Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) | ||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | o | Accelerated filer | o | ||||||||
☒ | Smaller reporting company | ||||||||||
Emerging growth company |
Page | ||||||||
March 31, 2022 (Unaudited) | December 31, 2021 (Audited) | ||||||||||
Assets | |||||||||||
Cash and due from banks | $ | $ | |||||||||
Interest-bearing deposits in banks | |||||||||||
Federal funds sold | |||||||||||
Total cash and cash equivalents | |||||||||||
Securities available for sale, at fair value | |||||||||||
Securities held to maturity, at amortized cost | |||||||||||
Other equity securities, at fair value | |||||||||||
Restricted equity securities, at cost | |||||||||||
Loans held for sale | |||||||||||
Loans, net of unearned income | |||||||||||
Less allowance for loan losses | |||||||||||
Loans, net | |||||||||||
Premises and equipment, net | |||||||||||
Accrued interest receivable | |||||||||||
Bank owned life insurance | |||||||||||
Annuities | |||||||||||
Foreclosed assets | |||||||||||
Goodwill | |||||||||||
Core deposit intangible | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders' Equity | |||||||||||
Liabilities: | |||||||||||
Deposits: | |||||||||||
Noninterest-bearing | $ | $ | |||||||||
Interest-bearing | |||||||||||
Total deposits | |||||||||||
Other borrowings | |||||||||||
FHLB advances | |||||||||||
Subordinated notes | |||||||||||
Accrued interest payable | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Stockholders' equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Capital surplus | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
Unvested restricted stock | ( | ( | |||||||||
Total stockholders' equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ |
For the Three Months Ended | |||||||||||
March 31, 2022 | March 31, 2021 | ||||||||||
Interest income: | |||||||||||
Loans, including fees | $ | $ | |||||||||
Taxable securities | |||||||||||
Nontaxable securities | |||||||||||
Other interest and dividends | |||||||||||
Total interest income | |||||||||||
Interest expense: | |||||||||||
Deposits | |||||||||||
Other borrowings | |||||||||||
Total interest expense | |||||||||||
Net interest income | |||||||||||
Provision for loan losses | |||||||||||
Net interest income after provision for loan losses | |||||||||||
Noninterest income: | |||||||||||
Swap fees | |||||||||||
SBA/USDA fees | |||||||||||
Mortgage origination fees | |||||||||||
Net gain (loss) on securities | ( | ( | |||||||||
Other operating income | |||||||||||
Total noninterest income | |||||||||||
Noninterest expenses: | |||||||||||
Salaries and employee benefits | |||||||||||
Equipment and occupancy expenses | |||||||||||
Data processing fees | |||||||||||
Regulatory assessments | |||||||||||
Other operating expenses | |||||||||||
Total noninterest expenses | |||||||||||
Income before income taxes | |||||||||||
Income tax expense | |||||||||||
Net income | $ | $ | |||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | $ | $ |
For the Three Months Ended | |||||||||||
March 31, 2022 | March 31, 2021 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive income (loss): | |||||||||||
Unrealized holding losses on securities available for sale arising during the period, net of benefit of $ | ( | ( | |||||||||
Reclassification adjustment for losses on securities available for sale realized in net income, net of benefit of $ | |||||||||||
Other comprehensive loss | ( | ( | |||||||||
Comprehensive income (loss) | $ | ( | $ |
Preferred Stock | Common Stock | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Unvested Restricted Stock | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock under the stock repurchase program | — | — | ( | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends paid | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | $ | $ | $ | $ | ( | $ | ( | $ |
For the Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
OPERATING ACTIVITIES | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and software amortization | |||||||||||
Net loss on securities | |||||||||||
Net amortization of securities | |||||||||||
Amortization of core deposit intangible | |||||||||||
Provision for loan losses | |||||||||||
Stock-based compensation | |||||||||||
Net (increase) decrease in loans held for sale | ( | ||||||||||
Income from bank owned life insurance | ( | ( | |||||||||
(Increase) decrease in interest receivable | ( | ||||||||||
Decrease in interest payable | ( | ( | |||||||||
Net other operating activities | |||||||||||
Net cash provided by operating activities | |||||||||||
INVESTING ACTIVITIES | |||||||||||
Purchase of securities available for sale | ( | ( | |||||||||
Proceeds from sale of securities available for sale | |||||||||||
Proceeds from maturities, calls, and paydowns of securities available for sale | |||||||||||
Net (purchase) redemption of restricted equity securities | ( | ||||||||||
Purchase of bank owned life insurance | ( | ||||||||||
Purchase of annuities | ( | ||||||||||
Net increase in loans | ( | ( | |||||||||
Proceeds from sale of foreclosed assets | |||||||||||
Purchase of premises, equipment and software | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
FINANCING ACTIVITIES | |||||||||||
Net (decrease) increase in deposits | ( | ||||||||||
Proceeds from issuance of common stock | |||||||||||
Repurchase of common stock | ( | ||||||||||
Net proceeds of other borrowings | |||||||||||
Repayment of note payable | ( | ||||||||||
Net proceeds of subordinated notes | |||||||||||
Common stock dividends paid | ( | ( | |||||||||
Net cash provided by financing activities | |||||||||||
Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at beginning of year | |||||||||||
Cash and cash equivalents at end of year | $ | $ | |||||||||
SUPPLEMENTAL DISCLOSURE | |||||||||||
Cash paid during the year for: | |||||||||||
Interest | $ | $ | |||||||||
Income taxes | $ | $ | |||||||||
NONCASH TRANSACTIONS | |||||||||||
Transfers of loans to foreclosed assets | $ | $ | |||||||||
Internally financed sales of foreclosed assets | $ | $ |
Years | |||||
Buildings | |||||
Furniture and equipment |
For the Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Basic Earnings Per Share: | |||||||||||
Net Income | $ | $ | |||||||||
Weighted average common shares outstanding | |||||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted Earnings Per Share: | |||||||||||
Net income allocated to common shareholders | $ | $ | |||||||||
Weighted average common shares outstanding | |||||||||||
Net dilutive effect of: | |||||||||||
Assumed exercises of stock options | |||||||||||
Average shares and dilutive potential common shares | |||||||||||
Dilutive earnings per share | $ | $ |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||
Securities Available for Sale | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | ( | $ | ||||||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | ( | ||||||||||||||||||||||
State and municipal securities | ( | ||||||||||||||||||||||
Corporate debt securities | ( | ||||||||||||||||||||||
Asset based securities | ( | ||||||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | ( | ||||||||||||||||||||||
Total securities available for sale | $ | $ | $ | ( | $ | ||||||||||||||||||
Securities Held to Maturity | |||||||||||||||||||||||
State and municipal securities | ( | ||||||||||||||||||||||
Total securities held to maturity | $ | $ | $ | ( | $ | ||||||||||||||||||
Total securities | $ | $ | $ | ( | $ |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Securities Available for Sale | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | ( | $ | ||||||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | ( | ||||||||||||||||||||||
State and municipal securities | ( | ||||||||||||||||||||||
Corporate debt securities | ( | ||||||||||||||||||||||
Asset based securities | ( | ||||||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | ( | ||||||||||||||||||||||
Total securities available for sale | $ | $ | $ | ( | $ | ||||||||||||||||||
Securities Held to Maturity | |||||||||||||||||||||||
State and municipal securities | ( | ||||||||||||||||||||||
Total securities held to maturity | $ | $ | $ | ( | $ | ||||||||||||||||||
Total securities | $ | $ | $ | ( | $ |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
Securities Available for Sale | |||||||||||||||||||||||
Due in less than one year | $ | $ | $ | $ | |||||||||||||||||||
Due from one year to five years | |||||||||||||||||||||||
Due after five to ten years | |||||||||||||||||||||||
Due after ten years | |||||||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||||||
Total securities available for sale | $ | $ | $ | $ | |||||||||||||||||||
Securities Held to Maturity | |||||||||||||||||||||||
Due in less than one year | $ | $ | $ | $ | |||||||||||||||||||
Due from one year to five years | |||||||||||||||||||||||
Due after five to ten years | |||||||||||||||||||||||
Due after ten years | |||||||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||||||
Total securities held to maturity | $ | $ | $ | $ | |||||||||||||||||||
Total securities | $ | $ | $ | $ |
March 31, | December 31, | ||||||||||
2022 | 2021 | ||||||||||
Federal Home Loan Bank stock | $ | $ | |||||||||
First National Banker’s Bankshares, Inc. stock | |||||||||||
Pacific Coast Banker’s Bank stock | |||||||||||
Total restricted equity securities | $ | $ |
Less Than Twelve Months | Over Twelve Months | ||||||||||||||||||||||||||||
Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Total Unrealized Losses | |||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||
Securities Available for Sale | |||||||||||||||||||||||||||||
U.S. Treasury securities | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | ( | ( | ( | ||||||||||||||||||||||||||
State and municipal securities | ( | ( | |||||||||||||||||||||||||||
Corporate debt securities | ( | ( | ( | ||||||||||||||||||||||||||
Asset based securities | ( | ( | ( | ||||||||||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | ( | ( | ( | ||||||||||||||||||||||||||
Total securities available for sale | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Securities Held to Maturity | |||||||||||||||||||||||||||||
State and municipal securities | ( | ( | ( | ||||||||||||||||||||||||||
Total securities held to maturity | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Total securities | $ | ( | $ | $ | ( | $ | $ | ( |
Less Than Twelve Months | Over Twelve Months | ||||||||||||||||||||||||||||
Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Total Unrealized Losses | |||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Securities Available for Sale | |||||||||||||||||||||||||||||
U.S. Treasury securities | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | ( | ( | ( | ||||||||||||||||||||||||||
State and municipal securities | ( | ( | |||||||||||||||||||||||||||
Corporate debt securities | ( | ( | |||||||||||||||||||||||||||
Asset based securities | ( | ( | ( | ||||||||||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | ( | ( | ( | ||||||||||||||||||||||||||
Total securities available for sale | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Securities Held to Maturity | |||||||||||||||||||||||||||||
State and municipal securities | ( | ( | |||||||||||||||||||||||||||
Total securities held to maturity | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||
Total securities | $ | ( | $ | $ | ( | $ | $ | ( |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||
Construction and development | $ | $ | |||||||||||||||||||||
Residential | |||||||||||||||||||||||
Commercial | |||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||
Consumer and other | |||||||||||||||||||||||
Gross Loans | |||||||||||||||||||||||
Deferred loan fees | ( | ( | |||||||||||||||||||||
Allowance for loan losses | ( | ( | |||||||||||||||||||||
Loans, net | $ | $ |
Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||
As of March 31, 2022 | |||||||||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||||||||
Construction and development | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||
Consumer and other | |||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
As of December 31, 2021 | |||||||||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||||||||
Construction and development | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||
Consumer and other | |||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
Past Due Status (Accruing Loans) | |||||||||||||||||||||||||||||||||||||||||
Current | 30-59 Days | 60-89 Days | 90+ Days | Total Past Due | Nonaccrual | Total | |||||||||||||||||||||||||||||||||||
As of March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||||||||||||||||||||
Construction and development | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Consumer and other | |||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
As of December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||||||||||||||||||||
Construction and development | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Consumer and other | |||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ |
Real Estate | Commercial | Consumer | Total | ||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||
Provision (credit) for loan losses | ( | ( | |||||||||||||||||||||
Loans charged off | ( | ( | ( | ||||||||||||||||||||
Recoveries of loans previously charged off | |||||||||||||||||||||||
Ending balance at March 31, 2022 | $ | $ | $ | $ | |||||||||||||||||||
Ending balance - individually evaluated for impairment | $ | $ | $ | $ | |||||||||||||||||||
Ending balance - collectively evaluated for impairment | |||||||||||||||||||||||
Ending balance - loans acquired with deteriorated credit quality | |||||||||||||||||||||||
Total ending balance at March 31, 2022 | $ | $ | $ | $ | |||||||||||||||||||
Loans: | |||||||||||||||||||||||
Ending balance - individually evaluated for impairment | $ | $ | $ | $ | |||||||||||||||||||
Ending balance - collectively evaluated for impairment | |||||||||||||||||||||||
Ending balance - loans acquired with deteriorated credit quality | |||||||||||||||||||||||
Total ending balance at March 31, 2022 | $ | $ | $ | $ |
Real Estate | Commercial | Consumer | Total | ||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ | |||||||||||||||||||
Provision (credit) for loan losses | ( | ( | |||||||||||||||||||||
Loans charged off | ( | ( | ( | ||||||||||||||||||||
Recoveries of loans previously charged off | |||||||||||||||||||||||
Ending balance at March 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||
Ending balance - individually evaluated for impairment | $ | $ | $ | $ | |||||||||||||||||||
Ending balance - collectively evaluated for impairment | |||||||||||||||||||||||
Ending balance - loans acquired with deteriorated credit quality | |||||||||||||||||||||||
Total ending balance at March 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||
Loans: | |||||||||||||||||||||||
Ending balance - individually evaluated for impairment | $ | $ | $ | $ | |||||||||||||||||||
Ending balance - collectively evaluated for impairment | |||||||||||||||||||||||
Ending balance - loans acquired with deteriorated credit quality | |||||||||||||||||||||||
Total ending balance at March 31, 2021 | $ | $ | $ | $ |
Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | ||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||
Construction and development | $ | $ | $ | — | $ | ||||||||||||||||||
Residential | — | ||||||||||||||||||||||
Commercial | — | ||||||||||||||||||||||
Commercial and industrial | — | ||||||||||||||||||||||
Consumer and other | — | ||||||||||||||||||||||
Total with no related allowance recorded | — | ||||||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||
Construction and development | |||||||||||||||||||||||
Residential | |||||||||||||||||||||||
Commercial | |||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||
Consumer and other | |||||||||||||||||||||||
Total with an allowance recorded | |||||||||||||||||||||||
Total impaired loans | $ | $ | $ | $ |
Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | ||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||
Construction and development | $ | $ | $ | — | $ | ||||||||||||||||||
Residential | — | ||||||||||||||||||||||
Commercial | — | ||||||||||||||||||||||
Commercial and industrial | — | ||||||||||||||||||||||
Consumer and other | — | ||||||||||||||||||||||
Total with no related allowance recorded | — | ||||||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||
Construction and development | |||||||||||||||||||||||
Residential | |||||||||||||||||||||||
Commercial | |||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||
Consumer and other | |||||||||||||||||||||||
Total with an allowance recorded | |||||||||||||||||||||||
Total impaired loans | $ | $ | $ | $ |
Recorded Investment | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
Three Months Ended March 31, 2022 | |||||||||||||||||
With no related allowance recorded: | |||||||||||||||||
Real estate mortgages: | |||||||||||||||||
Construction and development | $ | $ | $ | ||||||||||||||
Residential | |||||||||||||||||
Commercial | |||||||||||||||||
Commercial and industrial | |||||||||||||||||
Consumer and other | |||||||||||||||||
Total with no related allowance recorded | |||||||||||||||||
With an allowance recorded: | |||||||||||||||||
Real estate mortgages: | |||||||||||||||||
Construction and development | |||||||||||||||||
Residential | |||||||||||||||||
Commercial | |||||||||||||||||
Commercial and industrial | |||||||||||||||||
Consumer and other | |||||||||||||||||
Total with an allowance recorded | |||||||||||||||||
Total impaired loans | $ | $ | $ |
Recorded Investment | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
Three Months Ended March 31, 2021 | |||||||||||||||||
With no related allowance recorded: | |||||||||||||||||
Real estate mortgages: | |||||||||||||||||
Construction and development | $ | $ | $ | ||||||||||||||
Residential | |||||||||||||||||
Commercial | |||||||||||||||||
Commercial and industrial | |||||||||||||||||
Consumer and other | |||||||||||||||||
Total with no related allowance recorded | |||||||||||||||||
With an allowance recorded: | |||||||||||||||||
Real estate mortgages: | |||||||||||||||||
Construction and development | |||||||||||||||||
Residential | |||||||||||||||||
Commercial | |||||||||||||||||
Commercial and industrial | |||||||||||||||||
Consumer and other | |||||||||||||||||
Total with an allowance recorded | |||||||||||||||||
Total impaired loans | $ | $ | $ |
March 31, 2022 | December 31, 2021 | ||||||||||
Noninterest-bearing transaction | $ | $ | |||||||||
Interest-bearing transaction | |||||||||||
Savings | |||||||||||
Time deposits, $250,000 and under | |||||||||||
Time deposits, over $250,000 | |||||||||||
$ | $ |
April 1, 2022 to March 31, 2023 | $ | ||||
April 1, 2023 to March 31, 2024 | |||||
April 1, 2024 to March 31, 2025 | |||||
April 1, 2025 to March 31, 2026 | |||||
April 1, 2026 to March 31, 2027 | |||||
Thereafter | |||||
$ |
March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
Derivatives not Designated as Hedging Instruments | Notional Amount | Balance Sheet Location | Fair Value | Derivatives not Designated as Hedging Instruments | Notional Amount | Balance Sheet Location | Fair Value | |||||||||||||||||||||||||||||||||||||
Interest Rate Products | $ | Other Assets | $ | Interest Rate Products | $ | Other Assets | $ | |||||||||||||||||||||||||||||||||||||
Interest Rate Products | Other Liabilities | ( | Interest Rate Products | Other Liabilities | ( |
March 31, 2022 | December 31, 2021 | ||||||||||
Commitments to extend credit | $ | $ | |||||||||
Standby letters of credit | |||||||||||
Total | $ | $ |
Actual | Required for Capital Adequacy Purposes | Minimums To Be “Well Capitalized” Under Prompt Corrective Action | ||||||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
As of March 31, 2022 | ||||||||||||||||||||||||||||||||||||||
Tier 1 capital (to average assets) | ||||||||||||||||||||||||||||||||||||||
Company | $ | % | $ | % | $ | — | — | |||||||||||||||||||||||||||||||
Bank | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
CET 1 capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||
Company | $ | % | $ | % | $ | — | — | |||||||||||||||||||||||||||||||
Bank | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
Tier 1 capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||
Company | $ | % | $ | % | $ | — | — | |||||||||||||||||||||||||||||||
Bank | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
Total capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||
Company | $ | % | $ | % | $ | — | — | |||||||||||||||||||||||||||||||
Bank | $ | % | $ | % | $ | % |
Actual | Required for Capital Adequacy Purposes | Minimums To Be “Well Capitalized” Under Prompt Corrective Action | ||||||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
As of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
Tier 1 capital (to average assets) | ||||||||||||||||||||||||||||||||||||||
Company | $ | % | $ | % | $ | — | — | |||||||||||||||||||||||||||||||
Bank | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
CET 1 capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||
Company | $ | % | $ | % | $ | — | — | |||||||||||||||||||||||||||||||
Bank | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
Tier 1 capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||
Company | $ | % | $ | % | $ | — | — | |||||||||||||||||||||||||||||||
Bank | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
Total capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||
Company | $ | % | $ | % | $ | — | — | |||||||||||||||||||||||||||||||
Bank | $ | % | $ | % | $ | % |
Fair Value Measurements At Reporting Date Using: | |||||||||||||||||||||||
Fair Value | Quoted Prices In Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | |||||||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | |||||||||||||||||||||||
State and municipal securities | |||||||||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||
Asset based securities | |||||||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | |||||||||||||||||||||||
Other equity securities | |||||||||||||||||||||||
Interest Rate Products - asset | |||||||||||||||||||||||
Interest Rate Products - liabilities | ( | ( | |||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | |||||||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | |||||||||||||||||||||||
State and municipal securities | |||||||||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||
Asset based securities | |||||||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | |||||||||||||||||||||||
Other equity securities | |||||||||||||||||||||||
Interest Rate Products - asset | |||||||||||||||||||||||
Interest Rate Products - liabilities | ( | ( |
Fair Value Measurements At Reporting Date Using: | |||||||||||||||||||||||
Fair Value | Quoted Prices In Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
March 31, 2022: | |||||||||||||||||||||||
Impaired loans | $ | $ | $ | $ | |||||||||||||||||||
Foreclosed assets | |||||||||||||||||||||||
Totals | $ | $ | $ | $ |
Fair Value | Quoted Prices In Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
December 31, 2021: | |||||||||||||||||||||||
Impaired loans | $ | $ | $ | $ | |||||||||||||||||||
Foreclosed assets | |||||||||||||||||||||||
Totals | $ | $ | $ | $ |
Carrying Amount | Valuation Technique | Significant Unobservable Input | Weighted Average of Input | |||||||||||||||||||||||
Nonrecurring: | ||||||||||||||||||||||||||
Impaired loans | $ | Appraisal | Appraisal discounts (%) | |||||||||||||||||||||||
Foreclosed assets | $ | Appraisal | Appraisal discounts (%) |
Carrying Amount | Valuation Technique | Significant Unobservable Input | Weighted Average of Input | |||||||||||||||||||||||
Nonrecurring: | ||||||||||||||||||||||||||
Impaired loans | $ | Appraisal | Appraisal discounts (%) | |||||||||||||||||||||||
Foreclosed assets | $ | Appraisal | Appraisal discounts (%) |
March 31, 2022 | |||||||||||||||||||||||
Estimated Fair Value | |||||||||||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Securities available for sale | |||||||||||||||||||||||
Other equity securities | |||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||
Trading assets | |||||||||||||||||||||||
Loans, net | |||||||||||||||||||||||
Bank owned life insurance | |||||||||||||||||||||||
Annuities | |||||||||||||||||||||||
Accrued interest receivable | |||||||||||||||||||||||
Restricted equity securities | |||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||
Deposits | $ | $ | $ | $ | |||||||||||||||||||
Trading liabilities | |||||||||||||||||||||||
FHLB advances | |||||||||||||||||||||||
Other borrowings | |||||||||||||||||||||||
Subordinated notes | |||||||||||||||||||||||
Accrued interest payable |
December 31, 2021 | |||||||||||||||||||||||
Estimated Fair Value | |||||||||||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Securities available for sale | |||||||||||||||||||||||
Other equity securities | |||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||
Trading assets | |||||||||||||||||||||||
Loans, net | |||||||||||||||||||||||
Bank owned life insurance | |||||||||||||||||||||||
Annuities | |||||||||||||||||||||||
Accrued interest receivable | |||||||||||||||||||||||
Restricted equity securities | |||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||
Deposits | $ | $ | $ | $ | |||||||||||||||||||
Trading liabilities | |||||||||||||||||||||||
FHLB advances | |||||||||||||||||||||||
Other borrowings | |||||||||||||||||||||||
Subordinated notes | |||||||||||||||||||||||
Accrued interest payable |
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||||
Gross loans, net of unearned income(1) | $ | 1,278,413 | $ | 14,766 | 4.68 | % | $ | 1,066,556 | $ | 13,021 | 4.95 | % | |||||||||||||||||||||||
Taxable securities | 106,820 | 619 | 2.35 | % | 78,354 | 401 | 2.08 | % | |||||||||||||||||||||||||||
Nontaxable securities | 54,863 | 299 | 2.21 | % | 33,255 | 207 | 2.52 | % | |||||||||||||||||||||||||||
Other interest-earnings assets | 244,202 | 188 | 0.31 | % | 78,154 | 48 | 0.25 | % | |||||||||||||||||||||||||||
Total interest-earning assets | $ | 1,684,298 | $ | 15,872 | 3.82 | % | $ | 1,256,319 | $ | 13,677 | 4.42 | % | |||||||||||||||||||||||
Allowance for loan losses | (15,041) | (12,138) | |||||||||||||||||||||||||||||||||
Noninterest-earning assets | 117,758 | 123,941 | |||||||||||||||||||||||||||||||||
Total Assets | $ | 1,787,015 | $ | 1,368,122 | |||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
Interest-bearing transaction accounts | 110,983 | 26 | 0.09 | % | 88,578 | 18 | 0.08 | % | |||||||||||||||||||||||||||
Savings and money market accounts | 675,504 | 591 | 0.36 | % | 440,803 | 677 | 0.62 | % | |||||||||||||||||||||||||||
Time deposits | 237,411 | 256 | 0.44 | % | 324,668 | 495 | 0.62 | % | |||||||||||||||||||||||||||
FHLB advances | 25,950 | 22 | 0.34 | % | 33,244 | 51 | 0.62 | % | |||||||||||||||||||||||||||
Other borrowings | 32,924 | 323 | 3.98 | % | 12,755 | 152 | 4.82 | % | |||||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 1,082,772 | $ | 1,218 | 0.46 | % | $ | 900,048 | $ | 1,393 | 0.63 | % | |||||||||||||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | $ | 514,456 | $ | 316,553 | |||||||||||||||||||||||||||||||
Other liabilities | 12,543 | 8,532 | |||||||||||||||||||||||||||||||||
Total noninterest-bearing liabilities | $ | 526,999 | $ | 325,085 | |||||||||||||||||||||||||||||||
Stockholders’ Equity | 177,244 | 142,989 | |||||||||||||||||||||||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 1,787,015 | $ | 1,368,122 | |||||||||||||||||||||||||||||||
Net interest income | $ | 14,654 | $ | 12,284 | |||||||||||||||||||||||||||||||
Net interest spread(2) | 3.36 | % | 3.79 | % | |||||||||||||||||||||||||||||||
Net interest margin(3) | 3.53 | % | 3.97 | % |
Three Months Ended March 31, 2022 vs. Three Months Ended March 31, 2021 | |||||||||||||||||
Changes due to: | |||||||||||||||||
Volume | Rate | Total Variance | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Interest-earning assets: | |||||||||||||||||
Gross loans, net of unearned income | $ | 2,428 | $ | (683) | $ | 1,745 | |||||||||||
Taxable securities | 165 | 53 | 218 | ||||||||||||||
Nontaxable securities | 118 | (26) | 92 | ||||||||||||||
Other interest-earning assets | 128 | 12 | 140 | ||||||||||||||
Total increase in interest income | $ | 2,839 | $ | (644) | $ | 2,195 | |||||||||||
Interest-bearing liabilities: | |||||||||||||||||
Interest-bearing transaction accounts | 5 | 3 | 8 | ||||||||||||||
Savings and money market accounts | 205 | (291) | (86) | ||||||||||||||
Time deposits | (94) | (145) | (239) | ||||||||||||||
FHLB advances | (6) | (23) | (29) | ||||||||||||||
Other borrowings | 198 | (27) | 171 | ||||||||||||||
Total decrease in interest expense | $ | 308 | $ | (483) | $ | (175) | |||||||||||
Increase in net interest income | $ | 2,531 | $ | (161) | $ | 2,370 |
Three Months Ended March 31, | |||||||||||||||||
2022 | 2021 | Increase (Decrease) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Service charges on deposit accounts | $ | 445 | $ | 360 | $ | 85 | |||||||||||
Swap fees | 15 | 558 | (543) | ||||||||||||||
SBA/USDA fees | 388 | 2,865 | (2,477) | ||||||||||||||
Bank card services and interchange fees | 413 | 362 | 51 | ||||||||||||||
Mortgage banking activities | 286 | 407 | (121) | ||||||||||||||
Net loss on securities | (361) | (232) | (129) | ||||||||||||||
Other operating income(1) | 147 | 176 | (29) | ||||||||||||||
Total noninterest income | $ | 1,333 | $ | 4,496 | $ | (3,163) |
Three Months Ended March 31, | |||||||||||||||||
2022 | 2021 | Increase (Decrease) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Salaries and employee benefits | $ | 5,725 | $ | 5,057 | $ | 668 | |||||||||||
Equipment and occupancy expenses | 705 | 879 | (174) | ||||||||||||||
Professional services | 465 | 625 | (160) | ||||||||||||||
Data processing fees | 564 | 514 | 50 | ||||||||||||||
Other real estate (income) expenses | (21) | (90) | 69 | ||||||||||||||
Other operating expenses(1) | 1,852 | 1,547 | 305 | ||||||||||||||
Total noninterest expense | $ | 9,290 | $ | 8,532 | $ | 758 |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||
Construction and development | $ | 165,400 | 12.6 | % | $ | 174,480 | 13.9 | % | |||||||||||||||
Residential | 154,143 | 11.7 | % | 147,490 | 11.8 | % | |||||||||||||||||
Commercial | 765,685 | 58.3 | % | 716,541 | 57.1 | % | |||||||||||||||||
Commercial and industrial | 218,868 | 16.6 | % | 197,694 | 15.8 | % | |||||||||||||||||
PPP Loans | 893 | 0.1 | % | 9,203 | 0.7 | % | |||||||||||||||||
Consumer and other | 9,077 | 0.7 | % | 8,709 | 0.7 | % | |||||||||||||||||
Gross Loans | 1,314,066 | 100.0 | % | 1,254,117 | 100.0 | % | |||||||||||||||||
Deferred loan fees | (3,996) | (3,817) | |||||||||||||||||||||
Allowance for loan losses | (15,492) | (14,844) | |||||||||||||||||||||
Loans, net | $ | 1,294,578 | $ | 1,235,456 |
Three Months Ended | |||||||||||
March 31, 2022 | March 31, 2021 | ||||||||||
(dollars in thousands) | |||||||||||
Average loans, net of unearned income | $ | 1,278,413 | $ | 1,066,556 | |||||||
Loans, net of unearned income | $ | 1,310,070 | $ | 1,083,274 | |||||||
Allowance for loan losses at beginning of the period | $ | 14,844 | $ | 11,859 | |||||||
Charge offs: | |||||||||||
Construction and development | 66 | — | |||||||||
Residential | — | 16 | |||||||||
Commercial | — | — | |||||||||
Commercial and industrial | — | — | |||||||||
Consumer and other | 6 | 2 | |||||||||
Total charge offs | 72 | 18 | |||||||||
Recoveries: | |||||||||||
Construction and development | — | — | |||||||||
Residential | 17 | 2 | |||||||||
Commercial | — | — | |||||||||
Commercial and industrial | — | 11 | |||||||||
Consumer and other | 3 | 1 | |||||||||
Total recoveries | 20 | 14 | |||||||||
Net charge offs (recoveries) | $ | 52 | $ | 4 | |||||||
Provision for loan losses | $ | 700 | $ | 750 | |||||||
Balance at end of period | $ | 15,492 | $ | 12,605 | |||||||
Ratio of allowance to end of period loans | 1.18 | % | 1.16 | % | |||||||
Ratio of net charge offs (recoveries) to average loans | 0.00 | % | 0.00 | % |
March 31, 2022 | March 31, 2021 | ||||||||||||||||||||||
Amount | Percentage of loans in each category to gross loans | Amount | Percentage of loans in each category to gross loans | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Real estate mortgages: | |||||||||||||||||||||||
Construction and development | $ | 2,422 | 12.6 | % | $ | 977 | 11.1 | % | |||||||||||||||
Residential | 1,051 | 11.7 | % | 1,020 | 14.0 | % | |||||||||||||||||
Commercial | 6,733 | 58.3 | % | 7,277 | 52.9 | % | |||||||||||||||||
Commercial and industrial | 5,175 | 16.7 | % | 3,192 | 21.2 | % | |||||||||||||||||
Consumer and other | 111 | 0.7 | % | 139 | 0.8 | % | |||||||||||||||||
Total | $ | 15,492 | 100.0 | % | $ | 12,605 | 100.0 | % |
March 31, | December 31, | ||||||||||||||||
2022 | 2021 | 2021 | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Nonaccrual loans | $ | 3,246 | $ | 3,857 | $ | 1,478 | |||||||||||
Past due loans 90 days or more and still accruing interest | — | — | 494 | ||||||||||||||
Total nonperforming loans | 3,246 | 3,857 | 1,972 | ||||||||||||||
OREO | 2,930 | 10,229 | 2,930 | ||||||||||||||
Total nonperforming assets | $ | 6,176 | $ | 14,086 | $ | 4,902 | |||||||||||
Troubled debt restructured loans – nonaccrual(1) | 904 | 731 | 940 | ||||||||||||||
Troubled debt restructured loans – accruing | 1,058 | 1,005 | 1,072 | ||||||||||||||
Total troubled debt restructured loans | $ | 1,962 | $ | 1,736 | $ | 2,012 | |||||||||||
Allowance for loan losses | $ | 15,492 | $ | 12,605 | $ | 14,844 | |||||||||||
Gross loans outstanding at the end of period | $ | 1,314,066 | $ | 1,087,461 | $ | 1,254,117 | |||||||||||
Allowance for loan losses to gross loans | 1.18 | % | 1.16 | % | 1.18 | % | |||||||||||
Allowance for loan losses to nonperforming loans | 477.26 | % | 326.81 | % | 752.74 | % | |||||||||||
Nonperforming loans to gross loans | 0.25 | % | 0.35 | % | 0.16 | % | |||||||||||
Nonperforming assets to gross loans and OREO | 0.47 | % | 1.28 | % | 0.39 | % | |||||||||||
Nonaccrual loans by category: | |||||||||||||||||
Real Estate: | |||||||||||||||||
Construction and development | $ | 76 | $ | 1,062 | $ | 346 | |||||||||||
Residential | 510 | 825 | 167 | ||||||||||||||
Commercial | 2,388 | 1,572 | 674 | ||||||||||||||
Commercial and industrial | 269 | 383 | 285 | ||||||||||||||
Consumer and other | 3 | 15 | 6 | ||||||||||||||
$ | 3,246 | $ | 3,857 | $ | 1,478 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
March 31, 2022 | (dollars in thousands) | ||||||||||||||||||||||
Securities Available for Sale | |||||||||||||||||||||||
U.S. Treasury securities | $ | 9,797 | $ | — | $ | (556) | $ | 9,241 | |||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | 8,453 | — | (414) | 8,039 | |||||||||||||||||||
State and municipal securities | 56,963 | 607 | (2,924) | 54,646 | |||||||||||||||||||
Corporate debt securities | 10,528 | 129 | (216) | 10,441 | |||||||||||||||||||
Asset based securities | 10,096 | 14 | (105) | 10,005 | |||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | 60,264 | 6 | (1,615) | 58,655 | |||||||||||||||||||
Total securities available for sale | $ | 156,101 | $ | 756 | $ | (5,830) | $ | 151,027 | |||||||||||||||
Securities Held to Maturity | |||||||||||||||||||||||
State and municipal securities | 19,667 | — | (1,440) | 18,227 | |||||||||||||||||||
Total securities held to maturity | $ | 19,667 | $ | — | $ | (1,440) | $ | 18,227 | |||||||||||||||
Total securities | $ | 175,768 | $ | 756 | $ | (7,270) | $ | 169,254 |
December 31, 2021 | |||||||||||||||||||||||
Securities Available for Sale | |||||||||||||||||||||||
U.S. Treasury securities | $ | 7,820 | $ | 22 | $ | (20) | $ | 7,822 | |||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | 9,228 | 68 | (103) | 9,193 | |||||||||||||||||||
State and municipal securities | 54,236 | 2,611 | (66) | 56,781 | |||||||||||||||||||
Corporate debt securities | 10,530 | 289 | (35) | 10,784 | |||||||||||||||||||
Asset based securities | 10,380 | 116 | (24) | 10,472 | |||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | 37,123 | 185 | (188) | 37,120 | |||||||||||||||||||
Total securities available for sale | $ | 129,317 | $ | 3,291 | $ | (436) | $ | 132,172 | |||||||||||||||
Securities Held to Maturity | |||||||||||||||||||||||
State and municipal securities | 19,672 | 364 | (126) | 19,910 | |||||||||||||||||||
Total securities held to maturity | $ | 19,672 | $ | 364 | $ | (126) | $ | 19,910 | |||||||||||||||
Total securities | $ | 148,989 | $ | 3,655 | $ | (562) | $ | 152,082 |
Due in One Year or Less | Due After One Year Through Five Years | Due After Five Years Through Ten Years | Due After Ten Years | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | ||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Available for Sale | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | — | — | % | $ | 1,989 | 1.33 | % | $ | 7,808 | 1.37 | % | $ | — | — | % | $ | 9,797 | 1.36 | % | |||||||||||||||||||||||||||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | — | — | 807 | 0.59 | 5,340 | 1.56 | 2,306 | 1.27 | 8,453 | 1.39 | |||||||||||||||||||||||||||||||||||||||||||||||||
State and municipal securities | 301 | 0.16 | 1,173 | 1.79 | 3,031 | 1.95 | 52,458 | 2.18 | 56,963 | 2.15 | |||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt securities | — | — | 3,028 | 4.82 | 7,500 | 4.72 | — | — | 10,528 | 4.75 | |||||||||||||||||||||||||||||||||||||||||||||||||
Asset based securities | — | — | — | — | — | — | 10,096 | 1.13 | 10,096 | 1.13 | |||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | — | — | 24,334 | 2.96 | 7,114 | 2.21 | 28,816 | 1.96 | 60,264 | 2.39 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total securities available for sale | $ | 301 | 0.16 | % | $ | 31,331 | 2.93 | % | $ | 30,793 | 2.47 | % | $ | 93,676 | 1.98 | % | $ | 156,101 | 2.26 | % | |||||||||||||||||||||||||||||||||||||||
Securities Held to Maturity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
State and municipal securities | — | — | — | — | 1,772 | 2.44 | 17,895 | 2.36 | 19,667 | 2.37 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total securities held to maturity | $ | — | — | % | $ | — | — | % | $ | 1,772 | 1100 | 2.44 | % | $ | 17,895 | 2.36 | % | $ | 19,667 | 2.37 | % | ||||||||||||||||||||||||||||||||||||||
Total securities | $ | 301 | 0.16 | % | $ | 31,331 | 2.93 | % | $ | 32,565 | 2.47 | % | $ | 111,571 | 2.04 | % | $ | 175,768 | 2.27 | % |
Due in One Year or Less | Due After One Year Through Five Years | Due After Five Years Through Ten Years | Due After Ten Years | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | ||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Available for Sale | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | — | — | % | $ | — | — | % | $ | 7,820 | 1.36 | % | $ | — | — | % | $ | 7,820 | 1.36 | % | |||||||||||||||||||||||||||||||||||||||
U.S. Government Sponsored Enterprises (GSEs) | — | — | 561 | 1.94 | 6,122 | 0.46 | 2,545 | 2.13 | 9,228 | 1.01 | |||||||||||||||||||||||||||||||||||||||||||||||||
State and municipal securities | 302 | 0.16 | 1,175 | 1.79 | 3,033 | 1.95 | 49,726 | 2.19 | 54,236 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt securities | — | — | 1,030 | 3.50 | 9,500 | 4.89 | — | — | 10,530 | 4.75 | |||||||||||||||||||||||||||||||||||||||||||||||||
Asset based securities | — | — | — | — | — | — | 10,380 | 0.94 | 10,380 | 0.94 | |||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed GSE residential/multifamily and non-GSE | — | — | 15,870 | 3.02 | 5,299 | 1.41 | 15,954 | 1.30 | 37,123 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total securities available for sale | $ | 302 | 0.16 | % | $ | 18,636 | 2.94 | % | $ | 31,774 | 2.31 | % | $ | 78,605 | 1.84 | % | $ | 129,317 | 2.11 | % | |||||||||||||||||||||||||||||||||||||||
Securities Held to Maturity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
State and municipal securities | — | — | — | — | 1,100 | 2.36 | 18,572 | 2.37 | 19,672 | 2.37 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total securities held to maturity | $ | — | — | % | $ | — | — | % | $ | 1,100 | 1100 | 2.36 | % | $ | 18,572 | 2.37 | % | $ | 19,672 | 2.37 | % | ||||||||||||||||||||||||||||||||||||||
Total securities | $ | 302 | 0.16 | % | $ | 18,636 | 2.94 | % | $ | 32,874 | 2.31 | % | $ | 97,177 | 1.94 | % | $ | 148,989 | 2.15 | % |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amount | Percent of Total | Amount | Percent of Total | ||||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||||
Noninterest-bearing transaction | $ | 515,110 | 33.4% | $ | 541,546 | 34.8% | |||||||||||||||||
Interest-bearing transaction | 749,119 | 48.6% | 704,326 | 45.3% | |||||||||||||||||||
Savings | 62,462 | 4.1% | 56,715 | 3.6% | |||||||||||||||||||
Time deposits, $250,000 and under | 189,172 | 12.2% | 224,556 | 14.4% | |||||||||||||||||||
Time deposits, over $250,000 | 25,976 | 1.7% | 29,308 | 1.9% | |||||||||||||||||||
Total deposits | $ | 1,541,839 | 100.0% | $ | 1,556,451 | 100.0% |
March 31, 2022 | |||||||||||||||||||||||||||||
Maturity Within: | |||||||||||||||||||||||||||||
Three Months | Three Months Through 12 Months | Over 12 Months Through 3 Years | Over 3 Years | Total | |||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||
Time deposits, less than $100,000 | $ | 32,724 | $ | 53,200 | $ | 22,668 | $ | 2,909 | $ | 111,501 | |||||||||||||||||||
Time deposits, $100,000 through $250,000 | 22,170 | 49,743 | 4,608 | 1,150 | 77,671 | ||||||||||||||||||||||||
Time deposits, over $250,000 | 7,273 | 16,454 | 1,066 | 1,183 | 25,976 | ||||||||||||||||||||||||
Total time deposits | $ | 62,167 | $ | 119,397 | $ | 28,342 | $ | 5,242 | $ | 215,148 |
December 31, 2021 | |||||||||||||||||||||||||||||
Maturity Within: | |||||||||||||||||||||||||||||
Three Months | Three Months Through 12 Months | Over 12 Months Through 3 Years | Over 3 Years | Total | |||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||
Time deposits, less than $100,000 | $ | 33,061 | $ | 61,646 | $ | 29,563 | $ | 2,832 | $ | 127,102 | |||||||||||||||||||
Time deposits, $100,000 through $250,000 | 39,753 | 51,112 | 5,464 | 1,125 | 97,454 | ||||||||||||||||||||||||
Time deposits, over $250,000 | 13,238 | 13,560 | 1,327 | 1,183 | 29,308 | ||||||||||||||||||||||||
Total time deposits | $ | 86,052 | $ | 126,318 | $ | 36,354 | $ | 5,140 | $ | 253,864 |
March 31, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Average Balance | Average Rate Paid | Average Balance | Average Rate Paid | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Noninterest-bearing transaction | $ | 514,456 | —% | $ | 316,553 | —% | |||||||||||||||||
Interest-bearing transaction | 110,983 | 0.09% | 88,578 | 0.08% | |||||||||||||||||||
Money markets | 616,663 | 0.37% | 396,894 | 0.67% | |||||||||||||||||||
Savings | 58,841 | 0.20% | 43,909 | 0.20% | |||||||||||||||||||
Time deposits | 237,411 | 0.44% | 324,668 | 0.62% | |||||||||||||||||||
Total deposits | $ | 1,538,354 | 0.23% | $ | 1,170,602 | 0.41% |
March 31, 2022 | December 31, 2021 | ||||||||||
(dollars in thousands) | |||||||||||
Amount outstanding at end of period | $ | 25,950 | $ | 25,950 | |||||||
Weighted average interest rate at end of period | 0.34 | % | 0.34 | % | |||||||
Maximum month-end balance | $ | 25,950 | $ | 25,950 | |||||||
Average balance outstanding during the period | $ | 25,950 | $ | 30,636 | |||||||
Weighted average interest rate during the period | 0.34 | % | 0.47 | % |
Actual | Required for Capital Adequacy Purposes | Minimums To Be “Well Capitalized” Under Prompt Corrective Action | |||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||
As of March 31, 2022 | |||||||||||||||||||||||||||||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||||||||||||||||||
Company | $ | 154,648 | 8.75% | $ | 70,717 | 4.00% | $ | — | — | ||||||||||||||||||||||||||
Bank | $ | 192,383 | 10.88% | $ | 70,717 | 4.00% | $ | 88,396 | 5.00% | ||||||||||||||||||||||||||
CET 1 capital (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||
Company | $ | 154,648 | 9.90% | $ | 109,331 | 7.00% | $ | — | — | ||||||||||||||||||||||||||
Bank | $ | 192,383 | 12.32% | $ | 109,331 | 7.00% | $ | 101,522 | 6.50% | ||||||||||||||||||||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||
Company | $ | 154,648 | 9.90% | $ | 132,759 | 8.50% | $ | — | — | ||||||||||||||||||||||||||
Bank | $ | 192,383 | 12.32% | $ | 132,759 | 8.50% | $ | 124,950 | 8.00% | ||||||||||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||
Company | $ | 218,140 | 13.97% | $ | 163,997 | 10.50% | $ | — | — | ||||||||||||||||||||||||||
Bank | $ | 207,875 | 13.31% | $ | 163,997 | 10.50% | $ | 156,187 | 10.00% |
Actual | Required for Capital Adequacy Purposes | Minimums To Be “Well Capitalized” Under Prompt Corrective Action | |||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||
As of December 31, 2021 | |||||||||||||||||||||||||||||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||||||||||||||||||
Company | $ | 156,723 | 9.74% | $ | 64,376 | 4.00% | $ | — | — | ||||||||||||||||||||||||||
Bank | $ | 168,027 | 10.44% | $ | 64,376 | 4.00% | $ | 80,470 | 5.00% | ||||||||||||||||||||||||||
CET 1 capital (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||
Company | $ | 156,723 | 10.35% | $ | 106,019 | 7.00% | $ | — | — | ||||||||||||||||||||||||||
Bank | $ | 168,027 | 11.09% | $ | 106,019 | 7.00% | $ | 98,446 | 6.50% | ||||||||||||||||||||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||
Company | $ | 156,723 | 10.35% | $ | 128,737 | 8.50% | $ | — | — | ||||||||||||||||||||||||||
Bank | $ | 168,027 | 11.09% | $ | 128,737 | 8.50% | $ | 121,164 | 8.00% | ||||||||||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||
Company | $ | 171,567 | 11.33% | $ | 159,028 | 10.50% | $ | — | — | ||||||||||||||||||||||||||
Bank | $ | 182,871 | 12.07% | $ | 159,028 | 10.50% | $ | 151,455 | 10.00% |
Payments Due as of March 31, 2022 | |||||||||||||||||||||||
Within One Year | One to Five Years | After Five Years | Total | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Time deposits | $ | 181,564 | $ | 33,398 | $ | 186 | $ | 215,148 | |||||||||||||||
FHLB advances | 25,950 | — | — | 25,950 | |||||||||||||||||||
Subordinated debt borrowings | — | — | 47,154 | 47,154 | |||||||||||||||||||
Total contractual obligations | $ | 207,514 | $ | 33,398 | $ | 47,340 | $ | 288,252 |
March 31, 2022 | December 31, 2021 | ||||||||||
(dollars in thousands) | |||||||||||
Commitments to extend credit | $ | 313,155 | $ | 314,194 | |||||||
Standby letters of credit | 4,428 | 3,434 | |||||||||
Total | $ | 317,583 | $ | 317,628 |
Percent Change in Net Interest Income | |||||||||||
As of March 31, 2022 | As of March 31, 2021 | ||||||||||
Change in Interest Rates (Basis Points) | |||||||||||
+400 | 26.47 | 18.27 | |||||||||
+300 | 19.94 | 13.78 | |||||||||
+200 | 13.33 | 9.17 | |||||||||
+100 | 6.68 | 4.56 | |||||||||
-100 | (9.01) | 0.42 | |||||||||
-200 | (19.33) | (4.39) | |||||||||
-300 | (24.96) | (9.68) | |||||||||
-400 | (29.72) | (14.22) |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of the Publicly Announced Program | Dollar Value of Shares that May Yet Be Purchased Under the Program(1) | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
January 1 - January 31, 2022 | — | $ | — | — | $ | — | ||||||||||||||||||||
February 1 - February 28, 2022 | 10,475 | $ | 20.58 | 10,475 | $ | 9,784 | ||||||||||||||||||||
March 1 - March 31, 2022 | 276,769 | $ | 21.37 | 276,769 | $ | 3,869 | ||||||||||||||||||||
Total | 287,244 | $ | 21.35 | 287,244 |
Item 6. Exhibits | ||||||||
NUMBER | DESCRIPTION | |||||||
2.1# | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
4.3 | Form of 3.50% Fixed-to-Floating Rate Subordinated Note due February 7, 2032 (included as Exhibit A-1 and Exhibit A-2 to the Indenture filed as Exhibit 4.2 hereto) (incorporated by reference to Exhibit 4.2 to Southern States Bancshares, Inc.’s Current Report on Form 8-K filed with the SEC on February 8, 2022, file number 001-40727). | |||||||
10.1 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS* | Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definitions Linkbase Document | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104* | Cover Page Interactive Data File - Formatted as Inline XBRL and contained within the Inline XBRL Instance Document in Exhibit 101. | |||||||
* | Filed herewith | |||||||
** | These exhibits are furnished herewith and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act. | |||||||
† | Indicates a management contract or compensatory plan. | |||||||
# | Certain schedules, exhibits and appendices have been omitted pursuant to Item 601(b)(5). We will furnish the omitted schedules exhibits and appendices to the Securities and Exchange Commission upon request by the Commission. |
SOUTHERN STATES BANCSHARES, INC. | ||||||||
Date: May 13, 2022 | By: | /s/ Stephen W. Whatley | ||||||
Stephen W. Whatley | ||||||||
Chairman and Chief Executive Officer, and Director | ||||||||
(Principal Executive Officer) | ||||||||
Date: May 13, 2022 | By: | /s/ Lynn Joyce | ||||||
Lynn Joyce | ||||||||
Senior Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer and Principal Accounting Officer) |
Date: May 13, 2022 | By: | /s/ Stephen W. Whatley | ||||||
Stephen W. Whatley | ||||||||
Chairman and Chief Executive Officer | ||||||||
(Principal Executive Officer) |
Date: May 13, 2022 | By: | /s/ Lynn Joyce | ||||||
Lynn Joyce | ||||||||
Senior Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer and Principal Accounting Officer) |
Date: May 13, 2022 | By: | /s/ Stephen W. Whatley | ||||||
Stephen W. Whatley | ||||||||
Chairman and Chief Executive Officer, and Director | ||||||||
(Principal Executive Officer) |
Date: May 13, 2022 | By: | /s/ Lynn Joyce | ||||||
Lynn Joyce | ||||||||
Senior Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer and Principal Accounting Officer) |
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - $ / shares |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock outstanding (in shares) | 0 | 0 |
Preferred stock issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 5 | $ 5 |
Common stock authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock outstanding (in shares) | 8,749,878 | 9,012,857 |
Common stock issued (in shares) | 8,749,878 | 9,012,857 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||
Net Income | $ 4,557 | $ 5,681 |
Other comprehensive income (loss): | ||
Unrealized holding losses on securities available for sale arising during the period, net of benefit of $2,062 and $543, respectively | (5,868) | (1,546) |
Reclassification adjustment for losses on securities available for sale realized in net income, net of benefit of $0 and $56, respectively | 0 | 161 |
Other comprehensive loss | (5,868) | (1,385) |
Comprehensive income (loss) | $ (1,311) | $ 4,296 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||
Unrealized holding gains on securities available for sale arising during the period, tax | $ 2,062 | $ 543 |
Reclassification adjustment for losses (gains) on securities available for sale realized in net income, benefit (tax) | $ 0 | $ 56 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - 3 months ended Mar. 31, 2022 - USD ($) $ in Thousands |
Total |
Preferred Stock |
Common Stock |
Capital Surplus |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Unvested Restricted Stock |
---|---|---|---|---|---|---|---|
Beginning balance (in shares) at Dec. 31, 2021 | 0 | 9,012,857 | |||||
Beginning balance at Dec. 31, 2021 | $ 177,198 | $ 0 | $ 45,064 | $ 80,640 | $ 49,858 | $ 2,113 | $ (477) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income | 4,557 | 4,557 | |||||
Issuance of restricted stock (in shares) | 24,265 | ||||||
Issuance of restricted stock | 0 | $ 121 | 379 | (500) | |||
Repurchase of common stock under the stock repurchase program (in shares) | (287,244) | ||||||
Repurchase of common stock under the stock repurchase program | (6,132) | $ (1,436) | (4,696) | ||||
Stock-based compensation | 245 | 103 | 142 | ||||
Common stock dividends paid | (811) | (811) | |||||
Other comprehensive loss | (5,868) | (5,868) | |||||
Ending balance (in shares) at Mar. 31, 2022 | 0 | 8,749,878 | |||||
Ending balance at Mar. 31, 2022 | $ 169,189 | $ 0 | $ 43,749 | $ 76,426 | $ 53,604 | $ (3,755) | $ (835) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Southern States Bancshares, Inc. (the “Company”) is a bank holding company whose principal activity is the ownership and management of its wholly-owned subsidiary, Southern States Bank (the “Bank”). The Bank is a commercial bank headquartered in Anniston, Calhoun County, Alabama. The Bank also operates branch offices in Birmingham, Opelika, Auburn, Huntsville, Sylacauga, Wedowee, Ranburne, Roanoke, Heflin, Alabama as well as Columbus, Carrollton, Dallas, and Newnan, Georgia. The Bank also has an LPO office located in Atlanta, Georgia. The Bank provides a full range of banking services in its primary market areas and the surrounding areas. Basis of Presentation and Accounting Estimates The unaudited consolidated financial statements include the accounts of the Company and its subsidiary. Significant intercompany transactions and balances have been eliminated in consolidation. In preparing the unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of foreclosed assets, financial instruments, deferred taxes, and other-than-temporary impairment of securities. In connection with the determination of the estimated losses on loans and the valuation of foreclosed assets, management obtains independent appraisals for significant collateral. The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. The Company’s loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Company has a diversified loan portfolio, a substantial portion of its borrowers’ ability to honor their contracts is dependent on local economic conditions. While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Company to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated. Cash, Cash Equivalents and Cash Flows For purposes of reporting cash flows, cash and cash equivalents includes cash on hand, cash items in process of collection, amounts due from banks, interest-bearing deposits in banks and federal funds sold. Cash flows from loans held for sale, loans, restricted equity securities, and deposits are reported net. The Company maintains amounts due from banks which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Bank may be required to maintain reserve balances in cash or on deposit with a correspondent bank for the Federal Reserve Bank, based on a percentage of deposits. The total of those reserve balances was $0 at March 31, 2022 and December 31, 2021. Securities The Company classifies its securities into one of two categories based upon management’s intent and ability to hold the securities: (i) securities held to maturity or (ii) securities available for sale. Securities classified as held to maturity are stated at cost adjusted for amortization of premiums and accretion of discounts. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. The Company has the ability, and it is management’s intention, to hold such securities to maturity. Securities classified as available for sale are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss). Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities available for sale are recorded on the trade date and are determined using the specific identification method. The Company evaluates investment securities for other-than-temporary impairment (OTTI) using relevant accounting guidance on a regular basis. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer including an evaluation of credit ratings, (3) the impact of changes in market interest rates, (4) the intent of the Company to sell a security, and (5) whether it is more likely than not the Company will have to sell the security before recovery of its cost basis. If the Company intends to sell an impaired security, or if it is more likely than not the Company will have to sell the security before recovery of its cost basis, the Company records an other-than-temporary loss in an amount equal to the entire difference between fair value and amortized cost. Otherwise, only the credit portion of the estimated loss is recognized in earnings, with the other portion of the loss is recognized in other comprehensive income (loss). Other Equity Securities The mutual funds owned by the Company are classified as equity securities and are carried at fair value with any periodic changes in value recorded through the income statement. Restricted Equity Securities Restricted equity securities are investments that are restricted in marketability. The Company, as a member of the Federal Home Loan Bank (FHLB) system, is required to maintain an investment in capital stock of the FHLB based upon its assets or outstanding advances. The Company has also purchased stock in First National Banker’s Bankshares, Inc. (FNBB), and Pacific Coast Banker’s Bank (PCBB), both correspondent banks. These securities are carried at cost and periodically evaluated for impairment based on ultimate recoverability of par value. Loans Held For Sale Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value (LOCOM). For loans carried at LOCOM, gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income, and direct loan origination costs and fees are deferred at origination of the loan and are recognized in noninterest income upon sale of the loan. The estimated fair value of loans held for sale is based on independent third party quoted prices. Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balances less deferred fees and costs on originated loans and the allowance for loan losses. Interest income is accrued on the outstanding principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield over the life of the loan, using the straight-line method without anticipating prepayments. Loans (Continued) The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due, or at the time the loan is 90 days past due, unless the loan is well-secured and in the process of collection. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal and interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income or charged to the allowance; unless management believes that the accrual of interest is recoverable through the liquidation of collateral. Interest income on nonaccrual loans is recognized on the cash basis, until the loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and the loan has been performing according to the contractual terms generally for a period of not less than six months. Certain Purchased Loans Purchased loans are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan losses is not recorded at the acquisition date. Acquired loans are evaluated upon acquisition and classified as either purchased impaired or purchased non-impaired. Purchased impaired loans reflect credit deterioration since origination such that it is probable at acquisition that the Company will be unable to collect all contractually required payments. The purchased impaired loans acquired are subject to the Company’s internal and external credit review and monitoring. If credit deterioration is experienced subsequent to the initial acquisition fair value amount, such deterioration will be measured, and a provision for credit losses will be charged to earnings. Such purchased loans are accounted for individually. The Company estimates the amount and timing of expected cash flows for each purchased loan, and the expected cash flows in excess of the amount paid is recorded as interest income over the remaining life of the loan or pool (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan, expected cash flows will continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income. Purchased impaired loans at the time of acquisition are accounted for under ASC 310-30. Purchased non-impaired loans are accounted for under ASC 310-20, with the difference between the fair value and unpaid principal balance of the loan at the acquisition date amortized or accreted to interest income over the estimated life of the loans. Allowance for Loan Losses The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to expense. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Confirmed losses are charged off immediately. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of loans in light of historical experience, the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic conditions that may affect the borrower’s ability to pay, 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. This evaluation does not include the effects of expected losses on specific loans or groups of loans that are related to future events or expected changes in economic conditions. Allowance for Loan Losses (Continued) The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired. For those loans that are classified as impaired, 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-impaired loans and is based on historical loss experience adjusted for qualitative factors. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data. A loan is considered impaired when it is probable, based on current information and events, the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Loans, for which the terms have been modified at the borrower’s request, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest when due. Loans that experience insignificant payment delays and payment shortfalls are not generally classified as impaired. Impaired loans are measured by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. The Company’s allowance is allocated among commercial real estate loans, real estate construction and development loans, residential real estate loans, commercial and industrial loans, and consumer loans. The general allocations to these loan pools are based on the historical loss rates for specific loan types and the internal risk grade, if applicable, adjusted for both internal and external qualitative risk factors. The qualitative factors considered by management include, among other factors, (1) changes in local and national economic conditions; (2) changes in asset quality and foreclosure rates; (3) changes in loan portfolio volume; (4) the composition and concentrations of credit; (5) the impact of competition on loan structuring and pricing; (6) the experience and ability of lending personnel and management; (7) effectiveness of the Company’s loan policies, procedures and internal controls; (8) current conditions in the real estate and construction markets; (9) the effect of entrance into new markets or the offering of a new product; (10) the loan review system and oversight of the Board of Directors. The total allowance established for each homogeneous loan pool represents the product of the historical loss ratio adjusted for internal and external factors and the total dollar amount of the loans in the pool. Troubled Debt Restructurings A loan is considered a troubled debt restructuring (TDR) based on individual facts and circumstances. The Company designates loan modifications as TDRs when for economic or legal reasons related to the borrower’s financial difficulties, it grants a concession to the borrower that it would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses. In determining whether a borrower is experiencing financial difficulties, the Company considers if the borrower is in payment default or would be in payment default in the foreseeable future without the modification, the borrower declared or is in the process of declaring bankruptcy, the borrower’s projected cash flows will not be sufficient to service any of its debt, or the borrower cannot obtain funds from sources other than the Company at a market rate for debt with similar risk characteristics. In determining whether the Company has granted a concession, the Company assesses, if it does not expect to collect all amounts due, whether the current value of the collateral will satisfy the amounts owed, whether additional collateral or guarantees from the borrower will serve as adequate compensation for other terms of the restructuring, and whether the borrower otherwise has access to funds at a market rate for debt with similar risk characteristics. Premises and Equipment Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets or the expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured. Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized. Gains and losses on dispositions are reflected in income. The estimated useful lives are as follows:
Transfers of Financial Assets 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 Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Foreclosed Assets Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated selling costs. Any write-down to fair value at the time of transfer to foreclosed assets is charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. Costs of improvements are capitalized, whereas costs related to holding foreclosed assets and subsequent write-downs to the value are expensed. Any gains and losses realized at the time of disposal are reflected in income. Goodwill Goodwill represents the excess of the amount paid over the fair value of the net assets at the date of acquisition. Goodwill is subject to an annual evaluation of impairment. If desired, the Company can assess qualitative factors to determine if comparing the carrying value of the reporting unit to its fair value is necessary. Should the fair value be less than the carrying value, an impairment write-down would be taken. Based on its assessment of qualitative factors, the Company determined that no impairment exists at March 31, 2022. Goodwill is not amortized but is evaluated for impairment on an annual basis or whenever an event occurs or circumstances change to indicate that it is more likely than not that an impairment loss has been incurred (i.e., a triggering event). The Company performed a goodwill impairment test in March 2022. The qualitative factors considered in determining if fair value of the unit was less than the carrying amount were economic conditions related to the COVID-19 virus and the change in the interest rate environment. A quantitative assessment of goodwill impairment included determining the estimated fair value of Company using a market-based approach. It was determined there was no impairment. Core Deposit Intangible A core deposit intangible is initially recognized based on a valuation, of acquired deposits, performed as of the acquisition date. The core deposit intangible is amortized over the average remaining life of the acquired customer deposits, or approximately 7 years. The intangible asset is reviewed annually for events or circumstances that could negatively impact the recoverability of the intangible. These events could include loss of core deposits, increased competition, or adverse changes in the economy. Core Deposit Intangible (Continued) To the extent this intangible asset is deemed unrecoverable, an impairment charge would be recorded. The Company maintains steady deposit growth across our markets and continues to attract new customer deposits. The intangible asset was evaluated for impairment as of March 31, 2022 and based on that evaluation there was no impairment. Accounting Policy for Derivative Instruments and Hedging Activities FASB ASC 815, Derivatives and Hedging (ASC 815), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Income Taxes Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets may be reduced by deferred tax liabilities and a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Management believes that the Company will generate sufficient operating earnings to realize the deferred tax benefits. Stock Compensation Plans Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options and warrants, restricted stock plans, performance-based awards, share appreciation rights, and employee share purchase plans. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the estimated market price of the Company’s common stock at the date of grant is used for restricted stock awards and stock grants. Comprehensive Income (Loss) Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income (loss). Fair Value of Financial Instruments Fair values of financial instruments are estimates using relevant market information and other assumptions, as more fully disclosed in Note 12. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. Revenue Recognition On January 1, 2019, the Company adopted ASC 606 and all subsequent amendments (collectively ASC 606) which (1) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (2) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as foreclosed assets. The majority of the Company’s revenues come from interest income and other sources, including loans and securities that are outside the scope of ASC 606. With the exception of gains/losses on sale of foreclosed assets, the Company’s services that fall within the scope of ASC 606 are presented within noninterest income and are recognized as revenue as the Company satisfies its obligations to the customer. Services within the scope of ASC 606 reported in noninterest income include service charges on deposit accounts, bank card services and interchange fees, and ATM fees. Recent Accounting Pronouncements In February 2016 the Financial Accounting Standards Board (FASB) issued ASU 2016-02, “Leases (Topic 842)” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU 2016-02 requires organizations that lease assets (lessees) to recognize on the balance sheet the assets and liabilities for the rights and obligations created by the lease for all operating leases under current U.S. GAAP with a term of more than 12 months. The ASU is effective for non-public business entities for fiscal years beginning after December 15, 2021. Early adoption is permitted. The ASU should be applied on a modified retrospective basis, with a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted ASU 2016-02 on June 30, 2021 and there was no material impact on the Company’s consolidated financial statements. Recent Accounting Pronouncements (Continued) In July 2018 the FASB issued ASU 2018-11, “Leases – Targeted Improvements” to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2022 for the Company). The Company adopted ASU 2018-11 on June 30, 2021 and there was no material impact on the Company’s consolidated financial statements. In June 2016 the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The new guidance will apply to most financial assets measured at amortized cost and certain other instruments including loans, debt securities held to maturity, net investments in leases and off-balance sheet credit exposures. The guidance will replace the current incurred loss accounting model that delays recognition of a loss until it is probable a loss has been incurred with an expected loss model that reflects expected credit losses based upon a broader range of estimates including consideration of past events, current conditions and supportable forecasts. The guidance also eliminates the current accounting model for purchased credit impaired loans and debt securities, which will require re-measurement of the related allowance at each reporting period. The guidance includes enhanced disclosure requirements intended to help financial statement users better understand estimates and judgement used in estimating credit losses. As originally issued, ASU 2016-13 was effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2020, with institutions required to apply the changes through a cumulative-effect adjustment to their retained earnings balance as of the beginning of the first reporting period in which the guidance is effective. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2016-13 by two years for non-public business entities and SEC filers that qualify as smaller reporting companies, including the Company. Management has been in the process of developing a revised model to calculate the allowance for loan and leases losses upon implementation of ASU 2016-13 in order to determine the impact on the Company’s consolidated financial statements and, at this time, expects to recognize a one-time cumulative effect adjustment to the allowance for loan and lease losses as of the beginning of the first reporting period in which the new standard is effective. The magnitude of any such one-time adjustments is not yet known but is not anticipated to be material. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). 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 is effective for other than public business entities for fiscal years beginning after December 15, 2020, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 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 amended presentation and disclosure guidance is required only prospectively. The Company did not experience any impact on the Company’s consolidated financial position, results of operations or cash flows as a result of ASU 2017-12.
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EARNINGS PER SHARE | EARNINGS PER SHAREBasic earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share reflect additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options.
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES | SECURITIES The amortized cost and fair value of securities at March 31, 2022 and December 31, 2021 are summarized as follows:
Securities with a carrying value of $45,534 and $46,263 at March 31, 2022 and December 31, 2021, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law. The amortized cost and fair value of securities available for sale and securities held to maturity as of March 31, 2022 and December 31, 2021 by contractual maturity are shown below. Actual maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid with or without penalty. Therefore, these securities are not included by maturity in the following summary:
Restricted equity securities as of March 31, 2022 and December 31, 2021 consist of the following:
Temporarily Impaired Securities The following table shows the gross unrealized losses and fair value of securities, aggregated by category and length of time that securities have been in a continuous unrealized loss position at March 31, 2022 and December 31, 2021.
The unrealized losses on 172 securities were caused by interest rate changes. Because the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before recovery of the amortized cost bases, at maturity, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2022. Other-Than-Temporary Impairment The Company routinely conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred. Factors included in the evaluation process may include geographic concentrations, credit ratings, and other performance indicators of the underlying asset. As of March 31, 2022 and December 31, 2021, no securities within the Company’s investment securities portfolio was considered other-than-temporarily impaired.
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LOANS |
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Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS | LOANS Portfolio Segments and Classes The composition of loans, excluding loans held for sale, is summarized as follows:
For purposes of the disclosures required pursuant to ASC 310, the loan portfolio was disaggregated into segments and then further disaggregated into classes for certain disclosures. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. There are three loan portfolio segments that include real estate, commercial and industrial, and consumer and other. A class is generally determined based on the initial measurement attribute, risk characteristic of the loan, and an entity’s method for monitoring and assessing credit risk. Commercial and industrial is a separate commercial loan class. Classes within the real estate portfolio segment include construction and development, residential mortgages, and commercial mortgages. Consumer loans and other are a class in itself. In light of the U.S. and global economic crisis brought about by the COVID-19 pandemic, the Company has prioritized assisting its clients through this troubled time. The CARES Act provides for Paycheck Protection Plan (PPP) loans to be made by banks to employers with less than 500 employees if they continue to employ their existing workers. As of March 31, 2022, the Company has outstanding 6 loans for a total amount of $893 under the PPP. At March 31, 2022, unaccreted deferred loan origination fees related to PPP loans totaled $0. PPP loan origination fees recorded as an adjustment to loan yield for the three months ended was $298. These PPP loans are included within the commercial and industrial loan category in the table above. The following describe risk characteristics relevant to each of the portfolio segments and classes: Real estate - As discussed below, the Company offers various types of real estate loan products. All loans within this portfolio segment are particularly sensitive to the valuation of real estate: •Loans for real estate construction and development are repaid through cash flow related to the operations, sale or refinance of the underlying property. This portfolio class includes extensions of credit to real estate developers or investors where repayment is dependent on the sale of the real estate or income generated from the real estate collateral. •Residential mortgages include 1-4 family first mortgage loans which are repaid by various means such as a borrower’s income, sale of the property, or rental income derived from the property. Also included in residential mortgages are real estate loans secured by farmland, second liens, or open end real estate loans, such as home equity lines. These loans are typically repaid in the same means as 1-4 family first mortgages. Portfolio Segments and Classes (Continued) •Commercial real estate mortgage loans include both owner-occupied commercial real estate loans and other commercial real estate loans such as commercial loans secured by income producing properties. Owner-occupied commercial real estate loans made to operating businesses are long-term financing of land and buildings and are repaid by cash flows generated from business operations. Real estate loans for income-producing properties such as apartment buildings, hotels, office and industrial buildings, and retail shopping centers are repaid by cash flows from rent income derived from the properties. Commercial and industrial - The commercial loan portfolio segment includes commercial and industrial loans. These loans include those loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, leases, or expansion projects. Loans are repaid by business cash flows. Collection risk in this portfolio is driven by the creditworthiness of the underlying borrower, particularly cash flows from the borrowers’ business operations. Consumer and other - The consumer loan portfolio segment includes direct consumer installment loans, overdrafts and other revolving credit loans. Loans in this portfolio are sensitive to unemployment and other key consumer economic measures which affects borrowers’ incomes and cash for repayment. Credit Risk Management The Chief Credit Officer, Officers Loan Committee and Directors Loan Committee are each involved in the credit risk management process and assess the accuracy of risk ratings, the quality of the portfolio and the estimation of inherent credit losses in the loan portfolio. This comprehensive process also assists in the prompt identification of problem credits. The Company has taken a number of measures to manage the portfolios and reduce risk, particularly in the more problematic portfolios. The Company employs a credit risk management process with defined policies, accountability and routine reporting to manage credit risk in the loan portfolio segments. Credit risk management is guided by a comprehensive Loan Policy that provides for a consistent and prudent approach to underwriting and approvals of credits. Within the Board approved Loan Policy, procedures exist that elevate the approval requirements as credits become larger and more complex. All loans are individually underwritten, risk-rated, approved, and monitored. Responsibility and accountability for adherence to underwriting policies and accurate risk ratings lies in each portfolio segment. For the consumer portfolio segment, the risk management process focuses on managing customers who become delinquent in their payments. For the commercial and real estate portfolio segments, the risk management process focuses on underwriting new business and, on an ongoing basis, monitoring the credit of the portfolios. To ensure problem credits are identified on a timely basis, several specific portfolio reviews occur each year to assess the larger adversely rated credits for proper risk rating and accrual status. Credit quality and trends in the loan portfolio segments are measured and monitored regularly. Detailed reports, by product, collateral, accrual status, etc., are reviewed by the Chief Credit Officer and reported to the Board of Directors. A description of the general characteristics of the risk categories used by the Company is as follows: •Pass - A pass loan is a strong credit with no existing or known potential weaknesses deserving of management’s close attention. •Special Mention - A loan that has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution's credit position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Credit Risk Management •Substandard - Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. •Doubtful - Loans classified Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. •Loss - Loans classified Loss 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 but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future. The following tables summarize the risk category of the Company’s loan portfolio based upon the most recent analysis performed as of March 31, 2022 and December 31, 2021:
Past Due Loans A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. Generally, management places a loan on nonaccrual when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due. The following tables present the aging of the recorded investment in loans and leases as of March 31, 2022 and December 31, 2021:
Allowance for Loans Losses The following tables detail activity in the allowance for loan losses by portfolio segment as of March 31, 2022 and March 31, 2021. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
Allowance for Loans Losses (Continued)
Impaired Loans A loan held for investment is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the loan agreement. The following tables detail our impaired loans, by portfolio class as of March 31, 2022 and December 31, 2021.
Impaired Loans (Continued)
Impaired Loans (Continued) A loan held for investment is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the loan agreement. The following tables detail our interest income recognized on impaired loans, by portfolio class in the three months ended March 31, 2022 and 2021.
Impaired Loans (Continued)
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DEPOSITS |
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Banking and Thrift, Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS | DEPOSITS Major classifications of deposits are as follows:
Brokered deposits totaled $34,110 at March 31, 2022 and December 31, 2021. The scheduled maturities of time deposits at March 31, 2022 are as follows:
At March 31, 2022 and December 31, 2021, overdrawn transaction accounts reclassified to loans totaled $131 and $208, respectively.
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SUBORDINATED NOTES |
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Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
SUBORDINATED NOTES | SUBORDINATED NOTESOn June 23, 2016, the Company issued $4,500 of Fixed-to-Floating Rate Subordinated Notes due July 2026 (the “2026 Notes”). The 2026 Notes initially bore interest at 6.625% per annum, payable semi-annually in arrears on January 1 and July 1 of each year, commencing on January 1, 2017 until July 1, 2021. Thereafter and to, but excluding, the maturity date or earlier redemption, interest was payable quarterly in arrears, at an annual floating rate equal to three-month LIBOR as determined for the applicable quarterly period, plus 5.412%. The Company could, at its option, beginning on July 1, 2021 and on any scheduled interest payment date thereafter, redeem the 2026 Notes, in whole or in part, at a redemption price equal to the outstanding principal amount of the 2026 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the date of redemption. Issuance costs related to the 2026 Notes totaled $79 and were netted against the subordinated notes liability on the balance sheet. At March 31, 2022 and December 31, 2021, there was no remaining balance of the debt issuance cost related to the 2026 Notes. On June 23, 2021, the Company redeemed all of the outstanding 2026 Notes.On February 7, 2022, the Company issued $48,000 of Fixed-to-Floating Rate Subordinated Notes due February 2032 (the “Notes”). The Notes bear interest at 3.50% per annum, payable quarterly in arrears. From and including February 7, 2027, to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to a Three-Month Term Secured Overnight Financing Rate plus 205 basis points, payable quarterly in arrears. The Company will be entitled to redeem the Notes, in whole or in part, on any interest payment on or after February 7, 2027, and to redeem the Notes in whole upon certain other events. Issuance costs related to the Notes totaled $875 and have been netted against the subordinated notes liability on the balance sheet. At March 31, 2022, the remaining balance of the debt issuance cost was $846. The debt issuance costs are being amortized using the straight line method over sixty months and are recorded as a component of interest expense. |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Non-designated Hedges Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet The table below presents the fair value of the Company’s derivative financial instruments including the effects of offsetting as well as their classification on the consolidated balance sheets as of March 31, 2022 and December 31, 2021. As of March 31, 2022, the Company has posted cash collateral of $4,470. The amount of gain recognized in income on derivatives as a fair value adjustment and fee income, for the three months ended March 31, 2022, were $15 and $0, respectively.
Credit-risk-related Contingent Features Applicable for OTC derivatives with dealers The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company has agreements with certain of its derivative counterparties that contain a provision where if the company fails to maintain its status as a well / adequate capitalized institution, then the Company could be required to post additional collateral. As of March 31, 2022, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $4,240. If the Company had breached any of these provisions at March 31, 2022, it could have been required to settle its obligations under the agreements at their termination value of $4,240, less the required collateral of $4,470.
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | Loan Commitments The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the balance sheets. The majority of all commitments to extend credit and standby letters of credit are variable rate instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments. A summary of the Company’s commitments is 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. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate, and income-producing commercial properties. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral held varies and is required in instances which the Company deems necessary. The Company has not been required to perform on any standby letters of credit, and the Company has not incurred any losses on financial standby letters of credit for the three months ended March 31, 2022 and March 31, 2021. Contingencies In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material effect on the Company’s financial statements.
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CONCENTRATIONS OF CREDIT |
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Mar. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS OF CREDIT | CONCENTRATIONS OF CREDIT The Company originates primarily commercial, commercial real estate, residential real estate, and consumer loans to customers in Alabama and Georgia. The ability of the majority of the Company’s customers to honor their contractual loan obligations is dependent on the economy in these areas. Eighty-three percent of the Company’s loan portfolio is concentrated in real estate. A substantial portion of these loans are secured by real estate in the Company’s primary market area. In addition, a substantial portion of the other real estate owned is located in those same markets. Accordingly, the ultimate collectibility of the loan portfolio and the recovery of the carrying amount of the other real estate owned are susceptible to changes in market conditions in the Company’s primary market area. The other concentrations of credit by type of loan are set forth in Note 4. The Company, according to regulatory restrictions, may not generally extend credit to any single borrower or group of related borrowers on a secured basis in excess of 20% of capital, as defined, or approximately $41,298 or on an unsecured basis in excess of 10% of capital, as defined, or approximately $20,649.
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STOCKHOLDERS’ EQUITY |
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Mar. 31, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY As of March 31, 2022, the Company had 8,749,878 shares of common stock issued and outstanding and does not have any non-voting shares issued and outstanding. As of December 31, 2021, the Company had 9,012,857 shares of common stock issued and outstanding and does not have any non-voting shares issued and outstanding.
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REGULATORY MATTERS |
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Regulatory Capital Requirements Under Banking Regulations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY MATTERS | REGULATORY MATTERS The Bank is subject to certain restrictions on the amount of dividends that may be declared without prior regulatory approval. At March 31, 2022, approximately $38,082 of retained earnings was available for dividend declaration without regulatory approval. The Bank is also subject to various regulatory capital requirements administered by the federal banking agencies. 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 Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total capital, Tier 1 capital, and common equity Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. In addition, the Bank is subject to an institution-specific capital buffer, which must exceed 2.50% to avoid limitations on distributions and discretionary bonus payments. Management believes, as of March 31, 2022 and December 31, 2021, that the Bank meets all capital adequacy requirements to which it is subject. As of March 31, 2022, the Company and the Bank believe they are each well capitalized on a consolidated basis for bank regulatory purposes as their respective capital ratios exceed minimum total Tier 1 and CET1 risk-based capital ratios and Tier 1 leverage capital ratios as set forth in the following table. As a bank holding company with less than $3 billion in total consolidated assets, the Company is eligible to be treated as a “small bank holding company” under the Federal Reserve’s Small Bank Holding Company and Savings and Loan Holding Company Policy Statement. As a result, the Company’s capital adequacy is evaluated at the bank level and on a parent-only basis, and it is not subject to consolidated capital standards for regulatory purposes. The ratios set forth below as to the Company are for illustrative purposes in the event it were to become subject to consolidated capital standards for regulatory purposes. The column styled “Required for Capital Adequacy Purposes” includes the 2.5% capital conservation buffer.
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FAIR VALUE OF ASSETS AND LIABILITIES |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF ASSETS AND LIABILITIES | Determination of Fair Value The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures topic (FASB ASC 820), the fair value of a financial instrument 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 many instances, there are no quoted market prices for the Company’s various financial instruments. 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 instrument. The fair value guidance provides a consistent definition of fair value, which focuses on exit price 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. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. Fair Value Hierarchy In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 - Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 - Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on 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 for substantially the full term of the asset or liability. Level 3 - Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: Cash and Cash Equivalents: The carrying amounts of cash and due from banks, interest-bearing deposits in banks, and federal funds sold make up cash and cash equivalents. The carrying amount of these short-term instruments approximate fair value. Securities and Other Equity Securities: Where quoted prices are available in an active market, management classifies the securities within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government bonds and exchange-traded equities. Fair Value Hierarchy (Continued) If quoted market prices are not available, management estimates fair values using pricing models and discounted cash flows that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, and credit spreads. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include GSE obligations, and state and municipal securities. Mortgage-backed securities are included in Level 2 if observable inputs are available. In certain cases where there is limited activity or less transparency around inputs to the valuation, those securities would be classified in Level 3. Restricted Equity Securities: The carrying amount of restricted equity securities with no readily determinable fair value approximates fair value based on the redemption provisions of the issuers which is cost. Loans Held for Sale: The carrying amounts of loans held for sale approximates fair value. Loans: The carrying amount of variable-rate loans that reprice frequently and have no significant change in credit risk approximates fair value. The fair values of fixed rate loans is estimated based on discounted contractual cash flows using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. Bank Owned Life Insurance: The carrying amount of bank owned life insurance approximates fair value. Annuities: The carrying amounts of annuities approximate their fair values. Deposits: The fair values disclosed for transaction deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). Fair values for fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits. Other Borrowings: The fair value of fixed rate other borrowings is based on discounted contractual cash flows using interest rates currently being offered for borrowings of similar maturities. The fair values of the Company’s variable rate other borrowings approximate their carrying values. Subordinated Notes: The carrying amounts of the subordinated notes approximate fair value. Accrued Interest: The carrying amounts of accrued interest approximate fair value. Trading Assets and Liabilities: The Company has derivative instruments in the form of interest rate swap agreements accounted for as trading assets and liabilities and carried at fair value. The fair value of these instruments is based on information obtained from a third party financial institution. The Company reflects these instruments within Level 2 of the valuation hierarchy. Off-Balance Sheet Credit-Related Instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. Assets Measured at Fair Value on a Recurring Basis The only assets and liabilities measured at fair value on a recurring basis are our securities available for sale and swaps. There were no transfers between levels during the period. Information related to the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021 is as follows:
Assets Measured at Fair Value on a Nonrecurring Basis The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measure at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis are included in the table below as of March 31, 2022 and December 31, 2021:
Impaired Loans Loans considered impaired under ASC 310-10-35, Receivables, are loans for which, based on current information and events, it is probable that the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Impaired loans can be measured based on the present value of expected payments using the loan’s original effective rate as the discount rate, the loan’s observable market price, or the fair value of the collateral less estimated selling costs if the loan is collateral dependent. The fair value of impaired loans were primarily measured based on the value of the collateral securing these loans. Impaired loans are classified within Level 3 of the fair value hierarchy. Collateral may be real estate and/or business assets including equipment, inventory, and/or accounts receivable. The Company generally determines the value of real estate collateral based on independent appraisals performed by qualified licensed appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Appraised values are discounted for estimated costs to sell and may be discounted further based on management’s historical knowledge, changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts by management are subjective and are typically significant unobservable inputs for determining fair value. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors discussed above. Impaired loans, which are usually measured for impairment using the fair value of collateral, had a carrying amount of $17,483 and $16,347 with a specific valuation allowance of $732 and $704 at March 31, 2022 and December 31, 2021, respectively. Of the $17,483 and $16,347 impaired loan portfolio, $9,061 and $8,422 were carried at fair value as a result of charge offs, specific valuation allowances, and the fair market adjustments at March 31, 2022 and December 31, 2021, respectively. The remaining $8,422 and $7,925 was carried at cost, as the fair value of the collateral on these loans exceeded the book value for each individual credit at March 31, 2022 and December 31, 2021, respectively. Charge offs and changes in specific valuation allowances at March 31, 2022 and December 31, 2021 on impaired loans carried at fair value resulted in additional provision for loan losses of $111 and $40, respectively. Foreclosed Assets Foreclosed assets, consisting of properties/assets obtained through foreclosure or in satisfaction of loans, are initially recorded at fair value less estimated costs to sell upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value less estimated costs to sell. Fair values are generally based on third party appraisals of the property/assets and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes further discounted based on management’s historical knowledge, and/or changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts are typically significant unobservable inputs for determining fair value. In cases where the carrying amount exceeds the fair value, less estimated costs to sell, a loss is recognized in noninterest expense. Quantitative Disclosures for Level 3 Fair Value Measurements The Company had no Level 3 assets measured at fair value on a recurring basis at March 31, 2022 or December 31, 2021. For Level 3 assets measured at fair value on a nonrecurring basis as of March 31, 2022, the significant unobservable inputs used in the fair value measurements are presented below.
For Level 3 assets measured at fair value on a non-recurring basis as of December 31, 2021, the significant unobservable inputs used in the fair value measurements are presented below.
Fair Value of Financial Instruments The carrying amount and estimated fair value of the Company’s financial instruments were as follows:
Fair Value of Financial Instruments (Continued)
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation and Accounting Estimates | Basis of Presentation and Accounting Estimates The unaudited consolidated financial statements include the accounts of the Company and its subsidiary. Significant intercompany transactions and balances have been eliminated in consolidation. In preparing the unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of foreclosed assets, financial instruments, deferred taxes, and other-than-temporary impairment of securities. In connection with the determination of the estimated losses on loans and the valuation of foreclosed assets, management obtains independent appraisals for significant collateral. The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. The Company’s loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Company has a diversified loan portfolio, a substantial portion of its borrowers’ ability to honor their contracts is dependent on local economic conditions. While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Company to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.
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Cash, Cash Equivalents and Cash Flows | Cash, Cash Equivalents and Cash Flows For purposes of reporting cash flows, cash and cash equivalents includes cash on hand, cash items in process of collection, amounts due from banks, interest-bearing deposits in banks and federal funds sold. Cash flows from loans held for sale, loans, restricted equity securities, and deposits are reported net. The Company maintains amounts due from banks which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Bank may be required to maintain reserve balances in cash or on deposit with a correspondent bank for the Federal Reserve Bank, based on a percentage of deposits. The total of those reserve balances was $0 at March 31, 2022 and December 31, 2021.
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Securities and Other Equity Securities | Securities The Company classifies its securities into one of two categories based upon management’s intent and ability to hold the securities: (i) securities held to maturity or (ii) securities available for sale. Securities classified as held to maturity are stated at cost adjusted for amortization of premiums and accretion of discounts. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. The Company has the ability, and it is management’s intention, to hold such securities to maturity. Securities classified as available for sale are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss). Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities available for sale are recorded on the trade date and are determined using the specific identification method. The Company evaluates investment securities for other-than-temporary impairment (OTTI) using relevant accounting guidance on a regular basis. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer including an evaluation of credit ratings, (3) the impact of changes in market interest rates, (4) the intent of the Company to sell a security, and (5) whether it is more likely than not the Company will have to sell the security before recovery of its cost basis. If the Company intends to sell an impaired security, or if it is more likely than not the Company will have to sell the security before recovery of its cost basis, the Company records an other-than-temporary loss in an amount equal to the entire difference between fair value and amortized cost. Otherwise, only the credit portion of the estimated loss is recognized in earnings, with the other portion of the loss is recognized in other comprehensive income (loss). Other Equity Securities The mutual funds owned by the Company are classified as equity securities and are carried at fair value with any periodic changes in value recorded through the income statement.
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Restricted Equity Securities | Restricted Equity Securities Restricted equity securities are investments that are restricted in marketability. The Company, as a member of the Federal Home Loan Bank (FHLB) system, is required to maintain an investment in capital stock of the FHLB based upon its assets or outstanding advances. The Company has also purchased stock in First National Banker’s Bankshares, Inc. (FNBB), and Pacific Coast Banker’s Bank (PCBB), both correspondent banks. These securities are carried at cost and periodically evaluated for impairment based on ultimate recoverability of par value.
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Loans Held for Sale | Loans Held For Sale Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value (LOCOM). For loans carried at LOCOM, gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income, and direct loan origination costs and fees are deferred at origination of the loan and are recognized in noninterest income upon sale of the loan. The estimated fair value of loans held for sale is based on independent third party quoted prices.
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Loans and Certain Purchased Loans | Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balances less deferred fees and costs on originated loans and the allowance for loan losses. Interest income is accrued on the outstanding principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield over the life of the loan, using the straight-line method without anticipating prepayments. Loans (Continued) The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due, or at the time the loan is 90 days past due, unless the loan is well-secured and in the process of collection. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal and interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income or charged to the allowance; unless management believes that the accrual of interest is recoverable through the liquidation of collateral. Interest income on nonaccrual loans is recognized on the cash basis, until the loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and the loan has been performing according to the contractual terms generally for a period of not less than six months. Certain Purchased Loans Purchased loans are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan losses is not recorded at the acquisition date. Acquired loans are evaluated upon acquisition and classified as either purchased impaired or purchased non-impaired. Purchased impaired loans reflect credit deterioration since origination such that it is probable at acquisition that the Company will be unable to collect all contractually required payments. The purchased impaired loans acquired are subject to the Company’s internal and external credit review and monitoring. If credit deterioration is experienced subsequent to the initial acquisition fair value amount, such deterioration will be measured, and a provision for credit losses will be charged to earnings. Such purchased loans are accounted for individually. The Company estimates the amount and timing of expected cash flows for each purchased loan, and the expected cash flows in excess of the amount paid is recorded as interest income over the remaining life of the loan or pool (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan, expected cash flows will continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income. Purchased impaired loans at the time of acquisition are accounted for under ASC 310-30. Purchased non-impaired loans are accounted for under ASC 310-20, with the difference between the fair value and unpaid principal balance of the loan at the acquisition date amortized or accreted to interest income over the estimated life of the loans.
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Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to expense. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Confirmed losses are charged off immediately. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of loans in light of historical experience, the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic conditions that may affect the borrower’s ability to pay, 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. This evaluation does not include the effects of expected losses on specific loans or groups of loans that are related to future events or expected changes in economic conditions. Allowance for Loan Losses (Continued) The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired. For those loans that are classified as impaired, 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-impaired loans and is based on historical loss experience adjusted for qualitative factors. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data. A loan is considered impaired when it is probable, based on current information and events, the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Loans, for which the terms have been modified at the borrower’s request, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest when due. Loans that experience insignificant payment delays and payment shortfalls are not generally classified as impaired. Impaired loans are measured by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. The Company’s allowance is allocated among commercial real estate loans, real estate construction and development loans, residential real estate loans, commercial and industrial loans, and consumer loans. The general allocations to these loan pools are based on the historical loss rates for specific loan types and the internal risk grade, if applicable, adjusted for both internal and external qualitative risk factors. The qualitative factors considered by management include, among other factors, (1) changes in local and national economic conditions; (2) changes in asset quality and foreclosure rates; (3) changes in loan portfolio volume; (4) the composition and concentrations of credit; (5) the impact of competition on loan structuring and pricing; (6) the experience and ability of lending personnel and management; (7) effectiveness of the Company’s loan policies, procedures and internal controls; (8) current conditions in the real estate and construction markets; (9) the effect of entrance into new markets or the offering of a new product; (10) the loan review system and oversight of the Board of Directors. The total allowance established for each homogeneous loan pool represents the product of the historical loss ratio adjusted for internal and external factors and the total dollar amount of the loans in the pool.
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Troubled Debt Restructurings | Troubled Debt Restructurings A loan is considered a troubled debt restructuring (TDR) based on individual facts and circumstances. The Company designates loan modifications as TDRs when for economic or legal reasons related to the borrower’s financial difficulties, it grants a concession to the borrower that it would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses. In determining whether a borrower is experiencing financial difficulties, the Company considers if the borrower is in payment default or would be in payment default in the foreseeable future without the modification, the borrower declared or is in the process of declaring bankruptcy, the borrower’s projected cash flows will not be sufficient to service any of its debt, or the borrower cannot obtain funds from sources other than the Company at a market rate for debt with similar risk characteristics. In determining whether the Company has granted a concession, the Company assesses, if it does not expect to collect all amounts due, whether the current value of the collateral will satisfy the amounts owed, whether additional collateral or guarantees from the borrower will serve as adequate compensation for other terms of the restructuring, and whether the borrower otherwise has access to funds at a market rate for debt with similar risk characteristics.
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Premises and Equipment | Premises and EquipmentLand is carried at cost. Premises and equipment are carried at cost less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets or the expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured. Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized. Gains and losses on dispositions are reflected in income. |
Transfers of Financial Assets | Transfers of Financial Assets 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 Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.
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Foreclosed Assets | Foreclosed Assets Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated selling costs. Any write-down to fair value at the time of transfer to foreclosed assets is charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. Costs of improvements are capitalized, whereas costs related to holding foreclosed assets and subsequent write-downs to the value are expensed. Any gains and losses realized at the time of disposal are reflected in income.
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Goodwill and Core Deposit Intangible | Goodwill Goodwill represents the excess of the amount paid over the fair value of the net assets at the date of acquisition. Goodwill is subject to an annual evaluation of impairment. If desired, the Company can assess qualitative factors to determine if comparing the carrying value of the reporting unit to its fair value is necessary. Should the fair value be less than the carrying value, an impairment write-down would be taken. Based on its assessment of qualitative factors, the Company determined that no impairment exists at March 31, 2022. Goodwill is not amortized but is evaluated for impairment on an annual basis or whenever an event occurs or circumstances change to indicate that it is more likely than not that an impairment loss has been incurred (i.e., a triggering event). The Company performed a goodwill impairment test in March 2022. The qualitative factors considered in determining if fair value of the unit was less than the carrying amount were economic conditions related to the COVID-19 virus and the change in the interest rate environment. A quantitative assessment of goodwill impairment included determining the estimated fair value of Company using a market-based approach. It was determined there was no impairment. Core Deposit Intangible A core deposit intangible is initially recognized based on a valuation, of acquired deposits, performed as of the acquisition date. The core deposit intangible is amortized over the average remaining life of the acquired customer deposits, or approximately 7 years. The intangible asset is reviewed annually for events or circumstances that could negatively impact the recoverability of the intangible. These events could include loss of core deposits, increased competition, or adverse changes in the economy. Core Deposit Intangible (Continued) To the extent this intangible asset is deemed unrecoverable, an impairment charge would be recorded. The Company maintains steady deposit growth across our markets and continues to attract new customer deposits. The intangible asset was evaluated for impairment as of March 31, 2022 and based on that evaluation there was no impairment.
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Accounting Policy for Derivative Instruments and Hedging Activities | Accounting Policy for Derivative Instruments and Hedging Activities FASB ASC 815, Derivatives and Hedging (ASC 815), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
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Income Taxes | Income Taxes Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets may be reduced by deferred tax liabilities and a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Management believes that the Company will generate sufficient operating earnings to realize the deferred tax benefits.
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Stock Compensation Plans | Stock Compensation Plans Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options and warrants, restricted stock plans, performance-based awards, share appreciation rights, and employee share purchase plans. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the estimated market price of the Company’s common stock at the date of grant is used for restricted stock awards and stock grants.
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Comprehensive Income (Loss) | Comprehensive Income (Loss) Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income (loss).
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair values of financial instruments are estimates using relevant market information and other assumptions, as more fully disclosed in Note 12. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.
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Revenue Recognition | Revenue RecognitionOn January 1, 2019, the Company adopted ASC 606 and all subsequent amendments (collectively ASC 606) which (1) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (2) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as foreclosed assets. The majority of the Company’s revenues come from interest income and other sources, including loans and securities that are outside the scope of ASC 606. With the exception of gains/losses on sale of foreclosed assets, the Company’s services that fall within the scope of ASC 606 are presented within noninterest income and are recognized as revenue as the Company satisfies its obligations to the customer. Services within the scope of ASC 606 reported in noninterest income include service charges on deposit accounts, bank card services and interchange fees, and ATM fees. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016 the Financial Accounting Standards Board (FASB) issued ASU 2016-02, “Leases (Topic 842)” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU 2016-02 requires organizations that lease assets (lessees) to recognize on the balance sheet the assets and liabilities for the rights and obligations created by the lease for all operating leases under current U.S. GAAP with a term of more than 12 months. The ASU is effective for non-public business entities for fiscal years beginning after December 15, 2021. Early adoption is permitted. The ASU should be applied on a modified retrospective basis, with a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted ASU 2016-02 on June 30, 2021 and there was no material impact on the Company’s consolidated financial statements. Recent Accounting Pronouncements (Continued) In July 2018 the FASB issued ASU 2018-11, “Leases – Targeted Improvements” to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2022 for the Company). The Company adopted ASU 2018-11 on June 30, 2021 and there was no material impact on the Company’s consolidated financial statements. In June 2016 the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The new guidance will apply to most financial assets measured at amortized cost and certain other instruments including loans, debt securities held to maturity, net investments in leases and off-balance sheet credit exposures. The guidance will replace the current incurred loss accounting model that delays recognition of a loss until it is probable a loss has been incurred with an expected loss model that reflects expected credit losses based upon a broader range of estimates including consideration of past events, current conditions and supportable forecasts. The guidance also eliminates the current accounting model for purchased credit impaired loans and debt securities, which will require re-measurement of the related allowance at each reporting period. The guidance includes enhanced disclosure requirements intended to help financial statement users better understand estimates and judgement used in estimating credit losses. As originally issued, ASU 2016-13 was effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2020, with institutions required to apply the changes through a cumulative-effect adjustment to their retained earnings balance as of the beginning of the first reporting period in which the guidance is effective. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2016-13 by two years for non-public business entities and SEC filers that qualify as smaller reporting companies, including the Company. Management has been in the process of developing a revised model to calculate the allowance for loan and leases losses upon implementation of ASU 2016-13 in order to determine the impact on the Company’s consolidated financial statements and, at this time, expects to recognize a one-time cumulative effect adjustment to the allowance for loan and lease losses as of the beginning of the first reporting period in which the new standard is effective. The magnitude of any such one-time adjustments is not yet known but is not anticipated to be material. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). 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 is effective for other than public business entities for fiscal years beginning after December 15, 2020, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 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 amended presentation and disclosure guidance is required only prospectively. The Company did not experience any impact on the Company’s consolidated financial position, results of operations or cash flows as a result of ASU 2017-12.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Property, Plant and Equipment | The estimated useful lives are as follows:
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EARNINGS PER SHARE (Tables) |
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Schedule of Earnings Per Share |
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SECURITIES (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Securities, Available-for-sale | The amortized cost and fair value of securities at March 31, 2022 and December 31, 2021 are summarized as follows:
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Schedule of Debt Securities, Held-to-maturity | The amortized cost and fair value of securities at March 31, 2022 and December 31, 2021 are summarized as follows:
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Schedule of Investments Classified by Contractual Maturity Date | The amortized cost and fair value of securities available for sale and securities held to maturity as of March 31, 2022 and December 31, 2021 by contractual maturity are shown below. Actual maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid with or without penalty. Therefore, these securities are not included by maturity in the following summary:
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Schedule of Restricted Investments | Restricted equity securities as of March 31, 2022 and December 31, 2021 consist of the following:
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Schedule of Available-for-sale in Continuous Unrealized Loss Position | The following table shows the gross unrealized losses and fair value of securities, aggregated by category and length of time that securities have been in a continuous unrealized loss position at March 31, 2022 and December 31, 2021.
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Schedule of Debt Securities, Held-to-maturity, Unrealized Loss Position, Fair Value | The following table shows the gross unrealized losses and fair value of securities, aggregated by category and length of time that securities have been in a continuous unrealized loss position at March 31, 2022 and December 31, 2021.
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LOANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Composition of Loans | The composition of loans, excluding loans held for sale, is summarized as follows:
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Schedule of Financing Receivable Credit Quality Indicators | The following tables summarize the risk category of the Company’s loan portfolio based upon the most recent analysis performed as of March 31, 2022 and December 31, 2021:
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Schedule of Aging Analysis | The following tables present the aging of the recorded investment in loans and leases as of March 31, 2022 and December 31, 2021:
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Schedule of Allowance for Credit Loss | The following tables detail activity in the allowance for loan losses by portfolio segment as of March 31, 2022 and March 31, 2021. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
Allowance for Loans Losses (Continued)
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Schedule of Impaired Loans |
Impaired Loans (Continued)
Impaired Loans (Continued) A loan held for investment is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the loan agreement. The following tables detail our interest income recognized on impaired loans, by portfolio class in the three months ended March 31, 2022 and 2021.
Impaired Loans (Continued)
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DEPOSITS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift, Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Deposits | Major classifications of deposits are as follows:
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Time Deposit Maturities | The scheduled maturities of time deposits at March 31, 2022 are as follows:
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Values of Derivative Instruments on the Balance Sheet |
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COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loan Commitments | A summary of the Company’s commitments is as follows:
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REGULATORY MATTERS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements Under Banking Regulations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Regulatory Capital and Ratios | As of March 31, 2022, the Company and the Bank believe they are each well capitalized on a consolidated basis for bank regulatory purposes as their respective capital ratios exceed minimum total Tier 1 and CET1 risk-based capital ratios and Tier 1 leverage capital ratios as set forth in the following table. As a bank holding company with less than $3 billion in total consolidated assets, the Company is eligible to be treated as a “small bank holding company” under the Federal Reserve’s Small Bank Holding Company and Savings and Loan Holding Company Policy Statement. As a result, the Company’s capital adequacy is evaluated at the bank level and on a parent-only basis, and it is not subject to consolidated capital standards for regulatory purposes. The ratios set forth below as to the Company are for illustrative purposes in the event it were to become subject to consolidated capital standards for regulatory purposes. The column styled “Required for Capital Adequacy Purposes” includes the 2.5% capital conservation buffer.
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FAIR VALUE OF ASSETS AND LIABILITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Information related to the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021 is as follows:
The carrying amount and estimated fair value of the Company’s financial instruments were as follows:
Fair Value of Financial Instruments (Continued)
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Fair Value Measurements, Nonrecurring | Assets measured at fair value on a nonrecurring basis are included in the table below as of March 31, 2022 and December 31, 2021:
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Fair Value Measurement Inputs and Valuation Techniques | For Level 3 assets measured at fair value on a nonrecurring basis as of March 31, 2022, the significant unobservable inputs used in the fair value measurements are presented below.
For Level 3 assets measured at fair value on a non-recurring basis as of December 31, 2021, the significant unobservable inputs used in the fair value measurements are presented below.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
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Finite-Lived Intangible Assets [Line Items] | ||
Reserve balances, federal reserve bank | $ 0 | $ 0 |
Goodwill, impairment loss | $ 0 | |
Core Deposits | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, remaining amortization period | 7 years | |
Impairment of intangible assets, finite-lived | $ 0 | |
Minimum | Buildings | ||
Finite-Lived Intangible Assets [Line Items] | ||
Premises and equipment, estimated useful life | 10 years | |
Minimum | Furniture and equipment | ||
Finite-Lived Intangible Assets [Line Items] | ||
Premises and equipment, estimated useful life | 3 years | |
Maximum | Buildings | ||
Finite-Lived Intangible Assets [Line Items] | ||
Premises and equipment, estimated useful life | 39 years | |
Maximum | Furniture and equipment | ||
Finite-Lived Intangible Assets [Line Items] | ||
Premises and equipment, estimated useful life | 7 years |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
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Basic Earnings Per Share: | ||
Net Income | $ 4,557 | $ 5,681 |
Weighted average common shares outstanding (in shares) | 8,935,384 | 7,681,578 |
Basic earnings per share (in dollars per share) | $ 0.51 | $ 0.74 |
Diluted Earnings Per Share: | ||
Net income allocated to common shareholders (in shares) | $ 4,549 | $ 5,674 |
Weighted average common shares outstanding (in shares) | 8,935,384 | 7,681,578 |
Net dilutive effect of: | ||
Assumed exercises of stock options (in shares) | 129,980 | 113,281 |
Average shares and dilutive potential common shares (in shares) | 9,065,364 | 7,794,859 |
Dilutive earnings per share (in dollars per share) | $ 0.50 | $ 0.73 |
SECURITIES - Restricted Equity Securities (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt and Equity Securities, FV-NI [Line Items] | ||
Restricted equity securities, at cost | $ 2,825 | $ 2,600 |
Federal Home Loan Bank stock | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Restricted equity securities, at cost | 1,900 | 1,675 |
First National Banker’s Bankshares, Inc. stock | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Restricted equity securities, at cost | 675 | 675 |
Pacific Coast Banker’s Bank stock | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Restricted equity securities, at cost | $ 250 | $ 250 |
SECURITIES - Other-Than-Temporary Impairment (Details) - USD ($) |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Securities considered other than temporary impairment | $ 0 | $ 0 |
DEPOSITS (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Banking and Thrift, Interest [Abstract] | ||
Noninterest-bearing transaction | $ 515,110 | $ 541,546 |
Interest-bearing transaction | 749,119 | 704,326 |
Savings | 62,462 | 56,715 |
Time deposits, $250,000 and under | 189,172 | 224,556 |
Time deposits, over $250,000 | 25,976 | 29,308 |
Total deposits | $ 1,541,839 | $ 1,556,451 |
DEPOSITS - Schedule Maturities of Time Deposits (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
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Banking and Thrift, Interest [Abstract] | |
April 1, 2022 to March 31, 2023 | $ 181,564 |
April 1, 2023 to March 31, 2024 | 12,514 |
April 1, 2024 to March 31, 2025 | 15,828 |
April 1, 2025 to March 31, 2026 | 3,597 |
April 1, 2026 to March 31, 2027 | 1,459 |
Thereafter | 186 |
Total time deposits | $ 215,148 |
DEPOSITS - Narrative (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Banking and Thrift, Interest [Abstract] | ||
Brokered deposits | $ 34,110 | $ 34,110 |
Overdrawn deposits reclassified as loans | $ 131 | $ 208 |
SUBORDINATED NOTES (Details) - Subordinated Notes due July 2026 - Subordinated Debt - USD ($) $ in Thousands |
3 Months Ended | |||
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Feb. 07, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Jun. 23, 2016 |
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Debt Instrument [Line Items] | ||||
Face amount | $ 48 | $ 4,500 | ||
Interest rate, stated percentage | 3.50% | 6.625% | ||
Debt issuance costs, gross | $ 79 | |||
Debt issuance costs, net | $ 846 | $ 875 | ||
Amortization period | 60 months | |||
London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.05% | 5.412% |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Fair Values of Derivative Instruments on the Balance Sheet (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2022 |
Dec. 31, 2021 |
|
Derivatives, Fair Value [Line Items] | ||
Collateral already posted | $ 4,470 | |
Loss recognized in income from fair value adjustment | 15 | |
Loss recognized in income from fee income | 0 | |
Interest Rate Products | Not Designated as Hedging Instrument | ||
Other Assets | ||
Notional Amount | 76,883 | $ 77,534 |
Fair Value | 4,278 | 1,784 |
Other Liabilities | ||
Notional Amount | 76,883 | 77,534 |
Fair Value | $ (4,322) | $ (1,843) |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Credit-risk-related Contingent Features (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value of derivatives in a net liability position | $ 4,240 |
Termination value | 4,240 |
Required collateral | $ 4,470 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Guarantor Obligations [Line Items] | ||
Exposure to credit loss | $ 317,583 | $ 317,628 |
Commitments to extend credit | ||
Guarantor Obligations [Line Items] | ||
Exposure to credit loss | 313,155 | 314,194 |
Standby letters of credit | ||
Guarantor Obligations [Line Items] | ||
Exposure to credit loss | $ 4,428 | $ 3,434 |
CONCENTRATIONS OF CREDIT (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
| |
Concentration Risk [Line Items] | |
Commitments to expend in excess of capital, secured basis, percentage | 20.00% |
Commitments to expend in excess of capital, secured basis | $ 41,298 |
Commitments to expend in excess of capital, unsecured basis, percentage | 10.00% |
Commitments to expend in excess of capital, unsecured basis | $ 20,649 |
Real estate mortgages | Financing Receivable | Loan Portfolio Concentration Risk | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 83.00% |
STOCKHOLDERS’ EQUITY (Details) - shares |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Equity [Abstract] | ||
Common stock issued (in shares) | 8,749,878 | 9,012,857 |
Common stock outstanding (in shares) | 8,749,878 | 9,012,857 |
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