Allowance for loan losses | $ 3,284 | $ 4,022 |
Net operating loss carryforwards | 518 | 555 |
Purchase accounting adjustments | 0 | 14 |
Deferred fees | 1,152 | 1,162 |
Deferred director fees | 31 | 0 |
Start-up costs | 118 | 144 |
Depreciation | 0 | 67 |
Unrealized loss on available for sale securities | 367 | 0 |
Other | 204 | 88 |
Gross deferred tax assets | 5,674 | 6,052 |
Deferred tax liabilities: | ||
Deferred expenses | 628 | 482 |
Servicing rights | 166 | 216 |
Purchase accounting adjustments | 61 | 0 |
Depreciation | 382 | 0 |
Unrealized gain on derivatives | 90 | 427 |
Unrealized gain on available for sale securities | 0 | 23 |
Gross deferred tax liabilities | 1,327 | 1,148 |
Net deferred tax asset | $ 4,347 | $ 4,904 |
Income Taxes - Reconciliation of the beginning and ending balances of the Company's uncertain tax positions (Details 3) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns | |||
Balance, beginning of year | $ 393 | $ 95 | $ 0 |
(Reductions) additions relating to potential liability with taxing authorities | (200) | ||
(Reductions) additions relating to potential liability with taxing authorities | 298 | 95 | |
Balance, end of year | $ 193 | $ 393 | $ 95 |
401(K) Profit Sharing Plan (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Retirement Benefits [Abstract] | |||
Profit sharing plan age of covered employee | 21 years | ||
Vesting period for employer under defined contribution plan | 5 years | ||
Profit sharing plan contribution amount | $ 265 | $ 257 | $ 227 |
Earnings Per Share (EPS) - Reconciliation of earnings available to common stockholders and basic weighted-average common shares outstanding to diluted weighted average common shares outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings Per Share [Abstract] | |||||||||||
Net income | $ 3,261 | $ 4,857 | $ 4,715 | $ 4,600 | $ 2,096 | $ 4,263 | $ 3,769 | $ 3,702 | $ 17,433 | $ 13,830 | $ 12,350 |
Dividends to participating securities | (51) | (28) | (27) | ||||||||
Undistributed earnings allocated to participating securities | (178) | (151) | (211) | ||||||||
Net income for earnings per share calculation | $ 17,204 | $ 13,651 | $ 12,112 | ||||||||
Weighted average shares outstanding, basic (in shares) | 7,722,175 | 7,572,409 | 7,396,019 | ||||||||
Effect of dilutive equity-based awards (in shares) | 53,000 | 98,000 | 95,000 | ||||||||
Weighted average shares outstanding, diluted (in shares) | 7,775,480 | 7,670,413 | 7,491,052 | ||||||||
Net earnings per common share: | |||||||||||
Basic earnings per common share (in dollars per share) | $ 0.42 | $ 0.62 | $ 0.60 | $ 0.59 | $ 0.27 | $ 0.55 | $ 0.49 | $ 0.49 | $ 2.23 | $ 1.80 | $ 1.64 |
Diluted earnings per common share (in dollars per share) | $ 0.41 | $ 0.62 | $ 0.60 | $ 0.59 | $ 0.27 | $ 0.55 | $ 0.49 | $ 0.48 | $ 2.21 | $ 1.78 | $ 1.62 |
Stock Based Compensation Plans - Outstanding stock options (Details) - Employee Stock Option |
12 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Number of Shares | |
Options outstanding at beginning of period, shares | shares | 47,050 |
Exercised, shares | shares | (28,020) |
Options outstanding at end of period, shares | shares | 19,030 |
Options exercisable at end of period, shares | shares | 19,030 |
Weighted Average Exercise Price | |
Options outstanding at beginning of period (usd per share) | $ / shares | $ 17.83 |
Exercised (usd per share) | $ / shares | 19.14 |
Options outstanding at end of period (usd per share) | $ / shares | 15.91 |
Options exercisable at end of period (usd per share) | $ / shares | $ 15.91 |
Stock Based Compensation Plans - Summary of information for options (Details) - $11.00–17.86 |
12 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Shares, shares | shares | 19,030 |
Range of exercise prices, lower limit (usd per share) | $ 11.00 |
Range of exercise prices, upper limit (usd per share) | $ 17.86 |
Weighted- Average Remaining Contractual Life | 3 years 2 months 18 days |
Weighted- Average Exercise Price (usd per share) | $ 15.91 |
Stock Based Compensation Plans - Activity for restricted stock (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Number of Shares | |
Unvested at beginning of period, shares | shares | 75,186 |
Granted, shares | shares | 44,300 |
Vested, shares | shares | (37,989) |
Forfeited, shares | shares | (3,873) |
Unvested at end of period, shares | shares | 77,624 |
Weighted Average Grant Date Fair Value | |
Unvested at beginning of period (usd per share) | $ / shares | $ 26.39 |
Granted (usd per share) | $ / shares | 32.81 |
Vested (usd per share) | $ / shares | 24.85 |
Forfeited (usd per share) | $ / shares | 27.02 |
Unvested at end of period (usd per share) | $ / shares | $ 30.78 |
Comprehensive Income - Summary of reclassified from accumulated other comprehensive income or loss (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Unrealized (losses) gains on securities: | |||||||||||
Gain (loss) on sale of available for sale securities, net | $ 222 | $ 165 | $ (115) | ||||||||
Income tax expense | $ (216) | $ (1,056) | $ (1,226) | $ (1,222) | $ (5,275) | $ (1,895) | $ (2,394) | $ (1,735) | (3,720) | (11,299) | (5,960) |
Net income | $ 3,261 | $ 4,857 | $ 4,715 | $ 4,600 | $ 2,096 | $ 4,263 | $ 3,769 | $ 3,702 | 17,433 | 13,830 | 12,350 |
Net Unrealized Gain (Loss) on Available for Sale Securities | |||||||||||
Unrealized (losses) gains on securities: | |||||||||||
Net income | 175 | 108 | (75) | ||||||||
Net Unrealized Gain (Loss) on Available for Sale Securities | Amount Reclassified from Accumulated Other Comprehensive Income | |||||||||||
Unrealized (losses) gains on securities: | |||||||||||
Gain (loss) on sale of available for sale securities, net | 222 | 165 | (115) | ||||||||
Income tax expense | $ (47) | $ (57) | $ 40 |
Derivative Instruments - Narratives (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Notional amount | $ 25,000,000 | |
Accrued interest excluded from derivative fair value | 224,000 | $ 70,000 |
Accrued interest included in derivative fair value | $ 654,000 | $ 1,964 |
Derivative Instruments - Changes in consolidated statements of comprehensive income related to interest rate derivatives (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Interest rate swap on FHLB advances and brokered CD's: | ||
Unrealized (loss) gain recognized in accumulated other comprehensive income | $ (1,604) | $ 1,297 |
Income tax benefit (expense) on items recognized in accumulated other comprehensive income | 337 | (454) |
Other comprehensive (loss) income | (1,267) | 843 |
Amount recognized in interest expense on hedged FHLB advances and brokered CD's | $ 2,552 | $ 1,909 |
Fair Value of Financial Instruments (Details) - Discount rate |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities, measurement input | 0.047 | 0.045 |
Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities, measurement input | 0.051 | 0.048 |
Fair Value Measurements - Financial instruments carried at fair value on nonrecurring basis (Details) - Fair Value Measurements Nonrecurring - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Impaired loans | $ 0 | $ 0 |
Servicing asset, net | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Impaired loans | 0 | 0 |
Servicing asset, net | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Impaired loans | 18,709 | 13,898 |
Servicing asset, net | $ 797 | $ 1,030 |
Related Party Transactions - Narratives (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Related Party Transaction [Line Items] | ||
Related party deposits | $ 46,700 | $ 45,400 |
Payment to related parties for services | $ 60 | $ 133 |
Affiliated Entity | Minimum | ||
Related Party Transaction [Line Items] | ||
Equity ownership percentage | 10.00% |
Related Party Transactions - Changes in loans outstanding (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Loans and Leases Receivable, Related Parties | ||
Balance, beginning of year | $ 20,721 | $ 22,471 |
Additional loans | 1,702 | 3,067 |
Repayments | (9,417) | (4,831) |
Effect of changes in related parties | (4,333) | 14 |
Balance, end of year | $ 8,673 | $ 20,721 |
Parent Company Only Financial Statements - Condensed Statements of Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Interest income | $ 74,715 | $ 66,841 | $ 58,077 | ||||||||
Income before income tax expense | $ 3,477 | $ 5,913 | $ 5,941 | $ 5,822 | $ 7,371 | $ 6,158 | $ 6,163 | $ 5,437 | 21,153 | 25,129 | 18,310 |
Net income | $ 3,261 | $ 4,857 | $ 4,715 | $ 4,600 | $ 2,096 | $ 4,263 | $ 3,769 | $ 3,702 | 17,433 | 13,830 | 12,350 |
Parent Company | |||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Interest income | 15 | 13 | 23 | ||||||||
Dividend income from subsidiary | 4,000 | 0 | 0 | ||||||||
Total income | 4,015 | 13 | 23 | ||||||||
Expenses | 3,444 | 2,295 | 3,444 | ||||||||
Income before income tax expense | 571 | (2,282) | (3,421) | ||||||||
Equity in undistributed earnings of subsidiaries | 16,862 | 16,112 | 15,771 | ||||||||
Net income | $ 17,433 | $ 13,830 | $ 12,350 |
Quarterly Financial Information of Bankwell Financial Group, Inc. (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total interest income | $ 21,543 | $ 20,500 | $ 19,414 | $ 18,607 | $ 18,729 | $ 18,348 | $ 17,688 | $ 16,436 | $ 80,064 | $ 71,201 | $ 60,990 |
Total interest expense | 7,076 | 6,254 | 5,506 | 4,902 | 4,815 | 4,487 | 4,047 | 3,488 | 23,738 | 16,837 | 11,898 |
Net interest income | 14,467 | 14,246 | 13,908 | 13,705 | 13,914 | 13,861 | 13,641 | 12,948 | 56,326 | 54,364 | 49,092 |
Provision for loan losses | 2,795 | 322 | 310 | 13 | (495) | 398 | 895 | 543 | 3,440 | 1,341 | 3,914 |
Noninterest income | 601 | 859 | 1,107 | 1,333 | 1,541 | 824 | 998 | 1,266 | 3,900 | 4,629 | 2,676 |
Noninterest expense | 8,796 | 8,870 | 8,764 | 9,203 | 8,579 | 8,129 | 7,581 | 8,234 | 35,633 | 32,523 | 29,544 |
Income before income tax expense | 3,477 | 5,913 | 5,941 | 5,822 | 7,371 | 6,158 | 6,163 | 5,437 | 21,153 | 25,129 | 18,310 |
Income tax expense | 216 | 1,056 | 1,226 | 1,222 | 5,275 | 1,895 | 2,394 | 1,735 | 3,720 | 11,299 | 5,960 |
Net income | $ 3,261 | $ 4,857 | $ 4,715 | $ 4,600 | $ 2,096 | $ 4,263 | $ 3,769 | $ 3,702 | $ 17,433 | $ 13,830 | $ 12,350 |
Earnings per common share: | |||||||||||
Basic (in dollars per share) | $ 0.42 | $ 0.62 | $ 0.60 | $ 0.59 | $ 0.27 | $ 0.55 | $ 0.49 | $ 0.49 | $ 2.23 | $ 1.80 | $ 1.64 |
Diluted (in dollars per share) | $ 0.41 | $ 0.62 | $ 0.60 | $ 0.59 | $ 0.27 | $ 0.55 | $ 0.49 | $ 0.48 | $ 2.21 | $ 1.78 | $ 1.62 |
Quarterly Financial Information of Bankwell Financial Group, Inc. (Unaudited) - Narratives (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||
Charge-offs | $ 6,200 | $ 6,926 | $ 572 | $ 111 | |
Allowance for loan losses pretax reduction in the reserve | $ 1,300 | (1,300) | |||
Write-down of deferred tax asset due to tax law changes | $ 3,300 | $ (3,300) |
Subsequent Events (Details) - $ / shares |
12 Months Ended | |||
---|---|---|---|---|
Feb. 25, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Subsequent Events | ||||
Dividends per common share (in dollars per share) | $ 0.48 | $ 0.28 | $ 0.22 | |
Subsequent Events | ||||
Subsequent Events | ||||
Dividends per common share (in dollars per share) | $ 0.13 | |||
Change is Dividend Distribution Rate | 8.00% |
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